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Costs, Forthwith!

An attempt to highlight 2 practical aspects on the issue of costs in civil proceedings which I think ought to be common knowledge, but is not.


 

I do not think it far-fetched to say that the single constant in all Court orders and/or judgments are costs. Whether you win, lose or the terms of the said order/judgment are by consent, costs will have to be provided for.


Generally, the matter of costs is provided for in the various applicable Court rules and the Courts of Judicature Act 1964. The general provisions on costs, and a good starting point, is set out in Order 59 of the Rules of Court 2012 ("Order 59"). This is of course notwithstanding the fact that specific provisions on costs may also be provided for under other acts and/or rules on specific issues and/or areas of law.


Order 59 is quite extensive and provides an explanation of the various terminology on costs, how and when costs are provided and a scale of costs, amongst other things. I do not intend to write on Order 59, as better and more thorough writings can be found elsewhere.


Instead, what I would like to try to do here is to highlight 2 slightly more practical aspects on the issue of costs which I think ought to be common knowledge, but sadly is not.


When are costs payable?


I learnt this the hard way as a 1st year lawyer.


We succeeded on an interlocutory application, and happily, my client was awarded costs in the sum of RM2,000.00. The moment I was able to extract the sealed order, I served the document on my opponent, and demanded for payment. In response, he called me and said, "Dei, you don't know your law ah? You cannot ask for costs now. The suit has not been fully disposed off yet!"


My opponent is a great lawyer, much more senior than me, and we were and are still friends. And of course, he was right!


Guidance can be gleaned from the Court of Appeal case of Hai Yue Hin v Public Feedmill (M) Sdn Bhd [1997] 3 MLJ 730. I will not bore you with the facts of the case, and I reckon it suffice for me to set out the relevant passage by Shaik Daud JCA, who delivered the judgment of the Court (note that the Court was dealing with the old Rules of the High Court 1980):-


In interpreting O 59 r 4(1), the operative words must be 'may, if the court thinks fit'. If the judge finds evidence sufficient to justify an order of costs to be paid forthwith, then if he thinks it fit, he would make such an order. For instance in dismissing an application for summary judgment under O 14, if there is evidence to suggest that the plaintiff, in the opinion of the judge, knew that the defendant relied on a contention which would entitle them to unconditional leave to defend, then the judge could and should, in our opinion, order that the costs be paid forthwith. The decision in Chow Yong Hong was adopted by Mohamed Dzaiddin J (as he then was) in Ko Ko Ma Pony Horse Centre v Rasa Sayang Beach Hotels (Pg) Bhd [1990] 1 MLJ 304. In dismissing an interlocutory application by the defendant, the court ordered costs to the plaintiff without adding the word 'forthwith'. The learned judge held that where the proceedings were purely interlocutory, the general rule was that costs of the proceedings should be settled at the end of the action. The court further ordered that the costs of interlocutory proceedings should only be made payable forthwith or in any event when the party against whom the order has been made has been guilty of oppressive or unreasonable conduct, or the party has taken unnecessary or improper action.


Although the Court of Appeal in Hai Yue Hin dealt with Order 59 rule 4(1) under the old Rules of the High Court 1980 which expressly sets out a discretion on the part of the Judge to order that costs be paid forthwith, which was not adopted in the Rules of Court 2012, it is my opinion that the principles encapsulated in the excerpt above still applies.


Many lawyers today, even some rather senior ones, do not seem to appreciate this distinction. I was perhaps just lucky to have been shown the error of my ways early on.


Shortly put, unless there is an express order that it be paid forthwith, the general rule is that costs arising from an interlocutory application is only payable at the end of the action. If you think that the circumstance entitles your client for costs to be paid forthwith, remember to raise this before the Court, and ensure that it is recorded in the Court minutes and set out in the body of the order.


Allocatur Fees


As at the time of writing, when costs are provided for in favour of a party in an order or a judgment, the party filing the order or judgment in Court is required to pay what is known as an allocatur fee. This is presently fixed at 4% of the costs awarded (see Order 59 rule 7(4)), and the Chief Justice of Malaysia has issued a Practice Direction No. 1 of 2018 ("2018 PD"), which supersedes and revokes Practice Direction No. 1 of 2016, setting out provisions and directions in respect of the form and manner for the filing of the Certificate of Allocatur and the payment of the allocatur fees. A copy of this practice direction can be downloaded from the Malaysian Bar website here. Do note that this only applies to the High Court, Court of Appeal and Federal Court. From my personal experience thus far, unless the subordinate Courts expressly orders it, allocatur fees are presently not required.


The draft Certificate of Allocatur (template provided as "Lampiran A" in the 2018 PD) is usually filed together with the draft order or judgment for the Court's approval. Once faired, both the Certificate and the order or judgment can be filed, but the order or judgment will only be sealed once the Allocatur Fee has been paid in full.


What I would like to highlight is found at paragraph 10 of the 2018 PD, which provides as follows:-


"Fi alokatur yang dibayar boleh dituntut daripada pihak yang diperintahkan membayar kos".


As the winning party is the one usually taking the initiative to file the order or judgment, they will therefore also be the one who will fork out payment for the allocatur fees. So, remember to demand from the losing party not only your costs, but also for the payment of the allocatur fees!


I still encounter many lawyers who are either clueless about this, or cheekily ignore my demands for payment of such fees to my winning client(s).


Anyway, the above were just some practical aspects in relation to the issue of costs which I wished somebody was readily on hand to teach me.

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