Claim No: CA 006/2024
IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
In the Name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai
THE COURT OF APPEAL
BEFORE JUSTICE TUN ZAKI AZMI, H.E. DEPUTY CHIEF JUSTICE ALI AL MADHANI AND JUSTICE ROBERT FRENCH
BETWEEN
TR88HOUSE RESTAURANT AND ENTERTAINMENT CENTRE LLC
Appellant
and
BOND INTERIOR DESIGN LLC
Respondent
| Hearing : | 20 August 2024 |
|---|---|
| Counsel : |
Mr Antonio M Varvaro instructed by Noorhan Abdullatif AlZaabi Advocates and Legal Consultants for the Appellant. Mr Nathan Landis, Counsel for the Respondent. |
| Judgment : | 18 September 2024 |
UPON hearing Counsel for the Appellant and Counsel for the Respondent on 20 August 2024
AND UPON reading the submissions and relevant documents on the Court file
IT IS HEREBY ORDERED THAT:
1. The Order of the Court made by consent on 21 August 2024 is amended to read:
“Paragraph 3 of the Judgment is to be varied to substitute the amount of AED 1,665,386.89 for AED 2,873,837.14.”
2. The Respondent is to pay the Appellant’s costs of the appeal up to but not including 2 July 2024.
3. The Appellant is to pay the Respondent’s costs of the appeal from 2 July 2024, save for the submissions as to costs.
4. Each party is to bear its own costs of the Application for Permission to Appeal.
5. Each party is to bear its own costs of the submissions as to costs.
6. Costs to be assessed by the Registrar on the standard basis if not agreed.
Issued by:
Hayley Norton
Assistant Registrar
Date of Issue: 18 September 2024
Time: 1pm
JUDGMENT
JUSTICE TUN ZAKI AZMI, H.E. DEPUTY CHIEF JUSTICE ALI AL MADHANI AND JUSTICE ROBERT FRENCH:
1. On 28 February 2024, Justice Wayne Martin gave judgment in favour of the Respondent in the sum of AED 2,873,937.14, including interest accrued to the dated of the judgment. The claim arose out of contracts entered into between the parties for the performance of mechanical engineering, plumbing and fit out works at premises occupied by the Appellant in Dubai.
2. Paragraph 3 of the Judgment, which is the subject of the present appeal, was in the following terms:
“3. Judgment is entered in favour of the Claimant in the amount of AED 2,873,837.14 which includes interest accrued up to the date of Judgment.”
The Primary Judge also made the following Orders:
“4. Interest will accrue on any outstanding balance of the Judgment debt at the rate applicable to judgments of the Court from time to time from the date of Judgment until the date of full payment.
5. The Defendant shall pay the Claimant’s costs of the proceedings to be assessed by the Registrar if not agreed, save that the Claimant is not entitled to recover anything in respect of the costs of the report prepared by Mr Dev or of him giving evidence.”
3. It is not necessary for present purposes to set out the details of the dispute or the reasons for judgment. The short point which was taken on appeal was that the figure awarded included two sums for outstanding retention which were already included in the lump sum contract value agreed by the parties and which formed part of the calculation. In effect, the amount awarded reflected double counting of the retention sums.
4. The appeal came on for hearing on 20 August 2024. On that date the Court issued a Consent Order in the following terms:
“1. Paragraph 3 of the Judgment is to be varied to substitute the amount of AED 2,873,837.14 for AED 1,665,386.89.
…”
5. This Order was incorrectly framed. It was in fact intended to substitute the amount of AED 1,665.386.89 for the amount of AED 2,873,837.14.
6. The intention of the parties was clear and the Order can be amended to reflect their consent.
7. The parties were directed to file written costs submissions: the Appellant by 30 August 2024 and the Respondent by 6 September 2024.
Appellant’s submissions on the costs of the Appeal and of the Permission Application
8. The Appellant contended that it had been wholly successful in its appeal and that the Court should exercise its discretion and follow the general principle for the allocation of costs and order the Respondent to pay the costs of the Appellant for the request to appeal and for the appeal.
9. The Appellant relied, inter alia, upon RDC 38.7:
“38.7 If the Court decides to make an order about costs:
(1) The general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(2) The Court may make a different order.
38.8 In deciding what order (if any) to make about costs, the Court must have regard to all the circumstances including:
(1) the conduct of all the parties;
(2) whether a party has succeeded on part of his case even if he has not been wholly successful; and
(3) any payment into court or admissible offer to settle made by a party which is drawn to the Court’s attention and which is not a Part 32 offer.
38.9 The conduct of the parties includes:
(1) conduct before, as well as during the proceedings;
(2) whether it was reasonable for a party to raise pursue or contest a particular allegation or issue;
(3) the manner in which a party has pursued or defended his case or a particular allegation or issue; and
(4) whether a claimant who has succeeded in his claim in whole or in part exaggerated his claim.”
10. RDC 38.10 sets out the orders which the Court may make, including orders for the payment by one party of a proportion of another party’s costs. RDC 38.17 provides for costs to be assessed on a standard or indemnity basis. Under RDC 38.18 where the amount of costs is to be assessed on the standard basis, the Court will only allow costs which are proportionate to the matters in issue and resolve any doubt which it may have as to whether the costs were reasonably incurred or reasonable and proportionate in an amount in favour of the paying party.
11. The Appellant’s submissions set out the history of the case, which began with the Respondent’s submission to the Appellant in December 2022 of its final account for the project for the amount of AED 4,142,210.71. The Appellant then set out a timeline of the proceedings in the DIFC TDC which commenced on 9 March 2023 with a claim for AED 4,142,210.71. This was amended on 15 February 2024 to AED 2,532,766.90. That was the last day of the trial.
12. On 19 March 2024, the Appellant submitted its Application for Permission to Appeal (“Permission Application”), an application which was heard on 23 May 2024 and granted on the ground relating to the double counting of the retention. On 14 August 2024, the Respondent submitted skeleton arguments stating that it requested the judgment to be altered to AED 1,769,063.09. This sum was further amended on 16 August 2024 to the amount of AED 1,665,386.89.
13. The Appellant maintained that it was the successful party on the appeal having regard to the reduction in the award.
14. It appears that on 11 June 2024, a Part 32 Offer to Settle was made by the Respondent in the following terms:,
“The Respondents offer to substitute the amount of AED 2,873,837.14 which appears in paragraph 3 of the Order of Justice Martin dated 28 February 2024 for the amount of AED 1,665,386.89. The effect of this amendment means that the Respondent will accept the amount of AED 1,726,758 in substitution of its entitlement under the final account.”
The offer remained open until 2 July 2024.
15. The Appellant contended that it attempted to contact the Respondent by a WhatsApp Message on 26 June 2024, asking for a telephone call to be arranged between the Appellant’s CEO and the Respondent’s CEO to finally resolve the dispute. The call never happened. The Appellant did not hear back until 5 July 2024 with a proposition that the meeting be extended for another week, three days after the lapse of the Part 32 offer and nine days from the first attempt at contact by the Appellant.
16. A meeting was arranged for 18 July 2024, but no meeting was held. Ultimately, according to the Appellant, its CEO and the Respondent’s CEO met on 12 August 2024, 42 days after the lapse of the Part 32 Offer.
17. The Part 32 Offer was made immediately after the request to appeal hearing where, according to the Appellant, it was clear that the Appellant would succeed in its appeal and that the judgment order would have been reduced.
18. The Appellant had submitted a statement of costs totalling AED 128,562.50, inclusive of legal fees and disbursements. It asserted that the costs were reasonable and proportionate under RDC 38.18.
The Appellant’s submissions on the costs in the CFI
19. The Appellant also made a submission as to the costs awarded in the Court of First Instance (the ‘CFI’). The CFI ordered that the Appellant pay the Respondent’s costs of the proceedings to be assessed by the Registrar if not agreed, save that the Respondent was not entitled to recover anything in respect of the costs of the report prepared by Mr Dev or of him giving evidence.
20. The Appellant contended that the findings were not incorrect as the Respondent had been the successful party. The costs award was not brought up as a ground of appeal. However, the Appellant contended that the Respondent was not entitled to its full costs for the CFI. Its claim had been manifestly exaggerated. It had gone from claiming AED 4,142,210.71 to claiming AED 1,665,386.89. The final amount awarded was only 39.9% of the original claim that had been advanced.
The Respondent’s costs submission
21. The Respondent did not accept the Appellant’s contention that it should be awarded the costs of the appeal and the costs at first instance. There were said to be three key difficulties facing the Appellant in seeking those orders.
22. The first was that a valid Part 32 Order was made and not accepted. A Part 32 Order does not trigger some period of negotiation between the parties, but rather the binary options contemplated by the RDC. It was only open to the Appellant to either accept or reject the offer within the relevant period. It did not do either. The Respondent submitted that there was no reason for the Court to depart from the consequences set out in RDC 32.51 as applied to the appeal by RDC 32.8(2) where an appellant fails to accept the Part 32 offer and then does no better than the offer.
23. There was no reason advanced by the Appellant why it would be unjust for orders to be made to give effect to RDC 32.51. The Respondent submitted that the Court should make orders in terms of the proposed orders attached to its submissions.
24. The second proposition advanced by the Respondent was that although the Appellant was successful in the Permission Application it failed on two of the three grounds advanced. Thirdly, much of the Appellant’s submissions were said to be directed towards revisiting the Costs Order made at first instance. The Appellant was seeking to agitate a point that should have been made at first instance. It was not and no permission was granted for it to seek to disturb the costs orders below.
Part 32 offers
25. Part 32 of the RDC deals with offers to settle. Those provisions of the Part which are relevant to the costs submissions are as follows:
“32.1
This Part contains Rules about:
(1) Offers to settle; and
(2) The consequences where an offer to settle is made in accordance with Rule 32.4.
32.2
Nothing in this Part prevents a party making an offer to settle in whatever way he chooses, but if that offer is not made in accordance with Rule 32.4, it will not have the consequences specified in Rules 32.28 to 32.41, and 32.49 to 32.54.
32.3
An offer to settle which is made in accordance with Rule 32.4 is called a Part 32 offer.”
26. It is not in contention that the Respondent’s Part 32 offer complied with the requirements of Part 32. It is not necessary to refer to the provisions of Part 32 dealing with those requirements.
27. The costs consequences of a Part 32 offer following judgment are set out in RDC 32.49 to 32.54:
“32.49
Rules 32.50 to 32.54 apply where upon judgment being entered:
(1) a claimant fails to obtain a judgment more advantageous than a defendant’s Part 32 offer; or
(2) judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant’s Part 32 offer.
32.50
Subject to Rule 32.54, where Rule 32.49(1) applies, the Court will, unless it considers it unjust to do so, order that the defendant is entitled to:
(1) his costs from the date on which the relevant period expired; and
(2) interest on those costs.
32.51
Subject to Rule 32.54, where Rule 32.4((2) applies, the Court will, unless it considers it unjust to do so, order that the claimant is entitled to:
(1) interest on the whole or part of any sum of money (excluding interest) awarded at a rate not exceeding 10% above Base Rate for some or all of the period starting with the date on which the relevant period expired;
(2) his costs on the indemnity basis from the date on which the relevant period expired; and
(3) interest on those costs at a rate not exceeding 10% above Base Rate.
32.52
In considering whether it would be unjust to make the orders referred to in Rules 32.50 and 32.51, the Court will take into account all the circumstances of the case including:
(1) the terms of any Part 32 offer;
(2) the stage in the proceedings when any Part 32 offer was made, including in particular how long before the trial started the offer was made;
(3) the information available to the parties at the time when the Part 32 offer was made; and
(4) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated.
32.53
Where the Court awards interest under this rule and also awards interest on the same sum and for the same period under any other power, the total rate of interest may not exceed 10% above Base Rate.
32.54
Rules 32.50 and 32.51 do not apply to a Part 32 offer:
(1) that has been withdrawn;
(2) that has been changed so that its terms are less advantageous to the offeree, and the offeree has beaten the less advantageous offer;
(3) made less than 21 days before trial, unless the Court has abridged the relevant period.”
Conclusion on the Costs Orders in the Court of First Instance
28. The Court sees no reason to disturb the Order as to costs made the Primary Judge. The Appellant was the unsuccessful party, albeit the Respondent recovered considerably less than the amount claimed.
Conclusions as to the costs of the appeal and permission to appeal
29. The Permission Application and the appeal were brought in rather unusual circumstances where it was clear that there had been a miscalculation by the Primary Judge of the amount due. It is not clear why the parties could not simply have then agreed a variation of the primary judgment, an agreement which may not have been subject to the limitations of the slip rule. Indeed, it was open to the parties to agree by private treaty that the Respondent would not enforce the judgment save to the extent of the amount which it was agreed was recoverable.
30. Be that as it may, the appellate pathway was chosen and the Appellant was successful in obtaining, albeit by consent, the order that it sought. However the Part 32 offer if accepted, would have avoided the need for an appeal hearing. The Appellant did no better than the offer which was reflected in the variation to Order 3 of the primary judgment order.
31. The provisions of Part 32 are clear. Abortive attempts to negotiate do not render its application unjust. In the opinion of the Court, the Appellant should have the costs of the appeal up to the expiry of the Part 32 offer, which was 2 July 2024. The Respondent should have its costs of the appeal thereafter.
32. As to the costs of the Permission Application, the Court is of the view that, there having been partial success on both sides, each party should bear its own costs.