Kiri Industries Ltd v Senda International Capital Ltd and another

• Court: International Commercial Court (Singapore)
• Judge: Kannan Ramesh J
• Judgment Date: 08 December 2021
• Neutral Citation: [2021] SGHC(I) 16
• Citation: [2021] SGHC(I) 16
• Docket Number: Suit No 4 of 2017
• Hearing Date: 16 July 2021,18 August 2021,12 November 2021
• Plaintiff Counsel: Dinesh Dhillon, Lim Dao Kai, Margaret Joan Ling, Dhivya Naidu and Serene Chee Yi Wen (Allen & Gledhill LLP)
• Defendant Counsel: Toh Kian Sing SC, Cheng Wai Yuen, Mark, Soh Yu Xian, Priscilla and Lim Wee Teck Darren (Rajah & Tann Singapore LLP),Teng Po Yew (Drew & Napier LLC)
• Subject Matter: Civil Procedure,Costs,Principles,Costs in the Singapore International Commercial Court,Taxation
• Published date: 10 December 2021

Kannan Ramesh J (delivering the judgment of the court): Introduction

This judgment addresses the costs of proceedings that have spanned more than six years. The facts of the dispute that led to these protracted proceedings have been set out extensively in DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries and others and another suit [2018] 5 SLR 1 (the “Main Judgment”), as well as in Kiri Industries Ltd v Senda International Capital Ltd and another [2021] 3 SLR 215 (the “Valuation Judgment”). We adopt all terms of reference and abbreviations used in the Main Judgment and the Valuation Judgment.

Background

On 3 July 2018, we delivered the Main Judgment. In essence, the claim was for minority oppression of Kiri by Senda in relation to the former’s minority interest in DyStar, their joint venture vehicle. In the Main Judgment, we found that Senda had engaged in instances of oppressive conduct against Kiri. Senda was consequently ordered to purchase Kiri’s shares in DyStar at a valuation to be determined. The buy-out order was upheld on appeal: Senda International Capital Ltd v Kiri Industries Ltd and others and another appeal [2019] 2 SLR 1.

On 8 January 2019, following delivery of the Main Judgment, we issued an oral judgment (the “Oral Judgment”), which stated at [12(a)] as follows: “although some of Kiri’s claims of oppression were not made out, it [had] substantially succeeded in its claim” and “[a]ccordingly, Kiri [was] entitled to the full costs on its claim”. This order was for costs of the liability tranche of the proceedings which included the issues dealt with in the Oral Judgment (this period, ie, from the commencement of proceedings to the Main Judgment, shall be referred to as “the Liability Tranche”). In addition, the Oral Judgment stated at [12(c)] that “[a]ll such costs are to be taxed if not agreed”. The Court of Appeal upheld the costs order that was made: see Senda International Capital Ltd v Kiri Industries Ltd and others [2020] 2 SLR 1 at [49]. To date, the parties have not been able to agree on costs based on the costs order in the Oral Judgment.

On 21 December 2020, the Valuation Judgment was issued. An interim valuation of DyStar was arrived at in the Valuation Judgment, subject to the experts assessing whether adjustments needed to be made to account for nine issues that were identified and discussed in the Valuation Judgment. The interim valuation was primarily based on the approach of Kiri’s expert, Ms Roula Harfouche (“Ms Harfouche”), which we generally preferred, subject to the possible adjustments arising from the nine issues. Accordingly, it was directed that the parties’ experts were to revert with their conclusion on the nine issues: at [313]. In the Valuation Judgment, all issues of costs were reserved, pending the determination of a final valuation: at [314].

Following parties’ submissions, on 3 June 2021, in Kiri Industries Ltd v Senda International Capital Ltd and another [2021] 5 SLR 1, we addressed the nine issues. Save for two issues concerning tax rates, we generally accepted Kiri’s position on the nine issues as per Ms Harfouche, who expressed the view that the updated value of Kiri’s shares was US$482.5m. We nevertheless required the parties’ experts’ assistance in calculating the final valuation of DyStar in the light of our findings: at [67]. The costs of the valuation tranche (that is, the period commencing immediately after the conclusion of the Liability Tranche up to issuance of the final valuation (as defined below, “the Valuation Tranche”)) and the quantum of costs for the entire proceedings were reserved pending the determination of the final valuation: at [70].

Finally, in Kiri Industries Ltd v Senda International Capital Ltd and another [2021] 5 SLR 111, we adjudged the final valuation of Kiri’s shares to be US$481.6m (“the Final Valuation”).

It is against the backdrop of these decisions that we now deliver our judgment on costs.

Parties’ positions

As a starting point, it is indisputable that the present case is one that falls in the second of two categories of the Singapore International Commercial Court (“SICC”) cases identified by the Court of Appeal in the recent case of CBX and another v CBZ and others [2021] SGCA(I) 4 (“CBX”): at [17]. This is the category of cases that began its legal life in the General Division of the High Court (“High Court”) and was later transferred to the SICC pursuant to O 110 r 12 of the Rules of Court (2014 Rev Ed) (“ROC”). In the present case, the writ of summons and statement of claim were filed in the High Court on 26 June 2015. Kiri later applied to have the case transferred to the SICC, and the application was allowed on 11 May 2017 after a contested hearing. As such, and as was explained in CBX, two different costs regimes may govern the case before us.

Parties have accordingly made submissions on costs pre- and post-transfer, in addition to disbursements, and have taken vastly differing approaches to assessing costs. Kiri has asked for costs amounting to S$7,797,718.50. Senda rejects Kiri’s costs as disproportionate and counters with the figure of S$360,000.

On costs incurred pre-transfer (“Pre-Transfer Costs”), Kiri recognises that O 59 of the ROC applies, but argues that it ought to be entitled to costs exceeding the scale provided in Appendix G of the Supreme Court Practice Directions (“Appendix G”), leading to a sum of S$500,000. Similarly, Senda refers to Appendix G, but argues for a strict application of the rates set out therein. Its position is that Kiri is only entitled to a sum of S$102,000 for Pre-Transfer Costs.

On the costs post-transfer (“Post-Transfer Costs”), Kiri seeks S$7,297,718.50. This encompasses costs for two periods: First, costs for the period between the date of transfer to the SICC and the rendering of the Main Judgment. In this judgment, this period is referred to as the “Post-Transfer Liability Tranche”. This is not to be confused with the period between the commencement of proceedings and the rendering of the Main Judgment, which is referred to as the “Liability Tranche” as defined at [3] above. Secondly, costs of the Valuation Tranche (as defined at [5] above).

Senda argues that for the Post-Transfer Costs incurred during the Post-Transfer Liability Tranche, the court ought to continue to apply Appendix G strictly, and on that basis, Kiri is only entitled to S$102,000. On the Valuation Tranche, Senda’s primary position is that parties ought to bear their own costs, as: (a) it has succeeded on significant issues; and (b) the final valuation is in-between the parties’ respective proposed figures. Alternatively, Senda argues that if costs are awarded for the Valuation Tranche, the court ought to apply a significant discount of at least 48%, which it submits will yield a figure of S$156,000. In riposte, Kiri argues that it ought to be entitled to the full costs of the Valuation Tranche as it has substantially succeeded in the valuation proceedings.

On disbursements, Kiri claims S$5,944,073.44. This figure consists of travel expenses, expert witness fees and foreign lawyer’s fees. Senda does not offer an alternative figure. Rather, it objects to several of the line items claimed by Kiri.

Senda also takes issue with the mode of assessing costs, arguing that costs and disbursements ought to be referred to the Registrar for assessment based on the procedure for taxation under O 59 r 20 of the ROC. Senda argues that this was the effect of the costs order in the Oral Judgment (see [3] above). Kiri disagrees, arguing that costs and disbursements ought to be fixed by this court.

Issues

From the above, several issues arise for our consideration, which we address in turn below: whether costs in this matter ought to be taxed by the Registrar under O 59 r 20 of the ROC; whether Kiri is entitled to costs of the Valuation Tranche; and what is the quantum of the costs and disbursements that ought to be awarded to Kiri?

Mode of assessment of costs in the SICC

The first issue is whether this court ought to order taxation of costs in the usual way, ie, using the procedure under O 59 r 20 of the ROC whereby a detailed Bill of Costs is produced and scrutinised by the Registrar. This issue arises out of the Oral Judgment, where we had made an order that Kiri was “entitled to the full costs on its claim” and that “[a]ll such costs are to be taxed if not agreed” [emphasis added]: the Oral Judgment at [12]. To date, there has been no agreement on costs. We instead have a vast divide between the parties’ respective positions on the quantum of costs that ought to be allowed. The positions taken have been somewhat extreme, particularly in the case of Senda, which is unsatisfactory. The result is that costs have to be settled by the court. The parties disagree on the mode by which the court should assess the costs ordered. The dispute centres on the meaning to be attributed to “taxed”.

Kiri argues that the word “taxed” “refers in practical terms to costs being decided by [this Court] as opposed to [it] commencing taxation proceedings by filing a bill of costs under O 59”. Senda disputes this, arguing instead that the costs order in the Oral Judgment is clear, and that the only plausible reading is that, absent agreement, Kiri had been directed to have its costs for the liability stage taxed in the usual way by a Registrar under O 59 r 20.

We disagree with Senda’s interpretation of [12] of the Oral Judgment; that was not what was ordered, and in fact could not have been the case in the light of O 110 r 46(6) of the ROC. We elaborate.

Taxation in the O 59 sense entails the Registrar, and not the trial judge or trial coram, scrutinising a detailed Bill of Costs submitted by the receiving party. However, the substance of “taxation” does not pertain to who conducts the assessment. Rather, it refers to the level of scrutiny in...