Redstone Mortgages v B Legal

Costs orders should achieve broad justice between the parties while remaining practical and proportionate. The court should identify the successful party in each action and apply the general rule that the successful party receives its costs, subject to all the circumstances. An issues-based order is available, but courts should avoid elaborate attribution of common costs and satellite costs litigation. Where preliminary issues include liability but quantum remains unresolved, costs may be reserved or dealt with by a costs-in-the-case order. Indemnity costs require conduct that is morally reprehensible or unreasonable to a high degree and outside the ordinary run of cases.

The judgment concerned costs following determination of preliminary issues in four related sample actions concerning duties owed by B Legal to Redstone Mortgages and whether those duties had been discharged. The claims concerning Welch and Sher had been dismissed. Redstone had established breach of duty in Howard and McOwen, but causation and loss remained unresolved. The court therefore had to determine how common and case-specific costs should be allocated, whether costs should be reserved, whether a cap should be imposed, and whether any costs should be assessed on the indemnity basis.

1. General approach. A costs order must do broad justice where exact attribution would require complicated and disproportionate analysis. The court should decide whether to make an order, identify the successful party in each action, apply the general rule that the successful party is entitled to its costs, and consider all the circumstances. An issues-based order is permissible, but overall success commonly involves losing on some issues and the approach should not generate satellite litigation.
2. Welch and Sher. B Legal was successful because the claims were dismissed. Redstone was ordered to pay B Legal’s costs in each action on the standard basis, with one quarter of the generic costs attributed to each action.
3. Howard and McOwen. Redstone had established breach of duty, but causation, quantification, contributory negligence and mitigation remained to be determined. The court declined to make a special order requiring Redstone to pay most of B Legal’s costs of the generic issues or to impose a costs cap. Redstone’s costs to date were treated as claimant’s costs in the case, subject to liberty to apply if B Legal later relied on an admissible offer.
4. Common costs. The generic costs were to be allocated by a simple broad-brush method. One quarter was attributable to each action. The court rejected sentence-by-sentence analysis of pleadings, disclosure and witness evidence as an unsuitable and disproportionate method.
5. Indemnity costs. The lengthy witness statement and the late challenge to the authenticity of the Sher Memorandum did not justify indemnity costs. The challenge was warranted by suspicious circumstances, and an unsuccessful challenge did not make Redstone’s conduct morally reprehensible or highly unreasonable.

First-instance costs judgment following determination of preliminary issues in four related actions. No appellate history is stated in the judgment.