Litigation Update 1

TAXATION OF COSTS

In order to seek legal costs, two basic conditions must be met. These are as follows:-

  1. The client must have been issued with a letter of engagement or similar letter pursuant to Section 68 of the Solicitors (Amendment) Act, 1994; and
  2. A Bill of Costs (or similar) must have been delivered to the client.

The time limits in relation to seeking costs are to be considered in light of Sections 2, 6 and 9 respectively of the Attornies and Solicitors (Ireland) Act, 1849 (as amended).

In short, these provisions have the following combined effect:-

  1. A solicitor cannot lawfully sue a client for recovery of fees for one month after delivery of a Bill of Costs;
  2. The client has a period of twelve months within which to demand and obtain taxation;
  3. After the expiry of the twelve month period or after payment of the amount of the bill, the Court may, if the special circumstances of the case appear to require same, refer the matter for taxation provided the application to the Court is made within twelve calendar months after payment; and
  4. After the expiry of periods referred to above, there is no statutory power to refer for taxation.

The taxation of costs is the assessment and measurement of legal costs by an officer known as a Taxing Master. A Taxing Master provides an independent and impartial process of assessment of legal costs which endeavours to achieve a balance between the costs involved and the services rendered. The party claiming costs must demonstrate to the satisfaction of the Taxing Master that such costs as are incurred were proper and reasonable in all the circumstances.

There are two main categories of costs:-

(i) Party and Party Costs which cover all costs, charges and expenses reasonably incurred by one party for the purposes of the relevant proceedings which the other side is obliged to pay; and

(ii) Solicitor and Client Costs which are those costs that a client is obliged to pay his solicitor which are not recoverable under Party and Party costs.

Taxation of costs may arise as a result of any of the following:-

  • an order of a Court;
  • an arbitration hearing;
  • a notice of discontinuance;
  • a demand by a client to have his costs taxed;
  • the cost of registering a judgment as a mortgage;
  • notice of acceptance of a lodgment; or
  • an order of a Tribunal.

The factors that the Taxing Master will consider when assessing an instruction fee are as follows:-

  • the complexity of the item or of the cause or matter in which it arises and the difficulty and novelty of the questions involved;
  • the skills, specialised knowledge and responsibility required of and the time and labour expended by the solicitor;
  • the number and importance of the documents prepared and perused;
  • the place and circumstance in which the business involved is transacted;
  • the importance of the cause or matter to the client;
  • where money or property is involved, its amount or value; and
  • any other fee and allowance payable to the solicitor in respect of other items in the same cause or matter but only where work done in relation to those items has reduced the work which would otherwise have been necessary in regard to the item in question.