New Appeal: Re s 22 of the Courts Act 1981; Re Order 22 r 6 Rules of the Superior Courts

In this determination (Reaney v Interlink), the Supreme Court granted Interlink leave to appeal the Court of Appeal’s decision to exercise its discretionary jurisdiction under s 22 of the Courts Act 1981 and award Reaney interest on damages for breach of contract from the date of breach rather than from the date of judgment.

 

Law

S 22 of the Courts Act 1981 (here) grants a court the discretionary power to order the payment of interest on an award of damages for the period from when the cause of action arose to the date of judgment.

Order 22, rule 6 of the Rules of the Superior Courts (here) provides for the awarding of costs in cases where a defendant has paid a sum into the court which is equal to or in excess of the award that the court makes to a successful plaintiff.

 

Background

Interlink operates a network of courier franchises throughout Ireland. From 1995 to 2010, Reaney operated an Interlink franchise in Cork. In 20o8 a dispute arose between the parties; Reaney issued High Court proceedings seeking damages for breach of contract. In late 2009 Interlink issued a notice of termination of contract to Reaney pursuant to s 13 of the franchise agreement. The franchise terminated in July 2010. Reaney issued separate High Court proceedings for money due under s 13 of the franchise agreement. In December 2010 the High Court consolidated both sets of proceedings.

In January 2011 Interlink lodged €253,000 with the High Court to satisfy all of Reaney’s claims but denied liability. In October 2011 Interlink lodged another €109,000 with the High Court to satisfy all of Reaney’s claims, while denying liability.

In November 2012 the High Court (here) awarded Reaney €356,000 in damages against Interlink (which had lodged €363,000 in total with the court) but refused to award interest from the dates at which the actions arose as the franchise agreement did not make provision for such interest. And the High Court refused to exercise its discretionary jurisdiction under s 22 of the 1981 Act to award interest from the earlier dates.

As Interlink’s lodgment was greater that the award, under Order 22, that decision could mean that: Interlink would be liable for its own and Reaney’s costs up to the date it lodged the second payment with the court; and Reaney would be liable for his own and Interlink’s costs after the date Interlink lodged the second payment with the court. (Someone may correct me on this: Order 22 is complex).

Interlink appealed to the Court of Appeal. Reaney cross appealed, arguing that the High Court should have exercised its jurisdiction to award interest from the dates the actions arose.

In July 2016, the Court of Appeal (Finlay Geoghan J writing) dismissed Interlink’s appeal and upheld Reaney’s cross appeal. On the application of interest, Reaney’s award increased to €423,500. Under Order 22, this judgment, if allowed to stand, means that Interlink could be liable for all of the legal costs of both parties (I think).

Interlink applied to the Supreme Court for leave to appeal the CoA decision. The Court determined that the case raised a number of issues of general importance and granted leave to appeal on the following issues:

(i) The clear functioning of the Order 22 lodgment procedure is a matter of general public importance.

(ii) It is appropriate for the Court to consider the issue of the interest to be paid on lodgments pursuant to s. 22 of the Courts Act, 1981, and to clarify the law.

(iii) Does a court have a discretion pursuant to s. 22 of the Courts Act, 1981, in relation to proceedings arising out of an agreement even if the agreement does not contain any proviso in respect of the payment of interest?

(iv) Does a court have a discretion to refuse to exercise its discretion to award interest under s. 22 of the Courts Act, 1981.

(v) What are the principles according to which a court should exercise its discretion under s. 22 of the Courts Act 1981?

(vi) In construing Order 22 rule 6, was the Court of Appeal correct in law in finding that, for the purposes of Order 22, rule 6, the “amount awarded” by the Court is to be regarded as including any Courts Act interest awarded?

(vii) Was it correct in law to hold (as in the High Court) that even though the amount ultimately awarded to the plaintiffs was less than the total amount lodged by the defendant pursuant to Order 22, that the lodgments were nihil ad rem and of no relevance to the issue of costs because (the High Court held) the form of notices of lodgement did not comply with Order 22(5) because they did not allocate the accounts lodged to the different claims being made by the plaintiffs? (High Court judgment 30th November, 2012).

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