CONCORDE CONSTRUCTION CO LTD AND ANOTHER v. COLGAN CO LTD AND OTHERS

Headnote

Costs - plaintiff's claim (by counterclaim) dismissed 3rd party proceedings also dismissed - 3rd party should normally have its costs against defendant even though they can't be recovered by defendant from plaintiff due to its insolvency.

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JUDGMENT

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Preliminary

1. The plaintiff ("Concorde") is a construction company and it entered into a contract with the defendant ("Colgan") to build a large block of flats on Repulse Bay Road. Adispute arose between them and Concorde sued for non-payment of amounts owing. Colgan counterclaimed due to delay in completion and Concorde joined Plasteel Hong Kong Ltd. ("Plasteel") as a 3rd party, it being a subcontractor.

2. There were, as usual, voluminous and complex interlocutory matters and finally Colgan was ordered to put up a substantial sum as security for costs. This it failed to do and its counter-claim was accordingly dismissed on the 26th October 1984. The counterclaim having gone Plasteel seeks an order that the 3rd party proceedings should also be dismissed and it should have its costs against Concorde.

Considerations

3. There is no doubt that Plasteel is entitled to have the 3rd party proceedings dismissed. The only question is what order, if any, should be made in respect of its costs.

4. Mr. Kelly, for Plasteel, argues that the claim and counterclaim each had a life of their own and, although brought together as a matter of convenience, are in fact separate. Concorde chose to bring in Plasteel in respect of the counterclaim by 3rd party-proceedings and those proceedings having been dismissed, it is entitled to look to Concorde for its costs and not to Colgan (which is insolvent). This may be hard on Concorde, who have succeeded on the counterclaim, but it was they who brought Plasteel into the action and they must pay its costs when Plasteel succeeds. In Johnson v. Ribbins and Ors. (Sir Francis Pittis and Son third party) (1977) 1 W. L. R. 1458 it was held that a successful third party was normally entitled to costs against a successful defendant even when the plaintiff was legally aided (and therefore, judging from the report, not liable for costs). Mr. Bond for Concorde says it would be unjust if anybody other than Colgan was liable for the costs of the successful parties. When Concorde was sued by way of counterclaim for delay it was inevitable that it would join Plasteel, a major sub-contractor, as a 3rd party. The counterclaim having been dismissed it should not be liable for Plasteels costs. He points out that the court has a complete discretion to make such order as to costs as justice may require and relies on Edginton v. Clark (1964) 1 Q. B. 367.

Decision

5. I am satisfied that Plasteel should be awarded its costs against Concorde. In the normal event a successful party to litigation looks to the person who has caused him to incur such costs for payment. Plasteel's contract was with Concorde, not Colgan. It has been sued for alleged breach of that contract. It has succeeded in its defence. In Johnson v. Ribbins Goff L. J., while agreeing that the court had a discretion as to costs between plaintiffs, defendants and third parties as justice may require (Edginton v. Clark), in the exercise of that discretion the court should be guided by the principle that costs normally follow the event R. S. C. 62/3/2. If it thinks fit it may order that the 3rd parties, costs awarded against the defendant should be added to the defendant's costs against the plaintiff. I realise that, as apparently in Johnson v. Ribbins that may well be a hollow order but I do not consider that Colgan's insolvency should affect the position.

6. There will be an order dismissing the 3rd party proceedings against Plasteel. Plasteel to have its costs against Concorde, such costs to be included in the costs payable by Colgan to Concorde.