Singapore High Court: ‘Reasonable Cost’ Standard For Awarding Costs In Transfer Cases From Singapore High Court To SICC

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In Singapore, the costs of civil proceedings in the High Court are assessed by reference to Order 59 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”) and the Costs Guidelines (‘the SHC Criteria’) in Appendix G of the Supreme Court Practice Directions (“Appendix G”), while costs before the Singapore International Commercial Court (‘SICC’) are assessed under ROC Order 110 rule 46 (‘the SICC Criteria’). Pertinently, the SHC Criteria under Appendix G provides a threshold of S$15,000 as the estimated costs recoverable for a contested hearing of a setting aside of the order granting leave to enforce an award.

In BYL and another v BYN [2020] SGHC(I) 12, the proceedings to set aside the award were transferred from SHC to SICC. In the transferring order by the Deputy Registrar of SHC, the issue of determination of costs was left open as to whether the SHC criteria should continue to apply to the assessment of costs in respect of all proceedings in and arising from Plaintiffs’ setting aside application post its transfer to SICC. The latter regime requires that, unless the SICC otherwise orders, an unsuccessful party must pay the “reasonable costs” of the successful party (CPIT Investments Ltd v Qilin World Capital Ltd and another [2018] 4 SLR 38 (“CPIT”).

In the instant case, the question before the SHC was what amounts to “reasonable costs” standard, especially in such transfer cases. While analyzing and taking into account the legal literature on ‘reasonable cost’, the SHC concluded that the Deputy Registrar’s direction is to be read as leaving the proper regime for assessing costs, whether pre- or post-transfer, to the SICC.

Things to Consider while assessing ‘reasonable costs’

The SHC has considered several criteria in order to gauge what should be the ‘reasonable costs’ which are as follows:

Amount in Dispute

  1. Whilst the amount in dispute is relevant when evaluating whether costs have been proportionately incurred, proportionality is not the sole factor to be considered when determining the reasonableness of costs. For one, the mere fact that a sizeable amount x is involved does not give a party carte blanche to spend however much it wishes on whatsoever activities it pleases, provided only that its overall expenditure is within some percentage of x. A party would also need to establish that a particular activity was not just a superfluous frill, but a measured and appropriate step towards achieving a relevant legal result.

Parties Overall Expenditure

  1. Plaintiffs’ overall expenditure can be a rough-and-ready yardstick against which to gauge the reasonableness of the Defendant’s costs. But such an approach needs to be used with considerable caution. Parties’ respective positions may not be symmetrical. For instance, an award is not readily set aside. Thus, in some proceedings (as here), the Plaintiffs had much more heavy lifting to do than the Defendant. The disparity between the parties’ expenditures here may simply have reflected that reality.

Extravagant Expenditure

  1. There is also the possibility that both sides to a dispute have been extravagant in terms of the activities undertaken by them in the litigation and the amounts incurred in respect of those activities. In metaphorical terms, parties may opt for a Rolls-Royce or Mercedes Benz level of service to realise their desired result. But it would not be reasonable to expect an opposing side to bear the cost of the Rolls-Royce or Mercedes Benz service, when a Toyota could have been just as effective. The reasonableness of the individual items claimed by a party would often still have to be established.

Why Court should prefer SICC Criteria of Costs over SHC Criteria in Transfer Cases

In Court’s view, in principle, the setting aside application having been transferred to the SICC, the assessment of pre- and post-transfer costs ought to be in accordance with SICC Criteria. Such approach is especially apt when (as here) the SICC is exercising its jurisdiction under Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) section 18D(2) in relation to an unsuccessful setting aside application. Having already gone through the time and expense of establishing its claim in arbitration proceedings pursuant to the parties’ arbitration agreement, the successful party in an arbitration should in the ordinary course of events be entitled to recover its reasonable costs of subsequently defending the award. Where recoverable costs as specified in SHC Criteria constitute a significant discount to the successful party’s reasonable costs, there could be an incentive to the unsuccessful party to delay having to pay on an award by putting up unmeritorious applications to set aside the same. The unsuccessful party would not be bearing the reasonable economic cost of its failed attempt at delay. The successful party would in effect be subsidising the unsuccessful party’s attempt to avoid having to honour an award. In the absence of compelling justification, this should not be the normal position. However, that does not necessarily mean that the SICC should ignore Appendix G when assessing costs in transfer cases as held in CPIT wherein Ramsey IJ inter alia observed that the weight to be given to Appendix G in assessing costs is highly dependent on the circumstances of each case.

Disclaimer: The views expressed in this post are mine and do not reflect the views of the organisation(s) I am engaged with

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