Smith v Madden

This matter concerned an application by the plaintiffs to review the taxation of costs in an action heard in the High Court's original jurisdiction. The action involved a claim by the plaintiffs and a counterclaim by the defendants, with judgment ultimately entered for the plaintiffs on the claim and for the defendants on the counterclaim. The core dispute on review related to the taxing officer's disallowance of the costs of a second counsel for the plaintiffs and the taxing officer's allowance of certain items in the defendants' bill of costs for the counterclaim.

The court was required to determine two principal legal issues. Firstly, whether the employment of two counsel by the plaintiffs in the trial of this substantial action was reasonable and proper, and thus recoverable as a cost. Secondly, the court had to consider the correct principle for taxing the costs of a counterclaim when judgment is given for the plaintiff on the claim with costs and for the defendant on the counterclaim with costs, specifically addressing how to treat costs incurred in relation to issues that might be common to both the claim and the counterclaim.

Dixon J. held that the employment of two counsel was justified, stating that in superior courts, engaging two counsel in a substantial action is generally considered reasonable and proper, and should be treated as usual unless the proceedings are simple. He applied the principle from *Kroehn v. Kroehn* and indicated that taxing officers should presume the propriety of two counsel unless the case is demonstrably straightforward. Regarding the counterclaim costs, the court applied the established principle that the claim should be treated as if it stood alone, and the counterclaim should only bear the additional costs occasioned by its existence, as per *Medway Oil and Storage Co. Ltd. v. Continental Contractors Ltd.*. While individual items cannot be apportioned between claim and counterclaim, severable parts of a single charge for work may be divided if they relate distinctly to either the claim or the counterclaim.

The court ordered that the objections of the plaintiffs to the taxation of both their own bill and the defendants' bill be allowed. The bills were referred back to the taxing officer for review on the footing that the costs of two counsel for the plaintiffs should be allowed. The defendants were granted liberty to withdraw and substitute their bill of costs for the counterclaim. The defendants were ordered to pay the costs of the application.