CFI 061/2018 (1) Khaldoun Tabari (2) Zeina Tabari v Tabarak Investment LLC
CFI 061/2018 (1) Khaldoun Tabari (2) Zeina Tabari v Tabarak Investment LLC
May 17, 2020  court of first instance - Orders
Claim No: CFI 061/2018
IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE
COURTS
IN THE
COURT
OF FIRST INSTANCE
BETWEEN
(1) KHALDOUN TABARI
(2) ZEINA TABARI
Claimants/Respondents
and
TABARAK INVESTMENT LLC
Defendant
/Appellant
AMENDED ORDER WITH REASONS OF H.E. JUSTICE ALI AL MADHANI
UPON
reviewing the order of H.E Justice Ali Al Madhani issued on 28 November 2019 (the “
Order
”)
AND UPON
reviewing the Appellant’s application filed on 19 December 2019 for permission to appeal the Order (the “
Permission Application
”)
AND UPON
considering the Appellant’s skeleton argument and Grounds of Appeal filed on 9 January 2020
AND UPON
considering the Respondent’s submissions filed in opposition to the Permission Application on 2 February 2020
AND UPON
reviewing all the relevant documents on the case file
IT IS HEREBY ORDERED THAT:
1. The Permission Application is denied.
2. The Appellant is to pay USD 50,000 to the Respondents’ account pending final determination of the costs Order and the assessment of quantum.
3. The Appellant is to pay the costs of this application on the standard basis to be assessed if not agreed.
Issued by:
Nour Hineidi
Deputy Registrar
Date of Issue: 30 April 2020
Date of Re-Issue: 17 May 2020
At: 12pm
SCHEDULE OF REASONS
1. This is my reasoned order in respect of the Appellant’s application for permission to appeal the order of this
Court
’s made on 28 November 2019, being the Order, together with its schedule of reasons (the “
Reasons
”), in respect of the costs of the Appellant’s (then the Defendant / Applicant) application challenging the jurisdiction of the
DIFC Courts
over the claim.
2. I have the benefit of both parties’ submissions. I note that the submissions were unnecessarily lengthy. I also note the agreement between parties for the Permission Application to be dealt with on the papers without a hearing.
3. To proceed, the background of this case is that on 4 September 2018, the Respondents brought a claim before the
DIFC
Courts in respect of an alleged breach of an undertaking that had been provided by the Appellant to the First Respondent. The Appellant took the position, however, that the Respondents’ case was one which had no substantive link to the DIFC.
4. In the week commencing 7 October 2018, discussion took place between the parties about the jurisdiction of the DIFC Courts over the case and they ended with the Respondents insisting that DIFC Courts did indeed have jurisdiction to hear the matter. In the circumstances, on the 18 October 2018, the Appellant formally submitted its application to challenge the jurisdiction of this Court. A hearing for the Application was listed for 5 March 2019 with the following case management timetable determined:
I. the Respondents’ evidence in response to the Application was to be served by 29 November 2018;
II. the Appellant’s evidence in reply was to be served by 10 January 2019;
III. the Application bundle was to be agreed between the parties by 7 February 2019; and
IV. skeleton arguments were to be filed by both parties before 28 February 2019.
5. On 28 February 2019, both parties filed and served their skeleton arguments together with the authorities that they relied on for the hearing on 5 March 2019. It was not until the 3 March, however, that the Appellant disclosed to the Respondents and to this Court that it had filed a claim against the latter in the
Dubai Courts
(the “
Onshore Proceedings
”). Furthermore, the Appellant informed the Respondents and this Court of its application to the Joint Judicial Committee (the “
JJC
”) in respect of the conflicting DIFC and Onshore Proceedings and that, moreover, this application had been accepted by the JJC. Accordingly, by the acceptance of this application by the JJC, the DIFC Courts proceedings were thereby stayed and the Appellant sought vacation of the hearing listed for 5 March 2019.
6. On 3 March 2019, the Respondents advised the Court that they had not been made aware of the Onshore Proceedings or any application to the JJC and they asked that if the Court was minded to vacate the hearing on 5 March 2019, that it do so only on terms that the Appellant pay the Respondents’ costs of the Appellant’s application on an indemnity basis, such costs to be assessed if not agreed.
7. On 4 March 2019, the Court vacated the hearing listed for 5 March 2019 and ordered the parties to serve written submissions in relation to costs.
8. On 11 March 2019, the Appellant filed its submissions on costs in which it argued that the Respondents’ application for costs was misconceived for the following reasons:
I. If the DIFC Courts did not have jurisdiction over the Claim, the Respondents could never recover any costs;
II. The Respondents could not be entitled to costs that they would never have received because the opposing party acted within its rights to challenge an unmeritorious claim;
III. The case raised interesting questions about the meaning in Arabic of the
judicial authority law
which should be decided by the JJC;
IV. Since the proceedings were stayed, this should extend to the DIFC Courts’ power to make an order for costs;
V. If the DIFC Courts were found not to have jurisdiction, it would be the Appellant who was entitled to its costs, and not the Respondents;
VI. In all the circumstances, the appropriate course of action was to consider costs when the final outcome of the issue as to jurisdiction was known.
9. On 17 March 2019, the Respondents filed their submissions on costs in which they maintained that they sought their costs on an indemnity basis on the basis that it had defended the Appellant’s application disputing the jurisdiction of the DIFC Courts, while the Appellant itself had rendered this application pointless.
10. On 20 June 2019, the JJC concluded that the Dubai Courts had jurisdiction to hear the dispute and that the DIFC Courts should cease hearing it. Later, on 28 November 2019, I gave the Order on costs, ordering the Appellant to pay the Respondents’ costs of the application challenging this Court’s jurisdiction on a standard, but not an indemnity, basis.
11. The Appellant’s case now is that, following a reasonable period of investigation, it became aware that it had claims against the Respondents and, accordingly, that it filed a claim against the Respondents in the Dubai Courts (Case No. 411/2019), with these courts being, the Appellant submits, the courts that were properly seized of jurisdiction over the matter.
12. The Appellant further submits that the Onshore Proceedings were formally accepted by the Dubai Courts on 26 February 2019 and that Immediately thereafter on 27 February 2019, and in accordance with general practice where a jurisdictional conflict exists as between the DIFC Courts and the Dubai Courts, the Appellant applied to the JJC for a determination in respect of that conflict. The JJC proceedings were formally registered on 3 March 2019. The Appellant submits that on both occasions that proceedings were issued by the Appellant, adequate notice was given to the Respondents in accordance with the relevant laws and procedures of the Dubai Courts and the JJC.
The Appellant’s appeal
13. Notwithstanding that the Appellant succeeded in its case on jurisdiction and that the Respondents’ claim has thereby failed entirely, the Appellant submits in this Permission Application that the decision in the Order was wrong on the following four grounds (the “
Grounds
”):
I. The Court erred by failing to consider, apply, or otherwise adequately take into account the material provisions of Part 38 of the Rules of the DIFC Courts (the “
RDC
”), and in particular Rule 38.7(1). The Court should have ordered that the Respondents pay the Appellant’s costs on the basis that it was the successful party and that the Respondents failed entirely in their claim;
II. The Court erred in finding that the Appellant’s conduct was not reasonable, in circumstances where it acted in a reasonable and timely manner, and in any event where it at all times complied with the relevant procedural rules of the DIFC Courts, the Dubai Courts, and the JJC. Accordingly, the Court should not have determined that there were grounds on which to depart from the general position set out in Rule 38.7(1) RDC;
III. In the alternative, the Court erred in concluding that the costs incurred by the Respondents in responding to the application were caused by the unreasonable conduct of the Appellant, through an alleged failure to give adequate notice to the Respondents of proceedings before the Dubai Courts and the JJC. In particular, the Appellant avers that most, if not all, of those costs would have been incurred in any event, since even if notice had been provided at an earlier time it would still have been given after most of the costs of the Application had been incurred. Further, notice of intention to commence proceedings would not have provided the Court with sufficient grounds on which to justify a stay of proceedings, and had such notice been provided at an earlier time it would not have made any difference;
IV. In the further alternative, the Court erred in the exercise of its discretion by making an Order that was manifestly wrong, in that it was disproportionate having regard to all of the circumstances of the case. In particular, having regard to the range of orders open to the Court in accordance with Rule 38.10 RDC, the Appellant’s conduct could not have reasonably justified an order that it pay the entirety of the losing parties’ costs of the Application.
The Respondents’ response
14. The Respondents first argue that none of Grounds 2 to 4 above were raised previously as arguments before myself and, moreover, that the Appellant had not made any application for permission to raise them on appeal. In this regard, the Respondents rely on the case of Damac Park Towers Company Ltd v Youssef Issa Ward [2015] DIFC CA 006 (14 December 2015), in which the DIFC Court of Appeal held at [65] to [70] that an appeal court should generally not allow a new argument to be run on appeal where the new point presents factual questions which might have affected the conduct of the proceedings before the lower court.
15. The Second argument made by the Respondents is that Grounds 2 to 4 of this proposed appeal comprise an attempt by the Appellant for fresh evidence to be adduced in order for the arguments made therein to be properly put before the Court. The new evidence should not be permitted, the Respondents maintain, and these Grounds imply a concession that the new issues turn on facts not previously put before the Court.
16. The Respondents’ third argument is that it is inconceivable that the Court would not have been aware of the general rule stipulating that the unsuccessful party is ordered to pay the costs of the successful party or that it confused the Appellant’s position as being unsuccessful rather than successful. The Respondents assert, furthermore, that the Appellant should not be deemed the successful party in its application before the DIFC Courts to contest its jurisdiction over the matter, not least because of its unreasonable behaviour.
17. Of importance with regards to this third argument, the Respondents submit, is that the Appellant was fully engaged in the DIFC proceedings right up until just before the hearing, without giving the Respondents nor the Court any warning of its intention to make a claim before the Dubai Courts and to make an application thereafter to the JJC. By the time the Dubai proceedings and the JJC proceedings had been commenced, the Respondents were, in effect, facing a completely different application to that which both parties had prepared to argue on 5 March 2019. As such, the Respondents submit, it cannot sensibly be said that the Appellant was successful in its original application to the DIFC Court.
18. The fourth argument made by the Respondents concerns the second Ground of Appeal, that the Court erred in finding that the Appellant’s conduct was unreasonable. The Respondents contend, in agreeance with the Court, that the Appellant’s conduct was plainly unreasonable as the Appellant should have informed the Respondents of its intention to issue other proceedings from the outset. This is particularly the case as, the Respondents submit, the inevitable effect of the JJC application would be to render the entirety of the Appellant’s DIFC Courts application moot.
19. The Respondents’ fifth argument concerns the Appellant’s submission that even if its conduct was to be regarded as unreasonable, still, it did not, as a matter of fact, cause the Respondents to incur costs. The Respondents say that this is wrong. They argue that the only evidence the Appellant relies on – namely the Respondents saying they would proceed with preparations for the hearing of the application until they heard from the JJC – is irrelevant. By that stage, they submit, all the costs of responding to the DIFC Courts application had been incurred, including the costs of the hearing; counsel had already been briefed and had travelled to Dubai, even. The Respondent submits that it was obviously appropriate in the circumstances to proceed until the they were sure that a hearing would either not be required or not be possible.
20. The last argument put forward by the Respondents against the appeal grounds relates to the Appellant’s submission that the judgment against it regarding costs was disproportionate having regard to all the circumstances of the case. The Respondents submit that this Ground appears, at best, to be an amalgamation of other Grounds and, at worst, to be an impermissible attempt to ask the Court of Appeal to substitute its judgment for the
Judge
’s exercise of discretion.
21. The Respondents insist that the order on costs was, in any event, correct as the misuse of the JJC jurisdiction should be discouraged and should, accordingly, be reflected in the costs order. The Respondents says that where parties use the JJC to make extant DIFC jurisdiction applications redundant, the general rule should be that those parties meet the costs thereby “thrown away,” unless there are very good reasons to order otherwise: there is nothing the DIFC Courts can do to prevent these abusive practices, but what the Courts can do is mark its disapproval with robust costs orders.
22. The Respondents ask this Court to order the Appellant to pay  USD 115,941.46, being 50% of the sum sought on account of its costs subject to detailed assessment as they have claimed USD 231,882.92 in their Statement of Costs in accordance with Paragraph 5 of Practice Direction No.5 of 2014 which provides:
Where the Court has ordered a party to pay costs subject to detailed assessment unless agreed, it will order 50% of the amount claimed in the statement of costs to be paid on account before the costs are assessed, unless the Court sees fit to order otherwise.
Discussion
Ground 1
23. As for the first Ground of appeal – that the Court failed to recognise that the Appellant was the successful party in the case and then failed to consider, apply, or otherwise adequately take into account the material provisions of RDC 38.7(1), with the general principal being that the successful party is entitled to its cost – in my judgment, it is evident from the Order itself that neither of these assertions is correct. The following clearly establishes this:
I. The Judgment on Costs referred to the Appellant’s submission that “if the DIFC Courts is not found to have jurisdiction, it will be the [the Appellant] who is entitled to its costs, not the [Respondents]” ([14]);
II. I decided to await the decision of the JJC before making my Judgment on Costs, and then finally issued the Order “with the benefit of the JJC having issued its judgment in favour of the [Appellant]” ([15]);
III. The Order expressly referred to the fact that the Appellant had been successful in the JJC proceedings; it was my decision that the Claimants should not be awarded their costs on an indemnity basis since they have the JJC decision against them.
24. As to the point that I should not have departed from the general rule that the losing party bear the costs, the RDC provides that such departure is permissible. RDC 38.7 states:
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. (emphasis added)
25. Moreover, DIFC Courts caselaw demonstrates that the approach of this Court in circumstances where a DIFC Courts hearing has been lost as a result of a late application to the JCC is to, in disapproval of such conduct, depart from the general rule regarding costs and even to award costs to the “losing” party on an indemnity basis: See Standard Chartered Bank v Investment Group Private Ltd [2014] DIFC CFI 026 (27 October 2016) and Barclays Bank PLC v Kapoor [2018] CFI 030 (20 May 2019). In Standard Chartered Bank, the then Deputy
Chief Justice
, Sir David Steel, observed at [2]:
…[the] application [was] made at the last possible moment. No explanation is forthcoming as to why no application was made much earlier, so as to avoid the waste of costs and time involved in waiting until the eve of the immediate judgement hearing.
26. At [4] to [6] the learned judge held:
4. Nonetheless, it is not appropriate for me to disregard… the Order that has been made by the Chief Justice of the Court of Cassation on 13 October, and accordingly I suspend the hearing on the merits of this case. I have no idea what in due course the tribunal will decide in relation to the application, but I do know that, prima facie, they need to decide it within 30 days as expressed in the terms of the decree. It follows that the Order being dated 13 October, it is appropriate to pencil in a date for a refixture of a hearing on the merits for 13 November 2016, being just over 30 days from today.
5. It is clearly right that the hearing on the merits is determined as promptly as possible. The original proceedings were issued in this court in August 2014 in relation to loans that had been outstanding since 2009. In effect, the present manoeuvres afford no credit to the activities of the Defendant. Neither do they redound to the credit of this Court and the Courts of Dubai. In those circumstances, it seems to be clearly appropriate to make some order in relation to the significant costs that have been thrown away by this late application and the emergence of this order.
6. It seems to me that the Defendant must pay the costs thrown away in any event and it should do so on an indemnity basis. I order that a payment on account of costs should be made of USD 10,000 payable within 30 days.