knowledge 17 February 2020 |

Commercial Court orders Defendant to Pay Specified Costs in Cross Border Litigation

The application in question was brought by the plaintiffs against a defendant in Trafalgar Developments Ltd v Mazepin.¹ While awarding costs on a party and party basis the court stipulated a number of specific items of which the defendant was ordered to bear the full cost incurred by the plaintiffs.

Service in Cyprus

The proceedings commenced against numerous defendants in November 2016.  Being domiciled in Cyprus, the ninth defendant (the "defendant”) was served with the proceedings in English under Regulation (EC) no. 1393/2007 (the “Service Regulation”). She did not enter an appearance, as required by the Rules of the Superior Courts.   She was later served with amended pleadings, again in English, but refused to accept service on the basis that the documents had not been translated into Greek.  The plaintiffs had to then incur the costs of arranging Greek translations of the documents in question and re-effecting service of those translated documents.

Motion for judgment in default of appearance

The plaintiffs ultimately sought judgment in default of appearance against the defendant prompting an unconditional appearance on her behalf.  The motion for judgment was struck out on consent, with the defendant conceding that she must pay the costs of the motion on a party and party basis. The plaintiffs, however, sought an order for costs on the (more generous) solicitor and client basis as the defendant had deliberately held off entering an appearance, resulting in delay and considerable expense to the plaintiffs in having to incur the additional translation and service costs.  The plaintiffs pointed out that the defendant had previously accepted service of documents in English without Greek translations and had previously transacted business in English.  No criticism was made of the legal representatives for the defendant.

The defendant admitted that she had made a deliberate decision not to enter an appearance until a motion for judgment was issued against her. She denied however that she had sought to delay the proceedings, in which she had entered a full Defence, and maintained that her conduct was not so inappropriate that an award of costs on a solicitor and client basis would be justified.  She maintained that while she spoke English, she did not do so well.

Judicial discretion

The court noted that the making of costs orders on the solicitor and client basis is exceptional and outlined the relevant principles when assessing whether such an order is appropriate on the facts of a given case, including where the conduct merits marking of the court’s displeasure or disapproval.  The court emphasised that there must be conduct of a particularly blatant or serious nature having consequences for the other party to justify such an award.  Here the fact that the proceedings were Commercial Court proceedings did not in and of itself render the very late entry of an appearance a basis for a solicitor and client award of costs.  The defendant had ultimately entered an unconditional appearance and had complied with the court’s directions for the progression of the proceedings thereafter.  There were various factors contributing to the delay in the proceedings. She was not solely responsible for it and the explanation given for the delay was not totally unreasonable.  The appropriate order was therefore an order for costs on the usual party and party basis.

It was, however, clear that certain costs had been occurred as a result of the filing of the late appearance which would not ordinarily be covered by a party and party costs order.  Barniville J therefore directed that in addition to party and party costs, the plaintiffs should recover the full costs of translating and serving various documents on the defendant, including the plaintiffs’ application seeking leave to amend the Statement of Claim, the further version of the amended Statement of Claim, the plaintiffs’ motion for judgment in default of appearance and numerous affidavits sworn in connection with that motion. This was because those costs would not have been incurred had the Defendant entered an appearance in time.

The court also held that the defendant had been entitled to require the documents to be translated into Greek, despite the fact that she had transacted business in English, as director of a number of companies. This appears to be the first time the Irish courts have considered this issue in a written judgment. The court followed authority from the Court of Justice of the European Union in deciding that “the degree of knowledge of a language required for correspondence is not the same as that needed to defend an action” and that it is a matter of fact for the national court to determine whether the document being served is written in a language which the addressee understands, unless it is in the official language of the Member State addressed.

Significantly, in a departure from the usual practice, the court also declined to place a stay on the order for costs.

Comment

This judgment reiterates the circumstances in which a court will consider awarding costs on a solicitor client basis and serves as a reminder that the court has discretion in respect of the costs of and incidental to every set of proceedings.  Where significant costs or outlays are incurred as a result of delay or other conduct that may be prejudicial to another party, the court has a variety of options at its disposal with regard to costs, including stipulating the payment of specific costs and disbursements and declining to place a stay on costs. Significantly, this judgment also sets a high standard in respect of a defendant’s entitlement under the Service Regulation to require the translation of documents into another language, particularly in circumstances where that defendant has transacted business in English.