TAJUDIN BIN GULAM RASUL & Anor v SURIAYA BINTE HAJA MOHIDEEN

Facts

The claimants had obtained a default judgment against the defendant in Originating Claim No 125 of 2025. By HC/SUM 1240/2025 the defendant applied to set it aside, the central question being whether she had a prima facie defence. Anticipating an illegality defence under the Moneylenders Act 2008, the claimants' written submissions cited a case said to hold that isolated loans between acquaintances are not moneylending. The case was missing from their bundle of authorities. It did not exist; its name had been produced by a generative AI tool, and the court left its name and number out of the grounds so as not to spread it further.

The Assistant Registrar had directed on 4 June 2025 that all cited authorities be exhibited with pinpoint citations. On 18 July 2025 defence counsel emailed claimants' counsel that he could not find the case. On 21 July 2025, without permission, claimants' counsel filed amended submissions with a replacement authority, describing the problem as clerical or typographical errors and a case inadvertently cited. Only under questioning at the hearing on 22 July 2025 did he admit the case did not exist, and only during costs submissions did he say a junior lawyer had likely run the research through an AI app and that the case was a placeholder. The Assistant Registrar allowed the amended submissions, and the defendant later dropped the illegality defence. The setting-aside application was dismissed on 31 July 2025, and the court then considered whether claimants' counsel should personally pay costs.

Issues

1. Whether counsel acted improperly, unreasonably or negligently in citing a fictitious authority produced by a generative AI tool
2. Whether that conduct caused the defendant to incur unnecessary costs
3. Whether it was just in all the circumstances to order counsel to pay those costs personally

Holding

The Assistant Registrar dismissed the defendant's setting-aside application, with the defendant liable for the claimants' costs of it. Separately, the court ordered counsel for the claimants to pay the defendant personally costs of $800 for the costs of and incidental to citing the fictitious authority, within 14 days. It also directed both counsel to give their clients a copy of its directions.

Reasoning

The court applied the three-stage test from Ridehalgh v Horsefield as endorsed in Tang Liang Hong, read against the Guide on the Use of Generative Artificial Intelligence Tools by Court Users. That guide is neutral on using such tools but requires court users to verify that every authority exists and is accurate, and leaves lawyers fully responsible for their documents; the practice directions separately require all authorities relied on to be in the bundle.

At the first stage, counsel's conduct was improper, unreasonable and negligent. A simple LawNet search would have shown the case was fabricated; he failed to exhibit it despite the court's direction; and, most seriously, he was less than candid, calling it a clerical or typographical error and a placeholder and disclosing the use of an AI tool only when pressed. His attribution of the error to an unnamed junior was given no weight because he was responsible for supervising and had told the court he was prepared.

At the second stage, the defendant had spent time and resources searching for the case, alerting counsel and raising it with the court, and the proceedings were lengthened even though no hearing was adjourned. The power is compensatory, so no order would follow where no extra costs were caused.

At the third stage, the court weighed fairness and proportionality as the main consideration, with protecting the integrity of the justice system and deterrence as subsidiary ones. The fictitious case supported only a trite point that was later abandoned, but the prejudice to the defendant and the lack of candour justified an order. The quantum reflected the egregiousness of the conduct rather than a count of citations, and the court noted that grave misconduct is a matter for disciplinary proceedings, not higher costs.

From the judgment