DB Trustees (Hong Kong) Ltd v Consult Asia Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 24 May 2010
• Date: 24 May 2010
• Docket Number: Civil Appeal No 19 of 2009 (Originating Summons No 1044 of 2008) and Civil Appeal No 90 of
• Court: Court of Appeal (Singapore)

DB Trustees (Hong Kong) Ltd

Plaintiff

and

Consult Asia Pte Ltd and another appeal

Defendant

[2010] SGCA 21

Chan Sek Keong CJ

,

Andrew Phang Boon Leong JA

and

V K Rajah JA

Civil Appeal No 19 of 2009 (Originating Summons No 1044 of 2008) and Civil Appeal No 90 of 2009 (Originating Summons No 800 of 2009)

Court of Appeal

Civil Procedure—Costs—Principles—Party to proceedings applying to make non-party pay costs—Test to determine whether non-party should be made to pay costs—Whether non-party had to be joined to proceedings, or otherwise forewarned of possibility of being made to pay costs, before costs could be awarded against it

In 2006, Consult Asia Pte Ltd (“Consult Asia”) issued US$32m worth of senior secured notes (“the Notes”) and mortgaged its only notable assets, two pieces of real property, as security. DB Trustees (Hong Kong) Ltd (“DB Trustees”) acted as trustee of the security for the noteholders. When Consult Asia failed to redeem the Notes by the contractually stipulated redemption date, DB Trustees appointed receivers and managers (“the receivers”) over the business and assets of Consult Asia. However, Consult Asia did not allow the receivers access to Consult Asia's property and documents, claiming that it was DB Trustees who had unreasonably impeded Consult Asia's attempt to redeem the Notes by its refusal to release the security concurrently with the payment of redemption monies. Consequently, in Originating Summons No 1044 of 2008 (“OS 1044/2008”), DB Trustees applied for, inter alia, an order that the appointment of the receivers were valid. A High Court Judge found in favour of Consult Asia and allowed Consult Asia up to 29 April 2009 to redeem the Notes. Against this decision DB Trustees appealed in Civil Appeal No 19 of 2009 (“CA 19/2009”).

While CA 19/2009 was pending, 29 April 2009 passed without Consult Asia redeeming the Notes. Accordingly, DB Trustees reappointed the receivers the following day. Consult Asia disputed the reappointment of the receivers and filed Originating Summons No 800 of 2009 (“OS 800/2009”) seeking, inter alia, a rescission of the reappointment of the receivers. In this regard, another High Court Judge decided against Consult Asia. Consult Asia appealed against that decision in Civil Appeal No 90 of 2009 (“CA 90/2009”).

The Court of Appeal held in favour of DB Trustees for both CA 19/2009 and CA 90/2009. In addition, the costs of both appeals as well as the proceedings below were awarded to DB Trustees on an indemnity basis. Thereafter, DB Trustees applied for one Ms Koh to pay the costs of both appeals personally. Ms Koh was the only director of Consult Asia and owned all but one of Consult Asia's shares. She, however, had not been joined as a party to the actions.

Held, allowing the application:

(1) There was no rule limiting the court's power to award costs in favour of or against a non-party and there was no reason why the court should be so precluded: at [23].

(2) The overarching rule with regard to ordering costs against a non-party in court proceedings was that it had to, in the circumstances of the case, be just to do so: at [29] and [36].

(3) However, two particular factors, among the myriad of possibly relevant considerations, ought ordinarily to be present to make it just to award costs against a non-party. First, there had to be a close connection between the non-party and the proceedings. Secondly, the non-party had to have caused the incurring of costs. While these factors were not indispensable prerequisites, considerable weight would ordinarily be placed on the presence of these two factors: at [29], [30], [35] and [36].

(4) In the present application, three factors weighed in favour of an order for Ms Koh to pay the costs of the appeals and the proceedings below. First, Ms Koh was solely responsible for Consult Asia's participation in CA 19/2009, CA 90/009 as well as the underlying actions. These proceedings, at their roots, stemmed from Ms Koh's unreasonable stance in not co-operating with the receivers. Secondly, Ms Koh was the alter ego of Consult Asia and the real and only beneficiary of any successful outcome of Consult Asia's litigation. Hence, not only was there a close connection between Ms Koh and the proceedings, Ms Koh had in fact caused the incurring of unnecessary legal costs which Consult Asia was unable to pay: at [37]to [40] and [43].

(5) There was no indispensible rule of practice that a non-party had to be given prior warning before an adverse order for costs was made. It was, however, essential that the non-party had to be accorded due process and his or her views adequately considered before such an order was made. In the present appeals, Ms Koh had been allowed, through counsel, to make submissions on costs and had sufficient notice that an application would be made for her to personally pay the costs of the appeals: at [47] and [48].

Chin Yoke Choong Bobby v Hong Lam Marine Pte Ltd [1999] 3 SLR (R) 907; [2000] 1 SLR 137 (refd)

DB Trustees (Hong Kong) Ltd v Consult Asia Pte Ltd [2009] SGHC 62 (refd)

DB Trustees (Hong Kong) Ltd v Consult Asia Pte Ltd [2009] SGCA 39 (refd)

Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] 1 WLR 2807 (refd)

Globe Equities Ltd v Globe Legal Services Ltd [1999] BLR 232 (refd)

Godfrey Gerald QC v UBS AG [2003] 2 SLR (R) 306; [2003] 2 SLR 306 (refd)

Har Chee Choey v Lee Khai Seng [2003] SGDC 237 (refd)

Karting Club of Singapore v Mak David [1992] 1 SLR (R) 786; [1992] 2 SLR 483 (refd)

Knight v FP Special Assets Ltd (1992) 174 CLR 178 (refd)

Ng Eng Chee v Mamata Kapildev Dave [2009] 4 SLR (R) 155; [2009] 4 SLR 155 (refd)

O'Keefe v Hayes Knight GTO Pty Ltd [2005] FCA 1559 (refd)

Shah v Karanjia [1993] 4 All ER 792 (refd)

Symphony Group plc v Hodgson [1994] QB 179 (refd)

Rules of Court (Cap 322,R 5, 2006 Rev Ed) O 59r 2 (2) (consd) ;O 59r 3 (2)

Civil Procedure Rules (SI 1998No 3132) (UK) r 48.2

Federal Court of Australia Act1976 (Cth) s 43

Rules of the Supreme Court (Qld) O 91r 1

Sarjit Singh Gill SC and Koh Junxiang (Shook Lin & Bok LLP) for the appellant in Civil Appeal No 19 of 2009 and the respondents in Civil Appeal No 90 of 2009

Ernest Yogarajah Balasubramaniam (Arfat Selvam Alliance LLC) for the respondent in Civil Appeal No 19 of 2009

Christopher Anand Daniel and Kenneth Jerald Pereira (Clifford Law LLP) for the appellant in Civil Appeal No 90 of 2009.

Judgment reserved.

V K Rajah JA

(delivering the judgment of the court):

Introduction

1 This judgment on costs arises in connection with two related appeals, viz, Civil Appeal No 19 of 2009 (“CA 19/2009”) and Civil Appeal No 90 of 2009 (“CA 90/2009”). CA 19/2009 was an appeal against the decision of the High Court judge in Originating Summons No 1044 of 2008 (“OS 1044/2008”) and CA 90/2009 was an appeal against the decision of a second High Court judge in Originating Summons No 800 of 2009 (“OS 800/2009”). For convenience, the two High Court judges concerned will, in this Judgment, be referred to, respectively, as “the OS 1044/2008 Judge” and “the OS 800/2009 Judge”. On 6 August 2009, we released our decision (“the 6 August Decision”) and brief grounds for that decision (see DB Trustees (Hong Kong) Ltd v Consult Asia Pte Ltd [2009] SGCA 39 (“the Brief Grounds”)) for both CA 19/2009 and CA 90/2009. In the 6 August Decision, we decided in favour of DB Trustees (Hong Kong) Ltd (“DB Trustees”), the appellant in CA 19/2009 and the main respondent in CA 90/2009, for both CA 19/2009 and CA 90/2009, and awarded costs on an indemnity basis to DB Trustees for both appeals and both sets of proceedings below.

2 Before the order of court was extracted, counsel for DB Trustees, Mr Sarjit Singh Gill SC (“Mr Singh”), submitted, by way of a letter dated 6 August 2009, that Ms Florence Koh Lee Kheng (“Ms Koh”) should be made personally liable for the costs of both appeals. This judgment contains our decision on whether Ms Koh should be made liable for the costs of the appeals and the full reasons for our decision. This judgment is, of course, to be read together with the 6 August Decision and the Brief Grounds.

The underlying proceedings

3 The Brief Grounds contains a short summary of the background facts. It is now necessary to supplement that summary as our present decision on costs is predicated on a broader foundation of facts that include the conduct of the proceedings below as well as the relationship between Ms Koh and Consult Asia Pte Ltd (“Consult Asia”), the respondent in CA 19/2009 and the appellant in CA 90/2009.

Originating Summons No 1044 of 2008

4 In OS 1044/2008, DB Trustees applied for,inter alia, an order that its appointment of receivers and managers over Consult Asia on 4 July 2008 was valid. The appointment was made pursuant to the existing security arrangement between the parties. Ms Koh, who previously was a practising solicitor, owned all but one of Consult Asia's issued and paid up shares - this being 999,999 of Consult Asia's one million shares. The last remaining share was held by Ms Koh's mother. Ms Koh was also, at the time of the hearing of CA 19/2009 and CA 90/2009, the only director of Consult Asia.

5 On 28 December 2006, Consult Asia entered into an arrangement with UBS AG (“UBS”) for Consult Asia to issue US$32m worth of senior secured notes (“the Notes”). The only notable assets owned by Consult Asia were mortgaged as security for the redemption of the Notes - two pieces of real property located at Balestier Road and Changi Road (collectively referred to as “the Security” hereafter). DB Trustees acted as the trustee of the Security for the holders of the Notes (“the Note-holders”). The overall effect of all the documents signed in relation to this arrangement was that a US$32m credit facility was obtained by Consult Asia that was secured by a floating charge over all of Consult Asia's assets as well as a legal mortgage...