COSTS

(0.59 ROC 2012)

 As well as resolving the issues in a case, the court will decide who should pay the costs of the
litigation.
 The court can order the whole cost of litigation to be paid by one party. Alternatively, the
court can order a party to pay for various stages of litigation, but not others.
 The expensive nature of litigation often means that the incidence of costs is almost as
important as the relief or remedy sought.

1. Costs awarded may consist of:

(a) Remuneration which a party pays to his solicitor; and

(b) The sum which one litigant pays to another litigant to compensate the latter for the
expense which he has incurred in the litigation.

2. An order for costs is essential:

(1) No party can recover any costs except under an order of the court: 0.59 r.3(1).

(2) Thus, if the judge fails or forgets to make an order for costs, the successful litigant’s
counsel must ask the judge orally or by Notice f Application supported by an Affidavit

(3) Exceptions where an order for costs is not required:

(a) Where P, by notice in writing and without leave, discontinues his action or withdraws
any claims against D, then D may tax his costs. If the taxed costs are not paid within
4 days after taxation, D may sign judgement for costs without an order: 0.59 r .11(1).

 Discretion of court:
(1) The court has discretionary power to award costs:0.59 r.2(2)
(2) The discretion is exercised based on established judicial principles.

General Principle
(3) As between litigants, the general rules is “costs to follow the event”, that is, the loser pays
the winner’s cost and is left to bear his own costs: r.3(2).
 Exceptions
(4) However, in particular circumstances, the court may:
(a) award the winner only a proportion of his costs or his costs from or up to a specified
stage of the proceedings; or
(b) make no order as to costs and each party will be left to bear his costs; or
(c) order the winner to pay the loser’s costs of certain matters.
 Exceptions to the rule that costs follow the event:
(a) Claim under an illegal contract
(b) Misconduct or neglect on
winner’s part- the winner pays
the costs
(c) Successful on a point not raised
below
(d) Relevant on a point not raised
below
(e) Winner has to pay loser’s costs
for “a very unusual thing”
(f) Where the appellant pleaded
guilty to negligence in the lower
court when in actual fact he was
not negligent in the road
accident:
(g) Other exceptions:
 Cheng Mun Siah v Tan Nam Su
P’s application was dismissed as the
agreement was illegal (contravened Spore
Residential Property Act 1976)
 Chen Chow Lek v Tan Yew Lai
Salleh Abbas FJ:
 Mohd Salleh Samad v Zainodin
Dongking
 Anna Jong Yu Hiang v Government of
Sarawak
 Re syed Alsagosf, Dec’d [1961]
 Chen Chow Lek
 Petroleum Nasional Bhd v Anor v
Cheah Kam Chiew
 Mohd Salleh Samad v Zainodin
Dongking[2002]
i. Where a party fails to admit facts
under 0.27 r.5, the costs of proving
such facts or documents shall be
borne by the party who failed to
make the admissions: 0.59
r.3(5)&(6)
ii. Makes any unnecessary
applicantion; or defaults causing the
other party to make the necessary
application:
iii. Where D has made payments into
court a sum of money to settle the
claim of P. If P accepts the
payments, then the action will be
stayed:
3. Costs against the advocate and solicitor personally

 Myers v Elman [1940] AC 282- the jurisdiction of the court in ordering solicitors to
pay personally 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.

 Under O 59 r 8(1)(c) – solicitors may be personally liable for the costs of the action
by reason of its vexatiousness

 Seah SCJ in Karpal Singh v Atip b Ali – ‘an advocate and solicitor is an officer of
the court and his professional conduct is always under the supervision and scrutiny of
the court, and that when there is dereliction of duty on the part of the advocate and
solicitor in the conduct of his professional work the court may, in a proper case, order
him to be personally liable for the costs of the proceedings after giving him an
opportunity to defend himself;

(1) 0.59 r.6(1) provides that where costs are incurred improperly or without reasonable cause
or are wasted by undue delay or by any other misconduct or default on the part of the
solicitor, the court may:
(a) disallow the costs as between the solicitor and his client; and
(b) direct the solicitor to pay the costs payable by his client to other parties; or
(c) direct the solicitor to indemnify such other parties against costs payable by them.

(2) The solicitor must be given a reasonable opportunity to appear before the court and show
cause why such order should not be made: 0.59 r.6(2).

(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.

(4) Examples where solicitors were personally liable for costs:

Where an action is unmaintainable  Karpal singh v Atip bin Ali

P sued D(Karpal) alleging D had defamed
UMNO Branch in Malacca.
H : P’s solicitors had to pay costs personally
as P has no cause of action

Conduct of litigation without due propriety  Ochard v South Eastern Electricity

Commencing a suit for plaintiff who is
bankrupt
Continuing with the action knowing that the
party is a bankrupt
Board
 Mohd Yusof bin Awang & Anor v
Malayan Banking Bhd & Anor
P’s solicitor acted for P who was a bankrupt
 Amos William Dawe v D & C(Ltd)
Bank
 No authority to act
Failure to attend court for hearing
Failure of solicitor to file defence in time
 Taxation of costs:
Costs may be dealt with at any stage of the proceedings or after the end of the proceedings:.
0.59 r.7. The party receiving costs is entitled only to his “taxed costs” which is determined in
a separate court proceedings.
 Basis of assesment
EMI Records v Wallace [1982] – Sir Robert Megarry VC laid down 5 main bases of taxation
to be considered:
(a) Party and party basis: 0.59 r.16(2)
(b) Common fund basis:
(c) Solicitor and own client basis: r.17
(d) Trustee basis: r.18(1)
(e) Indemnity basis.
 Syawal Enterprise Sdn Bhd & Anor v
Dayadiri Sdn Bhd Yonge v Toyabe
 Simmons v Liberal Opinion Ltd
 Brown v Holloway Bros(London)
Ltd.
 MJH Sdn Bhd v Jurong Granite
Industries
Costs payable by the losing party to the
winning party.
Costs payable by the losing party to the
winning party and to the solicitor of the
losing party.
Costs payable by the client to his own
solicitor for all contentious work apart from
legal aid cases. If the client loses the case,
he also has to pay party and party costs.
Costs are to be paid out of a fund, or the
person to whom the costs are to be paid was
a party to the proceedings in the capacity of
trustee or personal representative.
Court has the power to order costs to be
paid on an indemnity basis where all costs
incurred will be allowed except those
unreasonably incurred or are of
unreasonable amount.
Macmillan Inc v Bishogate Investent [19993]-
guidelies for an award of indemnity costs:
‘the power to order taxation on an indemnity
basis is not confined to cases which have been
brought with an ulterior motive or for an
improper purpose. Litigants who conduct their
cases in bad faith, or as a personal vendetta ,
or in an improper or oppressive manner, or
who cause costs to be incurred irrationally out
of all proportion as to what is at stake, may
also expect to be ordered costs on an indemnity
basis.’
 **In applying these exceptions, the receiving party will be given the benefit of the doubt.
(1) F117A

 Costs involving several parties:

(1) General principles:
(a) The general rule is that costs will follow the event i.e. the loser pays the winner.
(b) However, where P sues several Ds (A, B, C) and C wins, P has to pay C’s costs but
this may be unfair:
i. to P if P cannot recover from A & B; or
ii. to A & B if P is unreasonable in including C as a co-D and A & B have to
incur additional costs to pay C.
iii. Courts have used the following 2 orders where several parties are involved:

Bullock Order Sanderson Order

1) This is usually the 1st order which is used in
normal circumstances.
2) This order originated in the case of Bullock
v London General Omnibus [1970] 1 KB
264. P sued D1 and D2
3) The court found that only D1 was liable and
ordered costs in the following terms:
(a) Judgement for P against D1 with costs;
(b) P’s claim against D2 is dismissed with
costs i.e. P must pay D2’s costs.
(c) D1 must pay P’s costs which also
includes costs paid by P to D2.
4) The criteria for a Bullock Order are:
(a) It must be reasonable for P to sue D1
and D2, e.g. when D1 and D2 blame
each other; or
(b) D1 has made a payment into court or a
guarantee.
5) A Bullock Order was made in the case of
 Federal Flour Millls Ltd v “Ta Tung”
Owners & Ors
 Takong Tabari v Government of
Sarawak
1) Usually, this is the 2nd order made.
2) This order originated in the case of
Sanderson v Blyth Theatre
(a) Judgement for P against D with costs;
(b) P’s claim against co-D dismissed with
costs; and
(c) D to pay costs of co-D directly.
3) The criteria for a Sanderson Order are:
(a) It must be reasonable for P to sue both
D1 and D2;
(b) If D2 is successful, P’s claim against
D2 is dismissed with costs;
(c) Normally, P pays D2’s costs. But if
there are circumstances where P cannot
pay (e.g. P is insolvent or has no
money), then the court may order the
losing D1 to pay D2’s costs directly.
(d) The reason is that D1 did not admit
liability and caused P to include D2.
Hence D1 should pay D2’s costs.

 Costs of interlocutory proceedings:

 (1) The court may deal with the costs of the interlocutory proceedings such as costs of
making amendments, summary judgements, setting aside judgements/orders,etc.

1. Reserved costs Made where the court has deferred its decision
with respect to costs of the interlocutory
proceedings until the outcome of the trial.
2. Costs in the cause, P’s costs in the cause, 1. Costs in the cause:
P’s costs in any event, P’s costs, D’s costs The costs of those interlocutory proceedings
in the cause, D’s costs in any event, D’s will be awarded according to the final award
costs: of the costs of the action.
If P wins and gets an order for his costs, he
gets those interlocutory costs as part of his
costs of the action against the defendant.
2. P’s (or D’s) costs in the cause:
This order means that if P(or D) wins the
main action, he gets the costs of the
interlocutory proceedings but if he loses, he
does not have to pay D’s (or P’s) costs.
3. P’s (or D’s) costs in any event:
This means that P (or D) is entitled to the
costs in the interlocutory proceedings
whether he wins or loses the main action.
4. P’s (or D’s) costs:
This means that P (or D) is immediately
entitled to the costs of the interlocutory
proceedings without waiting for a decision.
3. Costs thrown away (a) Where applications are made by D to set
aside judgements in default of appearance
or defence:
i. If the judgement is regular, D has to pay.
ii. If the judgement is irregular, D can apply
to set aside the judgement as of right and P
has to pay.
(b) Where there has been unnecessary
adjournments; or where leave is given to
make amendments.
4. Costs of the day This order is usually made on the hearing day
where costs are awarded against a party who
makes a successful application for the
postponement of a hearing.
 Getting-up fee
A solicitor is entitled for a getting-up fee for work to be done relating to matters as given in O
59 r16:

(a) _______________________________________________________________________

(b) ________________________________________________________________________

(c)_______________________________________________________________________

(d) ________________________________________________________________________

(e) ________________________________________________________________________

(f) ________________________________________________________________________

(g) ________________________________________________________________________

(1) The true test to apply is not as to whether an issue has proceeded to trial but whether or
not an advocate and solicitor has acted reasonably and properly in getting up his client’s
case in readiness for trial. If he has done so, he is entitled to a getting –up fee regardless
of whether the case has actually proceeded to trial or not:
 Re Kana Moona Syed Abu Bakar, dec’d

(2) A getting-up fee may be allowed for work undertaken which is necessary and proper even
though the case has not been set down for trial and may include getting-up work
undertaken before the issue of the writ.
 Chop Yoon Kee Hong v Motor Union Insurance Co Ltd [1932] MLJ 67
(3) Guidelines for the exercise of the discretion:
 United Malayan Banking Corp Bhd v Indah Sejati Sdn Bhd 2 Mallal’s Digest

(4) Cases:
 Bar Council v Datuk V Kanagalingam [Gooi Hock Seng v Chuah Guat Khim,
Pemegang harta pesaka bagi estet Chuah Teow Hock , Simati
 Chan Kok Choon JP v MBF Finance