Mok Kwong Yue v Ding Leng Kong

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 16 November 2011
• Neutral Citation: [2011] SGHC 245
• Court: High Court (Singapore)
• Docket Number: Bill of Costs No 229 of 2010
• Published date: 18 November 2011
• Year: 2011
• Hearing Date: 28 July 2011,03 May 2011
• Plaintiff Counsel: Andrew Ee (Andrew Ee & Co)
• Defendant Counsel: Muthu Kumaran (Kumaran Law) the respondent.
• Subject Matter: Civil Procedure,Taxation of Costs
• Citation: [2011] SGHC 245

Judith Prakash J:

The question that concerns me in this review of taxation of a bill of costs is whether the principles established in Medway Oil and Storage Company, Limited v Continental Contractors, Limited and Others [1929] 1 A.C. 88 (“Medway Oil”) as to how costs should be taxed in the situation where each of the opposing parties to a suit obtains a costs order in his favour, should be followed in Singapore.

The principles in question (“the Medway principles”) are summed up in the headnote of the case which reads:

Where a claim and counterclaim are both dismissed with costs, upon the taxation of the costs, the true rule is that the claim should be treated as if it stood alone and the counterclaim should bear only the amount by which the costs of the proceedings have been increased by it. No costs not incurred by reason of the counterclaim can be costs of the counterclaim. In the absence of special directions by the Court there should be no apportionment. The same principle applies where both the claim and the counterclaim have succeeded.

Background

In 2004, Mok Kwong Yue (“the plaintiff”) sued Ding Leng Kong (“the defendant”) to recover sums of money which he alleged he had paid the defendant by reason of a mistake of law. The defendant resisted the claim on several grounds and also mounted a counterclaim. I heard the action and dismissed both the claim and the counterclaim with costs (see [2008] SGHC 65).

Judgment was delivered in May 2008. In November 2010, the plaintiff presented his bill of costs for the work done in respect of the counterclaim for taxation. Up to that time, the defendant had not presented his own bill of costs for the work done in resisting the claim. In fact, despite repeated assurances that the bill would be filed soon, counsel for the defendant, Mr Muthu Kumaran, did not file the defendant’s bill for taxation until 28 September 2011. Thus, the plaintiff’s bill had to be taxed in the absence of the defendant’s bill.

As drawn, the plaintiff claimed the following amounts under the bill: In respect of Section 1, $80,000; In respect of Section 2, $1,260; and In respect of Section 3, $9,617.80. Taxation took place over two sessions and at the end of the second session, the Assistant Registrar (“the AR”) awarded the plaintiff $7,000 in respect of Section 1, $400 in respect of Section 2 and taxed off all items in Section 3 except items 62 and 63. The AR disallowed the taxing and the allocatur fee in view of the amount that had been taxed off. The basis of the AR’s decision that the plaintiff was only entitled to $7,000 in respect of getting up for the counterclaim was that she accepted that the Medway principles applied to this case.

The plaintiff applied for a review of the AR’s decision. At the review, Mr Andrew Ee, counsel for the plaintiff, put forward a vigorous argument that it was wrong to apply the Medway principles. Instead, he submitted, the correct approach to take was that espoused in Christie v Platt (1921) 2 K.B. 17 (“Christie v Platt”). Although Medway Oil has been followed in Singapore previously (the first example being A.E. Beavis v Foo Chee Fong [1938] MLJ 129) and the Medway principles have been put forward in legal writing as the applicable principles of taxation in a case such as the present (see Taxation of Party and Party Costs in Civil Proceedings by Lee Teck Leng (5 S.Ac.L.J. 309)), in view of the arguments made, it may be useful to review the law on the matter.

Tracing the law

The first case in the series of authorities that was cited to me was Saner v Bilton (1879) 11 Ch. D. 416, the decision of a very well respected judge, Fry J. That case had a result that was similar to the one here in that the plaintiff’s claim was dismissed with costs to the defendant and the defendant’s counterclaim was dismissed with costs to the plaintiff. Fry J’s decision laid down the basis for the Medway principles and it was subsequently explained in Medway Oil by Viscount Haldane as follows:

In 1879 Fry J. decided Saner v Bilton. ... The question was whether the defendant ought to pay only so much of the costs pertaining to the claim as were occasioned by the counterclaim, or whether the costs of all the proceedings which related to both claim and counterclaim should be apportioned. Fry J. consulted some of the most eminent of the Taxing Masters, who advised against apportionment. He afterwards gave a considered judgment, in which he said that analysis of the practice before the Judicature Act threw but little light on the question before him. The true view seemed to him to be that the plaintiff having begun the litigation, and the counterclaim having only arisen in it as a consequence, the claim should be treated as if it stood by itself, and the counterclaim should bear only the amount by which the costs of the proceedings had been increased by it. Special directions might be given by the Court which would vary the application of the rule, but in a case where both claim and counterclaim were simply dismissed with costs, there should be no apportionment, and no question of quantum arose. [Emphasis added]

Part of the significance of Saner v Bilton and the basis of its weight as an authority was it was decided after consulting the judicial officers who regularly taxed costs.

The next case was Baines v Bromley & Another (1881) 6 Q.B. 69. Here, both parties were successful. The plaintiff was given judgment on his claim for approximately £115 and costs whilst the defendants recovered judgment on their counterclaim for approximately £230 and costs. The taxing master treated the case as a verdict for the defendants because they had recovered more and gave to them the costs of the cause. He allowed the plaintiff only the costs of his witnesses whose evidence was essential to establish the plaintiff’s claim. The judge upheld this taxation by the master. On appeal by the plaintiff, the Court of Appeal held that the taxation was wrong and had to be reviewed. Brett L.J. stated:

I have, however, a firm opinion that where there is a claim with issues taken on it and a counter-claim, not a set-off, but in the nature of a cross-action with issues on it, and where the plaintiff succeeds on the claim and the defendant on the counter-claim, the proper principle of taxation, if not other-wise ordered, is to take the claim as if it and its issues were an action, and then to take the counter-claim and its issues as if it was an action, and then to give the allocatur for costs for the balance in favour of the litigant in whose favour the balance turns. In such a case where items are common to both actions the master would divide them. Where the so-called counter-claim is a set-off, there is but one action.

The learned judge expressed the view that if the defendants’ case had been treated as a pure set-off to the amount of the plaintiff’s claim and it had so appeared in the judgment, then the defendants would have been entitled to the costs of the action, because then the defendants would have denied by way of defence that the plaintiff had any right to bring an action at all and would have succeeded in their defence. To me, it appears that the distinction between this case and the earlier one was that in Baines v Bromley the claim and counterclaims were distinct from each other and did not have facts in common. As the counterclaim was a separate action and not, essentially, a set-off to the plaintiff’s claim, the plaintiff was entitled to tax his costs as a successful party notwithstanding that the amount he recovered on the claim was less than the amount the defendants had recovered on the counterclaim.

The third case brought up, In re Brown; Ward v Morse (1883) 23 Ch. D. 377 (“Ward v Morse”), was a similar situation of both parties succeeding and the result was similar to that of Blaines v Bromley. The Court of Appeal, affirming the decision of Chitty J, held that when a plaintiff’s claim and a defendant’s counterclaim had both been successful, the plaintiff, in the absence of any special directions to the contrary, was entitled to the general costs of the action, notwithstanding that the result of the litigation was in favour of the defendant (in the sense that the counterclaim was for a greater sum than the claim). There would be no apportionment of such costs as would have been duplicated had the counterclaim been the subject of an independent action, but the plaintiff was not to recover as costs of the action any costs fairly attributable to the counterclaim. In this decision, Saner v Bilton was considered in addition to Baines v Bromley. Two of the members of the coram, Baggallay L.J. and Cotton L.J., considered that although in Saner v Bilton both parties had failed, the principle established there should be equally applicable to a case where both parties had succeeded. The third judge, Fry L.J. (of Saner v Bilton fame), agreed that the appeal should be dismissed without making further comments.

A few years later, in Atlas Metal Co. v Miller (1883) 23 C.H. 377 (“Atlas Metal”) (another case where the claim was dismissed with costs and the counterclaim was also dismissed with costs, ie, the Saner v Bilton situation) the taxing master had taxed the costs of both parties as though there had been two separate and distinct actions, and had allowed attendances on summonses, general attendances, term fees, instructions for brief, fees to counsel thereon, attendances in court, copies of documents etc to both parties. The defendants complained that as a result although they had succeeded in their defence of the claim, they had been deprived of the general costs of the action.

In the Court of Appeal, the defendants relied on Saner v Bilton. The judgment of the court (Lindley M.R. and Chitty L.J.) allowing the appeal was delivered by Lindley M.R. His Lordship noted that Saner v Bilton had been approved and followed by the Court of Appeal...