This order addresses the residual financial consequences of a successful appeal against worldwide freezing orders, specifically evaluating how procedural delays impact the recovery of legal costs in the DIFC Court of Appeal.
Why did the Court of Appeal in Sandra Holding v Fawzi Musaed Al Saleh limit the successful appellants to 80% of their costs?
The dispute originated from the imposition of Worldwide Freezing Orders (WFOs) by Justice Sir Jeremy Cooke in November 2021 against Fawzi Musaed Al Saleh, Ahmed Fawzi Al Saleh, Yasmine Fawzi Al Saleh, and Farah El Merabi. Following a successful appeal on 6 September 2023, which resulted in the complete discharge of these freezing orders, the Court of Appeal convened to address the allocation of legal costs. While the appellants were the prevailing party, the Court exercised its discretion under the Rules of the DIFC Courts (RDC) to depart from the general rule that costs follow the event.
The Court’s decision to award only 80% of the costs was explicitly tied to the appellants' own procedural conduct during the litigation. The Court noted that the appellants had failed to comply with the initial freezing orders or to seek their discharge in a timely fashion, resulting in a delay of approximately nine months. This delay was viewed as a significant factor that unnecessarily complicated the proceedings and extended the duration of the litigation. Consequently, the Court determined that a full recovery of costs would be inequitable given the appellants' contribution to the procedural impasse.
Which judges presided over the costs hearing for the Sandra Holding v Fawzi Musaed Al Saleh appeal on 26 October 2023?
The costs hearing was conducted by the DIFC Court of Appeal. The order was formally issued by Assistant Registrar Delvin Sumo on 2 November 2023, following the substantive hearing held on 26 October 2023. This hearing followed the Court of Appeal’s earlier judgment of 6 September 2023, which had already established the success of the appellants in setting aside the WFOs granted by Justice Sir Jeremy Cooke.
What arguments did the appellants and respondents advance regarding the recovery of costs in CA 003/2023?
The appellants, Fawzi Musaed Al Saleh and others, argued that as the successful parties who had secured the discharge of the WFOs, they were entitled to the entirety of their costs incurred both in the Court of Appeal and in the lower court proceedings. They maintained that the freezing orders were improperly granted and that the burden of the litigation was forced upon them by the respondents, Sandra Holding Ltd and Nuri Musaed Al Saleh.
Conversely, the respondents argued that the appellants’ conduct throughout the proceedings warranted a significant reduction in any costs award. They highlighted the appellants' failure to engage with the freezing orders or to challenge them in a timely manner, which they contended caused unnecessary delay and increased the costs for all parties involved. The respondents urged the Court to reflect this lack of diligence in the final costs order, a position that the Court ultimately found persuasive when determining the 80% recovery cap.
What was the specific legal question the Court of Appeal had to answer regarding the exercise of its discretion on costs?
The Court was tasked with determining the appropriate apportionment of costs under the RDC when a party succeeds on the merits of an appeal but has demonstrated procedural non-compliance or delay during the earlier stages of the case. The doctrinal issue centered on the extent to which the Court of Appeal should penalize a successful appellant for failing to challenge an order in a timely manner, and whether such conduct justifies a departure from the "costs follow the event" principle. The Court had to balance the vindication of the appellants' rights against the need to maintain procedural discipline and discourage parties from delaying applications to set aside orders.
How did the Court of Appeal apply the principle of proportionality when assessing the costs in Sandra Holding v Fawzi Musaed Al Saleh?
The Court adopted a two-fold approach to the costs assessment. First, it acknowledged the appellants' success in the substantive appeal, which served as the primary basis for the costs award. Second, it applied a reduction to account for the appellants' failure to act with due diligence. By citing the nine-month delay in challenging the WFOs, the Court signaled that procedural efficiency is a prerequisite for full cost recovery. The Court ordered an interim payment to be made while leaving the final determination of the total bill to a detailed assessment by the Registrar.
The Respondents to pay AED 1,000,000 on account towards the Appellants’ costs of here and below, within 28 days of the date of this Order.
Which specific Rules of the DIFC Courts (RDC) and statutory provisions governed the Court’s power to award costs in this matter?
The Court exercised its broad discretion under the RDC to manage the costs of the proceedings. While the order does not cite specific RDC numbers in the final text, the authority to award costs on a "standard basis" and to order "detailed assessment" is derived from the RDC Part 38, which governs the court's power to award costs and the assessment process. The Court also relied on its inherent jurisdiction to manage its own process, ensuring that the financial burden of litigation reflects the conduct of the parties throughout the life of the claim.
How did the Court of Appeal treat the security payment previously lodged by the appellants?
A critical component of the order was the treatment of the security payment. Because the appellants had successfully appealed the WFOs, the Court determined that the condition for the security payment had been satisfied and that the funds should be returned to the appellants. This ensured that the appellants were not left out-of-pocket for the security required to pursue their appeal, despite the reduction in their overall costs recovery.
The Appellants be returned their payment of USD 1,870,000 paid into Court as a condition for pursuing their appeal.
What was the final disposition and monetary relief ordered by the Court of Appeal on 2 November 2023?
The Court of Appeal issued a multi-part order to resolve the costs dispute. First, it awarded the appellants 80% of their costs, to be assessed on the standard basis. Second, it ordered the respondents to pay an interim sum of AED 1,000,000 on account of those costs within 28 days. Third, it ordered the immediate return of the USD 1,870,000 security payment to the appellants. Finally, the Court specified that there would be no interest awarded on the costs, effectively capping the financial recovery to the principal amounts determined by the assessment.
How does this order change the practice for litigants seeking to challenge freezing orders in the DIFC?
This case serves as a stern reminder that success on the merits does not guarantee a full recovery of legal costs. Practitioners must advise clients that any delay in challenging an order—even one that is ultimately found to be wrongly granted—can be used by the Court to reduce a costs award. The decision underscores the importance of timely procedural action. Litigants must anticipate that the DIFC Court of Appeal will scrutinize the entire procedural history of a case, not just the final outcome, when exercising its discretion under the RDC. Future litigants should be prepared to justify any periods of inactivity or failure to comply with existing orders, as these can significantly diminish the financial benefit of a successful appeal.
Where can I read the full judgment in Sandra Holding v Fawzi Musaed Al Saleh [2023] DIFC CA 003?
The full order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-appeal/1-sandra-holding-ltd-2-nuri-musaed-al-saleh-v-1-fawzi-musaed-al-saleh-2-ahmed-fawzi-al-saleh-3-yasmine-fawzi-al-saleh-4-farah-el-1
CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-appeal/DIFC_COA_1_Sandra_Holding_Ltd_2_Nuri_Musaed_Al_Saleh_v_1_Fawzi_Musaed_Al_Saleh_2_20231102.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Sandra Holding Ltd v Fawzi Musaed Al Saleh | [2023] DIFC CA 003 | Substantive appeal judgment (6 September 2023) |
Legislation referenced:
- Rules of the DIFC Courts (RDC) Part 38 (Costs)