Privacy Settings

Claim No: CA 002/2023

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF APPEAL

BEFORE CHIEF JUSTICE TUN ZAKI AZMI, H.E. JUSTICE SHAMLAN AL SAWALEHI AND JUSTICE MICHAEL BLACK KC

BETWEEN

(1) GATE MENA DMCC (FORMERLY HUOBI OTC DMCC)
(2) HUOBI MENA FZE

Claimants/Appellants

and

(1) TABARAK INVESTMENT CAPITAL LIMITED
(2) CHRISTIAN THURNER

Defendants/Respondents

---

ORDER WITH REASONS

---

UPON the Judgment of the Court of Appeal dated 13 June 2024 (the “Appeal Judgment”)

AND UPON the Consent Orders dated 28 June 2024 and 12 July 2024

AND UPON the parties filing written Cost Submissions on 15 July 2024

AND UPON the Court’s direction dated 19 July 2024 (the “Direction”) that the parties file brief reply submissions of no more than 5 pages by no later than 4pm on 26 July 2024 (the “Reply Submissions”)

AND UPON the parties having agreed by consent to vary the Direction in extending the time to file brief Reply Submissions by no later than 16 August 2024

AND UPON the parties filing written Reply Submissions on 16 August 2024

IT IS HEREBY ORDERED THAT:

1. The Appellants shall pay 60% of the First Respondent's costs of the Appeal. The balance of 40% of the Appellants’ and the First Respondent’s costs of the Appeal shall be costs in the Retrial.

2. The Appellants shall pay 60% of the First Respondent's costs of the Trial. The balance of 40% of the Appellants’ and the First Respondent’s costs of the Trial shall be costs in the Retrial. The deduction from the First Respondent’s costs of the Trial made by the Trial Judge shall stand. The costs of the Trial shall include the costs incurred by the First Respondent in making its applications for its costs of the Trial. Credit shall be given for the sum of AED 750,000 paid out of Court in respect of the First Respondent’s costs of the Trial.

3. 65% of the costs of the Appellants and of the First Respondent of the First Application for Permission to Appeal and all of the costs of the Appellants and of the First Respondent of the Second Application for Permission to Appeal shall be costs in the Retrial.

4. The Appellants shall pay 60% of the First Respondent's costs of the costs submissions. The balance of 40% of the Appellants’ and the First Respondent’s costs of the costs submissions shall be costs in the Retrial.

5. The Appellants shall pay to First Respondent the sum of AED 961,995.95 by way of interim payment on account of the First Respondent’s costs of the Appeal. AED 961,995.95 of the sum currently standing in Court as security for the First Respondent’s costs of Appeal shall be paid out to the First Respondent’s Legal Representatives in satisfaction of the interim payment on account of the First Respondent’s costs of the Appeal. The balance of the money currently standing in Court as security for the First Respondent’s costs of Appeal shall remain in Court.

6. The Appellants shall pay to the Second Respondent his costs of the Appeal.

7. The Appellants shall pay to the Second Respondent the sum of AED 919,900.50 by way of interim payment on account of the Second Respondent’s costs of the Appeal. AED 582,205 currently standing in Court together with any accrued interest shall be paid out in part satisfaction to the Second Respondent’s Legal Representatives.

8. All costs ordered to be paid shall be subject to detailed assessment on the standard basis in default of agreement.

9. Sums awarded as costs of the Trial shall bear simple interest at the rate 9% per annum from 5 October 2022 (being the date of the Trial Judgment) until payment as directed by the Trial Judge in the 21 February 2023 Order.

10. Sums awarded as the Second Respondent’s costs of the Appeal shall bear simple interest at the rate 9% per annum from 13 June 2024 (being the date of the Appeal Judgment) until payment.

Issued by:
Delvin Sumo
Assistant Registrar
Date of issue: 22 August 2024
At: 2pm

SCHEDULE OF REASONS

INTRODUCTION

1. On 13 June 2024, the Court handed down judgment in this Appeal (the “Appeal Judgment”). The Appeal Judgment directed the parties to file written submissions on costs within 7 days of the date of the Appeal Judgment, i.e. by 20 June 2024. The parties agreed by consent to extend the time for the filing of submissions until 15 July 2024.

2. On receipt of the parties’ costs submission the Court granted the parties the right to serve brief replies which were filed on 16 August 2024.

PROCEDURAL HISTORY

3. The first instance judgment of Justice Sir Richard Field was handed down on 26 October 2022 following trial (the “Trial Judgment”). On 21 February 2023, Justice Field ordered (the “21 February 2023 Order”):

4. The Appellants made their first application for appeal (the “First PTA Application “) to Justice Field who ordered on 7 February 2023 (the “7 February 2023 Order”):

5. The Appellants renewed their application for permission to appeal in respect of Grounds 2, 3, 4 and 5 before the Court of Appeal and on 14 April 2023 (the “14 April 2023 Order”) the Chief Justice:

6. The Appellants did not pay the 35% of the costs incurred by the Respondents in opposing the First PTA Application as provided for in the 7 February Order on the basis that the Appellants were successful in obtaining permission to appeal on all eight grounds sought (including the four grounds refused as part of the First PTA Application) in the Second PTA Application. The remaining costs of the First PTA Application (together with the costs of the Second PTA Application) fall to be decided by the Court in the present assessment of costs.

7. The Respondents made application for orders that the Appellants provide security for the costs of the Appeal and on 5 May 2023 Justice Field ordered (the “5 May 2023 Order”):

8. The Appellants paid the sum of AED 1,551,591.99 into Court on 4 July 2023 (the “Appeal Security Sum”). The Appeal Security Sum is currently held by the Court Registry.

THE APPLICABLE PRINCIPLES

9. There is no serious dispute between the parties as to the applicable principles, although there are differences of emphasis.

10. The pertinent provisions of the Rules of the DIFC Courts (the “RDC”) are:

11. All three parties refer to a passage in the judgment of Justice Sir John Chadwick in Al Khorafi & Ors v. Bank Sarasin-Alpen (ME) Ltd & Anor [2009] DIFC CFI 026 (16 January 2017) in which Justice Chadwick noted that the parties had agreed that, in applying the provisions of the RDC in relation to costs, it is appropriate for the Court to have regard to the approach established by decisions in the Courts of England and Wales on the comparable provisions in the Civil Procedure Rules (“CPR”) applicable in those courts. This Court agrees that analogous English decisions are of assistance in considering the exercise of the discretion under RDC Part 38. In a comprehensive summary Justice Chadwick gave guidance at paragraph [36] of his judgment:

12. The Appellant refers to the judgment without comment while the First Respondent emphasizes that the key principle in making a costs order is that a Court is to “make an order that reflects the overall justice of the case”.

13. The First Respondent notes that while the Courts can adopt an issue-based approach, Courts have often expressed caution about doing so. There is no automatic rule requiring an issue-based cost order in the form of a reduction of a successful party’s costs if he loses on one or more issues (HLB Kidsons v Lloyds Underwriters [2007] EWHC 2699 (Comm); [2008] 3 Costs L.R. 427 (Gloster J) at [10]). The mere fact that the successful party was not successful on every last issue cannot, of itself, justify an issue-based costs order (J Murphy & Sons Ltd v Johnson Precast Ltd (No.2) [2008] EWHC 3104 (TCC); [2009] 5 Costs L.R. 745 (Coulson J) at [10]). Moreover, the First Respondent submits, where the circumstances of the case require an issue-based order in the form of an order expressed by reference to the costs of the issue, that is what the judge should make; however, generally, because of the practical difficulties which this causes, the judge should hesitate before doing so and, where practicable, the order should be expressed as a percentage or with reference to a distinct period of time (Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd [2008] EWHC 2280 (TCC); [2009] 1 Costs L.R. 155 (Jackson J) at [72(iv)]).

14. In their reply submissions, the Appellants agree that there is no “automatic rule” requiring an issue-based costs order. They point to an irrelevant section of the decision in Multiplex v Cleveland Bridge addressing the balance of claims and cross-claims, which is not the present case. They suggest that if a party numerically loses more of its Grounds of Appeal than it wins, but the qualitative net or overall effect is that it obtains the remedy it seeks, it is the overall winner. The Court does not detect any difference between parties on this issue. In exercising its discretion on costs, the Court must decide who is the overall winner in “real life” not by a mechanistic calculation of issues won or lost without reference to their significance.

15. For his part, the Second Respondent suggests that in addition to the matters set out by Justice Chadwick in the Khorafi case, in the circumstances where the Court is minded to make the usual cost order, namely that the unsuccessful party be ordered to pay the costs of the successful party, the burden of proof is on the unsuccessful party to establish grounds for a departure from the presumption that it is liable to pay the wining party’s costs.

16. The Court accepts the gloss added by both Respondents to the guidance given by Justice Chadwick:

THE APPELLANTS’ SUBMISSIONS

Primary Submission

17. The Court has not found the Appellants’ submissions particularly easy to follow as they are somewhat repetitious and necessitated a certain amount of toing and froing to ensure that the Court fully captured the terms of the orders the Appellants are seeking. In particular, save to suggest that the costs consequences following the Trial Judgment should be set aside the Appellants deliberately decline to address the costs of the Trial in their costs submission dated 15 July 2024 (paragraph 10.a). The Court has found this position ambiguous and unhelpful. By way of example, at paragraph 36 of their submissions of 15 July 2024 the Appellants submit:

“Conclusion. The Appellants were successful against the First Respondent in obtaining the Retrial order, thereby reopening the Trial Judgment. The costs consequences following the Judgment should therefore be set aside and the First Respondent ordered to pay the Appellant and the Second Respondent’s costs of the appeal. This reflects the overall justice of the case.”

“The Judgment” is defined at paragraph 1 of the submissions as the judgment of this Court not the Court below. It is assumed that “costs consequences following the Judgment” is in fact referring to the costs below. Even if that is the case, the Appellants do not indicate what they say this Court should substitute for the orders to be set aside.

18. The Appellants’ primary submission is that they were the successful parties in the Appeal as against the First Respondent within the meaning of RDC 38.8(2) because the Court has ordered a retrial under Ground No. 3 as set out at paragraphs 183 and 184 of the Appeal Judgment (the “Retrial”). Ground No.3, on which the Appellants were successful, was a matter before Justice Sir Richard Field at first instance but was a matter with which the Judge “did not deal” (see paragraph 180 of the Appeal Judgment). Had the Judge determined Ground 3 at first instance, the costs of the Appeal may have been avoided in their entirety

19. The fact that the Appellants did not succeed on all Grounds of Appeal does not militate in favour of an issues-based costs order in circumstances where the overall effect of the Appeal Judgment is that the Appellants were substantively successful and justified in their appeal and none of the grounds was found to be unreasonable. In their reply submissions, the Appellants suggest that it would not be appropriate for their costs of the Appeal to be apportioned between the Grounds of Appeal, which would be an artificial exercise where the Grounds of Appeal are overlapping and interconnected.

20. Unsurprisingly, the Appellants dispute that the First Respondent was the “overwhelmingly” successful party. They suggest that when the litigation as a whole is considered, the Appellants succeeded in obtaining the remedy they sought in the appeal, which has the effect of setting aside the Trial Judgment so that the Appellants have a second chance to obtain the redress which were and remain the remedies at the heart of the Claim, namely very substantial damages and/or return of 300 Bitcoin, plus legal costs and interest. This is the “result in real life”.

21. Whilst the Appellants accept that the order for a Retrial was not the primary remedy the Appellants sought from the Court of Appeal, it was still one of the remedies that was sought in the alternative (and a remedy that was successfully granted).

22. The Appellants contend that the First Respondent should be ordered to pay their costs of the appeal including the costs of the applications for Permission to Appeal. That also involves reversing the 7 February 2023 Order whereby the Appellants were to pay 35% of the costs incurred by the Respondents in opposing the First PTA Application (which has not been paid). The Appellants suggest that if the Court is minded to make that Order, the costs of the First PTA Application will therefore become costs in the Appeal under the terms of the remaining costs order in the 7 February 2023 Order. The Court assumes that Appellants are requesting that the costs of the First PTA Application, like those of the Second PTA, should be theirs on the basis that they are overall winners of the Appeal. This assumption is reinforced by the Appellant’s opposition to the First Respondent’s submission that the costs of the Appeal (in part) should be reserved to the Judge at Retrial.

23. The Appellants submit that the result of the Appeal is that the 21 February 2023 Order should be set aside in its entirety. Under the 21 February 2023 Order, the AED 750,000 and AED 550,000 that had previously been paid into Court by the Appellants by way of security was to be paid out to the First and Second Respondents respectively, together with any accrued interest and the Appellants were to pay AED 1,150,000 and AED 1,078,249.99 to the First and Second Respondents respectively within 21 days by way of an interim payment on account of the costs of the Trial.

24. In their submissions, the Appellants say that they do not address the costs of the Trial save to note that following the 21 February 2023 Order, the First Respondent made an application on 13 March 2023 seeking an order that the Appellants’ permission to appeal be made subject to the Appellants first paying the First Defendant the Interim Payment on Account which was dismissed and the commencement of detailed costs assessment of their costs of the Trial was stayed pending the outcome of the Appeal. From this, the Court assumes that the Interim Payment on Account has not been paid. Despite saying they will not address the costs of the Trial, the Appellants do seek an order that the Respondents pay into Court the AED 750,000 and AED 550,000 (plus any accrued interest) that had previously been paid into Court by the Appellants by way of security and which was paid out to the First and Second Respondents under the 21 February 2023 Order.

25. In their reply submissions, the Appellants seek a different order, namely that the Appeal Security Sum (i.e. AED 1,551,591.99 paid into Court on 4 July 2023) be returned. They say this is implied by the order sought at paragraph 23(a) of the Appellants’ Costs Submissions, but that paragraph seeks an order that the First Respondent pays the Appellants’ costs of the Appeal on the standard basis to be assessed if not agreed. The only express reference to the disposition of the Appeal Security Sum in the Appellants’ Costs Submissions is at paragraph 27(b) where it is suggested that if the Court were minded to award some portion of the costs of the Appeal to the First Respondent the Appeal Security Sum currently held by the Court Registry as security for the Respondents’ costs of the Appeal should continue to be held by the Court and not paid out to either or both of the Respondents.

26. No order is sought for payment out of the Appeal Security Sum save that the 21 February 2023 Order be set aside.

27. The Appellants also suggest that the Secured Properties (see paragraph 3(4) above) secured in favour of the Respondents to cover their costs of the Trial should remain secured on the existing terms.

28. As part of their primary case, the Appellants seek an Order that the First Respondent to pay the Second Respondent’s costs of the Appeal. The Appellants submit that the First Respondent is solely responsible for the Second Respondent’s joinder as a defendant in these proceedings, with the consequence that the First Respondent should be responsible for the Second Respondent’s costs of the Appeal.

29. The Appellants ask this Court to delve back into the submission they made at the Trial at Section C1A which the Court found at page 9597 of the Appeal Bundle. Subparagraphs 39.a to 39.g of the Appellants’ costs submissions of 15 July 2024 are a cut and paste of paragraphs 14.a to 14.g of the Appellants’ costs submissions at the Trial including references to the Trial Bundle rather than the Appeal Bundle.

30. The short point is that in the first iteration of its Defence the First Respondent claimed that Second Respondent, who was not a defendant at that stage, took actions entirely in his personal capacity rather than for and on behalf of the First Respondent. The Appellant says that it is to be inferred that the First Respondent was saying that the Second Respondent was personally liable for First Appellant’s losses.

31. The Appellants point to inter partes correspondence which again restated the First Respondent’s position that the First Appellant did not become a client. That was found to be the case by the Trial Judge and the appeal against that finding was dismissed by this Court. The Appellants also point the Second Respondent’s costs submissions at Trial [Appeal Bundle page 9582]. While those submissions do record that the First Appellant said it was compelled to join the Second Respondent by the First Respondent’s pleading, they also note that in their Closing Submissions the Appellants made the positive case that the First Defendant authorised the Second Defendant to offer and provide crypto custody/escrow services. At paragraph 370 of their Closing Submissions [Appeal Bundle page 8887] the Appellants stated that “Cs’ primary case is that D2 acted within the scope of his employment by and/or with the authority of D1. Accordingly, D1 is liable for the actions of D2.” They also stated that as the First Defendant claimed that any actions taken or advice given by the Second Defendant in respect of the Transaction were taken/given by the Second Defendant in his personal capacity and without the Second Defendant’s authorisation “it became necessary for C1, after inviting D1 to reconsider its position, to add D2 as a defendant.”

Alternative Submission

32. The Appellants’ alternative submission has the merit of addressing both the costs of the Appeal and the costs below. The Appellants seek a stay of all costs orders until determination of the Retrial pursuant to the Court’s general management powers under RDC 4.2(6) (“The Court may stay the whole or part of any proceedings or judgment either generally or until a specified date or event”).

33. The Appellants recognise that in Investment Group Private Limited v Standard Chartered Bank [2015] DIFC CA 004 (19 November 2015) this Court accepted the parties’ agreement that a stay would be granted on case management grounds only in rare and compelling cases, and that the burden of proving that it is such a case falls on the party seeking a stay. The Appellants say that this is a rare and compelling case for the following reasons:

Quantum of Costs

34. The Appellants have put in Statements of Costs in accordance RDC 38.34 and 38.35 in the following sums:

35. The Appellants do not seek an interim payment on account.

36. So far as the First Respondent’s claimed costs are concerned, the Appellants contend that the are neither proportionate or reasonable nor reasonably incurred:

37. So far as the Second Respondent’s claimed costs are concerned, the Appellants contend some of the costs claimed are neither proportionate nor reasonable nor reasonably incurred for the following reasons:

THE FIRST RESPONDENT’S SUBMISSIONS

Costs of the Appeal

38. The First Respondent submits that it should be granted all, or substantially all, its costs of the Appeal as it was overwhelmingly the successful party. There were 8 Grounds of Appeal and all were dismissed in their entirety, save – to a limited extent - for Ground 3.

39. The First Respondent points out that even in relation to Ground 3, the appeal was allowed on a different basis from that advanced by the Appellants. The Appellants’ primary case was to challenge the Judge’s findings of fact that the contract he had found to have been formed was subject to a condition precedent that was not satisfied. This challenge was rejected, instead the Appeal was allowed on the narrow basis that there may have been a varied or new contract to be inferred from the parties’ actions. This was a line of argument developed in the course of the Appeal hearing and not one that had been ventilated with any prominence at trial.

40. In addition, the Appellant was not seeking a Retrial and a Retrial was only ordered because the Judge made no findings on the point, which, while it was alluded to in the Appellants’ Closing Submissions, was not drawn to the Judge’s specific attention by the Appellants for determination.

41. The First Respondent submits that the very limited relief obtained by the Appellants in relation to one aspect (only) of one of the Grounds of Appeal should not justify any departure from the overall conclusion that the First Respondent as the successful party should be awarded all its costs. It would be particularly unjust, says the First Respondent, if it had to bear any of its own costs (still less any of Appellants’) in relation to a point that did not feature centrally in the Appeal documentation (and was only developed in argument), and in relation to a result that was not sought until a late stage of the argument.

42. Even if the Court were to adopt an issue-based approach, the First Respondent says the result is the same and it is entitled to all, or substantially all, its costs of the Appeal. The First Respondent claims that it was overwhelmingly successful in relation to all the issues. It succeeded very substantially in relation to the Grounds of Appeal as formulated and submitted to this Court and accompanying written argument. The Appellants obtained only a partial result in respect of one argument that was very largely developed orally at the Appeal (and obtained a Retrial that was not the result that it came to the Court of Appeal to seek).

43. Alternatively, if the Court were minded to mark the Appellants’ limited success, the First Respondent suggests that it should immediately be awarded “at least” 90% of its costs. If the Appellants fail on the retrial, it could never have been just for the First Respondent to have had to bear some part of the costs of the Appeal, all of which will have been in vain (as regards any commercial outcome).

44. The First Respondent says that even if the Appellants were successful on the retrial, the First Respondents should not bear the costs of the Appeal: it was never open to the First Respondent, even theoretically, to have conceded in advance that there should be a Retrial on this point given that it was not the relief that the Appellants were seeking on the Appeal.

45. If the Court were to feel that the Appellants should have part of the costs of the Appeal attributable to the issue on which they will have succeeded, this can be achieved by either directing that the balance of the costs of the appeal shall be costs in the retried issue or reserving those costs to the Trial Judge.

Costs of the Trial

46. The position of the First Respondent is that the cost order below was not referred to in the Notice of Appeal and (ex hypothesi) no permission was granted for any appeal, and it has not been the subject of any appeal. That Order remains in effect.

47. The First Respondent submits that in any event it is right that the Order should remain in effect because:

48. These points are reiterated in the First Respondent’s reply submissions. The Appellants stated in their reply submissions that as they are seeking to set aside the entirety of the CFI Judgment in the retrial that necessarily includes the Costs Order. The First Respondent says that it is not open for them to seek to set aside the prior costs orders as there has never been any appellants’ notice in respect of them, and no permission has ever been granted; it is far too late for these matters to be addressed now

49. The First Respondent points out that the Appellants’ submission is unclear as to what they say should now happen in respect of those costs if the Judge’s Order were set aside. This, the First Respondent submits, underscores that the just result is to leave the Costs Order at trial unaffected, which is the result that the procedural position mandates.

Other Costs

50. The First Respondent submits that the 65% of the costs directed by the 7 February 2023 Order to be costs in the Appeal and the costs ordered by the 14 April 2023 Order to be costs in the case should follow the Costs Order in the Appeal.

Security

51. The First Respondent suggests that this Court should not make any order with regard to the security currently held by it in respect of the costs the Trial and of the Appeal any necessary orders may be made by the CFI.

Interim Payment

52. If an Order of costs is to be made in favour of the First Respondent, the First Respondent seeks an interim payment pending assessment. The First Respondent has put in a Statement of Costs in accordance RDC 38.34 and 38.35 in the total sum of AED 3,093,081.3. The First Respondent suggests that the Court should make an interim payment in a sum equivalent to 50% of that sum or such other sum as is allowed.

The Second Respondent’s Costs

53. The First Respondent submits that any suggestion that it pays the Second Respondent’s costs is “unreal, and has no justification at all”:

Response to the Appellants’ alternative submissions

54. The First Respondent opposes the Appellants’ alternative application for a stay of all costs of the Trial pending the outcome of the Retrial for two reasons:

55. The First Respondent accepts that it may be appropriate that some of the costs of the Appeal should be addressed by the Judge on the Retrial in light of the outcome, however:

Quantum of Costs

56. It is common ground that any costs order made in relation to the substantive Appeal hearing is to be on the basis that the costs are to be assessed if not agreed (rather than subject to immediate assessment and payment). The First Respondent says this includes the Appellants’ Schedules of Costs in relation to the two applications for Permission to Appeal and the security for costs application.

Costs of the Costs Submissions

57. The First Respondent submits the costs of the costs submissions should follow the result of the substantive Order made in relation to the costs of the Appeal.

58. The First Respondent claims AED 113,571.85. It suggests that the Appellants’ claim of AED 314,510.50 is excessive by comparison.

THE SECOND RESPONDENT’S SUBMISSIONS

Costs of the Appeal

59. The Second Respondent submits that the appeal against the Judgment in his favour was dismissed in its entirety and hence, in accordance with the RDC 38.7(1), the Appellants must pay the costs of the Second Respondent.

60. It is not in issue that Second Respondent must have his costs, the only question is whether they are paid by the Appellants or by the First Respondent. The Second Respondent initially sought his costs only against the Appellants, but in his reply submissions he said that “it is both just and equitable for the Court to order the Appellants or the First Respondent to bear these costs”. He contends that the Appellants: (1) never intended to bring a claim against the Second Respondent and failed to advance any meaningful case against the Second Respondent; (2) denied the Second Respondent’s offer for settlement at an early stage of this litigation; and (3) the Appellant must have known that the appeal as advanced was baseless and without any merit.

61. The Second Respondent refers to a letter from the Appellants to the First Respondent dated 17 June 2020 in which the Appellants wrote:

62. The Second Respondent points to an offer made on 7 March 2021 whereby he offered USD 500,000 payable by instalments. On 1 April 2021, the Appellants rejected the settlement offer and refused to provide any counteroffer for settlement or offer to engage in any further negotiation in an attempt to settle the claims against the Second Respondent.

63. The Second Respondent submits that his costs are reasonable and proportionate in amount. He has served a Statement of the Costs of the Appeal in the sum of AED 1,839,801. He requests an interim payment on account of 50% and payment out of the sums currently standing in Court as security for his costs of the Appeal.

64. The Appellants suggested that the Second Respondent pay into Court the AED 550,000 (plus any accrued interest) that had previously been paid into Court by the Appellants by way of security and which was paid out to Second Respondents under the 21 February 2023 Order. The Second Respondent does not address this suggestion nor seeks the costs of his costs submissions.

DISCUSSION

The Appellants’ and First Respondent’s Costs

Appeal

65. The Court cannot accept that the Appellants were the parties who were the successful parties in the Appeal. The Court considers that the First Respondent was largely successful in the Appeal.

66. This is not an appropriate case in which to make an issue-based order. Insofar as the Grounds of Appeal addressed various elements of the reasoning underlying the Trial Judgment, ultimately there was only one issue, namely whether the Respondents bore any responsibility for the loss of the Claimant’s Bitcoin to the fraudsters in the transaction facilitated by them. This case is different from, for example, Multiplex Constructions (UK) Ltd v Cleveland, which was a construction case in which discrete issues (and their associated costs) were identifiable as preliminary issues or attributable to claims set out in various schedules. In the present case it would be quite impossible to allocate the costs to particular arguments.

67. The Court must, in its discretion, form a view that reflects the “real life” result and the “overall justice of the case”. While the Appellants were only successful in securing a Retrial on a limited issue, that issue if it succeeds at the Retrial will be dispositive of the proceedings in the Appellants’ favour. On the other hand, while it was an issue that was theoretically before the Judge at the Trial it was not pressed upon him at all, nor was it in the forefront of the Appellant’s submissions on the Appeal.

68. The First Respondent suggests that if the Court were minded to reflect the Appellants’ partial success in the Appeal this should result in the First Respondent being awarded at least 90% of its costs with the balance reserved to the Judge on the Retrial, on the basis that they should be costs that in broad terms follow the event of the Retrial. The Court agrees with this approach in principle but considers that “at least 90%” only reflects one side of the coin. If one were simply apportioning the relative amount of resources devoted to each argument raised on the Appeal, 90% would not be an unreasonable estimate in relation to the point that secured the Retrial, but the Court considers that it also necessary to give some weight to the fact that the point itself has the potential to reverse the outcome of the Trial.

69. One possible way of addressing that possibility is to adopt the Appellants’ submission and stay of all costs orders until determination of the Retrial. The suggestion would enable all the costs to be addressed compendiously at a time when the final result will be known, but the Court finds it unattractive. The events in question occurred 4½ years ago and the Trial took place over 3 years ago. It seems unlikely that the Retrial will take place for several months and its result may lead to another appeal. Even if there were no further appeal, additional rounds of costs submissions would seem likely. It is unpalatable that litigants should be kept out of their costs for periods measured in years.

70. The solution is to make an immediate Order for costs that reflects both the substantial failure of the almost all the Appellants’ Grounds of Appeal and the possibility that they may yet prevail. It is an exercise of balance and discretion that admits of no precise analysis. In the judgment of the Court, justice is best served by an Order that the Appellants shall pay 60% of the First Respondent's costs of the Appeal. The balance of 40% of each party’s costs shall be costs in the Retrial.

The Costs Below

71. The First Respondent takes the preliminary objection that the Cost Order below was not referred to in the Notice of Appeal and no permission was granted for any appeal. For their part, the Appellants say that they are seeking to set aside the Judgment and consequential orders.

72. Article 26(2) of the DIFC Court Law and RDC 44.108 provide that on hearing an appeal from a decision of the Court of First Instance, the Court of Appeal may:

73. In the view of the Court, it is not necessary for there to be a separate ground of appeal or permission in relation to the costs consequential on the Court of Appeal’s substantive findings. Once the Court of Appeal is seised of a matter it may make any order that could have been made or given by the Court of First Instance; that includes consequential costs orders. The costs below therefore fall within the general discretion of the Court of Appeal. Further, it would be procedurally inefficient to require a separate permission to appeal in respect of a consequential costs order – if the substantive appeal enjoys a real prospect of success, it must follow that there is a real prospect of success that any costs order based on the underlying substance of the claim should be set aside.

74. The consequential Orders are the 21 February 2023 Order, the 7 February 2023 Order, the 14 April 2023 Order and the 5 May 2023 Order.

75. The 21 February 2023 Order addresses the following:

76. The same logic applies to the costs of the Trial as to the costs of the Appeal. The Appellants shall pay 60% of the First Respondent's costs of the Trial. The balance of 40% of each party’s costs shall be costs in the Retrial. The deductions from the Respondents’ costs made by the Trial Judge shall stand. For this purpose, the costs of the Trial shall include the costs incurred by the Respondents in making their applications for their costs of the Trial. Credit shall be given for the sum of AED 750,000 paid out of Court in respect of the First Respondent’s costs of the Trial.

77. Both Appellants and First Respondents suggest that Secured Properties remain as security and no order is necessary from this Court.

78. By the 7 February 2023 Order, the Trial Judge granted limited permission to appeal including on the Ground (No.3) on which the Appellants secured the Order for the Retrial. He ordered that the Appellants were to pay 35% of the costs incurred by the Respondents in opposing the First PTA Application and the remaining costs of the First PTA Application were to be costs in the Appeal. The Court sees no reason to interfere with that Order – it is rather more generous to the Appellants than the 60/40 Orders and the First Respondent is not seeking that it be revised. Accordingly, the Appellants shall pay 35% of the First Respondent's costs of the First PTA Application. The remaining 65% of each party’s costs shall costs in the Retrial.

79. By the 14 April 2023 Order, the Chief Justice granted Permission to Appeal in respect of the remaining Grounds of Appeal and directed that the costs of the application be in the case. In the circumstances as now obtain that Order means that the costs shall be in the Retrial.

80. By the 5 May 2023 Order, the Trial Judge ordered the Appellants to provide security for the Respondents’ costs of the Appeal in sum of AED 1,551,591.99 which was paid into Court on 4 July 2023. AED 969,386.99 of this sum was attributable to the First Respondent’s costs. The Appellants seek return of this money. The First Respondent says it should stay in Court.

Costs of the Costs Submissions

81. The First Respondent submits the costs of the costs submissions should follow the result of the substantive order made in relation to the costs of the Appeal. The Court agrees: the Appellants shall pay 60% of the First Respondent's costs of the costs submissions. The balance of 40% of each party’s costs shall be costs in the Retrial.

Interim Payment on Account

82. The only application before this Court relates to the First Respondent’s costs of the Appeal which are claimed in the grand total of AED 3,093,081.30.

83. As a result of this judgment, the First Respondent is entitled to 60% of its costs of the Appeal. The Court notes the Appellants’ criticisms of the quantum of the First Respondent’s claimed costs. It is common ground that the costs will have to be the subject of detailed assessment. It is to allow for possibility of the reduction of costs on detailed assessment that it is the practice of the Court under paragraph 5 of Practice Direction No. 5 of 2014 to award 50% of claimed costs by way of interim payment on account.

84. In the present case the First Respondent is entitled to 50% of 60% of AED 3,093,081.30 by way of interim payment on account, namely AED 927,924.39.

85. In addition, the First Respondent is entitled to 50% of 60% of AED 113,571.85 being the costs of the costs submissions, namely AED 34,071.56, making a grand total of AED 961,995.95.

86. AED 969,386.99 is currently standing in Court as security for the First Respondent’s costs of the Appeal. AED 961,995.95 of that sum shall be paid out to the First Respondent’s Legal Representatives in satisfaction of the Order for the interim payment on account. The balance of AED 7,391.04 shall be paid to the Appellants’ Legal Representatives together with any accrued interest.

Second Respondent’s Costs

87. It is common ground that the Second Respondent must have his costs.

88. This Court notes that in the early part of the Trial Judgment, the Judge recorded that the “claim against Mr Thurner proceeds on the basis that Mr Thurner was not acting for and on behalf of Tabarak in his dealings with Huobi but instead was acting on his own personal account”. In his decision on the Appellants’ claims in tort the Trial Judge did not consider whether the First Respondent was vicariously liable for the Second Respondent as he found that neither owed a duty of care to the Appellant. He did however hold at paragraph 71 of his Judgment that “Mr Thurner had apparent authority for all that he did and said in the lead up to the 3F Meeting prior to the alleged agreement that the fee could be paid out of the proceeds of the transaction and, after that call, throughout the course of the 3F Meeting”. There was no appeal against this finding.

89. On day 3 of the hearing before this Court, the Appellants accepted that when an employer is vicariously liable for its employee it would normally be the case that only the employer is sued because the employer is likely to have more money than the employee. The Appellants noted that while the First Respondent had initially sought to disown the Second Respondent, it eventually did accept vicarious responsibility for his actions. At that point, the Appellants recognised that the Second Respondent could have been released, but they decided to keep him in. The opportunity to release the Second Respondent came before the institution of the Appeal. In the context of the costs of the Appeal, the Appellants must bear the consequences of that decision and are solely responsible for the Second Respondent's costs of the Appeal.

90. Somewhat inconsistently, the Appellants do not seek an order that the First Respondent make any contribution towards the Second Respondent’s costs of the Trial. They do however submit that both Respondents pay into Court the sums that had previously been paid into Court by the Appellants by way of security and which were paid out to the Respondents under the 21 February 2023 Order. The Court can see no rational basis for making such an Order against the Second Respondent, nor does one appear in the Appellants’ submissions. The sum of AED 550,000 shall be credited against the amount of the Second Respondent’s costs found payable by the Appellants on detailed assessment.

91. The Second Respondent is entitled to an interim payment from the Appellants of 50% of his claimed costs on account of his costs of the Appeal in the sum of AED 919,900.50. The sum of AED 582,205 currently standing in Court together with any accrued interest shall be paid out in part satisfaction to his Legal Representatives.

92. The Second Respondent seeks interest at 9% per annum on the total amount of costs awarded pursuant to RDC 38.10(7).

93. All other costs orders affecting the Second Respondent remain unchanged and no order of this Court is required.

SUMMARY

94. The Court makes the following Orders:

CHIEF JUSTICE TUN ZAKI AZMI

95. I agree with the reasoning and conclusions of Justice Michael Black KC and have nothing further to add.

H.E. JUSTICE SHAMLAN AL SAWALEHI

96. I agree with the reasoning and conclusions of Justice Michael Black KC and have nothing further to add.