Case Details
- Title: PARAKOU SHIPPING PTE LTD (In Liquidation) v LIU CHENG CHAN & 5 Ors
- Citation: [2017] SGHC 91
- Court: High Court of the Republic of Singapore
- Date of Decision: 25 April 2017
- Judges: Chua Lee Ming J
- Proceedings: Suit No 434 of 2014 (Summons No 1040 of 2017)
- Judgment Date(s) Relevant to Costs: 13 March 2017; 19 April 2017 (clarification)
- Plaintiff/Applicant: Parakou Shipping Pte Ltd (In Liquidation)
- Defendants/Respondents: (1) Liu Cheng Chan; (2) Chik Sau Kam; (3) Liu Por; (4) Yang Jianguo; (5) Parakou Investment Holdings Pte Ltd; (6) Parakou Shipmanagement Pte Ltd
- Legal Area(s): Civil Procedure — Costs
- Statutes Referenced: Rules of Court (Cap 322, R 5, 2014 Rev Ed) (notably O 59 r 5(b))
- Other Authorities Referenced: Singapore Civil Procedure 2017 (Foo Chee Hock JC gen ed) (Sweet & Maxwell, 2017)
- Related Judgment: Parakou Shipping Pte Ltd v Liu Cheng Chan and others [2017] SGHC 15
- Cases Cited: [2017] SGHC 15; [2017] SGHC 91
- Judgment Length: 10 pages, 2,527 words
Summary
This High Court decision concerns the costs consequences following a prior liability judgment in a complex corporate and insolvency-related dispute. The plaintiff, Parakou Shipping Pte Ltd (in liquidation), had brought multiple claims against six defendants arising from a series of impugned transactions. Although the plaintiff succeeded on certain major issues—namely whether the transactions formed part of a restructuring plan and whether the company was insolvent at the material times—it did not succeed on all claims against each defendant.
In the costs judgment ([2017] SGHC 91), Chua Lee Ming J declined to award the plaintiff full costs on the basis of “substantial success”. Instead, the court treated each defendant’s liability for costs as reflecting the plaintiff’s mixed success across distinct claims. The judge apportioned costs and disbursements among the defendants in graduated percentages, jointly and severally, reflecting the extent of success and the unfairness of making defendants pay for dismissed claims.
The court also addressed three procedural costs issues: (i) whether the plaintiff should receive a certificate for costs for more than two solicitors (dismissed because the case, though complex, was not sufficiently exceptional); (ii) whether indemnity costs should be ordered (refused on balance, despite accepting that the defendants’ conduct could have justified indemnity costs); and (iii) the quantum of party-and-party costs (fixed at $600,000 on the standard basis). Finally, the judge made consequential orders on costs arising from interlocutory applications, including costs relating to Mareva injunction proceedings.
What Were the Facts of This Case?
The underlying dispute involved allegations that the defendants orchestrated transactions that stripped Parakou Shipping Pte Ltd of assets in anticipation of the company being put into liquidation. The plaintiff’s case, as described in the costs judgment, was broad and multi-layered. It advanced claims grounded in breaches of fiduciary duties and/or statutory duties of care and skill, breaches of trust, liability to account as constructive trustees, lifting of the corporate veil, and undervalued transactions. These claims were tied to multiple “impugned transactions” and were pursued against six defendants, including individuals and corporate entities.
After trial, the court delivered a liability judgment on 8 February 2017: Parakou Shipping Pte Ltd (In Liquidation) v Liu Cheng Chan and others [2017] SGHC 15. In that earlier decision, the plaintiff did not succeed in all of its claims against each defendant. However, the court found each defendant liable for one or more claims. The costs judgment therefore did not revisit liability; it focused on how the plaintiff’s partial and uneven success should translate into costs orders.
Two major issues cut across the impugned transactions and were contested by all defendants. First, the defendants argued that the impugned transactions were part of a restructuring plan. Second, the defendants disputed that the plaintiff company was insolvent at the material times. The plaintiff prevailed on both issues. Yet, crucially, the plaintiff’s claims against each defendant in respect of each impugned transaction were treated as separate and distinct claims. The plaintiff’s overall success on the two major issues did not automatically mean it succeeded on every claim against every defendant.
Following the liability judgment, the parties turned to costs. The plaintiff sought full costs and also sought a certificate for costs for three solicitors. The defendants accepted that the plaintiff was entitled to costs against them but argued for limits on their respective liability percentages. In addition, costs were reserved for interlocutory applications, including applications connected to a Mareva injunction. The costs judgment thus sits at the intersection of substantive findings (restructuring and insolvency) and procedural discretion (how to allocate costs fairly in light of partial success).
What Were the Key Legal Issues?
The principal legal issue was whether the plaintiff, having succeeded on the two major cross-cutting issues, should be treated as a “substantially successful party” and therefore awarded full costs. The court had to determine how to apply the general costs principle in circumstances where the plaintiff’s success was uneven across multiple distinct claims and multiple defendants.
A second issue was whether the plaintiff should be granted a certificate for costs for more than two solicitors under the relevant procedural framework. Such certificates are exceptional and depend on whether the case involves a high degree of complexity of facts and/or law, or many issues of fact and law with a lengthy trial.
Third, the court had to decide whether indemnity costs should be ordered. Indemnity costs are discretionary and typically reflect conduct that takes the case outside the ordinary range, such as unreasonable behaviour. The court also had to consider the plaintiff’s own conduct, including how the plaintiff pleaded and pursued claims.
How Did the Court Analyse the Issues?
1. Full costs versus partial success across distinct claims
The judge began by emphasising that the plaintiff’s argument for full costs rested on “substantially succeeding” in the majority of its claims. While the plaintiff did prevail on the two major issues—restructuring and insolvency—the court rejected the proposition that success on major issues automatically entitles a party to full costs. The judge reasoned that it was “wrong and unfair” to require defendants to pay for claims that were dismissed. This fairness concern was central: the plaintiff’s case comprised many separate claims tied to different impugned transactions, and the plaintiff did not succeed on all of them against each defendant.
In other words, the court treated the costs inquiry as a granular one. It did not simply ask whether the plaintiff won the case in a broad sense; it asked how the plaintiff’s success and failure mapped onto each defendant and each claim. The judge distinguished the situation from cases where a party substantially succeeds on a claim but fails on one or more issues within that same claim. Here, the plaintiff’s failures were not merely issue-level; they were claim-level failures across multiple transactions and defendants.
2. Apportionment of costs among defendants
Although the defendants accepted that the plaintiff was entitled to costs, they disputed the extent of their liability. The court therefore had to decide the appropriate percentage allocation for each defendant. The judge’s approach was explicitly tied to the extent of success and the number and complexity of claims against each defendant.
The judge identified several considerations. First, each defendant had failed on the two major issues (despite the plaintiff succeeding on those issues overall, the judge’s phrasing reflects that the defendants’ positions on those major issues did not succeed, and that this affected the costs allocation). Second, the claims differed in complexity and amounts claimed. Third, the plaintiff’s claims against some defendants involved more impugned transactions than others: the plaintiff’s claims against the individuals (CC Liu, Chik, Liu Por, Yang) covered all impugned transactions, while the corporate defendants faced fewer claims, with PSMPL facing the least number.
On this basis, the court fixed different percentages. CC Liu and Chik were liable for 90% of the plaintiff’s costs and disbursements; Liu Por and Yang for 80%; PIH for 70%; and PSMPL for 60%. The court also ordered that the 1st to 6th defendants were jointly and severally liable for the plaintiff’s costs in the action, but the internal allocation reflected the percentages above. This structure ensured the plaintiff could recover costs effectively while still reflecting relative culpability and success.
3. Certificate for costs for three solicitors
The plaintiff sought a certificate for costs for three solicitors. The judge dismissed the application, holding that such certificates are awarded only in “exceptional circumstances”. The court referred to the standard described in Singapore Civil Procedure 2017: certificates are appropriate where there is a high degree of complexity of facts and/or law, or many issues of fact and law with a lengthy trial.
Although the case was complex due to the multitude of claims across several impugned transactions and six defendants, the judge found that complexity was not of the exceptional degree required. There was overlap in law and facts, and while discovery produced voluminous documents, the trial itself was not particularly lengthy—about 14.5 days. The judge therefore concluded that the case did not warrant the additional costs associated with a third solicitor.
4. Indemnity costs: conduct of defendants and conduct of plaintiff
The plaintiff argued for indemnity costs based on the defendants’ alleged conduct, including: (a) stripping assets and shifting them out of the company to avoid a substantial claim by a contingent creditor; (b) the 1st to 4th defendants’ flagrant disregard for fiduciary duties; and (c) the restructuring defence being found to be a fabrication. The judge accepted that these grounds could have justified indemnity costs.
However, the court also applied the statutory procedural discretion under O 59 r 5(b) of the Rules of Court, which requires the court to consider the conduct of all parties, including conduct before and during proceedings. The judge found that the plaintiff’s conduct was also relevant: the plaintiff asserted a “whole gamut” of claims against each defendant without sufficient discernment about which claims could reasonably be brought against each. This overbreadth weighed against indemnity costs.
Balancing the defendants’ potentially blameworthy conduct against the plaintiff’s own litigation approach, the judge concluded that indemnity costs were not appropriate. This reflects a disciplined application of the indemnity costs discretion: even where the defendants’ conduct is serious, the plaintiff’s pleading and litigation strategy can still affect the costs outcome.
5. Quantum of party-and-party costs
The court then addressed the amount. The plaintiff sought $1,174,500 in party-and-party costs, while the defendants proposed a much lower range of $200,000 to $240,000. The judge applied proportionality and considered relevant circumstances: complexity, volume of documents, amount recovered, length of trial, and the fact that defendants were represented by three sets of solicitors.
Taking these factors together, the judge fixed party-and-party costs at $600,000 on the standard basis (undiscounted and excluding disbursements). This figure was intended to be fair and reasonable, aligning the costs award with the litigation effort and the degree of success.
6. Costs for interlocutory applications, including Mareva injunction proceedings
The judgment also dealt with costs reserved for interlocutory applications. For Summonses Nos 6150–6152 of 2014, the defendants had sought to set aside or vary a Mareva injunction. The Mareva injunction was initially granted by Choo Han Teck J, and then set aside by Choo J on 13 April 2015 after the defendants offered sufficient alternative security. Because the Mareva order was set aside only due to the provision of alternative security, the judge ordered that each party pay its own costs in respect of those summonses.
For Summons No 1482 of 2015, the plaintiff sought to increase the limits stated in the Mareva injunction order. The judge ordered that the plaintiff pay the defendants’ costs fixed at $10,000 plus disbursements. Finally, the judge ruled that the plaintiff was not entitled to costs of its application in Summons No 2021 of 2014 for the Mareva injunction order. These orders illustrate how the court allocated costs based on who succeeded on the interlocutory relief and why the relief changed.
What Was the Outcome?
The court’s outcome was a detailed costs regime. The 1st to 6th defendants were jointly and severally liable for the plaintiff’s costs in the action. However, the judge apportioned liability by percentage: CC Liu and Chik (90%); Liu Por and Yang (80%); PIH (70%); and PSMPL (60%). The plaintiff’s party-and-party costs were fixed on the standard basis at $600,000 (undiscounted and excluding disbursements), with disbursements to be fixed if not agreed.
The plaintiff’s application for a certificate for costs for three solicitors was dismissed. Indemnity costs were also refused. In addition, the judge made specific orders on costs arising from interlocutory applications, including ordering each party to bear its own costs for the defendants’ summonses challenging the Mareva injunction after alternative security was provided, and ordering the plaintiff to pay fixed costs for the plaintiff’s application to increase Mareva limits.
Why Does This Case Matter?
This decision is important for practitioners because it demonstrates a careful, claim-by-claim approach to costs where a plaintiff succeeds on major issues but fails on some claims against some defendants. The court’s refusal to award full costs based solely on “substantial success” on cross-cutting issues reinforces that costs discretion is not mechanical. Lawyers should therefore anticipate that partial success across multiple distinct causes of action can lead to proportional or apportioned costs rather than a full costs award.
For litigators, the case also provides practical guidance on seeking enhanced costs arrangements. The dismissal of the certificate for three solicitors shows that complexity alone is insufficient; the complexity must be exceptional in the sense contemplated by the procedural framework and reflected in the trial’s length and the degree of discrete issues. This is particularly relevant in multi-party, multi-transaction disputes where document volume is high but trial duration may still be moderate.
Finally, the indemnity costs analysis is a reminder that costs outcomes reflect conduct on both sides. Even where defendants’ conduct is serious and could justify indemnity costs, a plaintiff’s over-inclusive or indiscriminate pleading strategy may lead the court to keep costs on the standard basis. The case therefore encourages disciplined claim selection and proportionality in litigation strategy, not only in evidence and submissions but also in the architecture of pleadings.
Legislation Referenced
- Rules of Court (Cap 322, R 5, 2014 Rev Ed), O 59 r 5(b)
Cases Cited
- Parakou Shipping Pte Ltd v Liu Cheng Chan and others [2017] SGHC 15
- Parakou Shipping Pte Ltd (In Liquidation) v Liu Cheng Chan and others [2017] SGHC 91
Source Documents
This article analyses [2017] SGHC 91 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.