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Claim No. CFI 008/2023

IN THE COURTS OF THE DUBAI INTERNATIONAL FINANCIAL CENTRE

IN THE COURT OF FIRST INSTANCE

BETWEEN

FAIZAL BABU MOORKATH

Claimant

and

EXPRESSO TELECOM GROUP LTD

Defendant

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ORDER WITH REASONS OF JUSTICE RENE LE MIERE

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UPON the Judgment of Justice Rene Le Miere dated 14 March 2024

AND UPON the parties’ written submissions on costs dated 28 March 2024

IT IS HEREBY ORDERED THAT:

1. The parties shall bear their own costs of the Claimant’s claim.

2. The parties shall bear their own costs of the Defendant’s counterclaim.

3. The parties shall bear their own costs of the Claimant’s application for a Production Order of 10 November 2023.

Issued by:
Hayley Norton
Assistant Registrar
Date of issue: 19 April 2024
At: 8am

SCHEDULE OF REASONS

Summary

1. The Claimant was employed by the Defendant from 2011 until 23 March 2023.

2. On 23 March 2022, the Defendant summarily terminated the Claimant’s contract of employment for cause, stating that the Claimant and others caused the squandering and wasting of USD 2 million and exposed the company to the loss of that amount.

3. The reference to squandering and wasting USD 2 million was a referenced to two payments:

4. The Claimant brought a claim for three months’ salary in consideration of the statutory notice he was entitled to, for unpaid end of service benefits, and for damages for the loss of opportunity of employment as a result of the Defendant’s wrongful failure to cancel his visa.

5. The Defendant denied that it wrongfully terminated the Claimant’s employment or that he was entitled to any of the end of service benefits he claimed. The Defendant asserted that the Claimant was involved in the loss of USD 2 million by the Defendant in the 2016 and 2017 transactions, his actions reflected serious accounting irregularities and were contrary to standard and proper accounting practises and accordingly the Defendant justifiably terminated his employment. The Defendant asserted it had paid the Claimant all the end of service benefits to which he was entitled.

6. The Defendant counterclaimed for AED 7,356,500 which it asserted was economic loss it suffered as a result of the Claimant’s negligence in relation to the 2016 and 2017 transactions.

7. On 14 March 2024 the Court ordered that the Claimant’s claim and the Defendant’s counterclaim be dismissed and directed the parties to make submissions in relation to costs: Faizal Babu Moorkath v Expresso Telecom Group Ltd [2023] DIFC CFI 008 (March 14, 2024).

8. After considering the parties’ submissions and for the reasons which follow there will be orders in relation to costs as follows:

Reasons for dismissing claim and counterclaim

9. The Claimant claimed 3 months’ salary for wrongful termination of his employment and unpaid end of service entitlements for unpaid leave, child education allowance, air tickets allowance, additional gratuity, and penalties for late payment. He claimed loss of earnings as a result of the Defendant’s wrongful failure to cancel his visa.

10. I found that the Claimant’s employment was unlawfully or wrongfully terminated because it was terminated without notice and without just cause and the appropriate compensation is the salary for the period of notice to which he was entitled - 3 months - and any ancillary benefits. However, his claim was dismissed because it was presented to the Court more than six months after the Claimant's Termination Date and Article 10 of the Employment Law 2019 requires that the Court shall not consider the claim.

11. I found that the Claimant’s claims for unpaid child education allowance, underpaid gratuity, and penalties for late payment would have succeeded but were dismissed because they were presented to the Court more than six months after the Claimant's Termination Date and were time barred.

12. I found that the Claimant was not entitled to payment for claimed unpaid leave or in lieu of air tickets not taken.

13. The Claimant’s claim for loss of earnings was dismissed because the Defendant did not owe a relevant duty of care to the Claimant and the Claimant failed to discharge the onus on him of proving that he suffered loss of earnings which was caused by the Defendant’s failure to cooperate to cancel his visa.

14. The Defendant’s counterclaim was dismissed because it did not establish that it suffered actionable loss caused by the acts or omissions of the Claimant or that the Claimant breached a relevant duty of care he owed to the Defendant.

Claimant’s proposed orders

15. The Claimant submitted the Court should order:

Defendant’s proposed orders

16. The Defendant submitted the court should order:

Costs framework

17. The RDC provide:

Costs of the claim

18. The Claimant canvassed the issues that were raised in his claim and sought to characterise the parties’ respective successes and failures on those issues. But in my view, that level of abstraction would ignore practicality. The proper approach, in my view, is to look at what was the real question between the parties, and to see who succeeded and who failed on that issue.

19. Viewing the matter in that way, the Defendant was the successful party. The Claimant failed in his claims for 3 months’ salary, for unpaid end of service benefits, and for damages for loss of employment opportunity. His claim was dismissed. The proper approach to “success” and “failure” in this case requires consideration of the outcome and not the issues by reference to which that case was argued.

20. However, the Court may deprive the successful party of its costs, or a proportion of its costs, for good reason.

21. In this case there are two matters which together amount to good reason.

22. First, the Claimant succeeded, and the Defendant failed on the issues which occupied most of the evidence and the majority of the submissions at trial.

23. The trial and the evidence to a large degree revolved around the Defendant’s allegations that the Claimant’s conduct constituted serious accounting irregularities and was contrary to standard and proper accounting practises and procedures, maintained inadequate records, and caused substantial loss to the Defendant. The Defendant based its case that the Claimant’s summary dismissal was justified and its counterclaim for damages for negligence on those assertions.

24. I estimate that approximately 70% of the hearing time at trial was taken up with those issues. The Claimant succeeded and the Defendant failed in respect of those issues.

25. Secondly, the Defendant succeeded because of the limitation argument which it raised for the first time in its skeleton argument filed on the second last business day prior to the trial.

26. As a general rule, where a plaintiff makes a late amendment which substantially alters the case the defendant has to meet and without which the action will fail, the defendant is entitled to the costs of the action down to the date of the amendment, even where if the amendment had been made earlier the action would have been resisted: Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137, 154.

27. In this case the limitation argument raised was essentially a matter of law and in that respect, it is different to a late amendment of a pleading which substantially alters the case that a party must meet.

28. However, the limitation argument was raised at a time when the Claimant had little opportunity to consider and respond to it.

29. If the limitation argument had been raised by the Defendant as a jurisdictional point or pleaded in its defence, as it should have been, the issue may well have been heard and determined much sooner and avoided much of the costs of the trial.

30. An order that a successful defendant pay the costs of an unsuccessful claimant can rarely be justified. It is not justified in this case.

31. Where the court decides, in the exercise of its discretion, to modify the general costs rule to reflect the limited success of the successful party, that power will be exercised broadly, and as a matter of impression, and without any attempt at mathematical precision which is likely to prove illusory in any event.

32. Taking account of the late raising of the limitation argument upon which the Defendant was ultimately successful and the lack of success in its primary arguments originally raised that the Claimant’s dismissal without notice was justified, it would be appropriate to exercise the Court's discretion by ordering the Claimant to pay a proportion of the Defendant’s costs of resisting the claim.

The counterclaim

33. The Defendant wholly failed, and the Claimant succeeded on the Defendant's counterclaim.

34. A substantial part of the costs incurred by the Claimant in resisting the Defendant’s counterclaim were common to the costs incurred by the Claimant in advancing his claim.

35. In some cases, if the defendant’s counterclaim is unsuccessful, the claimant may be entitled to recover all costs associated with that counterclaim.

36. Alternatively, the court may order that the claimant only recover the additional costs incurred due to the counterclaim (i.e., costs beyond those related to the original claim). In that case, the claimant would not necessarily recover all his costs associated with the counterclaim itself.

37. Ultimately, the Court has a discretion in determining costs. It considers factors such as the complexity of the claim and counterclaim, the overlap of issues and evidence in relation to the claim and counterclaim, the conduct of the parties, and the overall fairness of awarding the claimant the whole or a proportion of his costs of the counterclaim.

38. In this case the Claimant should have only a proportion of its costs of resisting the counterclaim because much of the evidence was common to the claim and the counterclaim.

Claimant’s conduct

39. The Defendant submits that the Claimant should be penalised for its conduct of this dispute and the Court should award the Defendant a portion of its costs on account of the Claimant's conduct. The Defendant refers to three matters.

40. First, the Defendant says that the Claimant unreasonably opposed the Defendant’s application for an extension of time for filing its counterclaim and the Claimant’s conduct caused the parties to incur further and unnecessary costs. The Defendant’s application seeking a retrospective extension of time to file its defence and counterclaim was determined by H.E. Justice Maha Al Mheiri on 1 May 2023. Her Excellency ordered that there shall be no order as to costs. The costs of the application having already been dealt with, it would be inappropriate to award the Defendant a portion of its costs incurred in relation to that application.

41. Secondly, the Defendant says that the Claimant brought an application for a document production order on 10 November 2023 when there was no good basis for bringing the application.

42. The Claimant submits that it should be awarded its costs of the application because the requests for production related to the facts giving rise to the counterclaim and the Claimant was successful in resisting the counterclaim.

43. On 8 December 2023, H.E. Justice Nassir Al Nasser granted the document production application in part and ordered that the costs of the application be in the case. The costs of the application having already been dealt with, it would be inappropriate to revisit the costs order by awarding either party their costs or a portion of their costs other than as a consequence of deciding that they are entitled to the costs of the case.

44. As I set out below, I have decided that each party should bear their own costs of the claim and counterclaim. Therefore, neither party should recover costs from the other.

45. This outcome means that both the Claimant and the Defendant are responsible for covering their respective legal expenses incurred throughout the case, including costs ordered to be in the case.

46. Each party should bear their own costs in relation to the Claimant’s application for a Production Order.

47. Thirdly, the Defendant says that the Claimant’s legal representatives’ conduct in seeking an adjournment of the trial three business days before the trial was unreasonable and resulted in unnecessary costs being incurred. The Claimant sought the adjournment because of the ill health of his counsel. Counsel recovered sufficiently to be able to appear at the trial. I am satisfied that the application was made in good faith, that counsel was unwell, and it was reasonable to make the application. The Claimant should not be penalised for his conduct in making the application.

Appropriate order

48. The Court could order the Claimant to pay a proportion of the Defendant’s costs of the claim and order the Defendant to pay a proportion of the Claimant’s costs of the counterclaim. This would lead to the burden of multiple apportioned costs and costs assessments.

49. The Court may make a consolidated costs order which has the effect of consolidating competing costs entitlements and costs assessments. This process may involve offsetting one party’s costs entitlement against another party’s costs entitlement and awarding the balance in one global costs order on a percentage basis or making no order as to costs in respect of one or more costs entitlements and hence order that the parties bear their own costs. Wherever possible, it is desirable to simplify any costs assessments.

50. The appropriate approach in this case is to take a broad view of the success of the parties in the proceedings as a whole, the ultimate outcome, and a just allocation of costs.

51. A just outcome in this case is that each party should bear their own costs of the claim and counterclaim.