DeGroote v MacMillan and Bank of Butterfield Executor & Trust Company Ltd and Cooper Associates 1991 Civil Jur No 148

• Jurisdiction: Bermuda
• Judgment Date: 17 December 1993
• Date: 17 December 1993
• Docket Number: Civil Jurisdiction 1991 No. 148
• Court: Supreme Court (Bermuda)

In the Supreme Court of Bermuda

Ground, J

Civil Jurisdiction 1991 No. 148

BETWEEN:-

Michael George Degroote

Plaintiff

-and-

Marion Hamilton Macmillan

Defendant

-and-

The Bank of Butterfield Executor and Trustee Company Ltd.

First Third Party

-and-

Margot Cooper and Helen Cooper (Trading as Cooper Associates Real Estate)

Second Third Party

Mr. J. Riihiluoma for the plaintiff;

Mr. J. Hall for the defendant; and

Mr. M. Diel for the first third party.

Reed v GrayELR [1952] 1 Ch 337

EMI Records Ltd v WallaceELR [1983] Ch 59

Gibbs v GibbsELR [1952] P 332

Costs — Basis on which costs should be assessed — Indemnity costs — Solicitor and own client costs — Party and party basis

RULING ON COSTS

This matter was before me earlier this year, when I gave judgment for the plaintiff for specific performance and damages on the principal claim, and for the first third party on their counterclaim for payment of commission. At that time the question of costs was not resolved, and the matter is now back before me on that issue alone. In the interim the second third party and the defendant have come to terms on costs, and I do not, therefore, need to deal with the position in respect of them.

The matter is not entirely straightforward because; in my written judgment, I reprobated the defendant for having sworn a false affidavit in respect of proceedings brought by the plaintiff for summary judgment pursuant to Ord. 86. I considered that, had that affidavit not been sworn, the action may well have come to an end at an early stage, and I indicated that that might sound in costs.

There is no dispute that the plaintiff and first third party are entitled to their costs of the action. The question is on what basis those costs should be assessed. The plaintiff and the first third party seek indemnity costs. The defendant contends that I have no power to award costs on that basis because when the Supreme Court of Bermuda was established such an order was unknown. The defendant also contends that if I did have power it would be an inappropriate exercise of my discretion to award indemnity costs, because, whatever view I took of the affidavit, the issues which had been contested at trial were real and arguable.

The jurisdictional argument turned upon the illogical and arcane, but nevertheless very real distinction between costs on a solicitor and own client basis, and those merely on a solicitor and client basis. The former are more aptly described, at least on an inter partes taxation, as indemnity costs, while the latter appear in the rules in the guise of costs on a common fund basis. The distinction is explained in Reed v Grav[1952] 1 Ch. 337, while the availability of “solicitor and own client” as a basis for inter partes taxation, and its equation with costs on an ‘indemnity’ basis, is explained in the judgment of Sir Robert Megarry V-C in EMI Records Ltd. -v- Wallace[1983] Ch. 59. All that ‘ungodly jumble,’ as the Vice-Chancellor called it in EMI Records, was swept away in England in 1986, and now they only have two bases of inter partes taxation, namely standard and indemnity, but that has not yet been followed here, where the pre-1986 position still prevails.

Before me it was argued by the defendant's counsel that the jurisdiction to award costs on an indemnity basis had not existed in Bermuda before the Supreme Court Act 1905 amalgamated all the pre-existing courts, and that therefore it does not exist now. However, having considered the authorities, I have...