KOTAGARALAHALLI PEDDAPPAIAH NAGARAJA v MOUSSA SALEM & 2 Ors

Facts

This was the costs judgment in Suit No 663 of 2020. The plaintiff, Mr Kotagaralahalli Peddappaiah Nagaraja, had claimed to own beneficially a third of the shares in SLI Developments Pte Ltd (the third defendant) under a trust declared by deed on 23 July 2015 by Ms Serene Phey Sai Lin (the second defendant), a professional trustee. In December 2020 the court struck out all his other claims, including conspiracy and minority oppression, as plainly unsustainable, with fixed costs awarded. In Kotagaralahalli Peddappaiah Nagaraja v Moussa Salem and others [2023] SGHC 6, the court dismissed the remaining trust claim, finding that the first defendant, Mr Moussa Salem, was the sole beneficial owner of the shares under a resulting trust and that the deed was an imperfect gift.

All three defendants then sought costs. Mr Salem asked for indemnity costs, including $800,000 in professional fees, plus disbursements of $236,464 that included fees for two professional witnesses of fact, Mr Baldock and Mr Jordan, and airfares. He said the plaintiff had sued in bad faith, kept changing his case, acted improperly over a stop notice and was an evasive witness. Ms Phey claimed $140,957 on an indemnity basis, relying on a letter of indemnity from the plaintiff. The third defendant, a nominal party, sought $4,500. The plaintiff resisted.

Issues

1. Whether Mr Salem's costs should be assessed on the indemnity basis, and whether the court should depart from the Appendix G costs guidelines.
2. Whether fees of witnesses of fact and airfares invoiced to third parties were recoverable disbursements.
3. Whether Ms Phey, said to be a nominal defendant, was entitled to costs and on what basis, and whether the third defendant should recover costs.

Holding

Vinodh Coomaraswamy J ordered the plaintiff to pay Mr Salem standard costs of $255,000 for professional fees plus disbursements, including $60,867 for Mr Baldock's fee subject to an undertaking. He ordered the plaintiff to pay Ms Phey indemnity costs fixed at $80,000 including disbursements, leaving $41,990 after credit for $38,010 of earlier costs awards, conditional on undertakings not to pursue the letter of indemnity further. The third defendant was awarded $4,500.

Reasoning

Indemnity costs were refused for Mr Salem. The unsustainable claims and three rounds of amendment had already been dealt with by earlier standard costs orders, and it was too late to revisit them without a change of circumstances. The trust claim was objectively sustainable, so no bad faith could be inferred from it. The stop notice was pursued in separate proceedings where any remedy lay, and refusing to withdraw it was at worst overreach. The earlier merits judgment had not found the plaintiff deliberately untruthful.

The judge declined to depart from Appendix G, explaining that departing too readily would undermine its purposes of consistency, predictable costs exposure and a marker of reasonable fees. A departure should rest mainly on the complexity of the case, not conduct. The top of each tariff was applied for an equity and trusts case.

A volunteer professional witness's opportunity cost is recoverable if reasonably incurred and reasonable in amount; the subpoena rule does not limit party and party costs. Items invoiced to third parties were treated as incurred by Mr Salem because he was obliged in equity to reimburse them, reinforced by undertakings. As the witness invoices gave no detail, two-thirds was allowed on a broad-brush basis. A $7,229 flight change and upgrade fee was disallowed. Ms Phey was not merely nominal, since a breach of trust allegation against her stayed pleaded, and the letter of indemnity justified indemnity costs, though her claimed sum was far from reasonable. The nominal third defendant had reasonably incurred some costs.

From the judgment