Then Khek Koon v Arjun Permanand Samtani

CourtHigh Court (Singapore)
Judgment Date18 October 2013
Docket NumberSuit No 1084 of 2009 consolidated with Suits Nos 1085 and 1086 of 2009
Date18 October 2013

High Court

Vinodh Coomaraswamy J

Suit No 1084 of 2009 consolidated with Suits Nos 1085 and 1086 of 2009

Then Khek Koon and another
Arjun Permanand Samtani and another and other suits

Kannan Ramesh SC, Eddee Ng, Cheryl Koh, Ho Xin Ling, Yang Sue Jen (Tan Kok Quan Partnership) for the plaintiffs

NSreenivasan SC, Shankar s/o Angammah Sevasamy (Straits Law Practice LLC) for the first defendant

Subramanian Pillai, Luo Ling Ling, Leow Zi Xiang (Colin Ng & Partners LLP) for the second defendant.

Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965 (refd)

Armitage v Nurse [1998] Ch 241 (refd)

Bahin v Hughes (1886) 31 Ch D 390 (refd)

Beckkett Pte Ltd v Deutsche Bank AG [2009] 3 SLR (R) 452; [2009] 3 SLR 452 (refd)

Berry v British Transport Commission [1962] 1 QB 306 (refd)

Brickenden v London Loan & Savings Co of Canada [1934] 3 DLR 465 (refd)

Bristol and West Building Society v Mothew [1998] Ch 1 (refd)

British Racing Drivers' Club Ltd v Hextall Erskine & Co [1996] BCC 727 (refd)

Carroll v Kynaston [2011] QB 959 (refd)

Chang Mei Wah Selena v Wiener Robert Lorenz [2008] 4 SLR (R) 385; [2008] 4 SLR 385 (refd)

Chin Yoke Choong Bobby v Hong Lam Marine Pte Ltd [1999] 3 SLR (R) 907; [2000] 1 SLR 137 (refd)

Crawford Adjusters v Sagicor General Insurance (Cayman) Ltd [2013] UKPC 17 (refd)

Doreen Siow v Lo Pui Sang/Kuah Kim Choo [2007] SGSTB 3 (refd)

Dynamic Investments Pte Ltd v Lee Chee Kian Silas [2008] 1 SLR (R) 729; [2008] 1 SLR 729 (refd)

Firstlink Energy Pte Ltd v Creanovate Pte Ltd [2007] 1 SLR (R) 1050; [2007] 1 SLR 1050 (refd)

Ganesan Carlose & Partners v Lee Siew Chun [1995] 1 SLR (R) 358; [1995] 2 SLR 29 (folld)

Goh Nellie v Goh Lian Teck [2007] 1 SLR (R) 453; [2007] 1 SLR 453 (refd)

Gomba Holdings (UK) Ltd v Minories Finance Ltd (No 2) [1993] Ch 171 (refd)

Gregory v Portsmouth City Council [2000] 1 AC 419 (refd)

Henderson v Henderson (1843) 3 Hare 100; 67 ER 313 (refd)

Hunter v Chief Constable of the West Midlands Police [1982] AC 529 (refd)

Dawson (deceased) , Re; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWR 211 (refd)

Kok Chong Weng v Wiener Robert Lorenz [2009] 2 SLR (R) 709; [2009] 2 SLR 709 (refd)

Kumagai-Zenecon Construction Pte Ltd v Low Hua Kin [1999] 3 SLR (R) 1049; [2000] 2 SLR 501 (refd)

Lai Swee Lin Linda v AG [2006] 2 SLR (R) 565; [2006] 2 SLR 565 (refd)

Lee Hiok Tng v Lee Hiok Tng [2001] 1 SLR (R) 771; [2001] 3 SLR 41 (refd)

Little v Law Institute of Victoria (No 3) [1990] VR 257 (refd)

Lo Pui Sang v Mamata Kapildev Dave [2008] 4 SLR (R) 754; [2008] 4 SLR 754 (refd)

Lonrho plc v Fayed (No 5) [1993] 1 WLR 1489; [1994] 1 All ER 188 (refd)

Mamata Kapildev Dave v Lo Pui Sang/Kuah Kim Choo [2008] SGSTB 7 (refd)

National Westminster Bank plc v Rabobank Nederland [2007] All ER (D) 186 (May) (refd)

National Westminster Bank plc v Rabobank Nederland [2008] 1 All ER (Comm) 266 (distd)

Ng Eng Ghee v Mamata Kapildev Dave [2009] 3 SLR (R) 109; [2009] 3 SLR 109 (folld)

Ng Eng Ghee v Mamata Kapildev Dave [2009] 4 SLR (R) 155; [2009] 4 SLR 155 (refd)

Ng Swee Lang v Sassoon Samuel Bernard [2008] 2 SLR (R) 597; [2008] 2 SLR 597 (refd)

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Land Titles (Strata) Act (Cap 158, 1999 Rev Ed) ss 84 A, 84 A (9) (a) (i) (A)

Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 59 r 2 (2) , O 59 r 3 (2) , O 59 r 4 (2) , O 59 r 6 A, O 59 r 7, O 59 r 13, O 59 r 27 (2) , O 59 r 27 (3) , O 59 r 28, O 59 r 28 (2) , O 59 r 28 (2) (a) , O 59 r 28 (2) (b) , O 59 r 28 (2) (c) , O 62 r 12 (1) , O 62 r 12 (2) , O 62 r 15

Civil Procedure Rules 1998 (SI 1998 No 3132) (UK) Pts 44.13 to 44.17

Damages—Recovery of legal costs—Claim in separate action for legal costs as equitable compensation

Equity—Remedies—Equitable compensation—Principles in assessing—Plaintiffs objecting successfully to collective sale on grounds of defendants' breaches of fiduciary duties—Whether plaintiffs could recover equitable compensation for their unrecovered legal costs

The five plaintiffs and both defendants were subsidiary proprietors of flats in a condominium known as Horizon Towers. Both defendants were key members of the sale committee in charge of the collective sale of Horizon Towers. The plaintiffs objected to the collective sale unsuccessfully before the Strata Titles Board (‘STB’) and before the High Court but ultimately succeeded in the Court of Appeal. The Court of Appeal found in its judgment (‘the substantive judgment’) that the sale committee, of which both defendants were members, owed fiduciary duties of fidelity, care and skill and diligence and prudence to all subsidiary proprietors (including the plaintiffs) and breached those duties.

The plaintiffs incurred substantial legal costs in objecting successfully to the collective sale. They therefore applied to the Court of Appeal for an order that their costs of objecting to the collective sale be paid on the indemnity basis. The Court of Appeal rejected the plaintiffs' application and instead awarded the plaintiffs 80% of those costs on the standard basis (‘the costs judgment’). The defendants were not parties to the appeal. The plaintiffs therefore commenced this suit to recover from the defendants compensation equivalent to the difference between the costs awarded to them by the Court of Appeal and their actual costs of objecting to the collective sale. The defendants denied that they were in breach of their fiduciary duties, denied that any such breach had caused loss to the plaintiffs and argued in any event that the plaintiffs, having been awarded costs by the Court of Appeal, were precluded from recovering in a separate action that difference as compensation for the alleged breach of fiduciary duties.

Held, dismissing the claim:

(1) Under the extended doctrine of res judicata, it was an abuse of process for the defendants to deny that the sale committee had breached its fiduciary duties to the plaintiffs. The defendants' denial amounted to an impermissible collateral attack against a final decision of a court of competent jurisdiction. The court was therefore bound by the Court of Appeal's findings that the sale committee owed fiduciary duties to the plaintiffs and that those duties had been breached: at [76] , [80] , [99] , [101] and [102] .

(2) A fiduciary's liability to pay equitable compensation for breaches of the duties of skill and care and of prudence and diligence was subject to the doctrines of foreseeability, causation and remoteness. The defendants' liability for their breaches of these fiduciary duties was therefore subject to all of these limiting factors: at [108] and [118] .

(3) A fiduciary's liability to pay equitable compensation for breach of the core fiduciary duty of fidelity was subject to a requirement to show but-for causation where the fiduciary relationship was a novel one. A sale committee's fiduciary relationship with subsidiary proprietors was novel. The defendants' liability for breach of their fiduciary duty of fidelity therefore depended on establishing but-for causation: at [71] , [112] , [113] and [115] to [117] .

(4) The defendants' breaches of their fiduciary duties did not cause the plaintiffs' loss. The plaintiffs would have incurred the legal costs of objecting to the collective sale even if the defendants had fulfilled their fiduciary duties because their reason for objecting to the collective sale was a desire to keep their homes: at [120] , [121] , [123] , [129] to [131] , [134] , [136] and [139] .

(5) In any event, the acts of the buyer in the collective sale and of a successor sale committee broke the chain of causation between the defendants' breaches and the plaintiff's legal costs which they incurred after the date of those acts: at [143] .

(6) It was contrary to the objective of achieving finality in litigation to permit a party who had secured an award of costs as a deemed indemnity under the procedural law in earlier litigation subsequently to invite another court to consider the compensation it should recover under the substantive law for the costs incurred in that earlier litigation. The Court of Appeal rejected the plaintiffs' attempt to recover indemnity costs. It was also within the plaintiffs' power then to ask the Court of Appeal to award costs against the defendants as non-parties. The plaintiffs were now inviting the court to determine afresh an issue which the Court of Appeal had already dealt with in its award of costs or which it could have dealt with in that award: at [179] , [275] , [277] , [278] and [295] .

(7) The first plaintiff in Suit No 1085 of 2009 could not recover the interest which he incurred on the overdraft account he drew upon to pay his legal costs because the defendants' breaches of fiduciary duties did not cause him to incur that interest and that interest was, in any event, a different type of loss than would have been foreseeable: at [298] and [299] .

[Observation: One of the policies underlying the indemnity principle regulating the award of legal costs in civil litigation was the policy of enhancing access to justice...

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