CCM Industrial Pte Ltd v Uniquetech Pte Ltd

• Jurisdiction: Singapore
• Judge: Chan Sek Keong CJ
• Judgment Date: 21 November 2008
• Neutral Citation: [2008] SGHC 216
• Docket Number: District Court Appeal No 13 of 2008
• Date: 21 November 2008
• Published date: 26 November 2008
• Year: 2008
• Plaintiff Counsel: Leong Yung Chang (Veritas Law Corporation)
• Citation: [2008] SGHC 216
• Defendant Counsel: Uthayasurian s/o Sidambaram (Surian & Partners)
• Court: High Court (Singapore)
• Subject Matter: Whether appellant's conduct warranted imposition of indemnity costs,Rules of court,Scope of O 22A r 9(3) Rules of Court (Cap 322, R 5, 2006 Rev Ed),Order 22A rr 9, 12 and O 59 Rules of Court (Cap 322, R 5, 2006 Rev Ed),Relationship between O 22A and O 59,Principles,Whether O 22A r 12 applicable if O 22A r 9 inapplicable,Civil Procedure,Applicability of O 22A r 9(5),Costs

21 November 2008

Chan Sek Keong CJ:

1 This was an appeal by the appellant, CCM Industrial Pte Ltd, against the decision of the district judge (“the Judge”) in District Court Suit No 1614 of 2007 (“DC Suit 1614/2007”) in awarding costs on an indemnity basis to the respondent, Uniquetech Pte Ltd, from the date of an offer to settle made by the respondent.

2 After hearing arguments of counsel for the parties, I affirmed the decision of the Judge and dismissed the appeal. I now give my reasons.

3 I begin with the salient facts. In April 2007, the appellant informed the respondent that it was terminating a tenancy agreement between them due to the latter’s failure to pay the appellant rent amounting to $64,134.00. The respondent replied that the appellant owed it $62,728.48 and that it was seeking to set off this amount against the arrears of rent. The appellant rejected the respondent’s claim to a set-off and insisted on full payment of the arrears of rent.

4 On 17 May 2007, the appellant commenced DC Suit 1614/2007 to recover the sum of $64,134.00. On 18 June 2007, the respondent filed a defence of set-off and counterclaimed the sum of $62,115.68. At the same time, the respondent made an offer to settle (“the OTS”) as follows:

The Defendants [the respondent] offer to settle the proceedings on the following terms:-

1. The Defendants do pay the Plaintiffs [the appellant] the sum of $2,018.32, as full and final settlement in respect of the Plaintiffs’ claim.

2. Each party bear their own costs.

3. The offer may be terminated or withdrawn at any time by the Defendants giving the Plaintiffs and/or their Solicitors written notice of withdrawal by telefax.

4. The offer will automatically be withdrawn by any subsequent offer to settle sent by telefax to the Plaintiffs and/or their Solicitors.

5 The sum of $2,018.32 is the difference between the appellant’s claim and the respondent’s counterclaim. The appellant did not accept the OTS and persisted with its claim. Affidavits of evidence-in-chief were exchanged on 22 November 2007, and a pre-trial conference (“PTC”) was held on 19 December 2007, at which the appellant also rejected the respondent’s proposal to proceed to mediation at the Court Dispute Resolution Centre.

6 Two months later at a confirmatory PTC held on 13 February 2008, the appellant indicated that it would not contest the respondent’s counterclaim and contended that the OTS was ambiguous as it did not advert to the counterclaim. The appellant informed the court that the parties would attempt to settle the matter amicably before the hearing scheduled for 20 February 2008.

7 That same day after the PTC, the appellant faxed a letter to the respondent and indicated its intention to settle its claim upon the respondent paying the sum of $2,018.32 in “full and final settlement of [its] claim and [the respondent’s] counterclaim” and that “each party is to bear [its] own costs”. This offer was substantially the same as the OTS except for the additional reference to the counterclaim.

8 The respondent replied one and half hours later that it was “only prepared to settle” the claim and counterclaim on the condition that the appellant pay $4,000.00 “towards [its] costs plus disbursements, to be agreed or taxed”, and that the appellant file a notice of discontinuance in respect of its claim.

The hearing before the Judge

9 Eventually, on 20 February 2008, the parties appeared before the Judge to record a consent judgment in favour of the appellant against the respondent in the sum of $2,018.32 with interest thereon at 5.33% per annum from the date of writ to the date of judgment, with costs to be decided by the court. The Judge decided that the appellant should pay indemnity costs to the respondent from the date of the OTS after hearing counsel for the parties.

10 The relevant provision on costs in the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“ROC”) relied upon by the parties is O 22A r 9, which provides as follows:

9.—(1) Where an offer to settle made by a plaintiff —

(a) is not withdrawn and has not expired before the disposal of the claim in respect of which the offer to settle is made; and

(b) is not accepted by the defendant, and the plaintiff obtains a judgment not less favourable than the terms of the offer to settle,

the plaintiff is entitled to costs on the standard basis to the date an offer to settle was served and costs on the indemnity basis from that date, unless the Court orders otherwise.

(2) Where an accepted offer to settle does not provide for costs —

(a) where the offer was made by the plaintiff, he will be entitled to his costs assessed to the date that the notice of acceptance was served;

(b) where the offer was made by the defendant, the plaintiff will be entitled to his costs assessed to the date he was served with the offer, and the defendant will be entitled to his costs from the date 14 days after the date of the service of the offer assessed up to the date that the notice of acceptance was served.

(3) Where an offer to settle made by a defendant —

(a) is not withdrawn and has not expired before the disposal of the claim in respect of which the offer to settle is made; and

(b) is not accepted by the plaintiff, and the plaintiff obtains judgment not more favourable than the terms of the offer to settle,

the plaintiff is entitled to costs on the standard basis to the date the offer was served and the defendant is entitled to costs on the indemnity basis from that date, unless the Court orders otherwise.

(4) (a) Any interest awarded in respect of the period before service of the offer to settle is to be considered by the Court in determining whether the plaintiff’s judgment is more favourable than the terms of the offer to settle.

(b) Any interest awarded in respect of the period after service of the offer to settle is not to be considered by the Court in determining whether the plaintiff’s judgment is more favourable than the terms of the offer to settle.

(5) Without prejudice to paragraphs (1), (2) and (3), where an offer to settle has been made, and notwithstanding anything in the offer to settle, the Court shall have full power to determine by whom and to what extent any costs are to be paid, and the Court may make such a determination upon the application of a party or of its own motion.

11 The appellant’s submission was that the proper order of costs should be that each party pay its own costs for the following reasons:

(a) It was fair and equitable that each party pay its own costs as both parties had some measure of success.

(b) The OTS should be disregarded as it was ambiguous in that it referred only to the claim and not the counterclaim (citing SBS Transit Ltd v Teo Chye Seng Douglas [2005] SGHC 15).

(c) The judgment obtained was more favourable than the OTS by $8.96 (which represented the interest on the judgment sum computed at the rate of 5.33% per annum from the date of filing of the writ and the making of the OTS) as judgment interest in respect of the period before the service of the OTS had to be taken into consideration (see O 22A r 9(4)).

(d) The OTS was withdrawn on 13 February 2008 when the respondent counter-proposed that the appellant pay costs either at $4,000 or to be taxed.

12 The respondent’s submission was that it should be awarded indemnity costs from the date of the OTS for the following reasons:

(a) The OTS was clear and unequivocal, and there was no reason for the appellant not to accept it.

(b) The judgment sum was not more favourable than the OTS as the judgment interest was only $8.96, ie, it could be considered de minimis.

(c) The OTS was not withdrawn as the parties were only working out the costs issue. The fact remained that the appellant had obtained a consent judgment for the same amount in the OTS.

(d) The respondent had, by way of the OTS, made a genuine and serious attempt to settle the dispute and to save costs and judicial time, whereas the appellant had adopted an uncompromising stand throughout the proceedings, including refusing mediation and even an agreed bundle of documents.

13 The Judge made the following findings:

(a) The OTS was not ambiguous: it clearly referred to the proceedings, ie, both the claim and the counterclaim, and not merely the claim. The appellant could not have been confused as, even before the writ was issued, the respondent had already made an offer to set off the counterclaim against the claim.

(b) The respondent’s counter-offer on costs had the automatic effect of withdrawing the OTS as provided in para 4 of the OTS.

(c) The judgment sum was more favourable than the OTS even though the amount in excess was only $8.96 (see Singapore Airlines Ltd v Tan Shwu Leng [2001] 4 SLR 593 (“Singapore Airlines Ltd”) at [4]).

14 On these findings, the Judge held that the OTS did not satisfy the requirements of O 22A r 9(3)(b). Nevertheless, he held that the OTS was relevant in the determination of the issue of costs because of O 22A r 12 of the ROC, which provides as follows:

Without prejudice to Rules 9 and 10, the Court, in exercising its discretion with respect to costs, may take into account any offer to settle, the date the offer was made, the terms of the offer and the extent to which the plaintiff’s judgment is more favourable than the terms of the offer to settle.

For this proposition, the Judge referred to the following passages at [36] and [38] of the judgment of the Court of Appeal in Singapore Airlines Ltd as follows:

It will be seen that r 12 tempers the rigours of r 9 and gives the court a wide discretion to do justice as between the parties even in a case where the offer is less than the sum awarded in the judgment.

…

The scheme of things under O 22A is verily to encourage the plaintiffs to be realistic in their assessment of what they are entitled to and on the part of the defendants, to make reasonable offers, on pain of having to bear the costs on the indemnity basis if they should persist...