This consent order formalizes the settlement between the Second Claimant and the Second Defendant, establishing personal liability for costs and resolving ongoing disputes regarding travel bans and previous cost certificates.
Why did the parties in CFI 012/2010 seek a consent order to resolve disputes involving Smartpaper Computer Software and Keros?
The lawsuit originated from a commercial dispute between Smartpaper Computer Software LLC and Keros LLC, which escalated into complex applications regarding cost recovery and enforcement. The litigation, which had previously seen procedural developments such as the SMARTPAPER COMPUTER SOFTWARE v KEROSS [2012] DIFC CFI 012 — Procedural refinement and striking out of malice claims (16 February 2012), reached a critical juncture regarding the personal liability of the Second Claimant, Sami Caracund. The dispute centered on the settlement of all existing and future claims, including those related to the Amended Final Cost Certificate and a travel ban issued under Dubai Courts Case No. 2013/84.
The parties sought to finalize their obligations through this consent order to avoid further litigation. The core of the settlement involved the dismissal of Application 08 and the formalization of cost liabilities. As noted in the order:
The First Claimant and the Second Claimant Mr Sami George Henry Sami Caracund, the Manager and Shareholder of the Claimant, jointly and severally, shall pay the Second Defendant's costs of and occasioned by Application CFI 012/2010/08 in the amount of AED 100,000 (One hundred thousand Dirhams), by 4pm on 27 May 2013.
The settlement effectively brought an end to the specific applications pending before the Court, providing a clear path for the discharge of financial obligations. Further details can be found at the official DIFC Courts judgment repository.
Which judge presided over the consent order hearing in the DIFC Court of First Instance on 07 May 2013?
The consent order was issued by H.E. Justice Omar Al Muhairi, sitting in the Court of First Instance. The hearing took place on 07 May 2013 at 11:00 am, where the Court reviewed the terms agreed upon by the Second Claimant, Sami Caracund, and the Second Defendant, Farouk Said, to resolve the outstanding applications CFI 012/2010/08 and 09.
What specific legal arguments did the Second Claimant and Second Defendant advance regarding the joinder of Sami Caracund for costs?
The Second Defendant argued for the personal liability of Sami Caracund, the manager and shareholder of Smartpaper Computer Software, citing the need to enforce previous cost awards effectively. The Second Defendant maintained that the corporate veil should not shield the individual responsible for the litigation strategy from the financial consequences of unsuccessful applications.
Conversely, the Second Claimant, Sami Caracund, agreed to the terms of the settlement to resolve the ongoing disputes, including the travel ban issues. By consenting to the order, the Second Claimant accepted the joinder to the proceedings for the purpose of costs. The legal basis for this joinder was explicitly invoked under the Rules of the DIFC Courts (RDC). As stated in the order:
The Second Claimant Mr Sami George Henry Sami Caracund, the Manager and Shareholder of the Claimant is added as a Party to the proceedings for the purposes of costs only pursuant to RDC Part 20.11; and
What was the doctrinal issue the Court had to address regarding the joinder of a non-party for costs under RDC Part 20.11?
The Court had to determine whether it possessed the jurisdictional authority to join a non-party—specifically a manager and shareholder of a corporate claimant—to existing proceedings for the sole purpose of enforcing cost liability. The doctrinal issue involved the application of the Court's discretion to add parties under the RDC to ensure that the party effectively controlling the litigation could be held accountable for the costs incurred by the defendant. This required the Court to balance the principle of corporate personality against the Court’s inherent power to prevent abuse of process and ensure the fair distribution of litigation costs.
How did H.E. Justice Omar Al Muhairi apply the test for adding a party to proceedings for costs purposes?
Justice Al Muhairi utilized the procedural mechanism provided by RDC Part 20.11 to integrate the Second Claimant into the existing cost framework. By incorporating the findings from the previous Amended Order of Justice Sir John Chadwick and the Amended Final Cost Certificate of Justice David Williams, the Court established a clear nexus between the individual's role in the company and his personal liability for the costs of the litigation.
The reasoning relied on the consent of the parties to resolve the outstanding debt, effectively bypassing the need for a contested hearing on the merits of the joinder. The Court confirmed the personal liability of the Second Claimant as follows:
The Second Claimant, Mr Sami George Henry Sami Caracund is made personally liable to make payments of those costs awarded in the Amended Order and Final Costs Certificate.
This approach ensured that the previous judicial determinations regarding costs were not rendered unenforceable due to the corporate structure of the First Claimant.
Which specific DIFC statutes and RDC rules were applied to resolve the cost liability in CFI 012/2010?
The Court primarily relied on RDC Part 20.11, which governs the addition or substitution of parties to proceedings. This rule provided the procedural authority for Justice Al Muhairi to add Sami Caracund as a party for the purposes of costs. Additionally, the Court referenced the Amended Order of Justice Sir John Chadwick dated 09 May 2012 and the Amended Final Cost Certificate of Justice David Williams dated 27 December 2012 as the foundational documents establishing the quantum and nature of the costs to be paid.
How were the cited precedents used by the Court to reach the final consent order?
The Court utilized the Amended Order of Justice Sir John Chadwick and the Amended Final Cost Certificate of Justice David Williams to define the scope of the Second Claimant's liability. These documents served as the authoritative record of the costs previously awarded. By reading the current consent order in conjunction with these prior instruments, the Court ensured continuity in the enforcement process. The precedents were not used to re-litigate the merits of the cost awards, but rather to provide the necessary legal framework for the Second Claimant to assume personal responsibility for the debt already quantified by the Court in 2012.
What was the final disposition of the applications and the monetary relief ordered by the Court?
The Court dismissed Application No. CFI 012/2010/08. Regarding the financial relief, the Court ordered that the First Claimant and the Second Claimant, Sami Caracund, pay the Second Defendant's costs for Application 08 in the amount of AED 100,000. This payment was ordered to be made by 4:00 pm on 27 May 2013. Furthermore, the Court made no order as to costs in relation to Application No. CFI 012/2010/09, effectively finalizing the cost-related disputes between the parties.
What are the wider implications for DIFC practitioners regarding the personal liability of corporate managers for costs?
This case serves as a reminder that the DIFC Courts are willing to utilize RDC Part 20.11 to join individuals, such as managers or shareholders, to proceedings for the purpose of costs when circumstances warrant. Practitioners must anticipate that the corporate veil may be pierced in the context of cost recovery if the individual is deemed to have been the driving force behind the litigation. Litigants should be aware that consent orders can be used to resolve not only the primary dispute but also to settle collateral issues like travel bans and personal cost liabilities, providing a comprehensive resolution to complex, multi-jurisdictional litigation.
Where can I read the full judgment in SMARTPAPER COMPUTER SOFTWARE v KEROS [2013] DIFC CFI 012?
The full text of the consent order is available on the DIFC Courts website and can be accessed via the CDN link.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Amended Order of Justice Sir John Chadwick | CFI 012/2010 (09 May 2012) | Established the basis for cost liability |
| Amended Final Cost Certificate of Justice David Williams | CFI 012/2010 (27 Dec 2012) | Quantified the costs to be paid |
Legislation referenced:
- RDC Part 20.11 (Addition or substitution of parties)