Ram Das VNP v SIA Engineering Company Ltd

• Jurisdiction: Singapore
• Judge: Tan May Tee
• Judgment Date: 09 July 2014
• Neutral Citation: [2014] SGDC 258
• Court: District Court (Singapore)
• Docket Number: DC 2677 of 2009 Z
• Year: 2014
• Published date: 24 July 2014
• Hearing Date: 24 March 2014,05 May 2014,15 January 2014,09 July 2014
• Plaintiff Counsel: Mr Perumal Athitham (M/s Yeo Perumal Mohideen Law Corporation)
• Defendant Counsel: Mr Kanapathi Pillai Nirumalan (M/s Global Law Alliance LLC)
• Subject Matter: Civil Procedure,Offer to Settle
• Citation: [2014] SGDC 258

District Judge Tan May Tee: Introduction

The Plaintiff sued his employer, the Defendants, for an injury sustained at work on 1 August 2008. He was a technician supervising the cleaning of an aircraft when he fell from the open door of the aircraft. The trial of the Plaintiff’s action on the issue of liability was fixed for hearing before me on 16 June 2011 with a second tranche in July and August 2011. I dismissed the Plaintiff’s claim on 28 November 2011. The Plaintiff then appealed to the High Court in District Court Appeal No. 41 of 2011.

The appeal was heard on 29 June 2012 by the Honourable Justice Choo Han Teck. The learned Judge reserved judgment after hearing submissions from both counsel. On 13 July 2012 the learned Judge allowed the appeal by the Plaintiff. He apportioned liability at 50:50 between the parties and directed an assessment of damages by the trial judge. According to the record, an order for costs was made on the following terms: “Costs below and here to the Plaintiff to be taxed, if not agreed”.

The matter then came back for hearing before me. The assessment of damages started on 17 October 2013 with the Plaintiff taking the witness stand. After the first day, the assessment hearing was adjourned for parties to take another 2 days for the examination of the Plaintiff’s medical witnesses.

As it turned out, I did not need to hear any further witnesses as the parties managed to reach a settlement. The Defendants had issued a Calderbank offer on 29 November 2013 which the Plaintiff accepted on 9 January 2014. I recorded the terms of settlement between the parties on 15 January 2014. The Defendants would pay the Plaintiff the sum of $35,000-00 for damages inclusive of interest, with costs and disbursements (plus GST) to be agreed or taxed. This sum amounted to 50% of the agreed damages based on the interlocutory judgment granted by the High Court.

There, however, remained an outstanding issue. The Defendants had served an offer to settle (“OTS”) on the issue of liability at 50% after the first tranche of the trial. The OTS was dated 4 July 2011 and was served about 3 weeks before the second tranche of the trial was to commence on 27 July 2011. Since the Plaintiff had succeeded to the extent of 50% only on his appeal, the Defendants sought to argue that they should be entitled to costs for the liability portion of the action after the service of the OTS. The Plaintiff resisted. Mr Perumal, counsel for the Plaintiff, argued that the issue of costs had already been determined by the High Court when the appeal was heard and the costs order set out in [2] above was made. As there was disagreement whether I could hear the arguments on costs, counsel were directed to clarify the matter with the learned Judge.

I was informed that parties attended before Justice Choo on 3 March 2014 and the learned Judge directed that the effect of the costs order made on the appeal as well as the issue of the Defendants’ OTS were to be determined by me.

Issues

From the chronology of the proceedings, it was convenient to demarcate 3 distinct stages for allocation of costs in this action. The first stage was from the date of issue of the writ of summons to the date when the OTS was served. The second stage was from the date of service of the OTS to the date of the High Court decision on the appeal when the issue of liability was finally determined. The third stage was for work done for the assessment of damages – this would be up to the date when the Plaintiff accepted the Defendants’ Calderbank offer on 9 January 2014.

It was not disputed that the Plaintiff was entitled to costs for the first and third stages. It was the costs for the second stage that was in contention. This would cover the work done for the remainder of the liability trial before me, the closing submissions and judgment, followed by the preparation of the appeal and the hearing of the appeal in the High Court.

In determining which party was entitled to costs for the second stage, the issues I had to consider were: whether the Defendants’ OTS on liability was valid and effective; if the OTS was valid and effective, whether the Plaintiff had obtained a judgment which was not more favourable than the terms of the OTS; if the Plaintiff had obtained a judgment which was not more favourable than the terms of the OTS, whether the Defendants ought to be granted costs on an indemnity basis from the date of the OTS to the date of the High Court decision on the appeal.

The OTS and my decision

The Defendants’ OTS dated 4 July 2011 was worded as follows:

“The Defendants offer to settle these proceedings under Order 22A on the issue of liability with the Defendants paying the Plaintiff 50% of the damages to be assessed by the Registrar, with costs and disbursements reserved to the Registrar assessing the damages.”

I held the OTS to be valid and effective; and granted the Defendants costs on an indemnity basis from the date of the OTS to the date of the High Court decision on the appeal. The Plaintiff has appealed against my ruling, and I set out my reasons herein.

The applicable law

The governing provisions are O. 22A r. 1, O. 22A r. 9(3) and r. 9(5) of the Rules of Court which provide that:

O. 22A r. 1

1 A party to any proceedings may serve on any other party an offer to settle any one or more of the claims in the proceedings on the terms specified in the offer to settle. The offer to settle shall be in Form 33.

O. 22A r. 9(3)

(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.

O. 22A r. 9(5):

(5) Without prejudice to paragraphs (1), (2) and (3), where an offer to settle has been made, and notwithstanding anything in the offer to settle, the Court shall have full power to determine by whom and to what extent any costs are to be paid, and the Court may make such a determination upon the application of a party or of its own motion.

The Court’s overriding discretion as to costs is set out in O. 22A r. 12:

Discretion of Court (O. 22A, r. 12) 12. Without prejudice to Rules 9 and 10, the Court, in exercising its discretion with respect to costs, may take into account any offer to settle, the date the offer was made, the terms of the offer and the extent to which the plaintiff’s judgment is more favourable than the terms of the offer to settle.

The Plaintiff’s contentions

Mr Perumal, for the Plaintiff, argued that the Defendants’ OTS was invalid on the following grounds: The OTS being an offer to settle on liability alone was not valid, following the Court of Appeal’s observation in “The Endurance 1” [1998] 3 SLR 970 at [44] thus –

“In our view an offer to settle for a percentage of an unliquidated sum to be ascertained, as the claims in this case for damages to be assessed, cannot by any means be said to be a serious and a genuine offer to settle. It runs counter to the principle behind O 22A as stated in [45] above. An assessment of damages, even where liability is a matter of course, can give rise to numerous complexities and result in protracted hearings and expense. It must follow that to offer to settle at a percentage of the unliquidated sum to be ascertained or of damages to be assessed cannot be a serious and a genuine offer to settle but is made to take an unfair advantage of r 9 of O 22A.”

The Plaintiff’s argument was simply that an offer to settle on liability alone is not valid as a matter of law, based on the above paragraph in The Endurance 1. The OTS therefore had no effect, and the Plaintiff was entitled to costs of the trial before me as well as the appeal proceedings in DCA 41/2011. After the action was dismissed by the trial judge, the OTS was no longer available as it was obvious that the Defendants would not allow the Plaintiff to accept the OTS after the dismissal of his claim or before the hearing of the appeal. The OTS could not apply to the appeal stage following the commentary in paragraph 22A/4/1/2 of the Singapore Civil Procedure which stated as follows:

Non-application to appeals – Order 22A does not apply to appeals although there are no cases which held that an offer system with costs consequences and incentives should not be applicable at the appeal level: see Meadowfield Ventures v. Kennedy (1990) 75 O.R. (2d) 760, which followed Niagara v. Laflamme (1987) 58 O.R. (2d)773. In Niagara, the Court of Appeal of Ontario held that the better view is that the right to make an offer at any time before the court disposes of the matter means before the pronouncement of judgment by a court of first instance and, r.2 of O22A would not extend beyond this.

The Court of Appeal for Ontario in Douglas Hamilton v. Robert Mark (1993) Ont CA Lexis 238 held that while the court recognised that the Canadian equivalent of O22A (r.49) had no application to offers to settle in appeals, the existence of an offer to settle may, in appropriate circumstances, be considered by the courts in exercising its discretion on costs.

I will deal with each of the Plaintiff’s contentions in turn.

Whether the Defendants’ OTS on liability only was valid and effective

As the Plaintiff was primarily relying on the observations made in The Endurance 1, it was necessary to consider the facts and rulings made by the CA in some detail.

The Endurance 1

The claim in The Endurance 1 was made by the charterers of the vessel against the owners for breach of a time charterparty dated 2...