State faces €1m bill from Joan Collins promissory note case

A Supreme Court ruling today means the State will pay the bulk of the costs of Independent TD Joan Collins' failed case over the Minister for Finance's issuing of €31 billion promissory notes in 2009 for Anglo Irish Bank and other financial institutions.

The overall costs of the action are conservatively estimated by legal sources at more than €1.5 million with the effect the State’s liability could well exceed €1 million.

The case was the first to involve the courts addressing important constitutional issues concerning who gets to decide how to spend public monies.

Because of its importance, despite Ms Collins losing in the High Court, it granted her 75 per cent of her legal costs in that court against the State.

On Tuesday the Supreme Court directed the State also pay 50 per cent of her costs of her failed Supreme Court appeal.

The Chief Justice, Ms Justice Susan Denham, said the court would depart from the normal rule costs go to the winning party for reasons including the appeal raised great constitutional matters and Ms Collins stood to make no personal gain from it.

The case brought constitutional clarity to important matters not previously considered, she said.

The Chief Justice noted Michael McDowell SC, for the State, had drawn attention to comments by Ms Collins after she lost her appeal to the effect the Supreme Court had “sided against the Irish people”.

Those comments were regrettable because the Supreme Court decided the case solely on the law and Constitution but they did not influence the court’s costs ruling, she said.

That ruling must reflect that Ms Collins lost her appeal and the appropriate order was she get 50 per cent of her costs.

Earlier, John Rogers SC, for Ms Collins, said he was not challenging the High Court’s 75 per cent costs order but, because the case was so exceptional and in the public interest, wanted the full costs of the appeal.

This case required the courts to consider whether there is a need for a limit in legislation authorising a minister to provide financial support, he said. This was of critical public importance because the powers of the Minister remain extant and the court identified the Minister did not have unlimited power.

Counsel also disputed the State’s criticism of Ms Collins’ comments after the decision. Ms Collins had sought to show what the Minister did was illegal, that was not an academic exercise, she was entitled to speak after a difficult case and did not in any sense seek to impugn the court.

While she might believe the outcome of the judgment has the effect of being something not in the interests of the people, that was “her legitimate view”.

Mr McDowell, for the State, argued there should be no order for costs of the Supreme Court hearings, meaning both sides pay their own.

He said Ms Collins side had estimated 75 per cent of their High Court costs at €695,000 but the State hoped, after that costs application was examined by the High Court Taxing Master, it might be reduced to €500,000.

When the costs of the appeal, and the costs of the State’s defence of the case are added to the €695,000 figure claimed, sources estimate the overall costs of the case could top €1.5 million.

Last December, the six-judge court unanimously rejected the TD's core argument alleging the Minister had no power, under the 2008 law authorising him to issue the notes, to allocated unlimited sums of public money without those first being quantified and considered by the Oireachtas.

The Credit Institutions (Financial Support) Act 2008 was enacted with the aim of averting a banking collapse. The notes were essentially IOUs from the State to ensure continuation of Central Bank funding for Anglo, Irish Nationwide Building Society and Educational Building Society after the controversial bank guarantee of September 2008.

The Supreme Court held the 2008 Act was “a permissible constitutional response to an exceptional situation” and, although it did not include a cap on the financial support, the Constitution did not require such a limit.