BCBC Singapore Pte Ltd and another v PT Bayan Resources TBK and another

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 23 October 2023
• Neutral Citation: [2023] SGCA(I) 8
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal from the Singapore International Commercial Court No 4 of 2023
• Hearing Date: 04 September 2023
• Citation: [2023] SGCA(I) 8
• Year: 2023
• Plaintiff Counsel: Francis Xavier SC, Chia Xin Ran Alina, Gani Hui Ying Tracy, Tay Bok Chong Alvin and Joel Soon (Rajah & Tann Singapore LLP)
• Defendant Counsel: Jaikanth Shankar, Tan Ruo Yu and Rajvinder Singh Chahal (Davinder Singh Chambers LLC)
• Subject Matter: Civil Procedure,Costs
• Published date: 28 October 2023

Sundaresh Menon CJ (delivering the judgment of the court): Introduction

This is the final instalment of a protracted set of proceedings that have spanned over a decade. After three tranches of trial, the Singapore International Commercial Court (“SICC”) handed down its decision on costs in BCBC Singapore Pte Ltd and another v PT Bayan Resources TBK and another [2022] SGHC(I) 17 (the “Costs Judgment”), awarding the sum of $4,694,633.20 in costs and disbursements in respect of SIC/S 1/2015 (“S 1”) to the defendants in S 1. This comprised: (a) $90,000 in costs prior to the transfer of the suit to the SICC, (b) $2,671,787 in post-transfer costs, and (c) $1,932,846.20 in disbursements. Dissatisfied with the SICC’s decision, the plaintiffs sought permission to appeal, and this was granted on 14 March 2023. The appeal is only against the SICC’s decision on post-transfer costs, which is the amount of $2,671,787.

We heard the appeal on 4 September 2023. Having considered the parties’ arguments, we now allow the appeal for the reasons which we will set out below.

Background

The broad factual backdrop to this long-running dispute has been set out in our earlier judgment, BCBC Singapore Pte Ltd and another v PT Bayan Resources TBK and another [2023] SGCA(I) 1 (the “Third Tranche Appeal Judgment”). We do not propose to repeat this, save to the extent it is necessary and material to the issues raised in the appeal.

The matter was heard over three tranches. The appellants, BCBC Singapore Pte Ltd (“BCBCS”) and Binderless Coal Briquetting Company Pty Limited (“BCBC”), had succeeded on most of the issues concerning liability in S 1, which formed the focus of the first and second tranches. However, the respondents, PT Bayan Resources TBK (“BR”) and Bayan International Pte Ltd (“BI”), ultimately succeeded on issues relating to damages and quantum in the third tranche that were determinative of the appellants’ claim. As we held in the Third Tranche Appeal Judgment, this was chiefly because BR would have wound up the parties’ joint venture company, PT Kaltim Supacoal (“KSC”), as an unpaid creditor well before sufficient revenue would have been generated for BCBCS to realise any profits or even recover any of the wasted expenditure it had incurred in connection with the project (we refer to this aspect of BR’s case as the “Winding Up Defence”). In the third tranche appeal, the appellants were ultimately awarded $1,000 by way of nominal damages.

The SICC considered the costs of all three tranches of S 1 at the end of the suit. It issued the Costs Judgment on 19 December 2022, ahead of the Third Tranche Appeal Judgment being released. The main question, as the SICC had framed it, was how the award of costs should reflect the fact that the appellants had “won substantial battles in [the] litigation but ultimately lost the war and obtained nothing” (Costs Judgment at [1]). The SICC considered the following three issues in its assessment. First, it considered the approach it should adopt in awarding costs in S 1. Second, applying that approach, it determined the appropriate quantum of costs that the respondents were entitled to recover. Third, it determined the quantum of disbursements that the respondents were entitled to recover. The appeal before us is concerned only with the first two issues.

As to the approach to awarding costs, the SICC took, as its starting point, O 110 r 46 of the Rules of Court (2014 Rev Ed) (“ROC 2014”), noting, in particular, that the costs regime in the SICC under O 110 r 46 is different from the costs regime under O 59 of the ROC 2014 which applies to proceedings in the High Court. Where costs in the SICC are concerned, the principal underlying consideration is a commercial one of ensuring that a successful litigant is not unfairly put out of pocket for sensibly prosecuting its claim or mounting its defence.

Given the shape of the outcome of this litigation, a key question was whether a “successful party” could be identified. This was a necessary step to applying the starting point in O 110 r 46(1) – that the “successful party” is entitled to reasonable costs. Further, if the successful party could be identified, the issue would then be whether, and to what extent, the default entitlement to costs should be departed from as a matter of the court’s discretion in all the circumstances of this case.

In identifying the successful party, the SICC considered that the outcome of the litigation had to be assessed in its entirety, in a realistic and commercially sensible manner, to determine which party could be said in substance and reality to have won the litigation. On this basis, the SICC ruled that the respondents were, in overall terms, the successful party in S 1. Although they had failed on significant aspects of their defence as well as in their counterclaim against the appellants, the identification of the successful party did not, in the SICC’s view, turn on the outcome of the individual tranches or the discrete issues that were dealt with in those tranches. Ultimately, the respondents were the successful party because the appellants failed in their pursuit of substantial damages against the respondents, and, indeed, obtained practically nothing from the litigation.

The SICC then considered whether it should exercise its discretion under O 110 r 46(1) to depart from the starting point that a successful party is entitled to “reasonable costs” as against an unsuccessful party. Here, the appellants, as the unsuccessful party, bore the burden of convincing the court that this discretion should be exercised in their favour, and the extent to which this should be the case. The appellants advanced two arguments in this regard. First, they contended that an issue-based approach to costs should be adopted, and it was said that the net result would be for no costs to be awarded to either party. Second, even if the respondents were entitled to costs, the appellants contended that any costs order in favour of the respondents should be subject to a substantial reduction in quantum so as to better reflect the respective successes and failures of the parties in the course of the litigation.

In respect of the appellants’ first argument, that an issue-based approach be taken, the SICC found that the main hurdle to applying such an approach was the fact that there was a “clear overall winner” in this case. In the context of the costs regime in O 59 of the ROC 2014, a successful party is generally entitled to costs even though that party has not won on every issue. This equally applied to proceedings in the SICC. Adopting the issue-based approach meant that the incidence of costs could depend on factors other than the overall outcome of the litigation, with the result that the successful party could end up paying the unsuccessful party more than what it receives in costs. This could, in a case where there was an overall winner, run counter to the reasonable expectations of the litigants.

The SICC also ruled that the argument that the respondents had acted unreasonably and protracted the hearing of S 1 unnecessarily did not justify applying an issue-based approach – rather, it was a factor that the court could consider in assessing what amounted to “reasonable costs”.

The SICC did emphasise that it was fully cognisant that the appellants had succeeded on practically all issues of liability while the respondents only prevailed at the end largely due to the court’s decision on “narrow points of causation of loss and quantum” (Costs Judgment at [39]). On this note, the SICC then considered whether the costs award should be reduced and concluded that it should be. The starting point was that the court’s discretion under O 110 r 46(1) was sufficiently broad so as to allow it to look beyond the overall outcome of the litigation and make an order as to costs that would properly take into account the realities and circumstances of the case. Given that disputes before the SICC were international and commercial in nature, this meant that parties who appeared before the SICC were typically commercially sophisticated, and had better resources and access to quality advice. Further, as larger sums would generally be at stake in SICC cases, the parties were likely to spend more on legal representation and more liberally raise different claims or issues as compared to the average litigant appearing before the General Division of the High Court in non-SICC cases. This, however, did not mean that the parties were entitled to pursue any or all issues with impunity; a party that pursued claims or raised issues unreasonably would likely not be entitled to an undiminished costs award, even assuming it was successful in the litigation in overall terms. For that matter, even if the claims or issues had been reasonably pursued or raised, this did not necessarily mean that the successful party would always be entitled to recover the full quantum of costs. The discretion conferred under O 110 r 46(1) was sufficiently broad to allow the court to take into account the fact that while the respondents had prevailed in overall terms, their victory had been gained only as a consequence of their success on limited issues of causation of loss and quantum.

In the event, the SICC reduced the costs awarded to the respondents, first by 10%, and then by a further 40%. Using the respondents’ claimed costs for the post-transfer period as a starting point, the SICC applied a 10% discount for the respondents’ lack of particularisation. The respondents bore the burden of proving that their claimed costs were “reasonable costs” for the purposes of O 110 r 46(1), but failed to adduce sufficient evidence to this effect, for instance by including a breakdown in the form of a costs schedule. A further 40% discount was then applied. This accounted for the relative success of parties on issues of legal significance in...