Background

A shareholder was successful in its claim of minority oppression, obtaining a buyout order which valued its 37.57% shareholding at US$481.6m. 

The question of costs was made more complicated because the proceedings began in the High Court of Singapore, but were later transferred to the Singapore Commercial Court: should post-transfer costs be assessed by reference to the normal civil standard which applied in the High Court (per order 59), or was there a different regime to be applied in the Singapore International Commercial Court (per order 110, rule 46)?

The assessment of the valuation expert’s fees

In addition to the question of principle, there were specific questions in relation to a S$3.3m fee account from the minority shareholder’s valuation expert, described by the Court (in the context of its assessment) as “clearly deficient and inadequate,” with no detail of hourly rates, time spent, or the nature of the work done.

Once further detail was provided, the majority shareholder took the position that the fees had “not been reasonably incurred.”  The Court was concerned that this position was adopted without any detail about the fees of its own experts, and it invited the majority shareholder to provide that information. 

On determining that the majority shareholder’s own expert had charged S$2.82m – which exceeded the Court’s 69.59% allowance of the S$3.3m account – the Appeal Court declined to interfere with the original exercise of discretion.

Outcome

In Senda International Capital Ltd v Kiri Industries Ltd [2022] SGCA(I) 10 the Singapore Court of Appeal provided the following guidance in relation to “reasonable costs” for proceedings in the SICC:

• The Singapore International Commercial Court regime was “intended to restore or compensate the other party for the expense it had incurred in the legal proceedings as long as this been incurred…sensibly,” not to mirror the normal civil regime.
• An assessment of whether costs were reasonable was “an open-ended inquiry to be undertaken with due regard to the specific facts of the case at hand.”
• The party claiming costs must provide sufficient information to allow assessment, which would typically include detail about hours charged and by whom, and their seniority and hourly rates; and an explanation as to the nature of the work.
• Once that information was provided, the evidential burden shifted to the unsuccessful party.  Although the “best evidence” would “often be evidence of its own incurred costs” the unsuccessful party could provide other evidence, and also “point to flaws evident on the face of the costs claim.”