November 01, 2022 COURT OF FIRST INSTANCE - ORDERS
Claim No. CFI 030/2022
IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
MAD ATELIER INTERNATIONAL B.V.
Claimant
and
(1) AXEL MANES
(2) CATHERINE ZHILLA
Defendants
ORDER WITH REASONS OF H.E DEPUTY CHIEF JUSTICE ALI AL MADHANI
UPON the Order of Deputy Chief Justice Ali Al Madhani dated 1 August 2022 directing the parties to file Submissions on Costs
AND UPON reviewing the Claimant’s Submissions on Costs in Applications No. CFI-030-2022/5; CFI-030-2022/6 and CFI-030-2022/7
AND UPON reviewing the Second Defendant’s Submissions on Costs incurred in connection with the Set Aside Order dated 1 August 2022
AND UPON reviewing the First Defendant’s Submissions on Cost dated 19 September 2022
AND UPON reviewing the Claimant’s Application No. CFI-030-2022/5 seeking to set aside the Order of H.E Justice Maha Al Mheiri dated 29 June 2022 (the “Set Aside Application")
AND UPON reviewing the Second Defendant’s Application No. CFI-030-2022/6 seeking to set aside the Registrar’s Directions dated 6 August (the “Second Defendant’s De Novo Application”)
AND UPON reviewing the First Defendant’s Application No. CFI-030-2022/7 seeking to set aside the Registrar’s Directions dated 6 August (the “First Defendant’s De Novo Application”) together (the “De Novo Applications”)
AND UPON reviewing the email correspondence to the DIFC Courts Registry from the First Defendant dealing with the overlap of costs of the Claimant.
AND UPON reviewing the Practice Direction No.5 of 2014 - DIFC Courts’ Costs Regime (the “PD No. 5 of 2014”).
IT IS HEREBY ORDERED THAT:
1. The First Defendant and Second Defendants shall pay the Claimant’s costs of the Set Aside Application and the De-Novo Applications on a standard basis, or determined by the Registrar, if not agreed.
2. The First and Second Defendants shall pay the Claimant’s costs within 14 days of the date of this Cost Order being issued.
Issued by:
Delvin Sumo
Assistant Registrar
Date of Issue: 1 November 2022
At: 2pm
SCHEDULE OF REASONS
1. As set out under Rule 38.7(1) of the Rules of the DIFC Courts (“RDC”) the unsuccessful party[ies] will be ordered to pay the costs of the successful party. The First and Second Defendants were unsuccessful in the Set Aside Application and the De Novo Applications. It is just that the Defendants are ordered to pay the costs of the Claimant on a standard basis for the reasons set out below.
2. The Second Defendant recommends a “reasonable approach” for the DIFC Court to reserve its decision on costs pending the JJC’s final determination or that the costs shall be costs in the case. I disagree with this notion and will not reserve my judgment on costs relating to the Stay Application and the De Novo Applications based on two reasons.
3. First, the basic principle that costs follow the event. In this circumstance, the unsuccessful party (being, the First and Second Defendants) shall be ordered to pay the Claimant’s costs incurred in the Set Aside Application and the De Novo Applications, since the Claimant has succeeded on those Applications.
4. Second, there is simply no basis to reserve a costs order pending the JJC’s final determination when it has been ruled before this Court that there was no conflict of jurisdiction for the purposes of Article 5 of the Dubai Decree No 19. of 2016. In light of the decided authority, in particular, the decision of the Court of Appeal in Lakhan v Lamia [2021] DIFC CA 001 and the decision in Credit Suisse v Emirates Hospital [2021] DIFC CFI 060, there is no jurisdictional issue as between the Court of on-shore Dubai and the Court of the DIFC and there is no basis to wait for the final determination of the JJC.
5. The Claimant argued in their submissions that their costs should be awarded on an indemnity basis because (1) there was no justification for a stay of the proceedings pending the determination of the JJC; (2) the fact that it is difficult to avoid the conclusion that the Defendants’ applications were aimed at delaying the progress of proceedings; (3) submissions and evidence were materially incorrect and misleading; (4) Hearing of the Set Aside Application on 1 August 2022 was necessary to bring to the Court’s attention the Defendants’ conduct; and (5) the Defendants’ attack on the directions originally listing the Set Aside Application by way of a De Novo Application increased costs and itself was directed at achieving the effects of a stay, which was not justified.
6. I remind myself of PD No. 5 of 2014 which mandates certain factors, inter alia, to be taken into account in determining whether costs should be assessed on the indemnity basis as opposed to standard basis being: (i) the circumstances where the facts of the case or the conduct of the paying party are/is such as to take the situation away from the norm, for example where the Court has found deliberate misconduct in breach of a direction of the Court or unreasonable conduct to a high degree in connection with the litigation or (ii) otherwise inappropriate conduct in its wider sense in relation to a paying party’s pre-litigation dealings with the receiving party, or in relation to the commencement or conduct of the litigation itself or (iii) where the court considers the paying party’s conduct to be an abuse of process.
7. Although the conduct of the Defendants may warrant a cause of concern, the type of “deliberate misconduct” has not been established at this stage, it would be quite premature to take a conclusive position on the conduct of the Defendants. Whilst it may be difficult for the Claimant not to avoid the conclusion that the Defendants actions were aimed at delaying proceedings, one could argue that they were primarily putting forward applications which they are entitled to do so under a legislation and before a court of law.
8. The Court takes a strict view in awarding costs on an indemnity basis and there is an exceptionally high threshold for the Claimant to demonstrate to the Court that costs should be awarded on an indemnity basis. I do not think this threshold has been met in this matter.
9. On 24 October 2022, the DIFC Courts’ Registry received an email from the First Defendant’s Counsel notifying the Court to the possibility of duplication of costs incurred by the Claimant. The potential duplication of costs arose in the applications determined by myself, and those which were incurred in the applications determined by Justice Sir Jeremy Cooke.
10. It is on that basis that the Claimant shall be awarded their costs of the Set Aside Application and the De Novo Applications on a standard basis, otherwise costs shall be subject to the assessment of the Registrar, if not agreed between the parties.