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: 21 December 2022
- Judges: Philip Jeyaretnam J
- Proceedings: Suit No 1145 of 2020 (Summons No 5541 of 2020)
- Plaintiffs/Applicants: (1) The Agency for Policy Coordination on State Property of Mongolia (2) [additional plaintiffs not fully set out in extract] (3) Erdenet Mining Corporation LLC (4) Erdenes Oyu Tolgoi LLC
- Defendants/Respondents: (1) Batbold Sukhbaatar (2) [additional defendants not fully set out in extract] (3) Cheong Choo Young (4) Kim Hak Seon (5) Cliveden Trading AG (6) Eoin Barry Saadien (7) Everest VC Pte Ltd (8) Ponduver Pte Limited
- Legal Area: Civil Procedure — Mareva injunctions; Inquiry as to damages
- Statutes Referenced: Not specified in the provided extract
- Cases Cited: [2021] SGHC 91; [2022] SGHC 318 (this case); [2016] 2 SLR 737; [2015] 1 SLR 496; [2014] 1 SLR 245; [2022] SGCA(I) 10; [1962] 1 QB 306
- Judgment Length: 16 pages, 4,469 words
Summary
This decision concerns what happens after a Mareva freezing order is discharged: whether the court should order an inquiry as to damages, and—if so—what losses may be recovered under the plaintiffs’ undertaking as to damages. The High Court (Philip Jeyaretnam J) framed the inquiry around three established questions: whether the freezing order was wrongly obtained, whether special circumstances justify refusing an inquiry, and whether there is an arguable case that the defendants suffered loss. The immediate dispute in this application was narrower: whether the defendants’ “loss” could include the difference between their full legal expenses incurred to discharge the freezing order and the costs actually awarded to them on a party-and-party basis.
The court held that the defendants did not establish an arguable case of recoverable loss for the purpose of ordering an inquiry. Central to the reasoning was the general rule that unrecovered costs from prior proceedings are not recoverable as damages in subsequent proceedings, at least in same-party situations. That rule is rooted in the Singapore costs regime’s policy choices: promoting finality, suppressing parasitic litigation, and supporting access to justice by preventing full indemnification from becoming the norm.
Although the court recognised that enforcement of an undertaking as to damages can, in appropriate circumstances, justify an inquiry, it concluded that the defendants’ proposed “difference” in costs did not fall within a recoverable category. In practical terms, the defendants were left with the party-and-party costs already assessed by the court, rather than being able to recover additional amounts by reframing them as damages under the undertaking.
What Were the Facts of This Case?
The underlying litigation arose from allegations of corruption involving a former prime minister of Mongolia. The claims were brought in Singapore in the names of three Mongolian government agencies, with the Metropolitan Prosecutor’s Office of Mongolia (“MPOM”) acting through counsel. MPOM initially instructed an international law firm, King & Spalding International LLP (“K&S”), which in turn instructed a Singapore law firm, Rev Law LLC (“Rev Law”), to pursue proceedings in various jurisdictions, including Singapore.
In November 2020, the plaintiffs obtained a Mareva freezing order against certain defendants (the “Freezing Order”). The Freezing Order was later discharged by the High Court in an earlier decision: The Agency for Policy Coordination on State Property of Mongolia and others v Batbold Sukhbaatar and others [2021] SGHC 91. In that earlier judgment, the court discharged the freezing order because there was no real risk of dissipation. Importantly for the present application, the court in [2021] SGHC 91 invited submissions on whether there should be an inquiry as to damages, given that the plaintiffs had provided an undertaking as to damages.
The undertaking was 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 discharge, the question of an inquiry was reserved to the trial or earlier disposal of the proceedings. Subsequently, Rev Law was discharged as solicitors for the plaintiffs because K&S and 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 proceedings disposed of without trial, the fifth and sixth defendants renewed their application for an inquiry as to damages. At the hearing before Philip Jeyaretnam J on 7 November 2022, counsel confirmed that the loss relied upon was limited to the “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 defendants accepted that the items they would claim in an inquiry were items they had already claimed as costs and that were included in the court’s earlier assessment of party-and-party costs for the discharge application.
What Were the Key Legal Issues?
The principal legal issue was whether the court should order an inquiry as to damages after the Mareva freezing order had been discharged. The court emphasised that an inquiry should only be ordered if there is an arguable case of loss; otherwise, the inquiry would be a “pointless exercise.” This requirement is consistent with the broader approach to post-freezing-order undertakings: the court does not automatically convert the discharge into a damages process without a threshold showing.
Within that overarching issue, the case turned on a more specific question: whether the defendants’ proposed “loss” (the difference between their full legal expenses incurred to comply with and discharge the freezing order, and the party-and-party costs assessed by the court) was recoverable as damages pursuant to the undertaking as to damages. This required the court to consider the interaction between (i) the undertaking mechanism for compensating wrongful freezing orders and (ii) the general costs principle that unrecovered costs from earlier proceedings should not be recovered as damages in later proceedings.
Accordingly, the court structured its analysis into two parts. First, it restated the general rule of non-recoverability of costs as damages and explained the rationale behind it. Second, it examined whether there was an exception where the court was enforcing an undertaking as to damages in the context of a discharged Mareva injunction.
How Did the Court Analyse the Issues?
The court began by identifying the governing framework for deciding whether to order an inquiry as to damages after discharge of a freezing order. It referred to Astro Nusantara International BV and others v PT Ayunda Prima Mitra and others and another matter [2016] 2 SLR 737, which sets out three questions: whether the injunction order was wrongly asked for, whether special circumstances exist to justify refusing an inquiry, and whether there is an arguable case that the applicant suffered loss. In this application, the court focused on the third question—arguable loss—because the defendants’ claim depended on whether their “difference” in costs could constitute relevant loss.
On the general rule, the court relied on Maryani Sadeli v Arjun Permanand Samtani and another and other appeals [2015] 1 SLR 496. Maryani Sadeli articulates a clear principle: costs of previous legal proceedings that were unrecovered cannot be recovered in subsequent proceedings as damages, at least in same-party cases. The policy is that costs should be dealt with in the proceedings in which they were incurred; allowing a later damages claim would undermine the coherence and finality of the costs regime. The court also drew on Maryani Sadeli’s rationale, including the promotion of access to justice (by preventing full recovery of costs from becoming the norm), the need for finality in litigation, and the suppression of parasitic litigation.
The court further reinforced the policy logic by citing the Court of Appeal’s discussion of unrecovered costs as a “necessary incidence” of using the litigation process. It also referenced Senda International Capital Ltd v Kiri Industries Ltd [2022] SGCA(I) 10, which cautioned that entitlement to costs recovery is not a substantive right but an incident of the legal system’s costs scheme, driven by social policy. In particular, the Court of Appeal in Senda distinguished the High Court’s costs regime from the Singapore International Commercial Court’s separate regime, and warned that full indemnification could deter legitimate claims and create inequality of arms by rewarding better-resourced litigants.
Having set out the general rule, the court then addressed whether an exception applied in the context of enforcing an undertaking as to damages. The defendants’ argument effectively sought to treat the “gap” between their full legal expenses and the party-and-party costs assessed by the court as compensable loss. The court accepted that the undertaking as to damages is designed to compensate defendants for loss caused by a freezing order. However, it held that the defendants’ proposed loss was not recoverable because it was, in substance, an attempt to recover unrecovered costs from the discharge proceedings. The defendants had already obtained party-and-party costs for the application to discharge the Freezing Order, and the items they sought to claim in the inquiry were the same items included in that costs assessment. In other words, the “difference” was not a separate category of loss caused by the freezing order; it was the residual unrecovered portion of costs that the costs regime deliberately does not fully indemnify.
In reaching this conclusion, the court treated the undertaking as to damages as operating within the broader costs policy framework rather than displacing it. The court’s approach reflects a careful balancing: while defendants should be compensated where a freezing order causes genuine, legally relevant loss, the undertaking does not become a mechanism to circumvent the established rule against recovering unrecovered costs as damages. The court therefore found that there was no arguable case of recoverable loss on the defendants’ pleaded basis, and consequently no basis to order an inquiry.
What Was the Outcome?
The High Court declined to order an inquiry as to damages. The practical effect is that the defendants could not pursue a further damages process to recover the additional portion of their legal expenses beyond the party-and-party costs already awarded for the discharge application.
Accordingly, the defendants remained limited to the costs assessed by the court (including the earlier award of $32,500 in costs and $11,471.02 for disbursements for the discharge-related application), and the “difference” between their full legal expenses and those assessed costs was not treated as relevant loss recoverable under the undertaking as to damages.
Why Does This Case Matter?
This case is significant for practitioners because it clarifies the threshold for ordering an inquiry as to damages after a Mareva freezing order is discharged. It reinforces that the inquiry is not automatic and that defendants must show an arguable case of loss that is legally recoverable. In particular, it demonstrates that courts will scrutinise whether the alleged loss is, in substance, an attempt to recover unrecovered costs from earlier proceedings.
For lawyers advising applicants and respondents in freezing order litigation, the decision highlights an important drafting and strategy point. If a defendant’s damages claim is framed solely as the “gap” between full legal expenses and party-and-party costs, the claim may fail at the arguable-loss stage because of the Maryani Sadeli principle. Conversely, defendants seeking an inquiry should consider whether they can identify losses that are not merely unrecovered costs—such as distinct financial losses causally linked to the freezing order and not already captured by the costs assessment.
For plaintiffs and their counsel, the judgment provides comfort that the undertaking as to damages is not a backdoor for full indemnification of legal expenses. While undertakings remain enforceable, the court will apply the costs regime’s policy constraints. This affects risk assessment when seeking freezing orders and informs how plaintiffs might evaluate the potential exposure arising from discharge.
Legislation Referenced
- No specific statutes were identified in the provided judgment 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
- Senda International Capital Ltd v Kiri Industries Ltd [2022] SGCA(I) 10
- Berry v British Transport Commission [1962] 1 QB 306
- The Agency for Policy Coordination on State Property of Mongolia and others v Batbold Sukhbaatar and others [2021] SGHC 91
- The Agency for Policy Coordination on State Property of Mongolia and others v Batbold Sukhbaatar and others [2021] 5 SLR 556
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.