Lim Eng Hock Peter v Lin Jian Wei and another

• Jurisdiction: Singapore
• Judge: Chan Seng Onn J
• Judgment Date: 26 August 2010
• Neutral Citation: [2010] SGHC 254
• Court: High Court (Singapore)
• Docket Number: Bill of Costs No 247 of 2009 (Summonses Nos 803 and 815 of 2010)
• Year: 2010
• Published date: 22 September 2010
• Hearing Date: 09 March 2010
• Plaintiff Counsel: Koh Swee Yen and Suegene Ang (WongPartnership LLP)
• Defendant Counsel: Kristy Tan Ruyan (Allen & Gledhill LLP)
• Subject Matter: Civil Procedure,Costs,Indemnity basis
• Citation: [2010] SGHC 254

Chan Seng Onn J: Introduction

The Plaintiff successfully brought a defamation action against the Defendants and was awarded damages of $140,000 and aggravated damages of $70,000 for the libel arising from the Defendants’ publication of defamatory statements concerning the Plaintiff to the Scheme Creditors contained in an Explanatory Statement dated 2 November 2005. The Court of Appeal ordered the Defendants to bear the costs of the Plaintiff for the trial on an indemnity basis and for the appeal on a standard basis. Costs of two counsel were allowed.

As the Defendants have appealed against my award of costs of $650,000 for section 1 of the Plaintiff’s Bill of Costs for the trial, I now give my reasons.

Indemnity Basis

I had taxed the costs on an indemnity basis as set out in O59 r 27 (3) of the Rules of Court (Cap. 322, Rule 5, Revised Edition 2006) which states that:

On a taxation on the indemnity basis, all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred and any doubts which the Registrar may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party; and in these Rules, the term “the indemnity basis”, in relation to the taxation of costs, shall be construed accordingly.

Para 59/27/5 of the Singapore Court Practice 2009 (Jeffrey Pinsler gen ed) (LexisNexis Singapore, 2009) elaborates on the difference between the standard and the indemnity basis:

59/27/5. Observations on standard and indemnity bases. The indemnity basis is also characterised by the reasonableness principle and reflects the former ‘solicitor and own client’ basis. The standard basis is inclusionary so that the recovery of costs depends on meeting the principle of inclusion. Under the indemnity basis, which is exclusionary in nature, all costs are included unless they come within the scope of the principle of exclusion. Although the principle of the standard and indemnity bases is the same, the distinction between them lies in determining whether any doubts about the reasonableness of the costs should be resolved in favour of one party or the other. In the case of standard basis, any doubts are to be resolved in favour of the paying party; in the case of the indemnity basis, any doubts are to be resolved in favour of the receiving party. For instance, if the registrar is uncertain about whether certain attendances on the client or witnesses are reasonable (there may be doubt as to whether the attendances were excessive in the circumstances), these costs would not be recovered by the successful party if, as in the ordinary case, the standard principle applies. If the indemnity basis applies, these costs would be recoverable. If there are no doubts about an item on the bill then it is recoverable on either basis.

The Defendants thus submitted that the award of party-and-party costs on an indemnity basis does not entitle the receiving party to recover from the paying party all costs which the receiving party paid to his solicitors. The receiving party is only entitled to reasonable costs. However, the burden falls on the paying party to show, on a balance of probabilities, that the costs claimed by the receiving party are unreasonable. I do not believe that these submissions of the Defendants are controversial and I do accept them. The Court of Appeal in Ng Eng Ghee v Mamata Kapildev Dave and others (Horizon Partners Pte Ltd, intervener) and another appeal [2009] 4 SLR(R) 155 at [6]–[7] had further clarified as follows:

The costs indemnity principle

6 Before we discuss the issues set out in [5] above, it is important to recall the general rule in Singapore, viz, that costs should follow the event except in special circumstances (see Singapore Civil Procedure 2007 (GP Selvam gen ed) (Sweet & Maxwell Asia, 2007) (“Singapore Civil Procedure 2007”) at paras 59/3/1 and 59/3/5; see also Tullio v Maoro [1994] 2 SLR 489). This principle (ie, that an unsuccessful party would generally be ordered to pay the successful party’s reasonable litigation costs) has been sometimes termed “the indemnity principle”. It is not to be confused with costs on “the indemnity basis”, which would be costs taxed on the basis that any doubts as to their reasonableness are to be resolved in favour of the receiving party (O 59 r 27(3) of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“the Rules”)) as the alternative to costs on “the standard basis”, where any doubts as to reasonableness is to be resolved in favour of the paying party (see O 59 rr 27(1) and 27(2) of the Rules). 7 The fundamental conception of costs which underlies the indemnity principle is that costs are imposed to compensate the successful party and not to punish the losing party (although costs may sometimes be imposed as a punishment for improper or unreasonable behaviour in the proceedings; see, eg, O 59 rr 7 and 8 of the Rules). As Bramwell B astutely noted in Harold v Smith (1860) 5 H & N 381 (at 385) 157 ER 1229 (at 1231):

Costs as between party and party are given by the law as an indemnity to the person entitled to them: they are not imposed as a punishment on the party who pays them, nor given as a bonus to the party who receives them. Therefore, if the extent of the damnification can be found out, the extent to which costs ought to be allowed is also ascertained.

To this we should add that the indemnity principle as applied in Singapore rests on one bedrock feature. It only extends to costs reasonably incurred and not all costs incurred. Therefore, the principle, does not, in practice, amount to a full and complete indemnity to the successful party against all the expenses to which he has incurred in relation to the proceedings (see Singapore Civil Procedure 2007 at para 59/27/5) unless this has been contractually agreed upon or if the court makes a special order in exceptional circumstances.

[emphasis in original]

Relevant matters for consideration when awarding costs

In exercising my discretion when I was awarding costs to the Plaintiff, I was mindful that I must have full regard to all the relevant circumstances which would include those set out in Appendix 1 of O 59 of the Rules of Court to ensure that the amount of costs to be awarded on the ordered basis of taxation (i.e. indemnity basis) is reasonable in all the circumstances of the case. In other words, the costs must be reasonably incurred and must also be reasonable in amount having regard to all the relevant circumstances of the case. Order 59 Appendix 1 states:

Amount of costs

1. —(1) The amount of costs to be allowed shall (subject to any order of the Court) be in the discretion of the Registrar.

(2) In exercising his discretion the Registrar shall have regard to all the relevant circumstances, and in particular to — (a) the complexity of the item or of the cause or matter in which it arises and the difficulty or novelty of the questions involved; (b) the skill, specialised knowledge and responsibility required of, and the time and labour expended by, the solicitor; (c) the number and importance of the documents (however brief) prepared or perused; (d) the place and circumstances in which the business involved is transacted; (e) the urgency and importance of the cause or matter to the client; and (f) where money or property is involved, its amount or value.

Often as with this case, the real problem lies not with deciding what are the relevant principles to apply and what are the relevant factors to be taken into account in the assessment of the amount of costs to award but in the actual application of those principles and the weighing of the relevant factors in such a manner as to arrive at the appropriate and reasonable quantum in exercise of my discretion having regard to all the relevant facts and circumstances of the case. Counsel must therefore produce as much relevant information as he can in his Bill of Costs to justify his claim for the costs drawn up for the amount of work he has done so that the court can be well assisted to make that determination.

Plaintiff’s Bill of Costs for the trial

I would like to commend the Plaintiff’s counsel for providing detailed particulars in Section 1 of the Bill of Costs which have aided my assessment of the extent of the work done by them. I will briefly set out those relevant particulars: Writ: 3 pages. Statement of Claim (Amendment No. 1): 14 pages. Defence (Amendment No.1): 36 pages. Reply (Amendment No.1): 4 pages. SUM 4849/2007/S: The Defendants’ application for a determination pursuant to Order 14 Rule 12 of the Rules of Court that the words complained of were not capable of any meaning defamatory of the Plaintiff and/or for the Writ of Summons and the Statement of Claim be struck out under Order 18 Rule 19 of the Rules of Court and/or under the inherent jurisdiction of the court. The matter was heard before Tan Lee Meng J over 3 days with a total hearing time of some 9.5 hours. The Plaintiff’s submissions totalled 35 pages with 20 authorities. The Defendants’ submissions totalled 90 pages with 28 authorities cited. Costs were ordered to be in the cause. Attendance at 7 Pre-Trial-Conferences. 71 letters exchanged between solicitors, 41 letters exchanged with the court and 145 letters exchanged with the client. Documents provided at discovery: 71 documents by the Plaintiff; 3706 documents by the Defendants. The Plaintiff’s opening statement at trial: 24 pages with 30 cases cited. The Defendants’ opening statement at trial: 20 pages with 10 cases cited. One affidavit of the Plaintiff: 30 pages of text with 13 exhibits running to 559 pages. Three affidavits of the Defendants: 67 pages of text with 46 exhibits running to 1115 pages. The Plaintiff’s bundles: 7...