TAXATION OF PARTY AND PARTY COSTS IN CIVIL PROCEEDINGS

• Date: 01 December 1993
• Author: LEE TECK LENG
• Published date: 01 December 1993

1. INTRODUCTION

The taxation of party and party (P/P) costs in civil proceedings is governed by Order 59 of the Rules of Supreme Court1 and Orders 56 and 57 of the Subordinate Courts Rules2. This Paper will discuss the general principles of taxation of P/P costs, taxation review as well as the review of Registrar’s certificate by Judge in Chambers.

2. TAXATION OF PARTY AND PARTY BILLS OF COSTS — GENERAL PRINCIPLES

2.1 The Basis Of Taxation

Under the Rules, there are only 2 bases of taxation3 — the standard basis and the indemnity basis.

Unless the court orders otherwise, P/P bills are taxed on the standard basis4. In fact, where the court makes an order for costs without indicating the basis of taxation or an order that costs be taxed on any basis other than the standard basis or indemnity basis, the costs shall be taxed on the standard basis5.

On the taxation of costs on the standard basis, there shall be allowed a reasonable amount in respect of all costs reasonably incurred. Any doubts which the Registrar may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the paying party 6 . The burden is on the party whose bill it is to prove that the costs and/or their amounts are reasonable.

In other words, the Registrar will apply a 2-stage test as follows:

1. (1) whether the types of costs in question were reasonably incurred such that, in principle, they were recoverable from the paying party; and

1. (2) if “yes”, what would be a reasonable quantification of the costs in question.

The court making the order for taxation may, if it appears appropriate, order the P/P costs to be taxed on the indemnity basis7. On the taxation of costs on the indemnity basis, all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred. Any doubts which the Registrar may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receivingparty8. The burden is on the paying party to prove that the incurring of the costs and/or the amounts are unreasonable.

The correct viewpoint to be taken in considering whether any step was reasonable or unreasonable is that of a sensible solicitor considering what, in the light of his then knowledge, was reasonable in the interest of his client9.

For litigants in person, on the taxation of costs, there may be allowed such costs as would reasonably compensate the litigant for the time expended by him, together with all expenses reasonably incurred10.

Taxation of P/P costs may be for the following:

1. 1. costs of an action or interlocutory application;

2. 2. costs of an appeal; or

3. 3. costs thrown away due to the vacating of the hearing date (trial, assessment of damages or any interlocutory application).

I will proceed to deal with the general principles applicable to each type of P/P taxation.

2.2 Costs Of An Action Or Interlocutory Application

The following general principles are applicable to the taxation of the costs of an action or interlocutory application.

2.2.1 Where Parties Settled Before The Hearing

Very often, the parties settle the matters just before the hearing. The first issue that arises is whether, in principle, it would follow that whatever items

that were originally pleaded in the statement of claim as special damages would no longer be recoverable as disbursements in the P/P taxation if the parties entered into a global settlement for the claim. It is submitted that such items would in fact cease to be recoverable11.

The second issue is whether the party entitled to taxed costs should be awarded the costs of “getting-up” (ie the legal research and the general preparation for the hearing) when there was no hearing12.

In Re Kana Moona Syed AbuBakar decd13, Aitken J held that “the true test to apply is not whether or not an issue had proceeded to trial, but whether or not a solicitor and advocate has acted reasonably and properly in getting up his client’s case in readiness for a trial”.

In Lee Bang v. Nadzri14, Maclntyre J adopted Aitken J’s statement of the law and held that15:

“The principle established by this ruling is that where the proceedings in an action have reached a stage where a hearing in open court is inevitable the legal advisers of the parties are entitled to be in readiness for the hearing and must be compensated for the work done irrespective of whether there was actually a hearing in open court or not.”

As such, it is submitted that, in determining whether “getting-up” should be included in the taxed costs, the stage at which the parties settled the matters must be of paramount consideration. If it was settled at a very late stage such

that the party entitled to taxed costs would have already been fully prepared for the hearing, then in principle, a substantial part of, or even the full “getting-up”, should be allowed.

It would be instructive to note the following cases.

In Jendol v. Ng Beng Chan16, Wee J (as he then was) held that the successful party in that case was entitled to “getting-up” fee even though the case had not been set down for trial. In that case, the defendant made payment into court 2 days after the defence was filed, in satisfaction of the plaintiffs’ fatal accident claim. The court held that the “getting-up” fee was clearly justified on the ground that in a “running down” case, if a solicitor has to decide whether the amount paid into court should be accepted, he has to go into the questions of liability and quantum, and this necessitates some “getting-up”17

It would also be useful to note Thorne Ag.CJ’s comments in The State of Selangor v. Kepong Dredging Co Ltd18, where His Lordship held:

“In my view, this item (getting-up) cannot be charged until the case has proceeded to such a stage that the plaintiffs’ advisers know what are the issues of fact and law to be debated at the trial. Usually, that stage will not be reached until the pleadings had been closed.” (emphasis mine)

However, in Lee Bang v. Nadzri19, the court conceded that in certain cases, an issue for trial may be present irrespective of whether the defendant enters an appearance, delivers his defence or even admits liability. For example, in an action for personal injury, even if the defendant failed to enter an appearance such that an interlocutory judgment could be entered, the amount of damages is still in issue, thus necessitating “getting-up”.

In fact, Choor Singh J went even further in Starlite Ceramic Industry Ltd v. Hiap Huat Pottery20, holding that, in principle, there may well be cases in which “getting-up” done before the issue of the writ may be allowed21. A similar view was taken in Frankenburg v. Famous Lasky Film Service Ltd22, where the English Court of Appeal held that the allowance of costs before the issue of writ was a matter within the discretion of the Registrar, whose duty was to consider all the facts of the case and to allow all such costs as in his opinion had been properly incurred before the action was brought, in obtaining materials which would be useful to the plaintiff at the trial. It is submitted that, in determining whether it was reasonable to “get-up” the case

before the issue of the writ, it would be important to consider the nature of the action, in that, the more complex the case, the easier it would be to so justify.

2.2.2 Where The “Getting-Up” For Certain Issues Were Not Used

In United Malayan Banking Corporation Berhad v. Goodhope Realty (Private) Limited & Ors23, the defendants did “getting-up” for 5 issues which they identified as being relevant. Only 2 issues were really canvassed at the hearing. During taxation, the plaintiff contended that the defendants were only entitled to the costs of the issues that were canvassed at the hearing. On review, Karthigesu J held24:

“…a defendant has to prepare his case in anticipation of what he might expect to meet from the plaintiffs arising from the pleadings or in this case from the reliefs claimed in the Originating Summons and the affidavits[.]…The getting-up should be based on what is regarded as reasonable preparation to meet the other side’s case and should not be limited to how much of the getting-up is in fact used. After all it is the plaintiff in a case who has the conduct of the proceedings and to a certain extent controls its progress at the hearing.” (emphasis mine).

Karthigesu J held further that in determining the issues that the defendants had to meet, it would also be appropriate to look at the authorities included in the plaintiff’s bundle of authorities.

As regards the reverse situation where the successful plaintiffs did “getting-up” for several issues that they identified as being relevant, but actually canvassed only some of the issues at the hearing, it is submitted that the above principle should be equally applicable25.

2.2.3 Where The Successful Party Actually Failed On Some Issues

Very often, a successful party may have actually failed on some of the issues that were raised in the proceedings, but the trial judge did not expressly order that the successful party be awarded only a certain fraction of the taxed costs26. In such a case, the question which arises is whether the successful

party would be entitled to the full costs of the proceedings, including the “getting-up” on the issues that failed27. There are 3 possible views.

First, the successful party would not be entitled to the costs of the “getting-up” for the issues that he lost, as costs follow the event.

Secondly, the successful party would be entitled to his full “getting-up”, including the “getting-up” for the issues that failed. This is because, in the absence of an order expressly depriving the successful party of his costs on the failed issues, it must be assumed that the trial judge had intended to award full costs28. Moreover, in an...