Chapter 35 - Costs

Question 1

COSTS

Overview

Answer 1

1) Meaning of costs
2) Main issues on costs
3) Order to costs
4) Entitlement to costs
5) Costs for interlocutory proceedings
6) Assessment for quantum of costs
7) Costs for several parties
8) Costs against non-party

Question 2

COSTS

Meaning of costs

Answer 2

1) O.59, r.1(1):
- Costs is the sum of money that the (losing) party is ordered to pay the (winning) party as compensation for the expenses that the latter incurred as a result of the litigation.
2) Bangkok Bank Bhd v Chuan Kee Co Sdn Bhd:
- The sum which one litigant pays to another litigant to compensate the latter for the expense which he has incurred in the litigation.

Question 3

COSTS

Main issues on costs

Answer 3

1) Who is entitled to costs

2) How is quantum of costs to be assessed

Question 4

ORDER TO COSTS

Overview

Answer 4

1) General rule

2) Discretion of the court

Question 5

ORDER TO COSTS

General rule

Answer 5

O.59, r.3(1):

• No party is entitled to costs unless order by the Court.
• An order for costs is not as of right but subject to the court’s discretion

Question 6

ORDER TO COSTS

Discretion of the court

Answer 6

1) O.59, r.3:
Costs to follow event.

2) O.59, r.8:
Special matters for consideration when exercising discretion.

3) O.59, r.16:
Basis of assessment of costs.

4) Exercise of discretion - Yukilan Manufacturing Sdn Bhd & Anor v Dato’ Wong Gek Meng:

• The discretion to grant costs must be exercised judicially and according to the rules of reason and justice.
• It must not be motivated by private opinion, nor benevolence, nor sympathy;
• The discretion to grant costs must, by necessity, be justifiable.
• O.59, r.8 sets out some of the factors may be taken into account.

Question 7

ENTITLEMENT TO COSTS

Overview

Answer 7

1) General rule
2) Exception - circumstances dictate
3) Exception - misconduct or neglect
4) Examples of misconduct or neglect

Question 8

ENTITLEMENT TO COSTS

General rule

Answer 8

O.59, r.3(2):

• costs follow the event (the loser pays the winner’s costs and is left to bear his own costs)

Question 9

ENTITLEMENT TO COSTS

Exception - circumstances dictate

Answer 9

O.59, r.3(2):

• It appears to Court that circumstances dictates otherwise.

Question 10

ENTITLEMENT TO COSTS

Exception - misconduct or neglect

Answer 10

O.59, r.5:

• A successful party may be deprived of his costs or part of it when there is misconduct or neglect.

Question 11

EXAMPLES OF MISCONDUCT OR NEGLECT

Overview

Answer 11

1) Bitter fight
2) Illegal contract
3) Point not raised below
4) Relevant authorities missed out
5) Retrospective effect of new law amendment
6) Non-cooperative appellant
7) Costs by A&S personally

Question 12

EXAMPLES OF MISCONDUCT OR NEGLECT

Bitter fight

Answer 12

Chan Choy Ling v Chua Che Tek:

• The disputes had developed into a protracted and bitter fight and the parties had gone before the High Court on several occasions with the actual hearing occupying a period of two to three days.
• Therefore, the judge made no order as to costs & the order is upheld on appeal.

Question 13

EXAMPLES OF MISCONDUCT OR NEGLECT

Illegal contract

Answer 13

Cheng Mun Siah v Tan Nam Su:

• the whole of the transaction is illegal and as both parties to the transaction have contravened some of the provisions of the Act, the court cannot be called upon to assist either one or the other of the parties with regard to the agreement in question.
• There will be no order as to costs since both parties have offended against the law.

Question 14

EXAMPLES OF MISCONDUCT OR NEGLECT

Point not raised below

Answer 14

Anna Jong Yu Hiong v Government of Sarawak:

Ref. Hussey v Horne-Payne:

• “As our decision in favour of the defendant turns upon a point not raised by him in the court below, I agree with what the Master of the Rolls has said as to the costs.’
• In this appeal the appellant was only partly successful & that is another good reason for disallowing the costs of this appeal.

Question 15

EXAMPLES OF MISCONDUCT OR NEGLECT

Relevant authorities missed out

Answer 15

Re Syed Ahmad Hood Alsagoff:

As the relevant authorities which have determined this appeal were not cited to the learned Judge — nor indeed was any point made concerning the principles enunciated in them, the court ruled that there would be no order as to costs either here or below.

Question 16

EXAMPLES OF MISCONDUCT OR NEGLECT

Retrospective of new law amendment

Answer 16

Petroliam Nasional Bhd & Anor v Cheah Kam Chiew:

• The result of amendment was that when the application was heard, P no longer had a cause of action.
• The High Court struck-out the suit but awarded costs to P.
• The Supreme Court dismissed D’s appeal to have the costs awarded to him.

Question 17

EXAMPLES OF MISCONDUCT OR NEGLECT

Non-cooperative appellant

Answer 17

Chen Chow Lek v Tan Yew Lai:

• FC allowed the appeal but ordered that the appellant pay costs to the respondent.
• The court is of the view that had the appellant been cooperative this case would not have come to court & the respondent would probably not have started the civil suit.
• The litigation has been completely unnecessary and could have been avoided but for the appellant’s attitude.
• The costs of the proceedings before the court & in the court below should be borne by the appellant and the deposit should go to the respondent on account of taxed costs.

Question 18

EXAMPLES OF MISCONDUCT OR NEGLECT

Costs by A&S personally

Answer 18

1) The law - O.59, r.6:
- solicitor may be liable personally for costs
2) Karpal Singh v Atip bin Ali:

• Happens when costs are incurred improperly or without reasonable cause or are wasted by undue delay or by any other misconduct or default;
• OTF, the civil suit filed by the plaintiff was “conspicuously unmaintainable” & this was a proper case where the learned judge ought to have exercised his discretion and ordered that the costs of the proceedings be paid by Karam Singh, the lawyer, personally.

Question 19

COSTS FOR INTERLOCUTORY PROCEEDINGS

Overview

Answer 19

1) The law

2) Costs in the cause

Question 20

COSTS FOR INTERLOCUTORY PROCEEDINGS

The law

Answer 20

1) O.59, r.1(3):
- The party whose in favour of interlocutory proceeding is made will be entitled to the costs in interlocutory proceedings, whatever outcome of the proceedings.
2) O.59, r.20:
- Costs for interlocutory applications in Subordinate Courts.
3) O.59, r.21:
- Costs for interlocutory applications in High Courts.

Question 21

COSTS FOR INTERLOCUTORY PROCEEDINGS

Costs in the cause - law & scope

Answer 21

1) The law - O.59, r.7:

• Costs may be ordered at any stage of the proceedings;
• Any costs ordered shall be paid at the conclusion of proceedings;
• Unless court orders otherwise.

2) Scope of O.59, r.7 - Ko Ko Ma Pony Horse Centre v Rasa Sayang Beach Hotel Bhd:

General rule:

• Unless otherwise ordered, interlocutory costs is only payable at the conclusion of the proceedings.

Exception:

• Costs for interlocutory applications may be ordered to be paid forthwith when the party against whom the order is made is guilty of oppressive or unreasonable conduct.

Question 22

COSTS FOR INTERLOCUTORY PROCEEDINGS

Costs in the cause - meaning

Answer 22

Stratford & Son v Lindley (No. 2):

• “Costs in the cause” means that the costs of those interlocutory proceedings are to be awarded according to the final award of costs in the action.
• If the plaintiff wins and gets an order for his costs, he gets those interlocutory costs as part of his costs of the action against the defendant.
• Vice versa, if the defendant wins and gets an order for his costs, he gets those interlocutory costs as part of his costs of the action against the plaintiff.
• if the plaintiff wins, he gets the costs of the interlocutory proceedings; - but, if he loses, he does not have to pay the other side’s costs of them.
• “Plaintiff’s costs in any event” means that, no matter who wins or loses when the case is decided, the plaintiff is to have the costs of those interlocutory proceedings.
• “Plaintiff’s costs” means that the plaintiff is to have the costs of the interlocutory proceedings without waiting for a decision.

Question 23

ASSESSMENT FOR QUANTUM OF COSTS

Overview

Answer 23

1) General principles
2) Standard basis for assessment - getting-up
4) Standard basis for assessment - Disbursement reasonably incurred
5) Alternative basis for assessment - party & party basis
6) Alternative basis for assessment - common fund basis
7) Alternative basis for assessment - trustee basis
8) Alternative basis for assessment - Solicitor & own client basis
9) Alternative basis for assessment - indemnity basis

Question 24

ASSESSMENT FOR QUANTUM OF COSTS

General principles

Answer 24

• The quantum of costs is at the court’s discretion;
• Two things that the court will consider:

1) Getting-up under O.59, r.16; and
2) Disbursements reasonably incurred.

• The court will allow what it considers to be a reasonable amount;
• Any doubts as what is “reasonable” is to be resolved in favour of the paying party.

Question 25

ASSESSMENT FOR QUANTUM OF COSTS

Standard basis for assessment - scope

Answer 25

Property & Revisionary Investment Corporation v Secretary of State for the Environment:

• the proper approach is to start by taking a broad look at ‘all the circumstances of the case’;
• In particular, court shall look at the general nature of the business and then consider the factors under r.16.
• With the factors in mind, it is necessary to assess a sum which is fair and reasonable.
• Each case will always have to be considered on its merits and be subject ultimately to the discretion of the taxing master.

Question 26

ASSESSMENT FOR QUANTUM OF COSTS

Standard basis for assessment - getting-up

Answer 26

O.59, r.16(1)

• Getting-up refers to instructions for trial or hearing;
• The court is guided by factors set-out under O.59, r.16:

Question 27

ASSESSMENT FOR QUANTUM OF COSTS

Standard basis for assessment - Disbursement reasonably incurred

Answer 27

O.59, r.16(3):

• The court will allow what it considers to be a reasonable amount;
• Any doubts as what is “reasonable” is to be resolved in favour of the paying party.

Question 28

ASSESSMENT FOR QUANTUM OF COSTS

Alternative basis for assessment - party & party basis

Answer 28

EMI Records v Wallace:

• there are to be allowed ‘all such costs as were necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed.’
• The essence of this head is thus what is ‘necessary or proper;’ and it is the strictest of the normal heads of taxation.

Question 29

ASSESSMENT FOR QUANTUM OF COSTS

Alternative basis for assessment - common fund basis

Answer 29

O.59, r.15:

• allows “a reasonable amount in respect of all costs reasonably incurred.
  it is sometimes said that on average a common fund taxation produces a figure some 5% to 10% higher than a party and party taxation.

Question 30

ASSESSMENT FOR QUANTUM OF COSTS

Alternative basis for assessment - trustee basis

Answer 30

O.59, r.18:

• Costs may be given on a trustee basis if the costs are to be paid out of a fund, or the person to whom the costs are to be paid was a party to the proceedings qua trustee or personal representative.

Question 31

ASSESSMENT FOR QUANTUM OF COSTS

Alternative basis for assessment - Solicitor & own client basis

Answer 31

O.59, r.17:

• This rule applies to the assessment a solicitor’s bill to his own client for contentious work. On such assessment, “all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred

Question 32

ASSESSMENT FOR QUANTUM OF COSTS

9) Alternative basis for assessment - indemnity basis

Answer 32

1) The law - O.59, r.16(4)
- This basis is generally used against contemnors and is similar to the orders for costs as between solicitor and own client.
2) Discretion - Takako Sakao v Ng Pek Yuen & Anor (No.2):

• The discretion to award costs on an indemnity basis is unfettered.
• All that is required is that it must be an appropriate case warranting an award on that basis.

3) Guidelines for indemnity basis - Ref. Macmillan Inc v Bishopgate Investment Trust Ltd:
- The power to order taxation on an indemnity basis is not confined to cases which have been brought with an ulterior motive or for an improper purpose.

Litigants who:

• conduct their cases in bad faith; or
• as a personal vendetta; or
  in an improper or oppressive manner; or
  who cause costs to be incurred irrationally or out of all proportion as to what is at stake,
• May also expect to be ordered to pay costs on an indemnity basis if they lose, and have part of their costs disallowed if they win.
• Nor are these necessarily the only situations where the jurisdiction may be exercised;
• The discretion is not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be ‘appropriate’.

Question 33

COSTS FOR SEVERAL PARTIES

Overview

Answer 33

1) general rule
2) Exception - the Bullock order
3) Exception - the Sanderson order

Question 34

COSTS FOR SEVERAL PARTIES

General rule

Answer 34

• costs follow event;

- i.e. loser pay winner’s costs.

Question 35

COSTS FOR SEVERAL PARTIES

Exception - The Bullock Order

Answer 35

Bullock v London General Omnibus:

• Situation: P sues D1 & D2. Court finds D1 solely liable to P.
• Order:
  (i) judgment for P against D1 with costs;
  (ii) P’s claim against D2 is dismissed with costs; and
  (iii) D1 to pay P’s costs so paid by P to D2.
• Applied in: Federal Flour Mills Ltd v Ta Tung Owners

Question 36

COSTS FOR SEVERAL PARTIES

Exception - The Sanderson order

Answer 36

Sanderson v Blyth Theatre Co:

• In some circumstances, D (the unsuccessful defendant) will be ordered to pay D2’s (the successful defendant’s) costs to him directly.
• Thus, if P is insolvent, a Bullock order will not assist D2 to recover his costs.
• In such a case a Sanderson order will be useful.
• Situation:
  P insolvent & cannot pay costs to D2 which he lost against.
• Order:
  (i) judgment for P against D1 with costs;
  (ii) P’s claim against D2 is dismissed with costs; and
  (iii) D1 to pay D2’s costs.
• Applied in: Muniandy v Tan Lian Hock

Question 37

COSTS AGAINST NON-PARTY

Overview

Answer 37

1) Discretion to order

2) Guiding principles

Question 38

COSTS AGAINST NON-PARTY

Discretion to order

Answer 38

Alden Shipping Ltd v Interbulk Ltd:

• There is no doubt that that the court has a discretion to order costs against a non-party

Question 39

COSTS AGAINST NON-PARTY

Guiding principles

Answer 39

Symphony Group Plc v Hodgson:

1) EXCEPTIONAL:
- An order for the payment of costs by a non-party will always be exceptional;
2) CAUSE OF ACTION AGAINST NON-PARTY EXISTING AT THE TIME OF WRIT ISSUED:
- It will be even more exceptional where the applicant has a cause of action against the non-party and could have joined him as a party to the original proceedings.
3) WARNING TO NON-PARTY:
- Even if the applicant can provide a good reason for not joining the non-party against whom he has a valid cause of action, he should warn the non-party at the earliest opportunity of the possibility that he may seek to apply for costs against him.
3) APPLICATION DETERMINED BY JUDGE:
- An application for payment of costs by a non-party should normally be determined by the trial judge.
4) APPLICATION & OTHER EXAMPLES:
- The fact that a person gives evidence in an action does not normally mean that the company is taking part in that action, in so far as that is an allegation relied upon by the party who applies for an order for costs against a non-party company.