Case Summaries

CBX and another v CBZ and others (Case Summary)

21 June 2021

Case Summary

CBX and anor v CBZ and ors [2021] SGCA(I) 4
Civil Appeal No 197 of 2020

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Decision of the Court of Appeal (delivered by Judith Prakash JCA):

Outcome: Court of Appeal allows the appeal against the costs order made by the International Judge below (the “Judge”) and sets it aside in full. The Court of Appeal clarified the position on the costs regime that applies where a matter filed in the General Division of the High Court is, in the course of proceedings, transferred to the Singapore International Commercial Court (“SICC”) and dealt with there until its conclusion. The Court concluded that that the facts of this case did not justify a wholesale rejection of Appendix G to the Supreme Court Practice Directions in ascertaining costs incurred after this case’s transfer to the SICC.

Pertinent and significant points of the judgment

  • There are two types of cases that are heard in and determined by the SICC. The first is a case that emanates from a fresh filing in the SICC Registry. Such a case is from its inception governed by O 110 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”) and thus subject, always and only, to the costs regime established by O 110 r 46 of the ROC (“Rule 46”). Secondly, there is the case that is filed initially in the Registry of the High Court. This category of case is subject to the ROC generally (excluding O 110) and the applicable costs regime established by O 59 of the ROC. The award of costs in such a case is subject to the guidance of Appendix G: at [17].
  • In the absence of any order made by the Registrar handling the transfer to the SICC that Appendix G is entirely disapplied or of consent from both the parties to such disapplication, Appendix G will continue to be the guide for the assessment of pre-transfer costs. Whether it plays a role in the assessment of post-transfer costs which, on the face of it, will be assessed under Rule 46, will depend on the circumstances of the case. In relation to pre-transfer costs, however, the losing party should not have to bear the burden of providing “compelling justification” why Appendix G should be referred to; rather it should be the party who wants Appendix G to be departed from who needs to provide the justification for doing so: at [28].
  • On the facts, Appendix G ought not to have been rejected wholesale in the context of ascertaining post-transfer costs. Instead it should have remained one of a number of factors which should have been kept in mind when considering the very high amounts of costs that the Sellers were asking for. While the Judge was entitled to assess costs in accordance with Rule 46 for the post-transfer period, he should have adopted a two-stage process in assessing costs and asked parties to break down their costs into pre and post-transfer segments: at [39] and [40].

Background to the appeal

1. On 5 November 2019, HC/OS 1388/2019 was filed in the High Court by parties referred to as the “Buyers” to set aside parts of two Partial Awards and a consolidated Costs Award (collectively, “the Awards”) rendered against them in two ICC arbitrations. The Awards had been rendered in favour of parties referred to as the “Sellers”, who were named as the respondents in HC/OS 1388/2019.

2. On 14 February 2020, the High Court, on its own motion, ordered that the setting aside proceedings were to be transferred to the SICC. The orders made by the Deputy Registrar at the time of the transfer included the following (the “Appendix G order”): The issue whether the High Court costs scale and Order 59 of the Rules of Court should continue to apply to the assessment of costs in respect of proceedings in and arising from HC/OS 1388/2019, after its transfer to the Singapore International Commercial Court, is reserved to the Singapore International Commercial Court.

3. The proceedings were then re-designated as SIC/OS 1/2020 in the SICC. At the time of the transfer, parties had already filed their first round of affidavits. Thereafter, four further affidavits were filed and both parties put in written submissions before proceeding to the hearing. The proceedings were heard before the Judge over several hours on the morning of 15 June 2020, and his decision, CBX and another v CBZ and others [2020] 5 SLR 184 (“the Merits Judgment”) was delivered on 16 July 2020.

4. In the Merits Judgment, the Judge found in favour of the Sellers and gave his reasons for dismissing the Buyers’ setting aside applications in respect of all three Awards. This was followed by a subsequent hearing on costs, which led to another judgment, CBX and another v CBZ and others [2021] 3 SLR 10 (“the Costs Judgment”). By the Costs Judgment, the Buyers were ordered to pay the Sellers costs of $150,000 all-in (ie, inclusive of disbursements), with interest at 5.33% per annum from the date of the Costs Judgment. The basis of the award of costs was that as the Sellers had prevailed in the setting aside applications, they should have the costs of those applications.

5. The Buyers appealed against both judgments. CA/CA 136/2020 (“CA 136”) was their appeal against the Merits Judgment whilst this appeal, CA/CA 197/2020 (“CA 197”), was the appeal lodged against the Costs Judgment. The appeals were heard together by the Court of Appeal. In a separate judgment on CA 136 which concerned the substantive merits of the case, the Court of Appeal concluded that the Merits Judgment should be reversed and that the Awards should be set aside. As the basis on which the Costs Judgment was made no longer holds, that means that CA 197 should also succeed, and that the costs order made by the Judge should be set aside accordingly. However, having reference to the Costs Judgment and the parties’ written submissions, the Court of Appeal took the view that the substance of CA 197 should nonetheless be addressed.

6. In CA 197, the Buyers raised the following issues in their appeal against the Costs Judgment:

The first two issues engaged points of principle, whilst the third related to the exercise of the Judge’s discretion. 

The Court of Appeal’s decision

  • Whether the Judge erred in finding that Appendix G would not (at least) be applicable to costs incurred pre-transfer of proceedings to the SICC;
  • Whether the Judge erred in entirely disregarding the guidance of Appendix G in assessing the reasonableness of costs incurred post-transfer to the SICC; and
  • Whether the Judge erred in finding that the sum of $150,000 (all-in) was “reasonable” in the circumstances.

7. The Court of Appeal allowed CA 197 and set aside the Judge’s costs orders in full. While the appellants in CA 197 would have succeeded given their success in the substantive appeal (ie CA 136), CA 197 would have been allowed and the Judge’s orders as to costs adjusted downwards even if the Buyers had failed in their substantive appeal: at [7] and [43].

8. There are two types of cases that are heard in and determined by the SICC. The first is a case that emanates from a fresh filing in the SICC Registry. Such a case is from its inception governed by O 110 of the ROC and thus subject, always and only, to the costs regime established by Rule 46. Secondly, there is the case that is filed initially in the Registry of the High Court. This category of case is subject to the ROC generally (excluding O 110) and the applicable costs regime established by O 59, and the award of costs is subject to the guidance of Appendix G: at [17].

9. The Judge’s reliance on BYL and another v BYN [2020] 4 SLR 204 (“BYL (Costs)”), which he had previously decided, was misplaced. In BYL (Costs), the Court had misinterpreted the Deputy Registrar’s order by over-emphasising the word “all” at the expense of the phases “shall continue to apply” and “after its transfer” which also appear in the direction. An order must be read as a whole: one should not glean its meaning from one word when the thrust of the sentence is to the contrary effect. The Deputy Registrar’s order did not disapply Appendix G to the steps taken in the proceedings before its transfer. It merely stated that whether the costs of whatever happened after the transfer would still be assessed in accordance with Appendix G or not was up to the SICC judge who heard the case. The order did not give the Judge the authority to disapply Appendix G from the earlier steps before transfer: at [25].

10. In the absence of any order made by the Registrar handling the transfer to the SICC that Appendix G is entirely disapplied or of consent from both the parties to such disapplication, Appendix G will continue to be the guide for the assessment of pre-transfer costs. Whether it plays a role in the assessment of post-transfer costs which, on the face of it, will be assessed under Rule 46 of the ROC, will depend on the circumstances of the case. In relation to pre-transfer costs, however, the losing party should not have to bear the burden of providing “compelling justification” why Appendix G should be referred to; rather it should be the party who wants Appendix G to be departed from who needs to provide the justification for doing so: at [28].

11. The Appendix G order did not bear the interpretation that the Judge gave it. Although the sentence construction of the Appendix G order differed somewhat from the order made in BYL (Costs), the term “proceedings in and arising from” in the Appendix G order was defined by the phrase “after its transfer to the [SICC]”. Rather than considering himself totally freed from the constraints of Appendix G, the Judge should have applied it to his assessment of the pre-transfer costs: at [29].

12. The Judge stated at [12] of the Costs Judgment that: “Appendix G can serve as a useful reality test or starting point against which to evaluate whether costs are or are not reasonable within the terms of Rule 46”. The Court of Appeal did not agree with this statement in relation to the assessment of pre-transfer costs. In relation to such costs, Appendix G would be the starting point and then a judge would need to decide whether there were factors that justified a higher assessment of the costs, but, regardless, Rule 46 would not be applicable: at [29].

13. The Court’s consideration of the appropriate quantum turned on two aspects. First, in relation to pre-transfer costs, the Court found that determination of such costs had been done on the wrong basis, and so provided a ground for interference with the Judge’s determination in principle. Second, the question arose as to whether the Judge’s determination of post-transfer costs was reasonable. There needed to be a significant enough difference in the estimations of the appropriate level of costs made by the first instance court and by the appellate court before the appellate court would interfere: at [30].

14. On the facts, Appendix G ought not to have been rejected wholesale in the context of ascertaining post-transfer costs. Instead it should have remained one of a number of factors which should have been kept in mind when considering the very high amounts of costs that the Sellers were asking for. While the Judge was entitled to assess costs in accordance with Rule 46 for the post-transfer period, he should have adopted a two-stage process in assessing costs and asked parties to break down their costs into pre and post-transfer segments: at [39] and [40].

15. In the Court of Appeal’s view, a sum of $25,000 would have been closer to the mark for the pre-transfer stage. While this sum was considerably higher than the normal figure of $24,000 under Appendix G for an originating summons matter taking two days and where there was no cross-examination, it reflected the complexity of the work required in order to attack an arbitration award under the International Arbitration Act (Cap 143A, 2002 Rev Ed). In this case three such awards were involved. As for post-transfer costs, the Judge’s sum of $61,600 and his basis for arriving at that sum could be adopted as a starting point for the assessment of reasonable costs, although it would always remain open to the court to consider whether there should be any reduction of that sum in the light of the substantially lower figure which would have been recoverable under Appendix G had the case remained in the High Court. Given the success of the appellants in CA 136, the ascertainment of precise figures for costs was a theoretical exercise, and the Court of Appeal declined to posit a final figure. Suffice to say, however, the likely result of such an exercise would be lower by a significant enough amount than the $127,000 (the net figure after deduction of disbursements) which the Judge had awarded the Sellers for their legal costs to warrant appellate intervention: at [41].

This summary is provided to assist in the understanding of the Court’s judgment. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s judgment.