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Ahmed Abdulla Hasani Vs. Abdul Gafur - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 628 of 1922
Judge
Reported inAIR1927Bom449; (1927)29BOMLR673
AppellantAhmed Abdulla Hasani
RespondentAbdul Gafur
Excerpt:
.....in such a case the general costs of the case cannot be apportioned.;in such a case the taxing master should tax both the bills simultaneously and decide what items were to be attributed solely to the plaintiff's claim, what items were to be attributed solely to the defendant's counter-claim and what items were common to both so as to be apportioned. - - the defendants contend that the costs occasioned by the examination of this witness as well as other defence witnesses who proved the market-rate for pearls on december 16, and its further decline after that date was as much a part of the evidence on the counter-claim as on the claim and should therefore have been apportioned by the taxing master. bilton equally applies whether claim or counter-claim both fail or both..........(p. 340):-where the plaintiff succeeds on his claim and the defendant succeeds on his counter-claim costs follow the event in this way;-the plaintiff is entitled to the costs of the action other than the counter-claim; the defendant is entitled to the costs of the counter-claim. the defendants here have objected that the master was wrong in allowing the plaintiff the general costs of the action, and have contended that they themselves are entitled to them. i think that they are not entitled to them. in my view we need not in the present case give any opinion as to items common both to the claim and counter-claim, or as to the proper apportionment of the costs. those points do not arise here. i am of opinion that the costs must follow the two events. the result of the action is to.....
Judgment:

Mirza, J.

1. [His Lordship after setting out the above facts proceeded as follows:-] The Taxing Master so far has taxed the bill of the plaintiff only and not of the defendants. He states, in his reasons that he has followed the principle laid down by Fry J. in Saner v. Bilton (1879) 11 Ch. D. 416

The Plaintiff in the original action shall pay the general coats of action, and the Defendant, who is to pay the costs of the counter-claim, shall only pay the costs of the proceedings so far as they have been increased by reason of that counter-claim.

2. Applying the converse of that principle to the present case he has disallowed the plaintiff the costs incurred in the de bene esse examination of a pearl broker, who gave evidence on behalf of the defendants with regard to the market-rate prevailing on December 16, 1921, and the decline in the pearl market after that date. The Taxing Master had originally allowed this item in the taxation of the plaintiff's bill of costs as against the defendants. On review he disallowed it. The defendants contend that the costs occasioned by the examination of this witness as well as other defence witnesses who proved the market-rate for pearls on December 16, and its further decline after that date was as much a part of the evidence on the counter-claim as on the claim and should therefore have been apportioned by the Taxing Master. The Taxing Master, while disallowing the costs occasioned by the broker's examination, has allowed the plaintiff the costs occasioned by the examination of the other witnesses on the same point. It is contended on behalf of the plaintiff that the Taxing Master should also have allowed the costs occasioned by the de bene esse examination of the broker. The Taxing Master has held that the costs of the de bene esse were occasioned entirely by the defendants' counter-claim but the costs of the examination of the other witnesses on the same point came properly under the costs of the suit.

3. The defendants object also to the taxation of certain items in the bill under the following heads:-

(1). It appears that, after the defendants had filed their affidavit of documents, the plaintiff called upon them to disclose their ledger account and entries in their weighment book in respect of the sale of these pearls. After some correspondence on the subject, defendants made their supplemental affidavit of documents disclosing these entries. The Taxing Master has allowed the plaintiff the costs of the correspondence, the supplemental affidavit of documents and inspection of documents. The defendants contend that those items relate entirely to their counter-claim and should not be allowed as costs of the suit.

(2). The Taxing Master has allowed the plaintiff Rs. 300 for instruction charges in connection with the suit and has deducted from it Rs. 30 for the counter-claim. It is contended on behalf of the defendants that the apportionment made by the Taxing Master is unjust.

(3). The Taxing Master has allowed the plaintiff 8 G. Ms. and 6 G. Ms. for brief fee to his senior and junior counsel and deducted 2 G. Ms. from the fee of each counsel as fees for resisting the counter-claim He has also awarded 6 G. Ms. to plaintiff's counsel for refresher and has deducted from it 2 G. Ms, for resisting the counter-claim. The second counsel in the case, it appears, was not present during the hearing. The defendants object to the apportionment as unfair to the counter-claim.

(4). The defendants object also to the item of attendance charges allowed to the plaintiff. They contend that it should have been apportioned between the suit and the counter-claim.

4. In a matter of this nature our Courts will follow the practice laid down in English cases. In Saner v. Bilton (1879) 11 Ch. D. 416 the plaintiff's claim and the defendant's counter-claim had both been dismissed with costs. The principle to be applied is thus enunciated by Fry J. (p. 418):-

The proper course will be this : the Plaintiff in the original action shall pay the general costs of action, and the Defendant, who is to pay the costs of the counter-claim, shall only pay the costs of the proceedings so far as they have been incresed by reason of that counter-claim. The principal reason which leads me to that conclusion is this, that the Plaintiff in the original act on is the person who first commences litigation. The Plaintiff in the action first lets out the waters of litigation, and it is impossible to say how far the counter-claim ever would have been agitated if he had not begun that litigation. That appears to me to furnish a reason why as a general rule, the action should be treated as if it stood by itself, and the counter-claim should only bear the. amount by which the costs of the proceedings are increased by it. I need not add that in every case the Court can give special directions which may vary the rule, but all I decide now is this, that in a cage in which both action and counter-claim are dismissed with costs, the general costs of the proceedings are not to be apportioned, but the Defendant, who bears the costs of the counter-claim, has only to pay that sum by which the costs of the proceedings have been increased by the counter-claim.

5. Fry J.'s judgment was approved by Jessel M.R. in the Court of Appeal in Mason v. Brentini (1880) 15 Ch. D. 287 in the following terms (p. 289):-

I entirely agree with the decision of Mr. Justice Fry in Saner v. Bilton, and for the reasons which he has given; and am of opinion that his judgment is to be considered as expressing the rule of the Court.

6. In Baines v. Bromley (1881) 6 Q.B.D. 601 the plaintiff claimed to recover commission due to him from the defendants on an agreement. The defendants denied the claim, and claimed by way of counter-claim for goods sold. The jury found a verdict for the plaintiff on the claim, and a verdict for the defendants on the counter-claim. Both the claim and the counter-claim were decreed with costs. Brett L.J. remarks (p. 694):-

The question is how ought the costs to be taxed when in such a case the plaintiff succeeds on his claim and the defendants on their counter-claim. If this had been treated as a pure set-off to the amount of the plaintiff's claim (as I think it might have been), and it had so appeared on the judgment, then it seems to me that the defendants would have been entitled to the costs of the action, because then the defendants would have denied by way of defence that the plaintiff had any right to bring an action at all. There may be a case where the defence is partly by way of set-off and partly by way of counter-claim, as where the defendant asserts his right to recover the amount of balance due after satisfying the plaintiff's claim by his set-off. It is not necessary to say now how the costs in such a case are to be taxed, because here the judgment is in form, not that the defendants have a set-off, but a counter-claim only. It is as if the defendants chose to deny the whole of the plaintiff's claim and to rest on their cross-action. The costs have been taxed, however, as if the plaintiff had not succeeded at all in his action, but only on certain issues, and I think that that was wrong. That alone is sufficient to sustain the appeal, I have, however, a firm opinion that where there is a claim with issues taken on it and a counter-claim, not a set-off, but in the nature of a cross-action with issues on it, and where the plaintiff succeeds on the claim and the defendant on the counter-claim, the proper principle of taxation, if not otherwise ordered, is to take the claim as if it and its issues were an action, and then to take the counter-claim and its issues as if it were an action, and then to give the allocatur for costs for the balance in favour of the litigant in whose favour the balance turns. In such a case where items are common to both actions the master would divide them. Where the so-called counter-claim is a set-off, there is but one action.

7. In In re Brown: Ward v. Morse (1883) 23 Ch. D. 377 the plaintiff's claim and the defendant's counter-claim were both decreed with costs. The Court of Appeal in affirming Chitty J. referred with approval to Saner v. Bilton and Mason v. Brentini and held that in the absence of any special directions to the contrary the plaintiff in such a case would be entitled to the general costs of the action although the result of the litigation may be in favour of the defendants. The Court would not allow apportionment of such costs as would have been duplicated had the counter-claim been the subject of an independent action, but would award them to the plaintiff. The plaintiff, however, would not be entitled to recover as costs of the action any costs fairly attributable to the counter-claim Baggallay L.J. remarks as follows (p. 386):-

The plaintiff should recover from the defendant the costs of action, except so far as they are attributable to the counter-claim, and the Defendant should recover from the plaintiff the coats of the counter-claim. If there are any costs which can be properly considered common to both suits, e.g., a brief fee, if there is only one brief both on the claim or counter-claim...they should be divided. But apart from this qualification, I think that Saner v. Bilton equally applies whether claim or counter-claim both fail or both succeed.

8. In Shrapnel v. Laing (1888) 20 Q.B.D. 334 the plaintiff had obtained a decree against the defendant on his claim and the defendant had obtained a decree for a larger sum against the plaintiff on his counter-claim. The Court of Appeal held that the claim and counter-claim should for the purposes of taxing costs be treated as separate and independent actions, and the costs in each taxed in favour of the successful party, subject to a deduction in respect of the costs of any issues on which he had not succeeded. Pry L, J. remarks as follows (p. 340):-

Where the plaintiff succeeds on his claim and the defendant succeeds on his counter-claim costs follow the event in this way;-the plaintiff is entitled to the costs of the action other than the counter-claim; the defendant is entitled to the costs of the counter-claim. The defendants here have objected that the master was wrong in allowing the plaintiff the general costs of the action, and have contended that they themselves are entitled to them. I think that they are not entitled to them. In my view we need not in the present case give any opinion as to items common both to the claim and counter-claim, or as to the proper apportionment of the costs. Those points do not arise here. I am of opinion that the costs must follow the two events. The result of the action is to give the costs of the action to the plaintiff, and the result of the counterclaim is to give the costs of the counter-claim to the defendants.

9. In Atlas Metal Company v. Miller [1898] 2 Q.B. 500 Lindley M.R. sums up the earlier authorities as follows (p. 505):-

All the authorities agree so far, i e., they all decide that a plaintiff who is to pay or be paid the costs of his action is to pay or be paid the whole of such costs as if there were no counter-claim.

Next, as to the counter-claim. The defendant has to pay the coats of this, and the counter-claim is to be treated as an independent cause of action, and, to use Lord Esher's words, as if the claim did not exist. This last expression, however, is calculated to mislead, if not explained and properly understood. What are costs of a counter-claim? The answer must be the costs occasioned by it. No costs not incurred by reason of the counter-claim can be costs of the counterclaim. The fact that if there had been no action the costs of the counter-claim would have been larger, because the defendant would then have had to issue a writ and take other proceedings, does not make costs not incurred costs incurred, and in considering what the costs of a counter-claim really have been in any particular case, the costs saved by not bringing a cross-action cannot be treated as costs incurred.

The introduction of counter-claims has given litigants advantages in this respect. Counter-claims, although cross-actions for all purposes of procedure and evidence, cost less than actions, and the party who has to pay the costs of a counter-claim gets the benefit of the cheaper procedure. To include in the costs of a counter-claim any costs not occasioned by its being a counter-claim, but saved by its being what it is, appears to us wrong in principle and opposed to Saner v. Bilton and Ward v. Morse. If Lord Esher really meant to express a contrary opinion we cannot agree with him. We are satisfied that there is no decision to that effect. But, as pointed out by Lord Esher, there may be costs brought in for taxation which have been incurred partly in support of or in opposition to a defence, and partly in support of or in opposition to a counterclaim, e.g., where there is a defence of set-off equal to the plaintiff's demand, and a counter-claim for more than the plaintiffs demand. In such cases the taxing master must apportion the costs as best he can, and fix the amount applicable to the defence and the amount applicable to the counter-claim. Where there are no separate issues requiring special treatment the costs of the defence will be costs of the action; the costs attributed to the counter-claim will be costs of the counter-claim. Costs common to both defence and counter-claim must necessarily be dealt with in this way. But to do so is very different from apportioning what are properly costs of the action. Such costs when ascertained must be paid by the party ordered to pay them. They cannot have been increased by the counter-claim, and no part of them can be properly regarded as costs of the counter-claim.

10. In Jones v. Stott [1910] 1 K.B. 893 the Court of Appeal decided that the same principles would apply to a case where the appeal and cross-appeal had both been dismissed with costs.

11. In Christie v. Platt [1921] 2 K.B. 17 Atkin L.J. remarks as follows (p. 24):-

In one sense he (the Master) must tax the costs of the claim on the footing that there is no counter-claim, and the costs of the counterclaim on the footing that there is no claim; but that is subject to this overriding condition, that he must ascertain what are the costs really incurred by the plaintiff in establishing his claim and really incurred by the defendant in establishing his counterclaim. When that has been done then any costs saved to the defendant, by reason of there being a claim and a counterclaim instead of two separate and distinct proceeding's commenced by two separate writs and conducted as two separate actions, are not to be allowed to the defendant, because they are not coats incurred by the defendant, but saved to him...but it must be remembered that the Master has to ascertain what costs have in truth and in fact been incurred by the plaintiff in bringing and prosecuting the action and what costs have in truth and in fact been incurred by the defendant in litigating the counterclaim.

12. Younger L.J. remarks (p. 29):-

I agree so completely that I refrain from adding anything which might be taken to modify what Atkin L.J. has said. The Taxing Master has gone wrong in assuming that the effect of an order that the plaintiff shall recover on the claim with costs and an order that the defendant shall recover on the counterclaim with costs is to give the plaintiff such a position of priority that the taxation of the two sets of costs must be on wholly different principles. As Fletcher Moulton L.J. pointed out in Jones v. Stott that is an erroneous assumption in the case of an appeal and a cross-appeal. In my view it is equally erroneous in the case of an action and a cross-action.

13. In Wilson v. Walters [1926] 1 K.B. 511 there was a suit for damages for negligence and a counter-claim for damages for negligence and they were both dismissed with costs. Scrutton L.J., in the course of his judgment, refers with approval to the Irish case of Crean v. M'Millan [1922] 2 I.R. 105 where the practice is thus laid down (p. 130):-

Wherever there is a separate and substantial question raised by the counter-claim, there must be substantial costs paid in relation to the counterclaim, and it follows that there must be an apportionment of the costs. But, on the other hand, where the subject matter of the counterclaim is identical with the defence or part of the defence, in that case the Taxing Master should not apportion, but simply allow such extra costs as have been incurred by reason of the counter-claim.

14. In the same case Andrews L.J. said (p. 135):-

1. Whether the common items in the costs (i. e., the items which contain something apparently common to both claim and counter-claim) should be allowed in full to the successful party on the original claim, or should be apportioned as between the claim and counterclaim, depends in each case upon whether such costs were in truth and in fact occasioned solely by the claim or partly by the claim and partly by the counterclaim 2. Such costs are regarded as being occasioned solely by the claim and are, accordingly, allowed in full to the party who succeeds in the claim, when the counterclaim is a counterclaim in form only, and is in reality in the nature of a set off:...or where it is really a defence in disguise:...or where both claim and counterclaim arise out of the one transaction and in effect raise the same issue.

15. Applying these principles to the case before me, I have to consider whether this was a case which raised substantially only one issue between the plaintiff and the defendant, or whether the issues on the plaint and on the counter-claim were substantially separate and different.

16. The following issues seem to me to arise in this case:-

1. Whether there was an agreement between the plaintiff and the defendants not to sell the goods for two months from November 18, 1921 ?

2. If there was such an agreement, whether the defendants had committed a breach of it ?

3. Had any and what damages resulted to the plaintiff from the breach of the agreement ?

17. The plaintiff filed no reply to the defendants' counter-claim. It must be taken, however, that he was disputing the defendants' counter-claim. After the defendants had filed their written statement and counter-claim the plaintiff compelled them to disclose by a supplemental affidavit the plaintiff's account in their ledger as well as the items relating to the sale of the goods appearing in the defendants' weighment book. From that circumstance it seems that the plaintiff was disputing the items contained in the defendants' particulars of counter-claim. An issue was raised at the hearing whether the defendants were entitled to their counter-claim. That issue, to my mind, would comprise the following issues:-

1. Whether there had been an agreement between the plaintiff and the defendants not to sell the goods for two months from November 18, 1921 ?

2. If so, whether there had been a breach of that agreement ?

3. Whether the defendants were entitled to charge commission and brokerage in respect of the sale effected by them in consequence of a breach of the agreement ?

4 Whether the sale proceeds of the goods wore as alleged by the defendants ?

5. Whether the i ems of expenditure contained in their particulars of counter-claim were correct ?

18. The two causes of action, it seems to me, are separate and distinct. The plaintiff sues for special damages on a breach of an agreement; the defendants' counter-claim is in respect of monies lent and advanced as against which they give credit to the plaintiff for the net sale proceeds realised by the goods. The issues in common between the claim and the counter-claim seem to be those relating to the factum of the agreement and its breach. Apart from those issues the claim and the counter-claim appear to me to involve separate and distinct issues. I am of opinion that the Taxing Master should not have taken the plaintiff's bill of costs separately from that of the defendants. He should have taxed both bills simultaneously and decided as to what items in the respective bills were to be attributed solely to the plaintiff's claim and what items were to be attributed solely to the defendants' counter-claim, and what items were common to both so as to be apportioned.

19. Applying that test to the application for review brought by the plaintiff, I am of opinion that the Taxing Master has erred in holding that the costs occasioned by the de bene esse examination of the broker were to be attributed solely to the costs of the counter-claim. In my opinion, it was not necessary for the defendants' counter-claim to prove what the market rate for pearls on December 16 was or that the market in pearls continued to decline after that date. It has been contended on behalf of the defendants that they had to satisfy the Court on their counter-claim that they had given proper credit to the plaintiff for his goods, which they had wrongly sold. In my opinion that point did not arise on the counter-claim. The market rate between December 16, 1921, and January 18, 1922, when the stipulated period of two months expired would be material to the plaintiff's case for the plaintiff's measure of damages would be the difference between the highest market price during that period and the sale price of the goods. The defendants called the evidence of the broker to rebut any presumption that might arise in favour of the plaintiff's claim to such special damages. I must uphold the plaintiff's objection to this part of the Taxing Master's taxation of his bill of costs and direct that the amount may be allowed in the bill. The defendants will pay the costs of this review. Counsel certified.

20. I shall now deal with the defendants' objections to the Taxing Master's taxation of the plaintiff's bill. The objection with regard to the costs of the other witnesses on the subject of the market rate of the goods sold and their deterioration in value will, for the reasons I have given in dealing with the plaintiff's objection, be disallowed.

21. Coming to their other objections (1) the Taxing Master has held that the correspondence which resulted, in the supplemental affidavit of documents and the inspection which followed are all items which properly fall under the costs of the suit. In my opinion these items relate exclusively to the counter, claim and not to the suit. The objection of the defendants to this item in the bill of the plaintiff must be upheld. (2) The next item objected to relates to the apportionment of the instruction charges. In my opinion this apportionment should not have been made by the Taxing Master at this stage, but he should have waited until he had taxed the bill on the counter-claim as well. In apportioning the instruction charges it is necessary in my opinion that he should take a comprehensive view both of the claim and of the counter-claim in respect of the costs occasioned by each before he makes an apportionment on this item. I set aside the taxation on this item and remand it to the Taxing Master for re-taxation in accordance with my observations in this judgment. (3) Similarly, with regard to the apportionment of counsel's fees. I think this too is a matter in which there should be a remand and the Taxing Master should make his apportionment after he has taxed the bill on the counter-claim. (4) Similarly, with regard to the attendance charges. This item too will be remanded for the Taxing Master's reconsideration in the light of my observations here.

22. As the defendants have substantially succeeded in their objections and have failed on an item on which there would be no further argument after the plaintiff's objection had been heard, I think they should have the costs of their application for review. Counsel certified.

23. The result of my findings is that the plaintiff's application for review is allowed with costs and the defendants' application for review is also allowed with costs. Counsel being certified in both cases. The bill will be remanded to the Taxing Master for inserting in it the item he has disallowed to the plaintiff and for striking out from it the items which relate to (1) the correspondence on the subject of the supplemental affidavit of documents; (2) the supplemental affidavit of documents; and (3). the inspection consequential on such disclosure. The Taxing Master will re-tax the other items in respect of which I have upheld the plaintiff's objections in the light of my observations in this judgment.


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