Dublin landlord Paul Howard has failed in his appeal over a High Court judgment obtained against him by the Revenue Commissioners for some €2.4 million in tax and interest.
The Court of Appeal on Monday also dismissed an appeal taken by Mr Howard’s partner, Una McClean, who had challenged a similar judgment against her for some €625,513 in tax and interest.
In its judgment, the court roundly criticised a “hopeless” allegation of fraud made against the Revenue by Mr Howard and Ms McClean, of Larkfield Avenue, Harold’s Cross, Dublin 6W.
Mr Justice Brian O’Moore, noting generally the “uniquely grave” nature of a fraud allegation, stressed the obligation on legal professionals to exercise care in making such a claim, and outlined mechanisms to potentially deter “vitriolic but groundless allegations” in legal proceedings.
In their appeal, Mr Howard and Ms McClean argued the High Court was wrong in dismissing their claim that the terms of engagement between Revenue and its solicitors in the proceedings amounted to a champertous agreement, with the effect that the court action could not be maintained.
Champerty is an offence, on the basis of public policy against encouraging litigation, which arises where a third party, having no interest in the litigation, gives assistance to a party in litigation in return for a share in the proceeds of that litigation.
The champerty claim arose from a clause concerning remuneration structure in a January 2020 contract between Revenue and Ivor Fitzpatrick & Company Solicitors, one of six firms on a panel retained by Revenue for collection of unpaid taxes.
The couple argued the clause amounted to a contingency fee arrangement which provided the solicitors remuneration was only paid if sums allegedly due to the Collector General were actually realised. The clause was deleted under an amendment agreement made on February 14th, 2023 between Revenue and the Fitzpatrick firm.
In a judgment published on Monday, Mr Justice Donald Binchy said there was a “distinct air of unreality” in the appellants’ claim that the fee arrangement amounted to champerty.
Mr Justice Binchy said that the Revenue, given its statutory obligation to collect taxes and pursue those who fail to pay taxes due, would have brought these proceedings against Mr Howard and Ms McClean irrespective of the fee arrangements between it and its solicitors.
He also noted that the Revenue – as an emanation of the State, the single largest purchaser of legal services in the jurisdiction – has no need for financial support of its legal advisers to maintain proceedings it deems necessary to bring in order to carry out its function.
The judge said that even if fee arrangement did constitute champerty, that was not a defence to the proceedings. He said that counsel for the appellants did not advance any authority to support the claim that champerty constituted a defence to the proceedings.
In a separate judgment published on Monday, Mr Justice Brian O’Moore sharply criticised the appellants’ claim that the fee arrangement would facilitate the Revenue perpetrating a fraud on them or the legal costs adjudicator – namely by representing that it owed more in legal costs arising from the proceedings than it actually did.
The judge noted that an essential part of the claim of fraud made was that the arrangement between the Revenue and its solicitors was suppressed and kept from the appellants.
The judge said that the Revenue had not at any stage presented a bill for costs seeking payment from the appellants. He said the appellants were aware for “some considerable time” of the arrangements between the Revenue and its solicitors, and that the relevant agreement was publicly available.
Mr Justice O’Moore said that in these circumstances, the claim of fraud was impossible to stand up. The judge said it was “unforgivable” that the allegation was maintained on appeal.
The judge said that fraud was a very serious allegation to make for various reasons, including that the impact on a person accused of fraud “can be significant”.
Due to the “uniquely grave” nature of a fraud allegation, the judge stressed that counsel and solicitors “should act with the greatest of care in making such a claim”.
The judge said that steps should be taken to address and deter the making of groundless allegations in proceedings. One such deterrent, the judge suggested, is the possibility that costs be awarded on a full indemnity basis against parties making groundless allegations of fraud.
The preliminary view of the Court of Appeal is to award the Revenue the costs of the appeal, Mr Justice Binchy said.
