CNA v CNB and another and other matters

• Jurisdiction: Singapore
• Judge: Philip Jeyaretnam J
• Judgment Date: 02 August 2023
• Neutral Citation: [2023] SGHC(I) 12
• Court: International Commercial Court (Singapore)
• Docket Number: Originating Summonses Nos 2, 3, 4 and 5 of 2022
• Hearing Date: 13 June 2023
• Citation: [2023] SGHC(I) 12
• Year: 2023
• Plaintiff Counsel: Cavinder Bull SC, Tan Yuan Kheng (Chen Yuanqing), Lea Woon Yee, Tan Jui Yang, Benedict and Kenneth Sean Teo Hao Jin (Drew & Napier LLC), Junwoo Kim (alias Junu Kim) and Han Gil Lee (Bae, Kim & Lee LLC) (Korean law),Toby Landau KC (Duxton Hill Chambers) (instructed), Rachel Low Tze-Lynn (Rachel Low LLC) (instructed), Zhuo Jiaxiang and Alston Yeong (Providence Law LLC), Sunyoung Kim and Yoo Lim Oh (Lee & Ko) (instructed), Ing Loong Yang and Chi Ho Kwan (Akin Gump Strauss Hauer & Feld LLP) (instructing) (Korean law)
• Defendant Counsel: Chan Hock Keng, Chen Chi and Tang Xi-Rui, Charlotte (WongPartnership LLP), Prof Kwon Young Joon (Seoul National University) (instructed), Lee Eun Ngyung (KL Partners) (instructing) (Korean law)
• Published date: 02 August 2023

Simon Thorley IJ (delivering the judgment of the court): Introduction

By its judgment on the substantive issues raised in these originating summonses (CNA v CNB and another and other matters [2023] SGHC(I) 6) (the “Substantive Judgment”), the Court found in favour of the Defendants to all the summonses (CNB and CNC) and directed that the parties should seek to agree on an appropriate order as to costs.

Background

Whilst a measure of agreement has been reached between the Defendants and the Plaintiffs to the summonses, CNA in SIC/OSes 2/2022 and 5/2022 and CND and CNE in SIC/OSes 3/2022 and 4/2022, the parties were unable to reach full agreement and filed written submissions and, subsequently, reply written submissions in support of their respective contentions.

The summonses were commenced in the High Court and were all transferred to the Singapore International Commercial Court on 4 January 2022 by order of Deputy Registrar Phang Hsiao Chung. By that order the learned Deputy Registrar directed that costs incurred prior to the date of transfer should be assessed on the basis of the costs regime under O 59 r 7 of the Rules of Court (Cap 322, 2014 Rev Ed) (“ROC 2014”) but that the approach to costs after transfer should be reserved to this Court.

Parties’ positions on costs

The parties are agreed that: The Plaintiffs should pay the Defendants’ costs and disbursements, when assessed, in equal proportions so that the costs should be assessed as a unitary whole with CNA paying 50% and CND and CNE paying the other 50%. The costs incurred post-transfer should be assessed on the basis set out in O 110 r 46 ROC 2014 (“Rule 46”). This court should assess costs on the basis of the written submissions alone without the need for an oral hearing.

Annex A to the Defendants’ Reply Submissions sets out their (revised) Costs Schedule which demonstrates that: Pre-transfer, the Defendants’ counsel’s fees amounted to S$266,127. Pre-transfer, the Defendants’ disbursements amounted to S$19,553 and KRW139,742,050. Post-transfer, the fees were S$921,903. Post-transfer, the disbursements were S$48,324 and KRW195,085,126.

The sums claimed in South Korean Won relate primarily to fees and disbursements incurred by Professor Kwon, the Defendants’ Korean law expert and by KL Partners (“KL”), a Korean law firm which acted as Korean Counsel to the Defendants.

The Defendants contend that this schedule is an accurate reflection of the fees incurred pre- and post- transfer.¹ In the main, although CNA and CND/CNE filed separate submissions on costs, the same points were taken and we shall therefore refer to them together as the Plaintiffs save where it is necessary to distinguish between the two sets of Plaintiffs. Whilst the Plaintiffs do not contest that these were the sums that the Defendants actually incurred, they assert that a disproportionately large amount of those fees have been incorrectly allocated to the post-transfer stage and that the sums claimed differ significantly from those projected in Defendants’ Case Management Costs Plan (“CMP”),² so that this renders any excess over the projected fees unreasonable.

Accordingly, before we can address the sums that should be awarded for fees pre- and post- transfer, it is first necessary to decide what the total sums are that should be assigned to pre- and post- transfer so that any appropriate reductions in those fees can then be assessed.

Our decision Division of costs pre- and post- transfer

The Plaintiffs rely, and rely heavily, on the Defendants’ CMP which was dated 7 March 2022 (ie, some two months after transfer). This estimated that the Defendants would incur additional fees of S$350,000. Even allowing for an additional sum for the two-month period between January and March 2022, this is, they submit, in sharp contrast to the sum of S$921,903 actually claimed.

Further, in the CMP, the Defendants stated that the fees actually incurred prior to 7 March 2022 were approximately S$850,000 which again was in sharp contrast to the figure now claimed as being S$266,127.

Relying on the observation in BLG and another v BLI and others [2018] SGHC 86 at [18] that the purpose of requiring costs estimates is “to restrain a litigant from claiming excessive costs when he wins a case”, the Plaintiffs submit that the Defendants should be held to the sums specified in the CMP both to form the basis for determining the ratio of the costs incurred pre- and post- transfer and also to form the starting point for assessing the sums to be awarded pre-and post- transfer.

In response, the Defendants assert that there was an error in the costs stated as having been incurred prior to 7 March 2022 as these had inadvertently included costs attributable to a striking out application of approximately S$400,000 which should not have been included.³ This serves to reduce the sums prior to 7 March 2022 to some S$450,000 – in contrast to the sum of S$266,127 actually incurred prior to 4 January 2022.

In any event, say the Defendants, since the Defendants have now provided a detailed costs schedule it is no longer appropriate to rely on estimates. So far as concerns pre-transfer costs, Appendix G of the Supreme Court Practice Directions 2013 (“Appendix G”) will serve to act as a regulator on any costs incurred above any estimate in the CMP and, in the case of post-transfer costs, Rule 46 proceeds on the basis of the costs actually incurred with the burden being placed at the outset on the successful party to demonstrate that its claimed costs are reasonable: Senda International Capital Ltd v Kiri Industries Ltd [2023] 1 SLR 96 (“Senda”) at [72]–[73]. Once done, the evidential burden to show the extent to which the claimed costs are unreasonable will transfer to the losing party: Senda at [75].

In our judgment, the correct approach in the SICC where there is a significant difference between the costs actually incurred as set out in an appropriately detailed costs schedule and the anticipated future costs set out in a CMP is as follows: The detailed costs schedule will be accepted as being accurate both as to the costs incurred and the date on which they were incurred. The burden will then be on the paying party to demonstrate that the detailed costs statement is inaccurate. In so far as it is suggested by the paying party that the costs incurred are excessive, rather than inaccurate: in the case of an award of pre-transfer costs, any excess will be moderated both by reference to Appendix G and, if appropriate, by reference to the costs estimated in the CMP. In the case of post-transfer costs, where reasonableness is the test, one of the factors that the court may take into account in the circumstances of any given case is the contrast between the costs actually incurred and the costs estimated in the CMP.

In the present case the Costs Schedule shows that pre-transfer costs were S$266,127 and that post-transfer costs were S$921,903. For the reasons given it is these figures rather than the figures estimated in the CMP that form the basis of the assessment of both pre- and post- transfer costs. The Plaintiffs’ contention that a disproportionately large amount of fees had been incorrectly allocated to the post-transfer stage was based on the figure of S$850,000 originally stated in the CMP as being attributable to the pre-transfer stage.

This has now been reduced to the figure of S$450,000 due to the erroneous inclusion of the striking out costs (see [12] above). This was a figure assessed as at 7 March 2022 whereas the figure of S$266,127 in the Costs Schedule were for pre-transfer costs assessed up to 4th January 2022, which suggests that the roughly the same amount of fees were incurred in the intervening period as had been incurred in the entire period from the commencement of the litigation until the date of transfer.

The Plaintiffs point to this as being an anomaly which serves to demonstrate that the Costs Schedule is inaccurate. This, they say, should be taken in conjunction with the fact that the ratio between the fees incurred pre-and post-transfer if the Costs Schedule is correct is 22/78% which they say “beggars belief”.⁴ They back this up with a brief analysis of the amount of work which they claim the Defendants would have had to do pre-and post- transfer. ⁵ The Defendants’ response to this is to maintain its position that the Costs Schedule is accurate and to contend that the mere fact that the volume of documents produced prior to transfer exceeds those produced subsequently does not provide a rational basis for concluding that the time spent in preparing the documents was in proportion.⁶

It is a feature of the litigation process which leads to an oral hearing, in this case a three-day hearing involving two different sets of Plaintiffs, separately represented, that the fees incurred would be likely to be back-loaded, more being spent later in the proceedings than in the former.

In assessing whether this was a case where fees were significantly back-loaded, the Court might have been assisted by being provided with a Costs Statement by each set of Plaintiffs which would serve to demonstrate the balance between the pre-transfer and post-transfer fees incurred by them: Senda at [75] and [90]. The Plaintiffs were asked by the Defendants to do this but declined, claiming for various reasons that their costs would not be comparable. Be that as it may, it is for the Plaintiffs to demonstrate that the Defendants’ Costs Schedule is inaccurate. This is a means by which they might have sought to do so but they have elected not to.

Taking all this into account, whilst we accept that the Plaintiffs’ submissions do raise some concerns as to the accuracy of the Costs Schedule, these are not sufficient for us to cease to place reliance on the Schedule as being an accurate analysis of when the fees were incurred.

We...