Case Details
- Citation: [2022] SGHC 318
- Title: The Agency for Policy Coordination on State Property of Mongolia and others v Batbold Sukhbaatar and others
- Court: High Court of the Republic of Singapore (General Division)
- Date of decision: 21 December 2022
- Judgment reserved: 7 November 2022
- Hearing date: 7 November 2022
- Judges: Philip Jeyaretnam J
- Suit No: 1145 of 2020
- Summons No: 5541 of 2020
- Plaintiffs/Applicants: The Agency for Policy Coordination on State Property of Mongolia and others
- Defendants/Respondents: Batbold Sukhbaatar and others
- Legal area: Civil Procedure — Mareva injunctions; inquiry as to damages; enforcement of undertaking as to damages
- Procedural context: Discharge of a freezing (Mareva) order; subsequent application for inquiry as to damages
- Statutes referenced: (Not specified in the provided extract)
- Cases cited: Astro Nusantara International BV and others v PT Ayunda Prima Mitra and others and another matter [2016] 2 SLR 737; Maryani Sadeli v Arjun Permanand Samtani and another and other appeals [2015] 1 SLR 496; Then Khek Koon and another v Arjun Permanand Samtani and another and other suits [2014] 1 SLR 245; Berry v British Transport Commission [1962] 1 QB 306; Senda International Capital Ltd v Kiri Industries Ltd [2022] SGCA(I) 10
- Related decision: The Agency for Policy Coordination on State Property of Mongolia and others v Batbold Sukhbaatar and others [2021] SGHC 91
- Judgment length: 16 pages; 4,469 words
Summary
This High Court decision concerns the narrow but important question that arises after a Mareva (freezing) injunction is discharged: when the court later considers whether to enforce the plaintiffs’ undertaking as to damages and order an inquiry, what counts as “loss” for the purpose of that undertaking. The court emphasised that an inquiry as to damages is not automatic; it is ordered only if there is an arguable case of loss, and the inquiry must not become a pointless exercise.
In the proceedings, the plaintiffs had obtained a freezing order against certain defendants in a corruption-related dispute involving Mongolian state entities and a former prime minister. The freezing order was discharged earlier because there was no real risk of dissipation. After the substantive proceedings were later dismissed without trial, the defendants sought an inquiry into damages based on the legal expenses they claimed to have incurred in complying with and applying to discharge the freezing order. The court ultimately held that the difference between (i) the defendants’ full legal expenses and (ii) the costs assessed by the court on a party-and-party basis was not recoverable as damages under the undertaking, applying the general rule against recovering unrecovered costs as damages in subsequent proceedings.
What Were the Facts of This Case?
The underlying dispute involved allegations of corruption against a former prime minister of Mongolia. The claims were brought in the name of three Mongolian government agencies by the Metropolitan Prosecutor’s Office of Mongolia (“MPOM”). MPOM initially instructed an international law firm, King & Spalding International LLP (“K&S”), to pursue proceedings in various jurisdictions, including Singapore. K&S then instructed a Singapore law firm, Rev Law LLC (“Rev Law”), to act for the plaintiffs in the Singapore proceedings.
In November 2020, the plaintiffs obtained a Mareva freezing order against the fifth and sixth defendants. That freezing order was later discharged by Philip Jeyaretnam J in an earlier decision, The Agency for Policy Coordination on State Property of Mongolia and others v Batbold Sukhbaatar and others [2021] SGHC 91 (delivered on 16 April 2021). The discharge was grounded in the absence of a real risk of dissipation. In the course of that earlier decision, the court invited submissions on whether there should be an inquiry as to damages.
The plaintiffs had provided an undertaking as to damages in standard form: if the court later found that the freezing order had caused loss to the defendants and decided that the defendants should be compensated, the plaintiffs would comply with any order the court might make. After the freezing order was discharged, the court reserved the question of an inquiry as to damages to the trial or earlier disposal of the proceedings. Subsequently, Rev Law was discharged as solicitors for the plaintiffs in July 2022 because K&S and, in turn, Rev Law ceased to receive meaningful instructions from the Mongolian prosecutors.
As the plaintiffs remained unrepresented and took no further steps, the fifth and sixth defendants applied to dismiss the action against them. That application was granted on 9 September 2022. With the substantive case disposed of without trial, the fifth and sixth defendants renewed their application for an inquiry as to damages. At the hearing on 7 November 2022, counsel confirmed that the loss relied upon was limited to the defendants’ “full legal expenses incurred for the purposes of complying with and applying to discharge the [Freezing Order], less any award of costs (ordered on a party-and-party basis)”. The court had earlier assessed costs and disbursements in relation to the discharge application, awarding $32,500 in costs and $11,471.02 for disbursements.
What Were the Key Legal Issues?
The central issue was whether an inquiry as to damages should be ordered at all. The court reiterated that such an inquiry is ordered only if there is an arguable case of loss; otherwise, the inquiry would be a “pointless exercise”. This is consistent with the broader framework articulated in Astro Nusantara International BV and others v PT Ayunda Prima Mitra and others and another matter [2016] 2 SLR 737, where the court identified three considerations: (1) whether the injunction was wrongly asked for, (2) whether special circumstances exist to justify refusing an inquiry, and (3) whether there is an arguable case of loss.
Within that framework, the specific question became whether the defendants could characterise as “loss” the difference between their full legal expenses and the costs assessed by the court on a party-and-party basis. In other words, the court had to decide whether enforcing the undertaking as to damages could operate as an exception to the general costs principle that unrecovered costs from earlier proceedings should not be recovered as damages in later proceedings.
Accordingly, the court approached the inquiry in two parts. First, it considered the general rule on non-recoverability of costs as damages and the rationale behind it. Second, it examined whether there was an exception where the court was enforcing an undertaking as to damages following the discharge of a freezing order.
How Did the Court Analyse the Issues?
The court began by restating the general rule governing attempts to recover costs of previous legal proceedings as damages in subsequent proceedings. Relying on the Court of Appeal’s articulation in Maryani Sadeli v Arjun Permanand Samtani and another and other appeals [2015] 1 SLR 496, the court emphasised that costs which were unrecovered previously cannot be recovered in a subsequent claim for damages, at least in same-party situations. The policy is that costs should be dealt with in the proceedings in which they were incurred, and the incidence of unrecovered costs should not be revisited through later litigation.
The court then explained the rationale for this rule. In Maryani Sadeli, the Court of Appeal had traced the reasoning to Devlin LJ’s discussion in Berry v British Transport Commission [1962] 1 QB 306 and highlighted multiple policy objectives. These included promoting access to justice by preventing the litigation system from becoming a mechanism for full indemnification of costs, thereby deterring legitimate claims. The court also referred to the need for finality in litigation and the suppression of parasitic litigation. Finally, it noted that unrecovered legal costs are an accepted feature of the Singapore costs regime: full recovery is the exception, not the norm.
More recently, the Court of Appeal in Senda International Capital Ltd v Kiri Industries Ltd [2022] SGCA(I) 10 had reinforced that entitlement to costs recovery is not a substantive right but an incident of the legal system’s costs scheme, driven by social policy. The court in Senda also cautioned against awarding the full extent of costs incurred by the successful party, because that may diminish access to justice by deterring claims due to fear of unaffordable adverse costs and may create inequality of arms by tying outcomes to parties’ resources. Although Senda addressed the Singapore International Commercial Court’s separate costs regime, the High Court in the present case used its reasoning to underline the policy concerns relevant to the High Court’s costs framework.
Having set out the general rule, the court turned to the defendants’ attempt to frame the “difference” between full expenses and party-and-party costs as recoverable loss under the undertaking as to damages. The court’s analysis focused on whether enforcing the undertaking could justify departing from the general costs principle. The court observed that the defendants’ claimed damages were, in substance, an attempt to recover unrecovered costs from the earlier discharge application. At the hearing, the defendants accepted that the items they would claim as damages were items they had already sought as costs and were included in the court’s earlier assessment of costs and disbursements.
In this context, the court concluded that the difference between full legal expenses and assessed party-and-party costs did not constitute relevant loss recoverable under the undertaking. The undertaking as to damages is designed to compensate for loss caused by the freezing order, but it does not operate as a mechanism to convert unrecovered costs into damages where the costs regime has already determined what is recoverable. The court therefore held that there was no arguable case of loss in the specific form advanced by the defendants, and the inquiry into damages should not proceed.
What Was the Outcome?
The court refused to order an inquiry as to damages. The practical effect was that the defendants’ application to investigate and quantify damages under the plaintiffs’ undertaking as to damages did not proceed, because the defendants could not establish an arguable case of recoverable loss based on the difference between their full legal expenses and the party-and-party costs assessed by the court.
As a result, the costs already awarded on the discharge application (including the assessed costs and disbursements) remained the operative financial outcome, and the defendants could not seek additional compensation for unrecovered portions of their legal expenses through a damages inquiry.
Why Does This Case Matter?
This decision is significant for practitioners because it clarifies the limits of the undertaking as to damages in the Mareva injunction context. While undertakings are often treated as a meaningful safeguard against wrongful freezing orders, the court’s reasoning shows that the undertaking does not automatically entitle a defendant to recover all costs actually incurred in resisting the injunction. Instead, the court will scrutinise whether the claimed “loss” is legally recoverable, particularly where the claim effectively seeks to repackage unrecovered costs as damages.
For lawyers advising defendants who have successfully discharged a freezing order, the case underscores the importance of distinguishing between (i) costs already assessed and recoverable under the costs regime and (ii) any other categories of loss that are not merely unrecovered legal expenses. If a defendant’s damages case is limited to the “gap” between full expenses and party-and-party costs, this case suggests that the gap will likely be treated as non-recoverable, absent a different and properly pleaded head of loss.
For plaintiffs and applicants seeking freezing orders, the decision provides reassurance that the undertaking as to damages is not an open-ended obligation to indemnify defendants for all litigation expenditure. It also reinforces the broader policy of finality and suppression of parasitic litigation, ensuring that costs disputes are resolved within the original proceedings rather than through subsequent damages inquiries.
Legislation Referenced
- (Not specified in the provided extract.)
Cases Cited
- Astro Nusantara International BV and others v PT Ayunda Prima Mitra and others and another matter [2016] 2 SLR 737
- Maryani Sadeli v Arjun Permanand Samtani and another and other appeals [2015] 1 SLR 496
- Then Khek Koon and another v Arjun Permanand Samtani and another and other suits [2014] 1 SLR 245
- Berry v British Transport Commission [1962] 1 QB 306
- Senda International Capital Ltd v Kiri Industries Ltd [2022] SGCA(I) 10
- The Agency for Policy Coordination on State Property of Mongolia and others v Batbold Sukhbaatar and others [2021] SGHC 91
Source Documents
This article analyses [2022] SGHC 318 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.