Ruling puts 'no win, no fee' cases in doubt

Irish Times/November 16, 2002

A decision by a High Court Taxing Master has cast doubt on whether solicitors who act on a "no win, no fee" basis, and who are awarded their legal costs by a court, will actually receive their costs from the losing party. Master James Flynn yesterday ruled that two bills for costs before him in a legal action against the Church of Scientology (COS) and others should be taxed at "nil" as the defendants (who had been ordered by the Supreme Court to pay costs) could, he held, have no greater liability than the person who sued them. The ruling could have serious implications for the legal profession.

The director general of the Law Society said last night that most personal injuries actions in this country are taken on a no win, no fee basis. Mr Ken Murphy warned that meritorious cases would not be litigated if the legal profession was not prepared to fight cases in this manner. A solicitor successfully representing such a client usually recouped his/her fees and expenses from the opposing side.

"As the legal aid system does not cover the vast majority of cases, the no win, no fee system is essential to access to justice for the majority of clients," he added. However, he said he would have to study the ruling carefully to understand what it was saying.

Under Master Flynn's decision, a solicitor claiming costs following success by their client must show there was not a no win, no fee agreement with their client. The solicitor must prove the client had a "legal responsibility" for costs.

Master Flynn said the bills of costs had come before him in relation to a Supreme Court hearing involving a case taken by Ms. Mary Johnston, who operates a sports equipment shop at Westwood, Foxrock, Co Dublin, against the COS and others.

Ms. Johnston had claimed she had suffered a distinct personality change after being subjected to what she alleged were COS mind control techniques. She sued COS and three named persons for damages. The Supreme Court hearings concerned documents sought by the parties to the dispute.

Master Flynn said that, when the matter came before him, lawyers for the COS had requested sight of a "letter-of-action" or a "client care letter". The lawyers also said they were placing Ms. Johnston on "full proof of all issues and disputes arising at the taxation and in particular those relating to the legal liability for costs of the proceedings". The COS lawyers did not think a letter of action existed.

The Taxing Master said that nowadays there was a greater awareness in relation to the element of legal costs. A 1991 Supreme Court decision ensured or, in some cases, discouraged unmeritorious litigation or nuisance actions.

He said a no win, no fee arrangement between a solicitor and the client did not remove the legal responsibility (to pay). However, if the client could not prove the legal responsibility, then, regrettably, the defendant in a case, rightly or wrongly, was not obliged to discharge costs which the client would not be held liable for.

Master Flynn said the onus of proof in relation to legal liability for costs was a matter for the plaintiff. If Ms. Johnston asserted there was a legal liability, she must prove it. The solicitor for Ms. Johnston gave evidence that Ms. Johnston had a legal liability to discharge costs.

There was no "client care letter" and the best evidence the solicitor offered was that costs were discussed with Ms. Johnston quite some time after the proceedings were issued. The solicitor did not have a note of that conversation.

It appeared that, a day before the hearing in the Taxing Master's court, Ms. Johnston, at her solicitor's request, wrote that she had a legal responsibility for legal costs. However, Ms. Johnston had not been present in the Taxing Master's court to prove the contents of her letter and the solicitor's statement did not constitute evidence.

Master Flynn said Ms. Johnston had failed to discharge the necessary proof and he must accept the COS argument that she was not under a legal liability to her own solicitor as to costs. Accordingly, he was left with no option but to tax the bills of costs before him at nil as the COS could have no greater liability than Ms. Johnston.