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  • Order LXV, Rule 1,
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  • Order LXV, Rule 1,
Smart Summary

Factual and Procedural Background

The Chief Justice (Macleod, C.J.) first expressed entire agreement with the learned trial judge's conclusion that the plaintiffs had failed to prove the contract alleged to be contained in the correspondence. A further question then arose as to costs.

Two interlocutory orders are central to the cost dispute:

  • Order dated 7 June 1922: directed that Arthur Smith, a witness for the defendants, be examined de bene esse on 9 June 1922 before the Prothonotary or a Deputy Registrar, with liberty to the plaintiffs to cross-examine; it ordered that the evidence so taken should be admitted and used at the hearing of the suit saving all just exceptions, and that the costs of and incidental to that order and of the examination should be "costs in the cause".
  • Order dated 24 October 1923: issued a commission for taking the viva voce examination, cross-examination and re-examination of Mr. A.F. Pringle in Rangoon, directing that the evidence and any exhibits should be read and used in evidence in the suit saving all just exceptions, and that the costs of the application, the order and such examination should be "costs in the cause".

The Chief Justice referred to and analysed prior authorities and the Civil Procedure Code (Section 35) to decide whether the judge at trial (referred to in the opinion as Mr. Justice Crump) could interfere with those earlier interlocutory orders which had directed the costs to be "costs in the cause".

The appellate court concluded by dismissing the appeal and allowing the cross-objections with costs in both cases. Coyajee, J. agreed with the Chief Justice.

Legal Issues Presented

  1. Whether, when an interlocutory judge has ordered that the costs of a particular interlocutory application or examination shall be "costs in the cause", the judge who later hears the trial has jurisdiction to alter or deprive the party entitled to the general costs of the action of those interlocutory costs.
  2. How the general rule in Section 35 of the Civil Procedure Code ("costs shall follow the event" unless reasons in writing are given) interacts with the meaning and effect of an order that interlocutory costs shall be "costs in the cause".
  3. Whether established authorities (including the House of Lords decision in Reid, Hewitt and Company v. Joseph and the decisions discussed in Templeton v. Laurie and Koosen v. Rose) control the allocation of costs where interlocutory orders have expressly made costs "costs in the cause".

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Reid, Hewitt and Company v. Joseph (House of Lords) Explained that "the costs shall follow the event" means the party who succeeds overall gets the general costs, but where an action involves separate issues the costs of any particular issue go to the party who succeeds on that issue; an "issue" may be any matter which has a direct and definite event in defeating the claim in whole or in part. The court relied on this authority to confirm that costs may be allocated by issue, but distinguished that allocation from the question of construing an interlocutory order that expressly makes costs "costs in the cause".
Templeton v. Laurie Holds that the words "costs in the cause" do not mean those costs will automatically follow the event; rather, they remain to be dealt with by the court at the hearing. It discussed that in Chancery costs are in the Court's discretion and that generally costs follow the result. The court cited Templeton to support the proposition that "costs in the cause" means the costs remain for the final decision and are to be treated as part of the general costs of the action, not that they automatically follow the event without regard to the interlocutory order's effect.
Bartlett v. Wood Cited (along with Ferguson v. Wilson) as authority for the general practice that costs will follow the result. Used to illustrate the background general rule that costs normally follow the event, against which the specific effect of an interlocutory order saying "costs in the cause" must be construed.
Ferguson v. Wilson Cited as supporting the general rule that costs generally follow the result. Referenced as part of the general rule context; not separately analysed beyond confirming the conventional practice.
Hodges v. Hodges Jessel, M.R.'s observation that dismissal with costs ought to include all costs reserved and that registrars should insert standard words to include costs of applications reserved until trial. Quoted to show judicial practice of including reserved interlocutory costs when dismissing with costs and the expectation that such reserved costs will be included unless special directions are given.
Koosen v. Rose Involved an Order XIV Chambers application where Day, J. had ordered costs "to be costs in the cause"; at trial Wright, J. deprived the successful party of those interlocutory costs, but Lord Esher, M.R. held that the trial judge had no jurisdiction to interfere with the earlier order of a judge of co-ordinate jurisdiction. The court relied heavily on Koosen v. Rose and Lord Esher M.R.'s reasoning to conclude that when an interlocutory order has directed that costs be "costs in the cause" the judge who hears the case cannot subsequently alter that interlocutory order's effect by depriving the entitled party of those costs.

Court's Reasoning and Analysis

The court's analysis proceeded in discrete steps, closely following the authorities and Section 35 of the Civil Procedure Code:

  1. Statutory framework: The court cited Section 35 of the Civil Procedure Code, observing that it vests in the court a general discretion over costs and embodies the general rule that costs shall follow the event, subject to the requirement that when a court directs that costs shall not follow the event it must state reasons in writing. The Court treated this as recognition of the normal practice that costs follow the event unless good reason is given otherwise.
  2. Distinction between general rule and construction of interlocutory orders: The court emphasized the difference between (a) applying the general rule under Section 35 (costs following the event unless reasons are given), and (b) construing a specific interlocutory order which directs that certain costs shall be "costs in the cause". The latter is a discrete, operative judicial direction that affects how those costs are treated at the outcome of the action.
  3. Precedent on allocation of costs by issue: The court referred to the House of Lords decision in Reid, Hewitt and Company v. Joseph to acknowledge that costs may be allocated by issues where appropriate and that issues can have independent cost consequences. However, it noted that this general principle does not answer the question of the effect of an interlocutory order expressly making costs "costs in the cause".
  4. Interpretation of "costs in the cause": The court relied on Templeton v. Laurie and other authorities to explain that the phrase "costs in the cause" indicates those costs remain to be dealt with at the hearing and ordinarily form part of the general costs of the action, to be awarded to the party who obtains the general costs unless there are specific reasons otherwise.
  5. Authority that a later trial judge cannot upset interlocutory orders: The court discussed Koosen v. Rose and Lord Esher M.R.'s ruling that a trial judge cannot interfere with an interlocutory order of a judge of co-ordinate jurisdiction which has directed that certain costs be "costs in the cause". The court treated that principle as binding on the present question and held that the judge hearing the case lacked jurisdiction to alter the earlier interlocutory orders in the present case.
  6. Application to the present orders: Applying the foregoing, the court concluded that the orders dated 7 June 1922 and 24 October 1923—which expressly made the costs of the respective examinations "costs in the cause"—were to be treated as part of the general costs of the action. Therefore, the defendants, who were held to be the successful parties, were entitled to those costs.
  7. Assessment of the trial judge's approach: The court stated that Mr. Justice Crump failed to appreciate the distinction between giving effect to the statutory rule that costs follow the event and construing a specific interlocutory order about costs. Because the interlocutory orders had expressly made the costs "costs in the cause", Crump J. had no jurisdiction to interfere with them in the manner he did.

Holding and Implications

APPEAL DISMISSED; CROSS-OBJECTIONS ALLOWED WITH COSTS IN BOTH CASES.

Direct effect on the parties:

  • The interlocutory costs ordered on 7 June 1922 (examination de bene esse of Arthur Smith) and 24 October 1923 (commission for examination of A.F. Pringle) are to be treated as part of the general costs of the action.
  • The defendants, being the successful parties on the action, are entitled to those costs.
  • The appellate court allowed the cross-objections to the extent of awarding those costs to the defendants and dismissed the appeal.

Broader implications noted by the court:

  • The court reaffirmed the principle that a judge hearing the trial does not have jurisdiction to vary an interlocutory order made by a judge of co-ordinate jurisdiction which has expressly directed that certain costs shall be "costs in the cause".
  • The opinion distinguished the general discretionary rule that costs follow the event (Section 35) from the separate question of construing and giving effect to specific interlocutory orders as to costs.

The opinion does not purport to establish any other broader principle beyond those applied to the facts and interlocutory orders in this case.

Short Disposition and Formalities

The judgment includes the formal statement: "Appeal dismissed: Cross objections allowed with costs." Coyajee, J. concurred. The solicitors for the appellants were Messrs. Crawford, Bayley & Co., and for the respondents Messrs. Craigie, Blunt and Caroe.

Appeal dismissed: Cross objections allowed with costs.
K. MCI. K.

    American Trading Company v. Bird & Co.

    Macleod, C.J:— [After expressing entire agreement with the learned trial Judge's view on the main question that the plaintiffs had failed to prove the contract alleged to be contained in the correspondence, proceeded:] Then there arose a further question with regard to costs. There was a certain order made on June 7, 1922, whereby it was ordered that Arthur Smith, a witness for the defendants, should be examined de bene esse on June 9, 1922, before the Prothonotary or one of the Deputy Registrars of this Court with liberty to the plaintiffs if so advised to cross-examine the said witness, and that the evidence so to be taken should be admitted and used at the hearing of the suit saving all just exceptions. And it was ordered that the costs of and incidental to that order and of the examination should be costs in the cause Then on October 24, 1923, another order was obtained whereby a commission was issued for the purpose of taking the examination, cross-examination and re-examination viva voce, of Mr. A.F Pringle in Rangoon and it was ordered that the evidence taken under the commission together with Exhibits if any should be read and used in evidence in the suit saving all just exceptions and that the costs of the parties therein of and incidental to the application and order, and of such examination should be costs in the cause.

    [After referring to the passage in the judgment of Crump J., above quoted, the learned Chief Justice proceeded:]

    Section 35 of the Civil Procedure Code says:—

    “(1) Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incident to all suits shall be in the discretion of the Court, and the Court shall have full power to determine by whom or out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid. The fact that the Court has no jurisdiction to try the suit shall be no bar to the exercise of such powers.

    (2) Where the Court directs that any costs shall not follow the event, the Court shall state its reasons in writing.”

    That section lays down a general rule as to the powers of the Court in awarding costs, and, as it is provided that, if the Court directs that any costs shall not follow the event, the Court shall state its reasons in writing, effect was thereby given to the general rule of practice that costs shall follow the event, unless the Court decides that for some good reason the successful party shall be deprived of the whole or part of his costs.

    Reference has been made to the decision of the House of Lords in Reid, Hewitt and Company v. Joseph, where it was held that “the expression ‘the costs shall follow the event’ in the second proviso to Order LXV, Rule 1, which regulates the costs in jury actions, means that the party who on the whole succeeds in the action gets the general costs of the action, but that, where the action involves separate issues, whether arising under different causes of action or under one cause of action, the costs of any particular issue go to the party who succeeds upon it.

    An issue, in this sense, need not go to the whole cause of action, but includes any issue which has a direct and definite event in defeating the claim to judgment in whole or in part”.

    It has never been disputed in this Court that the Court which decides in favour of one party or the other may direct that the costs of certain issues shall be paid by the party who loses on those issues, although he may have won the action by reason of the findings on the remaining issues. The general rule of practice that costs should follow the event, is not connected in any way with the proper construction to be put on the words “costs costs in the cause”, when appearing in an order of the Court.

    In Templeton v. Laurie, a question arose before Mr. Justice Russell with regard to the meaning of the words “costs costs in the cause” in an order which had been made before trial. His Lordship said (p. 237):—

    “I am of opinion that these words do not mean that these costs will follow the event, but that those costs remain to be dealt with by the Court at the bearing. In the Court of Chancery as is well known, costs have always been in the discretion of the Court, and as a general rule costs will follow the result: See Bartlett v. Wood; Ferguson v. Wilson. In Hodges v. Hodges(4), Jessel, M.R, says:— ‘The dismissal of an action with costs ought to include all costs reserved. I will give instructions to the Registrars always to insert, without any special directions, in all orders made in this branch of the Court, the words “Including costs of all applications ordered to stand over until trial, and all costs reserved to be disposed of at the trial”. So that it will be for the other side to show why they should not be put in’.”

    It is perfectly clear that where no order has been made on an interlocutory application with regard to costs, or it is specially directed that the costs should be reserved, then the Judge who decides the case has complete power and discretion over the costs of such interlocutory applications. But it is different where the Judge who decides an interlocutory application makes an order as to costs, either directing that one of the parties should pay the costs, or that the costs should be costs in the cause.

    In the case I am dealing with reference was made to the decision in Koosen v. Rose. The action was brought to recover the sum of £150, the price of a motor carriage. The plaintiff having taken out a Summons for judgment under Order XIV, Day J., at Chambers, gave the defendant leave to defend, and ordered that the costs of the application should be costs in the cause, and further directed that the case should be put into the Short Cause list. Wright J. at the trial gave judgment for the plaintiff with costs, less the amount of the costs of the proceedings under Order XIV. The Judge said that in his opinion the case was not one fit to be tried under Order XIV, and that in all probability if the facts had been fully known to Day J. he would have made the plaintiff pay his own costs. The plaintiff appealed from so much of the judgment as deprived him of his costs of the application at Chambers. Lord Esher M.R said:—

    “Wriglit, J., at the trial assumed to himself the power of altering a decision which had been come to by Day, J., at chambers with regard to the costs of an application under Order 14. This appeal is brought on the ground that he had no jurisdiction to interfere with that order as to costs. The rule must be this, that a Judge cannot interfere with an order of a judge of co-ordinate jurisdiction by way of appeal or otherwise, unless some statute has expressly given him the power to do so. In my opinion that part of the judgment which deprived the plaintiff of his costs of the application under Order 14 was without jurisdiction and void, and must be overruled”.

    It was clearly considered, then, by the Master of the Rolls that Mr. Justice Day in ordering costs to be costs in the cause had directed that those costs should follow the general costs of the action, and it was not open to the Judge who heard the case to make another order depriving the plaintiff, who was entitled to the general costs of the action, of the costs of the interlocutory application under Order XIV. Mr. Justice Russell distinguished that case, considering that it was a special case, because Order XIV specially provides that the Judge in Chambers shall deal with costs. But it is perfectly clear that in all applications in Chambers the Judge has a discretion to deal with the costs of the application. The same rule applies to applications made in Court by way of motion. When the Judge either in Chambers or on motion makes an order that the costs of the application or motion shall be costs in the cause, he makes an order that those costs should be received by the party who gets the general costs of the action, and it, is not open to the Judge who hears the case to interfere with that order. We think, therefore, that the decision of Mr. Justice Russell in the case I have cited must be over-ruled. Although the case went to the appeal Court in appeal against the decision of the learned Judge on the preliminary issues raised at the trial, this particular decision on the question of costs does not appear to have been dealt with by the Judges in appeal, and therefore we are entitled to take it for granted that that particular question was not prosecuted before the appeal Court. The decision still remained the decision of a single Judge.

    We think that Mr. Justice Crump failed to realise the distinction between giving effect to the rule laid down in the Civil Procedure Code that costs shall follow the event, unless the Judge gives reasons to the contrary in writing, and the question of construing a particular order made by a Judge with regard to costs. When in the orders for the examination of one witness de bene esse and the examination of another witness on commission, it was ordered that the costs should be costs in the cause, the Judge who heard the case had no jurisdiction to interfere with those orders whereby those events become part of the general costs of the action to which the successful defendants were held entitled. It would have been open to the learned Judge to have held that the defendants by their conduct were not entitled to the whole of the costs of the action, and, if he had dealt with the case in that manner, then there would have been no reason to interfere. But as the case stands at present, the costs which I am now dealing with must be taken to be part of the general costs of the action, and the defendants are entitled to them. To that extent the cross-objections must be upheld. The appeal is dismissed and the cross-objections are allowed with costs in both cases.

    Coyajee, J.:— I agree.

    Solicitors for appellants:— Messrs. Crawford, Bayley & Co.

    Solicitors for respondents:— Messrs. Craigie, Blunt and Caroe.

    Appeal dismissed: Cross objections allowed with costs.
    K. MCI. K.
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    Comments

    American Trading Company v. Bird & Co.
    (Jan 27, 1926)