1. This appeal raises a point of principle on which it is necessary for this
to give guidance to the legal profession and intending litigants.
2. This appeal is brought by the Appellant, GCC International ("GCC"), against the order of the Judicial Officer made on 27 February 2012 described in paragraph 6 below.
3. The background to this Order is as follows.
4. On 11 May 2011, Aida Dagher filed a claim in the Court of First Instance (CFI 13/2011) claiming arrears of salary for March and April 2011 against the Respondent, Capital Investment International ("CII").
5. Subsequently, CII terminated Ms Dagher's employment. She then amended her claim to include arrears of salary for part of May 2011, accrued holiday pay and unpaid expenses as well as various other end of service benefits and damages for loss of reputation due to her employment having been publicly terminated, and her consequent inability to find a job, her claim for damages being quantified at six months' salary payments.
6. In its defence in CFI 13/2011, CII intended to prove that Aida Dagher was working for or with GCC, which was not a party to these proceedings. If this could be proved, her termination of employment by GCC could have been justified.
7. On 18 October 2011, CII filed Application No. 50/2011 under RDC30.3
, seeking a Disclosure Order requiring GCC to produce three classes of documents in relation to the employment of Aida Dagher with GCC which were to be used and presented in the main proceedings between Aida Dagher and CII. CII also required GCC to produce the documents requested "in an under oath testimony."
8. On 27 February 2012 the learned Judicial Officer made an order in the following terms:
's Application Notice No. 50/2011 received on 18 October 2011 seeking a Court Order to require GCC International to produce documents related to the Claimant;
AND UPONhearing all parties on 12 February 2012;
AND PURSUANTto Articles28.32-28.35of the Rules of the
IT IS ORDERED THAT:
1. The Respondent shall produce to the Applicant within 7 days of the date of this Order the following documents.
a. Incorporation License of GCC International Media City - Dubai
b. Articles of Association of GCC International Media City - Dubai
2. The Respondent, on producing the documents referred to in paragraph 1 above, shall specify which of those documents that the Court has ordered to be produced:
a. are no longer in its control; or
b. in respect of which it claims a right or duty to withhold production.
3. The documents produced under paragraph 1 above shall not be disclosed beyond the Court and the parties to these proceedings, and must not be used by the Applicant for any purpose other than these proceedings.
4. Each party to this application to pay their own costs.
5. Any other cost (if any) will be costs in the case."
9. On 29 March 2012 the learned Judicial Officer gave his reasons for his Disclosure Order,
"1. On 27 February 2012, I issued a Disclosure Order "the Order" on Application no. 05/2011 against the Respondent subsequent to hearing both parties on 12 February 2012.
2. The Respondent requested the Reasons for the Order in order to file an application for Permission to Appeal.
3. I ordered at paragraph 3 of the Order:
Each party to this application to pay their own Cost
4. I was relying onPart 38of the Rules of the
Courts and, in particular,Rule 38.7
(1) which says:
The general rule is that the unsuccessful party will be ordered to pay the cost of the successful party
However, the winning party in this Application is not legally represented and I directed that each party should bear their own costs.
5. The unsuccessful party in this Application was the Respondent, GCC International, who was ordered at paragraph 1 of the Order:
The Respondent shall produce to the Applicant within seven days of the date of this Order the following documents:
a. Incorporation License of GCC International Media City — Dubai
b. Articles of Association of GCC International Media City — Dubai
6. These were the reasons for paragraph 3 of the Order."
10. However, because the winning party in this Application (who, in the Judicial Officer's view, was CII) was not legally represented, he directed that each party should bear its own costs. He considered GCC to be the unsuccessful party since he had ordered GCC to produce two of the documents requested by CII.
11. GCC applied for leave to appeal against this Order, and the DIFC Courts of Appeal granted leave on 21 March 2012.
GCC's Skeleton Argument
12. In its Skeleton for this Appeal GCC argued as follows.
13. It insisted that it had co-operated with the Court when invited to do so prior to the filing of Application No 50/2011. GCC wrote to the Court (with a copy to CII) regarding its relationship with Aida Dagher on 4 October 2011,
14. GCC was not aware of the Application for production of documents until some 14 weeks after this Application had been filed. It wrote back to CII, in a letter dated 24 January 2012, to indicate its willingness to produce the requested documents if its costs were covered and the requirements of confidentiality were met.
"We are instructed that, although our client does not understand the basis upon which the documents have been requested in your client's application, this matter could have been resolvedwithout incurring the costsof issuing an application. Our client does not, in principle, object to voluntarily providing copies of the requested documents set out in the application notice subject to:
a. your client's confirmation that it will pay all of our reasonable legal and administrative costs incurred in doing so; and
b. Confirmation that the documents will be kept confidential and used for no other purpose than the DIFC Courts proceedings No.: CFI 013/2011."
15. GCC did not receive a reply to the above mentioned letter, and the Application hearing therefore moved forward. This hearing could have been avoided if CII had replied to the letter above or the second one sent by GCC on 9 February 2012.
"It is unfortunate that your client has opted to ignore our letter, and has thereby forced our client to incur significant additional legal costs of preparing for and attending at the hearing. We thereby put you on notice of our client's intention to seek its costs of and incidental to this Application."
16. GCC's lawyer attended the hearing and argued the application orally; later, when requested by the Court, GCC delivered a written submission on 13 February 2012.
17. Following this, the Judicial Officer issued an order on 27 February 2012 directing the Appellant to produce the above mentioned documents and ordered costs by saying;
"3. Each party to this Application to pay their own costs."
18. CII had relied on Article RDC30.3
in support of its Application. The Judicial Officer found that this Article did not apply, and instead referred to RDC28.32
, and ordered two classes of documents to be produced instead of the four requested by CII.
19. In his reasons for ordering costs, the Judicial Officer incorrectly relied on the general rule of costs requiring that the unsuccessful party pay the costs by applying RDC38.7
(1) instead of RDC38.65
(2)(b), which is the correct rule in dealing with costs regarding Disclosure Orders against third parties.
20. GCC supported its allegation with the precedents ofMeakin v British Broadcasting Corporation & Ors EWHC 2065 (Ch)
(27 July 2010) andBermuda International Securities Ltd v KPMG CP REP 73
, CA (E.) [32/44] which addressed the issue of
48.1, this rule being equivalent to RDC38.65
(2)(b). In the latter case it was said at [32/44, Para 32]:
"In my view it is important that it is recognized that in relation to pre-action disclosure, the cost of the actual exercise will be paid by the applicant for that disclosure. But so far as the application is concerned if it has been unreasonably resisted, those are the very circumstances contemplated where the order for costs may be different."
CII'S Skeleton Argument
21. In its Skeleton for this Appeal, CII argued as follows.
22. CII contends that GCC's conduct of not putting its correct address in its website and letterheads was the reason for CII's Application for the production of documents. CII was referring to the Media City address advertised in the website although GCC was actually incorporated in Ras Al Khaimah Free Zone. GCC ignored all calls and emails sent by CII, which meant that it chose to ignore and avoid all communications to itself.
23. CII alleged that it did not receive any responses from GCC until Thursday 9 February 2012 at 8:30pm, while the hearing was fixed for the next morning. So it was not aware that GCC was willing to produce any documents.
24. The concept of winner and loser is the correct rule to be applied for the application, since GCC had attended the hearing and argued the application orally, as well as by a written submission which included a challenge to the Judicial Officer's order.
25. It was argued by CII that GCC never had the true intention to give voluntary production of documents or to pay GCC's production costs.
26. CII had filed its application seeking a witness summons pursuant to RDC30.3
. This was clearly the wrong Rule for what CII was seeking, which was disclosure of documents before the trial, and the learned Judicial Officer made his Disclosure Order under RDC28
, which was the appropriate Rule for early document disclosure.
27. In such cases, disclosure proceeds according to the procedure set out in RDC28.32
. In the case of disclosure required of a non-party, it is in accordance with the Overriding Objective (as well as consonant with common sense) that the requesting party should first write to the party from whom document production is sought to ask for disclosure on voluntary basis. If the requested party agrees, then the cost of legal proceedings can be avoided,(Meakin v BBC)
. If the requested party declines, and the requesting party then seeks a court order to compel production, the Court will have to consider the justification for compelling disclosure from a non- party.
28. In the present case, CII did not write to GCC to seek voluntary disclosure of the documents it required from GCC. Ms. Saheb, CII's Company Secretary appearing on behalf of CII at the hearing, explained that CII had encountered great difficulties in making contact with the officers of GCC by physical visits and phone calls to GCC's numbers listed on its website; hence it decided to proceed with its application to Court instead of writing to GCC's Media City address as indicated on its website. It is unnecessary to decide whether CII acted reasonably in this regard insofar as the subsequent order for costs was concerned because, when GCC instructed KBH Kaanuun to write to CII on its behalf to offer production of the documents requested (albeit on certain terms), Ms. Saheb explained that she found KBH's letter unacceptable, and hence decided to proceed with arguing CIIs application on 12 February 2012. Ms. Saheb stated to the Court that she found the conditions imposed by KBH on behalf of GCC for the production of the documents requested in its application to Court (which omitted the alleged contract of employment between Aida Dagher) unacceptable insofar as (a) GCC refused to verify the documents produced on oath; and (b) GCC wanted CII to pay for its legal costs of production and of the application.
29. CII's position at the hearing on 12 February was therefore that:
(a) it wanted the three classes of documents listed in its Application pursuant to RDC30.3
(b) it wanted GCC to verify on oath the documents produced ; and
(c) it did not want to pay GCC's costs of production or its legal costs for the application
30. Accordingly, regardless of whether CII had previously written to GCC before filing the Application and, regardless of GCC's offer made through KBH to provide the documents requested, CII would, in any event, have contested the application so as to obtain an order for document production on its own terms.
31. In the result, the learned Judicial Officer only granted an order for production of two of the documents requested:
(a) GCC's Certificate of Incorporation
(b) GCC's Articles of Association
32. He also ordered CII to limit its use of those documents for purposes of the litigation only, and prohibited its use for any other purpose. He denied the request for disclosure of the agreement between GCC and Aida Dagher as well as other business agreements between GCC and Aida Dagher, and also the request that GCC verify on oath the documents produced.
33. In the circumstances, it is arguable that CII was not the successful party in this Application so as to make RDC38.7
(1) applicable, since only half of the documents requested had been ordered to be produced.
34. However, the real difficulty with the order made by the learned Judicial Officer is that RDC38.7
(1) was not intended for applications against non-parties to the principal action, and are governed by RDC (28.32
). In any event, RDC38.7
(2) empowers the Court to make a different order.
35. The correct rule to apply where there is an application against a non-party for document production is RDC38.65
(2)(b), which provides:
"Rule 38.66 applies where a person applies:
(1) for an order under:
(a) Rule 25.1(9); or
(b) Rules 28.28 to 28.31;
which give the Court powers exercisable before commencement of proceedings; or
(2) for an order under;
(a) Rule 25.1(10); or
(b) Rules 28.32 to 28.35;
which give the Court power to make an order against a non-party for disclosure of documents, inspection of property etc."
"The general rule is that the Court will award the person against whom the order is sought his costs:
(1) of the application; and
(2) of complying with any order made on the application."
37. The English Court of Appeal case ofBermuda International Securities Ltd v KPMGis clear authority that the normal rule is that a non-party who is compelled to produce documents should be awarded its costs of production as well as its reasonable costs of instructing lawyers to advise and appear on its behalf in proceedings to compel production unless the producing party resists the order for production on unreasonable grounds.
38. It is impossible to say that GCC acted unreasonably in seeking legal advice as to whether or not to comply with CII's request, whether before or after CII's application to court, particularly as the learned Judicial Officer did not grant CII its full requests. As a non-party, GCC clearly was entitled to seek legal advice before deciding on its position, which ultimately proved to be reasonable, and was accepted as such by the learned Judicial Officer.
39. In the circumstances, the Court agrees with GCC that the decision made by the learned Judicial Officer as to costs was wrong in principle, and should be replaced by an Order that:
(a) the reasonable legal costs of GCC in briefing Counsel to advise and appear for it at the hearing on 12 February 2012 should be paid by CII;
(b) the costs of this appeal be awarded to GCC.
40. The Court therefore directs accordingly. The Court will not rule on the quantum of costs to be awarded to GCC, but will leave that to be assessed by the
if the parties are unable to agree on the amount of costs to be paid by CII to GCC (but the Registrar should take into account the difficulties in communication caused by GCC in regards of its confusing addresses).
41. The Court now deals with GCC's application for an order that Ms. Lina Sehab be made personally liable for the costs to be awarded against CII. As indicated at the beginning of this hearing, this Court is of the view that this application should be remitted to the Court of First Instance to be dealt with there, and the Court orders accordingly.
Date of Issue: 24 September 2012