DEYAAR DEVELOPMENT v TAALEEM and NATIONAL BONDS CORPORATION [2017] DIFC CA 010 — Variation of costs orders post-appeal (03 May 2017)

This order addresses the limits of the Court of Appeal’s jurisdiction to reopen final judgments under RDC 44.179, specifically concerning the court's discretion to rectify inequitable costs allocations following a cross-appeal that proved unnecessary.

Did Deyaar Development have standing to apply for a variation of the Appeal Judgment regarding Taaleem’s legal costs?

The dispute arose following the Court of Appeal’s judgment of 18 August 2016, which initially ordered the Appellant, Deyaar Development, to pay the costs of both Respondents—Taaleem and National Bonds Corporation (NBC). Deyaar subsequently sought to shift the burden of Taaleem’s legal costs onto NBC, arguing that Taaleem’s participation in the appeal was necessitated solely by NBC’s conditional cross-appeal.

Deyaar’s application was framed as a request for the court to exercise its inherent discretion to correct an order that, in its view, unfairly penalized the Appellant for the procedural choices of the Second Respondent. As noted in the court records:

By way of letter dated 28 September 2016, Deyaar made an application under RDC 44.179 for the Court to exercise its discretion and vary the Appeal Judgment so as to order NBC to pay Taaleem’s costs (the “ Application ”).

The core of the dispute was whether the court could or should intervene after a final judgment to reallocate costs when the underlying liability for those costs was predicated on the assumption that all respondents were equally necessary parties to the appeal proceedings.

Which judicial officer presided over the Court of Appeal’s decision to vary the costs order in CA 010/2015?

The order was issued by Judicial Officer Nassir Al Nasser on 3 May 2017. The matter was handled by the DIFC Court of Appeal, which reviewed extensive correspondence from the parties submitted between September 2016 and April 2017 to determine whether the original costs order in the Appeal Judgment of 18 August 2016 required adjustment.

What were the specific arguments advanced by Deyaar and NBC regarding the necessity of Taaleem’s involvement in the appeal?

Deyaar, represented by Mr. Flynn, argued that Taaleem’s presence at the appeal hearing was entirely at the behest of NBC. Deyaar contended that Taaleem was forced to incur legal costs because NBC insisted on hearing its conditional cross-appeal applications simultaneously with Deyaar’s primary appeal. Deyaar maintained that Taaleem’s involvement was not related to Deyaar’s appeal, and therefore, the costs associated with Taaleem’s attendance should be borne by NBC.

Conversely, NBC, represented by Mr. Leech QC, argued that its cross-appeal against Taaleem was a necessary protective measure. NBC claimed that Deyaar’s shifting positions throughout the litigation necessitated a robust defense of its position against both parties. As documented in the proceedings:

In NBC’s letter dated 13 March 2017, NBC argued that its cross-appeal against Taaleem was necessary for the following reasons: (a) Deyaar had changed positions throughout the litigation.

NBC further challenged the procedural validity of Deyaar’s application, asserting that it failed to meet the strict requirements of the Rules of the DIFC Courts (RDC).

What was the precise legal question the Court of Appeal had to answer regarding the application of RDC 44.179?

The court had to determine whether the threshold for reopening a final appeal under RDC 44.179 had been met, and if not, whether the court retained the residual discretion to vary a costs order that had been left open for further submissions. The doctrinal issue was whether the finality of an appeal judgment could be pierced to correct a perceived injustice in costs allocation, even when the applicant failed to demonstrate the "exceptional circumstances" required to reopen the substantive merits of the case.

How did the court apply the test for reopening a final judgment under RDC 44.179?

The court applied a strict interpretation of RDC 44.179, emphasizing that the finality of litigation is a paramount public interest. The court held that Deyaar failed to meet the high bar required to reopen the substantive appeal. The reasoning process focused on distinguishing between the substantive merits of the appeal—which were settled—and the ancillary issue of costs, which the court had explicitly reserved for further submissions in its original judgment.

Under RDC 44.179, the Court of Appeal will not reopen the final determination of an appeal unless – (1) it is necessary to do so in order to avoid real injustice; (2) the circumstances are exceptional

While the court dismissed the application to reopen the appeal itself, it found that it possessed the procedural latitude to revisit the costs order because the original judgment had specifically invited further submissions on that point.

Which specific RDC rules and statutes governed the court’s decision on costs and procedural compliance?

The court’s decision was primarily governed by RDC 44.179, which sets the standard for reopening final appeals, and RDC 44.183, which dictates the procedural requirements for such applications. NBC specifically invoked RDC 44.183 to challenge Deyaar’s application, noting:

NBC argued that Deyaar failed to comply with RDC 44.183 which states that any application under RDC 44.179 must be made by way of application notice and supported by written evidence verified by a statement of truth.

Additionally, the court relied on its inherent case management powers to ensure that costs orders reflect the actual necessity of the parties' participation in the proceedings.

How did the court utilize the precedent of Raul Silva v United Investment Bank Limited?

The court referenced Raul Silva v United Investment Bank Limited (CA-004-2014) to reinforce the principle that the DIFC Court of Appeal must exercise its jurisdiction with extreme caution. The court used this authority to emphasize that the public interest in the finality of litigation outweighs the desire to correct minor errors, unless the circumstances are truly exceptional. By citing Raul Silva, the court signaled that it would not allow the "reopening" mechanism to be used as a backdoor for re-litigating settled matters, thereby limiting the scope of its intervention to the specific issue of costs.

What was the final disposition of the application and the resulting costs order?

The court dismissed the application for permission to reopen the final appeal but granted the variation of the costs order. The court determined that NBC’s cross-appeal against Taaleem was unnecessary, as the underlying obligation for Murabaha profits would have remained regardless of the Sharia Standards argument. Consequently, the court ordered that NBC bear its own costs for the cross-appeal and pay Taaleem’s costs incurred after 25 November 2015.

Based on the above reasoning, the Court makes the following costs orders: (a) Deyaar shall pay NBC’s costs, excluding any settlement costs for any matters that were dealt with or the subject of the Settlement Agreement between Deyaar and NBC dated 14 October 2015.

What are the wider implications for DIFC practitioners regarding costs submissions?

This decision serves as a warning to practitioners that the Court of Appeal will scrutinize the necessity of cross-applications. Even if a party is technically entitled to file a cross-appeal, if that application is deemed unnecessary or purely protective in a way that forces other parties to incur costs, the court may exercise its discretion to shift those costs. Practitioners should ensure that all applications are essential to the resolution of the dispute, as the court is willing to revisit costs orders if the original judgment left the door open for further submissions, even when the substantive appeal is closed.

Where can I read the full judgment in Deyaar Development P.J.S.C. v (1) Taaleem P.J.S.C. (2) National Bonds Corporation P.J.S.C. [2017] DIFC CA 010?

The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-appeal/ca-0102015-deyaar-development-pjsc-v-1-taaleem-pjsc-2-national-bonds-corporation-pjsc

Cases referred to in this judgment:

Legislation referenced:

• RDC 44.179 (Reopening of final appeal)
• RDC 44.183 (Procedural requirements for applications)