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Costs and interlocutory injunction applications
PRACTICE AREA GROUP: Commercial Litigation and Dispute Resolution
The High Court recently considered the principles applicable to making an award for the costs of an interlocutory injunction application.(1) The decision confirms that although the applicable rules provide that the court should make a determination as to costs in such cases (subject to an important qualification), it may not always be appropriate to do so. The decision also confirms that in applicable cases it may not always follow that a successful party in an interlocutory injunction hearing is awarded their costs.
The decision arose out of an unsuccessful application by the plaintiffs for an interlocutory injunction. Judge Barrett determined the question of the costs of the application as a separate matter and observed that although it is "always tempting to decide a costs application on-the-spot", since parties expend significant sums in litigating they "are entitled to a considered, reasoned decision even as to costs, in fact perhaps especially as to costs". Barrett felt that this observation applied "with even greater truth when it comes to the somewhat tortured issue of whether or not to order costs following an application for interlocutory relief". He then proceeded to analyse relevant authorities in considering the question of costs.
Barrett's starting point with regard to relevant authorities was Order 99, Rule 1 of the Rules of the Superior Courts, which as a general principle provides that costs are at the discretion of the courts. However, Order 99, Rule 1(4A) states that in determining any interlocutory application the court "shall make an award of costs save where it is not possible justly to adjudicate upon liability for costs on the basis of the interlocutory application".
Barrett noted that this principle applied to all interlocutory applications, and from which important qualifications and distinctions arose from other cases.
In seeking its costs, the successful respondent/defendant relied on Haughey v Synnott.(2) In this case, Judge Laffoy referred to Delany & McGrath's Civil Procedure in the Superior Courts in identifying that the 'shall' in Order 99, Rule 1(4A) requires the court to adjudicate on costs in respect of interlocutory applications and it is permissible to reserve costs only where it is impossible at that juncture to justly adjudicate on the costs of the application.(3) She further cited the textbook with regard to the factors relevant to dealing with costs in interlocutory applications as a general class:
"Important factors in determining how to deal with the costs of an interlocutory applications will include whether an application was required to be brought in any event, the success, or degree of success of a party on the application, whether the party bringing the application gave the opposing party an adequate opportunity to deal with the subject matter of the motion prior to its issue and whether the opposing party acted reasonably in refusing to deal with the particular matter on a consensual basis."(4)
However, more specifically with regard to interlocutory injunction applications, Laffoy commented that:
"the prospect of a courts being in a position to make an award of costs in relation to an application for interlocutory injunctive relief… is less likely than in the case of other forms of interlocutory applications, for example, interlocutory applications dealing with procedural matters that is because, in the case of an application for interlocutory injunctive relief, it is frequently 'not possible justly to adjudicate on liability for costs' at that juncture so the case comes within the saver in rule 1(4A)."(5)
She also referred to Allied Irish Bank plc v Diamond,(6) where Judge Clarke drew a further distinction in interlocutory injunction applications between cases where the decision turned on issues relating to the merits of the proceedings (which could develop and change as the case progresses) and those which turned on matters, such as adequacy of damages or the balance of convenience (which would not be addressed again at trial). It was recognised that in the former scenario, a risk of injustice could arise in determining costs at the interlocutory injunction stage; such risk might not arise where the application does not turn on the merits of the proceedings.
Barrett also referred to O'Dea v Dublin City Council(7) where the court identified that the usual position, before the introduction of Order 99, Rule 1(4A), was that the question of costs in relation to an interlocutory injunction application was reserved to the trial judge for determination at the end of the substantive hearing. The rationale was that:
"there may and frequently will be matters which can only be resolved by the court of trial on oral evidence at a plenary hearing of the action and indeed matters may come to light by way of discovery or by way of new evidence not available to the parties at the time of the hearing of an interlocutory application which will bring about a result which seemed unlikely or improbable at the time of the hearing of the interlocutory application."(8)
Another case relevant to Barrett's consideration was the Supreme Court decision in ACC Bank plc v Hanrahan & Sheeran,(9) where an order granting costs of the initial application was overturned and replaced by an order that costs should have been costs in the cause. This reflects that:
"different considerations… apply in cases where, at least to a material extent, some of the issues which are before the court at an interlocutory stage arise or are likely to arise again at the trial in at least some form."(10)
Indeed, the Supreme Court observed that:
"if the facts on which the plaintiff's claim is predicated are rejected at trial, then the justice of the case may well lead to the conclusion that the interlocutory injunction was wrongly sought. It may be that, on the basis of the evidence before the court at the interlocutory stage, the injunction was properly granted. However, with the benefit of hindsight, and after the trial, it may transpire that the case for the granting of an interlocutory injunction was only sustained on the basis of assertion that the facts were other than the true facts finally determined by the court at trial. It follows that in such cases there may well be good grounds for not dealing with the costs at the interlocutory stage for the trial court may be in a better position to assess the justice of the costs of an interlocutory hearing when it has been able to decide where the true costs lie."(11)
Taking all of these cases into account, Barrett felt that it was appropriate to reserve the costs on this occasion. He felt that if the plaintiffs succeeded at trial they would obtain a permanent injunction in the same form as the interlocutory injunction which had been declined. To make an order directing that the unsuccessful party pay the costs of the interlocutory hearing would be wholly inconsistent with the possibility of a contrary result at the full hearing and would be "absurd". He also felt that since the injunction application dealt with matters that would be central to the full trial, this also militated against making an order for costs at this stage. Finally, he also stated that he was mindful of the possibility that new matters may come to light through discovery of fresh evidence.
The case outlines the law relating to the award of costs in interlocutory injunction applications. Although the usual principle is that costs follow the event and the rules prescribe that in dealing with an interlocutory application the court should also determine costs, it may be appropriate in interlocutory injunction cases to reserve costs to the trial judge. Accordingly, any party involved in an interlocutory injunction application should not necessarily assume that if it prevails at the interlocutory stage it will secure an order for costs in its favour.
(1) Glaxo Group Limited v Rowex Limited  IEHC 467.
(2)  IEHC 403.
(3) Third edition 2012, Paragraphs 23 to 43.
(4) Ibid, Paragraphs 23 to 46.
(5)  IEHC 403, Paragraph 5.
(6) Unreported High Court, November 7 2011, Judge Clarke.
(7)  IEHC 100.
(8) Citing Judge Keane, Dubcap Ltd v Microchip Ltd (Unreported Supreme Court, December 9 1997).
(9)  IESC 40.
(10) Ibid, Paragraph 3.4.
(11) Ibid, Paragraph 3.5.
This article first appeared in International Law Office's Litigation newsletter, 15 September 2015.