Case Details
- Citation: [2019] SGHC 100
- Case Title: Seraya Energy Pte Ltd v Denka Advantech Pte Ltd and another suit (YTL PowerSeraya Pte Ltd, third party)
- Court: High Court of the Republic of Singapore
- Decision Date: 18 April 2019
- Judge: Woo Bih Li J
- Coram: Woo Bih Li J
- Case Number(s): Suit Nos 1328 and 1329 of 2014
- Tribunal/Court: High Court
- Plaintiff/Applicant: Seraya Energy Pte Ltd
- Defendant/Respondent: Denka Advantech Pte Ltd and another suit
- Third Party: YTL PowerSeraya Pte Ltd
- Counsel for Plaintiff and Third Party: Chan Kah Keen Melvin, Koh Li Qun, Kelvin (Xu Liqun) and Nguyen Vu Lan (TSMP Law Corporation)
- Counsel for Defendants: Tay Twan Lip Philip and Yip Li Ming (Rajah & Tann Singapore LLP)
- Legal Area: Civil Procedure – Costs
- Procedural History (as stated): Costs and disbursements after liability and quantum determined in earlier judgments: [2019] SGHC 02 (1st Judgment) and [2019] SGHC 18 (2nd Judgment)
- Judgment Length: 4 pages, 1,869 words
- Key Procedural Event: Offer to Settle (OTS) made on 31 October 2016; withdrawn on 31 March 2017; trial commenced 7 November 2017
Summary
This High Court decision concerns the allocation of costs following a multi-stage trial in which Seraya Energy Pte Ltd (“SE”) succeeded to a substantial extent on its claims, but not to the full quantum it sought. The court had previously determined liability and quantum in two earlier judgments ([2019] SGHC 02 and [2019] SGHC 18). After those determinations, Woo Bih Li J heard parties on costs and disbursements, with particular focus on the effect of a defendant’s Offer to Settle (“OTS”) under Order 22A of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”).
The central issue was how costs should be awarded where an OTS was made and remained open for acceptance for five months but was withdrawn before the disposal of the claim. The court ultimately set aside an earlier costs decision and ordered that SE pay Denka Advantech Pte Ltd (“Denka”) 90% of the action’s costs on a standard basis from the date the OTS was served (31 October 2016), together with disbursements incurred from that date. The court fixed the costs at $390,000 (standard basis) and made consequential orders for the quantification of disbursements.
What Were the Facts of This Case?
The litigation arose out of contractual arrangements in the electricity retail context, involving three electricity contracts and related supply arrangements. The dispute culminated in a trial in November 2017, after earlier procedural steps and interim determinations. The background facts and the substantive contractual issues were dealt with in the court’s earlier judgments: the “1st Judgment” dated 2 January 2019 ([2019] SGHC 02) and the “2nd Judgment” dated 29 January 2019 ([2019] SGHC 18). In the present costs judgment, Woo Bih Li J expressly adopted the same definitions used in those earlier decisions.
By the time the court came to costs, the court had already determined the extent of liability and the quantum of the sums payable. Under the 2nd Judgment, SE was entitled to receive or retain (i) $1,850,000, being the aggregate sum received from three bank guarantees on 22 December 2014, and (ii) $77,911.72 from Denka. SE was also liable to pay Denka’s counterparty, DSPL, $1,097.72. The net principal amount SE was entitled to was therefore $1,926,814 (excluding interest and costs).
Crucially for costs, Denka had made an OTS on 31 October 2016. The OTS remained open for five months and was withdrawn on 31 March 2017. The first day of the trial was 7 November 2017, which was more than seven months after the OTS was withdrawn. The OTS was not kept open for acceptance until the disposal of the claim, and it was therefore not available to trigger the strict indemnity-costs mechanism in the same way as an OTS that remains open through to judgment.
In the costs proceedings, the court compared the principal sums offered under the OTS with the principal sums awarded in the 2nd Judgment. Under the OTS, SE would have been entitled to receive or retain $1,850,000 and $792,450, for a total of $2,642,450 (excluding interest and costs). The difference between the OTS principal total and the awarded principal total was $715,636, which the court characterised as not a small difference, even though the maximum aggregate claim by SE was about $31 million and the OTS total was less than 10% of that maximum claim.
What Were the Key Legal Issues?
The first legal issue was the proper costs consequences of Denka’s OTS under Order 22A of the ROC, given that the OTS was withdrawn after five months and before the disposal of the claim. The court had to decide whether and how the OTS should influence the costs order, and whether the OTS should lead to indemnity costs (or some other adjustment) for the period after service of the offer.
Second, the court had to determine the appropriate basis and extent of costs—standard versus indemnity—and the temporal cut-off for when costs should shift. This required the court to interpret and apply the interaction between Order 22A r 9(3) and Order 22A r 9(5). Although r 9(3) provides for indemnity costs in certain circumstances (where the offer is not withdrawn and has not expired before disposal), r 9(5) preserves the court’s “full power” to determine by whom and to what extent costs are to be paid, notwithstanding other provisions.
Third, the court had to assess whether the conduct of the parties and the relative merits of their positions justified a particular costs outcome. In particular, the court considered (i) whether SE’s failure to accept the OTS was unreasonable in light of the difference between the offered and awarded sums, and (ii) Denka’s conduct in resisting liability for repudiatory breach of contract, as well as the nature of SE’s claims on liquidated damages and general damages.
How Did the Court Analyse the Issues?
Woo Bih Li J began by setting out the statutory framework. Under Order 22A r 9(3), where a defendant makes an OTS that is not withdrawn and has not expired before disposal, and the plaintiff does not accept but obtains judgment no more favourable than the terms of the offer, the defendant is entitled to costs on an indemnity basis from the date of service of the offer. The plaintiff retains entitlement to standard basis costs up to the date the offer was served. However, this is “subject to any order which the court may otherwise make.”
Order 22A r 9(5) was then emphasised. It provides that where an offer to settle has been made, the court has “full power” to determine by whom and to what extent costs are to be paid, and this power is without prejudice to other provisions including r 9(3). The court therefore treated r 9(5) as a discretionary safety net: even though the strict conditions for r 9(3) were not met (because the OTS was withdrawn), the court could still adjust costs to reflect the existence and content of the OTS.
Initially, the judge had decided on 5 March 2019 that each party should bear its own costs, largely because the OTS was withdrawn and not kept open for acceptance until disposal. After hearing further arguments, however, the judge reconsidered and placed “more weight” on the fact that the OTS had remained open for acceptance for five months, and “less weight” on the fact that it was withdrawn after five months. The judge also reasoned that there was no suggestion by SE that it would have accepted the OTS if it had not been withdrawn. This supported the view that the withdrawal did not negate the relevance of the offer to the costs analysis.
The court then compared the offered and awarded principal sums. The difference of $715,636 (about 37% of the principal amount awarded under the 2nd Judgment) was treated as significant. Although SE’s maximum claim was about $31 million, and the OTS total was under 10% of that maximum, the court did not treat the OTS as automatically “small” or “unreasonable” for purposes of costs. Instead, the judge concluded that, in principle, Denka should be awarded some costs because the OTS was materially closer to the eventual outcome than SE’s refusal implied.
On the question of quantum of costs, Denka sought $2 million on an indemnity basis and $1.2 million on a standard basis. Denka stressed that SE itself had sought $1.2 million in standard costs against Denka, based on complexity, novelty, and importance of issues relating to enforceability of liquidated damages provisions in electricity retail contracts between commercial parties. The judge accepted that it was “open” to award SE costs on a standard basis up to the date the OTS was served and indemnity costs thereafter, using r 9(3) as a guide and recognising the discretion under r 9(5). However, the judge did not adopt that approach in full.
Two additional points influenced the judge’s discretion. First, the judge considered it was not entirely unreasonable for SE not to accept the OTS because the OTS total was less than 10% of the maximum sum claimed, and it was not obvious at the time that SE would not succeed for the maximum sum. The judge also noted that Denka had lost on the issue of liability for repudiatory breach of contract. While the judge acknowledged that liability issues might not have been determinative if SE had accepted the OTS, the judge still placed “some weight” on Denka’s conduct in resisting liability.
In assessing conduct, the judge described Denka’s behaviour as reneging on its contractual bargain. Denka had sought an accommodation regarding a steam supply agreement and agreed to terms requiring Denka to enter into the three electricity contracts. When electricity prices later moved against Denka, Denka attempted to avoid liability by advancing arguments that the judge characterised as “clearly without merit.” This conduct weighed against Denka receiving indemnity costs for the entire post-OTS period.
At the same time, the judge did not treat SE’s case as wholly meritless. Although SE lost on liquidated damages, the judge could not say SE’s case for liquidated damages was “clearly without merit.” Similarly, the alternative claim for general damages required the court to disregard a contract for difference, and the judge could not say that alternative was clearly without merit either. This balance—Denka’s weak resistance on liability, but SE’s not-clearly-meritless quantum arguments—supported a more moderate costs adjustment.
Accordingly, the judge concluded that it would be “just and also neater” to award Denka costs on a standard basis from the date the OTS was served, and to award no costs to SE from the date the writ was filed (19 December 2014) to the date the OTS was served (31 October 2016). This effectively created a single temporal cut-off for the costs shift, rather than a hybrid standard-to-indemnity split.
To quantify the costs, the judge relied on the Supreme Court Practice Directions’ Appendix G costs guidelines. The guideline for a complex contract case was a daily tariff of $17,000, tiered at 100% for the first five hearing days, 80% for the next five, and 60% thereafter. The trial was for 12 days. Applying Appendix G produced a base figure (as calculated in the judgment) of $173,400 for 12 days at the tiered daily rates. The judge then made adjustments: first, an uplift because the liquidated damages arguments were complex enough to warrant some increase beyond the guideline daily tariff, even though the tariff already applied to complex contract cases; and second, an uplift because the maximum amount of SE’s claim was about $31 million, making Denka’s potential liability and SE’s potential gain “quite real.”
Taking these factors into account, and also considering that the total sum awarded under the 2nd Judgment was about $1.926 million and the estimated costs figure of $1.2 million submitted by each side, the judge increased the base costs by a factor of 2.5. This yielded $432,500 as the “100%” standard costs figure before applying the temporal percentage. The judge then awarded 90% of that figure to Denka, reasoning that most getting-up costs and trial work would have accrued after 31 October 2016. The judge rounded the resulting figure up to $390,000.
Finally, the judge addressed disbursements. Parties had agreed on the quantum of disbursements, but the agreement was for the entire duration of the action. The judge held that Denka was entitled to disbursements incurred from the date the OTS was served, and that SE was not entitled to disbursements incurred before that date. This reinforced the temporal cut-off approach used for costs.
What Was the Outcome?
The court set aside its earlier decision of 5 March 2019 on costs and disbursements. SE was ordered to pay Denka 90% of the costs of the action on a standard basis from the date the OTS was served, fixed at $390,000. In addition, SE was ordered to pay Denka disbursements incurred from the date the OTS was served, with the quantum to be agreed or fixed by the court.
The court also ordered SE to pay Denka $3,000 (all in) for getting-up and work done for submissions on costs and disbursements. Procedurally, the parties were directed to agree disbursements within 14 days, failing which Denka was to write in for an appointment to fix the quantum within 21 days from the date of the judgment.
Why Does This Case Matter?
This case is a practical illustration of how Singapore courts exercise discretion on costs in the context of settlement offers, particularly where the strict statutory conditions for indemnity costs under Order 22A r 9(3) are not met because the OTS was withdrawn before disposal. Woo Bih Li J’s approach confirms that Order 22A r 9(5) can still justify meaningful costs consequences, even when the OTS is withdrawn, provided the offer remained open for a substantial period and was relevant to the eventual outcome.
For practitioners, the decision highlights several cost-relevant considerations: (i) the materiality of the difference between the OTS and the eventual award, (ii) whether the plaintiff’s refusal to accept was unreasonable in light of the litigation risk at the time, and (iii) the court’s assessment of each party’s conduct, including whether one party resisted liability in a manner the court viewed as lacking merit. The judgment also demonstrates that courts may prefer a “neater” single cut-off for costs (standard basis from the OTS date) rather than a more complex indemnity/standard split, depending on the overall justice of the case.
Finally, the case is useful for understanding how Appendix G guideline tariffs may be adjusted. The court did not treat the guideline daily tariff as rigid; instead, it applied uplifts based on the complexity of particular issues (liquidated damages) and the scale of potential liability. This provides a structured method for litigators to estimate costs exposure and to frame submissions on why an uplift (or reduction) is warranted.
Legislation Referenced
- Rules of Court (Cap 322, R 5, 2014 Rev Ed), Order 22A r 9(3)
- Rules of Court (Cap 322, R 5, 2014 Rev Ed), Order 22A r 9(5)
- Supreme Court Practice Directions, Appendix G (Costs guidelines)
Cases Cited
- [2019] SGHC 02
- [2019] SGHC 100
- [2019] SGHC 18
Source Documents
This article analyses [2019] SGHC 100 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.