Case Details
- Citation: [2026] SGCA 7
- Court: Court of Appeal of the Republic of Singapore
- Date: 3 March 2026
- Judges: Steven Chong JCA, Ang Cheng Hock JCA and Hri Kumar Nair JCA
- Court of Appeal / Civil Appeal No: Civil Appeal No 26 of 2025
- Summons No: Summons No 32 of 2025
- Title: Owner of the vessel(s) “CHLOE V” (IMO No. 9457452) v UBS AG
- Appellant: Owner of the vessel(s) “CHLOE V”
- Respondent: UBS AG
- Legal areas: Civil Procedure; Stay of proceedings; Costs; Security for costs
- Statutes referenced: (not provided in the extract)
- Cases cited (as provided): [2022] SGHCR 9; [2025] SGHC 142; [2025] SGHC 250; [2025] SGHCR 16; [2026] SGCA 7
- Judgment length: 27 pages, 7,892 words
Summary
This Court of Appeal decision concerns an application to stay (or dismiss) an appeal where the respondent has obtained costs orders below, but those costs remain unpaid. The dispute arose out of proceedings in rem and related interlocutory applications concerning a mortgage and the arrest of the vessel “CHLOE V” (IMO No. 9457452). The appellant, a special purpose vehicle incorporated in the British Virgin Islands and registered owner of the vessel, pursued a counterclaim despite failing to comply with multiple costs orders made against it.
The Court of Appeal emphasised that costs rules and orders can materially affect the practical outcome of litigation. Where the respondent has secured a victory “in name only” because it remains out of pocket in legal fees, the respondent is entitled to seek payment of outstanding costs before being required to incur further costs in the appeal. The Court framed the central balancing exercise as one between (i) the respondent’s right to be paid outstanding costs and (ii) the appellant’s right to pursue its appeal notwithstanding its failure to pay.
Applying the framework under the Rules of Court 2021 (“ROC 2021”), the Court granted the respondent’s application to stay the appeal pending payment of outstanding costs and further security for costs. The decision provides guidance for future courts on how to approach stay applications in the costs-and-security context, particularly where there is a pattern of delay or non-compliance by the appellant.
What Were the Facts of This Case?
The underlying litigation began when UBS AG (formerly Credit Suisse AG, absorbed into UBS AG by statutory merger on 31 May 2024) commenced proceedings against the vessel “CHLOE V” on 18 September 2021. The respondent’s claim in HC/ADM 102/2021 (“ADM 102”) was for outstanding sums due under a Facilities Agreement dated 26 June 2019. The Facilities Agreement was secured by a mortgage over the vessel, and the respondent proceeded to enforce that mortgage by arresting the vessel on 15 October 2021.
The appellant entered an appearance on 29 September 2021 and filed a counterclaim. The counterclaim alleged that the respondent breached implied contractual terms and/or duties relating to discretion and approvals under the Facilities Agreement. In particular, the appellant relied on the respondent’s refusal to grant a Letter of Quiet Enjoyment, which it said undermined negotiations for a new charterparty with Koch Supply and Trading Pte Ltd.
On 18 November 2021, the trial judge ordered that the vessel be appraised and sold pendente lite. The vessel was subsequently sold for US$42,100,000, and the total sum of US$42,933,184.45 (including bunkers onboard) was paid into court on 26 January 2022 as the Sale Proceeds. The Sale Proceeds were later found to be insufficient to satisfy the respondent’s judgment debt.
After the counterclaim was filed, the respondent pursued summary judgment. On 21 March 2022, Assistant Registrar Paul Tan granted summary judgment in favour of the respondent for US$43,586,317.36, together with interest, in HC/SUM 5945/2021 (“SUM 5945”). Costs for SUM 5945 were fixed at S$80,000 on an indemnity basis, with disbursements to be agreed or fixed. The respondent then demanded payment of costs, but the appellant did not respond. The appellant appealed against the assistant registrar’s decision in HC/RA 82/2022 (“RA 82”), which the judge dismissed on 18 May 2022, again awarding costs fixed at S$30,000 on an indemnity basis. Despite further demands, the appellant continued to refuse to pay.
What Were the Key Legal Issues?
The Court of Appeal had to determine whether the appeal should be stayed or dismissed pending payment of outstanding costs and provision of further security for costs. This required the court to consider the applicable principles under ROC 2021 and to balance competing interests: the respondent’s entitlement to recover costs already ordered below against the appellant’s right to have its appeal heard on the merits.
A second issue concerned the significance of the appellant’s conduct in relation to security and costs. The record showed that the appellant delayed furnishing security for costs for its counterclaim and, even after eventually paying into court, refused to comply with multiple subsequent costs orders. The Court therefore had to assess whether the appellant’s pattern of non-compliance justified a stay as a matter of procedural fairness and effective case management.
Finally, the Court had to address whether the appellant’s explanation for non-payment—namely, that outstanding costs had been paid out of the Sale Proceeds pursuant to Clause 34.5 of the Facilities Agreement—could defeat the respondent’s application. This required an analysis of the contractual clause and whether it applied to costs incurred in the course of defending and prosecuting the action.
How Did the Court Analyse the Issues?
The Court began by situating the application within the broader purpose of costs orders and security mechanisms. It reiterated the principle that costs rules can have a “profound impact” on the practical outcome of litigation. A litigant’s success on the merits may be undermined if the successful party cannot recover costs and remains out of pocket. The Court relied on the idea that, in an appeal where costs of the proceedings below remain outstanding, the respondent is entitled to seek payment before being required to incur further costs in the appeal.
Crucially, the Court identified the “fundamental consideration” as a balancing exercise. On one side was the respondent’s right to be paid outstanding costs. On the other side was the appellant’s right to pursue its appeal despite failure or omission to pay. The Court’s approach was not to treat non-payment as an automatic bar to an appeal. Instead, it required the court to weigh the seriousness and context of the non-payment, the stage of proceedings, and the impact on the respondent’s ability to defend the appeal without further financial prejudice.
In developing the framework, the Court considered arguments and principles from earlier cases and applied them to the ROC 2021 regime. The Court’s reasoning reflected that stay applications in this context are inherently fact-sensitive. However, the Court also sought to provide structured guidance so that future courts could apply consistent principles when confronted with similar applications. The Court’s analysis therefore focused on how to calibrate the response to non-payment: whether a stay is proportionate, what conditions should be imposed, and how to ensure that the respondent is not forced to litigate further while remaining uncompensated.
On the facts, the Court placed significant weight on the appellant’s delay and refusal to comply with costs orders. The appellant did not furnish security for costs for its counterclaim within the deadline set by AR Seow on 14 September 2022. The counterclaim was automatically stayed if security was not provided by 28 September 2022, but the appellant appealed and obtained dismissal of that appeal (RA 304) on 14 November 2022, with an extension to 28 November 2022. Even then, the appellant failed to meet the extended deadline and only paid the S$265,000 into court on 29 December 2022—more than three months after AR Seow’s order. The Court noted that the assistant registrar had observed that the reasons for delay were “not entirely satisfactory”, and that the appellant should have taken steps earlier, including seeking a stay if it intended not to comply pending appeal.
The Court then examined the appellant’s refusal to pay costs even after security had been provided. Multiple costs sums remained outstanding, including costs and disbursements for SUM 2171, costs for RA 304, and net costs relating to other applications (SUM 4110 and further sums under other applications). The respondent repeatedly demanded payment, but the appellant did not respond. When the respondent sought payment out of the security held in court, the judge ordered payment of S$21,953.53 on 30 August 2023, and as at 20 November 2025 a balance remained in the security.
As to the contractual argument under Clause 34.5 of the Facilities Agreement, the Court treated it as a matter of legal interpretation and scope. Clause 34.5 dealt with partial payments received by the agent against amounts due under the Finance Documents, and it specified an order of application. The respondent’s position was that Clause 34.5 applied to payments received against amounts due under the Finance Documents, not to costs incurred in defending or prosecuting the action. The Court accepted that the appellant’s reliance on Clause 34.5 could not justify continued non-payment of costs orders. The practical effect was that the appellant could not avoid the costs consequences of its litigation conduct by characterising the payment out of Sale Proceeds as falling within the clause.
Finally, the Court’s analysis reflected that the stay mechanism operates as an equitable procedural safeguard. It prevents a situation where the appellant, having been found to have no merit below, continues to pursue an appeal while leaving the respondent uncompensated for costs already incurred. The Court therefore considered that a stay pending payment and further security was the appropriate balancing remedy.
What Was the Outcome?
The Court of Appeal granted the respondent’s application to stay the appeal pending payment of the outstanding costs ordered below. The stay was not merely punitive; it was structured to protect the respondent’s right to recover costs and to ensure that the respondent would not be required to incur further appeal costs while remaining out of pocket.
In addition to the stay, the Court ordered further security for costs for the appellant’s counterclaim. The practical effect is that the appellant’s ability to proceed with the appeal was conditioned on compliance with the costs and security requirements, thereby aligning the procedural posture of the appeal with the underlying principle that costs orders should not be rendered illusory by non-payment.
Why Does This Case Matter?
This decision is significant for practitioners because it clarifies how appellate courts should approach stay applications where costs remain outstanding and where the appellant has delayed or refused to comply with costs orders. The Court’s emphasis on balancing the respondent’s right to be paid against the appellant’s right to pursue the appeal provides a principled framework under ROC 2021, rather than a mechanical rule.
For litigants, the case underscores that security for costs and costs orders are not procedural formalities. Where a party repeatedly fails to comply, courts may be willing to impose a stay that effectively pauses the appeal until the financial prejudice to the successful party is addressed. This is particularly relevant in commercial disputes involving substantial sums and in proceedings where the respondent’s ability to recover costs may be complicated by the existence of security held in court or by contractual payment mechanisms.
For lawyers advising clients, the decision highlights the importance of timely compliance with costs orders and security requirements, and it cautions against relying on broad contractual clauses to justify non-payment of litigation costs. It also signals that courts will scrutinise explanations for delay and will consider whether a party took appropriate procedural steps, such as seeking a stay of an order pending appeal, rather than simply postponing compliance.
Legislation Referenced
- Rules of Court 2021 (ROC 2021) (as referenced in the judgment)
Cases Cited
- Ng Eng Ghee v Mamata Kapildev Dave [2009] 4 SLR(R) 155
- [2022] SGHCR 9
- [2025] SGHC 142
- [2025] SGHC 250
- [2025] SGHCR 16
- [2026] SGCA 7
Source Documents
This article analyses [2026] SGCA 7 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.