Senda International Capital Ltd v Kiri Industries Ltd

• Judge: Sundaresh Menon CJ
• Judgment Date: 25 November 2022
• Neutral Citation: [2022] SGCA(I) 10
• Citation: [2022] SGCA(I) 10
• Court: Court of Appeal (Singapore)
• Published date: 30 November 2022
• Docket Number: Civil Appeal No 14 of 2022
• Plaintiff Counsel: Toh Kian Sing SC, Cheng Wai Yuen, Mark, Chew Xiang, Soh Yu Xian Priscilla and Lim Wee Teck, Darren (Rajah & Tann Singapore LLP)
• Defendant Counsel: Dhillon Dinesh Singh, Loong Tse Chuan, Dhivya Rajendra Naidu, Chee Yi Wen Serene and Jung Sol (Allen & Gledhill LLP)
• Subject Matter: Civil Procedure,Costs,Principles
• Hearing Date: 15 September 2022

Sundaresh Menon CJ (delivering the judgment of the court): Introduction

The appellant, Senda International Capital Ltd (“Senda”), was ordered by a three-judge bench (“the Court”) of the Singapore International Commercial Court (“SICC”) to pay costs and disbursements in SIC/S 4/2017 (“SIC 4”) in the sum of S$8.1m to the respondent, Kiri Industries Ltd (“Kiri”). SIC 4 was a suit commenced by Kiri, in which it succeeded in its claim of minority oppression against Senda and obtained a buyout order for its shares. This appeal, in which Senda urges us to interfere with the Court’s decision on the costs of SIC 4, raises the question of the manner in which costs are to be assessed for proceedings in the SICC, and as to the principles by which such costs are to be assessed.

Background

The DyStar group was a major player in the international dye industry and was based in Germany. It experienced financial difficulties in 2009 and insolvency administrators were appointed. Kiri wanted to acquire the DyStar group’s business but could not raise the funds to do so on its own. Kiri accordingly turned to Zhejiang Longsheng Group Co Ltd (“Longsheng”) and invited it to enter into a joint venture for this purpose. The relevant agreements were executed by Kiri and Longsheng in 2010 and DyStar Global Holdings (Singapore) Pte Ltd (“DyStar”) was incorporated as the vehicle that would be used to acquire the DyStar group’s business. Kiri was the majority shareholder in DyStar while Longsheng (through its wholly-owned subsidiary Well Prospering Ltd (“WPL”)) held one share in DyStar and a €22m zero-coupon bond issued by DyStar, which could be converted at any time into ordinary shares at S$10 per share.

In July 2012, the convertible bond was transferred from WPL to Senda, which was another wholly-owned subsidiary of Longsheng. Then, in December 2012, which was also around the time DyStar turned profitable, Senda converted all of the debt under the convertible bond into equity. As a consequence of these developments, Senda became the majority shareholder of DyStar while Kiri became a minority shareholder. Respectively, they held 62.43% and 37.57% of the issued capital.

The relationship between Kiri and Senda as joint venture partners deteriorated following the emergence of Senda as a majority shareholder in DyStar. On 26 June 2015, Kiri commenced a suit in the High Court against Senda alleging minority oppression. On 11 May 2017, the suit was transferred to the SICC.

SIC 4 was tried before the Court in two tranches. The first tranche of the proceedings involved the determination of Senda’s liability for minority oppression. The Court concluded that Senda had oppressed Kiri and ordered Senda to purchase Kiri’s 37.57% shareholding in DyStar, which was to be valued as at the date of its judgment, 3 July 2018 (see DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries Ltd and others and another suit [2018] 5 SLR 1). That decision was upheld on appeal in May 2019 (see Senda International Capital Ltd v Kiri Industries Ltd and others and another appeal [2019] 2 SLR 1). After the conclusion of the first tranche, the Court held, by way of an oral judgment delivered on 8 January 2019, that Kiri was to be awarded “full costs”, and that all such costs were to be “taxed if not agreed”.

The second tranche involved the determination of the value of Kiri’s shareholding for the purposes of the buyout order. The Court delivered its decision by way of three judgments, and in a final judgment dated 21 June 2021, adjudged the value of Kiri’s shareholding to be US$481.6m (see Kiri Industries Ltd v Senda International Capital Ltd and another [2021] 3 SLR 215 (“First Valuation Judgment”), [2021] 5 SLR 1, [2021] 5 SLR 111). In July 2022, Kiri’s appeal against the Court’s decision on valuation was allowed in part while Senda’s appeal was dismissed, though the details of that decision of the Court of Appeal are not relevant to the present appeal (see Kiri Industries Ltd v Senda International Capital Ltd and another and other appeals [2022] SGCA(I) 5).

For clarity, we explain that, in this judgment, we refer to the period beginning with Kiri’s commencement of its suit against Senda in the High Court on 26 June 2015 until 3 July 2018, when the Court delivered its judgment on liability and made the buyout order, as “the Liability Tranche”. The costs order made after the conclusion of the Liability Tranche in the oral judgment dated 8 January 2019 (see [5] above) is referred to as “the Liability Tranche Costs Order”. The period commencing immediately after 3 July 2018 until 21 June 2021, when the Court adjudged the final valuation of Kiri’s shares in DyStar, is referred to as “the Valuation Tranche”.

After the conclusion of the Valuation Tranche, the Court directed the parties to file written submissions on costs. Two rounds of written submissions were filed, and on 8 December 2021, the Court issued its judgment ordering Senda to pay Kiri costs and disbursements of S$8,111,642.11 (see Kiri Industries Ltd v Senda International Capital Ltd and another [2022] 3 SLR 174 (“the Costs Judgment”)). The Costs Judgment is the subject of this appeal.

Procedural history leading to the Costs Judgment

We set out the procedural history leading to the Court’s decision in the Costs Judgment and the arguments made below by Kiri and Senda in some detail because, as we will shortly explain, this has a bearing on some of the views that we have arrived at in this appeal.

The Court invites the parties to file costs submissions

On 21 June 2021, being the day on which the Court delivered its judgment as to the final valuation of Kiri’s shareholding in DyStar, it also directed that the parties “file written submissions on costs, limited to 10 pages in standard font size, by 12 July 2021”. On 22 June 2021, by a joint letter, counsel for Kiri and for Senda sought clarification in respect of that direction on, amongst other issues, whether the parties were to address the Court only on issues of their in-principle entitlement to costs for the Valuation Tranche, or if they were also to address the quantum of costs and disbursements that they should be entitled to for the Valuation Tranche, and whether their submissions should also address the quantum of costs for the Liability Tranche.

On 23 June 2021, the Court directed the parties to address the issues of the entitlement to costs for the Valuation Tranche and of the quantum of costs for the Liability Tranche and the Valuation Tranche.

The first round of costs submissions

On 16 July 2021, the parties filed their costs submissions as directed. Senda made the following arguments in its costs submissions: For the Liability Tranche, the order that Kiri’s costs are to be “taxed if not agreed” (meaning the Liability Tranche Costs Order) should stand. Since Kiri had not made any costs proposal to Senda and no agreement had been reached by the parties on costs, Kiri’s costs for the Liability Tranche should remain either to be agreed or, failing that, be taxed. The Court should therefore not fix the costs for the Liability Tranche. Alternatively, if the Court wished to fix costs, then Appendix G of the Supreme Court Practice Directions 2013 (“Appendix G”) setting out “Guidelines for Party-and-Party Costs Awards” should apply, and Kiri should be awarded costs of no more than S$204,000 for the Liability Tranche. For the Valuation Tranche, the Court should make no order as to costs and the parties should bear their own costs. This was because, first, Senda had succeeded on some issues in the Valuation Tranche which entailed far greater expenditure in terms of time and costs than the issues on which Kiri had succeeded, and second, the final valuation which the Court arrived at was one falling between the respective valuations adduced by the parties, suggesting that the parties were essentially equally successful or unsuccessful in the valuation proceedings. In the alternative, if Kiri were to be awarded costs, a significant discount of at least 48% should be applied.

In its submissions, Kiri referred to the decision of the Court of Appeal in CBX and another v CBZ and others [2022] 1 SLR 88 (“CBX”). There, we held that, for a case (like SIC 4) that had been filed initially in the High Court and was then later transferred to the SICC Registry, the assessment of costs should distinguish between (a) costs for the period before the transfer to the SICC (“Pre-Transfer Costs”) and (b) costs for the period after the transfer to the SICC (“Post-Transfer Costs”).

In CBX, we held that, for the assessment of Pre-Transfer Costs, O 59 of the Rules of Court (2014 Rev Ed) (“the ROC 2014”) and Appendix G would apply, unless the parties had at the time of the transfer consented to its disapplication, or the Registrar handling the transfer of the matter to the SICC had made an order to this effect (see CBX at [28]). This is because, in general, the policy underlying the adoption of Appendix G for cases filed in the High Court would continue to apply at least in respect of steps that had been taken in the High Court, even if it should later be considered appropriate to transfer the case to the SICC for adjudication (see CBX at [28]). However, in an appropriate case, the court may either depart altogether from Appendix G or apply an uplift from Appendix G in the assessment of Pre-Transfer Costs (see CBX at [34] and [40]). On the other hand, for the assessment of Post-Transfer Costs, O 110 r 46 of the ROC 2014 applies. Order 110 r 46(1) states: 46.—(1) The unsuccessful party in any application or proceedings in the Court must pay the reasonable costs of the application or proceedings to the successful party, unless the Court orders otherwise.

[emphasis added]

Kiri accordingly drew a distinction between Pre-Transfer Costs and Post-Transfer Costs in its costs submissions. Kiri first submitted that...