Claim No. CA 004/2023
IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai
IN THE COURT OF APPEAL
BEFORE: H.E. JUSTICE SHAMLAN AL SAWALEHI, JUSTICE RENE LE MIERE, AND JUSTICE SIR PETER GROSS
BETWEEN
ZUZANA KAPOVA
Claimant/Appellant
and
(1) MILOSLAV MAKOVINI
(2) PHARM TRADE HOLDING LTD
Defendants/Respondents
| Hearing : | 21 December 2023 |
|---|---|
| Counsel : | Dr John Turner instructed by Lutfi & Co Advocates & Legal Consultants for the Appellant Mr Salah Mattoo assisted by Mr Brian Kotick, instructed by M.B Kemp LLP for the Respondents |
| Judgment : | 11 January 2024 |
JUDGMENT OF THE COURT OF THE APPEAL
UPON reading the submissions, witness statements and other documents filed and recorded on the Court file
AND UPON the appeal hearing held on 21 December 2023
IT IS HEREBY ORDERED THAT:
1. The Appeal is dismissed, save and to the extent set out in para. 2 below.
2. The sum of USD 200,000 is to be paid into court within 14 days, unless, within the 14 days’ period, the parties have agreed an escrow arrangement with a first-class Bank in the UAE and have submitted that escrow arrangement to the Court for its approval.
3. The Appellant is ordered to pay 85% of the Respondents’ costs, to be assessed by the Registry if not agreed.
Issued by:
Hayley Norton
Assistant Registrar
Date of issue: 12 January 2024
At: 2pm
Justice Sir Peter Gross
INTRODUCTION
1. This is the Judgment of the Court, to which we have each contributed.
2. This is an Appeal by the Claimant/Appellant (the “Appellant”) from the Judgment in the DIFC Court of First Instance (“CFI”) of H.E. Justice Nassir Al Nasser on security for costs, dated 1 August 2023 (the “Judgment” and the “Judge”).
3. By his Judgment, the Judge granted the Application of the Defendants/Respondents (the “Respondents”) and ordered the Appellant to provide security for the Respondents’ costs, within 14 days of the date of the Judgment, in the amount of USD 270,000. The Judge further ordered the Appellant to pay the Respondents’ costs of the Application, to be assessed if not agreed.
4. Before this Court the Appellant seeks to overturn the Judgment, alternatively, reduce the amount of security for costs ordered.
5. The dispute as to security for costs is one of several applications in this hotly contested litigation. In the view we take of the matter, it is unnecessary to delve into the other applications in any detail, although the briefest reference to other applications may be unavoidable.
6. So far as concerns the underlying claim, the Appellant and the First Respondent were each 50% shareholders in the Second Respondent. In a nutshell, the Appellant is described in her Particulars of Claim as:
“…a well-known entrepreneur in the pharmaceutical industry in Slovakia and the Czech Republic.”
7. In 2016, according to the Particulars of Claim, the Appellant set up a company under the name and style PT Data Services FZE ("PTDS") in Umm AI Quwain Free Zone which is said to be wholly owned by her.
8. The Appellant alleges that she met the First Respondent for the first time in Dubai in around November 2018. It is said that he:
“…introduced himself as an attorney and a tax consultant and offered his services to advise the Claimant on a tax optimalisation scheme that was meant to assist her make significant tax savings for her companies in Slovakia and the Czech Republic.”
9. The Appellant goes on to allege that, in reliance on the First Respondent’s representations and his standing as an attorney and tax consultant, she engaged his services and followed his advice, including as to the tax optimalisation scheme. Accordingly, the Appellant submits, a fiduciary relationship arose between her and the First Respondent, under the DIFC Law of Obligations.
10. In the event, the Appellant advances serious complaints against the First Respondent, including: (1) the issuing of fictitious invoices; and (2) the illegal ouster of the Appellant as a director of the Second Respondent and misusing the First Respondent’s status as the sole director of the Second Respondent to the Appellant’s detriment.
11. The Appellant seeks a variety of declaratory relief against the First Respondent, including that he has acted in breach of his fiduciary duties; furthermore, the Appellant claims damages in the amount of EUR 2,000,000 or such amount as may be assessed or the USD equivalent at the time of payment.
12. It may be noted that the Appellant’s claims are themselves now subject to a jurisdictional challenge to be determined in due course by the DIFC Courts.
13. Before proceeding further, the Court thanks Dr Turner, who appeared for the Appellant, and Mr Mattoo, who appeared for the Respondents, for their respective submissions.
THE JUDGMENT
14. Having summarised the various proceedings before the DIFC Courts, the Judge (at [7]) underlined the Court’s wide discretion in an application for security for costs. The Respondents did, however, need to come within one of the conditions in RDC 25.102. In the present case, the condition relied upon was “…that the Claimant has taken steps in relation to her assets that would make it difficult for the Defendants to enforce an order against her” (i.e., RDC 25.102(6)).
15. The Judge then turned (at [8] – [10]) to the Respondents’ inquiries as to the Appellant’s assets in the UAE; to two transfers made by the Appellant, which aroused the Respondents’ concerns; and also, to the Respondents’ reluctance to bring the Application:
“8. The Defendants submit after the matter was initiated with the DIFC Courts by the Claimant, the Defendants - by way of letters from April 2023 to June 2023 - have sought understanding of the Claimant's assets in the United Arab Emirates, her bank accounts and her other assets, which they can rely on to satisfy any adverse costs order against the Claimant. However, the Defendants add that the Claimant has provided no evidence in response to the Application accompanying her witness statement. There is no documentary exhibit provided concerning her assets. The Defendants are bringing this Application reluctantly because, even in their Application, the Defendants indicated that they will be willing to withdraw the Application if the Claimant were to provide sufficient comfort that she has enough assets and funds which the Defendants can rely on at the end of the Claim to satisfy any adverse order against the Claimant. The Defendants submit they have received no information but just blanket assertions that the Claimant has enough funds and enough revenue from her companies.
9. The Defendants assert that on 20 May 2021, the Claimant unlawfully transferred a 90 per cent shareholding of her Slovakian company owned by the Second Defendant. This 90 per cent shareholding, owned by the Second Defendant in a Slovakian company, was transferred to the Claimant's son without any consideration, for no amount of value at all. The Second Defendant was paid no value as a result of this transaction. There was no board meeting or steps taken under DIFC company law by the Claimant before transferring the 90 per cent shareholding of the Slovakian company to her son.
10. In addition, in May 2021, the Claimant transferred EUR 945,000 from the bank account of the Second Defendant to her companies in Slovakia and Czech Republic. The Defendants submit that all the identifiable assets that the Claimant had, whether directly or indirectly in UAE, were stripped and dissipated by the Claimant prior to commencing these proceedings. The Defendants add that they are left with their assertions that they should rely on without having any substantive information for this.”
16. The Judge recorded the Respondents’ submissions in outline (at [13]). The Respondents relied on the lack of evidence to establish that the Appellant owned realisable assets to meet an adverse costs order:
“…Further, it could be suggested that the Claimant’s undisclosed assets leads to the implication that the Claimant is putting them out of the Defendants’ reach, allowing the Claimant to litigate risk-free and leaving the Defendant with the unenviable choice between bearing their own costs or investing further time and money in trying to enforce a future adverse order against the Claimant.”
17. Against this background, the Judge reached the following conclusions (at [14] – [15]):
“14. Therefore, it is wholly appropriate and reasonable to assume based on the absence of evidence of the Claimant’s assets and the facts provided that the Claimant has to some extent taken steps in making any enforcement procedure of a future adverse cost order difficult.
15. Since it is clear to me that the Claimant did not provide any evidence of her assets she will be unable to meet a potential cost order if granted in the Defendants’ favour, It is on that basis I am satisfied that the Application undoubtedly satisfies one of the conditions in RDC 25.102(6).”
18. The Judge concluded (at [16]) by observing that the principle of justice would be infringed should the Appellant lose but have no available assets to pay the Respondents’ costs. Finally, there was no evidence to suggest that an order for security for costs would stifle the Appellant’s claim.
19. It may be noted that, much earlier in the Judgment (at [2]), the Judge had made it clear that, in addition to the oral submissions of the parties, he had read the documentary evidence in the case. Accordingly, “…if I may omit some arguments or legal authorities relied on by either the Claimant or the Defendants, this does not mean that I have overlooked it.”
20. The Judge then made the order for security for costs in the Respondents’ favour, as already recounted.
THE GROUNDS OF APPEAL
21. The Appellant advanced 8 grounds of appeal (“the Grounds”), in the terms which follow:
“1. For the reasons set out in grounds 2 to 7 below, in exercising his general discretion under RDC 25.101 to award security for costs when the proper application of the principles in the foregoing grounds of appeal showed that granting security for costs was not appropriate in terms of the Defendants’ application, so that the learned judge had acted upon wrong principles and failed to take into account material considerations in the course of exercising his discretion. The Claimant raises this ground of appeal as an appeal on a point of law.
2. In upholding at paragraph 12 of his Reasons the Defendants’ submission in their application that the Claimant had failed to provide any evidence of her assets within the UAE prior to the Defendants initiating their application for security for costs even though the burden of proof of the grounds for such application lay on the Defendants and there was no obligation on the Claimant to do so. In arriving at this conclusion, the learned judge erred in placing a legal obligation on the Claimant to provide the information requested by the Defendant. The Claimant raises this ground of appeal as an appeal on a point of law.
3. In holding at paragraphs 13 and 15 of his Reasons that the matters referred to in paragraphs 9 and 10 of his Reasons met the condition in RDC 25.102(6) when these matters did not pertain to any actions taken by the Claimant in relation to her assets in the UAE but in fact pertained to necessary steps taken by the Claimant in 2021 in relation to the Second Defendant to preserve the Claimant’s position in the light of the wrongful acts of the First Defendant. The Claimant’s justification for carrying out these transactions was explained in detail in the Claimant’s skeleton arguments and in her evidence in support filed in Application Number CFI-004-2023/5. The learned judge’s failure to consider the Claimant’s justification for these transfers and its connection to the illegal acts of the First Defendant led the learned judge to conclude in error that the condition in RDC 25.102(6) had been satisfied. The Claimant raises this ground of appeal as an appeal arising from an incorrect finding of fact and as an appeal on a point of law
4. In failing to address or give any weight in his Reasons to the fact that, as submitted by the Claimant, the First Defendant’s position as to the grounds for the application for security for costs had fundamentally changed since the issue of security for costs was first raised, which served to cast serious doubt as to the bona fides of the Defendants’ application. The letters sent by the Defendants’ legal representatives asserted that they were not aware of any assets belonging to the Claimant in the UAE. However, the security for costs application and the evidence provided by the First Defendant in support revealed that this assertion was untrue so that the application for security for costs was filed on frivolous grounds. The learned judge’s failure to address or give any weight to these facts, particularly in terms of paragraph 12 of the Reasons, is a material error in the Reasons for the Order. The Claimant raises this ground of appeal as an appeal arising from an incorrect finding of fact.
5. In failing to address or give any weight in his Reasons to the requirements of RDC 25.109, which required the Defendants to provide evidence of the practical difficulties (if any) of enforcing an order for costs against the Claimant outside the UAE, when this formed part of the Defendants’ case and required the provision of expert evidence from a foreign lawyer, which had not been provided by the Defendants. The Defendants had provided a list of certain assets belonging to the Claimant in Slovakia and the Czech Republic as part of their evidence in support of the application. The Claimant raises this ground of appeal as an appeal on a point of law.
6. In failing to address or give any weight in his Reasons to the fact that, as submitted by the Claimant, the First Defendant had already secured his legal costs by having wrongfully obtained the sum of Euros 384,000 from the bank accounts of the Second Defendant and having applied those funds to his own benefit. The Claimant raises this ground of appeal as an appeal on a point of fact.
7. In failing to address or give any weight in his Reasons to the fact that, as submitted by the Claimant, the estimate of legal costs provided by the First Defendant was extravagant and unparticularised and contained no itemised breakdown of the costs of the Defendants as was required by the authorities, far exceeded the comparable legal costs incurred by the Claimant, and also included costs in respect of steps in the proceeding which were unlikely to be awarded by the Court to the Defendants in the final event. The Claimant raises this ground of appeal as an appeal on a point of fact and as an appeal on a point of law.
8. In failing to address or give any weight in his Reasons to the submission of the Claimant that the First Defendant should be directed to provide an undertaking under RDC 25.111 in relation to the Claimant’s own legal costs. The Claimant raises this ground of appeal as an appeal on a point of law...”
PERMISSION TO APPEAL
22. By his Order dated 20 September 2023, the Judge granted the Appellant permission to appeal, pursuant to RDC 44.19 (the “PTA Judgment”).
23. In the PTA Judgment, the Judge held that the Appellant’s application met the requirements of RDC 44.19. The essence of the Judge’s reasoning was set out as follows (at [5] – [6]):
“5. The Claimant provided that [i.e., proved that] she is the sole shareholder and director of PT Data Services FZE, a free zone company incorporated in Umm Al Quwain Free Zone. The Claimant submits that she had made a term deposit of AED 1,000,000 with Mashreq Bank of behalf of PT Data Services FZE.
6. The above can be construed to be a position from which the Claimant can argue that there is a real prospect of success pursuant to RDC 44.19.”
For the same reason, the Judge added (at [7]) that there was also a compelling reason for the Appeal to be heard (so satisfying the other limb of RDC 44.19).
PRELIMINARY AND GENERAL MATTERS
24. Before turning to deal with each of the Grounds, it is convenient to address a number of preliminary and general matters:
(a) The RDC framework;
(b) Guarding against the proliferation of skeleton arguments; and
(c) The Court’s approach to the Grounds.
(A) The RDC framework:
25. The RDC framework governing security for costs is found in RDC 25.97 and following. In very broad terms, the RDC regime resembles that of the CPR of England and Wales (“England” or “English law” for convenience) - though it may be necessary to consider, below, one or two suggested points of difference.
26. Insofar as relevant, RDC 25.101 provides as follows:
“The Court may make an order for security for costs…if it is satisfied, having regard to all the circumstances of the case that it is just to make such an order; and
(1) one or more of the conditions in Rule 25.102 applies…”
27. It follows that the Court can only make an order for security for costs if the applicant comes within one or more of the conditions in Rule 25.102. The Court has no jurisdiction to make an order for security for costs if the applicant does not come within any of those conditions. However, the fact that one (or more) of the conditions is satisfied is not itself sufficient for an order to be made. It is thereafter for the applicant to persuade the court that, in all the circumstances, it is “just” to make such an order. In this regard, the Court has a very wide discretion. By way of example only as no such question arises in this case, even if a condition is satisfied, the fact that a claim might be stifled by an order for security may tell against the making of the order.
28. With regard to the RDC 25.102 conditions, the only condition relied upon in the present case is condition (6) (“condition (6)”):
“the claimant has taken steps in relation to his assets that would make it difficult to enforce an order against him.”
29. As was not in dispute before us, the test in condition (6) is wholly objective; it is immaterial whether or not the claimant/transferor intended the consequence in question:Frontline Development Partners v Asif Hakim Adil [2015] CA 005 (7 September 2015), at [6]. On its wording, three requirements need to be met for condition (6) to be satisfied:
(1) The claimant must have “taken steps”;
(2) The steps must have been taken in relation to his/her assets; and
(3) The steps must be steps which would make it difficult to enforce an order for costs against him/her.
30. Pausing here, an appeal as to whether a RDC 25.102 condition was satisfied, going to the Court’s jurisdiction to order security for costs, involves a question of fact or, possibly law, or mixed fact and law; but no question of discretion is involved. The condition is either satisfied or not. It is of course for an appellant to satisfy this Court that there was an error in the CFI such as to warrant allowing the appeal.
31. By contrast, an appeal as to whether in all the circumstances it was just for the CFI to order security for costs is an appeal against a case management decision involving the exercise of the lower Court’s discretion. In such a case, this Court will be slow to interfere, as illustrated by the decision of the High Court of Australia inHouse v The King [1936] HCA 40; (1936) 55 CLR 499. The joint Judgment of Dixon, Evatt and McTiernan JJ, said this (at pp. 504-505):
“…The manner in which an appeal against the exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.”
See too, Lord Diplock to similar effect, inHadmor Productions v Hamilton [1983] AC 191, at p.220.
32. The RDC address, in two places, the requirement that the applicant for security for costs, upon whom the burden of proof rests, must adduce evidence in support of the application. First, RDC 25.99 (2) is in these terms:
“25.99 An application for security for costs must be supported by written evidence, setting out:
…
(2) any factors relevant to the exercise of the Court’s discretion, such as the location of the claimant’s assets and any practical difficulties which may arise in enforcing any order for costs. …”
Secondly, RDC 25.109 requires an affidavit or witness statement in support of an application for security for costs to address those same matters.
33. Considerations of case management and common sense mean that security for costs applications cannot become bogged down with an exploration of the detailed merits of the underlying dispute. Those are matters best left for the trial; the alternative is prolonged satellite litigation. The language of RDC 25.110 could not be clearer:
“Investigation of the merits of the case on an application for security is strongly discouraged. Only in those cases where it can be shown without detailed investigation of evidence or law that the claim is certain or almost certain to succeed or fail will the merits be taken into consideration.”
The law and practice in England are, in substance, identical, notwithstanding (with respect) a very few scattered dicta to which Dr Turner drew our attention.
(B) Guarding against the proliferation of skeleton arguments:
34. Remarkably, this Appeal generated no fewer than 6 skeleton arguments (or written statements), covering 146 pages. That is unacceptable. In the event, the concise arguments addressed to us at the Appeal Hearing focused on one or two principal documents (indeed, the Appellant relied on a speaking note, arguably a seventh document). It is not appropriate to be referred to a sequence of skeleton arguments, each of which is said to build on those which have gone before. Nor can an Appeal of this nature possibly warrant 146 pages of written submissions.
35. Provision is made in RDC Part 44 for the production of skeleton arguments, including as to page length - a maximum of 35 pages, unless permission is given by the Court (RDC 44.61) – and for the filing of supplementary skeleton arguments (RDC 44.102), with the same maximum page length but the expectation that they will be significantly shorter (RDC 44.102.1).
36. Thus, while it cannot be said here that the mere production of supplementary skeleton arguments breached the RDC, or that the length of individual skeleton arguments exceeded the maximum (absent permission from the Court) allowed under the RDC, there was a most unfortunate proliferation of skeleton arguments. Had the matter been referred to any member of this Court, once it became clear to the Registry that the parties were going beyond an initial skeleton argument and a brief supplementary skeleton argument, it is overwhelmingly likely that we would have ordered consolidation into a single skeleton argument, superseding anything that had gone before.
37. Against this background, we would respectfully refer this aspect of this Appeal to the Chief Justice, with a view to consideration of a Practice Direction, giving authoritative and clear guidance to the Registry as to controlling the number of skeleton arguments and referring questions of proliferation to the Court.
(C) The Court’s approach to the Grounds:
38. Two matters arise. The first goes to the scope of the Appeal. There was some dispute as to whether the Appeal is limited to the matter expressly mentioned by the Judge when granting PTA, namely, that the Appellant had made a term deposit of AED 1 million with Mashreq Bank on behalf of PTDS (the “Deposit”).
39. The Respondents contended that the Appeal was so limited. The Deposit had been relied upon by the Appellant in support of an application to stay the Judgment; it was not related to and did not support any of the Grounds.
40. The Appellant submitted that the grant of permission to appeal encompassed all the Grounds. The PTA Judgment was not limited to the point as to the Deposit, as appeared clearly from the terms of the accompanying Order, which provided simply that “The Claimant’s Appeal Notice shall be granted”. All the (eight) Grounds were open for argument as was the Stay application. Moreover, when the Respondents had requested the Judge to clarify the position, he responded by declining further clarification but saying (through the Registry) that the parties were at liberty to apply; the Respondents had not pursued the matter.
41. The issue is not altogether straightforward, especially having regard to the lack of connection between the Deposit point and the Grounds, the complete absence of reference to the Grounds in the PTA Judgment, and the consideration (as next discussed) that the evidence as to the Deposit was fresh evidence. It is, however, unnecessary for us to reach a conclusion on this dispute. De bene esse we prefer instead to consider all the Grounds on their merits.
42. Secondly, the Respondents submitted with force that the evidence as to the Deposit was fresh evidence which only came to light after the Judgment. There was no reason, let alone good reason, why this evidence had not been adduced before the Judge. InDamac Park Towers v Youssef Issa Ward [2015] DIFC CA 006 (14 December 2015), this Court (at [65]) recognised “…the importance of the long-standing principle that an appellant should not have free rein to introduce points on appeal that were not advanced at trial.” The Court went on (at [66] and following) to distinguish a new question raised which “…is one of pure law which involves no further factual investigation…” from the position applying “…where the new point raised presents factual questions which might affect the evidence or conduct of the trial if the new point was raised then…”; whereas in the former situation, the new point might well be admissible on appeal, a far more restrictive approach would apply in the latter situation. As seems clear to us, the evidence as to the Deposit comes within the latter rather than the former category
43. Accordingly, absent any reasoned justification for its late introduction (of which there was none aside from Dr Turner’s protestations), there was a cogent argument for excluding the evidence as to the Deposit. However, and again de bene esse in the interests of justice, we preferred to take this evidence into account and consider it on its merits. In the event, for his part, Dr Turner made only brief mention of this point at the Hearing of the Appeal, saying little more than that we should take it into account
44. Without more ado, we turn to the individual Grounds.
THE GROUNDS OF APPEAL
GROUND I
45. For ease of reference, Ground I is in these terms:
“For the reasons set out in grounds 2 to 7 below, in exercising his general discretion under RDC 25.101 to award security for costs when the proper application of the principles in the foregoing grounds of appeal showed that granting security for costs was not appropriate in terms of the Defendants’ application, so that the learned judge had acted upon wrong principles and failed to take into account material considerations in the course of exercising his discretion. The Claimant raises this ground of appeal as an appeal on a point of law.”
46. Ground I can immediately be put to one side. As its language makes clear, Ground I is derivative on the view taken on Grounds II – VIII; if those Grounds do not find favour on this Appeal, then Ground I falls away. If and insofar as any of Grounds II – VIII find favour, then the general considerations canvassed in Ground I will come into play. No more need be said of Ground I.
GROUND II
(A) Introduction:
47. Ground II said this :
“In upholding at paragraph 12 of his Reasons the Defendants’ submission in their application that the Claimant had failed to provide any evidence of her assets within the UAE prior to the Defendants initiating their application for security for costs even though the burden of proof of the grounds for such application lay on the Defendants and there was no obligation on the Claimant to do so. In arriving at this conclusion, the learned judge erred in placing a legal obligation on the Claimant to provide the information requested by the Defendant. The Claimant raises this ground of appeal as an appeal on a point of law.”
48. Ground II essentially encapsulated Dr Turner’s submission to us, though (which matters not) his target was [13] of the Judgment (set out above) rather than [12]. The Judgment, at [12], merely recorded the Respondents’ submission:
“…it is the Defendants’ case that the Claimant has not provided any evidence of assets within the UAE, although requested by the Defendants prior to initiating this Application for Security for costs.”
49. Dr Turner further submitted that there was a difference between the English CPR provision and the RDC. Thus, (the English) CPR provided, at CPR r. 25.12(2), that “An application for security for costs must be supported by written evidence”. By contrast, as already seen, RDC 25.99(2) is more specific as to the evidence to be provided.
(B) Discussion and Conclusions:
50. We are not persuaded that the Judge erred in the manner alleged by the Appellant or at all. No legal obligation was placed by the Judge on the Appellant to provide the information requested by the Respondents; however, the Appellant’s failure to provide the requested information meant that there was a foundation from which an inference adverse to the Appellant was capable of being drawn which could assist the Respondents in satisfying the (legal) burden of proof resting upon them. That is the subject of this Ground; whether the Judge was correct to draw the inference he did is dealt with in Ground III below. Our reasons follow.
51. First, to get it out of the way, we do not think there is any relevant distinction between the English and the DIFC provisions. The only distinction is that the English provision says nothing as to the evidence to be adduced, whereas the RDC are somewhat more prescriptive to the extent which appears from the wording of RDC 25.99(2). In the present context, however, that is a distinction without any material difference. In both systems, evidence must be adduced by the applicant, upon whom the (legal) burden of proof rests, in support of an application for security for costs. The RDC do not impose some additional burden on the applicant for security for costs which is absent from the English CPR.
52. Secondly, to maintain focus, the issue to be determined is ultimately (see Ground III below) whether the Judge erred in holding that the Respondents satisfied condition (6) of RDC 25.102. The question of the Appellant’s assets in the UAE is relevant – not for itself but instead for such light as it may shed on condition (6), namely, whether the Appellant had taken steps in relation to her assets that would make it difficult to enforce an order (for costs) against her.
53. Thirdly, while the (legal) burden of proof rests – and rests throughout – on the Respondents to satisfy condition (6) of RDC 25.102, that burden is capable of being satisfied by an inference, as part of the totality of the evidence, at least where: (1) the Respondents have raised the issue of the Appellant’s assets within the UAE jurisdiction, in a manner calling for an answer and therefore satisfying the evidential burden; and (2) the Appellant has been given every opportunity of showing that she has such assets and is in a position to pay the applicant’s costs if ordered to do so, but has deliberately not responded.
54. A closely analogous situation arose in the English decision ofSarpd Oil International Ltd v Addax Energy SA [2016] EWCA Civ 120, 2016 WL 00750617. There being no material difference between the English CPR and the RDC (as already explained), the reference to English law in this context is unexceptionable. Giving the judgment of the Court, Sales LJ (as he then was) said this (at [17] and [19]):
“If a company is given every opportunity to show that it can pay a defendant's costs and deliberately refuses to do so there is, in our view, every reason to believe that, if and when it is required to pay a defendant's costs, it will be unable to do so.
…
Mr Nolan may be right to say that CPR Part 1.3 [i.e., the “overriding objective” in the English CPR] does not require a respondent voluntarily to fill gaps in an applicant's evidence in order to assist an applicant to discharge a burden of proof. But even if deliberate reticence on the part of a respondent is not a breach of CPR Part 1.3 a court can and should take account of deliberate reticence as part of the overall picture. Any evaluation has to be made on the totality of the evidence before the court; part of that totality is the absence of relevant evidence from the only party who is able to provide it.”
“In reaching this view, Sales LJ had rejected the claimant’s submission (set out at [16]), a submission notably similar to that advanced here by Dr Turner, namely that “The duty to co-operate with the defendant to enable the court to deal with cases justly did not extend to filling evidential gaps when the burden of proof was on the defendant.”
55. With respect, the conclusion arrived at by Sales LJ is inescapable. Provided that the question of the Appellant’s assets has been squarely put in issue and the Appellant has had every opportunity to respond, then an adverse inference is capable of being drawn. Rules of court, whether in England or the DIFC are designed to assist in the resolution of disputes not to lend encouragement to arid, formulaic, tactical posturing. As observed by Sales LJ, a most material consideration is the question of which party is in a position to provide the evidence in question.
56. Fourthly, in our judgment, there was an ample foundation in this case for the Judge to consider proceeding by way of inference, as he did at [13] of the Judgment. No error of law is disclosed in that paragraph; nor was any erroneous burden placed on the Appellant. Her refusal to respond meaningfully to the Respondents’ repeatedly posed questions as to her assets in the UAE permitted the Judge to consider drawing an adverse inference assisting the Respondents to satisfy the burden resting on them. Whether, on the facts, the Judge was correct to draw the inference he did, at [14] – [15] of the Judgment, is the subject of Ground III below.
57. That foundation appears straightforwardly from the correspondence exchanged between the Respondents’ and Appellant’s legal representatives, helpfully – and tellingly – outlined in the Respondents’ Skeleton Argument (of 6 November 2023), at paras. 34 and following. In summary:
(1) By letter dated 24 April 2023, from the Respondents’ legal representative to the Appellants’ legal representative, the Respondents sought clarity on the Appellant’s ability to pay the Respondents’ legal costs at the end of the proceedings and requested evidence of the Appellant’s assets in the UAE.
(2) The 26 April response on behalf of the Appellant was confined to generalised assertions as to the Appellant’s status and her resources exceeding the amount of costs in question.
(3) The Respondents did not leave the matter there and instead pursued it further by way of letter dated 18 May 2023. In this letter, the Respondents referred to the Appellant’s previous conduct (discussed further in connection with Ground III below) and, in effect, sought particulars of the Appellant's UAE shareholdings, bank accounts and assets. The Appellant’s 22 May response did not take matters further. On 31 May, the Respondents again pursued the matter, saying that it would be necessary to apply to Court if they could not obtain comfort from the Appellant. They were met by the Appellant’s response, dated 1 June, in which the Appellant’s legal representative refused to provide details of the Appellant's assets and bank accounts in the UAE.
(4) On 5 June 2023, the Respondents filed the security for costs application but stated that they would withdraw it if provided with the information sought as to the Appellant’s UAE assets and accounts.
(5) The Respondents underlined that they had had no relationship with the Appellant since May 2021 and that the publicly available information pointed to the Appellant not having assets in the UAE to satisfy any adverse costs order. The Respondents further emphasised the transactions (dealt with under Ground III) below which, they said, were indicative of the Appellant dissipating her only known UAE assets.
58. Against this background, the Judge’s approach at [13] of the Judgment is unimpeachable.
59. Fifthly, our conclusion in this regard is not undermined by the fresh evidence as to the Deposit, which it is convenient to deal with here. In a nutshell, this item of evidence raises more questions than it answers and in no way assuages such concerns as there might otherwise be regarding the Appellant’s willingness or ability to satisfy an order for costs against her.
60. The fresh evidence adduced by the Appellant (which, as indicated, we are considering de bene esse) is to the effect that the Appellant, on behalf of PTDS, made a 6-months’ deposit with the Mashreq Bank of AED 1 million on 7 April 2023, with a maturity date of 7 October 2023 (as before, the “Deposit”).
61. The fresh evidence additionally includes an irrevocable Undertaking given to the Court by the Appellant and PTDS, jointly and severally, dated 25 September 2023 (the “Undertaking”) –. According to the Undertaking:
(1) PTDS is incorporated and is in good standing in the Umm Al Quwain Free Zone in the UAE.
(2) PTDS is an entity owned and controlled by the Appellant.
(3) Recital F to the Undertaking provides:
“The Claimant has arranged for PTDS to deposit the sum of One Million UAE Dirhams (AED1,000,000) with Mashreq Bank Dubai (the "Deposit") as referred to and confirmed in the Seventh Witness Statement of Zuzana Kapova dated 11 August 2023, with the intention that the Deposit be available to the Defendants/ Respondents by way of security for costs if so required…”
(4) As recorded in Recital H, the Undertaking was furnished to “place beyond doubt” that the Deposit was an available asset of the Appellant for the purpose of security for costs.
(5) Clause 3 of the Undertaking provides:
“ZUZANA KAPOVA and PTDS do each jointly and severally undertake to the Court to make the amount of the Deposit, or such part of the Deposit as may be required, available to provide security for costs to the Defendants/Respondents, in whole or in part, in accordance with any order as to the provision of security for costs or the release of such security made in this proceeding by the Court of First Instance, as the same may be varied or altered by the DIFCCourt of Appeal.”
62. The Deposit and the Undertaking give rise to a variety of difficulties.
63. First, there is no explanation as to why the Deposit was held back until after the Judgment and was not produced before the Judge. In the same vein, if the Deposit represents an unencumbered asset of the Appellant, there is no explanation why she made no reference to it when asked (repeatedly) by the Respondents as to her assets in the UAE. We have of course decided to consider the fresh evidence de bene esse but this (unexplained) feature does nothing to reassure us.
64. Secondly, we have no more than the Appellant’s assurances as to the good standing of PTDS. There is no evidence as to its balance sheet, or any indebtedness which might impact on the Undertaking. Likewise, we have only the Appellant’s assurances that she owns and controls PTDS. We know no more about the relationship between the Appellant and PTDS.
65. Thirdly, there is no explanation as to the background to the Deposit and what led to the Appellant making the Deposit on behalf of PTDS. We know nothing of any underlying transactions which might shed light on the Deposit and the strength of the Undertaking.
66. Fourthly, if the Appellant’s intention was that the Deposit should be available as security for the Respondents’ costs, there is no or no obvious reason as to why she did not make the Deposit in her own name rather than in that of PTDS. Or, for that matter, when the Deposit was suggested as security after the Judgment, why the Appellant did not simply pay the AED 1 million into Court or seek an escrow arrangement agreed with the Respondents’ legal representatives.
67. Fifthly, as canvassed by the Court in the course of the Appeal Hearing, if the language of Recital F and clause 3 of the Undertaking is given its ordinary meaning (as the Appellant urged), the Recital and the clause are profoundly difficult to reconcile with the Appellant’s continued pursuit of the Appeal. The latter makes little sense if the former mean what they say.
68. For these reasons, both individually and cumulatively, the Deposit and the Undertaking do not cast doubt on the course taken by the Judge at [13] of the Judgment and his readiness to consider drawing an adverse inference against the Appellant. Ground II of the Appeal fails.
GROUND III
(A) Introduction:
69. Ground III is that the Respondents did not meet condition (6):
“In holding at paragraphs 13 and 15 of his Reasons that the matters referred to in paragraphs 9 and 10 of his Reasons met the condition in RDC 25.102(6) when these matters did not pertain to any actions taken by the Claimant in relation to her assets in the UAE but in fact pertained to necessary steps taken by the Claimant in 2021 in relation to the Second Defendant to preserve the Claimant’s position in the light of the wrongful acts of the First Defendant. The Claimant’s justification for carrying out these transactions was explained in detail in the Claimant’s skeleton arguments and in her evidence in support filed in Application Number CFI-004-2023/5. The learned judge’s failure to consider the Claimant’s justification for these transfers and its connection to the illegal acts of the First Defendant led the learned judge to conclude in error that the condition in RDC 25.102(6) had been satisfied. The Claimant raises this ground of appeal as an appeal arising from an incorrect finding of fact and as an appeal on a point of law.”
70. As earlier outlined, the Judge arrived at his conclusion on condition (6) by way of the Appellant’s failure to respond to the Respondents’ inquiries as to her UAE assets (at [8]), coupled with the transfers of the Second Respondent’s assets (detailed at [9] and [10]). In the event, the Judge drew the inference both that the Appellant had undisclosed assets and steps had been taken to put them out of reach of her creditors.
71. To be clear, the Appellant does not deny the transfers in question; she instead admits and avers causing the Second Respondent:
(1) To transfer EUR 945,000 to PT SK, a company incorporated in Slovakia, and PTS, a company incorporated in the Czech Republic; and
(2) To transfer the shares held by the Second Respondent in PT SK to her son.
(Collectively, the “transfers”.)
72. Those admissions notwithstanding, the Appellant goes on to submit that condition (6) is not satisfied. First, the acts in question were performed by the Second Respondent as a separate legal entity and not by the Appellant personally. Secondly, there was no net loss of assets dissipated out of the UAE and in any event the assets in question were never the personal property of the Appellant to begin with.
73. Accordingly, in the Appellant’s submission, the Judge erred in both fact and law in coming to his conclusion.
(B) Error of law:
74. We are unable to accept that the Appellant has demonstrated any error of law on the part of the Judge. Causing a company in which the claimant holds shares to transfer assets to another jurisdiction is manifestly capable of amounting to steps in relation to her assets that would make it difficult to enforce an order for costs against her. The Appellant’s suggested justification that the law on corporate personality precludes such a conclusion because it is the company (a separate legal entity) which transfers the assets is, with respect, without foundation. The individual is capable of being answerable for causing the company to make the transfer/s. It is as simple as that. No elaboration is required. As it seems to us, no other question of law arises in connection with the Judgment on this Ground.
(C) Error of fact:
75. It follows that, on this Ground, the Appellant is left to an appeal on a question of fact. Whether the connection between the steps taken by a claimant and her shares in the company is sufficient to constitute steps in relation to her assets that would make it difficult to enforce an order for costs against her, is a question of fact depending on the circumstances of the individual case – to be decided (as will be recollected) in accordance with the objective test governing condition (6).
76. Here, as we have seen, the facts as to the transfers are common ground. Did the Judge err in his evaluation of those primary facts by rejecting or failing to consider the Appellant’s suggested justification for her actions? We are not at all persuaded that he did. Our reasons follow.
77. First, in entire agreement with the Judge, we conclude that the Appellant took the steps that resulted in the transfers, notwithstanding that she did so in the exercise of her authority (or purported authority) as a director of the Second Respondent. She is answerable for those acts. To recap, there is no principle of law based on corporate personality which requires the transfers to be treated as exclusively the acts of the Second Respondent and to ignore the Appellant’s role in causing those transfers. The Appellant’s first justification for the transfers accordingly fails.
78. Secondly, at first blush, had the Second Respondent retained the money and the shares in PT SK, the Respondents could have been expected to be well-placed to enforce against the Appellant’s shares in the Second Respondent any costs order that they might obtain against her. The position has changed because of the steps that the Appellant has taken to cause the Second Respondent to part with. EUR 945,000 and its shares in PT SK. As it is not clear that the Appellant has other assets in the UAE against which a costs order could easily be enforced, it can fairly be concluded – the test being objective - that the Appellant has taken steps in relation to her assets (her shares in the Second Respondent) that would make it difficult to enforce an order for costs against her.
79. Thirdly, the Appellant’s second justification was along these lines:
(1) PT SK was originally a limited liability company wholly owned by the Appellant. It was converted into a Private Joint Stock Company on the advice of the First Respondent. The shares of PT SK were then acquired by the Second Respondent by payment of their face value of EUR 90,000.
(2) The First Respondent, acting in his capacity as the director of the Second Respondent, issued various invoices to PT SK and PTS which were not based on any valid underlying transactions.
(3) The shares in PT SK were acquired by the Second Respondent from funds advanced by PTS and PT SK based on invoices issued unlawfully by the First Respondent.
(4) The Appellant cancelled these invoices upon discovering that the First Respondent’s tax optimisation scheme was illegal. After cancellation of these invoices, the Appellant had the responsibility of ensuring that all assets and funds received by the Second Respondent from the cancelled invoices were repaid to the respective companies which had transferred them.
(5) Additionally, the transfers were carried out in May 2021, which was well before the present proceedings were in contemplation (they commenced in January 2023). Furthermore, the First Respondent did not challenge these transactions before the DIFC Courts and did not file any complaint before the DIFCA or the DIFC Registrar of Companies alleging any improper conduct on the part of the Appellant in carrying out these transactions.
(6) The transfers therefore simply reversed the consequences of the First Respondent’s invoices which had been wrongfully raised on the Appellant’s companies. Additionally, none of these transactions made any change to the Appellant’s personal assets either in the UAE or in Slovakia, which remained intact. There is no allegation made that the Appellant took any steps to dissipate her personal assets either before or after these transactions.
80. Carefully structured though this argument is, we are not persuaded that it amounts to a justification for the Appellant’s actions and that the Judge’s conclusion that condition (6) was satisfied was vitiated by any error of fact.
(1) First, so far as concerns the transfer of the PT SK shares, this did not merely reverse the consequences of the First Respondent’s alleged wrongdoing. Before the matters of which the Appellant complains, the shares in PT SK were held by the Appellant. After the steps taken by the Appellant the shares were held by her son.
(2) Secondly and more generally, apart from the obvious and unarguable point as the shares being transferred to the Appellant’s son, questions of reversal of wrongdoing are questions going to the detailed merits of the underlying litigation. They are for a trial in due course; it was not for the Judge to become bogged down in any detailed investigation of the rival contentions – and it is likewise not for us to do so: RDC 25.110 (set out above).
(3) Thirdly, similar considerations apply to the point as to the absence of complaint in 2021 by the First Respondent regarding the transfers. The point goes nowhere at this stage. If there is any force in the point (and no argument of estoppel or waiver was developed before us), it is one for the trial not for this appeal.
(4) Fourthly, we have seen nothing to suggest that the Judge failed to consider the Appellant’s justification for the transfers in reaching his conclusion. The Judge was not obliged to recite each and every argument advanced before him; that would be a recipe for prolix and defensive judgment writing. In general, brevity is a virtue rather than the converse. In any event, for the reasons we have now set out at some length, we agree with the Judge’s conclusions. For completeness, we note the Judge’s observation (at [2]) that an omission to mention an argument in the Judgment did not mean he had overlooked it. While a statement of that nature would not save a judgment if there plainly was a material omission, it is a reminder that an Appellate Court should not readily leap to the conclusion that an argument not expressly mentioned in a judgment has been overlooked.
(D) Discretion:
81. Thus far, we have considered whether the Judge erred in holding that condition (6) was satisfied and have concluded that no error of law or fact on the part of the Judge has been demonstrated in this regard. At the Hearing before us, we did not discern that Dr Turner devoted time to the separate question of discretion and whether it was “just” to make an order for security for costs (see the discussion of RDC 25.101 above). As made clear in the Judgment (at [16]), the Judge plainly had regard to this consideration. Especially given the width of the Judge’s discretion, we think Dr Turner was prudent not to take time on this separate point. Provided only that condition (6) was satisfied (as we and the Judge have concluded it was), then, in our judgment, the Judge was plainly entitled and indeed correct to conclude that it was just in all the circumstances of the case to make an order for security for costs.
(E) A nominal claimant?
82. Finally on this Ground, we should make it plain that we were not at all attracted to the Respondents’ suggestion (at para. 44 of their 6 November 2023 Skeleton argument) that the Appellant was a “nominal claimant” acting on behalf of her son. Suffice to say there is nothing in this point, but it is academic given our views on the remainder of the argument on Ground III.
(F) Conclusion on Ground III:
83. For the reasons set out, Ground III fails and is dismissed.
GROUND IV
84. Ground IV is as follows:
“In failing to address or give any weight in his Reasons to the fact that, as submitted by the Claimant, the First Defendant’s position as to the grounds for the application for security for costs had fundamentally changed since the issue of security for costs was first raised, which served to cast serious doubt as to the bona fides of the Defendants’ application. The letters sent by the Defendants’ legal representatives asserted that they were not aware of any assets belonging to the Claimant in the UAE. However, the security for costs application and the evidence provided by the First Defendant in support revealed that this assertion was untrue so that the application for security for costs was filed on frivolous grounds. The learned judge’s failure to address or give any weight to these facts, particularly in terms of paragraph 12 of the Reasons, is a material error in the Reasons for the Order. The Claimant raises this ground of appeal as an appeal arising from an incorrect finding of fact.”
85. There is, with respect, nothing in this Ground. As indicated in the course of oral argument, the Court struggled, unavailingly, to identify an inconsistency let alone a “fundamental” change in the Respondent’s position. The Respondents’ position was that they had had no contact with the Appellant from 2021 and had, at best, a general awareness of her activities – rather than a detailed knowledge of her assets. Nothing in the correspondence to which we were referred by Dr Turner contradicts that position. Insofar as reliance is placed on the Deposit and the Undertaking, they take the matter no further for the reasons already given. The insinuation as to the Respondents’ “bona fides” should not have been made; there is no foundation for it. It is fanciful to suggest, as this Ground does, that the Application for security for costs was made on frivolous grounds – a proposition in any event belied by the course the Application has taken. This Ground provides no basis whatever for seeking to challenge the Judgment. Ground IV fails
GROUND V
(A) Introduction:
86. Ground V goes to the practical difficulties of enforcement of an order for costs:
“In failing to address or give any weight in his Reasons to the requirements of RDC 25.109, which required the Defendants to provide evidence of the practical difficulties (if any) of enforcing an order for costs against the Claimant outside the UAE, when this formed part of the Defendants’ case and required the provision of expert evidence from a foreign lawyer, which had not been provided by the Defendants. The Defendants had provided a list of certain assets belonging to the Claimant in Slovakia and the Czech Republic as part of their evidence in support of the application. The Claimant raises this ground of appeal as an appeal on a point of law.”
87. The Appellant’s contention is that the Judge failed to address or give any weight to RDC 25.109 (set out above) which required the Respondents to provide evidence of the practical difficulties (if any) of enforcing an order for costs against the Appellant outside the UAE. Ground V submits that RDC 25.109 required “the provision of expert evidence from a foreign lawyer”. The Judge’s failure in this regard amounted to an error of law.
(B) Discussion and conclusions:
88. We go part of the way with the Appellant on this Ground but, thereafter, with respect, we part company.
89. First, while the burden of proving its case rests upon the applicant for security for costs, we are unable to conclude that in all cases provision of a witness statement addressing the practical difficulties of enforcement is a condition precedent to the making of an order for security. We do not think that RDC 25.99 and 25.109 go that far. There must of course be material on which the Court can rely for an order to be made – but the nature or form of that material may vary. In particular, we are not persuaded that adducing expert evidence is a condition precedent to the grant of an order for security. In this case, as observed by the Court during oral argument, the Judge was amply entitled to take judicial notice of the absence of an enforcement treaty between the UAE on the one hand and Slovakia and the Czech Republic on the other. On that footing, the Judge was again amply entitled to take judicial notice that, without such a treaty, enforcement in Slovakia and/or the Czech Republic would inevitably be more complicated and, hence, more expensive and difficult than enforcing against assets in the UAE. Similarly, no expert evidence is needed to conclude that executing against assets held by the Appellant’s son in Slovakia is (overwhelmingly) likely to be more difficult than executing against assets held in the name of the Appellant in the UAE.
90. Secondly, the decision of this Court inBader & Others v Bank Sarasin-Alpen & Others [2010] DIFC CA 001 is clearly distinguishable. Bader was concerned with enforcement against identified assets in Kuwait, raising questions as to the interpretation of the Riyadh Convention. In the circumstances the production of expert evidence may have been necessary - and was hardly surprising. Here, not only was there uncertainty as to the detailed identification and location of the Appellant’s assets in Slovakia and the Czech Republic but no questions arose as to the interpretation of an international Convention. We therefore read Bader as an example of a situation where expert evidence was required but not as a prescriptive template for all cases.
91. Thirdly, insofar as Ground V submits that the Judge failed to address or to give weight to RDC 25.109, we are not persuaded. As seems clear to us, it is implicit in the Judge’s reasoning that executing against assets of the Appellant in Slovakia and the Czech Republic would be more complicated, expensive and difficult than executing against her assets in the UAE. On this basis and on the further footing that (as concluded above) an affidavit, witness statement or expert report was not a condition precedent to an order for security, we are satisfied that the Judge’s reasoning does not disclose an error law.
92. We therefore dismiss Ground V.
GROUND VI
93. Ground VI says this:
“In failing to address or give any weight in his Reasons to the fact that, as submitted by the Claimant, the First Defendant had already secured his legal costs by having wrongfully obtained the sum of Euros 384,000 from the bank accounts of the Second Defendant and having applied those funds to his own benefit. The Claimant raises this ground of appeal as an appeal on a point of fact.”
94. We take this Ground summarily. Assuming in the Appellant’s favour that (as appears to be the case) the Judge did not address this point, nothing turns on it. The allegation is one for the trial on the merits (as to which we express no view) not for the Application before the Judge or for this Appeal: RDC 25.110 is squarely applicable. Ground VI fails.
GROUND VII
(A) Introduction: Ground VII deals with the question of quantum:
“In failing to address or give any weight in his Reasons to the fact that, as submitted by the Claimant, the estimate of legal costs provided by the First Defendant was extravagant and unparticularised and contained no itemised breakdown of the costs of the Defendants as was required by the authorities, far exceeded the comparable legal costs incurred by the Claimant, and also included costs in respect of steps in the proceeding which were unlikely to be awarded by the Court to the Defendants in the final event. The Claimant raises this ground of appeal as an appeal on a point of fact and as an appeal on a point of law.”
95. The figure claimed by the Respondents – and awarded by the Judge - is based on 60% of their total costs in the various proceedings allegedly amounting to USD 450,000 (until the end of the trial and any consequential proceedings). The Respondents say that they have incurred costs of about USD 167,000 to date. The Respondents state that they have used the Schedule of Costs available on the DIFC Courts’ e-portal and that it is standard practice to use this Schedule to provide an estimate of costs.
96. As Ground VII indicates, the Appellant criticises the Respondents’ quantification of their claim for security, as grossly exaggerated and disproportionate. By contrast with the amount claimed by the Respondents, the Appellant says that her legal costs to date amount to less than USD 60,000. In the Appellant's Skeleton Argument (dated 20 November 2023) at [78] – [79], the argument is expressed this way:
“78. A detailed costs breakdown does not consist merely of listing the names of individual fee earners working on the matter and their total hours expended, as the applicant has done in this case. It needs to show the particular individual work items performed and the hours expended or estimated to be expended in the future on each item of work…
79. The Schedule of Costs on the DIFC Courts e-portal may be a useful general guide but for the purposes of assessing the reasonableness of a party’s costs on a security for costs application, further detail needs to be provided…”
97. Furthermore, and relying onBader(supra), the Appellant submits that the absence of a detailed breakdown of costs is fatal to the Respondents’ Application regardless of whether the Court might otherwise have been minded to order Security for Costs.
(B) Discussion and conclusions:
98. In our judgment, there is force in the Appellant’s argument on the quantum of security. The upshot, however, is not that no security should be ordered but that the amount ordered by the Judge should be reduced. Our reasons follow.
99. First, the Schedule of Costs on the DIFC Courts’ e-portal is a useful guide but it is plainly not exhaustive of what is needed in all applications for security for costs. More detail may well be required – as it was here. Precisely what level of detail is required is necessarily a fact specific question turning on the circumstances of the individual case. In this case it is unfortunate that no better attempt was made to relate the individuals, the hours spent, and the generic nature of the work done, to particular stages in the case.
100. Secondly, and perhaps in consequence, the Schedule is not as reliable as it should be. In particular, there is a puzzling contrast with the figures for the work done on documents (charged at a full rate) and the implausibly low costs related to attendances at hearings. This is strongly indicative of something having gone wrong, suggestive of a tick-box exercise.
101. Thirdly, though the decision of the Judge on the quantum of security to be ordered is very much at the discretionary end of the spectrum, we are entitled to intervene because, with respect, the Judge failed to take into account: (1) that the e-portal provides no more than a guide which – here at least – needed to be supplemented; and (2) the deficiencies in the Schedule. We accordingly exercise the discretion afresh.
102. Fourthly, we are not persuaded that a nil order is the just and fair outcome in this case. Nothing inBaderrequires a disproportionate conclusion to such effect. Manifestly this is hard-fought litigation as the dispute on this Application has itself demonstrated. Inevitably, significant costs have been and will be incurred. In our judgment, practical justice will be done if the order for USD 270,000 is quashed and the figure ofUSD 200,000is substituted in its place. This amount is on no view disproportionate, having regard to the factual and legal complexities disclosed by the pleadings, the interlocutory disputes to date and the likely length of a trial.
103. Accordingly, we order that the sum ofUSD 200,000be provided by way of security for the Respondents’ costs by the Appellant within 14 days of this Order. That sum must bepaid into Courtunless, within the 14 days’ period, the partieshave agreed an escrow arrangement with a first-class Bank in the UAEand have submitted that escrow arrangement to the Court for its approval. So that there is no misunderstanding, absent an agreement by the parties on such an escrow arrangement within the 14 days’ period and submission of the escrow arrangement to the Court for its approval, the funds must be paid into Court.
GROUND VIII
104. Ground VIII is in these terms:
“In failing to address or give any weight in his Reasons to the submission of the Claimant that the First Defendant should be directed to provide an undertaking under RDC 25.111 in relation to the Claimant’s own legal costs. The Claimant raises this ground of appeal as an appeal on a point of law.”
105. It is unnecessary to take much time on this Ground or to explore the suggested differences between the RDC and the English CPR. The Appellant has not adduced evidence from which it may be concluded that this is an appropriate case for the Court to require a cross undertaking. Generally, a cross undertaking is only relevant in respect of losses or costs which do not constitute costs which are recoverable under the power conferred by RDC 38.10 (7) to order a party to pay interest on costs from or until a certain date, including a date before judgment; otherwise, it is unnecessary. The Appellant has not identified any loss to her which cannot be compensated for by an order pursuant to RDC 38.10 (7). The Appellant’s argument is based upon her contention that it can be predicted with a fair degree of confidence that it is very likely that costs will not be awarded to the Respondents on most of the interlocutory applications and the substantive hearing. As we have already noted only in those cases where it can be shown without detailed investigation of evidence or law that the claim is almost certain to succeed or fail will the merits be taken into consideration. This is not such a case.
106. Further, as the Order of this Court provides for a payment into Court or an agreed escrow arrangement, any need for a cross-undertaking from the Respondents falls away.
OTHER MATTERS
107. For completeness, we do no more than mention two other matters:
(a) The Appellant’s application for a stay: Having now dealt with the Appeal on its merits, any question of a stay has been overtaken by events. No more need be said of it.
(b) An extension of time for the Respondents’ Notice: This too has been overtaken by events.
OVERALL CONCLUSION AND COSTS
108. For the reasons given, we dismiss the Appeal, save insofar that we have reduced the amount of security to be provided from USD 270,000 toUSD 200,000 and ordered that the amount be paid into courtwithin 14 days,unless, within the 14 days’ period, the parties have agreed an escrow arrangement with a first-class Bank in the UAE and have submitted that escrow arrangement to the Court for its approval.
109. No elaboration is required on the question of costs. These must follow the event, reflecting the Respondents’ overall success on the Appeal but making a limited allowance for the Appellant’s success on the quantum of security to be provided. Justice will be done if the Appellant is ordered to pay85%of the Respondents’ costs, to be assessed by the Registry if not agreed.