11 In Beoco Limited v Alfa Laval Co Limited [1995] QB 137, Stuart-Smith LJ (with whom Peter Gibson and Balcombe LJJ concurred) said that as a general rule [at 154]:-
… where a plaintiff makes a late amendment as here, which substantially alters the case the defendant has to meet and without which the action will fail, the defendant is entitled to the cost of the action down to the date of amendment.
12 This statement of principle, which was supported by reference to authorities [including Anglo-Cyprian Trade Agencies Limited v Paphos Wine Industries [1951] 1 AllER 873 (Devlin J) and Lipkin Gorman v Karpnale Limited [1989] 1 WLR 1340 (CA)], was applied in this court by Studdert J in Murrihy v Radio 2UE Sydney Pty Ltd [2000] NSWSC 318.
13 In Anglo-Cyprian Trade Agencies, the plaintiff had claimed £2,028, being the full value of certain wine bought by it from the defendant which the plaintiff said was valueless by reason of the defendant's breach of contract. The defendant, while disputing breach of contract, contended that any defect could be cured by a modest and inexpensive remedy. At trial, the plaintiff amended to claim damages on that alternative basis. Devlin J rejected the claim for £2,028 but allowed £52 on the alternative basis, and awarded the defendant the entire costs of the action. It is readily apparent that the defendant was the true victor.
14 In Alltrans Express Limited v CVA Holdings Limited [1984] 1 WLR 394, the plaintiffs claimed £82,500 for breach of warranty on the sale of shares, but recovered £2 nominal damages. The Court of Appeal reversed a costs order in favour of the plaintiffs, and awarded costs to the defendant on the basis that in truth the defendant was the successful party.
15 In Lipkin Gorman, the plaintiffs claimed £250,000, adding by late amendment a claim for conversion of a bankers' draft in the sum of £3,375. They failed on all but the claim for the £3,375. The Court of Appeal awarded the defendants the cost of the action down to the date of amendment (and 80% of the costs thereafter), on the basis that the defendants were the winners, subject to there being a discount in respect of the modest extent to which the plaintiffs had succeeded.
16 In Beoco, the plaintiffs propounded a claim of about £720,000 (with which interest came to about £1,000,000) for breach by the defendants of a contractual warranty in respect of design, selection of materials and workmanship of a heat exchanger which exploded. By a very late amendment, the plaintiffs raised an alternative claim for a lesser sum calculated on an entirely different basis [see Beoco, 148H-149A]]. Ultimately, the Court of Appeal limited still further what was recoverable on the alternative claim [see Beoco, 153D-E]]. It was part of the basis of the decision to award costs to the defendant that the defendant "was substantially the successful party because the plaintiff was aiming at recovering a sum in the order of £1,000,000, whereas all that it succeeded in getting was judgment for damages to be assessed, which on any basis were likely to be more modest" [see Beoco, 153G]].
17 Accordingly, although the general rule, as stated in Beoco, is said to be that, where a plaintiff makes a late amendment which substantially alters the case the defendant has to meet and without which the action would have failed, the defendant is entitled to the costs of the action down to the date of the amendment, this "general rule" has emerged in the context that though the late amendment has resulted in some slight measure of success for the plaintiff, ultimately the true victor, having regard to the case as a whole, has been the defendant.
18 It is true that that was not so in Murrihy, in which the plaintiff succeeded in having a jury find that two of the three imputations which he pleaded were conveyed by the matter complained of and were defamatory of him, those imputations having been added by amendment at the outset of the trial. Studdert J regarded it as significant that it was conceded that the plaintiff could not have succeeded on the claim as pleaded before that amendment [Murrihy, [8]-[9]].
19 In Beoco, Stuart-Smith LJ acknowledged that there were circumstances in which what his Lordship described as "the general rule" should not be applied, referring to Kaines (UK) Limited v Osterreichische Warrenhandelsgesellschaft (formerly CGL Handelsgesellschaft MBH) [1993] 2 Lloyds Rep 1, 9. In that case, the judge was satisfied that, even had the amendment been made earlier, the action would have been vigorously resisted; the defendant's witnesses were disbelieved; and the plaintiff recovered substantial damages. Steyn J said:-
Then I come to the question of costs. Here what is stressed on behalf of the defendants is there was an eleventh hour amendment which changed the nature of the plaintiffs' case. That is perfectly true. It is also perfectly true that the plaintiffs have been beaten down in respect of the amount recovered considerably. On the other hand, they have recovered very substantial damages and that has been the result of an acceptance of the evidence of their witnesses and the rejection of the evidence of the defendants' witnesses. What is of importance, I think, is that if that amendment had been made at a very much earlier stage, it is clear that this claim would still have been vigorously resisted. In my judgment, there is no reason why in exercise of my discretion I should make any special order for costs. I order that the plaintiffs are entitled to their costs.
20 In the present case, the plaintiff has recovered in substance what he sought at the outset, albeit not on the legal basis originally articulated. It cannot be said that, despite nominal success for the plaintiff, the defendants were the true victors.