A Plaintiff who is successful in its claim against a Defendant is usually awarded costs. Conversely, a Defendant who successfully opposes a Plaintiff’s claim is awarded costs. In other words, a party who is successful in litigation is usually awarded costs. We refer to this as the “general rule as to costs”.
A difficult situation arises when a Plaintiff issues proceedings against two or more Defendants, and is successful against one or some of those Defendants only, but unsuccessful with the claim against the other Defendant/s. There may be reasons why a Plaintiff has issued its proceeding against more than one Defendant – for example, one Defendant may be pointing the finger at another Defendant (whether in whole, or by way of a proportionate liability allegation). In that case, the Plaintiff may run the real risk of not recovering some or all of their claim unless they join the other Defendant/s.
If the “general rule as to costs” is applied, the Plaintiff should be awarded costs with respect to its claim against the unsuccessful Defendant, but pay the successful Defendant’s costs.
There are, however, special circumstances which may give rise to a Court ordering that an unsuccessful Defendant also pay the costs of the successful Defendant.
Two examples of cost orders that can be made in this regard are:
- a Bullock Order (pursuant to the rule in Bullock v London General Omnibus Company[1907] 1 KB 264); and
- a Sanderson Order (pursuant to the rule in Sanderson v Blyth Theatre Co[1903] 2 KB 533).
A Bullock Order involves a Plaintiff being ordered to pay the costs of the successful Defendant, but the unsuccessful Defendant being ordered to pay the Plaintiff the costs that the Plaintiff had to pay the successful Defendant. In other words, although the Plaintiff pays the successful Defendant its costs, the Plaintiff ends up recovering those costs from the unsuccessful Defendant.
A Sanderson Order involves an unsuccessful Defendant being ordered to pay the successful Defendant its costs.
From a simplicity standpoint, a Sanderson Order may be viewed as more favourable when compared to a Bullock Order as it involves a direct payment by the unsuccessful Defendant to the successful Defendant, rather than a payment followed by a reimbursement.
The implications of both a Bullock Order and a Sanderson Order are that the unsuccessful Defendant, whether direct or indirect, has to pay the costs of both the Plaintiff and successful Defendant.
Importantly, for either a Bullock Order or a Sanderson Order to be made, the Court will need to be satisfied that:
- it was reasonable for the Plaintiff to have joined both the Defendants to the proceedings; and
- the conduct of the unsuccessful Defendant justifies making the order in favour of the Plaintiff.
For the best chance of obtaining a Bullock Order or Sanderson Order, we would suggest sending “set up” letters noting the intention to seek special cost orders should the circumstances justify it.
The content of this article is intended to provide a general guide to the subject matter. Specific advice should be sought about your specific circumstances.
