Crean & Son Ltd v McMillan

• Jurisdiction: Ireland
• Judgment Date: 28 February 1922
• Date: 28 February 1922
• Court: Court of Appeal (Irish Free State)

Crean v. M'Millan.

JAMES CREAN & SON, Ltd.

and

J. STEEN M'MILLAN

Appeal. (S. I.)

High Court of Appeal.

Practice - Costs - Counterclaim identical with defence - Claim dismissed with costs - Counterclaim dismissed with costs - Principle of taxation.

In an action for the price of goods tendered and refused and for damages for breach of contract the plaintiffs' claim was dismissed with costs, and the defendant's counterclaim for damages for failure to supply the goods was also dismissed with costs. The substantial question on which the defendant succeeded in the defence was the same as that raised by the counterclaim. The Taxing Master taxed the costs of the defendant as if there had been no counterclaim, and gave him the general costs of the action, deducting any costs incurred by reason of and solely attributable to the counterclaim. He gave the plaintiffs only such costs as were incurred by reason of and solely attributable to the counterclaim, and allowed them none of the costs incurred in the action that would have been incurred if there had been no counterclaim. The plaintiffs moved that the taxation of the defendant's bill of costs should be reviewed on the ground that the master should have apportioned the charges which were common to the original action and the counterclaim.

The King's Bench Division (Molony C.J., Dodd and Pim JJ.) held that the Taxing Master had taxed the costs on correct principles, and refused to review the taxation.

On appeal to the Court of Appeal in Southern Ireland, the Court (Ronan and O'Connor L.JJ., Campbell C. having resigned before judgment was delivered) being equally divided, the decision of the King's Bench Division stood affirmed.

On appeal, the High Court of Appeal for Ireland (Ross C., O'Connor M.R., and Andrews L.J.), agreeing with O'Connor L.J., affirmed the decision of the King's Bench Division.

Where a separate and substantial question is raised by a counterclaim, substantial costs are taxable in relation to the counterclaim, and in such a case there must be apportionment; but where the subject-matter of a counterclaim is substantially the same as the defence or part of the defence, the costs should not be apportioned, and only such extra costs should be allowed as were incurred by reason of the counterclaim.

By a contract in writing dated the 26th July, 1918, the plaintiffs agreed to sell and deliver to the defendant, and the defendant agreed to buy from the plaintiffs ten tons of dripping at the price therein mentioned, the delivery to be ex plaintiffs' works by weekly or monthly deliveries up to the end of October, 1818. Portion of the dripping was delivered and paid for, but the defendant refused to accept delivery of the balance, on the ground that the goods were not sent or tendered to him within the stipulated time.

This action was brought by the plaintiffs claiming £89 12s. 5d., the price for goods tendered and refused, and £346 3s. for damages for breach of contract, representing the loss on resale of the balance of the goods.

The defendant by his defence pleaded that the goods were not sent or tendered within the agreed time, and that he had accordingly cancelled the contract; and he counterclaimed £57 12s. 8d., damages for loss sustained by reason of the plaintiffs' alleged failure to deliver the goods within the stipulated time.

The action was tried before Gordon J., without a jury, on the 23rd July, 1920, and in the result the learned Judge dismissed both claim and counterclaim with costs.

Subsequent to the taxation of the costs in the action the plaintiffs brought in an objection to the principle on which the defendant's bill of costs was taxed, submitting that the principle on which the bill should be taxed was that set forth by Ridley J. in Fox v. The Central Silkstone Collieries, Ltd. (1).

The report of Master Denning, dated the 16th February, 1921, was as follows:—

The following are my grounds and reasons for my decision on the objections of the plaintiffs to the disallowances in their bill of costs and to the allowances in the defendant's costs respectively taxed by me herein.

I beg to refer to the judgment herein of the 24th July, 1920. The plaintiffs object to the principle on which I have taxed their costs and the defendant's costs, on the grounds that I should have apportioned the charges in both bills which were common to the original action and the counterclaim, and that the plaintiffs are entitled to the general costs of the counterclaim. In support of their objection the plaintiffs rely on the following authorities:—National Gas Engine Co. v.Dolphin's Barn Brick and Tile Co. (2), Henderson v. M'Tear (3), Fox v.Central Silkstone Collieries, Ltd. (1), Kennedy v. Healy (4).

I consider I am bound by the decision in the case of Duffy v.O'Meara (5), followed in the King's Bench Division and the Court of Appeal in Coulter v. Craugh (6), and also Atlas Metal Co. v. Miller (7). The order in this case is in the same terms as in the case of the Atlas Metal Co. v. Miller (7). I have taxed the costs of the defendant as if there was no counterclaim, giving him all the general costs of the action, but deducting from him any costs that were incurred solely by reason of and attributable to the counterclaim. I have taxed the costs of the plaintiffs, giving them only such costs as were incurred solely by reason of and attributable to the counterclaim, and I have allowed them none of the costs incurred in the action that would have been incurred if there were no counterclaim.

I have been asked to apportion the counsels' fees, but being of opinion that the fees given to counsel were not increased by reason of the counterclaim, and following the decision in the Atlas Metal Co. v.Miller (7), I have declined to do so.

The plaintiffs applied to the King's Bench Division for an order that the taxation both of the plaintiffs,' and defendant's bills of costs should be reviewed, on the ground that the Taxing Master had gone wrong in principle, and that he should have taxed both bills on the principle set forth in the judgment of Ridley J. in Fox v. Central Silkstone Collieries, Ltd. (1).

This motion was refused with costs, whereupon the plaintiffs applied by way of appeal to the Court of Appeal for Southern Ireland, which was equally divided, and the decision of the King's Bench Division accordingly stood affirmed.

The plaintiffs appealed to the High Court of Appeal for Ireland (1).

Ronan L.J. :—

This case was fully argued before the late Lord Chancellor, my colleague, and myself. I think it right to say that the Lord Chancellor had written his judgment in the case, which contained an exhaustive analysis of all the authorities bearing on the subject. I shall hand this judgment to the officer of the Court.

Prior to the Judicature Act, if no special order was made and a plaintiff got a verdict in an action, this gave him the general costs of the action, but the defendant was entitled to have deducted from these costs the costs of any issues on which he succeeded, e.g., plaintiff sues for £200; defendant denies the debt and pleads a set off of £200; plaintiff disputes the entire set off, plaintiff proves debt; defendant proves set off to extent of £100; plaintiff gets a verdict for £100 and the general costs of the action; the defendant gets the costs of the issue of set off, but this meant generally costs exclusively attributable to that issue: see Bewley and Naish, pp. 57-58. Only a liquidated debt could be set off, and it could only be used to defeat the plaintiff's claim. If the defendant, in the case I have put, proved a valid debt for £300, he could not get judgment for £100 against the plaintiff; he would get credit for £200 and the general costs of the action. He had to bring a cross action to recover the £100. So if his claim against the plaintiff was not a liquidated debt, it could only be recovered in a cross action. But the effect of this was that if he succeeded in his cross action, he would get his full costs of the cross action. The expression used in the case, "a real counterclaim," as distinguished from a set off, means a claim which prior to the Judicature Act could only be enforced in a cross action to recover the £100; so if his claim against the plaintiff was not a liquidated debt, it could only be recovered in a cross action. But the effect of this was that if he succeeded in his cross action, he would get his full costs of the cross action. The expression used in the law,"a real counterclaim," as distinguished from a set off, means a claim which prior to the Judicature Act could only be enforced in a cross action. Order 19, rule 3, provides—"A defendant may set off or set up by way of counterclaim . . . . any right of claim, whether it sounds in damages or not, and such set off or counterclaim shall have the same effect as a cross action." The object of this was to dispense with the extra cost caused by two actions. It is obvious that if the defendant was put in a worse position as to costs than in a cross action, no defendant would adopt this procedure.

Under the old law there was in substance and in form only one action. The defence of set off was only a defence in that action; it was in no sense a cross action or treated as such. The costs of the set off were simply treated as costs of an issue in the action. The two things are the general costs of the action and the costs of a particular issue in the action, i.e., exclusively arising from it. If the plaintiff succeeds, he gets the general costs, save so far as they were increased by this issue, and the defendants get the increase only. Is this the law as to a real counterclaim? I confess the case of Saner v. Bilton (1)seems to me to say that it is. [His Lordship read the head-note and continued:—] The case is certainly a very peculiar one. It was

shortly after the Judicature Act came into force. Fry J. proceeds on the analogy of the old practice in cases...