Supreme Court Awards Partial Costs Despite Revenue Win

In a consequential development for legal practitioners and litigants across Ireland, the Supreme Court has issued its costs ruling in the long-running dispute between the Revenue Commissioners and defaulting taxpayers. Delivered by Mr Justice Gerard Hogan, the decision in Howley v Howard and Howley v McClean addresses the financial fallout of litigation that fundamentally reshaped the Irish approach to litigation funding and fee agreements. The five-judge bench, comprising Justices Woulfe, Hogan, Murray, Collins, and Donnelly, navigated the complex intersection between statutory cost rules and the wider public benefit derived from resolving contentious points of law.

Clarifying 'No Foal, No Fee' and Uplift Agreements

The dispute originated from debt recovery proceedings initiated by the Collector General, Mr Joseph Howley, who had obtained substantial judgments against taxpayers Mr Paul Howard and Ms Una McClean. The defendants resisted the enforcement actions by challenging the arrangements between Revenue and private solicitors' firms, which included conditional uplift fees and standard 'no foal, no fee' mechanisms. In an earlier substantive judgment delivered in June 2026, the Supreme Court decisively clarified the ancient doctrines of maintenance and champerty. The court concluded that both conditional uplift fees under Section 149(1)(a) of the Legal Services Regulation Act 2015 and general 'no foal, no fee' retainer models are entirely lawful within the State.

Because the issues went to the heart of everyday practice within the Irish legal profession, the proceedings attracted substantial institutional scrutiny. Both the Attorney General and the Law Society of Ireland appeared as amici curiae to assist the bench in evaluating modern litigation funding. While these institutional parties agreed to bear their own respective expenses, the Supreme Court was tasked with determining whether the Collector General or the individual taxpayers should carry the heavy legal costs incurred across the High Court, Court of Appeal, and Supreme Court.

The Statutory Presumption Under the 2015 Act

Under Section 169(1) of the Legal Services Regulation Act 2015, an entirely successful party is presumptively entitled to an award of costs against the losing party. Justice Hogan observed that the Collector General had been entirely successful in the primary dispute, having successfully retained judgments for significant financial sums. Furthermore, the State successfully established that the conditional fee clauses within its legal retention contracts were valid and did not infringe on common-law prohibitions against litigation funding. Ordinarily, such an unmitigated win would lead to a comprehensive costs order against the defendants in every court.

However, the Supreme Court emphasised that statutory rules on costs contain essential judicial discretion to account for broader systemic factors. Justice Hogan noted that the defendants had raised questions of profound systemic importance, which directly clarified obscure and historically unsettled principles surrounding champerty and fee uplift agreements. By testing these issues before the nation's highest court, the litigation provided an immense public benefit that extends far beyond the immediate parties, providing certainty to practitioners across personal injury, commercial, and general claims litigation.

Misconduct and Baseless Allegations Limit Relief

Despite the broader public utility of the proceedings, the court firmly rejected the notion that the defendants were entitled to recover the entirety of their legal expenses. Justice Hogan highlighted several countervailing factors that weighed heavily against the taxpayers in the balance of justice. Crucially, the litigation had its genesis in the defendants' own persistent failure to discharge lawful tax liabilities owed to the State. The court also observed with disapproval that the defendants had advanced serious, wholly unsubstantiated allegations of fraud against state bodies during the earlier hearings before the High Court and the Court of Appeal.

Such conduct, the court determined, disentitled the taxpayers to anything resembling an ordinary costs order. The bench made clear that while courts welcome genuine public-interest clarification of the law, litigants cannot use speculative or unmerited accusations to shield themselves from standard procedural consequences. Balancing the systemic legal value against the defendants' conduct, the Supreme Court crafted an equitable solution designed to reflect both aspects of the litigation.

The Final Orders and Wider Market Impact

Ultimately, the Supreme Court ruled that there should be no order as to costs in respect of both the High Court and Court of Appeal hearings, requiring each side to bear their own expenses for those stages. In relation to the Supreme Court appeal itself, where the definitive legal clarifications were settled, the court directed that the defendants should recover 50 per cent of their costs, to be adjudicated by the Office of the Legal Costs Adjudicators in default of agreement. This balanced outcome acknowledges the substantial public service rendered by clarifying modern retainer rules while holding the taxpayers accountable for the lower-court proceedings.

For the wider claims community, the ruling reaffirms that conditional fee arrangements and statutory uplift structures remain robust and legally protected under Irish law. Claimants and respondents alike now operate with greater certainty regarding how retainer agreements interact with maintenance and champerty. Furthermore, the judgment confirms that the Irish courts are willing to deviate from standard cost-following rules when an individual taxpayer or litigant shoulders the burden of resolving vital questions of public and statutory law.