Judge directs full hearing of dispute over liability for €380,000 legal fees

A dispute over whether a couple are liable for some €380,000 legal fees related to litigation over a mortgage is to go to a full High Court hearing.

There was nothing in the “limited” papers put before the court to indicate Stephen and Marina Hatton were informed in advance the legal fees “would be so high”, Mr Justice Garrett Simons observed.

The only figure identified in the initial letter of engagement from 2015 was a €10,000 sum sought by solicitor Cormac Lohan as an upfront payment, the judge said.

While it might be that the fee estimate could not have been more precise at that early stage of the litigation with Danske Bank, it was “not obvious” from the “limited” papers that the defendants were ever provided with an updated fee estimate, he said.

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Mr Lohan, practising as Lohan & Co Solicitors, initiated proceedings in July 2018 against the couple, based in Co Wexford, alleging some €381,277 was due and owing in connection with litigation in respect of a mortgage in favour of Danske Bank.

He sought summary judgment but last March consented to the case going to plenary hearing, Mr Justice Simons noted in his recent judgment setting out the conditions for that remittal.

The solicitor’s case is based on a bill of costs, dated March 8th, 2017, addressed to the couple and a company, Edenfarms Ltd.

The solicitor’s professional fee was €170,000, plus VAT, and the level of detail in the bill of costs was “sparse”, “especially given the very significant sums involved”, the judge said. The bill of costs was accompanied by fee notes for junior and senior counsel, amounting to €136,100, plus VAT.

The legal fees have not been adjudicated by the Legal Services Regulatory Authority (LSRA), which in 2019 took over costs’ adjudication functions of the High Court Taxing Master, he noted.

The couple purported to make a complaint about Mr Lohan to the Law Society in September 2018, some months after Mr Lohan initiated this case, he said. Their complaint raised several matters, some relating to the bill of costs.

In December 2018, the society informed them it could not investigate their complaint until the solicitor’s case was finalised but they might raise matters with the society after that.

On March 13th last, the court heard Mr Lohan now accepted his claim should go to plenary hearing and was also prepared to have the bill of costs referred for adjudication by the LSRA.

Counsel for the defendants raised no substantive objection to a plenary hearing but raised the delay in the proceedings to date. Apart from any question of adjudication, the Hattons were maintaining their defence that there was a collateral agreement under which the costs were to be borne by another company, Moralltach Ltd, counsel said.

Mr Justice Simons ruled the proceedings should go to plenary hearing, for reasons including a “significant factual dispute” as to whether or not some form of collateral agreement was entered into between the parties to the effect that Moralltach Ltd would provide a loan to cover the defendants entire debt to Danske Bank and would also discharge any legal costs.

Noting Mr Lohan “strenuously” denied any such agreement, the judge said the issue could not be resolved on affidavit evidence alone.

A second reason for a plenary hearing concerned whether the summary summons, in its current form, complied with requirements for summary proceedings identified by the Supreme Court, he said. A third reason was whether the bill of costs was sufficiently detailed to allow Mr Lohan rely on certain provisions of the Solicitors Acts.

The trial judge will decide those issues, the judge said, adding he himself was making no finding except that the threshold of an arguable or credible defence had been met.

A condition for the remittal to plenary hearing is that the defendants, if they wish, can remit the legal costs for adjudication. The objective of that is to ensure they are not prejudiced by the lack of detail on the bill of costs “nor by the (seeming) lack of an accurate fee estimate”, the judge said.

The defendants do not have to pursue adjudication and may wish to instead defend the case on other grounds, including that, due to the alleged agreement with Moralltach Ltd, they had no liability for legal costs, he said.