B2C2 Ltd v Quoine Pte Ltd

• Jurisdiction: Singapore
• Judge: Simon Thorley IJ
• Judgment Date: 12 September 2019
• Neutral Citation: [2019] SGHC(I) 12
• Court: International Commercial Court (Singapore)
• Docket Number: Suit No 7 of 2017 and Summons 44 of 2019
• Year: 2019
• Published date: 17 September 2019
• Hearing Date: 29 August 2019
• Plaintiff Counsel: Danny Ong, Sheila Ng and Jason Teo (Rajah & Tann Singapore LLP)
• Defendant Counsel: Stanley Lai SC, Ivan Lim and Marrissa Karuna (Allen & Gledhill LLP)
• Subject Matter: Civil Procedure,Costs,Principles,Interim payments
• Citation: [2019] SGHC(I) 12

Simon Thorley IJ: Introduction

Judgment was given on 14 March 2019 in B2C2 Ltd v Quoine Pte Ltd [2019] 4 SLR 17 (the “Main Judgment”). The action, which was heard in the Singapore International Commercial Court (“SICC”) having been transferred from the High Court, succeeded both in breach of contract and breach of trust but, for the reasons given in that judgment at [254]–[257], I held that B2C2 was not entitled to an order for specific performance. Its remedy lay only in damages. The Main Judgment therefore dealt solely with liability and not with any issue relating to the assessment of loss which had been the subject of a previous order for bifurcation. Nor did it deal with the assessment of costs.

The Defendant has appealed against the finding of liability and the appeal is listed to be heard in October 2019.

There was a subsequent judgment of this Court, B2C2 Ltd v Quoine Pte Ltd [2019] 4 SLR 204, given on 14 May 2019 following written submissions on the appropriate form of the Order. As a result of the directions given in that judgment, evidence has been filed and written submissions made in relation to a number of outstanding issues which led to an oral hearing on Thursday, 29August 2019.

The issues which arose for consideration were set out in paragraph 7 of a letter from the Registry to the parties dated 2 July 2019: The question of costs. The limitation of liability issue. The question of whether there should be an interim payment and, if so, in what sum. The question of what protection, if any, should be given to the Defendant in respect of any sums ordered to be paid by way of costs and/or interim payment of damages. The question of any election between damages at common law or in equity. Whether there should there be a stay of the assessment of damages once the question of an interim payment has been decided pending the outcome of the appeal to the Court of Appeal?

During the course of the hearing I informed the parties of the conclusions that I had reached on each issue and indicated that I would give full written reasons in due course. These are my reasons.

Costs The approach to costs in a transfer case

The principal dispute between the parties lay in the correct approach to the award of costs under O 110 r 46 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”), which regulates the award of costs in the SICC, following a trial in the SICC in circumstances where the case was commenced in the High Court and subsequently transferred to the SICC pursuant to O 110 r 12.

Order 110 r 46 provides (so far as is relevant): 46.––(1) The unsuccessful party in any application or proceedings in the court must pay the reasonable costs of the application or proceedings to the successful party, unless the Court orders otherwise.

…

(6) Order 59 (costs) does not apply to – (a) proceedings in the [SICC]

…

[Emphasis added]

At the outset, it should be noted that at the time of transfer, the parties were invited to indicate whether they wished the costs regime of O 59 (which applies to proceedings in the High Court) or that of O 110 r 46 (which governs proceedings in the SICC) to apply subsequent to the date of transfer. Both parties expressed a preference that the SICC regime in O 110 r 46 should apply and accordingly this was ordered by an Order dated 20 February 2018.¹

As the discussion on O 59 in Singapore Civil Procedure 2018: Vol 1 (Foo Chee Hock, gen ed) (Sweet & Maxwell, 2018) at para 59/0/2 makes plain, that Order is based upon the old English O 62 and employs expressions well known to both English and Singaporean practitioners such as party and party costs, indemnity costs, and solicitor and own client costs. Where, however, costs are to be assessed on the standard basis, O 59 r 27(2) provides that:

On a taxation of costs on the standard basis, there shall be allowed a reasonable amount in respect of all costs reasonably incurred …

On the face of it, such language is not dissimilar to the language of O 110 r 46 but there are recognised differences in policy underlying the approach to costs under O 59 and under O 110 r 46. The approach to costs in O 59 r 27(2) is conditioned by the Guidelines contained in Appendix G to the Supreme Court Practice Directions, which seek to regulate the assessment of standard basis costs in the Supreme Court. The standard fee ranges specified in Appendix G will often be lower, sometime significantly lower, than the actual fees incurred even if these fees are “reasonable” in the widest sense of that word. This is due to the social policy concern of enhancing access to justice as reflected in the observations of the Court of Appeal in Maryani Sadeli v Arjun Permanand Samtani and another and other appeals [2015] 1 SLR 496 at [34]:

“Ultimately, our legal regime on costs recovery is calibrated in a manner such that full recovery of legal costs by the successful party is the exception rather than the norm. What we need to bear in mind is that this state of affairs is not something which exists to prejudice the winning party in litigation, but is a manifestation of the law’s policy of enhancing access to justice for all. Put another way, unrecovered legal costs is something which is part and parcel of resolving disputes by seeking recourse to our legal system and all parties who come before our courts must accept this to be a necessary incidence of using the litigation process. It is in this light that the general rule must be understood.

[emphasis in original]

There is no equivalent to Appendix G in the SICC Practice Directions. Paragraphs 152(2) and (3) of those Directions identify the matters which the Court may take into account in assessing reasonable costs for the purposes of O 110 r 46: (2) In assessing costs, the Court: (a) shall have regard to Order 110, Rule 46(1) of the Rules of Court, which provides that the reasonable costs of any application or proceeding in the SICC be borne by the unsuccessful party to that application or proceeding unless the Court orders otherwise; and (b) may, in particular, as set out in Order 110, Rule 46(1): (i) apportion costs between the parties if the Court determines that the apportionment is reasonable, taking into account the circumstances of the case; (ii) take into account such circumstances as the Court considers relevant, including the conduct of the case; (iii) order costs to be paid by counsel… personally, or by a person who is not a party to the application or proceeding; (iv) order interest on costs; or (v) make any ancillary order, including the time and manner of payment. (3) In relation to sub-paragraph (2)(b)(ii) above, the circumstances which the Court may take into consideration in ordering reasonable costs of any application or proceeding under Order 110, Rule 46(1) of the Rules of Court include: (a) the conduct of all parties, including in particular – (i) conduct before, as well as during the application or proceeding; (ii) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; and (iii) the manner in which a party has pursued or contested a particular allegation or issue; (b) the amount or value of any claim involved; (c) the complexity or difficulty of the subject matter involved; (d) the skill, expertise and specialised knowledge involved; (e) the novelty of any questions raised; (f) the time and effort expended on the application or proceeding.

As Vivian Ramsey IJ observed in CPIT Investments Ltd v Qilin World Capital Ltd and another [2018] 4 SLR 38 (“CPIT”) at [15], it is clear from the above that the provisions of O 110 r 46 were intended to introduce a simpler regime to that applicable in O 59. I respectfully agree and consider that this is due to slightly different policy considerations which underlie litigation in the SICC. The SICC is a court empowered to resolve commercial disputes on the international stage. The parties come before the SICC either by consent or if the High Court orders the transfer of an appropriate case, they will normally be commercial entities, and there will be an international dimension to the disputes. Whilst the social policy of enhancing access to justice underlies, and should underlie, the approach to assessing reasonable costs in international commercial litigation, there are other policy considerations in play as well. Commercial disputes are, as the name suggests, focussed on commerce and the making of money. Paragraph 152(3) sets out considerations which commercial people would understand as being factors which are intended to enable the court to draw a proper and clear line as to what expenditure is necessary to succeed in the litigation and what is in excess of that expenditure. A successful commercial litigant should not be out of pocket if it has prosecuted its claim or defence sensibly and, more specifically, without enhancing the cost of the litigation as a means of seeking to oppress the losing party.

The SICC website makes clear that the SICC was established to “serve as a companion rather than a competitor to arbitration as it seeks to provide parties in transnational business with one more option among a suite of viable alternatives to resolve transnational commercial disputes”. More specifically, it was established to enable litigants “to take advantage of a well-designed court-based mechanism which will enable parties to avoid one or more of the following problems often encountered in international arbitration” which relevantly includes, for our purposes, the “over-formalisation of, delay in, and rising costs of arbitration.”²

The fact that there may be a perception that the actual costs of arbitrations may be rising does not detract from the similarity of the objectives of the SICC to those of international arbitration. Similar provisions to O 110 r 46 exist...