When considering whether to depart from the general rule that costs follow the event on the basis of a party's misconduct, courts must follow a three-step process: (1) identify the precise conduct said to amount to misconduct and determine whether it qualifies as relevant misconduct under established authorities; (2) analyse whether and to what extent the misconduct caused or contributed to the litigation and the incurring of costs; and (3) determine the appropriate costs order. The mere rejection of a party's evidence does not itself constitute relevant misconduct. Where both parties' conduct concurrently caused the litigation, each bearing their own costs may be appropriate. Separately, where a contract is signed by only one director in a s 127 execution clause requiring two signatures, the partial execution is manifestly incomplete and cannot found a claim for breach of warranty of authority because the signatory was not purporting to act as agent for the company.
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