The Court of Appeal has offered useful guidance on the issues-based approach to costs orders and on determining the joint liability of partnerships.
The claimant brought a claim against a property partnership. One of the two partners had acted in breach of his fiduciary duties. The question was whether both partners were jointly and severally liable in respect of the partner’s breach of fiduciary duties. The claimant had also brought a negligence claim.
The Court of Appeal found joint and several liability and ruled as follows:
- Following Dubai Aluminium Co Limited v Salaam & Ors [2003] 2 AC 366, authority was not the touchstone for partnership liability. The touchstone was the connection between the wrongful conduct and the acts the partner was authorised to do, and in particular whether the wrongful conduct may fairly and properly be regarded as done by the partner while acting in the ordinary course of the business of the partnership. As the partner in breach of fiduciary duties had been carrying out the work for which the partnership had been contracted, he had been acting in the course of the partnership’s business. However, the negligence claim against the partnership failed.
- The judge had adopted an issues-based approach to costs. However, this approach did not achieve a fair balance between the claimant’s overall success and its failure on the negligence issue. The starting point should be that the successful party was entitled to its costs, and success was generally indicated by which party had to pay money to the other. In all the circumstances, the justice of the case was met by an award to the claimant of 50% of its costs of the action and the appeal, to be borne jointly and severally by the defendants.
The Northampton Regional Livestock Centre Company Ltd v Cowling and another [2015] EWCA Civ 651, 30 June 2015
