High Court 

In re Dunnes Holding Company and in re Section 205 of the Companies Acts 1963-1990 and in re 'The High Court: Record No 7722 P; 

Dunne v Fox and Others, and (by Order of the Court) Dunne and Others, and (by further Order of the Court) Mellon and Another

1993/7190 P 

3 April 1998 

LAFFOY J: 

BACKGROUND 

Order 31, Rule 29, of the Rules of the Superior Courts, 1986 provides as follows:- 

"Any person not a party to the cause or matter before the Court who appears to the Court to be likely to have or to have had in his possession, custody or power any documents which are relevant to an issue arising or likely to arise out of the cause or matter or is likely to be in a position to give evidence relevant to any such issue may by leave of the Court upon the application of any party to the said cause or matter be ordered by the Court . . . to make discovery of such documents or to permit inspection of such documents. The provisions of this Order shall apply mutatis mutandis as if the said order of the Court had been directed to a party to the said cause or matter provided always that the party seeking such order shall indemnify such person in respect of all costs thereby reasonably incurred by such person and such costs borne by the said party shall be deemed to be costs of that party for the purposes of Order 99." 

By Order of this Court (Lynch J) made on 3 October, 1994 in these proceedings, it was ordered that Price Waterhouse, which firm will be hereafter referred to as "the Non-party", should within a period of three weeks from the date of the Order make discovery of the documents described in paragraph 1 of the Notice of Motion dated 14 September 1994 referred to in the said Order and furnish copies thereof to the Plaintiff and to all the parties to the proceedings. The Non-party was given liberty to apply in the meantime in the event of difficulty in complying with the said time limit. It was further ordered that the Plaintiff should pay to the Non-party their costs of appearing on the motion and the reasonable costs of complying with the Order, the costs to be taxed in default of agreement. 

By a further Order of this Court (Lynch J) made on 8 November, 1994, it was ordered that the Plaintiff should pay to the Non-party the costs of a motion dated 1 November, 1994, brought by the Plaintiff seeking to disallow the claim to privilege made by the Fifth, Sixth and Seventh named Defendants, to which motion the Non-party was a notice party, when taxed and ascertained. 

Two Bills of Costs presented by the Non-party were taxed by the Taxing Master, Master James Flynn, pursuant to the said Orders on 3 May, 1995. Subsequently, objections were carried in on behalf of the Petitioner in the first proceedings mentioned in the title hereof, who is also the Plaintiff in the second proceedings mentioned in the title hereof, to whom, for the sake of brevity, I will hereafter refer as "the Plaintiff'. On 20 February, 1996 the Taxing Master ruled on the objections disallowing the objections in their entirety. 

On this application the Plaintiff seeks an Order under Order 99, Rule 38(3), of the Rules of the Superior Courts to review the said taxation by the Taxing Master of the items to which objections were raised by the Plaintiff. 

ISSUE OF PRINCIPLE 

An issue of principle arose before the Taxing Master and in this Court on the review, namely, what is the proper basis for the taxation of costs payable by a litigant who has obtained an Order under Order 31, Rule 29, to the person against whom that Order has been obtained. I propose addressing this issue of principle before dealing with the specific objections of the Plaintiff in relation to the taxation of the Non-party's costs. I understand that this is the first occasion on which this issue of principle has been raised in this Court on a review of taxation. 

The Taxing Master, in ruling on the Plaintiffs objections, set out his views on the issue of principle in a very comprehensive reasoned report dated 20 February, 1996. He rejected the submission made by the Plaintiff that he should follow the ruling dated 23 February, 1988 made by his predecessor in Pandion Haliaetus Limited & Ors v The Revenue Commissioners, in which it was ruled that costs being taxed pursuant to Order 31, Rule 29, should be taxed on a party and party basis. Referring to the decision of Sir Robert Megarry, VC, in EMI Records Limited v Wallace, [1982] 2 All ER 980, he stated that he believed that the appropriate criterion to apply when taxing costs under Order 31, Rule 29, is that of an indemnity basis provided the charges have not been unreasonably incurred or are not of an unreasonable amount. He stated his approach to the taxation of the Non-party's costs against the Plaintiff in clear and unequivocal terms in the following passage from his report:- 

"In summary, my view as stated is that the non-party is entitled to be paid their costs on an indemnity basis provided such costs have not been unreasonably incurred or are [not] of an unreasonable amount and in applying these two exceptions the receiving party will be given the benefit of any doubt." 

In this Court, it was submitted on behalf of the Plaintiff that the Taxing Master erred in law in that an "indemnity" basis as applied in the EMI case, which it was suggested was a more generous basis that a "solicitor and client" basis, is not the appropriate basis for the taxation of costs under Order 31, Rule 29. It was submitted that the EMI case, which concerned the taxation of costs awarded by the Court on an "indemnity" basis against the defendants in proceedings for contempt of court was not an appropriate analogy because the award reflected the court's displeasure and its desire to punish the contemnors. The following further submissions were made on behalf of the Plaintiff:- 

(1) It is an incorrect interpretation of Order 31, Rule 29, to equate the word "indemnify" therein with the term "indemnity" in the concept of "indemnity costs". Even the recipient of party and party costs is entitled to be indemnified and the dictum of Hamilton J, as he then was, in Kelly v Breen, [1978] ILRM 63 at page 68 was cited in support of this proposition. 

(2) The Taxing Master's approach does not have sufficient regard to the requirement in Rule 29 that the costs in respect of which the non-party is entitled to be indemnified are costs "reasonably" incurred in making discovery. His approach seeks to model costs payable under Order 31, Rule 29, on solicitor and client costs pursuant to Order 99, Rule 11. If it had been the intention of the rule making authority that costs payable under Order 31, Rule 29, should be payable on a solicitor and client basis, it would have been a simple matter to so provide. Unlike Order 99, Rule 11, Order 31, Rule 29, does not contemplate payment of all costs, other than those of "an unreasonable amount" or which "have been unreasonably incurred"; rather it contemplates payment only of costs shown to be reasonable. 

(3) That the onus should be on a non-party receiving costs under Order 31, Rule 29, to establish their reasonableness is consistent with the approach adopted by the English Courts where an innocent third party who is affected by a Mareva injunction successfully applies to the Court for a variation of the order. In Project Development Company Limited SA v KMK Securities Limited, [1983] 1 All ER 465, it was held that, while the successful third party intervener should be allowed all his reasonable costs, it was also held to be right that he should have to establish the reasonableness of the costs for which he was contending. 

(4) That the onus should be on the non-party to establish that the costs were reasonably incurred is also consistent with the fulfilment of the purpose underlying Order 31, Rule 29 -- to advance justice (Allied Irish Banks Plc v Ernst & Whinney (1993) 1 IR 375). As with other aspects of the administration of justice, for example, jury service, its advancement is some times necessarily burdensome on members of the public. 

(5) As regards a non-party who is ordered to make discovery under Order 31, Rule 29, the true analogy is with a witness, possibly an expert witness, served with a subpoena and required to attend Court to testify. Such a witness is not entitled to claim expenses by reference to his full fees. What he is entitled to is a reasonable sum, the reasonableness of which is capable of being reviewed by the Taxing Master. In support of this proposition, the Plaintiff cited Halsbury, 4th Ed, Vol 17 at paragraph 254; Re Working Men's Mutual Society, (1882) 21 Ch D 831; and The Ibis VI, [1921] P 255. To allow the Non-party's costs as taxed by the Taxing Master would be to undermine the whole basis of allowing costs for professional witnesses. 

Arising out of the foregoing, it was submitted, the burden of establishing reasonableness lies on the Non-party on the taxation under review. The Taxing Master was in error in holding that the onus was on the Plaintiff to establish unreasonableness and in holding that he was obliged to give the benefit of any doubt on any point to the Non-party. 

On the review in this Court the following submissions were made on behalf of the Non-party on the issue of the proper basis for taxation under Order 31, Rule 29:- 

(1) The Taxing Master was correct in rejecting the Plaintiff's submission that the costs of the Non-party ought properly to be taxed on a party and party basis. Such a basis is not appropriate to the position of a non-party who is obliged by a litigant, so as to advance the litigant's interests, to make discovery. 

(2) The provision in Order 31, Rule 29, as to costs is mandatory and the Orders of this Court made on 3 October, 1994 and 8 November, 1994 must be construed in the context of the rule. What the rule provides is that the Non-party is entitled to be indemnified in respect of "all" costs reasonably incurred in complying with the Order for discovery. 

(3) The approach adopted by the Taxing Master was correct, in that the Non-party is entitled to be paid "all" costs reasonably incurred on an indemnity basis. In this context, it was suggested by Counsel for the Non-party that the approach adopted by Megarry VC in the EMI case is reflected in the judgment of Murphy J in McGrory v Express Newspapers Plc (unreported, 21 July 1995). In that judgment, in outlining the factual background, Murphy J stated that five libel actions, two of which had been commenced in this jurisdiction, had been settled between the parties for a substantial sum and he went on to say:- 

"In addition, it was agreed (among other things) that the Defendants would pay the Plaintiffs costs in the Republic of Ireland 'on an indemnity basis'. Effect was given to that agreement by the Order of Mr Justice Gannon made on consent on 20 November, 1990, which provided that the Plaintiff should have his costs on a 'solicitor and own client basis'." 

The point made by Counsel for the Non-party on the basis of the foregoing passage was that an agreement for payment of costs "on an indemnity basis" was "translated" in this jurisdiction into an Order for costs on a "solicitor and own client" basis. In my view, Murphy J was merely recording the factual position of an agreement between the parties and a consent order made on foot of that agreement and his judgment cannot be regarded in any way as an endorsement of the approach adopted by Megarry VC in the EMI case. 

(4) In a taxation pursuant to Order 31, Rule 29, as in a taxation under Order 99, Rule 11, the onus is and remains on the paying party to establish that any particular item claimed was of an unreasonable amount or was unreasonably incurred. 

(5) To suggest that a non-party against whom an order for discovery is made under Order 31, Rule 29, should be willing to bear some loss so as to facilitate the litigant to progress his litigation, flies in the face of the clear wording of Rule 29 which unambiguously provides that "all" costs, other than costs unreasonably incurred, of the non-party are to be paid. The suggested interpretation, it was submitted, would also give rise to "real constitutional difficulties", although this argument was not developed. 

(6) The principle that a non-party against whom an order for discovery is made under Order 31, Rule 29, is not to be at a loss receives support from the approach adopted by the English Courts in cases in which so-called Norwich Pharmacal orders which, in effect, are orders for non-party discovery, are made, for example, Bankers Trust Company v Shapira, [1980] 1 WLR 1274 and Arab Monetary Fund v Hashim, (No 5) [1992] 2 All ER 911. 

(7) Counsel for the Non-party also relied on the Project Development case referred to above and, in particular, in the support of their contention that the party and party basis is not the appropriate basis for the taxation of the costs of a non-party who finds himself entangled in the litigation of others. It is true that in that case which, as I have indicated, concerned an innocent third party who was affected by a Mareva injunction and who was seeking to have the order of the court varied, Parker J rejected the "party and party" basis, but, as I have indicated above, although he held that the successful third party intervener should be allowed all his reasonable costs, the third party was nonetheless required to establish the reasonableness of the costs for which he was contending. 

The resolution of the issue of principle which arises in this matter, in my view, essentially turns on the proper construction of Order 31, Rule 29, in the overall context of the Rules of the Superior Courts, 1986. Order 31, Rule 29, expressly provides that costs borne by a non-party shall be deemed to be costs of that party for the purposes of Order 99. That being the case, in my view, it is of particular importance to have regard to Order 99 in construing Order 31, Rule 29. 

There is a very helpful analysis of the structure of Order 99 of the Rules of the Superior Courts, 1962, which, by and large, corresponds with Order 99 of the current rules in the unreported judgment of Gannon J delivered on 2 December, 1974 in Re Heffernandeceased, Heffernan v Heffernan. Gannon J pointed out that Parts I to III set out the powers invested in the Court in relation to costs and the manner in which these powers may be exercised in regard to the awarding of costs. Part IV regulates the taxation of costs by the Taxing Master, while Part V provides for the review by the Court of taxations made by the Taxing Master. Parts VI to X deal with costs in particular types of proceedings. The purpose of that analysis by Gannon J was to emphasise that the distinction between taxation on a party and party basis and taxation on a solicitor and client basis is made in Part III, and the provisions of Rule 37, which is contained in Part IV, and which are directions to the Taxing Master as to the conduct of taxation of costs, do not effect a change in the distinction as to the basis of a taxation made or directed by a Court Order. 

For present purposes, in my view, it is instructive to take the analysis of Order 99 even further and to contrast Part I and Part III. Part I deals with the right to costs and, for instance, provides that, subject to any statutory provision and any other provision of the rules, costs shall be at the discretion of the Court. Part III deals with the amount of costs. Rule 10(2), which is in Part III, concerns taxation on a party and party basis and provides as follows:- 

"Subject to the following provisions of this rule, costs to which this rule applies shall be taxed on a party and party basis, and on taxation on that basis there shall be allowed all such costs as were necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed." 

Rule 11 concerns taxation on a solicitor and client basis and Sub-Rule (1) provides as follows:- 

"On a taxation as between solicitor and client, all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred." 

Rule 11 then goes on to provide for the following presumptions:- 

(a) A presumption that any costs which in the circumstances are of an unusual nature and such that they would not be allowed on a taxation of costs as between party and party have been unreasonably incurred, unless the solicitor shall have expressly informed his client in writing before they were incurred that they might not be so allowed (Rule 11(2)); and 

(b) A conclusive presumption that costs incurred with the express or implied approval of the client evidenced in writing have been reasonably incurred (Rule 11(3)). 

The portion of Order 31, Rule 29, which performs, in relation to costs pursuant to that rule, the function performed by Part I and Part III of Order 99 in relation to costs generally is the following portion thereof:- 

". . . the party seeking such order shall indemnify such person in respect of all costs thereby reasonably incurred by such person . . ." 

That portion deals both with the right to costs and the amount of costs. As regards the right to costs, there is an imperative direction that the non-party against whom an order for discovery is made shall have his costs against the litigant seeking the order. As regards the amount of the costs, it is provided that the indemnity to be provided by the paying party relates to all costs reasonably incurred in complying with the order for discovery. In my view, the terminology used in Order 31, Rule 29, that the paying party "shall indemnify" is no more onerous vis-a-vis the paying party than the terminology used in Order 99, Rule 10 (". . . on a taxation . . . there shall be allowed") or Order 99, Rule 11 ("on a taxation . . . all costs shall be allowed . . ."). In each of the three cases what the receiving party is entitled to from the paying party is an indemnity and no more. However, three different bases of quantifying the amount of the respective indemnities are provided for in Order 99, Rule 10(2), Order 99, Rule 11(1) and Order 31, Rule 29, respectively. 

The different bases of quantification comprehend not only different ranges of costs allowable, but also differences in the imposition of the burden of proving that the costs are within the relevant range. This is illustrated in relation to taxation on a party and party basis and taxation on a solicitor and client basis under Order 99 as follows:- 

(i) Under Rule 10(2) to be allowable on taxation on a party and Party basis, the costs must be within the range of costs which are shown to have been necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed. The onus of showing that expenditure comes within that range is on the party who incurred it and who is claiming that it is allowable. 

(ii) Under Rule 11(1), on a taxation on a solicitor and client basis, the range of costs allowable encompasses all costs other than expenditure which is shown to be of an unreasonable amount or to have been unreasonably incurred. Subject to the special evidential impact of the presumptions stipulated in Rule 11, the general thrust of Rule 11 is that the onus of proving that an item of expenditure was of an unreasonable amount or unreasonably incurred is on the party against whom the costs are being taxed. This interpretation of Rule 11(1) is supported by the dictum of Murphy J in McGrory v Express Newspapers Plc & Anor referred to above. 

When one considers the portion of Order 31, Rule 29 dealing with the question of costs in the light of the provisions of Rule 10(2) and Rule 11(1) of Order 99 as interpreted above, its proper import becomes quite clear. First, all expenditure reasonably incurred is within the range allowable on taxation. Thus, the range of expenditure allowable is broader than is allowable on taxation on a party and party basis. However, in my view, the requirement that expenditure be reasonably incurred necessitates that it should be of a reasonable amount; expenditure which is gross or extravagant in amount could hardly be regarded as having been reasonably incurred. Thus, the range of expenditure allowable corresponds to the range allowable on taxation as between solicitor and client. Secondly, the onus is on the person who incurred the expenditure and is seeking indemnity in respect of it to show that the expenditure was reasonably incurred. It is logical that this should be the case, because, in the absence of a relationship between the receiving party and the paying party such as the relationship of solicitor and client, mechanisms for easing the burden of proof, such as the presumptions provided for in Rule 11(2) and (3) of Order 99, could not be provided for if the onus of disproving that expenditure had been reasonably incurred was imposed on the paying party. 

The resolution of the issue being essentially a question of the proper construction of Order 31, Rule 29, in my view, it is not necessary to resort to the English authorities referred to in Counsel's submissions to determine the issue of principle. Indeed, in my view, none of the English authorities is apposite. The judgment in the EMI case concerned the interpretation of a court order. The cases relating to so-called Norwich Pharmacal Orders were concerned with the terms on which the order for discovery should be made, and the orders were being made under the inherent jurisdiction of the relevant Court at common law. In the Project Development case the Court had first to decide how, in the exercise of its equitable jurisdiction, on the issue of costs justice could be achieved between the successful third party intervener and the Plaintiff who had obtained a Mareva injunction against it and, secondly, how the Order for costs should be framed within the parameters of the English Rules of the Superior Courts so as to give effect to its decision. As I have already stated above, Parker J held that the successful third party intervener should be allowed all his reasonable costs but that he should establish the reasonableness of the costs. The second question was resolved by an order that the intervener's costs should be taxed on a solicitor and own client basis but with a special direction that, notwithstanding the terms of the Rules of the Superior Courts, the burden of establishing the reasonableness of incurring the costs and of their amount should be on the intervener. While this decision is similar in effect to the provision in relation to costs in Order 31, Rule 29, it represents the exercise of a discretionary power, whereas Order 31, Rule 29, is an imperative direction imposed by the Rules. 

In summary, on the issue of principle, I hold as follows:- 

(1) The provision in relation to costs embodied in Order 31, Rule 29, is mandatory both as to the right to costs and the amount of costs. 

(2) Consequently, the Orders dated 3 October, 1994 and 8 November, 1994 must be construed as giving effect to that provision. 

(3) The Non-party is entitled to all costs reasonably incurred in consequence of the Orders. 

(4) The onus of establishing that the costs contended for were reasonably incurred is on the Non-party. 

It follows that the Taxing Master correctly identified the range of expenditure on the part of the Non-party allowable on taxation, namely, costs reasonably incurred, but was mistaken as to where the burden of proof as to whether the costs were reasonably incurred or otherwise lay and erred in law in ruling that the Non-party should be given the benefit of any doubt. 

TAXATION OF THE NON-PARTY'S COSTS: ITEMS IN ISSUE 

The background to the making of the Order of 3 October, 1994 was that in 1993 the Plaintiff had initiated various proceedings, including the proceedings first mentioned in the title hereof, which were brought under Section 205 of the Companies Act, 1963 alleging oppression by various directors of Dunnes Holding Company against him. In December 1993, in connection with the proceedings, Dunnes Holding Company and other subsidiary and related companies retained the Non-party to carry out an investigation in relation to a number of transactions. The investigation was put in train. The documents which the Non-party was ordered to make discovery of by the Order of 3 October, 1994 comprised:- 

(i) All documentation and working papers prepared by the Non-party for the purposes of carrying out the investigation and preparing any report, draft report, interim report or other documentation recording the results of the investigation; 

(ii) All witness statements and notes of attendances on witnesses and persons who attended with or were examined by members of the Non-party's firm with the view to providing information necessary for the purposes of carrying out their report; and 

(iii) All attendances and statements to the Non-party's firm's investigators of the Fifth, Sixth and Seventh named Defendants in the second proceedings mentioned in the title hereof. 

As I have already stated, the period allowed to the Non-party for making discovery was three weeks from 3 October, 1994. The Non-party complied with the Order of 3 October, 1994, deploying in all 28 members of staff on the project, and the Affidavit of Discovery was sworn by Peter Lacy, a partner in the Non-party's firm, on 24 October, 1994. In the Affidavit of Discovery a claim to privilege was asserted on behalf of the Fifth, Sixth and Seventh named Defendants in the second proceedings mentioned in the title hereof, clients of the Non-party. This assertion led to the Notice of Motion dated 1 November, 1994 to which the Non-party was a notice party, which, in turn, led to the Order of 8 November, 1994 disallowing the claim to privilege. 

The items in the Bills of Cost which were the subject of the objections carried in before the Taxing Master, which objections were disallowed by the Taxing Master and which are the subject of this review can be conveniently considered under two headings: 

(a) Fees claimed by the Non-party itself for dealing with the discovery and privilege applications and complying with the Order of 3 October, 1994; and 

(b) Payments by the Non-party to its Solicitors and to Counsel. 

RULING OF TAXING MASTER IN RELATION TO NON-PARTY'S OWN FEES 

In October and November 1994 the Non-party issued four invoices to the Plaintiff claiming sums aggregating £116,254 exclusive of VAT. Fees were charged on a time-cost basis. Details of the personnel, the nature of the task each person was involved in, the number of hours each was involved on the task, and the hourly rate charged in respect of each was furnished to the Plaintiff. 

At the hearing of the objections, Mr Richard George, a Chartered Accountant and a partner in KPMG Stokes Kennedy Crowley, Chartered Accountants, gave evidence on behalf of the Plaintiff. Mr George acknowledged that he had not seen the documentation generated by the discovery and he had not sought inspection facilities from the Non-party. On this account, the Taxing Master concluded that his testimony was not only unreliable but that it was without foundation and speculative in nature. The Taxing Master declined to accept Mr George's evidence on the costs of discovery. Mr Lacy also testified. In his report the Taxing Master commented that Mr Lacy participated in and had first hand knowledge of what was involved in the discovery process. Considerable partner and manager time was directly involved in the actual work, as well as in supervising and co-ordinating the large team carrying out the assignment. It was a huge undertaking to complete the discovery in the time period allowed by the Order. However, the Taxing Master was factually incorrect when he recorded in his report that 40,000 pages were discovered from an unquantified larger body of documents which the team had to peruse. In fact, the total population of documents from which the discovery was culled was 40,000 documents and 80% of those documents were itemised in the Affidavit of Discovery, which comprised approximately 200 pages. The Taxing Master accepted Mr Lacy's evidence and concluded as follows:- 

"Accordingly, from the evidence adduced I can only draw one conclusion and that is that the sum incurred, the time spent was reasonable in amount and was not unreasonably incurred." 

He also rejected a submission made on behalf of the Plaintiff that the costs to be allowed to the Non-party should not include a profit element. 

TAXING MASTER'S RULING ON PAYMENTS TO SOLICITORS AND COUNSEL 

In outline the items in the Bills of Cost at issue in relation to the Non-party's disbursements to its Solicitors and to Counsel before the Taxing Master and his findings in relation thereto were as follows:- 

(i) Fees in connection with a consultation with Counsel, the finding of the Taxing Master being that it was reasonable that an allowance should be made for this item. 

(ii) Counsel's brief fee on the discovery motion, the amount of which the Taxing Master considered to be perfectly reasonable in the circumstances and in line with similar fees charged and allowed on taxation. 

(iii) Fees in connection with consultations with Counsel in the period during which the discovery process was on-going, that is to say, after the making of the Order of 3 October, 1994 but before the swearing of the Affidavit of Discovery. The Taxing Master found that it was perfectly reasonable for the Non-party to consult its Solicitors and Counsel in relation to the discovery process, particularly, having regard to the fact that it had only three weeks in which to comply with the Order for discovery. He also found it was perfectly reasonable for the Non-party to consult with Counsel on the question of privilege claimed by its clients. 

(iv) Fees in connection with a consultation with Counsel prior to the privilege motion. The Taxing Master found that it was reasonable and proper for the Non-party to consult with and obtain the appropriate advices from its legal advisors in connection with the motion. 

(v) Counsel's brief fee on the discovery motion, which the Taxing Master found was not excessive after referring to the judgments of this Court in Dunne v O'Neill, [1974]IR 180 and Kelly v Breen, the Taxing Master stated that the brief fee could not under any circumstances be said to be a fee which no Solicitor acting reasonably carefully and reasonably prudently based on his experience in the course of his practice would have discharged. 

(vi) The Solicitors' instructions fee in relation to each action. The Taxing Master recorded in his report that on the hearing of the objections the Plaintiff had not produced any supporting evidence or documentation that the allowance made was "exorbitant and excessive", as was being contended by the Plaintiff. The Taxing Master reiterated his finding that the fees allowed were reasonable in the circumstances. 

EVIDENCE 

At the hearing in this Court the Plaintiff sought leave to adduce oral evidence. Order 99, Rule 38(4), provides that a review of taxation in this Court shall be heard and determined upon the evidence which shall have been brought in before the Taxing Master and no further evidence shall be received upon the hearing, unless the Court otherwise directs. Counsel for the Plaintiff submitted that it has been the practice in reviews of taxation to admit evidence of the type adduced before the Taxing Master and to proceed to hear evidence in relation to the objections. Dunne v O'Neill, Kelly v Breen and Best v Wellcome, [1996] 1 ILRM 34 were cited as cases in which this course had been adopted. Despite objection from Counsel for the Non-party, I allowed oral evidence to be adduced. 

Two witnesses were called on behalf of the Plaintiff, Mr Alex Burns and Mr Stephen Daly. 

Mr Burns, a partner in KPMG Stokes Kennedy Crowley, was, in effect, a substitute for Mr George, who had testified before the Taxing Master, but who was not available. Mr, Burns had the advantage of having met with a partner in the Non-party's firm and ascertained the methodology which had been adopted in the discovery process. He had also inspected a small sample of files. This entire process occupied him for about 45 minutes. On the basis of what he had learned of the task which the Non-party had been compelled to undertake, Mr Burns did his own costing. His costing was £57,440, exclusive of VAT, by contrast to the fees claimed by the Non-party, £116,254, exclusive of VAT. Mr Burns' costing provided for a total of 1,081 hours by contrast to 1,354.5 hours upon which the Non-party's claim was based. However, Mr Burns did not dispute that 1,354.5 hours had been actually worked and in part worked on Saturdays and Sundays and late into the evenings; he had seen the Non-party's time sheets and time summaries. The main element in Mr Burns' costing which differentiated it from the Non-party's actual charge-out related to the categories of personnel involved. Mr Burns envisaged managers, senior accountants, and junior accountants being deployed on the task, whereas the Non-party actually deployed partners, managers and senior accountants in the discovery process. While Mr Burns did not dispute the rates charged by the Non-party per se he did suggest that premium rates were not appropriate for the task which had to be undertaken. Mr Burns characterised his costing at £57,440 as "generous" and he considered that in a hypothetical situation where the job was put out to tender and he was tendering on the basis of his costing, it would be profitable. 

Mr Daly, a member of the firm of Connolly Lowe, Legal Cost Accountants, gave evidence of amounts awarded to non-parties on previous taxations under Order 31, Rule 29. However, all of the "comparisons" referred to by Mr Daly had been taxed on a party and party basis and, having regard to my finding as to the basis of taxation under Order 31, Rule 29, they are of no relevance for present purposes. 

Mr Lacy was called on behalf of the Non-party. He testified that when his firm was confronted with the task of complying with the Order of 3 October, 1994, its principal concern was the limited time-scale for completing the process. There was to be no time for "re-working" and the personnel involved had "to get it right" the first time. Mr Lacy's opinion was that had staff of lesser seniority been deployed, he could not have had confidence that they would have "got it right the first time", having regard to the scale of the task and the limited time-scale available in which to complete it. Moreover, the investigation on behalf of Dunnes Holding Company was on-going during the discovery process and this presented problems. In consequence, staff who are not familiar with the documentation had to be deployed on the discovery process. That the investigation was on-going meant that the treatment of the documentation, which related to work in progress, was not as straightforward as would have been the case if one was dealing with completed work and closed files. Mr Lacy confirmed that the hours charged for were worked and that many of the hours worked were unsocial. He considered that the rates worked were appropriate rates for the calibre of work involved. He confirmed that the staff engaged had been taken away from other profit-making work. In cross-examination, Mr Lacy agreed that the rates charged were "top of the range" rates -- the rates charged for mergers and acquisitions work. He acknowledged that mergers and acquisitions work was not lost by the firm by reason of the deployment of staff in the discovery process. 

Mr Lacy was the person who was going to have to swear the Affidavit of Discovery and who did in fact swear the Affidavit of Discovery in compliance with the Order of 3 October, 1994. It was quite clear from his testimony that Mr Lacy was fully aware of his responsibilities as the deponent. He considered that he was personally responsible for ensuring that the Affidavit of Discovery was correct. His view was that it was appropriate to involve staff of sufficient seniority in the discovery process to ensure that the Affidavit was correct. He was also fully aware of the responsibility of his firm to its clients, Dunnes Holding Company and its subsidiaries and associated companies. He was also concerned to ensure that no unwitting disclosure was made of confidential material which was outside the ambit of the Order of 3 October, 1994. 

CONCLUSIONS 

In relation to both categories of objections, it was submitted on behalf of the Plaintiff that costs incurred in connection with the claim of the Non-party's clients to privilege were unreasonably incurred. While acknowledging that it was not unreasonable that a firm of Accountants making discovery would be astute to ensure that its clients' entitlement to privilege was preserved, it was submitted that it was unreasonable to expect the clients' opponent to bear the cost of the firm consulting with the clients and obtaining legal advice from a Solicitor and Counsel on the issue of the clients' privilege. It is quite clear that the issue of the Defendants' privilege was of paramount importance at all material times and it was expressly provided in the Order of 3 October, 1994 that the Order was without prejudice, inter alia:- 

". . . to the right of the Defendants to assert a claim for privilege over any documents so discovered . . ." 

Apart from the Non-party's responsibility to the Court in making the discovery, the Non-party also owed a duty of care to its clients for whom it was carrying out the investigation. In my view, the costs incurred by the Non-party in consulting with its clients and their Solicitors and in obtaining advice from its own Solicitors and from Counsel instructed by its own Solicitors as outlined in Mr Lacy's evidence were reasonably incurred and it is reasonable that they should be ultimately borne by the Plaintiff, because they would not have been incurred at all but for the existence of the Order of 3 October, 1994 which was obtained at the behest of the Plaintiff for the advancement of his litigation. 

The principal area of controversy between the Plaintiff and the Non-party related to the quantum of the Non-party's own fees. A number of points arise on this aspect of the taxation. First, in my view, the Taxing Master was correct in rejecting the submission made before him on behalf of the Plaintiff that the costs to be allowed to the Non-party should not include a profit element. That submission was not repeated on the review in this Court and, indeed, it was conceded, properly in my view, that the Non-party was entitled to opportunity costs where it was established that costs were forgone. The argument advanced in this Court was that the Non-party could only equate "costs" with fees if it could establish that those were fees forgone, that is to say, that not only would the personnel deployed in the discovery process have been involved on equally remunerative work, but also that that work would have been lost to the firm. It is clear from Mr Lacy's evidence that, had the staff engaged in the discovery process not been so engaged, they would have been engaged in other available work which would have generated profit for the firm. Whether or not that work was lost to the firm, in my view, the Non-party is entitled to recoupment of the profit element, because, even if it was retained in the firm it had to be performed by other staff or it had to be postponed, with a "knock-on" effect on other work. 

Secondly, in my view, the Taxing Master was correct in preferring Mr Lacy's evidence to Mr George's evidence, given that Mr George purported to cost the task without apprising himself of what was involved in it. Even though he believed that he was entitled to give the benefit of the doubt to the Non-party on any issue, it is clear from the report of the Taxing Master that he was able to determine all issues without having to resort to this stratagem. As to the evidence adduced in this Court, in my view, Mr Burns' evidence cannot be given the same weight as Mr Lacy's evidence because Mr Burns could have only obtained a very superficial knowledge of what was involved in the discovery process from his cursory inspection and enquiries, whereas Mr Lacy was actually in charge of the task. On the evidence, I am satisfied that the hours spent on the task were reasonable and that the categories of staff deployed on the task were reasonable having regard to the volume of documentation involved and the very limited time within which the task had to be performed and the sensitivity of the task which was being carried out in the context of impending litigation, in which the firm's clients were the Plaintiff's opponents indirectly, if not directly. The only point on which I have some misgivings is in relation to the hourly rates charged, which it is acknowledged represented premium rates. While I would accept, as a general proposition, Mr Burns' opinion that the normal charge-out rate for normal work should apply when an accountancy firm is compelled to make discovery, not the premium rate such as is merited in mergers and acquisitions work and such like which requires special skill, having regard to the problems of time, scale, sensitivity and other difficulties encountered in relation to this discovery as outlined in the evidence of Mr Lacy, I have come to the conclusion that the Non-party has established that the amounts charged were reasonable in the circumstances. 

No evidence was adduced in this Court in relation to the payments to Counsel and the Solicitors. On the basis of the evidence before the Taxing Master and of his approach to the taxation of the items in issue, I am satisfied that the allowances he made were correct and proper and, even on a taxation on a party and party basis would have been properly allowable.