Lin Jian Wei v Lim Eng Hock Peter

• Jurisdiction: Singapore
• Judgment Date: 31 May 2011
• Date: 31 May 2011
• Docket Number: Civil Appeal No 138 of 2010
• Court: Court of Appeal (Singapore)

Lin Jian Wei and another

Plaintiff

and

Lim Eng Hock Peter

Defendant

[2011] SGCA 29

Chan Sek Keong CJ

,

Andrew Phang Boon Leong JA

and

V K Rajah JA

Civil Appeal No 138 of 2010

Court of Appeal

Civil Procedure—Costs—Principles—Proportionality

—Civil Procedure—Costs—Principles—Reasonableness

—Civil Procedure—Costs—Taxation—Factors to be taken into consideration in taxation of party and party costs

—Civil Procedure—Costs—Taxation—Principles governing taxation of party and party costs

The respondent, Lim Eng Hock Peter, commenced a defamation claim,viz, Suit No 514 of 2007 (‘Suit 514’) , against the appellants, Lian Jian Wei and Tung Yu-Lien Margaret who were the directors of Raffles Town Club Pte Ltd (‘the Company’) at the material time. The respondent claimed that the 391-page explanatory statement dispatched by the Company to 17,374 of its creditors pursuant to s 211 (1) of the Companies Act (Cap 50, 1994 Rev Ed) under a Scheme of Arrangement contained three passages which had defamed him.

Suit 514 was dismissed by the High Court judge (‘the Judge’) who found that although the respondent was defamed, the alleged defamatory statement had been published under the cover of qualified privilege (see Lim Eng Hock Peter v Lin Jian Wei [2009] 2 SLR (R) 1004). On appeal, it was held that malice had been established on the appellants' part and this defeated the defence of qualified privilege. The Court of Appeal also directed that costs of the trial be taxed on an indemnity basis (see Lim Eng Hock Peter v Lin Jian Wei [2010] 4 SLR 331). The court subsequently clarified that the costs of the trial below should be assessed for two counsel only. The respondent was awarded damages of $140,000 and aggravated damages of $70,000 (seeLim Eng Hock Peter v Lin Jian Wei [2010] 4 SLR 357).

The respondent filed Bill of Costs 247 of 2009 (‘BC 247’) in respect of Suit 514. He claimed costs under Section 1 of BC 247 in the sum of $1,115,655 on the basis of time spent by six solicitor/counsel in the matter totalling 2,309.3 hours. The appellants filed their notice of dispute in response to, inter alia, BC 247. In respect of Section 1 of BC 247, the taxing registrar awarded the respondent costs in the amount of $400,000. Both parties filed for a review of the taxing assistant registrar's award.

Upon review of taxation, the Judge increased the amount of costs under Section 1 of BC 247 to $650,000. Dissatisfied, the appellants filed an appeal.

Held, allowing the appeal:

(1) The court had broad supervisory jurisdiction in its oversight of costs agreement entered into between a solicitor and client in both non-contentious and contentious business as well as all other costs disputes involving solicitors: at [24] to [26].

(2) The amount of costs to be allowed upon taxation, subject to any court order, was in the discretion of the Registrar. All relevant circumstances had to be taken into account by the Registrar and, in particular, the considerations listed in para 1 (2) of Appendix 1 to O 59 of the Rules of Court. Although there was no express reference to the principle of proportionaliy under the applicable Rules of Court (Cap 322, R 5, 2006 Rev Ed) (‘ROC’) governing the present assessment of costs, it was plain that aspects of proportionality were an inarticulate premise in the considerations listed in para 1 (2) of Appendix 1 to O 59 of the ROC: at [27] and [29].

(3) Although the ROC and the English Rules of the Supreme Court 1965 (as contained in the Supreme Court Practice 1997 vol 1 (Sweet & Maxwell, 1996)) appear to have a common genesis, ie, Supreme Court Costs Rules 1959 (UK) (contained in The Annual Practice 1965 vol 1 (Sweet & Maxwell, 1964)), the trajectory of the evolution of our legal costs scheme was different from the English system. Proportionality had always been a feature of the assessment of legal costs in Singapore, be it taxation on a standard or indemnity basis: at [38] to [43] and [58].

(4) The two-stage approach which segregated the concepts of reasonableness and proportionality expounded in the case of Lownds v Home Office [2002] 1 WLR 2450 (‘Lownds’) ought to be approached with caution. The Lownds approach was unsatisfactory as it led to proportionality being qualified by reasonableness such that costs which were reasonably incurred and of reasonable amount could be recovered even if they were disproportionate. In fact, recommendations had been made for the Lownds approach to be abandoned in favour of an approach which prioritises proportionality: at [45] and [47] to [49].

(5) Necessity was part and parcel of the consideration of proportionality. It was one of the interplaying factors that went towards showing that the costs claimed were proportionate in view of all circumstances of the case. Proportionality of costs incurred should also be considered by reference to, inter alia, the amount or value at stake, in particular, in the light of para 1 (2) (f) of Appendix 1 to O 59 of the ROC. Costs that were plainly disproportionate to, inter alia, the value of the claim could not be said to have been reasonably incurred: at [52], [55] and [56].

(6) The blended rate methodology adopted by the Judge was problematic as it could either over or under compensate the successful party, depending on which member of the team actually did the bulk of the work. Further, the formula devised by the Judge in comparing taxation precedents by reference to ‘hours claimed’ failed to adequately acknowledge the peculiarities arising in different matters and the considerations to be taken into account by taxing registrars or judges under the ROC. A straightforward application of the multiplier and multiplicand approach was also undesirable. Charge out rates unilaterally set by law firms were also not the best indicia of what the court ought to assess as reasonable compensation for the expertise of a competent solicitor of a certain standing. The taxation precedents also showed that costs under Section 1 of the bills of costs which were allowed in the region of $600,000 involved highly specialised and/or novel points of law as well as consideration of evidence from multiple factual and/or expert witnesses in lengthy hearings, none of which was a feature of Suit 514: at [59] to [62] and [73].

(7) Caution should be had against an approach which places undue emphasis on time as it might result in penalising the efficient and rewarding the inefficient. In addition to that, it might lead to ‘timesheet padding’ by counsel. Thus, taxing registrars and judges should always approach claims for large amounts for time spent with an attitude of healthy agnosticism. It bore emphasis that while it was true that the importance and complexity of the matter and the difficulty or novelty of questions raised affect the amount of time spent, time was but one of a number of reference points to gauge the reasonableness and proportionality of the amount to be taxed: at [68] to [71].

(8) In the course of taxation, the taxing registrar or judge should first assess the relative complexity of the matter, the work supposedly done against what was reasonably required in the prevailing circumstances, the reasonableness and proportionality of the amounts claimed on an item by item basis and thereafter, assess the proportionality of the resulting aggregate costs. In this exercise, all the Appendix 1 considerations were relevant. In the general scheme of things, no single consideration ordinarily ought to take precedence. In every matter, this called for careful judgment by reference to existing precedents and guidelines: at [78].

(9) Taking into account the complexity of the matter, the time that ought to have been reasonably spent on the matter, the amount of damages awarded, the recent precedents on costs, the principle of proportionality and all the relevant circumstances of the case, the proper sum to be awarded under Section 1 of BC 247 was the sum of $250,000: at [80].

[Observation: The concept of proportionality required that there ordinarily be some correlation between the quantum of damages awarded and the costs taxed. For the taxing registrar or judge to satisfactorily assess whether the amount of costs awarded was proportionate to the stake of the controversy, trial costs in claims for unliquidated damages should ordinarily not be assessed before damages had been agreed or determined as a matter of sound practice: at [76] and [84].]

EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59 (refd)

Lim Eng Hock Peter v Lin Jian Wei [2009] 2 SLR (R) 1004; [2009] 2 SLR 1004 (refd)

Lim Eng Hock Peter v Lin Jian Wei [2010] SGHC 254 (refd)

Lim Eng Hock Peter v Lin Jian Wei [2010] 4 SLR 331 (refd)

Lim Eng Hock Peter v Lin Jian Wei [2010] 4 SLR 357 (refd)

Lock Han Chng Jonathan v Goh Jessiline [2008] 2 SLR (R) 455; [2008] 2 SLR 455 (refd)

Lownds v Home Office [2002] 1 WLR 2450 (refd)

Property and Reversionary Investment Corp Ltd v Secretary of State for the Environment [1975] 1 WLR 1504 (refd)

Raffles Town Club Pte Ltd v Lim Eng Hock Peter [2010] SGHC 163 (refd)

Raffles Town Club Pte Ltd v Tan Chin Seng [2005] 4 SLR (R) 351; [2005] 4 SLR 351 (refd)

Shorvon Simon v Singapore Medical Council [2006] 1 SLR (R) 182; [2006] 1 SLR 182 (refd)

Smith v Buller (1875) LR 19 Eq 473 (refd)

Sumitomo Bank Ltd v Kartika Ratna Thahir [1996] 3 SLR (R) 165; [1997] 1 SLR 690 (folld)

Tan Chin Seng v Raffles Town Club Pte Ltd [2003] 3 SLR (R) 307; [2003] 3 SLR 307 (refd)

Treasury Solicitor v Regester [1978] 1 WLR 446 (folld)

VV v VW [2008] 2 SLR (R) 929; [2008] 2 SLR 929 (refd)

Companies Act (Cap 50,1994 Rev Ed) ss 210, 211 (1)

Legal Profession Act (Cap 161,2009 Rev Ed) ss 108 (1) , 108 (2) ,108 (3) , 109 (1) ,109 (6) , 111,113 (3) , 113 (4) ,113 (5)

Rules of Court (Cap 322,R 5, 2006 Rev Ed) O 59r 27 (3) , O 59Appendix 1para 1 (2) (consd) ;O 14r 12, O 59r 27 (2) , O 59Appendix 1para 1, O 59Appendix...