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07 Jul 2015
Appeal Status
Not appealed

Costs on a joint and severable basis

2015 case note – High Court declined respondents' application to apportion costs severally between each respondent - joint, severable, liability, costs.

Commissioner of Inland Revenue v Muir & Anors

High Court Rules


The High Court declined the respondents' application to depart from r 14.14 of the High Court Rules ("HCR") and to apportion costs severally between each respondent. The High Court held that given the background to the application, and the unified opposition efficiently presented by all the respondents, there is no arguable basis for departing from the default principle under the rule.


An application to the High Court to transfer and consolidate multiple tax challenges filed by different taxpayers in the Taxation Review Authority ("TRA") may be by a single application. Separate applications for each taxpayer or each tax challenge are not required.

Liability to pay court costs is joint and several unless the Court directs otherwise.


The respondents in this matter were investors in the Trinity tax avoidance scheme. In October 2013, the Commissioner of Inland Revenue ("the Commissioner") was granted leave to bring an application for transfer and consolidation of proceedings by way of an originating application under Part 19 of the HCR. This is a costs judgment addressing a submission that the Court should make a costs order, which departs from the usual rule that liability of each of two or more parties ordered to pay costs is joint and several (as per r 14.14 of the HCR).

The Commissioner filed a costs memorandum in November 2013 seeking an order for costs in a sum that had been agreed. Counsel for the Commissioner noted that the respondents had been unable to agree that the liability for costs should be on a joint and several basis.

In a memorandum dated 4 December 2013, counsel for some of the respondents argued that the costs burden should be divided equally amongst the 13 responding parties.

The Commissioner argued that there is no reason for the Court not to apply the default position in r 14.14 of the HCR, of joint and several liability for costs.

GJ Judd QC (on behalf of a number of the respondents) argued that although the Commissioner sought consolidation of proceedings in the application considered by the Court, the Commissioner was not entitled to file a single application without leave of the Court. Furthermore, a separate application should have been made for each challenge to the assessments.


Justice Toogood dismissed the argument that costs should be apportioned equally between the respondents. The Court relied on the fact that the proceeding was commenced as a single application against the respondents. The Court further noted that the respondents' claim was a highly technical afterthought and it was in any event far too late to raise it.

The Court stated that the single application was administratively efficient for the Court, and also provided a convenient and cost-saving approach for the parties.

Rule 14.14 of the HCR provides that liability for each of two or more parties ordered to pay costs is joint and several, unless the Court otherwise directs.

The Court further noted that the respondents must have realised this when proceedings were transferred from the TRA to the High Court. The effect of r 14.4 would mean that any liability of the respondents to pay costs would be joint and several unless the Court considered it unjust.

The Court relied on the observations of Lord Neuberger, President of the UK Supreme Court who stated in Re Nortel GmbH [2013] UKSC 52, [2014] AC 209 at [89]:

  • … by becoming party to legal proceedings in this jurisdiction, a person is brought within a system governed by the rules of the court, which carry with them the potential for being rendered legally liable for costs, subject to the discretion of the court.

Given the background of the application, there was no arguable basis for departing from the default principle under r 14.14 and this was consistent with the approach to costs taken by other Courts in related Trinity matters.

Justice Toogood ordered the respondents to pay the Commissioner costs, jointly and severally, on a category 2B basis.