Trans Eurokars Pte Ltd v Koh Wee Meng

Justin Yeo AR:

[3] The Applicant filed the Bill on 3 December 2014, claiming the following:

(a) Section 1: $608,807.28 (before GST);

(b) Section 2: $3,000 (before GST); and

(c) Section 3: $281,422.73 (with GST on items for which GST is chargeable; this amount was subsequently modified, see [36] below).

[4] The Respondent disputed the Bill by way of a Notice of Dispute filed on 17 December 2014.

(a) Suit 873 involved highly complex technical issues. The Judge had recognised that in order to deal with the issues in Suit 873, it was necessary to first determine whether there was a defect in the Rolls when it was delivered to the Respondent (Koh Wee Meng at [33]). In order to determine the technical issue of whether the noise and vibration constituted a defect, it was necessary for the Rolls to be inspected on two occasions, at meetings that involved different experts. It was also necessary for the Respondent’s expert, Mr David John Bellamy (“Mr Bellamy”), to inspect two comparison vehicles in the United Kingdom (“UK”), and for the Applicant’s expert, Mr Robert Johann Matawa (“Mr Matawa”), to inspect six similar vehicles at the Rolls-Royce factory in Goodwood, UK. In addition, the Applicant’s witnesses had to give evidence in respect of a particular rating system used in the automotive industry (known as the “BI Rating”). The application of the BI Rating was complex, technical and required specific expertise. It should be noted that the Judge found that Mr Bellamy was unable to apply the BI Rating as he did not possess the necessary expertise (ibid at [87]).

(b) Suit 873 also involved numerous legal issues which the Judge had to consider, and upon which parties had submitted at length. The issues were as follows:

(i) What constitutes “satisfactory quality” under s 14 of the Sale of Goods Act (Cap 393, 1999 Rev Ed) (“Sale of Goods Act”) (Koh Wee Meng at [89]–[91]).

(ii) Whether a reasonable person who, like the Respondent, had paid $1.4m to purchase a luxury motor vehicle touted for its ride comfort and quiet performance, would have considered the quality of the car to be unsatisfactory because of the noise and vibration experienced during a three-point turn (ibid at [93]–[99]).

(iii) Whether the Respondent had acquiesced in any breach (ibid at [119]–[122]).

(iv) The measure of damages payable in the event of any breach, and in particular, whether the buyer of defective goods is entitled to rely on the measure in s 56(3) of the Sale of Goods Act if doing so would recover more than his true loss (ibid at [123]–[124]).

(v) Whether the Respondent had proved his claim for loss of amenity (ibid at [135]).

(vi) Whether the Respondent was obliged to mitigate his losses, and if so, whether he failed to do so by continuing to use the Rolls or, alternatively, because he had refused to accept the Applicant’s offer made in October 2009 to send the Rolls to Rolls-Royce’s UK workshop for further investigation (ibid at [136]–[141]).

(a) Due to the complex technical nature of the dispute, the Applicant’s solicitors had to attend inspection of the Rolls (on 28 and 29 February 2012), inspection of Rolls-Royce vehicles at Goodwood, UK (in August 2012), and a meeting with Mr Matawa and Mr Alexander Uphoff (“Mr Uphoff”) in Munich, Germany (in March 2013). According to Mr Quek, the legal costs incurred from inspections and meetings alone amounted to $107,065. Mr Quek submitted that the Applicant’s team of solicitors and counsel had acted reasonably in attending these inspections and meetings. For instance, for the two-day inspection of the Rolls in February 2012, Ms Choo attended only half a day, and Mr Quek attended only one day. Mr Quek claimed that such attendances were necessary for the team to understand how the readings were taken as well as the rationale of the expert’s approach. The inspection at Goodwood was attended only by Ms Choo. The meeting in Germany involved both Mr Tan SC and Ms Choo as it was necessary for both counsel to get up for the second tranche of trial.

(b) There were three different periods of getting-up for trial. Trial dates were initially fixed in November 2012. However, as the Respondent’s lead counsel had to attend a Court of Appeal hearing during that time, the trial dates were re-fixed, three working days prior to the trial, to January 2013 (first tranche) and February 2013 (second tranche). At the hearing of RA 6 before the Judge on 8 January 2013, the second tranche was further re-fixed to March 2013. According to Mr Quek, the legal costs incurred for getting-up and trial attendance alone amounted to $415,326.

(c) On the issue of Pre-Trial Conferences (“PTCs”), the Respondent did not dispute the attendance at and the length of the PTCs. According to Mr Quek, the legal costs incurred from attending the PTCs amounted to $4,275.

(d) Mr Quek pointed out that all of these costs (ie for attendance at inspections and meetings, for getting-up for trial, and for PTCs) already amounted to $537,291. He further pointed out that the total time costs for all legal work since 2011 (ie including the taking of instructions, the drafting and preparation of documents, discovery, etc, but excluding interlocutory applications where costs had been fixed by the court) amounted to $842,684, of which the time costs of the two most senior solicitors (ie Mr Tan SC and Ms Choo) alone amounted to $776,800. He emphasised that the amount of Section 1 costs claimed already included a sizeable discount from the actual time costs incurred by the Applicant’s team of solicitors and counsel.

(a) If only the time spent by the two most senior solicitors could be considered in the present case, this would lead to the unfair result that the Applicant is substantially deprived of its costs for work done by the more junior solicitors just because different solicitors had handled different aspects of the dispute for better costs management. Awarding costs strictly on the basis of only two solicitors’ costs would give rise to an unrealistic costs award which did not take into consideration that work should reasonably be delegated to more junior solicitors in the interests of costs management. In this regard, Mr Quek argued that the Applicant’s team of solicitors and counsel had allocated work such that work of lesser complexity would be appropriately delegated to the junior solicitors so as to reduce costs. As an example, he pointed out that he had attended a full day inspection of the Rolls while Ms Choo had attended only half a day, and Mr Tan SC did not attend at all. Mr Quek also submitted, in response to a query from this court, that the team was careful to ensure that there was minimal overlap of the responsibilities of the different counsel.

(b) As a matter of policy, it is desirable for work to be appropriately delegated to junior solicitors. As such, the court should consider the reasonable costs to be allowed rather than depriving the Applicant of the costs of the junior solicitors even in the absence of a certificate for more than two counsel. In making this argument, Mr Quek relied on Greenslade on Costs (Fees Update) 1997 (“Greenslade on Costs”), where the learned authors observed that:

Mr Quek also relied on ST International Company Limited v General Nice Resources (Hong Kong) Ltd DCCJ 4192 of 2007 (“ST International”), where the District Court of Hong Kong noted (at [12]) that:

(c) There are also practical policy implications should costs incurred by junior solicitors be disallowed. Such an approach would mean that senior solicitors are expected to undertake every aspect of the case, including drafting pleadings, attending to all witnesses, complying with discovery obligations, compiling lists of documents, attending all interlocutory applications and PTCs, preparing all affidavits, preparing all legal submissions, and so forth. This, Mr Quek submitted, would not be optimal from the perspective of costs management.

[19] First, according to Ms Tan, Suit 873 was “simple and straightforward”. The matter concerned only a single sale of goods transaction in Singapore, in which the legal and factual issues fell within a very narrow compass. No particular skill, specialised knowledge or responsibility, or extensive time and labour was required by the Applicant’s team of solicitors and counsel. Furthermore, the documentary evidence was not voluminous.

(a) A certificate for more than two solicitors will be granted if, and only if, the court is satisfied that the services of more counsel are reasonably necessary for the adequate presentation of the case, or that the case involves a high degree of complexity of facts and/or law, or where the trial is lengthy (citing Colliers International (Singapore) Pte Ltd v Senkee Logistics Pte Ltd [2007] 2 SLR(R) 230 and Raffles Town Club Pte Ltd v Lim Eng Hock Peter and others (Tung Yu-Lien Margaret and others, third parties) [2011] 1 SLR 852). If a party chooses not to apply for a certificate for more than two solicitors, that party is simply not allowed to claim or recover costs incurred by a third, fourth or subsequent solicitor working on the case.

(b) As a matter of precedent, in Lin Jian Wei, the Court of Appeal did not consider it appropriate to allow a party to recover costs beyond those of two solicitors in the absence of the requisite certificate, even though a team of six solicitors had worked on the case.

(c) On a plain reading of O 59 r 19 of the Rules of Court, it is clear that unless the court so certifies, a party will not be allowed to recover costs for getting up the case by and for attendance in court of more than two solicitors, even if the first two senior solicitors have delegated work to other junior solicitors. Furthermore, in view of the language “shall not” in O 59 r 19(1) of the Rules of Court, the court has no discretion to award costs for more than two counsel. This is because the express words of O 59 r 19(2) of the Rules of Court specifically provide that the restrictions in O 59 r 19(1) of the Rules of Court apply even where the solicitors are members of the same firm, and no distinction is made as to the seniority of the solicitors in question. Furthermore, the Rules Committee must have been alive to the distinction between junior and senior solicitors when it amended O 59 r 19 of the Rules of Court 1970. As such, it must be inferred that the rule was meant to preclude claims for costs of three or more solicitors, regardless of their seniority, even if there were junior solicitors who did some of the legwork for the two senior solicitors. This position was buttressed by the note dated 22 November 2006 issued by the Supreme Court on the Rules of Court (Amendment) Rules 2006. The note stated, inter alia, that prior to the Rules of Court (Amendment) Rules 2006, “the receiving party cannot include in his bill of costs, the costs (of attendance, getting up, etc) of another solicitor, even if two or more solicitors had attended court or done the work”, and that the 2006 amendments did not effect any substantial change to this practice. Taking the time costs of the third, fourth or subsequent solicitors into consideration would render O 59 r 19 of the Rules of Court nugatory.

(a) BC 195 concerned a consolidated suit which related to a specialised and technical area of patents and inventions, and was believed to be the “longest and most intensive patent litigation in Singapore”. The subject matter was complex, involving 40 pieces of alleged prior art and numerous novel issues of law. Counsel for the applicant in BC 195 had spent a total of 2,250 hours on the case, with about 300 hours accruing to Senior Counsel. The High Court eventually awarded $668,000 (before GST) as Section 1 costs.

(b) BC 296 involved a negligence claim that required highly technical expert evidence in relation to the malfunctioning of ship engines due to defective design and manufacture of component parts of an oil tanker. The trial lasted 28 days, and a total of 15 witnesses testified. The claim of $600,000 by the receiving party was not disputed by the paying party; in this regard, it should be noted that in Lin Jian Wei, the Court of Appeal opined (at [73]) that the $600,000 bill in BC 296 was “rightly” not disputed, hence providing further confirmation that the amount claimed was proportionate and reasonable.

(a) First, Mr Quek cited Bill of Costs No 115 of 2014 (Originating Summons No 505 of 2010, Fong Wai Lyn Carolyn v Airtrust (Singapore) Pte Ltd and another) (“BC 115”). The claim in that case concerned an application for leave to commence an action on behalf of a company pursuant to s 216A of the Companies Act (Cap 50, 2006 Rev Ed). The matter was heard over seven days, and the applicant had instructed Senior Counsel. The applicant claimed that the time spent was about 750 hours, but that there were numerous urgent applications that had to be dealt with in the course of the matter (including, inter alia, applications for a mareva injunction and a search order). The claim amount had not been quantified, but allegedly went into the millions of dollars. The High Court awarded $300,000 (before GST) as Section 1 costs.

(b) Second, Mr Quek cited Bill of Costs No 32 of 2010 (Suit No 615 of 2007, RecordTV Pte Ltd v MediaCorp TV Singapore Pte Ltd and others) (“BC 32”). The claim in that case concerned groundless threats of legal proceedings pursuant to s 200 of the Copyright Act (Cap 63, 2006 Rev Ed) in respect of each alleged act of infringement in relation to each alleged broadcast and cinematograph film. The matter was heard over five days, and, for the purposes of the taxation, the applicant claimed that the total amount of time spent on getting up was about 1,441.5 hours, including the services of one Senior Counsel. In BC 32, the High Court awarded $230,000 (before GST) for Section 1 Costs. It should be noted that the 1.441.5 hours claimed in BC 32 was very similar to the alleged amount of time spent by counsel in Suit 873, which the Applicant quantified at about 1,400 hours (excluding interlocutory applications for which costs were fixed by the court).

[29] I pause here to address the arguments concerning the “two counsel rule”, which were canvassed at some length before me. Order 59 r 19 of the Rules of Court provides:

[32] However, in the final analysis, I preferred the “notional” approach to the “headcount” approach, for the following reasons:

(a) First, it is trite the court may take the amount of time spent on a case into consideration when taxing a bill, although the time spent and actual costs incurred are not conclusive of the amount of costs to be awarded. While the assessment of costs is not an arithmetic exercise based on trial days or hours spent by counsel (see Lin Jian Wei at [71]), the time and effort invested by counsel is certainly a relevant factor. As such, in appropriate circumstances, even where there is no certificate for more than two counsel, there appears to be no reason in principle why the court cannot take into consideration the work done by the legal team as a whole. This would, at the very least, assist the court in formulating a fuller picture of the magnitude of the legal task at hand. The court is, of course, free to tax the bill downwards to reflect the absence of a certificate for more than two counsel, but this is altogether different from Ms Tan’s submission that the court cannot even take the time and effort of the third and fourth solicitors into consideration.

(b) Second, the “headcount” approach would lead to practical difficulties in some, if not many, cases. By way of a simple illustration, in a situation where four solicitors arrange to work, on a “half time” basis each, as part of a legal team to perform the tasks that would otherwise have proportionately and reasonably been done by a two-man team, it does not appear proportionate or fair to insist that the taxing court can only take into consideration the time spent by two of those four “half time” solicitors. The practical effect of a procrustean adherence to the “headcount” approach is that the “two counsel rule” would generally reward law practices that function in a particular manner (eg, with each solicitor, regardless of seniority, specialising full-time on a particular file), while prejudicing other styles of case and costs management (eg, deploying teams of solicitors of varying seniority to work cooperatively across different files). This does not seem to be an intended or desired effect of the “two counsel rule”.

(c) Third, the “notional” approach avoids the practical problems engendered by the “headcount” approach, and as such, appears to be more in line with the overarching principle of proportionality. It also better gives effect to the indemnity principle, which must, to paraphrase Then Khek Koon at [158], not only set a ceiling on the loser’s liability to pay costs, but also “a floor on the winner’s entitlement to recover costs” (emphasis added). If the work done by the legal team is, in totality, proportionate to the matter at hand, and may reasonably and realistically have been done by a notional two-man team, there seems to be no reason to limit the court to considering only the work done by two actual counsel and to disregard all other work done.

(d) Fourth, contrary to Ms Tan’s argument, adopting the “notional” approach does not render O 59 r 19(1) of the Rules of Court nugatory. As alluded to in the foregoing paragraph, the limitation in O 59 r 19(1) of the Rules of Court restricts the total amount of costs claimable to what would have been proportionately and reasonably incurred by a notional team of two counsel. A claiming party remains unable to claim for costs exceeding what would have proportionately and reasonably been incurred by a notional two-man team.

[33] Returning to the present case, I am of the view that the time spent by Mr Quek and Mr Lim should be taken into consideration even in the absence of a certificate for more than two counsel. To put matters in perspective, the time spent by Mr Quek (approximately 443 hours) and Mr Lim (approximately 110 hours) amounted to about 40% of the total time spent by the Applicant’s team of solicitors and counsel. If these hours could not be considered, this would mean that only 847 hours of work could be taken into consideration for what was effectively 2.5 years of legal proceedings in a relatively complex suit. Such a drastic reduction in the hours taken into consideration seemed neither proportionate nor reasonable in the circumstances of the present case.

[36] At the hearing on 22 January 2015, the Applicant tendered a revised table of disbursements to correct some minor errors. There were 119 items of disbursements claimed in all, amounting to a total of $6,190.60 (for disbursements on which no GST is chargeable) and $274,177.07 (on which GST is chargeable, amounting to $19,192.39), resulting in a total of $299,560.06 (inclusive of GST). The Respondent did not contest the disbursements relating to court fees, document filing fees, photocopying and binding charges, and transcription charges. However, the Respondent took issue with all other disbursements, claiming that these were either unreasonable, or have not been sufficiently proven by the Applicant.

[37] Without going into the minutiae of the 34 disputed items, I will address the items which, in my view, were either unreasonably incurred or lacked the necessary supporting evidence:

(a) First, the attendance of Mr Uphoff and Mr Marshall at the inspection in February 2012 did not appear to be necessary. Mr Uphoff and Mr Marshall were not acting as expert witnesses, and indeed, at the time of the inspection, Mr Uphoff was not even a factual witness. I therefore did not grant the $12,921.84 claimed for the accommodation and air fare incurred for this inspection.

(b) Second, the Applicant’s expert Mr Matawa came to Singapore four days in advance for the first tranche of trial, and stayed all the way to the end of the first tranche of trial despite the fact that on the second day of trial, it was decided that his evidence would only be given at the second tranche of trial. This was an “overstaying” of about nine days. For the second tranche of trial, Mr Matawa again came five days in advance. While the Applicant might have preferred having his expert with him, I did not think that it was reasonable to visit these costs upon the Respondent. As such, I taxed off $5,000 from the travelling expenses claimed on behalf of Mr Matawa.

(c) Third, for the meeting with Mr Matawa in Germany, it did not seem reasonable for the Applicant to fly two senior solicitors to Germany for the meeting. No good reasons were given as to why it would not have been sufficient to fly only one of the two solicitors, or for the meeting to take place via video- or tele-conference. I therefore allowed the costs of only one solicitor’s travel to Germany and taxed off $8,727.02 from the travelling expenses claimed under this head.

(d) Fourth, the inspection of the Rolls-Royce vehicles in Goodwood concerned the “subjective test” conducted by Mr Matawa. No convincing reason was given as to why the Applicant’s solicitor had to attend such an inspection, or why the solicitors could not be briefed on the same by way of video- or tele-conference. While it may be the Applicant’s preference for a solicitor to attend the inspection, I did not think that these costs should be foisted upon the Respondent. As such, I taxed off $9,403.51 from the travelling expenses claimed under this head.

(e) Fifth, I agreed with the Respondent that the Applicant’s experts’ fees, which amounted to about $167,079, were somewhat excessive. As such, I taxed off 20% of the said fees (ie $33,415.80).

[38] There were also items relating to miscellaneous travel expenses (amounting to $701.03) and translation charges (amounting to $1,150) that were not supported by any documentary evidence. On the authority of Ong Jane Rebecca v Lim Lie Hoa [2008] 3 SLR(R) 189 (see, in particular, at [11]), I disallowed the disbursements claimed for these items.

[39] After the deductions, the total amount of disbursements amounted to $223,248.52 (with GST on items for which GST is chargeable). While this appeared to be a relatively large amount for disbursements, it may be attributed to the unique circumstances of the case which required, on the side of the Applicant, the services and presence of two expert witnesses (one of whom was not based in Singapore) and two factual witnesses (both of whom were not based in Singapore), as well as inspections of vehicles both in Singapore and the UK.

[42] In summary, I taxed the Bill as follows:

(a) Section 1: $320,000 (before GST);

(b) Section 2: $2,000 (before GST); and

(c) Section 3: $223,248.52 (with GST on items for which GST is chargeable).