How Weng Fan v Sengkang Town Council

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ,Judith Prakash JCA,Tay Yong Kwang JCA,Woo Bih Li JAD,Andrew Phang Boon Leong SJ
• Judgment Date: 29 November 2023
• Docket Number: Civil Appeals Nos 196 to 200 of 2019
• Court: Court of Appeal (Singapore)

How Weng Fan and others

and

Sengkang Town Council and other appeals

[2023] SGCA 42

Sundaresh Menon CJ, Judith Prakash JCA, Tay Yong Kwang JCA, Woo Bih Li JAD and Andrew Phang Boon Leong SJ

Civil Appeals Nos 196 to 200 of 2019

Court of Appeal

Civil Procedure — Costs — Applicable principles — Costs of more than two solicitors — Whether award of certificate allowing for recovery of costs for getting up of case and for attendance in court of more than two solicitors was warranted in light of factual and legal complexity of case, voluminous materials and lengthy trial — Order 59 r 19 Rules of Court (2014 Rev Ed)

Civil Procedure — Costs — Applicable principles — Entitlement to costs — Whether party could be said to have prevailed in appeal despite neither party achieving complete victory — Whether court should have regard to outcome of litigation as a whole in determining whether party could be said to have been successful in given case

Civil Procedure — Costs — Applicable principles — Single or separate costs orders to be made — Whether it was reasonable for respondents to engage separate sets of counsel despite some degree of shared interests and overlap in broad arguments underlying their respective defences

Held, awarding costs of the Appeals to the Town Councillors, the Employees and FMSS:

The Town Councillors, Employees and FMSS should be entitled to costs for the Appeals

(1) Costs were discretionary, but this discretion necessarily had to be exercised in accordance with established principles. The “indemnity principle” underpinning the incidence of costs in civil litigation meant that costs ordinarily followed the event. While it was often not controversial who the successful party was in a given litigation, the position became less clear where neither party could be said to have achieved a complete victory. The court would have to have regard to the outcome of the litigation as a whole and how the outcome reflected the respective and relative success of each party in the context of the dispute as a whole, which was a fact-sensitive exercise: at [30] and [31].

(2) Having regard to the overall outcome of the Appeals and the issues that were found in favour of the Town Councillors, Employees and FMSS, they had succeeded substantially in the Appeals and as a matter of course, they were entitled to costs: at [32] to [34].

The Town Councillors should be allowed costs of more than two solicitors for CA 198 and CA 199

(3) The “two counsel rule” was enshrined in O 59 r 19(1) of the Rules of Court (2014 Rev Ed) (the “Rules”), which provided that the costs of more than two solicitors shall not be allowed unless the court ordered otherwise. An award of a certificate allowing for the recovery of costs for getting up of the case and for attendance in court of more than two solicitors (“Certificate of Three Counsel”) should only be granted exceptionally in cases that involved a high degree of complexity of facts and/or law, or where there were many issues of both facts and law, and the trial was lengthy. Paragraph 1(2) of Appendix 1 to O 59 of the Rules further set out a list of factors that were to be considered by the court when determining whether the use of more than two solicitors was reasonable: at [38].

(4) This was an exceptional case that warranted the award of a Certificate of Three Counsel to the Town Councillors for CA 198 and CA 199. This was because they involved complex issues of both law and fact and voluminous materials. In addition, the stakes in the Appeals were very high for all parties involved and the claims against the Town Councillors and Employees were serious ones, involving allegations of breaches of fiduciary duties owing to the wrongful award of contracts, as well as the lack of oversight of public funds. The use of more than two counsel was therefore reasonably necessary for the adequate presentation and preparation for CA 198 and CA 199: at [40] to [44].

(5) However, a Certificate of Three Counsel was not warranted for CA 200, which was a relatively confined appeal and turned largely on a question of law, that in turn depended upon certain anterior questions being answered. Such questions were already the subject of CA 196, CA 197, CA 198 and CA 199. In addition, CA 200 was withdrawn in large part before the hearing of the Appeals: at [45].

Separate costs orders ought to be made against STC in CA 196, CA 198 and CA 200

(6) Whether a single costs order or separate costs order should be made when several parties were separately represented required the court to consider whether it was reasonable for the parties to have engaged separate counsel. In determining this, the court could consider the following factors: (a) the degree of the community of interests among the parties; (b) the size of the sum or importance of the interest that was the subject matter of the dispute; and (c) the degree of overlap in the pre-hearing preparations and conduct of proceedings: at [47] to [49].

(7) It was appropriate for separate costs orders to be made against STC in CA 196, CA 198 and CA 200. It was reasonable for the Town Councillors, Employees and FMSS to have engaged separate counsel. While there was a degree of shared interests as between the Town Councillors and the Employees and their interests were aligned in so far as they relied on the same broad arguments, there were some nuances and differences as between their positions. Moreover, the Town Councillors and Employees stood in distinct positions and acted in rather distinct capacities in respect of AHTC's affairs. The nature of the claims against the Town Councillors, Employees and FMSS were also somewhat distinct. Any degree of overlap in the pre-hearing preparations and conduct of proceedings could not be taken too far, given the differences in the nature of the claims brought and the nature of the defences ran by the Town Councillors, Employees and FMSS: at [51] to [55].

Quantum of costs payable

(8) In arriving at the quantum of costs payable for the Appeals, the Court of Appeal took into account the following: (a) there had to be a degree of uplift for costs payable to the Town Councillors on account of the grant of the Certificate of Three Counsel; (b) there had to be some discount in the costs payable to the Employees and FMSS for CA 196 and CA 197 given the overlap in work and the same also applied to the costs payable to the Town Councillors for CA 198 and CA 199; and (c) there had to be some further discount in the costs payable by AHTC and STC, as the Town Councillors and the Employees ultimately did not succeed on some issues in the Appeals: at [57].

Case(s) referred to

Afro-Asia Shipping Co (Pte) Ltd v Da Zhong Investment Pte Ltd [2004] 3 SLR(R) 274; [2004] 3 SLR 274 (refd)

AG v Aljunied-Hougang-Punggol East Town Council [2016] 1 SLR 915 (refd)

BCBC Singapore Pte Ltd v PT Bayan Resources TBK [2023] SGCA(I) 8 (refd)

Colliers International (Singapore) Pte Ltd v Senkee Logistics Pte Ltd [2007] 2 SLR(R) 230; [2007] 2 SLR 230 (refd)

Comfort Management Pte Ltd v OGSP Engineering Pte Ltd [2022] 5 SLR 525 (refd)

Harold v Smith (1860) 5 H&N 381 (refd)

How Weng Fan v Sengkang Town Council [2023] 1 SLR 707, CA (refd)

How Weng Fan v Sengkang Town Council [2023] 2 SLR 235, CA (refd)

Lim Siew Soo v Sembawang Engineers and Constructors Pte Ltd [2021] 4 SLR 556 (refd)

New Civilbuild Pte Ltd v Guobena Sendirian Berhad [2000] SGHC 47 (refd)

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

Raffles Town Club Pte Ltd v Lim Eng Hock Peter [2011] 1 SLR 582 (refd)

Roache v News Group Newspapers Ltd [1998] EMLR 161 (refd)

Senda International Capital Ltd v Kiri Industries Ltd [2023] 1 SLR 96 (refd)

Sim Poh Ping v Winsta Holding Pte Ltd [2020] 1 SLR 1199 (refd)

Then Khek Koon v Arjun Permanand Samtani [2014] 1 SLR 245 (refd)

Trans Eurokars Pte Ltd v Koh Wee Meng [2015] SGHCR 6 (refd)

Wing Joo Loong Ginseng Hong (Singapore) Co Pte Ltd v Qinghai Xinyuan Foreign Trade Co Ltd [2009] 2 SLR(R) 814; [2009] 2 SLR 814 (refd)

Facts

In How Weng Fan v Sengkang Town Council[2023] 1 SLR 707 (the “Judgment”), the Court of Appeal delivered its judgment on the substantive merits of the appeals (the “Appeals”) concerning the liability of the members and senior employees of Aljunied-Hougang Town Council (“AHTC”) to AHTC and to Sengkang Town Council (“STC”). These members were Ms Sylvia Lim (“Ms Lim”), Mr Low Thia Khiang (“Mr Low”), Mr Pritam Singh, Mr Chua Zhi Hon and Mr Kenneth Foo (collectively, the “Town Councillors”). The senior employees were Ms How Weng Fan (“Ms How”) and Mr Danny Loh (“Mr Loh”) (collectively, the “Employees”).

The Court of Appeal then clarified the orders to be made in respect of the Appeals in How Weng Fan v Sengkang Town Council[2023] 2 SLR 235 (the “Supplementary Judgment”) in light of what appeared to be inadequacies in AHTC's pleadings on a number of issues.

In the Judgment and Supplementary Judgment, the Court of Appeal reversed several of the trial judge's factual findings and legal conclusions. Among other things, the Court of Appeal held that the Town Councillors and Employees did not owe fiduciary or equitable duties to AHTC or to STC. The Court of Appeal also held that they had acted in good faith in the award of various contracts on behalf of AHTC. However, the Court of Appeal held that the Town Councillors and Employees were grossly negligent in implementing AHTC's and STC's payments process (the “System”), which led to the persistence of what were referred to by parties as “control failures” in the System. Specifically, this arose from the involvement of conflicted persons in processing payments to FM Solutions & Services Pte Ltd (“FMSS”) and FM Solutions & Integrated Services (“FMSI”) and the absence of safeguards, which together created a risk of overpayments being made. Furthermore, the Court of Appeal held that Ms Lim was...