How Weng Fan and others v Sengkang Town Council and other appeals

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 29 November 2023
• Neutral Citation: [2023] SGCA 42
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeals Nos 196, 197, 198, 199 and 200 of 2019
• Hearing Date: 28 July 2023
• Citation: [2023] SGCA 42
• Year: 2023
• Plaintiff Counsel: Netto Leslie, Netto Leslie née Lucy Michael and Roqiyah Begum d/o Mohd Aslam (Netto & Magin LLC),Chelva Retnam Rajah SC, Eusuff Ali s/o N B M Mohamed Kassim, Samantha Tan Sin Ying and Lee Yen Yin (Tan Rajah & Cheah)
• Defendant Counsel: Chin Li Yuen Marina SC, Teo Jin Yun Germaine and Mohamed Shafie Bin Allameen (Tan Kok Quan Partnership),Chan Ming Onn David, Joseph Tay Weiwen, Fong Zhiwei Daryl and Lin Ruizi (Shook Lin & Bok LLP)
• Subject Matter: Civil Procedure,Costs,Principles
• Published date: 01 December 2023

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

We previously dealt with the substantive merits of the present appeals (the “Appeals”) in How Weng Fan and others v Sengkang Town Council and other appeals [2023] 1 SLR 707 (the “Judgment”), which concerned the liability of members and senior employees of Aljunied-Hougang Town Council (“AHTC”) to AHTC and to Sengkang Town Council (“STC”) (collectively, the “Town Councils”). The members comprise Ms Sylvia Lim Swee Lian (“Ms Lim”), Mr Low Thia Khiang (“Mr Low”), Mr Pritam Singh (“Mr Singh”), Mr Chua Zhi Hon (“Mr Chua”) and Mr Kenneth Foo Seck Guan (“Mr Foo”) (collectively, the “Town Councillors”). The senior employees are Ms How Weng Fan (“Ms How”) and Mr Danny Loh Chong Meng (“Mr Loh”) (collectively, the “Employees”), with Ms How acting as the personal representative of Mr Loh’s estate. There is also FM Solutions & Services Pte Ltd (“FMSS”), which too is a party to the Appeals, and of which, at the material time, Ms How and Mr Loh were directors and shareholders (see the Judgment at [14(g)]).

Subsequent to the Judgment, we clarified the orders to be made in respect of the Appeals in How Weng Fan and others v Sengkang Town Council and other appeals [2023] 2 SLR 235 (the “Supplementary Judgment”) in light of what appeared to be inadequacies in AHTC’s pleadings on a number of issues.

We thereafter directed the parties to tender written submissions on the issue of costs for the Appeals. The parties have since done so. We now provide our decision on the costs of the Appeals. For ease of reference, we adopt all terms of reference and abbreviations employed in the Judgment and the Supplementary Judgment for this judgment as well.

This court’s decision in the Appeals

The Town Councillors, the Employees and FMSS were co-defendants in the Suits below. The Town Councillors were represented by Tan Rajah & Cheah in the Appeals, while the Employees and FMSS were represented by Netto & Magin LLC. AHTC and STC were represented by Shook Lin & Bok LLP and Tan Kok Quan Partnership in the Appeals, respectively.

The Appeals consist of the following five appeals arising out of the Suits below: (a) CA/CA 196/2019 (“CA 196”); (b) CA/CA 197/2019 (“CA 197”); (c) CA/CA 198/2019 (“CA 198”); (d) CA/CA 199/2019 (“CA 199”); and (e) CA/CA 200/2019 (“CA 200”). The nature of the Appeals are as follows (see also the Judgment at [17] and the accompanying Annex in the Judgment): CA 196 is the appeal brought by the Employees and FMSS against STC in respect of the Judge’s findings on their respective liabilities. CA 197 is the appeal brought by the Employees and FMSS against AHTC in respect of the Judge’s findings on their respective liabilities. CA 198 is the appeal brought by Town Councillors against STC in respect of the Judge’s findings on their respective liabilities. CA 199 is the appeal brought by the Town Councillors against AHTC in respect of the Judge’s findings on their respective liabilities. CA 200 is the appeal brought by STC against Ms Lim, Mr Low and the Employees, in respect of the Judge’s findings that limited the remedies available to it, specifically, that (i) STC was not entitled to equitable compensation in the form of substitutive compensation; and (ii) that STC bore the burden to demonstrate causation in the ‘but for’ sense to ascertain the loss recoverable in the form of equitable compensation arising from the Town Councillors’ and Employees’ breaches of fiduciary duties (see the Judgment at [109]). Just prior to the hearing of the Appeals, STC withdrew CA 200 in part and the parties to CA 200 agreed that the “hybrid approach” as set out in Sim Poh Ping v Winsta Holding Pte Ltd and another and other appeals [2020] 1 SLR 1199, under which the Town Councillors and the Employees bore the legal burden of showing that the loss would have been sustained by the Town Councils even if the Town Councillors and the Employees had not breached their duties, would apply. Ms Lim, Mr Low and the Employees reserved their rights to seek costs from STC in respect of CA 200 (see the Judgment at [115]).

In the Judgment and Supplementary Judgment, we reversed many of the Judge’s factual findings and legal conclusions (see the Judgment at [498] and [499] and the Supplementary Judgment at [66(a)]–[66(c)]). We held, in relation to AHTC, that Mr Low, Ms Lim and the Employees were negligent in permitting the control failures in the System to exist. In respect of STC, we held that the Town Councillors and the Employees were negligent in permitting the control failures in the System to exist, and in addition, Ms Lim was negligent in causing AHTC to award a fresh contract to Red-Power instead of renewing contracts with Digo and Terminal 9 at significantly cheaper rates. We further held that the degree of negligence involved in this context amounted to gross negligence so that the relevant parties could not rely on s 52 of the TCA to avoid personal liability (see the Judgment at [451]–[454]).

Accordingly, we made the following orders (see the Supplementary Judgment at [66(c)]): CA 196 was allowed in part in that the Employees succeeded in reversing some of the heads on which they had been found liable by the Judge but were held liable to STC in negligence for permitting the control failures in the System to exist. CA 197 was allowed in part in that the Employees succeeded in reversing some of the heads on which they had been found liable by the Judge but were held liable to AHTC in negligence for permitting the control failures in the System to exist. CA 198 was allowed in part in that the Town Councillors succeeded in reversing some of the heads on which they had been found liable by the Judge but were held liable to STC in negligence for permitting the control failures in the System to exist and Ms Lim was held liable to STC for causing AHTC to award a contract to Red-Power. CA 199 was allowed in part in that the Town Councillors succeeded in reversing some of the heads on which they had been found liable by the Judge but Mr Low and Ms Lim were held liable to AHTC in negligence for permitting the control failures in the System to exist. CA 200 was dismissed, because neither the Town Councillors nor the Employees owed any fiduciary duties to AHTC, and the issue of reparative compensation therefore fell away.

We pause here to note that since the time the parties filed their respective costs schedules prior to the hearing of the Appeals, they have filed four further sets of written submissions, as directed by this court. These are: (a) first, in February 2021, in response to this court’s list of questions preceding the hearing of the Appeals; (b) second, on 30 November 2022, to address the appropriate orders that ought to be made following the release of the Judgment; (c) third, on 3 July 2023, in response to our request for parties to indicate their positions on costs ahead of the release of the Supplementary Judgment; and (d) fourth, on 28 July 2023, in response to this court’s direction at [68] of the Supplementary Judgment for parties to file their submissions on costs of the Appeals. The parties have therefore revised their costs indications to take into account the additional work done, which we address below.

The parties’ submissions

We begin by summarising the parties’ respective submissions on the costs that should be awarded in respect of the Appeals.

The Town Councillors

The Town Councillors are the appellants in CA 198 and CA 199, and Ms Lim and Mr Low are also two of four of the respondents in CA 200.

The Town Councillors submit that they should be awarded costs for CA 198, CA 199 and CA 200 because, in substance, they should be seen as having succeeded in these Appeals. Having regard to the outcome of the Appeals, they contend that the majority of the claims pursued by AHTC and STC against them in the Suits below were ultimately dismissed as a result of the Appeals. These are, specifically, the claims for breach of fiduciary duties in respect of the waiver of tender of the Contracts, breach of duties in respect of the award of contracts to third-party contractors, as well as on the correct interpretation of s 52 of the TCA. The only claims on which the Town Councils prevailed were: (a) for CA 199, in the case of AHTC, in respect of the control failures in relation to Ms Lim and Mr Low as well as certain miscellaneous payments (see the Judgment at [464]–[465]); and (b) for CA 198, in the case of STC, the Town Councillors were found to be negligent in respect of the control failures in the System and Ms Lim for the award of a fresh contract to Red-Power.

The Town Councillors further submit that the exceptional nature and complexity of the Appeals warrant the award of a certificate pursuant to O 59 r 19 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (the “Rules”) allowing for the recovery of costs for getting up the case by and for attendance in court of more than two solicitors (“Certificate of Three Counsel”) for each of these three Appeals in CA 198, CA 199 and CA 200. This is said to be justified by reason of, among other things, the complexity and difficulty of the legal questions involved, the number of documents that were in the record, the urgency and importance of the cause or matter to the client and the amount claimed against them.

In terms of quantum, having regard to the limited issues on which AHTC and STC succeeded, the Town Councillors submit that a discount of 15% should be applied to the costs to which the Town Councillors ought to be entitled. The costs schedules were prepared on the basis of two solicitors, and on the basis of a Certificate of Three Counsel being awarded, they seek an uplift of 50% on the costs provided in their costs schedules. Further, they submit that the costs and disbursements in CA 198 and CA 199 are to be apportioned between STC and AHTC in the...