In CLM Properties Ltd v Greenstar Holdings Ltd & Ors [2014] IEHC 178, the High Court exercised its jurisdiction under Order 99 of the Rules of the Superior Courts (RSC) and made an order in favour of the third named defendant, Bank of Ireland, for the costs of the preliminary issue relating to use of waste charges for landfill sites.  The Court rejected the plaintiff's contention that the "special costs rule" in section 3 of the Environment (Miscellaneous Provisions) Act 2011 (the 2011 Act) applied (i.e. that each party must bear their own costs, subject to certain exceptions, instead of the usual rule that the "winner" gets their legal costs).  If the special costs rule had applied, then the Court could have made no order for the costs of the preliminary issue.

Specifically, the Court held that the proceedings were not instituted "for the purpose of ensuring compliance with or enforcement of a statutory requirement" within the meaning of the 2011 Act.  In reality and substance, the purpose of the proceedings was to obtain payment to the plaintiff, CLM, of the monies allegedly due to it for work done by it at the landfill sites operated by Greenstar.

Facts

On 8 April 2014, Finlay Geoghegan J. delivered judgment on a preliminary issue directed to be tried in this action and a related action.  That judgment determined that s.53A of the Waste Management Act 1996, when interpreted in conjunction with Article 10 of the Landfill Directive 99/81/EC and Article 14 of the Waste Framework Directive 2008/98/EC (to which it gives effect), does not restrict a landfill operator (such as Greenstar), who has been paid waste disposal charges, from using some or all of the monies received for purposes other than closure, restoration, remediation and aftercare of the landfill concerned. 

The defendant Bank was successful in the outcome of the preliminary issue (see our Client Bulletin of 13 May 2014 for more information). Therefore, in these proceedings, the Bank sought its costs against CLM. The Bank submitted that the Court, in exercising its jurisdiction under Order 99 RSC, should make an order in favour of the Bank against CLM for the costs of the preliminary issue (to include the costs of an additional hearing relating to the request to make a reference to the CJEU).

The Court had to determine whether the proceedings instituted by CLM were "for the purpose of ensuring compliance with or the enforcement of a statutory requirement…and…the failure to ensure such compliance with or enforcement of such statutory requirement …has caused, is causing or is likely to cause damage to the environment", pursuant to section 4 of the 2011 Act.

Decision

The High Court exercised its discretion in accordance with Order 99 RSC and ordered CLM to pay to the Bank the costs of the preliminary issue.  It held that the special costs rule in section 3 of the 2011 Act did not apply, as the proceedings were not "for the purpose of ensuring compliance with or enforcement of a statutory requirement".

In determining the issue, Finlay Geoghegan J. adopted the approach of Birmingham J. in Rowan v Kerry County Council [2012] IEHC 544. In Rowan, Birmingham J. observed that whilst the starting point for the consideration of the issue must be the proceedings actually initiated, it is also necessary "to consider whether, as a matter of reality and substance, the proceedings were designed to ensure to compliance…because of concern that non-compliance will result in damage to the environment…".

 In its proceedings, CLM had pleaded and relied upon alleged obligations of the Greenstar defendants pursuant to section 53A of the Waste Management Act 1996, and alleged breaches of that section, so as to maintain a claim that the alleged liabilities of the Greenstar defendants to CLM should be discharged out of monies previously held in an account of another entity, Greenstar Ltd, which was appropriated by the Bank pursuant to security held by it.  In such circumstances, the Court concluded that the proceedings could not be considered as being for the purpose of ensuring compliance with a statutory requirement or condition.  The purpose of the proceedings was the recovery of money allegedly due to CLM by the Greenstar defendants.

Comment

This decision clarifies the approach which a Court will take in considering whether the special costs rule in section 3 of the 2011 Act applies. It confirms that the Court should start by considering the pleadings delivered, but should then look at whether the substance of the proceedings is for the purpose of ensuring compliance, because of concern that non-compliance will result in damage to the environment. If the purpose of the proceedings is not for ensuring such compliance, then section 3 of the 2011 Act will not apply, and the court may exercise its discretion as to costs under Order 99 RSC.