Armira Capital Ltd v Ji Zenghe and others [2025] SGHCR 18

Case Details

• Citation: [2025] SGHCR 18
• Court: General Division of the High Court of the Republic of Singapore
• Decision Date: 20 June 2025
• Coram: Gan Kam Yuin AR
• Case Number: Bill of Costs No 171 of 2024
• Hearing Date(s): 15, 17 April, 6 May 2025
• Applicant: Armira Capital Ltd
• Respondents: Ji Zenghe; Fan Xianyong; Oriental Straits Fund III
• Counsel for Applicant: Yeap Poh Leong Andre SC, Gan Eng Tong and Wayne Yeo (Yang Weien) (Rajah & Tann Singapore LLP)
• Counsel for Respondents: Tan Chau Yee, Kok Yee Keong (Guo Yiqiang), Audrey Foo Xue Ning and Chong Ee Jin (Harry Elias Partnership LLP)
• Practice Areas: Civil Procedure; Costs; Assessment

Summary

The decision in Armira Capital Ltd v Ji Zenghe and others [2025] SGHCR 18 serves as a definitive practitioner-grade guide on the assessment of costs under the Rules of Court 2021 ("ROC 2021"), specifically where such costs are awarded on an indemnity basis pursuant to a contractual agreement. The dispute arose from the assessment of Bill of Costs No 171 of 2024 ("BC 171"), following the successful application by Armira Capital Ltd (the "Applicant") to set aside default judgments and service-out orders obtained by the Respondents in Originating Claim No 36 of 2023 ("OC 36").

The central doctrinal contribution of this judgment lies in its clarification of the court's role when faced with a contractual indemnity for legal costs. The court held that while a contractual indemnity is a "highly relevant factor" that shifts the burden of proof to the paying party to demonstrate unreasonableness, it does not oust the court's inherent and statutory discretion to scrutinize the quantum of costs. The Assistant Registrar ("AR") emphasized that the court is not a mere "rubber stamp" for any bill presented by a successful party’s solicitors, even when an indemnity basis is ordered. The judgment reinforces that the principles of reasonableness and proportionality, enshrined in Order 21 of the ROC 2021, remain the ultimate yardsticks for the taxing master.

Furthermore, the case provides a granular analysis of how Section 1 (work done in the cause), Section 2 (work done for the assessment), and Section 3 (disbursements and foreign lawyer fees) of a Bill of Costs are to be treated in complex cross-border litigation. The court's treatment of foreign lawyer fees—specifically those of UK-based solicitors—highlights the necessity of expert evidence in justifying the reasonableness of foreign hourly rates and the necessity of the work performed. The AR's decision to partially accept the evidence of the Applicant's costs expert, Mr. Thomas George Mason, while rejecting the Respondents' expert, underscores the evidentiary rigor required in high-stakes costs assessments.

Ultimately, the court's approach balances the commercial reality of contractual indemnities with the judicial duty to ensure that costs remain "reasonable" and "proportionate." This judgment is essential reading for practitioners involved in international commercial disputes where "costs-follow-the-event" is complicated by pre-existing contractual fee-shifting arrangements and the involvement of multiple jurisdictions.

Timeline of Events

1. 18 January 2023: The Respondents filed Originating Claim No 36 of 2023 ("OC 36") against Euro Credit Holdings Limited, Euro 1, and the Applicant.
2. 27 January 2023: The Respondents obtained an ex parte injunction and permission to serve the cause papers out of Singapore.
3. 13 February 2023: Service of the papers was purportedly effected on the Applicant in the United Kingdom.
4. 16 February 2023: The Respondents obtained further interlocutory orders against the defendants in OC 36.
5. 18 May 2023: Default judgments were entered against the Applicant and other defendants for failure to file a notice of intention to contest.
6. 6 June 2023: The Applicant filed SUM 1915, an application to set aside the default judgments and the order for service out of jurisdiction.
7. 27 June 2023: The court granted SUM 1915, setting aside the default judgments and ordering that the Respondents pay the Applicant’s costs on an indemnity basis.
8. 1 January 2024: The period for which certain costs were claimed in BC 171 commenced, covering the preparation for the assessment.
9. 16 February 2024: The Applicant filed Bill of Costs No 171 of 2024 ("BC 171") seeking assessment of the indemnity costs.
10. 15 April 2025: The substantive hearing for the assessment of BC 171 commenced before AR Gan Kam Yuin.
11. 17 April 2025: The second day of the substantive hearing for the costs assessment.
12. 6 May 2025: The final day of the hearing for the assessment of costs.
13. 20 June 2025: The court delivered its judgment on the assessment of BC 171.

What Were the Facts of This Case?

The Applicant, Armira Capital Limited, is a financial advisory services company based in the United Kingdom and is authorized and regulated by the Financial Conduct Authority ("FCA"). It has no physical presence or place of business in Singapore. The dispute originated from a complex financing arrangement involving the Respondents: Ji Zenghe ("Ji"), Fan Xianyong ("Fan"), and Oriental Straits Fund III ("OSF III").

The underlying transaction involved Euro 1 agreeing to lend US$25m each to Ji and Fan (the "Loans"). In connection with these loans, OSF III, Euro 1, and the Applicant entered into a Custodian Management Agreement ("CMA"). The CMA was governed by English law and contained an Exclusive Jurisdiction Clause in favor of the English Courts (Terms 39.1 and 39.2). Under the CMA, the Applicant acted as a custodian manager. Crucially, the CMA and the associated Terms of Business ("TOB") provided for a contractual indemnity for legal costs incurred by the Applicant in connection with its duties or any disputes arising therefrom.

The Respondents initiated OC 36 on 18 January 2023, alleging breaches of duty and seeking the return of pledged shares. They successfully obtained ex parte orders for service out of jurisdiction and subsequently obtained default judgments when the Applicant did not respond within the prescribed timelines. The Applicant contended that it had not been properly served and that the Singapore court lacked jurisdiction due to the exclusive jurisdiction clause in the CMA.

The Applicant filed SUM 1915 to set aside these default judgments. The application was successful, with the court finding that the Respondents had failed to make full and frank disclosure during their ex parte applications and that the service was irregular. Consequently, the court ordered that the Respondents pay the Applicant's costs of SUM 1915 and the related proceedings on an indemnity basis. This led to the filing of BC 171.

BC 171 was divided into three sections. Section 1 claimed costs for work done in the cause, including the setting aside of the default judgments and the challenge to jurisdiction. Section 2 claimed costs for the work done in the assessment of the bill itself. Section 3 claimed disbursements, which included significant fees paid to UK solicitors (Macfarlanes LLP) and UK counsel, as well as the fees of a costs expert, Mr. Thomas George Mason. The total amount claimed was substantial, reflecting the complexity of the cross-border legal issues and the high stakes of the underlying US$50m loan dispute.

The Respondents contested the quantum of the bill, arguing that despite the indemnity basis, the costs were unreasonable and disproportionate. They specifically challenged the hourly rates of the Singapore and UK lawyers, the necessity of the work performed by the UK lawyers, and the methodology used by the Applicant's costs expert. The Respondents also argued that the Applicant had already been indemnified by Euro 1, and therefore should not be allowed to recover the same costs from the Respondents, invoking the principle against double recovery.

The evidence record for the assessment was extensive, including eight volumes of the Common Bundle of Documents ("CBOD") totaling 4,405 pages. Both parties relied on expert testimony regarding the reasonableness of UK legal fees. The Applicant's expert, Mr. Mason, provided a detailed report justifying the UK rates and hours, while the Respondents' expert, Mr. Daval-Bowden, challenged these figures. The court was thus required to navigate a thicket of procedural rules, contractual interpretations, and expert opinions to arrive at a fair assessment.

What Were the Key Legal Issues?

The court identified several critical legal issues that required determination to assess BC 171:

• The Approach to Indemnity Costs under ROC 2021: Whether the shift from the Rules of Court 2014 to the ROC 2021 altered the fundamental approach to assessing costs on an indemnity basis, particularly the interplay between contractual indemnities and judicial discretion.
• The Impact of Contractual Indemnity: To what extent a pre-existing contractual agreement for the payment of "all costs" or "full indemnity" limits the court’s power to reduce costs for unreasonableness.
• Reasonableness of Section 1 Costs: Whether the S$477,700 claimed for work done in the cause was reasonable, considering the complexity of the setting-aside application and the seniority of the counsel involved (including Senior Counsel).
• Reasonableness of Section 2 Costs: Whether the S$40,311 claimed for the assessment process itself was justified, given the length of the hearings and the volume of documentation.
• Recovery of Foreign Lawyer Fees: Whether the fees of UK solicitors and counsel (totaling over £337,000) were recoverable as disbursements and whether the rates charged were consistent with UK market standards for "heavy" commercial litigation.
• The Double Recovery Argument: Whether the fact that the Applicant had a separate indemnity from a third party (Euro 1) precluded it from recovering costs from the Respondents under the court order.

How Did the Court Analyse the Issues?

The court’s analysis began with the fundamental principles of costs assessment. AR Gan Kam Yuin noted that under Order 21 Rule 22(3) of the ROC 2021, the court must allow all costs except those that are of an "unreasonable amount" or "unreasonably incurred." The AR emphasized that the burden of proof in an indemnity assessment rests on the paying party to show that the costs are unreasonable.

The Contractual Indemnity and Judicial Discretion

The Applicant argued that because the costs were awarded pursuant to a contractual indemnity in the CMA, the court should be highly deferential to the actual costs incurred. However, the AR, citing [2015] 1 SLR 496, held that an award of costs on an indemnity basis is "deemed to be an actual indemnity although in virtually every case it is not so" (at [28]). The court explicitly rejected the notion that a contractual indemnity ousts the court's discretion:

"I agreed with the respondents that even though the costs claimed in BC 171 were awarded pursuant to a contractual indemnity, the court should not simply allow the applicant to claim the amount of the bills presented to it by its Singapore lawyers without scrutiny." (at [28])

The AR further clarified that the court's power to assess costs is derived from paragraph 13 of the First Schedule to the Supreme Court of Judicature Act 1969. This power is not superseded by private contract. The court distinguished cases like Abani Trading Pte Ltd v BNP Paribas [2014] 3 SLR 909, noting that while a costs agreement is a relevant factor, it does not mandate the court to allow unreasonable costs.

Section 1: Work Done in the Cause

In assessing the S$477,700 claimed for Section 1, the court looked at the "complexity and novelty" of the issues in SUM 1915. The Applicant had engaged Senior Counsel (Andre Yeap SC). The court noted that while the use of Senior Counsel was justified given the US$50m value of the dispute and the allegations of material non-disclosure, the total hours claimed (over 700 hours) required scrutiny. The AR applied the principles from [2023] SGHC 195 and [2016] SGHC 278, ultimately making downward adjustments where work appeared duplicative or where the seniority of the person performing the task was not commensurate with the complexity of the task.

Section 3: Foreign Lawyer Fees and Expert Evidence

A significant portion of the dispute concerned the £337,971.55 claimed for UK solicitors (Macfarlanes). The Respondents argued these fees were "staggering." The AR relied on the expert evidence of Mr. Thomas George Mason. Mr. Mason’s report utilized the "Guideline Hourly Rates" (GHR) from the UK and adjusted them for "heavy" litigation. The AR accepted Mr. Mason's evidence that the litigation was indeed "heavy" due to the cross-border elements and the setting aside of default judgments. However, the AR found that some of the work performed by the UK solicitors overlapped with the work of the Singapore solicitors. Consequently, the court applied a "global reduction" to the foreign fees to account for this duplication, while still maintaining the indemnity basis.

The Double Recovery Issue

The Respondents argued that the Applicant should not recover costs because Euro 1 had already agreed to indemnify the Applicant. The AR dismissed this, holding that the "indemnity principle" in costs law means that a successful party cannot recover *more* than what they are liable to pay their own solicitors. It does not mean they cannot recover from a losing party simply because a third party has also promised an indemnity. The AR cited Bank of China Ltd v Sin Leong Ironbed & Furniture Manufacturing Co (Pte) Ltd [1988] 1 SLR(R) 76 to support the view that the existence of a third-party indemnity does not extinguish the Respondents' liability under the court order.

What Was the Outcome?

The court ordered a comprehensive assessment of BC 171, resulting in the following specific awards:

• Section 1 (Work in Cause): The court assessed the costs at S$477,700. This reflected a reduction from the original claim but affirmed the reasonableness of employing Senior Counsel for a complex setting-aside application involving international jurisdiction issues.
• Section 2 (Work for Assessment): The court awarded S$40,311. This amount was deemed reasonable given the three-day hearing and the extensive expert evidence required to justify the foreign disbursements.
• Section 3 (Disbursements - Singapore): The court allowed various Singapore-based disbursements totaling S$21,096.40, covering court fees and administrative expenses.
• Section 3 (Foreign Lawyer Fees): The court assessed the fees for Macfarlanes LLP and UK counsel at £337,971.55. However, after applying the court's scrutiny for duplication and reasonableness, the final allowed amount for foreign legal work was adjusted to reflect the "heavy" nature of the litigation while pruning excessive hours.
• Expert Fees: The fees for the Applicant's expert, Mr. Mason, were allowed in part, recognizing his contribution to the court's understanding of UK Guideline Hourly Rates.

The operative direction regarding the indemnity basis was stated as follows:

"costs for SUM 1915 are to be paid by the respondents to the applicant on an indemnity basis to be taxed if not agreed." (at [14])

The court also addressed the currency of the award, allowing the foreign lawyer fees to be claimed in Great British Pounds (£) while the Singapore-based costs were awarded in Singapore Dollars (S$). The Respondents were ordered to pay the assessed sums, with interest to run from the date of the original costs order in SUM 1915.

Why Does This Case Matter?

This case is of significant importance to the Singapore legal landscape for several reasons. First, it clarifies the application of the ROC 2021 to indemnity costs assessments. While the ROC 2021 emphasizes proportionality, this judgment confirms that the "indemnity basis" still functions as a robust mechanism for cost recovery, where the "benefit of the doubt" remains with the receiving party. Practitioners now have a clearer understanding that "proportionality" under the new rules does not override a clear contractual or judicial mandate for indemnity costs, though it does not grant a carte blanche.

Second, the judgment provides a roadmap for recovering foreign lawyer fees in Singapore proceedings. As Singapore continues to grow as a hub for international commercial litigation, the involvement of foreign counsel is increasingly common. This case establishes that such fees are recoverable as disbursements but must be supported by expert evidence if the rates or hours are contested. The court’s reliance on the UK Guideline Hourly Rates (GHR) and the "heavy litigation" uplift provides a predictable framework for future assessments involving UK-based solicitors.

Third, the decision reinforces the primacy of judicial discretion over private contract in the context of court-ordered costs. Even where parties have agreed to a "full indemnity" in their contracts, the court maintains its role as the arbiter of what is "reasonable." This prevents the potential for "fee-padding" and ensures that the costs system remains equitable. As the AR noted, the court's duty is to protect the integrity of the legal process by ensuring that even indemnity costs are not "unreasonable."

Fourth, the treatment of the "Double Recovery" argument is a helpful clarification of the indemnity principle. It confirms that a party’s right to recover costs from an opponent is not diminished by the existence of secondary indemnity arrangements (such as insurance or third-party funding), provided the party remains ultimately liable to their own solicitors. This provides certainty for litigants who utilize complex risk-management or financing structures.

Finally, the case highlights the evidentiary burden in costs assessments. The failure of the Respondents' expert to provide a sufficiently detailed or methodology-backed report led to his evidence being largely discounted. This serves as a warning to practitioners that costs experts must do more than offer "bare assertions" of unreasonableness; they must provide a comparative and factual basis for their conclusions.

Practice Pointers

• Contractual Indemnities are Not Absolute: Do not assume that a contractual indemnity clause will automatically result in the recovery of 100% of billed costs. The court will still apply a "reasonableness" test, and practitioners should advise clients accordingly.
• Expert Evidence for Foreign Fees: When claiming significant foreign legal fees as disbursements, engage a costs expert early. Ensure the expert uses recognized benchmarks (like the UK GHR) and provides a specific justification for any "uplift" based on the complexity of the case.
• Avoid Duplication of Work: In cross-border matters, clearly delineate the roles of Singapore and foreign counsel. The court will prune costs where it appears that both sets of lawyers are performing the same research or drafting tasks.
• Detailed Time Records are Essential: Even on an indemnity basis, the court will scrutinize time entries. Vague descriptions like "work on file" or "reviewing documents" are likely to be reduced. Specify the exact nature of the work and its necessity to the application.
• Senior Counsel Justification: If engaging Senior Counsel for interlocutory matters, ensure the "complexity, novelty, and value" of the dispute are clearly documented. The court in this case accepted SC fees because of the US$50m stake and the complexity of the jurisdiction challenge.
• Section 2 Costs Preparation: Keep meticulous records of the time spent preparing the Bill of Costs and the assessment hearings. As seen in this case, Section 2 costs can be substantial (over S$40,000) if the assessment is hard-fought.
• Address the Indemnity Principle: Be prepared to show that the client is indeed liable for the fees being claimed. While third-party indemnities don't block recovery, the fundamental rule that you cannot recover more than you owe your own solicitors still stands.

Subsequent Treatment

As a relatively recent decision from June 2025, Armira Capital Ltd v Ji Zenghe [2025] SGHCR 18 represents the current state of the law regarding the assessment of indemnity costs under the ROC 2021. It builds upon the foundational principles in Maryani Sadeli and Senda International Capital Ltd v Kiri Industries Ltd [2023] 1 SLR 96. Its detailed treatment of foreign lawyer fees and the "heavy litigation" uplift is likely to be followed in future assessments involving international firms, particularly those from the UK and other common law jurisdictions.

Legislation Referenced

• Supreme Court of Judicature Act 1969: First Schedule, Paragraph 13 (Power to assess costs).
• Rules of Court 2021: Order 21 Rule 2, Order 21 Rule 20, Order 21 Rule 22(3) (Principles of costs assessment).
• Rules of Court 2014: Order 59 Rule 27 (Referenced for historical context of indemnity costs).
• Judicature Act 1969: General provisions regarding the court's jurisdiction over costs.

Cases Cited

• Considered:
  • Maryani Sadeli v Arjun Permanand Samtani [2015] 1 SLR 496
  • Senda International Capital Ltd v Kiri Industries Ltd [2023] 1 SLR 96
  • Tjong Very Sumito and others v Antig Investments Pte Ltd [2009] 4 SLR(R) 732
• Referred to:
  • Razer (Asia-Pacific) Pte Ltd v Capgemini Singapore Pte Ltd [2023] SGHC 195
  • AmFraser Securities Pte Ltd v Goh Chengyu [2016] SGHC 278
  • Then Khek Koon and another v Arjun Permanand Samtani and another and other suits [2014] 1 SLR 245
  • Telemedia Pacific Group Ltd v Credit Agricole (Suisse) SA [2015] 4 SLR 1019
  • Abani Trading Pte Ltd v BNP Paribas and another appeal [2014] 3 SLR 909
  • BNP Paribas SA v Jacob Agam [2018] 3 SLR 1
  • Lin Jian Wei and another v Lim Eng Hock Peter [2011] 3 SLR 1052
  • Societa Finanziaria Industrie Turistiche SpA v Manfredi Lefebvre D'Ovidio De Clunieres Di Balsorano and another [2006] EWHC 90068
  • Cristovao v Tan & Tan Lawyers Pty Ltd [2018] FCAFC 41
  • North Australian Aboriginal Legal Aid Service Inc v Bradley (No 2) [2002] FCA 564

Source Documents

• Original judgment PDF: Download (PDF, hosted on Legal Wires CDN)
• Official eLitigation record: View on elitigation.sg