SATS Construction Pte Ltd v Islam Md Ohidul [2016] SGHC 99

Costs

After dismissing the appeal, I ordered costs in favour of the Respondent despite his lawyer telling the court that the law firm was acting for the Respondent on a pro bono basis and that any costs recovered would be donated to the Humanitarian Organization for Migration Economics (“HOME”), a registered charity dedicated to upholding the rights of migrant workers in Singapore. I subsequently fixed the matter for hearing on 11 March 2016 in order to hear any submissions parties may have on whether costs may be ordered in favour of a party whose lawyers are representing him on a pro bono basis. My concern was that the award of costs to a successful litigant represented on a pro bono basis could be viewed broadly as allowing a champertous agreement. Further, it could be argued that a party with the benefit of pro bono services does not need to be indemnified for any costs. At the hearing on 11 March 2016, both counsel made submissions on this issue of costs. Counsel for the Respondent also informed the court that he had sought guidance from the Law Society of Singapore (“the Law Society”) on the matter as well. He then relayed a request from the representatives of the Law Society to seek clarification on the legal position from this Court, urging this Court to make available its grounds of decision to guide the legal profession. I write these Grounds of Decision to set out my views and decision on this narrow issue.

Costs

The award of costs is a matter in the court’s discretion. The Court of Appeal in Aurol Anthony Sabastian v Sembcorp Marine Ltd [2013] 2 SLR 246 (“Aurol”) reiterated that (at [103] – [104]):

Costs

While the Court of Appeal’s findings were directed at the allocation of costs between parties and did not specifically address the issue of whether a successful litigant represented on a pro bono basis could be awarded costs, there is no ambiguity as to the broad discretion the court exercises in ordering costs.

Costs

In JBB v JBA [2015] 5 SLR 153, I cited the decision of the Court of Appeal in Maryani Sadeli v Arjun Permanand Samtani and another and other appeals [2015] 1 SLR 496 (“Maryani”) at [30] for the general principle that costs should follow the event:

Costs

As pointed out in 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 rule that costs should generally follow the event is one aspect of the indemnity principle. Another aspect relates to the quantification of costs — the indemnification operates in relation to the sums for which the winner is under a legal obligation to pay his solicitors for the legal services rendered (see Mohamed Amin bin Mohamed Taib and others v Lim Choon Thye and others [2011] 2 SLR 343 at [21], referring to Gundry v Sainsbury [1910] 1 KB 645 (“Gundry”)). A party ought not to enjoy any windfall by virtue of costs awards (see Wentworth v Rogers (2006) 66 NSWLR 474 (“Wentworth”) at [50]). The reason is well stated by the court in Harold v Smith (1860) 5 H & N 381 at 385 (cited in Gundry at 649) — costs are neither imposed as a punishment to the losing party nor as a reward to the winning party.

Costs

This was not a concern in the present case. On the facts, the arrangement between the Respondent and his solicitors had crystallised in the following manner: after his employment was terminated by the Appellant on 13 March 2015, the Respondent had remained in Singapore on a special pass issued by the Ministry of Manpower for the purpose of resolving his dispute before the Assistant Commissioner. That decision was rendered on 25 May 2015 and the Respondent, apparently in anticipation of his impending return to Bangladesh, executed a Power of Attorney in favour of a case worker from HOME (“the Respondent’s Representative”) on 16 July 2015, authorising her to instruct counsel in respect of the appeal. He returned to Bangladesh shortly thereafter on 20 July 2015. It was then clarified and agreed between the Respondent’s Representative and his counsel subsequent to the first hearing that any costs awarded in this appeal would go to pay the professional fees of his counsel, which in turn would be donated to HOME. There was thus no worry that costs awarded would be a windfall to the Respondent. I accepted that on the facts of this case, the Respondent and the solicitors had proceeded on the basis that the Respondent would not be required to pay any costs to his solicitors but the arrangement did not preclude them, if successful in the proceedings, from seeking costs from the court, which would be paid to the solicitors.

Costs

In my view, where the order of costs does not unjustly benefit the successful party or punish the unsuccessful one, there is no inconsistency with the rationale behind the indemnity principle. Indeed, it redresses what in my view is an unjust benefit to an unsuccessful party litigating against a pro bono-aided party; any advantage that the unsuccessful party may have in never being liable for costs falls away. This position results in an even playing field as far as cost orders are concerned and may have a positive effect in encouraging responsible conduct in litigation. I note the useful guidance given by the court in Wentworth at [50] that “the indemnity principle is not immutable, and should be applied flexibly rather than made into a rigid rule”. The flexibility of the indemnity principle is capable of accommodating costs arrangements such as that in the present case. It is also in accord with the underlying objective of enhancing access to justice to allow an order of costs in pro bono cases.

Costs

This is not to say that such personal sacrifices need necessarily go wholly uncompensated, particularly where the compensation is in the form of party-and-party costs that the losing party would have had to pay in non-pro bono situations. Allowing lawyers providing pro bono services to recover some fees in the form of party-and-party costs does no discredit to them, and if by doing so, brings us a step closer to a legal system where no one is denied legal representation by reason only of his impecuniosity, it is a right step forward.

Costs

This position is consistent with the legislation providing for costs in proceedings in which a legally aided person is a party. The Legal Aid and Advice Act (Cap 160, 2014 Rev Ed) provides:

Costs

One could argue that it is precisely because such costs orders are not permitted that legislation was required to provide for such situations. I do not find this argument persuasive, for, in my view, the policy and principle behind the two situations are similar: pro bono and legal aid services are provided to enhance access to justice and it is fair for the providers of such services to be paid for the work they have done by virtue of costs orders.

Costs

The present arrangement in respect of the retainer between the Respondent and his counsel could arguably be construed as a form of conditional fee agreement in which the Respondent’s liability to pay the solicitors is contingent on costs being awarded in his favour. While I have held above that this arrangement does not impinge on the indemnity principle (see, eg, the Victorian Court of Appeal decision in Mainieri v Cirillo [2014] VSCA 227), it could be argued that such arrangements are champertous in nature. Section 107 of the Legal Profession Act (Cap 161, 2009 Rev Ed) provides:

Costs

I decided that costs should be ordered to the Respondent. There was nothing in law or in principle that prohibited the award of costs to the successful litigant on the facts before me. The costs were ordered to be paid to the solicitors, who had put in substantial work in representing the Respondent. I noted that these solicitors acting pro bono would not be obtaining any solicitor-and-client costs from the client. I ordered that costs fixed at $6000, inclusive of disbursements, be paid by the Appellant to the Respondent.