Claim No: CA 002/2021
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
In the Name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai
IN THE COURT OF APPEAL
BEFORE CHIEF JUSTICE ZAKI AZMI, H.E JUSTICE SHAMLAN AL SAWALEHI AND JUSTICE ROBERT FRENCH
BETWEEN
(1) ASHOK KUMAR GOEL
(2) SUDHIR GOYEL
(3) MANAN GOEL
(4) PRERIT GOEL
Appellants
and
CREDIT SUISSE (SWITZERLAND) LIMITED
Respondent
JUDGMENT ON COSTS
UPONreviewing the Respondent’s Application No. CA-002-2021/4 dated 14 June 2021 for a Consolidated Costs Order (the“Application”)
AND UPONreviewing the Appellants’ evidence in answer to the Application dated 21 June 2021
AND UPONthe directions issued by the Registry on behalf of the Court of Appeal, sent by email on 18 February 2021, that “all orders regarding costs and payments into Court have been stayed”
AND UPONreading the submissions for the Respondent and the Appellants filed and recorded on the Court file
IT IS HEREBY ORDERED THAT:
1. The Appellants are to pay the Respondent’s costs of the appeal to be assessed, if not agreed, on a standard basis.
2. The Application is dismissed.
3. Stay Orders in effect in relation to the Jurisdiction Costs Order, the Stay Costs Order and the Registrar’s Orders of 2 February 2021 be discharged.
4. Costs to be assessed under outstanding costs orders in relation to the Appellants’ Jurisdiction Application and the Appellants’ Stay Application should, so far as practical, be assessed concurrently by the Registrar with the costs of this appeal and on a standard basis.
5. Each party is to bear its own costs of the Application of 14 June 2021.
Issued by:
Nour Hineidi
Registrar
Date of issue: 21 September 2021
At: 9am
JUDGMENT ON COSTS
Introduction
1. On 26 April 2021, in CA-002-2021, the Court dismissed an appeal against a decision of Justice Wayne Martin made on 1 October 2020 in CFI-066-2020. In that decision Justice Martin dismissed the Appellants’ application for a declaration that the Dubai International Financial Centre Courts (“DIFCC”) do not have jurisdiction in proceedings brought against them by the Respondent Bank. On 13 January 2021, Justice Martin granted the Appellants permission to appeal against his decision on their application in relation to jurisdiction.
2. On dismissing the appeal, this Court indicated that it would deliver a separate ruling on the question of the costs. Subsequent communications to the Court on the costs issue have been rather complex. They culminated in an application by the Respondent for a consolidated order for costs on this appeal and in relation to applications in the Court of First Instance (“CFI”), which have already been made the subject of orders for costs at first instance.
Rules of Court Relating to Costs
3. Part 44 of the Rules of the DIFC Courts 2014 (“RDC”) deals with appeals and applies to judgments and orders issued on or after 25 May 2017.
4. Rule 44.108 sets out the orders which the Court of Appeal may make on hearing an appeal from a decision of the CFI. It can, inter alia:
“(1) make or give any order that could have been made or given by the Court of First Instance;
…
(6) make any other order that the Court of Appeal considers appropriate or just.”
5. Rule 44.140 provides that costs are likely to be assessed by way of immediate assessment in various categories of hearing including:
“(5) appeals listed for one day or less.”
6. General rules about costs are found in Part 38 of the RDC. While the Court has a discretion in relation to the award of costs, the general rule, under Rule 38.7(1) is that “…the unsuccessful party will be ordered to pay the costs of the successful party”. However, the Court does have power to make a different order.[1]In deciding what order, if any, to make about costs the Court must have regard to all the circumstances, including the conduct of the parties and whether a party has succeeded on part of a case, even if not wholly successful.[2]Costs may be assessed on a standard or indemnity basis under Rules 38.17 and 38.20. Rules 38.21 to 38.26 provide for the factors to be taken into account in deciding the amount of costs to be awarded. And under Rule 38.27 a party may recover the fixed costs specified in Part 39 in accordance with that Part.
7. There is provision under Rule 38.34 for each party intending to claim costs to prepare a written statement of the costs showing separately, in the form of a schedule, hours claimed, the hourly rate, the qualifications and seniority of the fee earner, the amount and nature of any disbursement and the amount of the legal representative’s costs to be claimed for attending or appearing at the hearing. Any tax to be claimed on those amounts should also be set out.
8. Part 39 provides for fixed costs and sets out the amounts which, unless the Court orders otherwise, are to be allowed in respect of legal representatives’ charges in the cases to which that Part applies.
9. It does not, however, appear that any of the circumstances relevant to Part 39 apply in the present case.
The Freezing Order Proceedings and the First Appeal — CFI-0066-2020 and CA-008-2020
10. On 27 August 2020, the Respondent Bank applied ex parte to the CFI for a World-Wide Freezing Order (“WWFO”) against each of the Appellants. The primary judge dismissed the application but gave permission to appeal his decision. The application for the WWFO was in CFI-066-2020.
11. The matter was appealed to this Court in Appeal No CA-008-2020. This Court then made the following orders:
“1. The appeal is allowed.
2. The decision of the Court of First Instance dismissing the Appellant’s application for a Worldwide Freezing Order is set aside.
3. The matter is remitted to the Court of First Instance to issue the Worldwide Freezing Order for a limited period to allow the Respondents to be heard against its renewal and on the question of jurisdiction.
4. Costs are in the cause.”
The last-mentioned order left the costs of the appeal in CA-008-2020 to be determined according to the final outcome of the proceedings in CFI-066-2020. It did not leave them to be determined according to the final outcome of the challenge to jurisdiction, which was the subject of CA-002-2021.
12. A Worldwide Freezing and Provision of Information Order was issued against the Appellants in CFI-066-2020 on 13 September 2020 by H.E Justice Ali Al Madhani.
13. On 17 September 2020, a hearing with respect to the continuation of the WWFO was adjourned by order of Justice Wayne Martin to 28 September 2020. The costs of the application of the adjournment and costs thrown away by reason of the adjournment were reserved. Justice Martin made a further order on 23 September 2020 in CFI 066-2020 amending the WWFO and reserving the costs of the application for amendment. He made a further order on the same day directing the service of Skeleton Arguments relating to the jurisdiction of the Court.
14. On 1 October 2020, Justice Martin dismissed the Appellants’ application for a declaration that the DIFC Courts did not have jurisdiction to entertain the Respondent Bank’s action. He ordered that:
“4. The [Respondents] shall pay the Claimant’s costs of this Application, within 14 days from the date of this Order, to be assessed by a Registrar on the standard basis if not agreed.”
(the“Jurisdiction Costs Order”)
The Respondents there referred to were the Respondents in CFI-066-2020 who were the Appellants in CA-002-2021. The reasons for that Order were published on 4 October 2020.
15. The Court of Appeal published written reasons in CA-008-2020 on 4 October 2020.
16. Substantive proceedings by the Respondent against the Appellants were commenced in the DIFC CFI on 6 October 2020 in action number CFI-083-2020. The claim was for USD91.332,076.19. The brief details of the claim were that:
“The Defendants are in breach of Personal Guarantee Agreements due to reason of non-payment of sums due to the Claimant thereunder.”
Service of the application was acknowledged on 5 November 2020 with a statement by the Appellants that they would challenge the jurisdiction of the CFI.
17. On 7 October 2020, the Appellants applied to the CFI in CFI-066-2020, seeking a stay of the timelines set out in Justice Martin’s Order of 1 October 2020. Justice Martin dismissed that application but extended the time for compliance with the order relating to the provision of information with respect to assets until 21 October 2020. He also ordered that:
“The Defendants shall pay the Claimant’s costs associated with this Application, to be assessed by the Registrar if not agreed by the parties, within 14 days of assessment or agreement.”
(the“Stay Costs Order”)
18. On 3 November 2020, the Respondent Bank sought its costs on account in relation to the jurisdiction application pursuant to Practice Direction No 5 of 2014.
19. On 13 December 2020, the Appellants filed an application for a declaration that the DIFC Courts do not have jurisdiction to entertain the Respondent’s claim in CFI-083-2020. For completeness it should be noted that the Appellants also filed an application on 13 June 2021, pursuant to RDC 4.16, seeking to strike out the Respondent’s particulars of its claim for non-compliance with RDC 17.43 and for dismissal of the claim. Neither of these applications has been determined at the present time.
20. On 13 January 2021, an order was made by Justice Martin granted the Appellants’ application filed on 6 October 2020 seeking permission to appeal against his Order of 1 October 2020. He made no order as to costs in relation to that application.
21. On 2 February 2021, Registrar Hineidi made an order granting the Bank’s request of 3 November 2020 and ordering that the Appellants pay a total of USD48,669.48 into Court by 15 February 2021. That amount represented 50% of the total amount claimed by the Respondent Bank in the Bill of Costs.
22. As noted above this Court in CA-002-2021 dismissed an appeal from Justice Martin’s decision on 26 April 2021 and indicated it would issue a separate ruling as to costs.
Communications from the Parties
23. Since the decision of this Court in CA-002-2021 there has been a lengthy history of communication from the parties on the question of costs, some of which appear to relate to costs orders in the CFI proceedings and some in the Court of Appeal proceedings.
24. On 27 April 2021, the solicitors for the Respondent Bank in CA-002-2021, sent an email to the Registrar in which the following points were made:
1. The proceedings in the Court of First Instance which underlay the jurisdictional challenge are CFI-066-2020. In those proceedings the Respondent Bank obtained a WWFO which was issued by Justice Al Madhani on 13 September 2020. That followed the directions of the Court of Appeal in an earlier appeal CA-008-2020. The continuation of the WWFO was ordered but on the basis that it was open to the Appellants to challenge jurisdiction in the Court of Final Appeal. Justice Martin, sitting as the Court of First Instance, determined that the Court had jurisdiction and, as noted above, his order issued on 1 October 2020 with reasons shortly thereafter. Justice Martin also made two costs orders. One of those, on 1 October 2020, was the Jurisdiction Costs Order. The other, dated 14 October 2020, was the Stay Costs Order. Those orders were stayed further to the directions of the Court of Appeal dated 18 February 2021 and were the subject of detailed costs assessment proceedings which have also necessarily been stayed by implication. Pursuant to the commencement of detailed costs assessment proceedings, the Registrar issued two orders for payment of 50% of each of Justice Martin’s costs orders pursuant to Practice Direction No 5 of 2014 (the “50% Costs Orders”). The scope of the Jurisdiction Costs Order was interpreted differently by the parties.
2. The Respondent Bank submitted that in the circumstances where the Court of Appeal had determined the issue of jurisdiction once and for all in favour of its client, its client requested that without prejudice to the status of the 50% Costs Orders:
(a) The Jurisdiction Costs Order and the Stay Costs Order be supplemented by an order of the Court of Appeal, in order that, between the Jurisdiction Costs Order, the Stay Costs Order and the order of the Court of Appeal, their client would be awarded the totality of its costs in DIFC Courts Case Nos CFI-066-2020, CA-008-2020 and CA-002-2021 from 16 July 2020 until the date that judgment was issued in CA-002-2021 (26 April 2021).
(b) That the Respondent Bank be permitted to amend its Statement of Costs filed in CA-002-2021 to accord with the position as envisaged at paragraph (i) above.
(c) On receipt of the Amended Statement of Costs the Court carry out an immediate assessment of costs pursuant to RDC 38.28.
(d) In the event that the Court did not carry out an immediate assessment of costs and ordered that costs be assessed unless agreed, it order 50% of the amount claimed in the Amended Statement of Costs to be paid on account before the costs are assessed pursuant to Practice Direction No 5 of 2014.
(e) Without prejudice to the above, the Jurisdiction Costs Order, the Stay Costs Order and the 50% Costs Orders be reinstated with immediate effect.
(f) In the alternative, the Jurisdiction Costs Order be varied pursuant to RDC 36.45 so as to award the Respondent Bank the totality of its costs in the proceedings in DIFC Courts Case Nos CFI-066-2020, CA-008-2020 and CA-002-2021 from 16 July 2020 to 26 April 2021 with the Respondent Bank to be permitted to amend its Statement of Costs filed in CA-002-2021 accordingly and on receipt of the Amended Statement of Costs, the Court carry out an immediate assessment of costs pursuant to RDC 38.28.
(g) In the event that the Court does not carry out an immediate assessment of costs and orders that costs be assessed unless agreed, it order 50% of the amount claimed in the Amended Statement of Costs to be paid on account before the costs are assessed pursuant to Practice Direction No 5 of 2014.
(h) Without prejudice to the above, the Stay Costs Order and the 50% Costs Orders be reinstated with immediate effect, along with the Jurisdiction Costs Order, unless varied and immediately assessed as envisaged at paragraph (vi) above and subject to paragraph (vii).
25. The Registrar requested the Appellants to respond to the Respondent Bank’s correspondence by 2 May 2021. The Appellants supplied a response on that day. It took the form of an eight-page submission setting out a number of propositions, many of which were not relevant to the task of this Court in determining the costs of the appeal in CA-002-2021:
(a) The Application for Leave to Appeal was based on genuine grounds and was not frivolous. The issue of jurisdiction was complex.
(b) The Appellants did not expressly consent to the jurisdiction of the DIFC Courts and were within their rights to challenge the issue of jurisdiction.
(c) The Appellants are in great financial distress but are doing their best to live up to their financial obligations. The Respondent Bank should have provided an opportunity to them to do so and should not have invoked the Deed of Guarantee prematurely.
(d) The Respondent Bank is “affluent”, whereas the Appellants are individuals in no position to bear exemplary costs.
(e) The Court while applying a test of proportionality should give due regard to the overriding objective of the law which is to enable the courts to deal with cases justly.
(f) The costs claimed by the Respondent Bank are not proportionate to the financial position of the Appellants.
(g) The Respondent Bank has wrongly claimed costs from 16 July 2020 when CFI-066-2020 was filed on 27 August 2020.
(h) The Respondent Bank has not acted in good faith.
(i) The Appellants’ bank accounts have been frozen pursuant to the WWFO. There are no other sources of finance in the UAE to pay for those costs.
(j) In relation to the jurisdiction application and the order made by Justice Martin, the Appellants reverted to the Respondent Bank’s Schedule of Costs dated 8 October 2020 demanding payment of US$96,891 by 12 October 2020 latest.
(k) On 19 October 2020, the Respondent Bank’s counsel served another Schedule of Costs claiming US$97,338.95. No justification was provided for the difference.
(l) The discrepancies in the Schedule of Costs were said to make it clear that the Respondent Bank had not calculated costs in a systematic manner and had claimed exorbitant costs in its Schedule.
(m) The Jurisdiction Costs Order had directed the Appellants to pay the costs of the jurisdiction application, which was only filed on 27 September 2020. The Respondent Bank had calculated the costs from 13 September 2020, the date on which the WWFO was issued, until 19 October 2020.
(n) The Jurisdiction Costs Order made by Justice Martin only related to the application to him.
(o) The claim for jurisdiction costs until 19 October 2020 should have been calculated up to the date of that order. There was no award of future costs to the Respondent Bank.
(p) The costs claimed by the Respondent Bank in its application dated 30 December 2020 (Assessment of Costs – Jurisdiction Application) were said to be exorbitant and not proportionate. The Respondent Bank had failed to discharge its burden of proving that the costs were generally incurred in the amounts referred to in its claim. The Appellants submitted that this Court must take into account their current financial position and the steps taken by them towards restructuring their company, disclosed to this Court in earlier submissions.
(q) The Appellants further stated that they had sought the consent of the Respondent Bank to defer the provision of information under the WWFO until the determination of the appeal. The Respondent Bank refused to consent, compelling the Appellants to seek a stay of that order pending the determination of the appeal to this Court. The stay application was dismissed without reasons by an Order of 14 October 2020. The Court made the following direction in relation to the costs of the stay application:
“The Defendants [Appellants] shall pay the Claimant’s [Respondent’s] costs associated with this Application, to be assessed by the Registrar if not agreed by the parties, within 14 days of assessment or agreement.”
(r) The Respondent Bank subsequently served its Schedule of Costs on the Appellants calculated from 7 September 2020 to 19 October 2020. However, the Stay Application was only filed on 6 October 2020. The costs claimed in each of the Respondent Bank’s Schedule of Costs was USD $9,429.
(s) Following a direction from the Registry, the Respondent Bank filed its Notice of Commencement of Assessment of Bill of Costs on 27 December 2020. The Appellants complained that the Respondent Bank had changed the period for the costs calculation from 7 September 2020 – 19 October 2020 to 7 October 2020 – 19 October 2020 without any revision in the figures and items in the Bill of Costs.
(t) The Respondent Bank had failed to discharge its burden of proving that the costs were genuinely incurred in the amount referred to in its claim.
26. The Appellants in their submission of 2 May 2021 also listed what they called “Pertinent Considerations” concerning the repayment of debts by their corporate group and its restructuring with the appointment of a Chief Restructuring Officer. The Appellants contended they were acting in good faith and doing everything within their control to remedy the situation. Moreover, the Respondent Bank’s action had not affected the restructuring process.
27. The Appellants said that they are not in a position to make payments towards the Respondent Bank’s Schedule of Costs for the Assessment of Costs – Jurisdiction Application or the Assessment of Costs – Stay Application or for the appeal proceedings as their business is “in real trouble and all their assets are frozen by way of the WWFO”.
28. The most important reason for consideration by this Court is said to be that the Respondent Bank is a bank that is “affluent”, whereas the Appellants are individuals in no position to bear such high costs of the instant proceedings that the Respondent Bank is said to be improperly claiming.
29. The Appellants set out orders which they would seek:
(a) “direct the Parties to the proceedings in CFI-066-2020 and CA-002-2021 to bear their own costs;
(b) dismiss the Order of Justice Wayne Martin dated 01 October 2020 in CFI-066-2020 to the extent of costs;
(c) dismiss the [Respondent Bank’s] Application for Commencement of Bill of Costs dated 30 December 2020 for the Jurisdiction Application;
(d) dismiss the Order of Justice Wayne Martin dated 14 October 2020 in CFI-066-2020 to the extent of costs ordered;
(e) dismiss the [Respondent Bank’s] Application for Commencement of Bill of Costs dated 27 December 2020 for the Stay Application;
(f) treat this letter as an application to the Court under its extraordinary powers under the RDC; and
(g) grant such other orders/directions as this Court may deem appropriate.”
30. On 4 May 2021, the Registry sent an email to the Appellants’ solicitors saying that they could respond to the Respondent Bank’s email of 27 April 2021 by 5 May 2021 “without making any lengthy costs submissions”.
31. The Appellants’ solicitors responded on 5 May 2021 saying that they had already responded in detail by their email of 2 May 2021. However, they wanted to place on record their reply of 2 May 2021 should be considered in its entirety. The email of 5 May 2021 reiterated the propositions set out in the email of 2 May 2021. They sought the same orders.
32. The Respondent Bank replied on 6 May 2021 contending that the Appellants’ emails should not be put before the Court of Appeal and that no application could be made for a “remedy”.
33. On 25 May 2021, the Registrar made directions in CA-002-2021 that were communicated by email requiring the Respondent Bank to prepare an application for permission to adduce further submissions and provide a skeleton of those cost submissions alongside the permission application. The other party was to then file and serve its evidence in response to that application. Should it wish to make its own submissions on costs it must also file an application to the same effect as the Respondent Bank’s application.
The Respondent Bank’s Application for a Consolidated Costs Order
34. On 14 June 2021, the solicitors for the Respondent Bank lodged a sealed application notice and skeleton argument supported by a First Witness Statement of Nicola Jackson, all dated 14 June 2021 together with draft orders.
35. The Respondent Bank in its application sought the following orders (without a hearing):
“The Defendant/Applicant [ie the Respondent Bank] be permitted to adduce further submissions on the question of costs by way of the attached skeleton argument and supporting documents and thereafter be permitted to submit an amended statement of costs.”
The brief Statement of Reasons in support of the application was:
“In circumstances where the Court of Appeal has now determined the issue of jurisdiction once and for all in favour of the Defendant/Applicant, the Defendant/Applicant respectively requests that the Court of Appeal consider the costs position as a whole for matters CFI-066-2020, CA-008-2020 and CA-002-2021 in order to streamline the award of costs (and to save further time and costs).”
36. The Application was supported by a Witness Statement of Nicola Jackson dated 14 June 2021 and a skeleton argument on costs in the Court of Appeal of the same date.
37. In her Witness Statement, Ms Jackson a Legal Director at Clyde & Co, the legal representatives of the Respondent Bank, set out the background to the costs orders and proceedings. She referred to the history of email exchanges with the Registry and the directions made by the Registrar on 25 May 2021. She then made the following points in support of the Application:
(a) At paragraph 16 of her statement — the Court of Appeal’s judgment of 26 April 2021 finally determined the issue of jurisdiction once and for all in the Respondent Bank’s favour. The Jurisdiction Costs Order and the Stay Costs Order have already awarded the Bank its costs in dealing with those specific applications in CFI-066-2020 albeit the scope of the Jurisdiction Costs Order is in issue. Those costs orders were subject to detailed costs assessment proceedings commenced on 27 and 30 December 2020 respectively (which are also necessarily stayed). The resultant 50% Costs Orders were also stayed.
(b) The Bank is entitled to recover the totality of its costs in CFI-066-2020 and CA-008-2020 (including its costs outside of the scope of the Jurisdiction Costs Order and the Stay Costs Order. According to Ms Jackson, the Respondent Bank is also entitled to its costs incurred in respect of the Appellants’ application to challenge jurisdiction in CA-002-2021 (set out in its Statement of Costs filed in CA-002-2021).
(c) Paragraph 18 — The Respondent Bank requests that the Court of Appeal permit the Respondent Bank to make further submissions on costs (as set out in the Skeleton Argument) and, ultimately, make an order for costs having permitted the Bank to file an updated Statement of Costs.
(d) Paragraph 19 — Pursuant to RDC 38.7(1), the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party.
(e) Paragraph 20 — The Respondent Bank seeks its costs from 16 July 2020 pursuant to RDC 38.10(4) which outlines that costs incurred before proceedings have begun may be awarded by the Court. All costs incurred from that date are recoverable and follow the event. The Respondent Bank requests the Court to award its costs relevant to the preparation involved in applying for and obtaining the WWFO in CFI-066-2020 from 16 July 2020 and the costs of maintaining the WWFO in support of proceedings thereafter, including CA-008-2020 and CA-002-2021.
(f) Paragraph 21 — An Order of the Court awarding the Respondent Bank the totality of its costs in CFI-066-2020, CA-008-2020 and CA-002-2021 will save further time and costs and, in consideration of the overriding objective, it will streamline the process of awarding costs.
38. The Draft Order proposed on the Respondent Bank’s application was as follows:
“1. The Application is allowed.
2. The Claimant is permitted to file further submissions on the matter of costs by way of its skeleton argument dated 14 June 2021 (the“Skeleton”).
3. The Claimant is permitted to file an amended statement of costs in order to accord with the circumstances envisaged at paragraph 8(a)/(b)/(c) of the Skeleton for the Court’s consideration in the matter of costs.
4. The Defendants shall pay the Claimant’s costs of this Application.”
39. The Respondent Bank’s Skeleton Argument in support of the proposed application again set out the background to these proceedings and argued along the following lines:-
(a) There are two Costs Orders currently stayed (the Order of Justice Martin dated 1 October 2020 — the Jurisdiction Costs Order — and the Order of Justice Martin dated 14 October 2020 in respect of the Defendant’s failed Stay Application – the Stay Costs Order. They are subject to detailed costs assessment proceedings commenced on 27 and 30 December 2020 respectively, which have necessarily been stayed. There are two Orders of the Registrar dated 2 February 2021 pursuant to which the Appellants were ordered to pay 50% of the Respondent Bank’s costs claimed in the Jurisdiction Costs Order and the Stay Costs Order. These are referred to as the “50% Costs Orders”.
(b) The Respondent Bank’s costs incurred in respect of the Appellant’s application to challenge jurisdiction before the Court of Appeal in CA-002-2021 was set out in its Statement of Costs filed in that appeal.
(c) Other resultant costs were incurred by the Respondent Bank as a result of applying for, obtaining and continuing the WWFO including in respect of the proceedings in CFI-066-2020 outside of the scope of the Jurisdiction Costs Order and the Stay Costs Order and the costs incurred in the appeal in CA 008-2020.
(d) The Court of Appeal should consider the costs position as a whole for matters CFI-066-2020, CA-008-2020 and CA-002-2021 in order to streamline the award of costs and save further time and costs.
(e) RDC 38.71 provides that the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party. The Respondent Bank has been successful in obtaining and maintaining the WWFO. It has also been put to the time and costs of dealing with the Appellants’ various breaches of the WWFO including late filings, the provision of incomplete information and admissions of breach as regards the “surrender” of personal assets subject to the WWFO to a third party appointed by the Appellants’ company.
(f) The underlying claim in respect of which the WWFO was issued is not denied by the Appellants. It is a claim they are personally liable to pay. It was open to them to consent to the continuation of the WWFO in order to save time and costs but they did not do so. It would be a grave injustice if the Respondent Bank were not to be permitted to recover the totality of its costs in obtaining and maintaining the WWFO in support of proceedings for a claim by the Respondent Bank that is not denied by the Appellants. Those costs were said necessarily to include the preparation involved in order to file the application for the WWFO. The Respondent Bank’s position is that its costs incurred from the outset of the matter, ie 16 July 2020, should be awarded to it pursuant to RDC 38.10(4). The Appellants, by way of Personal Guarantees have agreed to pay all costs charges and expenses incurred by the Respondent Bank in connection with the enforcement, exercise or preservation of any of its rights under the Personal Guarantees. The Respondent Bank’s costs were said to have been proportionately and reasonably incurred.
40. The Respondent Bank submitted, in paragraph 8 of its Skeleton Argument, that the Court should issue an order in respect of costs as follows:
“a. an order that the Jurisdiction Costs Order and the Stay Costs Order are supplemented in order, that between the Jurisdiction Costs Order, the Stay Costs Order and the order of the Court of Appeal, the Bank is awarded the totality of its costs in CFI-066-2020, CA-008-2020 and CA-002-2021 from 16 July 2020 until the date that judgment was issued in CA-002-2021 (26 April 2021) plus its costs in this Application; or
b. in the alternative, the Jurisdiction Costs Order is varied pursuant to RDC 36.45 so as to award the Bank its costs in the proceedings in CFI-066-2020 from 16 July 2020 until the date that the Jurisdiction Costs Order was issued and issue a further costs order so as to award the Bank its other costs incurred in CFI-066-2020 (that are not already covered by the Jurisdiction Costs Order (as amended) or the Stay Costs Order) along with its costs in CA-008-2020 and CA-002-2021, plus its costs in this Application; or
c. in the alternative, cancel the Jurisdiction Costs Order and the Stay Costs Order and issue a single order awarding the Bank its costs in CFI-066-2020, CA-008-2020 and CA-002-2021 (the terms of which should be more advantageous to the Bank than the Jurisdiction Costs Order and the Stay Costs Order collectively), plus its costs in this Application.”
41. The Respondent Bank also requested that it be permitted to amend its Statement of Costs filed in CA-002-2021 as appropriate, dependent on the order that the Court of Appeal is minded to make and that on receipt of the Amended Statement of Costs the Court carry out an immediate assessment of costs pursuant to RDC 38.28 (to include costs in this application).
42. The Respondent Bank submitted that in the event that the Court is minded to make an order as envisaged in:
“a. paragraph 8(a) above, the Jurisdiction Costs Order, the Stay Costs Order and the 50% Costs Orders are reinstated with immediate effect and that the further costs order be subject to an immediate assessment of costs; or
b. paragraph 8(b) above, the Stay Costs Order and the related 50% Costs Order are reinstated with immediate effect and that the Jurisdiction Costs Order and the further costs order be subject to an immediate assessment of costs; or
c. paragraph 8(c) above, the costs order be subject to an immediate assessment of costs.”
43. The Respondent Bank submitted that in the event that the Court were not minded to carry out an immediate assessment of costs and orders that costs be assessed unless agreed, it should order 50% of the amount claimed in the Respondent Bank’s Amended Statement of Costs to be paid on account by the Appellants pursuant to paragraph 5 of Practice Direction No. 5 of 2014 before costs are assessed and that any such further costs are to be assessed by way of a single procedure before the Registrar, ie be joined to the existing costs assessment application as appropriate.
The Appellants’ Reply to the Respondent Bank’s Application — 21 June 2021
44. In their Introduction to their Reply to the Respondent Bank’s Application, the Appellants referred to emails from the Respondent Bank of 8 October 2020 and 19 October 2020 in which it was said the Respondent Bank had claimed exorbitant amounts disproportionate to the financial position of the Appellants. Much of their Reply repeated what was set out in their email of 2 May 2021.
45. In their substantive argument, the Appellants referred to their Application for Leave to Appeal dated 6 October 2020 which they said was based on genuine and legitimate grounds and could not be regarded as a frivolous claim. The Appellants had no precedent to rely upon and the facts of the case were unique. They cited “the several stages of argument” and the fact that the appeal was highly debated as further evidencing “the complexity of the issue of jurisdiction entailed in this case”.
46. The Appellants said that as is well known to the Respondent Bank, they are in financial distress while doing their best to meet their financial obligations. They referred to an application which they had filed on 14 June 2021 in CFI-083-2020 to strike out the Respondent Bank’s substantive claim brought under their Personal Guarantees. They submitted that until that application was decided, issues pertaining to costs could be deferred to a later date. If the Court were to dismiss the Respondent Bank’s claim based on the Appellants’ strike out application then the issue of costs in favour of the Respondent Bank would not be relevant.
47. The Appellants returned to the point made in their earlier emails that the Respondent Bank is affluent whereby the Appellants are individuals in no position to bear the exorbitant costs of litigation claimed by the Respondent Bank. It would be highly prejudicial towards the Appellants if they were directed to bear the costs in CA-008-2020, CFI-066-2020 and CA-002-2021, especially when there is an application pending seeking the dismissal of the substantive claim in CA-083-2020.
48. The WWFO application was filed in aid of the claim in CFI-083-2021. Because that proceeding is still pending consideration, the determination as to costs should be deferred until the determination of the substantive claim.
49. The Appellants submitted that the Respondent Bank is aware that they are currently engaged in raising funds to restructure their business and meet their financial obligations. They contended that the Court “must afford them a fair opportunity to overcome their distress and meet their obligations”.
50. The Appellants referred to RDC 39.25 which requires that the Court, while applying the test of proportionality should give due regard to the overriding objective of the Law, which is to enable the courts to deal with cases justly. They further referred to RDC 1.6 and contended that dealing with a case justly, as provided for in that Rule, includes the following:
“1. ensuring that the parties are on an equal footing;
2. saving expense;
3. dealing with a case in ways in which are proportionate —
…
d. to the financial position of each party.”
The Appellants submitted that the costs claimed by the Respondent Bank were not proportionate to their financial position. It had claimed exorbitant amounts despite being well aware of the immense financial hardship which the Appellants were currently facing.
51. The Appellants then referred to the Jurisdiction Application before Justice Wayne Martin and the Order which he had made that:
“The Defendants shall pay the Claimant’s costs of this Application, within 14 days from the date of this Order, to be assessed by a Registrar on the standard basis if not agreed.”
52. The Respondent Bank served its Schedule of Costs pertaining to the Jurisdiction Costs Order by email dated October 2020 seeking payment of USD 96,891, latest by 12 October 2020.
53. On 19 October 2020, a Further Schedule of Costs pertaining to the Jurisdiction Application was served claiming USD 96,338.95. No justification was provided for the increase in costs.
54. The Appellants contended that the discrepancies in the Respondent Bank’s Schedule of Costs in relation to the Jurisdiction Order made it clear that it had not calculated the costs in a systematic manner and had claimed exorbitant costs. This was said to be evident from the fact that when the Respondent Bank served its Schedule of Costs pertaining to the Jurisdiction Application once again on 19 October 2020 the “time spent” by one of the Respondent Bank’s counsel was reduced from what had been stated in their Schedule of Costs dated 8 October 2020 without providing any reason for the discrepancy. The reduction in the time spent was not reflected in a corresponding reduction of costs in the Respondent Bank’s Schedule of Costs.
55. The Appellants also submitted that the Respondent Bank had erroneously calculated costs in the Jurisdiction Costs Order from 13 September 2020, the date on which the WWFO was issued, until 19 October 2020. The application had been filed on 27 September 2020. The Jurisdiction Costs Order was rendered on 1 October 2020 so that costs should have been calculated to that date and not until 19 October 2020.
56. The Appellants contended that the costs claimed in the application of 30 December 2020 were exorbitant and not proportionate. They reverted to the argument that the Court should take into account their current financial position and the steps taken by them towards restructuring the company.
Appellants’ Argument with Respect to Stay Application Costs
57. Following Justice Martin’s Order of 1 October 2020 the Appellants asked the Respondent Bank to defer the requirement for provision of information pursuant to the Information Order until determination of the appeal against Justice Martin’s Order. The Respondent Bank refused to consent. The Appellants then sought a stay of the Information Order pending the determination of the appeal. That stay application was dismissed by an Order dated 14 October 2020, coupled with the following direction:
“The Defendants shall pay the Claimant’s costs associated with this Application, to be assessed by the Registrar if not agreed by the parties, within 14 days of assessment or agreement.”
58. Again, the Appellants made submissions in relation to the time period over which the costs in relation to the stay application were calculated. They contended that the Respondent Bank had failed to discharge its burden of proving that the costs were genuinely incurred in the amounts referred to in its claim. Again they pointed to the prejudice they would suffer if forced to pay costs at this stage to defend the additional proceedings. Again they requested that the Court take these facts into account while adjudicating upon the Respondent Bank’s application.
Allegations of Non-Compliance with the WWFO
59. The Appellants referred to paragraphs 6 and 7 of the Respondent Bank’s Skeleton Argument in which it alleged various breaches by the Appellants of the WWFO. The Appellants denied the allegations and asserted that they had at all times been compliant. They also rejected the contention by the Respondent Bank that they had not denied the underlying claim. They say that they have categorically denied the claim in the Statement of Defence dated 13 December 2020 filed in the substantive claim proceedings, CFI-083-2020.
60. The Respondent Bank had also contended that it had been open to them to consent to the continuation of the WWFO in order to save time and costs but they did not do so. The Appellants denied what they called “this unfounded and untrue allegation” made by the Respondent Bank. They were never approached for a consent to continue the WWFO. It was issued on 13 September 2020 and has caused grave prejudice to the Appellants.
Conclusion on Allegations by Respondent Bank against the Appellants
61. In the view of the Court, these allegations have no bearing on what costs orders should be made by the Court and will be disregarded.
Pertinent Considerations
62. The Appellants then set out in their Skeleton Argument what they called “Pertinent Considerations”. These included matters referred to in previous communications to the Court, including the fact that they have taken steps to arrange for the funds that their company GP FZC and its subsidiaries owe to various banks, including the Respondent Bank.
63. On 30 July 2020, they appointed an independent CRO and surrendered their property for the purposes of restructuring the business of the company. The independent CRO, with the consent of all creditors including the Respondent Bank, will sell the assets, realise the value and distribute it proportionally to all creditors. The Appellants’ intention was to settle the debt, restructure and revive the business of the company. They argue that the Respondent Bank, by filing multiple proceedings, have added to their costs as well as prevented them from meeting their obligations to all creditors.
64. The Respondent Bank had participated in restructuring meetings, yet it had chosen to initiate multiple proceedings making it difficult for the appellants to defend themselves and to focus on the restructuring process.
65. The Appellants again referred to their very difficult financial position and the freezing of their accounts. They repeated their contention that the Respondent Bank is guilty of incurring exorbitant costs.
Conclusion Re Pertinent Considerations
66. In the view of the Court, these matters are not relevant to the Orders which the Court should make for the assessment of costs on the appeal and in relation to the other matters. It may be that the position of the Appellants is such that the Respondent Bank will be unable to recover any costs order, save through a variation to the WWFO.
The Alternative Orders Sought by the Appellants
67. In their Reply to the Respondent Bank’s application, the Appellants proposed the following orders:
“(a) Dismiss the Claimant’s Application to file a further submission on the matter of costs, as unnecessary in the given proceedings, where an application seeking strike-out of the Claim is pending adjudication;
(b) Direct the Parties to the proceedings in CA-008-2020, CFI 066-2020 and CA-002-2021 to bear their own costs;
(d) Dismiss and/or hold in abeyance, the Order of Justice Wayne Martin dated 01 October 2020 and 14 October 2020 in CFI-066-2020 to the extent of costs, until the Claim in CFI 083 2021 [sic] are finally disposed of;
(e) Dismiss and/or hold in abeyance, the Claimant’s Application for Commencement of Bill of Costs dated 30 December 2020 filed in respect of costs incurred in the Jurisdiction Application, as proceedings are pending adjudication before the Dubai Courts;
(f) Dismiss the Claimant’s Application for Commencement of Bill of Costs dated 27 December 2020 for the Stay Application;
(g) Direct the Claimant to pay the costs of this Application to the Defendants;
(h) Grant such other order/direction as this Court may deem appropriate; and/or
(i) Alternatively, keep this Application pending until the proceedings in CFI-083-2020 are finally disposed of by the DIFC Courts, with a view to avoiding conflicting decisions.”
The Registry’s Email of 29 July 2021
68. On 29 July 2021, the Registry sent an email to the parties setting out the general effect of the Respondent Bank’s application. The Registry observed that the Respondent Bank sought a consolidated costs order in each of CA-002-2021, CA 008-2020 and CFI-066-2020 and wanted to vary each of the costs orders already made in the three cases so that the costs were assessed summarily in consolidation with the other two of the three cases and not subject to a detailed assessment. The Respondent Bank was asked to clarify whether that understanding was correct.
69. The solicitors for the Respondent Bank replied stating that the Registry’s understanding was partially correct. The Respondent Bank requested that costs were assessed summarily (ie immediately under RDC 38.28) rather than by way of detailed costs assessment proceedings (once an Amended Statement of Costs was filed by the Respondent Bank setting out the totality of its costs in the three cases). The objective of the application however was to ensure that the Respondent Bank was awarded the totality of its costs in the three cases (on an indemnity basis pursuant to the terms of the underlying contract between the parties). In order to achieve that objective, one of the options was to issue a Consolidated Costs Order in each of the three cases (once an Amended Statement of Costs had been filed by the Respondent Bank so as to include all other costs not already covered by existing costs orders/statements of costs filed in the three cases).
70. The Respondent Bank suggested that the most straight forward option to achieve its objective was by the issue of a single Consolidated Costs Order with respect to the three cases, to be assessed immediately, upon receipt of an Amended Statement of Costs from the Respondent Bank, on an indemnity basis.
Conclusion
71. The Court has considered the Respondent Bank’s application of 14 June 2021 and is prepared to treat the application as properly made. In considering the merits of the application it has had regard to the Respondent Bank’s Skeleton Argument and supporting witness statement, along with the Reply Statement filed by the Appellants. It has also noted the Registry email of 29 July 2021 and the Reply by the solicitors for the Respondent Bank. The Court will allow the Respondent Bank to rely upon the Skeleton Argument filed in support of the application and the supporting statement of Ms Jackson. It will not, however, allow the Respondent Bank to file an Amended Statement of Costs.
72. The financial position of the Appellants and their attempts to restructure their business is not relevant to the assessment of costs in the Jurisdiction Application or, for that matter, in the Stay Application. The assessment of the quantum of those costs is contested and, in accordance with the Order made by Justice Martin, should be assessed by a Registrar on the standard basis, if not agreed. The time period over which those costs can be claimed is a matter for assessment by the Registrar.
73. It is evident that the quantum of the assessments and the date range over which costs claimed are contested. In the view of the Court, the Respondent Bank has not made out a case for indemnity costs in the appeal or otherwise. This Court will direct that the Appellants pay the costs of this appeal, CA-002-2021, to be assessed by the Registrar on a standard basis, if not agreed. In the interests of efficiency, the Registrar will, no doubt, take appropriate steps to ensure that all outstanding costs orders are assessed concurrently but with separate determinations on each. Those outstanding Orders comprise the Orders made by Justice Martin in the Jurisdiction Application and the Stay Application and the Order made by this Court in CA-008-2020 be costs of that appeal falling against the Appellants having regard to their lack of success in relation to the WWFO. Any stay still in effect in relation to the Jurisdiction Costs Order and the Stay Costs Order should be discharged as also should any stay in effect in relation to the Registrar’s direction for payment in of 50% of costs made on 2 February 2021.
74. The orders of the Court will be as follows:
(a) The Appellants are to pay the Respondent’s costs of the appeal to be assessed, if not agreed, on a standard basis.
(b) The Respondent’s Application for a Consolidated Costs Order is dismissed.
(c) Stay Orders in effect in relation to the Jurisdiction Costs Order, the Stay Costs Order and the Registrar’s Orders of 2 February 2021 be discharged.
(d) Costs to be assessed under outstanding costs orders in relation to the Appellants’ Jurisdiction Application and the Appellants’ Stay Application should, so far as practical, be assessed concurrently by the Registrar with the costs of this appeal and on a standard basis.
(e) Each party is to bear its own costs of the Respondent’s application of 14 June 2021.