Case Details
- Citation: [2018] SGCA 56
- Case Number: Civil Appeal No 207 of 2017
- Date of Decision: 05 September 2018
- Court: Court of Appeal of the Republic of Singapore
- Judges (Coram): Sundaresh Menon CJ; Steven Chong JA; Quentin Loh J
- Parties: NTUC Foodfare Co-operative Ltd (appellant); SIA Engineering Co Ltd and another (respondents)
- Procedural Posture: Appeal allowed in part; further submissions on costs after the Court’s earlier liability/quantum judgment
- Legal Area: Civil Procedure – Offer to settle (OTS) and costs consequences
- Key Issue(s): Whether, for the purpose of O 22A r 9(3)(b) of the Rules of Court, the court should consider the plaintiff’s costs and disbursements incurred up to the date of the defendant’s OTS where the OTS is “all-in” (inclusive of costs) or proposes “no order as to costs”
- Statutes Referenced: State Courts Act (as part of the legislative framework governing the Rules of Court and/or appellate structure)
- Rules of Court Referenced: Order 22A r 3(5), Order 22A r 9(3), Order 22A r 9(4)
- Prior Related Decision: NTUC Foodfare Co-operative Ltd v SIA Engineering Co Ltd and another [2018] SGCA 41 (“the Judgment”)
- Counsel: N Sreenivasan SC, Palaniappan Sundararaj, N K Rajarh and Cheong Wei Yang, Daryl (Straits Law Practice LLC) for the appellant; Kwek Yiu Wing Kevin, Tan Yiting Gina and Charmaine Elizabeth Ong Wan Qi (Legal Solutions LLC) for the respondents
- Judgment Length: 8 pages, 4,176 words
Summary
In NTUC Foodfare Co-operative Ltd v SIA Engineering Co Ltd and another [2018] SGCA 56, the Court of Appeal addressed the costs consequences of a defendant’s offer to settle (“OTS”) under O 22A r 9(3) of the Rules of Court. The appeal itself had already been decided on liability and quantum in the earlier judgment ([2018] SGCA 41). This later decision focused narrowly on costs: specifically, whether the OTS triggered the “standard-to-indemnity” costs regime and, if so, what “favourability” comparison should be made between the judgment and the OTS.
The Court held that the OTS remained open for acceptance until the final disposal of the claim on appeal, because the OTS did not specify a time for acceptance (applying O 22A r 3(5)). It further endorsed a nuanced approach to the “favourability” requirement under O 22A r 9(3)(b): where the OTS does not make separate provision for the plaintiff’s costs up to the date of the OTS, the court should account for those costs when assessing whether the judgment is “not more favourable” than the OTS. This ensures that the comparison reflects the practical economic effect of the offer, not merely the headline settlement sum.
What Were the Facts of This Case?
NTUC Foodfare Co-operative Ltd commenced proceedings on 7 December 2015. The dispute proceeded to trial, which was set down for seven days. On 12 May 2017—11 days before the trial began—the respondents served an OTS on NTUC Foodfare. The OTS offered to settle the proceeding on terms that the defendants would pay NTUC Foodfare a settlement sum of S$225,000. The OTS required NTUC Foodfare to file a notice of discontinuance with “no order as to costs” within seven days of receipt of the settlement sum. The OTS also stated that the settlement was in full and final settlement of all claims arising out of or in connection with the action.
Crucially, the OTS did not provide for NTUC Foodfare to receive a separate sum for costs incurred prior to 12 May 2017. In other words, the settlement sum was effectively “all-in” as to costs: NTUC Foodfare would receive only the S$225,000, and it would bear its own costs up to the date of the OTS (subject to the “no order as to costs” mechanism). The OTS also did not specify an expiry date or a deadline for acceptance.
NTUC Foodfare did not accept the OTS at any time. The trial proceeded, and after the trial the claim was dismissed in its entirety. However, after the trial and before the hearing of the appeal, NTUC Foodfare wrote to the respondents on 16 April 2018 with a “Calderbank Offer” proposing a total sum of S$176,176.85 “all in” in settlement of the dispute. The respondents did not accept that Calderbank Offer.
On 19 July 2018, the Court of Appeal delivered the earlier judgment ([2018] SGCA 41), holding that the respondents were liable to NTUC Foodfare for S$176,176.85 plus interest at 5.33% per annum on that sum from the date of the writ to the date of the judgment. Following that decision, the Court allowed the appeal in part and directed the parties to file submissions on the appropriate costs orders for the trial and the appeal, unless they agreed on costs. They did not agree, and the present decision ([2018] SGCA 56) resolved the costs issues arising from the OTS and the comparison required under O 22A r 9(3).
What Were the Key Legal Issues?
The Court of Appeal identified two principal issues. First, it had to determine whether O 22A r 9(3) of the Rules of Court applied at all. That provision sets out a structured costs consequence where a defendant makes an OTS that is not withdrawn and has not expired before the disposal of the claim, and where the plaintiff does not accept the OTS but obtains judgment that is not more favourable than the terms of the OTS. If those conditions are met, the plaintiff is entitled to costs on the standard basis up to the date the offer was served, while the defendant is entitled to costs on the indemnity basis from that date, unless the court orders otherwise.
Second, assuming O 22A r 9(3) applied, the Court had to decide what the appropriate costs orders should be. This required the Court to interpret the “favourability” comparison mandated by O 22A r 9(3)(b), and in particular to address a question that had not previously been considered by the Court: whether, in assessing whether the judgment is “not more favourable” than the OTS, the court should take into account the plaintiff’s costs and disbursements incurred up to the date of the OTS when the OTS is inclusive of costs or proposes “no order as to costs”.
How Did the Court Analyse the Issues?
1. Applicability of O 22A r 9(3): the “Validity Requirement”
The first condition under O 22A r 9(3) is that the OTS is not withdrawn and has not expired before the disposal of the claim. It was not disputed that the respondents did not withdraw the OTS. The dispute lay in whether the OTS had “expired” when the trial ended. NTUC Foodfare argued that the OTS expired upon conclusion of the trial. The Court of Appeal rejected that argument.
The Court emphasised that the OTS did not specify any time for acceptance. In such circumstances, O 22A r 3(5) applies: where an offer does not specify a time for acceptance, it may be accepted at any time before the Court disposes of the matter in respect of which it is made. The Court then addressed what “disposal of the claim” means for the purposes of O 22A r 9(3)(a). Relying on established authority, the Court held that where an appeal is filed, “disposal of the claim” refers to the final disposal of the claim on appeal. Accordingly, the OTS remained open until the Court issued the judgment on 19 July 2018, which finally disposed of the claim. The “Validity Requirement” was therefore satisfied.
2. Applicability of O 22A r 9(3): the “Favourability Requirement”
The second condition under O 22A r 9(3) is that the plaintiff obtains judgment that is not more favourable than the terms of the OTS. The Court had to compare the judgment sum with the OTS settlement sum, but also had to apply O 22A r 9(4), which limits the interest considered for favourability to interest awarded for the period before service of the OTS.
The Court’s earlier judgment awarded S$176,176.85 plus interest at 5.33% per annum from the date of the writ to the date of judgment. For the favourability comparison, the Court calculated interest only up to the date before the OTS was served. It determined that interest from 7 December 2015 until 11 May 2017 amounted to S$13,429.31. Adding that to the principal of S$176,176.85 yielded a “comparison sum” of S$189,606.16. On a purely arithmetical basis, that figure was less than the OTS settlement sum of S$225,000, suggesting that the judgment was not more favourable.
However, NTUC Foodfare argued that the favourability assessment should not stop at the settlement sum and interest. It contended that once its costs and disbursements incurred up to the date of the OTS are taken into account, the OTS was less favourable than the judgment. The respondents argued that the OTS was more favourable because the settlement sum exceeded the judgment sum (as adjusted for pre-OTS interest). The narrow legal question was therefore whether the court should consider the plaintiff’s costs and disbursements incurred up to the date of the OTS in determining favourability, where the OTS does not separately provide for costs (or effectively proposes “no order as to costs”).
3. The test of favourability and the role of costs
The Court reviewed the governing approach to “favourability” under O 22A r 9(3)(b). It referred to CCM Industrial Pte Ltd v Uniquetech Pte Ltd [2009] 2 SLR(R) 20, where the Chief Justice had explained that “favourable” must be interpreted in context and that, in offers with multiple terms, the settlement sum is only one factor. The Court endorsed the proposition that the comparison should reflect all relevant terms of the OTS, not merely the headline amount.
Applying that contextual approach, the Court reasoned that where a defendant’s OTS proposes to pay a sum of money in settlement of the dispute but does not make separate provision for the plaintiff’s costs incurred up to the date of the OTS, an important factor in assessing favourability is whether the plaintiff would have to bear those costs. If the OTS is effectively “all-in” as to costs, then the economic value to the plaintiff is reduced by the costs it would still have to pay (or would not recover) up to the date of the offer.
Accordingly, the Court held that in such circumstances, the court should account for the plaintiff’s costs incurred up to the date of the OTS when determining whether the judgment is not more favourable than the OTS. This approach aligns the favourability comparison with the practical effect of the offer and avoids an overly formalistic comparison that would treat the OTS as more favourable simply because its settlement sum is higher, even though the plaintiff would have received no separate costs reimbursement.
4. Application to the facts
On the facts, the OTS provided only the S$225,000 settlement sum and required discontinuance with “no order as to costs”. It did not specify that NTUC Foodfare would receive a separate sum for its pre-OTS costs. The Court therefore treated the costs incurred up to 12 May 2017 as relevant to the favourability comparison. The Court’s analysis thus moved beyond the arithmetic comparison of S$189,606.16 versus S$225,000, and required consideration of the costs and disbursements that NTUC Foodfare had incurred up to the date the OTS was served.
Although the extract provided truncates the remainder of the judgment, the Court’s reasoning establishes the controlling principle: the favourability inquiry under O 22A r 9(3)(b) must incorporate the plaintiff’s pre-OTS costs where the OTS does not separately provide for those costs. This is the key doctrinal contribution of the decision and directly answers the previously unconsidered question raised by the parties’ submissions.
What Was the Outcome?
The Court of Appeal confirmed that O 22A r 9(3) applied because the OTS remained open until the final disposal of the claim on appeal and because the favourability comparison required a costs-inclusive assessment in the circumstances of an OTS that did not separately provide for costs. The Court then proceeded to determine the appropriate costs orders for the trial and the appeal in accordance with the standard-to-indemnity framework, subject to the “unless the Court orders otherwise” discretion.
Practically, the decision clarifies that where a defendant’s OTS is structured as an “all-in” settlement (or otherwise leaves the plaintiff to bear its own pre-offer costs), the court will not treat the settlement sum in isolation. The costs consequences will depend on the net economic comparison between the judgment and the OTS, including the plaintiff’s pre-OTS costs and disbursements.
Why Does This Case Matter?
This decision is significant for Singapore civil litigation because it refines the mechanics of the OTS regime under O 22A. Offers to settle are routinely used to manage litigation risk and encourage early resolution. However, the costs consequences under O 22A r 9(3) depend on a “favourability” comparison that can be deceptively technical. NTUC Foodfare [2018] SGCA 56 provides a clear doctrinal answer to a question that had not been addressed by the Court of Appeal: when the OTS does not separately provide for costs (or proposes “no order as to costs”), the plaintiff’s pre-OTS costs are relevant to the favourability assessment.
For practitioners, the case has immediate drafting and strategy implications. Defendants who wish to maximise the likelihood of triggering indemnity costs from the date of the OTS must understand that a higher settlement sum alone may not be sufficient if the OTS does not address costs in a way that makes the offer genuinely more favourable on a net basis. Conversely, plaintiffs should not assume that the court will compare only the settlement sum and pre-OTS interest; they can argue that the OTS is less favourable once their pre-offer costs are accounted for, particularly where the OTS is “all-in” and leaves costs to be borne by the plaintiff.
More broadly, the case reinforces the contextual approach to “favourability” articulated in CCM Industrial. It confirms that the court will look at the OTS as a package of terms and will consider how those terms affect the plaintiff’s real economic position. This makes NTUC Foodfare a key authority for costs hearings involving OTS disputes, especially where the OTS is silent on costs or expressly provides for “no order as to costs”.
Legislation Referenced
- State Courts Act (Cap 321) (as part of the statutory framework for the administration of justice and the operation of appellate courts in Singapore)
- Rules of Court (Cap 322, R 5, 2014 Rev Ed), specifically:
- Order 22A r 3(5)
- Order 22A r 9(3)
- Order 22A r 9(4)
Cases Cited
- NTUC Foodfare Co-operative Ltd v SIA Engineering Co Ltd and another [2018] SGCA 41
- CCM Industrial Pte Ltd v Uniquetech Pte Ltd [2009] 2 SLR(R) 20
- Man B&W Diesel S E Asia Pte Ltd and another v PT Bumi International Tankers and another appeal [2004] 3 SLR(R) 267
- Ram Das V N P v SIA Engineering Co Ltd [2015] 3 SLR 267
Source Documents
This article analyses [2018] SGCA 56 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.