OFFERS TO SETTLE AND COSTS
In the recent decision of Goh Kok Liang v GYP Properties Ltd and another [2020] SGHC 53 (“GKL v GYP”), the Singapore High Court made several important observations regarding Offers to Settle under O 22A of the Rules of Court (the “ROC”) and the issue of costs in a case where an Offer to Settle is made.
Background. In gist, GYP Properties Ltd (“GYP”) and Leisure Empire Pte Ltd (“LE”) formed a joint venture company, Singapore River Explorer Pte Ltd (“SRE”), which obtained a licence from the Urban Redevelopment Authority to operate river taxis along the Singapore River (the “Service Agreement”). LE was solely owned by the plaintiff Goh, and he became a director of SRE (GKL v GYP at [4] – [5]).
On 15 June 2015, SRE terminated the Service Agreement due to alleged breaches of the Service Agreement by LE, Goh and/or LE’s agents. On 11 December 2017, the two defendants GYP and SRE commenced proceedings in Court against Goh and LE for allegedly having breached the Service Agreement, the Joint Venture Agreement between GYP and LE, and Goh’s duties as a director of SRE (“the previous proceedings”): (GKL v GYP at [6] – [7]).
On 30 May 2018, Goh made an Offer to Settle to GYP and SRE. The two defendants served an Acceptance of the Offer to Settle on 4 March 2019 which omitted one of the terms of the Offer to Settle. Goh purported to withdraw the Offer to Settle on 5 March 2019 at 1.20pm, and the defendants served a second Acceptance at 4.20pm the same day (GKL v GYP at [9]).
The Declarations sought in GKL v GYP. In GKL v GYP, Goh sought declarations that:
(a) he was entitled to pursue a claim for costs (and interest thereon) in respect of the previous proceedings against the defendants;
(b) The defendants were to pay Goh’s costs in respect of the previous proceedings on an indemnity basis, with such costs to be taxed; and
(c) The defendants were to pay interest on such costs (GKL v GYP at [11]).
Was the Offer to Settle validly withdrawn? The court emphasised the requirement in O 22A, r 3(2) ROC that the offering party must give the other party at least one day’s prior notice of the offering party’s intention to withdraw the offer to settle.
As Goh did not comply with this requirement, the Offer to Settle was not validly withdrawn, and second Acceptance was valid: (GKL v GYP at [10]).
What of the first acceptance? In general, in contract law, for a binding contract between two parties to be formed, one party’s acceptance of an offer made by the other party is to be made on exactly the same terms as the offer itself.
Goh argued that the defendants’ acceptance of his Offer to Settle on 4 March 2019 was not valid because the acceptance had not included one of the terms of his Offer to Settle: (GKL v GYP at [9]).
While this did not matter in GKL v GYP since the defendants validly accepted the Offer to Settle the next day, if the defendants did not make the second attempt to accept the Offer to Settle, the court would have to decide if the defendants had validly accept the Offer to Settle.
Settlement of Costs? Having established that there was a Settlement Agreement between the parties, the court then ruled on whether the Settlement Agreement dealt with the issue of costs.
Goh argued that the Settlement Agreement did not deal with the issue of costs, and that he was entitled to claim for his costs in the previous proceedings (GKL v GYP at [14]). On the other hand, the defendants argued that the Settlement Agreement was a full and final settlement of all claims in the previous proceedings, including costs (GKL v GYP at [13]).
The court found that the Settlement Agreement dealt with the issue of costs, with the effect that Goh could not pursue a claim for costs. This was for two reasons.
Firstly, having examined the wording of Goh’s Offer to Settle, the court found that the phrase “offers to settle this proceeding on the following terms in full and final settlement of all claims” (emphasis added) meant that there was to be no more litigation with regard to the previous proceedings between the parties, including litigation on costs (GKL v GYP at [16]).
Secondly, Goh chose to “settle this proceeding” in Form 33, which is the form for making an Offer to Settle as stipulated in O 22A, r 1 ROC. Thus, the court found that he had meant to settle the whole of the previous proceedings, including the issue of costs (GKL v GYP at [17]).
What if the Offer did not deal with costs? Since the court had found that Goh’s Offer to Settle dealt with the issue of costs, it was not necessary for the court to go on to discuss the issue of how much in costs the defendants were to pay Goh, if any.
However, the court made several observations at [22] about how costs in Offers to Settle are dealt with under O 22A, r 9. In particular:
- Where an Offer to Settle made by one party is not accepted by the other party, either O 22A, r. 9(1) or r. 9(3) will apply (depending on whether it was made by the plaintiff or the defendant respectively);
- Where one party makes an Offer to Settle which does not provide for costs and this Offer to Settle is accepted by the other party, O 22A, r 9(2) will apply;
- In both cases listed above, the court has the overriding discretion under O 22A, r 9(5) to make orders regarding costs; and
- Where an Offer to Settle made by one party settles costs and has been accepted by the other party, O 22A, r 9(5) ROC does not apply.
Need to admit liability? Another issue that cropped up was that the defendants argued that an Offer to Settle cannot be made without an admission of liability pursuant to Colliers International (Singapore) Pte Ltd v Senkee Logistics Pte Ltd [2007] 2 SLR(R) 230 at [119], where the High Court had stated that:
“The defendant’s offer to settle quite simply did not comply with O 22A. An offer to settle cannot be qualified as a non-admission of liability nor can it be an ex gratia offer. It has to be made to settle the proceedings in a suit or a claim or counterclaim as the case may be. …”
The High Court in GKL v GKY held that an offer to settle under O 22A ROC does not have to include an admission of liability; allowing an offer to settle to be made without an admission of liability would not contradict the purpose of O 22A ROC and in fact “could be conducive to speedy out-of-court settlements” (GKL v GYP at [26]).
Significance. Litigants wishing to settle their disputes would do well to pay heed to the issues raised in GKLY v GYP. Apart from deciding the settlement amount, a litigant considering making an Offer to Settle may wish to consider other terms to be included, such as the issue of costs and admission of liability; litigants would also do well to pay careful attention to the various “formal” requirements such as timing of withdrawing an offer, etc.
Tags: Civil Procedure; Offers to Settle; Costs; O 22A Rules of Court; Failure to mention costs in offer to settle
This publication is not intended to be, nor should it be taken as, legal advice; it is not a substitute for specific legal advice for specific circumstances. You should not take, nor refrain from taking, actions based on this publication. Chancery Law Corporation is not responsible for, and does not accept any responsibility for, any loss or damage that may arise from any reliance based on this publication.