Case Details
- Citation: [2002] SGHC 228
- Court: High Court of the Republic of Singapore
- Decision Date: 30 September 2002
- Coram: Choo Han Teck JC
- Case Number: BOC 261/2002; SIC 3475/2002; 3660/2002
- Hearing Date(s): 24 July 2002
- Claimants / Plaintiffs: Mero Asia Pacific Pte Ltd
- Respondent / Defendant: Takenaka Corp
- Counsel for Claimants: Tan Liam Beng (Drew & Napier LLC)
- Counsel for Respondent: Kenneth Koh (UniLegal LLC)
- Practice Areas: Civil Procedure; Costs; Arbitration
Summary
The decision in Mero Asia Pacific Pte Ltd v Takenaka Corp [2002] SGHC 228 serves as a seminal clarification on the taxation of "costs thrown away" within the Singapore legal landscape, particularly in the context of adjourned arbitration proceedings. The dispute arose from a substantial construction arbitration concerning a project at Changi International Airport, where a late amendment by the respondent necessitated a significant adjournment of the hearing dates. Consequently, the arbitrator awarded the claimants "costs thrown away" resulting from the delay. The subsequent taxation of these costs became the subject of intense litigation, focusing on the recoverable quantum for counsel's hourly rates, "getting-up" expenses, and witness compensation.
The High Court, presided over by Choo Han Teck JC, addressed three primary contentions. First, the court evaluated the reasonableness of a $600 hourly rate for a director-level counsel from a major law firm. Second, it tackled the doctrinal question of whether "getting-up" costs—traditionally associated with the final preparation for trial—could be recovered under a general order for "costs thrown away" without a specific judicial direction to that effect. Third, the court scrutinized the basis for compensating witnesses who had set aside time for a hearing that was ultimately adjourned, distinguishing between actual loss of earnings and the mere loss of opportunity.
The judgment is particularly significant for its rejection of restrictive precedents that sought to limit the taxing master's discretion. Choo Han Teck JC explicitly declined to follow the brief note in Choo Ah Kiat v Ang Kim Hock, asserting instead that the taxing master possesses the inherent authority to evaluate what preparation work was genuinely wasted due to an adjournment. Furthermore, the court established a rigorous standard for witness compensation in the context of "costs thrown away," emphasizing that such awards must reflect actual loss rather than serving as a proxy for a full day's professional fee when the witness did not actually testify.
Ultimately, while the court upheld the counsel's hourly rate, it significantly reduced the amounts awarded for getting-up and witness costs. This decision underscores the principle that "costs thrown away" are intended to be compensatory and strictly tied to the wasted labor and expenses directly caused by the procedural disruption, rather than providing a windfall for the non-defaulting party.
Timeline of Events
- 2002 (Pre-July): Arbitration proceedings are initiated between Mero Asia Pacific Pte Ltd and Takenaka Corp regarding a sub-contract for a project at Changi International Airport.
- 8 July 2002: The arbitration hearing is scheduled to commence, with 17 days of hearing dates blocked out through 29 July 2002.
- 6 July 2002: Only two days before the scheduled commencement, the arbitrator adjourns 13 days of the hearing (to be rescheduled for November 2002). This adjournment is necessitated by a late amendment to the pleadings by the respondent and the resulting requirement for consequential discovery.
- July 2002 (Post-Adjournment): The arbitrator awards the claimants "costs thrown away" occasioned by the adjournment.
- 24 July 2002: The matter proceeds to a hearing regarding the taxation of these costs.
- 2002 (Taxation Phase): The Assistant Registrar (AR) conducts the taxation of the claimants' bill of costs. The AR allows an hourly rate of $600 for the claimants' lead counsel, $32,000 for getting-up costs, and $15,392 for witness costs.
- 2002 (Review Phase): Both parties file cross-applications (SIC 3475/2002 and 3660/2002) to review the AR's decision on taxation.
- 30 September 2002: Choo Han Teck JC delivers the judgment of the High Court, modifying the AR's assessment by reducing the getting-up and witness costs while maintaining the counsel's hourly rate.
What Were the Facts of This Case?
The underlying dispute was a commercial arbitration of considerable scale, involving a sub-contract for a construction project at the Changi International Airport. The financial stakes were significant: the sub-contract sum was approximately $18,000,000. Mero Asia Pacific Pte Ltd (the claimants) sought $3,805,000 in their claim, while Takenaka Corp (the respondents) pursued a counterclaim valued at $3,080,000. Given the complexity of the engineering and construction issues involved, the arbitration was scheduled for a lengthy 17-day hearing, intended to run from 8 July 2002 to 29 July 2002.
The procedural crisis that led to the present costs litigation occurred on 6 July 2002, a mere 48 hours before the hearing was set to begin. The arbitrator granted an adjournment of 13 of the 17 scheduled days, pushing those sessions to November 2002. The catalyst for this delay was the respondent's decision to amend its pleadings at the eleventh hour. This amendment was not a minor technicality; it was substantive enough to require the claimants to undertake consequential discovery, making it impossible to proceed with the original schedule. Recognizing the prejudice caused to the claimants, the arbitrator ordered that the respondent pay the claimants the "costs thrown away" by the adjournment.
The claimants subsequently filed a bill of costs for these "thrown away" items. The taxation process before the Assistant Registrar became a battleground for several key items of expenditure. The claimants were represented by Mr. Tan Liam Beng of Drew & Napier LLC, a director with eight years of experience at the time. The claimants sought an hourly rate of $600 for Mr. Tan's work. Furthermore, they claimed $32,000 for "getting-up" costs—the labor involved in the final, intensive preparation for the July hearing dates that were now postponed.
A significant portion of the dispute also concerned the costs of witnesses. The claimants had arranged for witnesses to be available for the July hearing. Because the hearing was adjourned so close to the start date, these witnesses had already cleared their schedules. The claimants sought compensation for the "loss of earnings" or "loss of time" for these individuals. The Assistant Registrar initially awarded $15,392 for witness costs, based on a calculation of $600 per day for two witnesses over approximately 12.5 days each, plus additional amounts for other witnesses.
The respondent challenged these figures on several grounds. Regarding the hourly rate, they argued that $600 was excessive for a solicitor of Mr. Tan's seniority, citing comparisons to rates awarded in other cases for assistants to Senior Counsel. Regarding the getting-up costs, the respondent raised a jurisdictional objection, arguing that a taxing master could not award getting-up costs under a general "costs thrown away" order unless the court or arbitrator had specifically mentioned "getting-up" in the order. Finally, the respondent contended that the witness costs were grossly inflated because the witnesses did not actually attend court and therefore did not suffer a compensable loss of earnings in the manner contemplated by the rules of taxation.
The cross-applications for review brought these issues before the High Court, requiring a definitive ruling on how "costs thrown away" should be calculated in modern, high-value commercial litigation where preparation and opportunity costs are substantial.
What Were the Key Legal Issues?
The High Court was tasked with resolving three distinct legal and procedural issues arising from the taxation review:
- Issue 1: The Reasonableness of Counsel's Hourly Rate. The court had to determine whether $600 per hour was a justifiable rate for a director at a major law firm with eight years of experience. This involved deciding whether such rates should be assessed based on a rigid comparison with other cases (specifically those involving assistants to Senior Counsel) or whether the taxing master should exercise independent discretion based on the specific demands of the case.
- Issue 2: The Recoverability of "Getting-Up" Costs under a General Order. This was the most significant doctrinal issue. The court had to decide if a taxing master is permitted to award costs for "getting up" (preparation for trial) when the underlying order simply specifies "costs thrown away" without explicitly mentioning "getting up." This required the court to interpret the scope of the term "costs thrown away" and to evaluate the continued relevance of the 1983 decision in Choo Ah Kiat v Ang Kim Hock.
- Issue 3: The Basis for Quantifying Witness Costs in Adjournments. The court needed to establish the correct principle for compensating witnesses when a hearing is adjourned. Specifically, it had to determine whether witnesses are entitled to a full "loss of earnings" allowance as if they had attended the hearing, or whether the compensation should be limited to the actual, proven financial detriment caused by the wasted time.
How Did the Court Analyse the Issues?
Choo Han Teck JC began his analysis by addressing the hourly rate of counsel. The respondent had argued that the Assistant Registrar erred in allowing $600 per hour for Mr. Tan, suggesting that a more appropriate rate would be $383 per hour, based on a comparison with the case of Engelin Teh & Partners v Shoba Gunasekaran. In that case, an assistant to a Senior Counsel was awarded $383 per hour. Choo Han Teck JC rejected this comparative approach as overly restrictive. He noted at [2]:
"The learned AR was of the view that Mr Tan’s rate of $600 per hour was reasonable. I do not see any reason to disagree with her. Every case must be considered on its own merits... I do not think that the rate of $600 per hour for a director of a major law firm is unreasonable."
The court emphasized that the seniority and firm status of the counsel are relevant factors, and the taxing master's discretion should not be fettered by a single data point from a different case involving a different professional role (an assistant vs. a lead director).
The court then turned to the "getting-up" costs. The respondent relied heavily on Choo Ah Kiat v Ang Kim Hock [1983] 2 MLJ xciv, which suggested that if a court orders "costs thrown away," the taxing master cannot consider getting-up costs unless specifically directed. Choo Han Teck JC fundamentally disagreed with this interpretation. He observed that Choo Ah Kiat was a "brief note" and that the principle it purportedly stood for was inconsistent with the practical realities of legal preparation. He stated at [4]:
"If the court merely orders costs thrown away, the taxing master is entitled to consider what, if any, getting up had been done and wasted. The term 'getting up' is used in two ways. First, as a stage of the work done, and secondly, as a head of costs. In the first sense, work done as 'getting up' may be 'thrown away' if it has to be repeated."
The judge reasoned that if an adjournment occurs so close to the trial that counsel has already completed the bulk of the preparation, and if that preparation must be largely repeated or refreshed due to a long delay, then that labor is "thrown away." However, he noted that in this specific case, the adjournment was only for 14 days (from July to November). Therefore, while some work was wasted, much of it would still be useful for the rescheduled hearing. The court found the $32,000 awarded by the AR to be excessive and reduced it to $15,000, reflecting the portion of the preparation that was truly lost.
Finally, the court analyzed the witness costs. The AR had awarded $15,392, treating the witnesses almost as if they had attended the full hearing. Choo Han Teck JC found this approach flawed. He cited Halsbury's Laws of England and the Australian case of Petrunic v Barnes [1989] VR 927 to clarify the principle of witness compensation. He noted that while professional witnesses (like doctors) might be paid for their time, ordinary witnesses are generally only entitled to "loss of earnings."
In the context of an adjournment, the judge argued that the witnesses did not actually lose the earnings they would have lost had they been sitting in a courtroom. Instead, they were free to pursue other work once the adjournment was announced, even if their original schedule was disrupted. The judge held at [6]:
"The witnesses in this case did not attend the hearing because it was adjourned. They are, therefore, not entitled to any allowance for attendance. They may be entitled to some compensation for the loss of opportunity to earn, but that is not the same as 'loss of earnings' for attending court."
The court applied the logic from Cook on Costs (1995), noting that the indemnity principle requires the claimant to prove actual loss. Since the witnesses were employees of the claimant or related entities, the "loss" was effectively the company's loss of their productive time. However, without evidence that this time was completely unrecoverable or that specific income was lost, a full daily rate was inappropriate. Consequently, the court reduced the witness costs to a nominal "loss of opportunity" figure of $2,000 per witness, totaling $4,000.
What Was the Outcome?
The High Court allowed the review in part, significantly modifying the Assistant Registrar's taxation of the costs thrown away. The court's orders were as follows:
- Counsel's Hourly Rate: The court upheld the AR's decision to allow an hourly rate of $600 for Mr. Tan Liam Beng. The court found this rate to be reasonable for a director of a major law firm (Drew & Napier LLC) with eight years of experience, regardless of comparisons to other cases.
- Getting-Up Costs: The court reduced the award for getting-up costs from $32,000 to $15,000. While the court affirmed that getting-up costs could be recovered under a "costs thrown away" order, it held that the original award was excessive given that the adjournment was relatively short and much of the preparation work would remain relevant for the rescheduled hearing in November.
- Witness Costs: The court reduced the witness costs from $15,392 to $4,000. This was calculated as a flat sum of $2,000 for each of the two primary witnesses. The court rejected the daily-rate calculation used by the AR, finding that since the witnesses did not actually attend the hearing, they were only entitled to a modest sum for "loss of opportunity" rather than a full "loss of earnings" allowance.
The operative conclusion of the judgment, as stated by Choo Han Teck JC at [6], was:
"In the circumstances, I will vary the order of the AR by reducing the amount for getting up from $32,000 to $15,000 and the witness costs from $15,392 to $4,000 ($2,000 for each witness). The hourly rate of $600 for Mr Tan is maintained. There will be no order as to costs for these applications."
The net effect of the judgment was a substantial reduction in the respondent's liability for the adjournment, while simultaneously establishing broader principles that favored the claimants' right to claim for wasted preparation time.
Why Does This Case Matter?
The decision in Mero Asia Pacific Pte Ltd v Takenaka Corp is a cornerstone of Singapore's costs jurisprudence for several reasons. Primarily, it liberated the taxing master from the perceived constraints of Choo Ah Kiat v Ang Kim Hock. Before this judgment, there was a lingering uncertainty as to whether a solicitor could claim for the intensive preparation work (getting up) that is inevitably wasted when a trial is pulled at the last minute, unless the judge had the foresight to specifically include "getting up" in the costs order. Choo Han Teck JC’s pragmatic distinction between "getting up" as a procedural stage and "getting up" as a head of costs provided a clear pathway for practitioners to recover for actual labor expended.
Furthermore, the case reinforces the indemnity principle in the context of modern commercial litigation. By upholding the $600 hourly rate, the court acknowledged that the "market rate" for senior practitioners in top-tier firms is a legitimate component of costs, provided it is not "manifestly excessive." This moved away from a "one-size-fits-all" approach to hourly rates and encouraged a more nuanced assessment of counsel's value and the complexity of the matter (in this case, an $18 million construction dispute).
The treatment of witness costs in this judgment also provides a vital cautionary tale for practitioners. The court’s refusal to award full "loss of earnings" for witnesses who did not actually testify serves as a reminder that costs thrown away are not a liquidated penalty for delay. They are a compensatory mechanism. Practitioners must be prepared to prove actual financial detriment—such as non-refundable travel costs or specific lost business contracts—rather than relying on a formulaic daily rate for witnesses who were simply "available."
In the broader landscape of Singapore's ambition to be a global hub for international arbitration, this case is significant. It demonstrates that the Singapore courts will apply rigorous, commercially-sensible standards to the taxation of arbitration-related costs. It ensures that while the "loser pays" for delays, the "winner" is not permitted to over-recover. This balance is essential for maintaining the cost-effectiveness and fairness of the dispute resolution process in Singapore.
Practice Pointers
- Drafting Costs Orders: While Mero Asia Pacific allows for getting-up costs under a general "costs thrown away" order, the safest course for a practitioner remains to ask the court or arbitrator to specifically include "costs of and incidental to the adjournment, including getting-up" to avoid any jurisdictional arguments during taxation.
- Evidence of Wasted Labor: When claiming getting-up costs for an adjournment, counsel should maintain detailed time records that distinguish between "perishable" preparation (e.g., memorizing facts, preparing cross-examination notes that will need refreshing) and "durable" preparation (e.g., reviewing discovery documents, legal research) which remains useful for the later hearing.
- Witness Loss Documentation: To recover significant sums for witness time in an adjournment, practitioners must provide evidence of actual loss. For employee witnesses, this might include evidence of specific projects delayed; for professional witnesses, evidence of cancelled appointments or non-refundable fees is essential.
- Hourly Rate Justification: When defending a high hourly rate, do not rely solely on seniority. Be prepared to justify the rate based on the complexity of the subject matter (e.g., specialized construction sub-contracts) and the total quantum at stake ($18 million in this instance).
- The "14-Day Rule" of Thumb: The court’s reduction of getting-up costs from $32,000 to $15,000 suggests that for a relatively short adjournment (a few months), the court may assume that roughly 50% of the preparation remains "useful" and is not "thrown away."
Subsequent Treatment
The ratio in Mero Asia Pacific Pte Ltd v Takenaka Corp has been consistently applied by taxing masters and the High Court to justify a flexible approach to "costs thrown away." It is frequently cited as the authority for the proposition that the taxing master has the discretion to look at the substance of the work done rather than being bound by the labels used in the underlying costs order. Its rejection of the restrictive reading of Choo Ah Kiat has become settled law in Singapore civil procedure.
Legislation Referenced
- Section 1: [Statutory provision referenced in judgment; Act not explicitly named in extracted metadata]
- Section 3: [Statutory provision referenced in judgment; Act not explicitly named in extracted metadata]
- Rules of Court: [Referenced generally in the context of taxation of costs and the indemnity principle]
Cases Cited
- Applied: Petrunic v Barnes [1989] VR 927
- Considered: Engelin Teh & Partners v Shoba Gunasekaran, Bill of Costs 1/2002
- Considered: New Zealand Insurance Co. Ltd v Ng Whye Keng [1978] 2 MLJ xxiv
- Not Followed: Choo Ah Kiat v Ang Kim Hock [1983] 2 MLJ xciv
- Referred to: Mero Asia Pacific Pte Ltd v Takenaka Corp [2002] SGHC 228