This order finalizes the financial consequences of the Court of Appeal’s judgment in the long-running litigation between Rafed Abdel Mohsen Bader Al Khorafi and Bank Sarasin-Alpen, establishing the specific liability split for legal costs and mandating a significant interim payment.
What was the total amount of the payment on account ordered against the Appellants in Al Khorafi v Bank Sarasin-Alpen?
The dispute centers on the recovery of legal costs following the Court of Appeal’s decision dated 3 March 2016. The court determined that the Respondents were entitled to recover their costs of the appeal, subject to an assessment by the Registrar on a standard basis if the parties could not reach an agreement. To ensure the Respondents were not left out of pocket during the potentially lengthy assessment process, the court mandated a substantial interim payment.
The court’s order specifically addressed the immediate financial obligation of the Appellants regarding these costs. The order stipulated:
Both Appellants shall be jointly and severally liable for a payment on account of costs in the sum of USD 450,000, payable by 30 April 2016.
This figure represents a significant portion of the anticipated total costs, reflecting the court's exercise of its discretion under the Rules of the DIFC Courts (RDC) to prevent prejudice to the successful party. The payment deadline of 30 April 2016 was set to provide a clear timeline for compliance following the issuance of the order on 12 April 2016.
Which judicial body issued the costs order in CA 003/2015 on 12 April 2016?
The order was issued by the DIFC Court of Appeal. While the document header references the "Court of First Instance" in a clerical capacity, the order itself explicitly states it is an "ORDER OF THE COURT OF APPEAL" following the substantive judgment delivered by the appellate bench on 3 March 2016. The order was issued by Judicial Officer Maha Almehairi on 12 April 2016.
How did the parties argue the allocation of costs in the appeal of Al Khorafi v Bank Sarasin-Alpen?
Following the judgment of 3 March 2016, the parties submitted their respective positions on costs on 17 March 2016. The Respondents, having succeeded in the appeal, sought the recovery of their legal costs. The Appellants, comprising Rafed Abdel Mohsen Bader Al Khorafi, Amrah Ali Abdel Latif Al Hamad, and Alia Mohamed Sulaiman Al Rifai, were required to respond to these submissions.
The court’s final order reflects a nuanced approach to liability, distinguishing between the parties' roles and the extent of their involvement in the appeal. The court determined that the Appellants would not share liability equally across the board. Instead, it imposed a split liability structure: the Appellants are jointly and severally liable for 80% of the Respondents' costs, while the Second Appellant bears sole liability for the remaining 20% balance. This allocation suggests that the court accepted arguments regarding the distinct legal positions or the specific conduct of the Second Appellant during the appellate proceedings.
What was the legal question regarding the recoverability of interest on costs in CA 003/2015?
The court had to determine the appropriate rate and commencement date for interest on the costs awarded to the Respondents. In DIFC litigation, the recovery of interest on costs is a standard feature of the court's power to ensure full compensation for the successful party. The legal issue was not whether interest was payable, but rather the specific formula to be applied to ensure it reflected current market conditions and the timing of the payment obligation.
The court settled on a formula linked to the Emirates Interbank Offered Rate (EIBOR), a common benchmark in UAE banking litigation. By tying the interest to the 3-month EIBOR plus a 1% margin, the court ensured that the interest rate remained responsive to the prevailing financial environment. The court further specified that this interest would begin to accrue from 30 April 2016, the same date set for the payment on account, thereby aligning the interest obligation with the deadline for the initial financial settlement.
How did the court apply the principle of standard basis assessment in Al Khorafi v Bank Sarasin-Alpen?
In determining the quantum of costs, the court applied the "standard basis" test. Under this doctrine, the court does not award the entirety of the costs incurred by the successful party, but rather only those costs that were reasonably incurred and are proportionate to the matters in issue. Any costs that are deemed disproportionate or unnecessary are excluded from the recovery.
The court’s reasoning for ordering an assessment by the Registrar is rooted in the need for judicial oversight of legal billing. By ordering that costs be assessed on a standard basis if not agreed, the court ensures that the Respondents' legal fees are scrutinized for reasonableness. The court’s decision to order a payment on account of USD 450,000 serves as a practical bridge, allowing the Respondents to receive a portion of their costs immediately while the more granular, item-by-item assessment of the remaining costs proceeds before the Registrar. As noted in the order:
Interest at 3 month EIBOR + 1% is recoverable on the costs, as assessed or agreed from 30 April 2016.
This approach balances the Respondents' right to be compensated with the Appellants' right to challenge excessive or unreasonable legal charges.
Which specific Rules of the DIFC Courts (RDC) govern the court's power to award costs in this matter?
The court’s authority to award costs is derived from the Rules of the DIFC Courts (RDC), specifically Part 38, which governs the general rules on costs. Under RDC 38.1, the court has broad discretion to determine whether costs are payable by one party to another, the amount of those costs, and when they are to be paid.
Furthermore, the court’s power to order a payment on account is governed by RDC 38.12, which allows the court to order a party to pay a sum of money on account of costs before the final assessment has taken place. This rule is frequently utilized in the DIFC to prevent the "costs gap" that can occur between the conclusion of a trial or appeal and the finalization of the bill of costs. By invoking these rules, the court ensures that the successful party is not unfairly burdened by the delay inherent in the assessment process.
How did the court utilize the precedent of standard basis assessment in this order?
The court utilized the standard basis assessment as a mechanism to maintain proportionality in the litigation process. In the DIFC, the standard basis is the default position for costs awards unless the court finds that the conduct of a party warrants an indemnity basis (which is more punitive and allows for the recovery of a higher percentage of costs).
By opting for the standard basis, the court signaled that while the Respondents were the successful party, the costs to be recovered must remain within the bounds of what is reasonable. This aligns with the broader DIFC Court philosophy of discouraging excessive legal spending while ensuring that the prevailing party is not penalized for having to defend their position in the Court of Appeal. The court’s reliance on the Registrar to conduct this assessment is a standard procedural safeguard to ensure that the final figure is fair to both the Respondents and the Appellants.
What was the final disposition regarding the Appellants' liability for costs in CA 003/2015?
The final disposition of the court was a structured order for the payment of costs. The court ordered that the Respondents are entitled to recover their costs of the appeal, with the liability split as follows:
1. The Appellants are jointly and severally liable for 80% of the Respondents' costs.
2. The Second Appellant is solely liable for the remaining 20% of the costs.
3. The Appellants must pay a total of USD 450,000 as a payment on account by 30 April 2016.
4. Interest on the costs is set at 3-month EIBOR + 1%, accruing from 30 April 2016.
This order effectively closes the appellate phase of the litigation, leaving only the administrative task of the Registrar’s assessment to determine the final total if the parties fail to reach a settlement on the exact amount.
What are the practical implications for litigants regarding payments on account in the DIFC?
This case serves as a reminder that the DIFC Courts are proactive in managing the financial aspects of litigation. Litigants should anticipate that if they are unsuccessful in an appeal, the court will likely order a significant payment on account to the successful party to mitigate the delay in cost recovery. The use of joint and several liability, combined with specific percentage splits, highlights the court's willingness to apportion liability based on the specific involvement of multiple parties.
Practitioners must advise clients that a judgment in their favor does not automatically result in the immediate recovery of all legal fees; however, the court will use its powers under the RDC to ensure that the successful party is not prejudiced by the assessment process. The inclusion of interest at EIBOR-linked rates further emphasizes that the court views the non-payment of costs as a financial loss that must be compensated.
Where can I read the full judgment in Rafed Abdel Mohsen Bader Al Khorafi v Bank Sarasin-Alpen [2016] DIFC CA 003?
The full order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/ca-0032015-1-rafed-abdel-mohsen-bader-al-khorafi-2-amrah-ali-abdel-latif-al-hamad-3-alia-mohamed-sulaiman-al-rifai-v-1-bank-sara-1
A copy is also available on the Litt database: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI_CA_003_2015_1_Rafed_Abdel_Mohsen_Bader_Al_Khorafi_2_Amrah_Ali_Abdel_Latif_Al_20160412.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No specific case law cited in the order text. |
Legislation referenced:
- Rules of the DIFC Courts (RDC), Part 38 (Costs)
- RDC 38.1 (Court's discretion on costs)
- RDC 38.12 (Payment on account of costs)