(2025) CLU 1 - No right to be heard if costs remain unpaid

Singapore Law Watch

14-05-2025

(2025) CLU 1 - No right to be heard if costs remain unpaid
Article Date:
Synopsis: The latest January issue of the Civil Litigation Update (CLU) discusses the court's discretion under RoC 2021 to stay or dismiss proceedings when a party has not complied with his obligation to pay costs arising from a previous proceeding.
A Introduction
B Position prior to RoC 2021
C Position under RoC 2021
D Principles governing the court's discretion under O 21 r 2(6) of RoC 2021
A Introduction
1 Should a party in litigation who has not complied with his obligation to pay costs arising from a previous proceeding (such as the hearing of an application or the trial) be entitled, despite his default, to be heard in a subsequent application or appeal? Prior to the commencement of the Rules of Court 2021 ('RoC 2021'), there were cases in which parties continued to engage in litigation (such as subsequent applications or appeals) despite not having paid the costs ordered in the previous proceedings. As will be shown, the court now has an express power under the RoC 2021 to stay or dismiss an application, action or appeal (or make another order) if costs are not paid within a specified period.
2 The reported cases under the Rules of Court preceding the RoC 2021 and the Rules of Court (2014 Rev Ed) ('RoC 2014') are concerned with whether an appeal should be permitted to proceed despite the appellant's non-compliance with an order of costs arising from the proceedings in the lower court. There are two main opposing arguments. The first is that the appellant's right of appeal (whether automatic or pursuant to the court's permission) should not be stifled by his failure to pay costs, which is an extraneous matter that the respondent can resolve through the independent process of enforcement. The second is that if the appellant is able to pay the costs, his refusal to do so amounts to disobedience of the court order and he should not be permitted to proceed with impunity. Moreover, the appellant's conduct denies justice for respondent and compels the latter to incur expense and use the court's resources in separate proceedings. In reality, the position is not always clear-cut. A variety of circumstances may exist which would impact the discretion of the court.
B Position prior to RoC 2021
3 It was once thought that a party to litigation had an almost sacrosanct right to a hearing and that this entitlement could only be impeded by a stay in exceptional circumstances. Prior to the introduction of the RoC 2021, a court would not stay the proceedings on appeal on the basis that the appellant had not paid the costs ordered by the court below unless there were exceptional grounds. In Roberto Building Material Pte Ltd v Oversea-Chinese Banking Corp Ltd [2003] 2 SLR(R) 353 ('Roberto'), the Court of Appeal held (at [17]) that it had the inherent power to order a stay but that it 'should only be invoked in exceptional circumstances where there is a clear need for it and the justice of the case so demands. The circumstances must be special'.
4 In the view of the Court of Appeal, the appellant's liability to pay the respondent's costs below, which could be separately enforced, was extraneous to, and should not interfere with, the appeal. As the court put it (at [17]): 'a right of appeal should not be curtailed by considerations which are extraneous to the appeal. The appellate court should not be used as a means to enable the respondent to obtain payment of his taxed costs'. It added (at [19]) that 'the circumstances where such an order may be made must be rare indeed' [emphasis added] stressing that 'the twin criteria of prejudice/justice … would be decisive'.
5 Roberto was regarded by the Court of Appeal (single judge sitting) in Independent State of Papua New Guinea v PNG Sustainable Development Program Ltd [2020] 1 SLR 97 ('PNG') (at [21]) as '[t]he key authority on staying an appeal pending payment by the appellant of costs awarded to the respondent below'. In PNG, the court observed (at [37]): 'Roberto suggests that the mere fact that the appellant has the ability to pay the costs below but has not done so is not a special or exceptional reason for a stay to be granted.' Furthermore, the fact that the party entitled to costs ordered by the court below would have to commence enforcement proceedings abroad to recover them is 'unlikely to be sufficient to constitute a special or exceptional reason for a stay to be granted' (at [51]).
C Position under RoC 2021
6 The RoC 2021 introduced a specific rule to govern the court's discretion to stay any proceedings when a party has not complied with his obligation to pay costs. Order 21 r 2(6) of the RoC 2021 states:
The Court may stay or dismiss any application, action or appeal or make any other order as the Court deems fit if a party refuses or neglects to pay any costs ordered within the specified time, whether the costs were ordered in the present proceedings or in some related proceedings.
7 Order 21 r 2(6) was analysed for the first time in Huttons Asia Pte Ltd v Chen Qiming [2024] 2 SLR 401 ('Huttons'). The Appellate Division considered two cases decided by the Court of Appeal: CA/SUM 20/2024 and The Republic of India v Deutsche Telekom AG [2024] 1 SLR 56 ('The Republic of India') ('the two SICC cases') relating to O 22 r 2(2)(f) of the Singapore International Commercial Court ('SICC') Rules 2021. Order 22 r 2(2)(f), which substantially corresponds to O 21 r 2(6), confers upon the court the discretion 'to stay or dismiss any application, action or appeal or make any other order as [it] deems fit if a party refuses or neglects to pay any costs ordered within the specified time, whether the costs were ordered in the present proceedings or in some related proceedings'. In CA/SUM 20/2024, the Court of Appeal ordered the appellant to make full payment of the outstanding costs for related proceedings before the appeal could be heard, but no reasons were given for this decision. In The Republic of India at [37], the court ordered that costs and disbursements awarded in respect of preceding matters be paid by the appellant to the respondent by a stipulated deadline (See Huttons at [26]).
8 In Huttons, the Appellate Division interpreted the two SICC cases as evincing 'the court's more robust approach that now prevails in response to an appellant's non-payment of the costs [in the court] below' (at [27]). This, as the court observed, is consistent with the Ideals in O 3 r 1(2) of the RoC 2021, which includes the goal of achieving 'fair and practical results suited to the needs of the parties'. As the court put it: 'an appellant's failure to pay the costs of proceedings at first instance, whilst continuing to pursue appellate proceedings, may be regarded as unfair to its counterparty, who is forced to be out of pocket in defending the appeal despite not having been paid costs for proceedings it was successful in' (at [27]).
9 Significantly, the Appellate Division in Huttons observed that the approach under O 21 r 2(6) had to be more amenable to the unpaid party than the principles governing the court's inherent power pursuant to O 92 r 4 of the RoC 2014. It determined that the court's express power to stay an appeal pending payment of the costs below (pursuant to O 21 r 2(6)) made it unnecessary to rely on the court's inherent powers (at [28]). It considered that '… less weight should be placed on the pre-RoC 2021 cases, such as PNG and Roberto, where the threshold was pegged at 'special or exceptional circumstances' (at [29]).
10 The observations in PNG at [37] and [51] that exceptional or special circumstances are not constituted by the failure of the appellant to pay costs ordered below despite his ability to do so, and the fact that enforcement proceedings would have to be commenced overseas against a judgment debtor, would not prevent the court from staying an appeal under O 21 r 2(6) of the RoC 2021. Under this rule, the court has a broad discretion which is to be exercised in accordance with the Ideals (See Huttons at [29]). The court decided to stay the appeal pending compliance with the costs order. The primary reasons were the appellant's attempts to evade payment of costs and the real possibility that the respondent might have to enforce the costs order overseas (at [30]–[38]].
D Principles governing court's discretion under O 21 r 2(6) of RoC 2021
11 Pursuant to O 21 r 2(6), the court has a broad discretion to stay or dismiss (or make any appropriate order) in respect any application, action or appeal if costs previously ordered to be paid within a specific period were not paid in time. In determining what order to make, the court must consider the Ideals in O 3 r 1(2) of the RoC 2021. As directed by O 3 r 1(3), '[t]he Court must seek to achieve the Ideals in all its orders or directions'. For example, in the case of an application, the court might stay the proceeding or grant the party in default an extension of time to pay the costs owed to the other party coupled, if necessary, with an 'unless order' mandating dismissal of the application on further default. Order 21 r 2(6) extends beyond the current proceedings to costs ordered in 'related proceedings'. 'Related proceedings' would include previous proceedings in the same litigation or separate proceedings which are sufficiently connected to the current proceedings.
12 The point should be made that the Court of Appeal in PNG referred extensively to English case law decided under para 52.18 of the Civil Procedure Rules 1998 (SI 1998 No 3132) (UK) ('CPR'). This rule provides the appellate court with a discretion to 'impose … conditions upon which an appeal may be brought' where there is a 'compelling reason' for doing so (CPR 52.18(1)(c) read with 52.18(2)). The Court of Appeal summarised the English position as follows (at [35]):
(a) In an application by the respondent for a stay of appeal pending payment by the appellant of the judgment debt or costs below, the respondent has to show that there is a 'compelling reason' for such a stay to be granted. A compelling reason is provided if the respondent would likely face difficulties in enforcing the judgment in the event the appellant loses the appeal, and the appellant's non-payment of the judgment debt or costs is not due to financial difficulty but an illegitimate reason.
(b) If a compelling reason is provided by the respondent for the stay to be granted, the appellant will have to establish on a balance of probabilities that the stay will stifle its appeal because of its inability to make payment, in order for the stay not to be granted.
13 Although O 21 r 2(6) and the Ideals in O 3 r 1(2) of the RoC 2021 obviate the need to refer to English case law based on para 52.18 of the CPR, the above observations may be germane to how a court may exercise its discretion in the appropriate circumstances. It should also be borne in mind that s 40(1)(a) and s 58(1)(a) of the Supreme Court of Judicature Act 1969 (2020 Rev Ed) ('SCJA') respectively enable the Appellate Division and the Court of Appeal to give a direction or make an order 'incidental to the pending matter not involving the decision of the pending matter'. This could include an order made after the filing of an appeal staying the proceedings until a pre-existing liability for costs is satisfied (See Roberto at [23] and PNG at [23]; both cases referred to corresponding provisions in contemporary versions of the SCJA). The discretion would be exercised in the light of O 21 r 2(6) read with the Ideals in O 3 r 1(2) of the RoC 2021.
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