Maryani Sadeli v Arjun Permanand Samtani and another and other appeals

• Court: Court of Appeal (Singapore)
• Judge: Sundaresh Menon CJ
• Judgment Date: 20 November 2014
• Neutral Citation: [2014] SGCA 55
• Citation: [2014] SGCA 55
• Defendant Counsel: N Sreenivasan SC and Shankar s/o Angammah (Straits Law Practice LLC),Anparasan s/o Kamachi and Tan Wei Ming (KhattarWong LLP)
• Published date: 25 November 2014
• Plaintiff Counsel: Kannan Ramesh SC, Eddee Ng Ka Luan, Ho Xin Ling, Ian Ho and Ooi Huey Hien (Tan Kok Quan Partnership)
• Hearing Date: 28 May 2014
• Docket Number: Civil Appeals Nos 152, 153 and 154 of 2013
• Date: 20 November 2014
• Subject Matter: Damages,Recovery of Legal Costs,Remedies,Equitable Compensation,Equity

Andrew Phang Boon Leong JA (delivering the grounds of decision of the court): Introduction

The present proceedings comprise appeals against the decision of the judge (“the Judge”) in Then Khek Koon and another v Arjun Permanand Samtani and another and other suits [2014] 1 SLR 245 (“the Judgment”). These appeals stem from a long and chequered history of litigation surrounding the unsuccessful collective sale of the development known as Horizon Towers and find their origin in three consolidated suits brought by the five plaintiffs (“the Appellants”) against the two defendants (“the Respondents”).

The Appellants in the present proceedings founded their claim against the Respondents in equitable compensation for breach of fiduciary duties, seeking as damages the shortfall in the costs of the previous proceedings which they did not manage to recover, notwithstanding the earlier costs orders awarded in their favour (in Ng Eng Ghee and others v Mamata Kapildev Dave and others (Horizon Partners Pte Ltd, intervener) and another appeal [2009] 4 SLR(R) 155 (“Ng Eng Ghee (Costs)”). This last-mentioned award of costs in favour of the Appellants was made as a result of the decision of this court in Ng Eng Ghee and others v Mamata Kapildev Dave and others (Horizon Partners Pte Ltd, intervener) and another appeal [2009] 3 SLR(R) 109 (“Ng Eng Ghee (CA)”).

After hearing detailed arguments by the Appellants, we decided that the Appellants could not have obtained in the present proceedings damages comprising the unrecovered costs of the previous proceedings, and therefore dismissed the appeals. Having arrived at this conclusion, it was not necessary for us to consider the anterior question of whether the Appellants’ claim based on equitable compensation could be established in the first place. We now give the detailed grounds for our decision.

Background to the appeals

The facts of the previous proceedings and the background to the appeals before us have been set out in meticulous detail in the Judgment, as well as in Ng Eng Ghee (CA) and Ng Eng Ghee (Costs), and it is unnecessary to canvass them again at length here. It suffices to note for the purposes of the present appeals that this court in Ng Eng Ghee (CA) set aside the collective sale and in so doing found, inter alia, that the Respondents, as members of a sales committee in a collective sale owed fiduciary duties to the subsidiary proprietors of the development which included the Appellants, and had in fact breached those fiduciary duties. This was the basis for the Appellants’ claim in equitable compensation which they submitted was a cause of action independent of the earlier proceedings in Ng Eng Ghee (CA).

As a result of this court’s decision in Ng Eng Ghee (CA), the Appellants were awarded costs for the proceedings leading up to their successful appeal (in Ng Eng Ghee (Costs)). However, the Appellants were not satisfied with those costs orders. As in most cases, the costs recovered by the Appellants did not amount to the actual sum of legal fees incurred. The Appellants were also involved in some earlier applications which were not part of the procedural history of Ng Eng Ghee (CA), where no orders were made as to costs. The Appellants were therefore left out of pocket to some extent; hence their claim against the Respondents in equitable compensation in the present proceedings for the difference or shortfall between the amount of costs awarded in Ng Eng Ghee (Costs) and the costs they had actually incurred. It bears noting that, if the Appellants were successful in the present proceedings, they would in effect have received a full indemnity for their costs – a position which would not have been attainable under a normal costs order.

Three further points bear setting out in order to provide the necessary background to the present appeals. First, costs were awarded to all the Appellants notwithstanding the fact that two of the Appellants were not parties to the appeal in Ng Eng Ghee (CA). Whilst these two were parties in the High Court proceedings (in Lo Pui Sang and others v Mamata Kapildev Dave and others (Horizon Partners Pte Ltd, intervener) and other appeals [2008] 4 SLR(R) 754 (“Ng Eng Ghee (HC)”)), where the court held against the subsidiary proprietors (including the Appellants), they chose not to appeal. Nevertheless, a number of other subsidiary proprietors (including the other three Appellants) did in fact appeal against the decision in Ng Eng Ghee (HC) and this court in Ng Eng Ghee (CA) allowed the appeal. After the appeal was allowed, the Court of Appeal received submissions on costs from the parties to Ng Eng Ghee (CA), and also from the two Appellants who did not appeal and were technically non-parties to the appeal. The two Appellants were not invited to submit on costs, but they nevertheless did so by way of a letter tendered to the court where they asked for an award of costs. The Court of Appeal made clear that it had the power to award costs in favour of all the Appellants, including those who did not appeal against the decision in Ng Eng Ghee (HC), and did in fact award costs for the proceedings leading up to the successful appeal.

Secondly, the Respondents were parties to the previous proceedings as members of the collective sales committee as a whole, whereas the claim in the present proceedings was brought by the Appellants against the Respondents in their individual capacities. This was significant inasmuch as the Appellants sought to rely on this distinction to persuade the court that their present claim was valid.

Thirdly, the Appellants did consider seeking costs as against the Respondents in their individual capacities in those proceedings, but eventually decided not to (see Judgment at [284]). This was significant because the Respondents sought to rely on this fact to say that the Appellants should not be allowed to bring a claim to recover those costs now.

The decision below

We observe that the Judgment was a lengthy one, but in fairness to the Judge, this was because he felt that he had to deal with all the issues which were presented to him (including the one upon which the present appeal turns, but which was dealt with by the Judge only in the last part of the Judgment (and whose decision in this particular regard we have, for the reasons set out below, generally affirmed)). In particular, the Judge considered the controversy surrounding, inter alia, the issue of causation in the context of the award of equitable compensation for breach of fiduciary duties (here, by the Respondents, as found in Ng Eng Ghee (CA) but which the Respondents nevertheless sought to controvert in the present proceedings). The Judge characterised this issue of causation as a question of whether the Appellants’ claim against the Respondents fell within the class of cases stemming from the Canadian Privy Council decision of Brickenden v London Loan & Savings Company of Canada [1934] 3 DLR 465 (in which but-for causation is not essential for liability) or the class of cases stemming from the House of Lords decision of Target Holdings Ltd v Redferns (a firm) [1996] 1 AC 421 (in which but-for causation is essential for liability) (see Judgment at [109]). Counsel for the Appellants, Mr Kannan Ramesh SC, submitted during the appeal that this was an unsettled area of law within the Commonwealth and was the subject of much academic debate (although this submission must now be considered in light of the very recent UK Supreme Court decision of AIB Group (UK) Plc v Mark Redler & Co Solicitors [2014] UKSC 58 (“AIB”), which in fairness to the parties was not yet decided when the present appeals were heard).

As astutely pointed out by Lord Toulson in AIB (at [47]), “the debate which has followed Target Holdings is part of a wider debate, or series of debates, about equitable doctrines and remedies and their inter-relationship with common law principles and remedies, particularly in a commercial context”. Coincidentally, that was our view on the issue when the appeals were heard, which was also borne out by the various opinions and views on the subject put forward by many learned writers (see, for example, Charles Mitchell, “Equitable Compensation for Breach of Fiduciary Duty” (2013) 66 Current Legal Problems 307; Michael O’Meara, “Causation, Remoteness and Equitable Compensation” (2005) 26 Aust Bar Rev 51; Matthew Conaglen, “Remedial Ramifications of Conflicts between A Fiduciary’s Duties” (2010) 126 LQR 72; Matthew Conaglen, “Equitable Compensation for Breach of Fiduciary Dealing Rules” (2003) 119 LQR 246; Jamie Glister, “Breach of Fiduciary Duty: Brickenden Lives On (Premium Real Estate v Stevens)” (2011) 5 J Eq 59; Charles Rickett, “Equitable Compensation: Towards a Blueprint?” (2003) 25 Sydney L Rev 31; as well as James Edelman and Steven Elliot, “Money Remedies against Trustees” (2004) 3 TL 116).

However, given that we did not think the Appellants were entitled to claim the aforementioned difference in the amount of costs recovered, assuming they could mount an independent cause of action for breach of fiduciary duties against the Respondents, it was strictly unnecessary for us to consider this particular issue any further. If the Appellants were not entitled to recover the aforesaid amount claimed in the first place, then that is the end of the matter. There would consequently be no need to discuss, inter alia, the complex as well as thorny issues relating to the test of causation for equitable compensation which we have referred to briefly in the preceding paragraph. A definitive ruling on this difficult area of the law can be made when it next comes for decision before this court. It should also be noted that, in light of the analysis adopted by this court in the present appeal, there is no need to address (as the Judge did) the doctrine of novus actus interveniens vis-à-vis the issue of causation.

Instead,...