THE INDUSTRIAL GROUP v Mr ABDELAZIM EL SHIKH EL FADIL HAMID [2022] DIFC CA 005/2022 — Court of Appeal costs determination (30 November 2022)

The DIFC Court of Appeal clarifies the application of judicial discretion in cost-shifting, awarding a successful party two-thirds of its appeal costs while balancing prior conduct and procedural fairness.

What was the specific nature of the dispute between The Industrial Group and Mr Abdelazim El Shikh El Fadil Hamid that necessitated this Court of Appeal order?

The dispute concerns the finalization of costs following the Court of Appeal’s substantive judgment delivered on 20 September 2022. The Industrial Group (TIG) and Mr Abdelazim El Shikh El Fadil Hamid (Mr Hamid) were involved in appellate proceedings (CA 005/2022 and CA 006/2022) that required the Court to determine the appropriate allocation of legal expenses. The core of the matter was not the underlying merits of the claim, which had been addressed in the September judgment, but rather the equitable distribution of the financial burden of the litigation.

The Court utilized the following nomenclature to define the parties:

As in the Court’s Judgment dated 20 September 2022 (the “Judgment”), the Court refers to the parties as “TIG” and “Mr Hamid” respectively.

The stakes involved a significant financial assessment, with the Court ultimately ordering an interim payment of USD 50,000 to be paid by the Appellant to the Respondent. This order serves as a procedural capstone to the appellate process, ensuring that the successful party is compensated for its legal outlays while acknowledging the specific conduct of the parties throughout the litigation history. Further details of the case background can be found at the official DIFC Courts judgment portal.

Which judges presided over the Court of Appeal in The Industrial Group v Mr Abdelazim El Shikh El Fadil Hamid on 30 November 2022?

The order was issued by a distinguished panel of the DIFC Court of Appeal consisting of H.E. Deputy Chief Justice Ali Al Madhani, H.E. Justice Shamlan Al Sawalehi, and Justice Sir Peter Gross. This panel, sitting in the Court of Appeal division, was tasked with reviewing the costs submissions filed by the parties on 19 October 2022 to reach a final determination on the financial consequences of the appeal.

What were the primary arguments advanced by TIG and Mr Hamid regarding the allocation of appeal costs?

The parties submitted detailed costs arguments following the September 2022 judgment. TIG, as the successful party, sought a favorable costs order, relying on the general principle that costs should follow the event. Conversely, the Court had to weigh the conduct of both parties, specifically examining TIG’s behavior during the proceedings. The Court noted that it had to balance the general rule of cost-shifting against the specific observations made by the trial judge regarding TIG’s conduct, which had been documented in the earlier judgment.

The Court’s approach to these arguments was guided by the need to ensure that the final order reflected the reality of the litigation success while remaining fair in light of the parties' procedural history. The Court explicitly stated its consideration of these factors:

In this regard, the Court has well in mind the Judge’s observations as to TIG’s conduct, set out in his judgment.

What was the precise legal question the Court of Appeal had to resolve regarding the exercise of its discretion under the RDC?

The Court was tasked with determining how to exercise its broad discretion under the Rules of the DIFC Court (RDC) to achieve "substantial justice" between the parties. The doctrinal issue was not merely the application of a default rule, but the calibration of a costs award that accounted for both the success on the merits and the conduct of the parties both before and during the proceedings. The Court had to decide whether to award 100% of the costs or to apply a reduction that would reflect the Court's disapproval of certain conduct or the complexity of the issues advanced.

How did the Court of Appeal apply the doctrine of judicial discretion to the costs award in this matter?

The Court emphasized that the determination of costs is not a mechanical or "arithmetically precise" exercise. Instead, it is a discretionary function aimed at achieving an equitable outcome. By awarding two-thirds of the costs, the Court signaled that while TIG was the successful party, its conduct—as noted by the trial judge—warranted a departure from a full recovery of costs.

The Court’s reasoning for this specific apportionment is captured in the following passage:

In all the circumstances, the Court awards TIG 2/3 of its costs of the Appeals before this Court, to be subject to detailed Assessment by the Registrar if not agreed.

This reasoning demonstrates a nuanced application of the RDC, where the Court balances the "general (but not invariable) rule" of cost-shifting against the specific behavioral history of the litigants. By remitting the interest applications to the judge below and upholding the lower court's costs order, the Court of Appeal maintained consistency across the different stages of the litigation.

Which specific provisions of the Rules of the DIFC Court (RDC) and prior judicial authorities informed the Court’s decision?

The Court relied primarily on its broad discretionary powers under the RDC to manage costs. While the RDC provides the framework for cost-shifting, the Court’s application was heavily informed by the findings in the Judgment dated 20 September 2022. The Court utilized the RDC to ensure that the costs award was not merely a reflection of the outcome of the appeal, but also a reflection of the procedural integrity of the parties’ conduct.

How did the Court of Appeal utilize the findings from the 20 September 2022 judgment in its final costs order?

The Court used the 20 September 2022 judgment as a foundational reference point for the parties' conduct. Rather than re-litigating the merits or the behavioral issues, the Court of Appeal deferred to the trial judge’s observations. This ensured that the costs order remained consistent with the overall judicial narrative of the case. The Court explicitly declined to interfere with the lower court’s costs order, noting that "Justice would not be served by any adjustment to the Judge’s order," thereby reinforcing the trial judge's assessment of TIG's conduct.

What was the final disposition and the specific monetary relief ordered by the Court of Appeal?

The Court of Appeal ordered that the Respondent be awarded two-thirds of its costs of the appeals, subject to detailed assessment by the Registrar if the parties could not reach an agreement. Furthermore, the Court issued a specific order for an interim payment to facilitate the immediate financial resolution of the costs issue.

The specific order for the interim payment is as follows:

The Appellant shall pay USD 50,000 on account towards the Respondent’s costs of this Appeal, within 28 days of the date of this Order.

Additionally, the Court remitted any applications regarding interest to the judge below and granted the parties liberty to apply, ensuring that any outstanding procedural matters could be addressed without further appellate intervention.

What are the wider implications for DIFC practitioners regarding the recovery of appeal costs?

This case serves as a reminder that the DIFC Court of Appeal will not treat costs as a guaranteed "winner-takes-all" outcome. Practitioners must anticipate that the Court will rigorously scrutinize the conduct of the parties throughout the entire lifecycle of the litigation. Even a successful appellant or respondent may see their costs award reduced if their conduct is found to be unsatisfactory by the bench. The use of an interim payment order (in this case, USD 50,000) is a standard mechanism to ensure that the successful party receives some immediate relief while the detailed assessment process proceeds.

Where can I read the full judgment in The Industrial Group v Mr Abdelazim El Shikh El Fadil Hamid [2022] DIFC CA 005/2022?

The full judgment and order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-appeal/ca-0052022-ca-0062022-industrial-group-limited-v-mr-abdelazim-el-shikh-el-fadil-hamid. The text is also available for review via the CDN at https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-appeal/DIFC_COA_CA_005_2022_CA_006_2022_The_Industrial_Group_Limited_v_Mr_Abdelazim_El_Shikh_El_20221130.txt.

Cases referred to in this judgment:

Legislation referenced:

• Rules of the DIFC Court (RDC)