Trans Eurokars Pte Ltd v Koh Wee Meng

JurisdictionSingapore
JudgeJustin Yeo AR
Judgment Date26 March 2015
Neutral Citation[2015] SGHCR 6
CourtHigh Court (Singapore)
Docket NumberBill of Costs No 247 of 2014
Year2015
Published date30 March 2015
Hearing Date17 February 2015,30 December 2014,22 January 2015
Plaintiff CounselMr Quek Kian Teck (WongPartnership LLP)
Defendant CounselMs Samantha Tan and Mr Tan Rui Wen (Drew & Napier LLC)
Subject MatterCivil Procedure,Costs,Taxation
Citation[2015] SGHCR 6
Justin Yeo AR:

Trans Eurokars Pte Ltd (“the Applicant”) brought the present application to tax the Bill of Costs No 247 of 2014 (“the Bill”) against Dr Koh Wee Meng (“the Respondent”), in respect of the costs in Suit 873 of 2011 (“Suit 873”).

Suit 873 was commenced by the Respondent (ie the Plaintiff in Suit 873) against the Appellant (ie the Defendant in Suit 873) for an allegedly defective Rolls-Royce Phantom SWB automobile (“the Rolls”). By way of a judgment dated 27 May 2014, Prakash J (“the Judge”) dismissed the Respondent’s claims (see Koh Wee Meng v Trans Eurokars Pte Ltd [2014] 3 SLR 663 (“Koh Wee Meng”)). Following a clarification hearing on 15 October 2014, the Judge ordered that the costs of Suit 873, including the costs of Registrar’s Appeal No 6 of 2013 (“RA 6”), be awarded to the Applicant and taxed on a standard basis.

The Applicant filed the Bill on 3 December 2014, claiming the following: Section 1: $608,807.28 (before GST); Section 2: $3,000 (before GST); and Section 3: $281,422.73 (with GST on items for which GST is chargeable; this amount was subsequently modified, see [36] below).

The Respondent disputed the Bill by way of a Notice of Dispute filed on 17 December 2014.

On 30 December 2014, I granted the Respondent’s request for an adjournment in view that the Applicant had submitted, at a late hour, a voluminous bundle of supporting documents that had hitherto not been given to the Respondent. On 22 January 2015, I heard the substantive arguments raised by the parties. By the end of that hearing, it transpired that further documents were required from the Applicant. I directed the Applicant to produce those documents, and also directed parties to tender further written submissions on the issue of whether the costs of the third and fourth solicitors on the Applicant’s team of solicitors and counsel should be taken into consideration for the purposes of taxation in view that there was no certificate for more than two counsel. The Respondent subsequently sought a hearing to address the further documentation adduced as well as the further written submissions tendered by the Applicant. I heard the parties again on 17 February 2015 and reserved my decision. On 26 March 2015, I rendered judgment and here provide the grounds for my decision.

The Applicable Legal Principles

In Singapore, the incidence of costs in civil litigation is governed by the “indemnity principle”, ie, that an unsuccessful party would generally be ordered to pay the successful party’s reasonable litigation costs (Ng Eng Ghee and others v Mamata Kapildev Dave and others (Horizon Partners Pte Ltd, intervener) and another appeal [2009] 4 SLR(R) 155 (“Ng Eng Ghee”) at [6]; and see Then Khek Koon and another v Arjun Permanand Samtani and another and other suits [2014] 1 SLR 245 (“Then Khek Koon”) at [153]–[154]). The indemnity principle gives the winning party an indemnity in respect of his costs from the losing party, subject to the court’s overriding discretion (Then Khek Koon at [153]). Underlying the indemnity principle is the notion that costs are generally imposed to compensate the successful party, rather than to punish the losing party (Ng Eng Ghee at [7], cited in Then Khek Koon at [155]). The indemnity principle extends only to costs reasonably incurred, rather than to all costs incurred; it therefore does not amount to a full and complete indemnity to the successful party against his expenses incurred in relation to the proceedings (Ng Eng Ghee at [7]). This is because while the indemnity principle is compensatory in nature, its ultimate policy is rooted not in compensation but in enhancing access to justice; it must therefore seek a balance between the interests of the parties (Then Khek Koon at [156] and [158]).

For clarity, the “indemnity principle” should not to be confused with costs awarded on the “indemnity basis”. Costs awarded on the “indemnity basis” are costs taxed on the basis that any doubts as to reasonableness of the costs incurred are to be resolved in favour of the receiving party (O 59 r 27(3) of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“Rules of Court”); and see Ng Eng Ghee at [6]). In contrast, where costs are awarded on the “standard basis”, the burden of proof is on the receiving party and doubts are resolved against recovery (Then Khek Koon at [167]). As a norm, the quantification rules are applied so as to maintain an appreciable margin between the two bases (ibid at [168]). In the present case, the Applicant had sought for costs to be taxed on the “indemnity basis”, but the Judge ordered that costs were to be taxed on the “standard basis”.

In Lin Jian Wei and anor v Lim Eng Hock Peter [2011] 3 SLR 1052 (“Lin Jian Wei”) at [78], the Court of Appeal set out the approach to be taken in taxation. The taxing court should first assess the relative complexity of the matter, the work supposedly done against what was reasonably required in the prevailing circumstances, the reasonableness and proportionality of the amounts claimed on an item by item basis (ibid). Thereafter, the taxing officer should assess the proportionality of the resulting aggregate costs (ibid). In so doing, all considerations in Appendix 1 to O 59 are relevant, with no single consideration ordinarily to take precedence (ibid). In this regard, paragraph 1(2) of Appendix 1 to O 59 of the Rules of Court requires the taxing court to take into account “the principle of proportionality and all the relevant circumstances”, and in particular:

(a) the complexity of the item or of the cause or matter in which it arises and the difficulty or novelty of the questions involved;

(b) the skill, specialised knowledge and responsibility required of, and the time and labour expended by, the solicitor;

(c) the number and importance of the documents (however brief) prepared or perused;

(d) the place and circumstances in which the business involved is transacted;

(e) the urgency and importance of the cause or matter to the client; and

(f) where money or property is involved, its amount or value.

The importance of the proportionality of costs in taxation cannot be overemphasised. In this regard, it is important to note the interplay between reasonableness, proportionality and necessity as set out by the Court of Appeal in Lin Jian Wei at [56]:

We think that costs that are plainly disproportionate to, inter alia, the value of the claim cannot be said to have been reasonably incurred. Thus, in assessing whether costs incurred are reasonable, it needs to be shown that the costs incurred were not just reasonable and necessary for the disposal of the matter, but also, in the entire context of that matter, proportionately incurred. [emphasis added]

With these general principles in mind, I will address each section of costs in turn.

Section 1 Costs The Applicant’s arguments

The Applicant sought $608,807.28 (before GST) for Section 1 costs. The Applicant set out in some detail the issues raised at trial, as well as the time spent by the Applicant’s team of solicitors and counsel comprising Mr Tan Chee Meng, Senior Counsel (“Mr Tan SC”), Ms Josephine Choo (“Ms Choo”), Mr Quek Kian Teck (“Mr Quek”) and Mr Wilbur Lim (“Mr Lim”). Mr Quek represented the Applicant at all the taxation hearings before me. He attempted to justify the Applicant’s claim for Section 1 costs on the following grounds.

First, Mr Quek contended that a higher costs award was justifiable in view of the complexity of the matter and novelty of questions involved. In this regard, Mr Quek argued that: Suit 873 involved highly complex technical issues.1 The Judge had recognised that in order to deal with the issues in Suit 873, it was necessary to first determine whether there was a defect in the Rolls when it was delivered to the Respondent (Koh Wee Meng at [33]). In order to determine the technical issue of whether the noise and vibration constituted a defect, it was necessary for the Rolls to be inspected on two occasions, at meetings that involved different experts. It was also necessary for the Respondent’s expert, Mr David John Bellamy (“Mr Bellamy”), to inspect two comparison vehicles in the United Kingdom (“UK”), and for the Applicant’s expert, Mr Robert Johann Matawa (“Mr Matawa”), to inspect six similar vehicles at the Rolls-Royce factory in Goodwood, UK. In addition, the Applicant’s witnesses had to give evidence in respect of a particular rating system used in the automotive industry (known as the “BI Rating”). The application of the BI Rating was complex, technical and required specific expertise. It should be noted that the Judge found that Mr Bellamy was unable to apply the BI Rating as he did not possess the necessary expertise (ibid at [87]). Suit 873 also involved numerous legal issues which the Judge had to consider, and upon which parties had submitted at length. The issues were as follows: What constitutes “satisfactory quality” under s 14 of the Sale of Goods Act (Cap 393, 1999 Rev Ed) (“Sale of Goods Act”) (Koh Wee Meng at [89]–[91]). Whether a reasonable person who, like the Respondent, had paid $1.4m to purchase a luxury motor vehicle touted for its ride comfort and quiet performance, would have considered the quality of the car to be unsatisfactory because of the noise and vibration experienced during a three-point turn (ibid at [93]–[99]). Whether the Respondent had acquiesced in any breach (ibid at [119]–[122]). The measure of damages payable in the event of any breach, and in particular, whether the buyer of defective goods is entitled to rely on the measure in s 56(3) of the Sale of Goods Act if doing so would recover more than his true loss (ibid at [123]–[124]). Whether the Respondent had proved his claim for loss of amenity (ibid at [135]). Whether the Respondent was obliged to mitigate his losses, and if so, whether he failed to do so by continuing to use the Rolls or,...

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