Qilin World Capital Ltd v CPIT Investments Ltd and another appeal

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 11 July 2018
• Neutral Citation: [2018] SGCA(I) 4
• Plaintiff Counsel: Martin Roderick Edward SC, Renganathan Nandakumar, Nandhu and Yap Yongzhi, Gideon (RHTLaw Taylor Wessing LLP)
• Date: 11 July 2018
• Docket Number: Civil Appeals Nos 126 and 145 of 2017
• Hearing Date: 24 April 2018
• Subject Matter: Costs,Civil Procedure,Singapore International Commercial Court
• Published date: 14 July 2018
• Defendant Counsel: the appellant in CA 145 of 2017 and the respondent in CA 126 of 2017 absent and unrepresented.
• Court: Court of Appeal (Singapore)
• Citation: [2018] SGCA(I) 4
• Year: 2018

Dyson Heydon IJ (delivering the judgment of the court): Introduction

These reasons concern the costs of certain proceedings both at trial and on appeal. In the proceedings from which the present appeal was brought, CPIT Investments Ltd (“CPIT”) brought claims against Qilin World Capital Ltd (“Qilin”) arising from a loan agreement (“the Loan Agreement”) secured by certain shares. CPIT asserted that Qilin had wrongfully disposed of these shares when it was not entitled to do so under the Loan Agreement, and thus held the proceeds on constructive trust for CPIT. On 17 July 2017, the learned trial judge (Vivian Ramsey IJ) made an order that Qilin held HK$31.25m on constructive trust for CPIT and granted related relief. But he also dismissed CPIT’s claim that Qilin’s conduct had caused a very large fall in the value of certain other shares owned by CPIT which were not used as security for the loan (see CPIT Investments Ltd v Qilin World Capital Ltd [2017] 5 SLR 1 (“CPIT v Qilin (trial judgment)”).

By Civil Appeal No 126 of 2017 (“CA 126”), Qilin appealed against the orders relating to the constructive trust. By Civil Appeal No 145 of 2017 (“CA 145”), CPIT appealed against the order rejecting its claim that Qilin was responsible for the fall in the value of its shares.

On 5 March 2018, the trial judge made costs orders reflecting CPIT’s success before him. He ordered Qilin to pay S$47,906.20 by way of costs and disbursements for interlocutory applications, S$384,000.00 as costs for the rest of the proceedings, and S$28,600.26 plus HK$648,427.57 as disbursements for the proceedings, excluding interlocutory applications (see CPIT Investments Ltd v Qilin World Capital Ltd [2018] SGHC(I) 02 (“CPIT v Qilin (costs judgment)”)).

On 6 March 2018, this court allowed Qilin’s appeal and dismissed CPIT’s appeal (see Qilin World Capital Ltd v CPIT Investments Ltd [2018] SGCA(I) 01).

That disposed of all issues between the parties except costs.

The submissions of the parties

On 23 April 2018, CPIT’s solicitors informed Qilin’s solicitors that on 20 April 2018 they had been discharged as CPIT’s solicitors and they had no instructions to file costs submissions on behalf of CPIT. On 24 April 2018, Qilin’s solicitors filed written submissions concerning costs. Thereafter, the Registry informed CPIT by letter that if it had any views on the issue of costs, it should provide these views to the court by 21 June 2018. No response was received.

It is desirable at the outset to note that in their letter of 23 April 2018, CPIT’s solicitors contended in effect that it was not open to Qilin to seek the costs, or all the costs, of the proceedings at trial. They requested Qilin’s solicitors to bring the following points to this court’s attention, which they have done: The direction from the Court of Appeal on 10 April 2018 was for parties to deal with the question of costs of the appeals. It did not include the costs of the proceedings below, which was not the subject of Qilin’s Notice of Appeal in CA 126. The trial judge held that Qilin was in breach of the terms of the Loan Agreement by disposing of the shares used as security (see CPIT v Qilin (trial judgment) at [79] and [91]). The trial judge also found that Qilin was in repudiatory breach of the Loan Agreement and that CPIT was entitled to terminate the Loan Agreement as it did on 4 January 2016. Qilin did not appeal against this finding. The trial judge dismissed Qilin’s counterclaim for loss arising from CPIT’s allegedly wrongful repudiation of the Loan Agreement. Qilin did not appeal against this finding. Apart from the fact that Qilin’s counterclaim had been dismissed, the Court of Appeal only ordered CPIT to return the money that Qilin had paid to CPIT pursuant to the lower Court’s judgment in favour of CPIT. CPIT’s solicitors suggested this was relevant to how costs would be affected by an offer to settle made by Qilin on 29 November 2016.

It is desirable to put to one side an interesting question: do persons who were once solicitors for a party to litigation but have since been discharged have any entitlement to be heard?

As to point (a), the fact that the costs of the first instance proceedings were absent from Qilin’s Notice of Appeal is not surprising. The Notice of Appeal was filed on 20 July 2017. The decision of the trial judge on costs was published on 5 March 2018. Despite the fact that the costs of the proceedings below are not mentioned in the Notice of Appeal, the court is entitled and empowered to deal with the costs of the proceedings below. Even if the Notice of Appeal is to be regarded as deficient in this respect, it is a deficiency which could readily be cured by amendment. In the circumstances an amendment is not necessary.

As to points (b)-(d), these factors do not deal with the fact that the result of Qilin’s appeal was to deprive CPIT entirely of the fruits of its victory at trial. The fact that certain findings were made against Qilin, and the fact that no appeal was brought in these respects by Qilin, overlooks the difficulties that appeals are made against orders, not findings. The orders of the trial judge in favour of CPIT have been set aside. The failure of Qilin in some respects at trial was not such as to justify departing from the principle that, prima facie, costs follow the event. Nevertheless, Qilin’s failure in relation to certain aspects of its case will be considered in relation to one of Qilin’s arguments (see [23]–[24] below).

Point (e) will be referred to later.

The trial judge’s costs orders

In dealing with the issue of costs, the trial judge issued a closely reasoned judgment which contains a careful exposition of the principles applicable to costs in the Singapore International Commercial Court. These reasons for judgment on costs should not be read as taking issue with the trial judge’s reasoning on costs. They simply have a different starting point. His reasoning on costs begins with a particular view of how the substantive issues in the litigation should be resolved. This court’s reasoning begins with a different view of how the substantive issues should be resolved.

It is worth noting that, with regard to the costs of the proceedings at first instance, Qilin has sought to be compensated in amounts which are substantially similar to those awarded by the trial judge to CPIT, subject to adjustments to reflect its success on appeal.

Qilin’s success in its appeal has the consequence that the trial judge’s costs orders in favour of CPIT must be set aside, subject to any material consideration urged by CPIT to the...