Lodgment and Tender – Useful Tools to Settle Disputed Legal Costs
Lodgments and tenders are frequently used in the Superior Courts to persuade a Plaintiff to settle a claim. In terms of O. 22(6) of the Rules of the Superior Courts a Plaintiff risks paying part of the Defendant’s legal costs if a lodgment or tender is not accepted by the Plaintiff, and the amount awarded at the end of the day is less than the amount lodged or tendered. But O. 22 only applies to the claim itself, and until recently no similar provision existed which could be used to persuade the party entitled to legal costs to settle the costs. Following the amendment of O. 99, effective from 3 December 2019, O. 99, r.57 – r.61 now provides for a lodgement and tender regime in respect of disputed legal costs.
Although lodgments differ from tenders (a lodgment require the actual payment of money as opposed to merely an undertaking by a “qualified” party to pay in the case of a tender), any tender made in satisfaction of legal costs in terms of O. 99 r.61 shall be deemed to be a lodgment in satisfaction of costs and shall have the same effect as a lodgment.
A “qualified” party bears the meaning set out in O.22, r.14(1), and can be a Minister of Government, the Government, the State, or an insurer. This is a closed list, and unless the party wishing to formally compromise the legal costs falls within any of the listed categories, that party is only allowed to pay the money into Court.
Lodgments and tenders are, like their O. 22 counterparts useful to persuade the party entitled to the legal costs to settle the costs. This is mainly due to the sanction of being liable for a portion of the costs of the adjudication if the lodgement or tender was equal or greater than the amount of legal costs allowed by the Legal Costs Adjudicator. In terms of O. 99, r. 60(2), if the lodgment or tender was not accepted, and afterwards not beaten on adjudication, the person entitled to payment of costs will only be entitled to the costs of the adjudication up to the time such tender or payment into Court was made, and conversely, in terms of O. 99, r. 60(3), the paying party will be entitled to the costs of the adjudication from the time of such lodgment or tender.
The term “costs of the adjudication” is not defined in O. 99 but Note 1 to the Notes on the Preparation of a Bill of Costs included in Form 3 of Part V of Appendix W to S.I. 584/2018, read with O. 99, r. 26(5) require a Bill of Costs to be divided into sections. Each section deals with a certain period in the life cycle of a case, and Section D, captioned “Costs incurred subsequent to trial” generally includes the adjudication costs, and can range from preparing a file for submission to a legal cost accountant for preparation of a detailed bill of costs, to attending at the adjudication of costs before the Legal Costs Adjudicator and taking up Certificate of Determination. The part of the legal costs to which the punitive sanction applies is accordingly the portion of the legal costs allowed under Section D which was incurred after the lodgment or tender was made. But it is submitted that the adjudication costs, for the purpose of the punitive sanction must also include the Court duties payable in terms of Schedule 6 to S.I. 492 of 2014 at the rate of 8% for every full €100.00 of the amount of legal costs allowed. To hold otherwise would defeat the purpose of the lodgment and tender regime, i.e. to prevent the unnecessary expense of an adjudication. This is because these duties only become payable after the Bill of Costs has been adjudicated, and before a Certificate of Determination is completed, signed and issued. If the lodgment or tender was accepted by the party entitled to costs, the adjudication, and concomitantly these duties would have been avoided.
The new lodgment and tender regime have the potential to change the way disputed legal costs are dealt with in a significant way, and practitioners would be remiss not to investigate this process the next time their client is on the receiving end of a Bill of Costs.