Razer (Asia-Pacific) Pte Ltd v Capgemini Singapore Pte Ltd [2023] SGHC 195

Costs

In the previous tranche of this suit (“Suit 1233”), I found the defendant liable for breach of contract and negligence against the plaintiff for misconfiguration of a server file, leading to a leak of the plaintiff’s non-public consumer data. This decision concerned the assessment of the costs to be awarded to the plaintiff, and it raised the question of the level of specificity required to plead a contractual entitlement to indemnity costs.

Costs

On 18 January 2023, I delivered my decision on costs. The grounds of my decision are as follows.

Costs

The crux of the parties’ disagreement was whether I should order indemnity costs against Capgemini.

Costs

Razer’s case was three-fold. First, by virtue of cl 12 of the CSA and cl 12 of the DPA (the “Indemnity Clauses”), it was contractually entitled to costs and disbursements on an indemnity basis. In the alternative, Capgemini’s wasteful conduct in Suit 1233 warranted an award of costs and disbursements on an indemnity basis. Finally, at minimum, Razer submitted that it was entitled to costs and disbursements on an indemnity basis from 27 June 2022, pursuant to O 22A r 1 of the Rules of Court (2014 Rev Ed) (“the ROC”). Razer had sent an offer to settle on that date (“the OTS”), the terms of which were more favourable than the court’s decision in Suit 1233 on 18 January 2023.

Costs

In response, Capgemini argued that Razer did not clearly and properly plead that it would be pursuing a contractual remedy of indemnity costs under the Indemnity Clauses: see Telemedia Pacific Group Ltd v Credit Agricole (Suisse) SA (Yeh Mao-Yuan, third party) [2015] 4 SLR 1019 (“Telemedia”) at [30]. Therefore, the Indemnity Clauses were only one relevant factor in the court’s exercise of discretion in determining the costs to be awarded to Razer. Further, notwithstanding the Indemnity Clauses, the court should award costs on a standard basis because Razer had acted unreasonably. However, even if the court awards indemnity costs, the quantum of the costs should be reasonable and limited, by virtue of the wording of cl 12 of the CSA, and O 59 r 27(3) of the ROC. Finally, Capgemini avers that the OTS was not a genuine attempt by Razer to reach an amicable settlement, given Razer’s repeated non-disclosures during the discovery process and leading up to the trial.

Costs

In summary, I awarded costs to Razer on an indemnity basis. In the alternative, Razer had a separate right to indemnity costs from 27 June 2022 on the basis of the OTS. I detail my decision below.

Costs

In my earlier decision of NSL Oilchem Waste Management Pte Ltd v Prosper Marine Pte Ltd and other suits [2020] SGHC 204 (“NSL Oilchem”), I summarised at [198] the relevant principles where parties had made a contractual agreement on costs:

Costs

However, where a party seeks to enforce its contractual rights directly under a costs agreement, such a cause of action would have to be clearly and properly pleaded: Telemedia at [30]; also see Abani Trading at [66]. In such a case, the party pursues a contractual remedy and must plead their entitlement to indemnity costs under contract: Telemedia at [66].

Costs

Order 22A rule 9 of the ROC provides that where an offer to settle is made by the plaintiff but not accepted by the defendant and the plaintiff obtains a judgment “not less favourable than the terms of the offer to settle”, the plaintiff would get his costs from the defendant up to the date of the offer to settle on a standard basis and the plaintiff’s costs on an indemnity basis from the date of the offer to settle “unless the court otherwise orders”: Singapore Civil Procedure 2021 (Sweet & Maxwell, 2021) (“SCP”) at para 22A/9/1.

Costs

Razer’s contractual entitlements to indemnity costs are found in cl 12 of the CSA and cl 12 of the DPA. I have reproduced them here for convenience.

Costs

However, Capgemini contended that Razer could not rely on its contractual entitlements under the Indemnity Clauses because it did not satisfy the requirement set out by the High Court in Telemedia at [31] – ie, Razer did not “clearly and properly plead” that it would be pursuing a contractual remedy of indemnity costs under the Indemnity Clauses. Specifically, Capgemini argued that the pleadings “only [made] reference to [Razer’s] reliance on the Indemnity Clauses but [did] not specifically plead indemnity costs based on the relevant contractual provisions”.

Costs

In Telemedia, the High Court did not go into the details of what must be specifically pleaded in order to rely on a contractual right to obtain indemnity costs, because the issue did not arise on the facts of that case. The High Court simply stated that the general principles governing pleadings would apply (Telemedia at [31]). In my judgment, when determining whether a party has sufficiently pleaded its contractual right to indemnity costs, the court must bear in mind the purpose of a pleading. Its fundamental purpose is to give the opposing party notice of the case against it so that it is not taken by surprise or prejudiced by an unexpected claim: Vestwin Trading Pte Ltd and another v Obegi Melissa and others [2006] 3 SLR(R) 573. Where a party seeks to rely on its contractual entitlement to costs, including the specific term of the contract in one’s pleading will allow the other party to make an informed decision at the early stages of the trial as to whether there is a need to adduce evidence to address the enforceability or applicability of that contractual provision: Abani Trading at [66]. Based on the foregoing, the relevant test to determine the sufficiency of the pleading would be whether the defendant can reasonably say that the plaintiff has expressed the intention to invoke a specific contractual term to recover costs against the defendant on an indemnity basis.

Costs

In my judgment, Razer had clearly and properly pleaded that it would enforce its contractual rights directly under the Indemnity Clauses. This was evident from para 24, which stated that Razer would “rely on the full terms, meaning and effect” of cl 12 of the CSA, “pursuant to which … [Capgemini] agreed to indemnify and hold [Razer] harmless from … including but not limited to reasonable legal fees and costs of suit”. Similarly, para 25 provided that Razer would “also rely on the full terms, meaning and effect of the indemnity clause in [cl] 12 of the DPA, pursuant to which [Capgemini] agreed to indemnify … [Razer] against losses, damages, costs or expenses (including legal fees) incurred by [Razer]”. These statements were sufficient to give Capgemini notice that Razer intended to rely on the Indemnity Clauses to recover legal costs on an indemnity basis. Contrary to Capgemini’s submissions, it was not necessary for Razer to go beyond that. Therefore, I find that the Indemnity Clauses were sufficiently pleaded.

Costs

I noted the difference in wording between the Indemnity Clauses. Clause 12 refers to “reasonable legal fees and costs of suit” as an illustration of what is covered by the indemnity clause, whereas cl 12 of the DPA makes no reference to the notion of reasonableness. I accepted Razer’s argument that cl 12 of the DPA is applicable as the DPA was entered into after the CSA. Even if I was wrong on this point, cl 12 of the CSA also cited “reasonable legal fees and costs of suit” as merely an illustration of what would fall within the indemnity. Therefore, cl 12 of the CSA did not exclude the option of all legal fees being indemnified.

Costs

Razer specifically pleaded, and relied on its contractual entitlement when seeking, indemnity costs for Suit 1233. Applying UOB v Sin Leong and NSL Oilchem, I held that full indemnity costs, as stipulated in cl 12 of the DPA, was appropriate here. I found no reason to deviate from the bargain struck between two commercial parties dealing at arm’s length: NSL Oilchem at [205].

Costs

In the alternative, I held that Razer had a separate right to indemnity costs from 27 June 2022, as Razer had sent an OTS to Capgemini on that date. The OTS was not subsequently withdrawn, and it did not stipulate an expiry date. According to the terms of the OTS, Capgemini would be liable to pay Razer a settlement sum amounting to US$3,000,000, as well as Razer’s costs to be agreed or taxed. The remaining terms of the OTS pertained to Razer’s withdrawal of Suit 1233.

Costs

It was clear that the outcome of Suit 1233 was less favourable than the terms of the OTS. In my view, the present case was similar to Singapore Airlines Ltd v Tan Shwu Leng [2001] 3 SLR(R) 439, where the Court of Appeal was concerned only with the sum offered in the offer to settle, comparing it with the judgment sum: CCM Industrial at [40]; also see Tan Shwu Leng at [96]. In my earlier decision, I found Capgemini liable to pay Razer a total sum of US$6,518,738.81 in damages: Razer (Asia-Pacific) at [160]. These damages far exceeded the settlement sum stated in the OTS, ie, US$3,000,000. I was also unconvinced by Capgemini’s arguments that the OTS was not a genuine attempt by Razer to reach an amicable settlement; in my judgment, Capgemini’s allegations about Razer’s conduct were not relevant. Therefore, applying O 22A r 9 of the ROC, Razer was entitled to costs and disbursements on an indemnity basis from 27 June 2022 onwards.

Costs

As a final note, and for completeness, I also considered Capgemini’s submissions about Razer’s allegedly unreasonable conduct in Suit 1233. These arguments did not persuade me to award costs against Capgemini on a standard basis.

Costs

In the circumstances, I held that Capgemini was liable to pay Razer the costs of the suit on an indemnity basis. In the alternative, by virtue of Razer’s OTS, Razer also had a separate right to claim costs on an indemnity basis from Capgemini from 27 June 2022 onwards.