NTUC Foodfare Co-operative Ltd v SIA Engineering Co Ltd and another

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 05 September 2018
• Neutral Citation: [2018] SGCA 56
• Citation: [2018] SGCA 56
• Defendant Counsel: Kwek Yiu Wing Kevin, Tan Yiting Gina and Charmaine Elizabeth Ong Wan Qi (Legal Solutions LLC))
• Published date: 08 September 2018
• Hearing Date: 02 August 2018
• Plaintiff Counsel: N Sreenivasan SC, Palaniappan Sundararaj, N K Rajarh and Cheong Wei Yang, Daryl (Straits Law Practice LLC)
• Date: 05 September 2018
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 207 of 2017
• Subject Matter: Civil Procedure,Offer to settle

Steven Chong JA (delivering the judgment of the court):

On 19 July 2018, we allowed this appeal in part and directed the parties to file written submissions on the appropriate orders on costs for the trial and the appeal, unless they came to an agreement on costs: see NTUC Foodfare Co-operative Ltd v SIA Engineering Co Ltd and another [2018] SGCA 41 (the “Judgment”) at [85]. The parties were unable to come to an agreement, and have now filed their submissions on costs.

The parties’ submissions raise the issue of whether, where a defendant makes an offer to settle (“OTS”) that is inclusive of costs or proposes that there be no order as to costs, the court should account for costs incurred by the plaintiff (up to the date of the OTS) in deciding whether the judgment is not more favourable than the OTS under O 22A r 9(3)(b) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“the Rules of Court”). This issue has not been considered by this court before. The costs consequences in this appeal are further obfuscated by a Calderbank offer which was made by the plaintiff following the trial, apparently in the mistaken belief that the OTS had lapsed. We now issue this judgment to address the aforementioned issue, and to give our decision on the appropriate costs orders.

Facts

On 7 December 2015, the appellant (“NTUC Foodfare”) commenced the suit from which this appeal arises.

On 12 May 2017, 11 days before the trial began, the respondents served an OTS (“the OTS”) on NTUC Foodfare, which states:¹

The Defendants offer to settle this proceeding on the following terms:

1. The Defendants shall pay to the Plaintiff the sum of S$225,000.00 (the “Settlement Sum”). 2. The Plaintiff shall file a Notice of Discontinuance with no order as to costs within 7 days of the receipt of the Settlement Sum by the Plaintiff. 3. This settlement is in full and final settlement of all or any claims whatsoever arising out of or in connection with this action …

[emphasis added]

By the OTS, the respondents offered to pay NTUC Foodfare S$225,000 (the “Settlement Sum”) in settlement of its claims. Importantly, the OTS did not provide for NTUC Foodfare to receive a separate sum for the costs it incurred prior to 12 May 2017. NTUC Foodfare was to receive the Settlement Sum only. Significantly, the OTS also did not specify a date on which it would expire.

NTUC Foodfare submits, and the respondents do not deny, that all of the affidavits of evidence-in-chief (“AEICs”) for the trial were filed by 12 May 2017.² We are also satisfied that much of the preparatory work for the trial, which was set down for seven days, would have been completed by this stage. Following the trial, the claim was dismissed in its entirety.

NTUC Foodfare did not accept the OTS at any time. However, on 16 April 2018, after the trial, but before the hearing of this appeal, NTUC Foodfare wrote a letter to the respondents stating that it was prepared to accept a total sum of S$176,176.85 (all in) in settlement of the dispute (the “Calderbank Offer”).³ The respondents did not accept the Calderbank Offer.

On 19 July 2018, we delivered the Judgment, holding at [84] that the respondents were liable to NTUC Foodfare in the sum of S$176,176.85 and interest at 5.33% per annum on the said sum from the date of the writ to the date of the Judgment (“the Judgment Sum”).

The parties’ submissions

The respondents submit that the OTS was open for acceptance until the disposal of the appeal. Furthermore, the judgment was less favourable to NTUC Foodfare than the terms of the OTS because the sum awarded – accounting for interest from the date of the writ of summons (7 December 2015) to the date of the OTS (12 May 2017), pursuant to O 22A r 9(4) of the Rules of Court – was less than the Settlement Sum.⁴ The respondents submit that O 22A r 9(3) of the Rules of Court therefore applies, and the court should apply the rule thereunder by awarding costs to NTUC Foodfare on a standard basis from 7 December 2015 (the date of the writ of summons) to 12 May 2017 (the date of the OTS), and costs to the respondents on an indemnity basis from 12 May 2017 onwards.⁵ In the alternative, the respondents seek costs on a standard basis, emphasising that NTUC Foodfare only partially succeeded in its claim and much time at the trial and on appeal was spent on aspects of the claim which NTUC Foodfare failed to prove.⁶

NTUC Foodfare submits that O 22A r 9(3) of the Rules of Court does not apply because its preconditions have not been satisfied. First, the OTS was not open for acceptance after the trial ended.⁷ Second, the terms of the OTS were less favourable than the judgment once costs and disbursements incurred by NTUC Foodfare up to the date of the OTS are accounted for.⁸

NTUC Foodfare submits that the appropriate costs order for the trial and the appeal is costs to NTUC Foodfare, to be taxed if not agreed. Further, NTUC Foodfare submits that it is entitled to indemnity costs from 16 April 2018, the date of the Calderbank Offer, on the basis that the global sum proposed therein was more favourable to the respondents than the outcome of this appeal.⁹

The issues

The following issues arise for our determination: First, does O 22A r 9(3) of the Rules of Court apply? Second, what are the appropriate orders on costs?

We now address these issues in turn.

Analysis The applicability of O 22A r 9(3) of the Rules of Court

Order 22A r 9(3) of the Rules of Court states: (3) Where an offer to settle made by a defendant — (a) is not withdrawn and has not expired before the disposal of the claim in respect of which the offer to settle is made; and (b) is not accepted by the plaintiff, and the plaintiff obtains judgment not more favourable than the terms of the offer to settle,

the plaintiff is entitled to costs on the standard basis to the date the offer was served and the defendant is entitled to costs on the indemnity basis from that date, unless the Court orders otherwise.

[emphasis added in italics]

NTUC Foodfare did not accept the OTS. Hence, the general rule on costs under O 22A r 9(3) would apply if two conditions are satisfied: the OTS was not withdrawn and had not expired before the disposal of the claim (the “Validity Requirement”); and the judgment is not more favourable than the terms of the OTS (the “Favourability Requirement”).

The Validity Requirement

It is not in dispute that the respondents did not withdraw the OTS at any time. However, NTUC Foodfare claims that the OTS expired upon the conclusion of the trial. We disagree. Here, the OTS did not specify a time for acceptance. Order 22A r 3(5), which provides for this scenario, states: (5) Where an offer to settle does not specify a time for acceptance, it may be accepted at any time before the Court disposes of the matter in respect of which it is made. [emphasis added]

Under O 22A r 3(5), the OTS remained open for acceptance “at any time before the Court dispose[d] of the matter in respect of which it [was] made” [emphasis added]. It is settled law that for the purposes of O 22A r 9(3)(a), “the disposal of the claim” refers to the final disposal of the claim on appeal if an appeal is filed: see Man B&W Diesel S E Asia Pte Ltd and another v PT Bumi International Tankers and another appeal [2004] 3 SLR(R) 267 at [20] and Ram Das V N P v SIA Engineering Co Ltd [2015] 3 SLR 267 at [73]. In our judgment, the phrase “dispos[al] of the matter” in O 22A r 3(5) must be interpreted consistently with O 22A r 9(3)(a) to refer to the final disposal of the claim on appeal where there is an appeal. We therefore conclude that under O 22A r 3(5), the OTS remained open for acceptance until 19 July 2018, when we issued the Judgment which finally disposed of the claim. Hence, the Validity Requirement is satisfied.

The Favourability Requirement

As noted above, we held in the Judgment that the respondents are liable for the sum of S$176,176.85 and interest at 5.33% per annum on the said sum from the date of the writ to the date of the Judgment.

Order 22A r 9(4) of the Rules of Court provides that in deciding whether the judgment is more favourable than the terms of an OTS, the court should only consider interest awarded in respect of the period before service of the OTS. Interest at 5.33% per annum on the sum of S$176,176.85 from 7 December 2015 until 11 May 2017 (before the OTS was served on 12 May 2017) amounts to S$13,429.31. Adding this sum to S$176,176.85 yields the sum of S$189,606.16.

The respondents submit that the Favourability Requirement is satisfied because S$189,606.16 is less than the Settlement Sum of S$225,000. On the other hand, NTUC Foodfare contends that the Favourability Requirement has not been satisfied because once costs and disbursements are taken into account, the terms of the OTS are less favourable than the judgment. Thus, the narrow point which we have to decide is whether we should take into account the costs and disbursements that NTUC Foodfare incurred up to the date of the service of the OTS in assessing the relative favourability of the OTS and the judgment.

The test of favourability

In CCM Industrial Pte Ltd v Uniquetech Pte Ltd [2009] 2 SLR(R) 20, Chan Sek Keong CJ made the following pertinent remarks at [40] on the test of favourability under O 22A r 9(3)(b):

… The word “favourable” has to be interpreted in the context in which it is used. What is favourable has to be determined on the terms of the offer to...