COSTS

AZHANI ARSHAD
 Introduction
Costs in civil suit are governed under Order 59 of Rules of Court 2012 (ROC). It refers to two:-

(a) Remuneration or fee which a party pays to his solicitors or counsel. It also refers to solicitor and client
costs. It is contractually agreed between the solicitor and the client before the solicitor proceeds to
represent his client in the matter. It includes legal advice, attendance, drafting and copying documents,
conducting legal proceedings etc.

(b) The sum of money that one litigant pays to another to compensate the latter for costs or expenses
incurred in the litigation. This includes, the costs between a party and another party once a trial is
concluded; or the party and party costs which can only be made by an order of the court as implied in
Order 59 Rule 3 of ROC.
Cont…
Costs means: the charges which a solicitor is entitled to make and recover as
remuneration for his professional services including legal advice, attendances,
drafting and copying documents, conducting legal proceeding etc.
The expenses which a person is entitled to recover from the other side by
reason of his being a party to legal proceedings. It include court fees, stamps etc
and also where the party is represented by a solicitor, the reasonable and
proper charges and fees of the solicitor and counsel.
The amount of all these costs is ascertained by the process of taxation.
An Order for Costs
No party can recover any costs except under an order of the court (order 59 rule 3(1))
If the judge fails or forgets to make an order for cost, the successful litigant’s counsel must ask
the judge orally or in writing to make an order for costs.
An application may be made by notice of application supported by affidavit.
The court has discretionary power to award costs (rule 2(2). The discretion is exercised based
on established judicial principles.
 Cont…
It was held in Re Elgindata Ltd (No. 2) [1993] 1 All ER 232 at 237:

‘the principles are these (1) Costs are in the discretion of the court. (2) They should follow the event,
except when it appears to the court that in the circumstances of the case some other order should be
made. (3) the general rule does not cease to apply simply because the successful party raise issues or
makes allegations on which he fails, but where that has caused a significant increase in the length or
cost of the proceedings he may be deprived of the whole or part of his costs. (4)Where the successful
party raises issues or makes allegations improperly or unreasonably, the court may not only deprive
him of his costs but order him to pay the whole or part of the unsuccessful party’s costs.’
Cost Follows the Event
The general rule is ‘costs to follow the event’. The loser pays the winner’s cost
and is left to bear his own costs as provided under Order 59 Rule 3(2) of ROC.
However, in particular circumstances, the court may award the winner only a
proportion of his costs or his costs from or up to a specified state of the
proceedings or make no order as to costs and each party will be left to bear his
costs or order the winner to pay the loser’s costs of certain matters.
Cont…
There are various orders that the court can make in respect of costs namely:
(a) when cost is ordered up to a stage of the proceeding or the proportion of the cost order;
(b) when there is no order as to cost;
(c) when the winner is to pay for the loser’s cost;
(d) when the solicitor is ordered to pay the cost of the proceeding.
Exceptions
There are exceptions whereby the court the court may depart from the general rule namely, costs follow
the event:

(a) Where it will arise that there is an offer to settle under Order 22B; Koperasi Kerian Dengan Tanggungan
Bhd & Anor v Taty Tjhai [2010] 5 MLJ 812. It was held that since the respondent had made an offer to
the appellant which was rejected. Order 22A of Brunei Civil Procedure (akin to Order 22B of ROC) was
enacted to penalise the appellant for not accepting the offer which would have brought the litigation to
an end.

(b) Claim is under an illegal contract; In Cheng Mun Siah v Tan Nam Sui [1980] 2 MLJ 269, an agreement
between P and D contravened the Singapore Residential Properties Act.
Cont…
“As the whole of this transaction is already an illegal one and as both parties to the transaction
have contravened some of the provisions of section 3 of the Act and as such punishable under
section 25 of the Act, I cannot see how the court can be called upon to assist either one or the
other of the parties with regard to the agreement in question. It seems to me that this issue is
further governed by the maxim, ‘in pari delicto potior est conditio defendentis’. Under the maxim
a party to an illegal contract who seeks to recover what he has transferred under it will normally
be denied relief or the ground that he cannot be heard to allege his own turpitude and that any
loss he may suffer is well-deserved.
I therefore dismiss the plaintiff’s application. There will be no order as to costs since both parties
have offended against the law“
Cont…
(c) When the winning party is guilty of misconduct; however, it is only in very rare cases that
gross deliberate misconduct cases occur whereby the court finds that the plaintiff has been
negligent and involved in a deliberate misconduct.

In the case of Chen Chow Lek v Tan Yew Lai [1983] 1 MLJ 170 (FC), the winner of the case
was ordered to pay for the loser’s cost. In this case, the court found that the appellant’s
conduct throughout the action was very uncooperative and if he had cooperated, a lot of
cost could have been avoided. The respondent sought the appellant to execute a new
memorandum of lease on which the appellant was uncooperative and unwilling to sign until
the matter had to be dragged all the way to the Court of Appeal.
Cont…
(d) Relevant authorities not cited: in Re Syed Alsagosf, dec’d [1961] MLJ 150, the court allowed
the appeal but no order as to costs was made for both the appeal and the trial stages
because the appellant has not referred to 2 ‘very relevant’ cases in the court below which
would have won him the case; or

(e) Pursuant to Order 59 Rule 6, the winning party’s solicitors to pay the cost when he has
incurred costs improperly; he had incurred unreasonable costs; or the costs was wasted due
to the solicitor’s delay or misconduct.
Cont…
(f) Other exceptions: where a party fails to admit facts under Order 27 rule 2 or documents
under Order 27 rule 5, the costs of proving such facts or documents may be borne by the
party who failed to make the admissions (Order 59 rule 8(b)
Costs will generally be awarded against the party who: makes any necessary application/
claim; or defaults causing the other party to make the necessary application (Order 59 rule
10
Cost to be Borne by the Solicitor Personally
or Non-party
Under Order 59 Rule 6(1)(c) of ROC, solicitors may be personally liable for the
costs of the action by reason of its vexatiousness.
In Karpal Singh v Atip bin Ali [1987] 1 MLJ 291, Seah SCJ ordered the
respondent’s lawyer to pay for the cost of the proceeding personally as the
respondent’s lawyer had brought a frivolous claim. The court granted the order
after giving the respondent’s lawyer the right to be heard and give explanation
to the court.
Cont…
Principles: the jurisdiction of the court in ordering solicitors to pay personally the costs is one
that the court by virtue of its inherent powers exercises over solicitors in their capacity as
officers of the court and is exercised not to punish the solicitor but to protect and compensate
the opposite party (Myers v Elman [1940] AC 282)
It is trite law that although an advocate and solicitor is not a party to the litigation in Q, his
conduct of the litigation may be such as to attract the application of Order 59 rule 6(1)(a) and (b)
or (c), in which case the court may be left with no other alternative but to exercise the discretion
thereunder and make an order holding the solicitor personally liable for costs.
Cont…
The solicitor must be given a reasonable opportunity to appear before the court and show
cause why such order should not be made (Order 59 rule 6(3).
The Bar Council may also be asked to attend and take part in any proceedings or inquiry under
this rule so that disciplinary action may also be taken against the solicitor (Order 59 rule 6(4).
 Cont…
Examples where solicitors were personally liable for costs:-

(a) Where an action is unmaintainable;

(b) Conduct of litigation without due propriety;

(c) Commencing a suit for plaintiff who is a bankrupt;

(d) Continuing with the action knowing that the party is a bankrupt;

(e) No authority to act;

(f) Failure to attend court for hearing; or

(g) Failure of solicitor to file defence in time.

Success of a Party who Appeals a Point
not Raised at the Trial Court
A losing party in the High Court or in the lower court appeals to the higher
court and he wins the appeal. However, he wins the appeal on a point or on an
argument which is not raised in the lower court but he raises the new point and
won the appeal.
In such a case, the court may order no order as to cost whereby each party will
bear their own cost.
Anna Jong Yu Hiong v Government of Sarawak [1972] 2 MLJ 244 (FC), the
appellant won on appeal on a point that she did not raise in the lower court. The
court did not allow cost on the appellant stage since the lower court had already
awarded cost.
Costs in respect of several parties
The Plaintiff may decide to bring proceedings against two or more
defendants in the alternative. If he succeeds against one or more
defendants but not all, the Q arises as to what orders for costs
should be made.
For instance: a pedestrian who is injured by a collision between
two vehicles may decide to sue both drivers. In a contract matter in
respect of which there is no doubt about whether a person was
acting as agent for another, both persons might be joined. If the
plaintiff has joined defendants unnecessarily, he should bear their
costs.
Bullock Order and Anderson Order
A Bullock order is granted in a situation where the plaintiff sues defendant one (D1) and
defendant two (D2). The plaintiff obtains a judgment against D1 whereby the claim against D2 is
dismissed with costs. Bullock order dictates that he is to pay D2’s cost first. He will then obtain
reimbursement or cost paid to D2 from D1 through the Bullock order. The winning D2 will get his
cost from the plaintiff and the plaintiff can get reimbursement from the losing defendant (D1)
since he obtains a judgment against D1.
Sanderson order dictates that D1 is to pay D2 as to cost. The court will make a Bullock order or
a Sanderson order depending on which party is insolvent or bankrupt. If the plaintiff is insolvent,
the court will make the Sanderson order whereby the winning defendant will have to look into
the losing defendant to pay his cost. If D1 is insolvent, the court would grant a Bullock order
whereby the winning defendant gets cost from the plaintiff.
Cases
Muniandy v Tan Lian Hock & Ors [1963] 1 MLJ 230. the plaintiff as a bullock cart
owner was involved in a collision with D1 and D2 who were the driver and the
owner of a lorry respectively. The lorry knocked into a station wagon which in
turn knocked the plaintiff’s bullock cart. The plaintiff prayed for the cost
awarded to D3 and D4 to be borne by D1 and D2.
Suffian J held that the cost of the winning defendants (D3 and D4) was to be
borne by D1 and D2 (losing defendants) since the plaintiff was uncertain as to
who the guilty parties in this case were. The court granted the Bullock order to
the plaintiff.
Cont…
Federal Flour Mills Ltd v “Ta Tung” Owners & Ors [1971] 2 MLJ 201 (FC)
D1 had paid a large sum of money as a guarantee for the vessel to be released.
Since D1 had already paid such sum of money, the court took into account that
the defendant might not have enough financial means to pay for the cost of D2.
Thus the court exercised its discretion and ordered the plaintiff to pay for the
cost of D2 (a Bullock order). D1, however, still needed to pay the plaintiff the
cost incurred in the proceeding for D2. It is just that this order allows the
plaintiff to pay off the extra cost incurred which D1 may not be able to pay to
D2.
Cost for Interlocutory Application
The cost of an interlocutory proceeding is also known as party and party cost.
It is a cost awarded by the court after a trial at the conclusion of a civil suit. At
the end of a civil suit when the court gives a judgment, it will give a cost.
There may be many interlocutory applications done before a trial such as a
summary judgment, an application for amendment, an application to strike out
etc.
Cont…
In an interlocutory proceeding, the principle of ‘cost follows the event’ does not apply. It only
applies at the end of the application. An interlocutory application does not conclude the case
and there are various types of order that the court may order that relates to cost:

(a) Reserve cost: the question as to who is to pay that cost of the interlocutory application will be
decided at the end of the trial whereby the cost is to be reserved.

(b) Costs in the cause: the party that wins the trial will get the cost in the interlocutory
application stage. Whoever wins the main trial will win the cost for that interlocutory
application, and the plaintiff cost in the cost.
Cont…
(c) A plaintiff’s cost in the cost/ defendant’s cost in the cost: If the plaintiff wins the trial, he gets
the cost of the interlocutory application but if he losses the trial, he will have to pay the
defendant for the cost of that interlocutory application.

(d) A plaintiff’s cost in any event: no matter who wins the trial, the plaintiff will get cost of that
interlocutory application. The same goes for the defendant.

(e) A plaintiff’s cost: the plaintiff gets cost as to the interlocutory application immediately when
he wins in the interlocutory application stage. The same goes for the defendant.
Cont…
(f) Cost thrown away: means wasted cost. It usually applies in specific situation namely, the
plaintiff obtains a judgment in default against the defendant, the defendant applies to set aside
judgment in default or the defendant succeeds in setting aside the judgment in default. If the
judgment entered is a regular one, the defendant should bear the cost thrown away because it is
his fault for not entering appearance or filing a defence. If a judgment is an irregular one, the
plaintiff should bear the cost.

(g) Cost of the day: arises if there is a successful application for an adjournment. The other party
who objects to the adjournment may ask for the cost of the day.
Security for Costs
Security for cost is governed under Order 23 of ROC. It is an
application by the defendant against the plaintiff where the
defendant is contending that the plaintiff does not have a bona fide
claim and if the defendant eventually wins the case, the defendant
will not be able to get his cost from the plaintiff.
Cont…
Circumstances where the defendant may apply for security for cost are:

(a) The plaintiff is ordinarily a resident out of jurisdiction;

(b) The plaintiff is a nominal plaintiff who is unable to pay costs for the defendant i.e the plaintiff
does not really have any financial interest in the case or has no financial means to pay if he
loses the case;

(c) The plaintiff’s address is not stated or is incorrectly stated; or

(d) The plaintiff has changed his address during the proceeding to avoid consequences of
litigation.
Security for Cost vs Company
The new Companies Act 2016 (CA 2016) does not have the provision to order for security for
cost against a company unlike the old Companies Act 1965.
However, in Customer Loyalty Solutions Sdn Bhd v Advance Information Marketing Bhd &
Anor [2017] MLJU 1919, the court held:
With the deletion of sec 351 in the new CA 2016, the focus would lie in the principle rule of Order 23 of
the ROC governing security of costs;
The court can exercise its inherent power to grant security of costs;
The CA 2016 has no power to take away the inherent power of the court to grant security for costs.
Taxation for Cost
This is governed by Order 59 rule 16.
When the trial is over, the winning party will send a document known as a bill of costs to the
losing party.
The bill of costs in Form 117 itemizes all the items that the winning party can claim from the
losing party.
In each item, there will be an amount claimed and at the end of the bill, there will be the grand
sum.
Before the losing party pay the bill, he will ask for the bill to be taxed by the court.
The court i.e. the Registrar, will go through each of the items which are claimed, and access the
amount claimed whether it is reasonable or not.
Cont…
The court can:
(a) allow the items;
(b) reduce the items or the sum; or
(c) disallow the items.
Cont…
Form 117 consists of 2 separate sections, namely the work done in the cause of matter; and
disbursement.
The work done including the value getting up i.e preparation of the case.
The meaning of disbursements was considered in Ong Jane Rebecca v Lim Lie Hoa [2008] 3
SLR(R) 189. Having pointed out that there is no statutory definition of disbursement in the
context of the RC (Sing) Order 59, rule 24(1)(c), Choo Han Teck J determined that disbursements
extend beyond expenses which have been paid to include ‘loans or debts properly incurred by a
party for the purposes of litigation, provided that it is proven that these loans or debts are due
and payable and would be paid after taxation’.
Cont…
In Positive Well Marketing Sdn Bhd v Oka Concrete Industries Sdn Bhd [2014] 10 MLJ 385,
Umi Kalthum Abd Majid J held that the learned SAR had taken into account the correct
principles of law when conducting the taxing of the expert fees. The sum of RM31,040 for the
expert fees was a reasonable sum to engage and obtain expert evidence. It was necessarily
incurred by the plaintiff in order to succeed in its case since the matter was highly technical.
As far as the plaintiff was concerned, the expenses incurred were reasonable and necessary for
litigation. The defendant had failed to prove its assertion that there were cheaper experts
available at MyIPO or Sirim. Hence, the defendant's submission that the fees were much
cheaper at these institutions was dismissed.
Bases of Assessment
There are two bases of determination of cost, namely, the standard basis and
the indemnity basis.
Order 59 rule 16(1) gives some guidelines as to what relevant circumstances
the court must take into consideration when assessing costs.
The court may look into other factors such as the conduct of the parties,
before as well as during proceedings, and efforts made to resolve the dispute to
order no costs or reduced costs or order party to party costs on indemnity basis,
ie, sometimes referred to as solicitor-client costs.
Standard Basis
To determine costs on the standard basis ‘there shall be allowed a reasonable amount in
respect of all costs reasonably incurred and any doubts which the Court may have as to whether
the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of
the paying party’ (rules 16(2) and (3).
The standard basis is prescribed as the ordinary basis for party and party to determine cost.
The amount of costs which any party will be entitled to recover is the amount allowed after
taxation on the standard basis where: ‘(a) an order is made that the costs of one party to
proceedings be paid by another party to those proceedings; (b) an order is made for the
payment of costs out of any fund; or (c) no order for costs is required, unless it appears to the
Court to be appropriate to order costs to be taxed on the indemnity basis’ (rule 16(2)(a)–(c).
Cont…
Under the new standard basis the costs would be recoverable if the
registrar determines that it was reasonable for the solicitor to take
that step at the time irrespective of the final outcome.
It has been held that in determining whether a solicitor has acted
reasonably for the purpose of assessing costs, the court should apply
the test of ‘a sensible solicitor sitting in his chair considering what in
the light of his then knowledge, is reasonable in the interests of his
client’
Indemnity Basis
To determine costs on the indemnity basis ‘all costs shall be allowed except in so far as they are
of an unreasonable amount or have been unreasonably incurred and any doubts which the
Court may have as to whether the costs were reasonably incurred or were reasonable in amount
shall be resolved in favour of the receiving party’ (rule 16(4).
Solicitor-client costs are based on indemnity basis. The said costs are not based on what costs
or fees the solicitor has agreed with the client. If the solicitor had agreed with the client on a
certain fees (actual costs), they are contractual and have nothing to do with taxation on solicitor-
client basis.
Even if there is a contract between the parties to assess costs on solicitor-client basis, the
ultimate discretion of costs is still vested in the court pursuant to the Courts of Judicature Act
1964 as well as the Rules of Court 2012 to award an appropriate amount.
Cont…
Factors which justify indemnity costs include litigation which is
conducted by the paying party in a dishonest, acrimonious or
otherwise improper manner, and the absence of merit and an
unreasonable refusal to admit facts in a notice to admit facts.
In Anne Joseph Aaron v Cheong Yip Seng (Suit No 999 of 1989) the
Singapore High Court has ruled that there must be compelling
reasons such as ‘exceptional circumstances’ or a ‘special case’ for
such an order to be made. However, in the unreported judgment,
the court decided that there were no compelling reasons in this case.
Cont..
Heng Holdings SEA (Pte) Ltd v Tomongo Shipping Co Ltd [1997] 2 SLR(R) 813, the Singapore
Court of Appeal rejected the appellant’s claim for indemnity costs as the issue of whether there
had been material non-disclosure in respect of the respondent’s application for a Mareva
injunction had not been determined and, in any event, was not sufficiently serious to justify
indemnity costs.
Where the reprehensible conduct of a party has been taken into account in awarding
additional damages (for example, in relation to the nature of a libel), the court is even more
reluctant to penalise him in the form of indemnity costs (Lee Kuan Yew v Vinocur [1996] 1 SLR)
840)
Cont…
As a general rule, the court is obliged to order party to party costs on a standard basis and is
given the discretion to order the same on indemnity basis.
If the court exercises its discretion to order costs on a standard basis, Order 59 rule 16(3) will
apply. (Teow Koon v Kian Joo Can Factory Berhad & Ors [2016] MLJU 367).
A party to party costs on indemnity basis may be ordered when there has been scandalous
conduct and is meant to be punitive in nature. Order 59 rule 16(4) sets out the manner by which
costs on indemnity basis should be assessed.