TAVIRA SECURITIES v RE POINT VENTURES [2018] DIFC CFI 026 — Costs and pleading amendments following a failed jurisdiction challenge (29 January 2018)

What specific costs and procedural disputes remained between Tavira Securities and RE Point Ventures after the initial jurisdiction challenge was dismissed?

The litigation arose from a dispute between Tavira Securities Limited and four defendants—RE Point Ventures Fzco, Jai Narain Gupta, Maynak Kumar, and Saroj Gupta—concerning a failed trade of 190 shares in SAB Miller plc. After the Court dismissed the Defendants' initial challenge to the DIFC Court's jurisdiction on 17 December 2017, two secondary issues required judicial resolution: the Claimant’s application for costs regarding the jurisdiction challenge and the Claimant’s request for permission to amend its Claim Form to introduce serious allegations of dishonest misrepresentation and conspiracy.

The stakes involved the recovery of legal costs incurred by Tavira Securities while defending the jurisdiction challenge, which totaled nearly USD 100,000. Additionally, the Claimant sought to expand the scope of the litigation to include claims that the Defendants had induced the contract through false representations and engaged in an actionable conspiracy. As noted in the court records:

The Claimant also applies under RDC Rule 38.13 for an interim payment on account of costs. The Claimant’s costs in resisting the Defendant’s jurisdiction challenge down to and including the service of its post-hearing submissions totaled US$97,964.

Which judge presided over the costs and amendment application in Tavira Securities v RE Point Ventures?

The matter was heard by Justice Sir Richard Field in the DIFC Court of First Instance. The ruling and declaration were issued on 29 January 2018, following the Court's earlier dismissal of the Defendants' jurisdiction challenge in December 2017.

What were the respective positions of Tavira Securities and the Defendants regarding the basis for cost taxation?

Tavira Securities argued that the Defendants’ conduct throughout the jurisdiction challenge was "reprehensible" and characterized by a "shifting nature," justifying an award of costs on an indemnity basis rather than the standard basis. Specifically, the Claimant pointed to the Defendants' inconsistent arguments regarding the appropriate forum—initially citing general forum non conveniens before belatedly identifying England as the preferred venue—and their contradictory stance on the General Terms and Conditions of Business.

The Claimant highlighted that the Defendants had accused them of "hiding" these terms, despite the fact that the documents had been provided to the Defendants months prior. Conversely, the Defendants failed to serve any reply submissions to the Claimant’s Costs Application or the Permission Application, leaving the Claimant’s arguments largely uncontested before the Court. As the Claimant submitted:

The Claimant submits that those costs should be taxed on the indemnity basis because of the shifting nature of the Defendants’ case and because of their reprehensible conduct.

What was the precise legal question the Court had to answer regarding the threshold for indemnity costs?

The Court had to determine whether the Defendants' litigation conduct—specifically their shifting jurisdictional arguments and the false accusation that the Claimant had concealed contractual terms—met the threshold of being "out of the norm." The doctrinal issue was whether such behavior warranted the punitive measure of indemnity costs, which are reserved for cases where a party’s conduct is sufficiently egregious to justify the Court marking its disapproval, or whether the standard basis for costs remained appropriate.

How did Justice Sir Richard Field apply the 'out of the norm' test to the Defendants' conduct?

Justice Sir Richard Field applied the test established in Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden and Johnson, which dictates that indemnity costs are appropriate only when a party’s conduct is truly exceptional. While the Court acknowledged the Claimant's frustration with the Defendants' shifting arguments and their unfounded allegations regarding the "hidden" terms, it concluded that this did not reach the level of "reprehensible" conduct required for an indemnity award.

The Court emphasized that while the Defendants' behavior was problematic, it did not constitute the type of baseless fraud or intentional misleading of the court that would trigger a departure from the standard costs regime. As stated in the ruling:

In my opinion, the conduct of the Defendants relied on by the Claimant in its application for indemnity costs is not sufficiently “out of the norm” to require the Court to mark its disapproval thereof by awarding indemnity costs.

Which specific statutes and rules did the Court rely upon to govern the costs and amendment applications?

The Court’s decision was grounded in the Rules of the DIFC Courts (RDC). Specifically, the Court relied on RDC 38.7(1), which establishes the general principle that costs should follow the event, and RDC 38.13, which governs applications for interim payments on account of costs. Furthermore, the Court referenced the Fiona Trust approach regarding the separability of arbitration clauses, which had been a point of contention during the Defendants' failed jurisdiction challenge.

How did the Court utilize English case law to interpret the standard for indemnity costs?

The Court utilized Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden and Johnson as the primary authority for defining the "out of the norm" threshold. Justice Sir Richard Field used this precedent to contrast the Defendants' conduct in the present case against examples of behavior that would typically justify indemnity costs, such as bringing claims that are totally devoid of merit or making baseless allegations of fraud. By applying this English authority, the Court maintained consistency with international best practices in commercial litigation.

What was the final disposition of the costs and amendment applications?

The Court ordered the Defendants to pay the Claimant’s costs of the jurisdiction challenge, to be taxed on a standard basis. Additionally, the Court granted the Claimant permission to amend the Claim Form to include the new allegations of dishonest misrepresentation and conspiracy. To facilitate the payment of costs, the Court ordered an interim payment of USD 46,000 to be paid by the Defendants within 14 days. The relevant orders were:

The Defendants must therefore pay the Claimant’s costs incurred in resisting the jurisdiction challenge, such costs to be taxed on the standard basis, unless otherwise agreed.

The Defendants shall pay to the Claimant within the 14 days of the date of this order USD46,000 on account of the costs awarded in paragraph 1 above.

What are the practical implications of this ruling for litigants seeking to amend pleadings or claim indemnity costs in the DIFC?

This ruling serves as a reminder that the DIFC Court maintains a high bar for awarding indemnity costs; litigants must demonstrate conduct that is truly "out of the norm" rather than merely frustrating or inconsistent. Conversely, the decision confirms the Court’s pragmatic approach to amending pleadings. Provided that the proposed amendments are pleaded with necessary particularity and supported by a reasonable evidential basis—such as witness statements or email trails—the Court will permit the introduction of serious allegations, even those involving fraud or conspiracy. As the Court noted:

In my judgment, the proposed amendments are pleaded with the necessary particularity and have a reasonable evidential basis. This is constituted both by the emails that passed between the Claimant and the Defendants that are referred to in the judgment of 17 December 2017, and by Mr Ulrich’s witness statement that constitutes evidence of a consistent modus operandi.

Where can I read the full judgment in Tavira Securities Limited v (1) RE Point Ventures Fzco (2) JAI Narain Gupta (3) Maynak Kumar [2018] DIFC CFI 026?

The full judgment is available on the official DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0262017-tavira-securities-limited-v-1-re-point-ventures-fzco-2-jai-narain-gupta-3-maynak-kumar

Cases referred to in this judgment:

Legislation referenced:

• RDC 38.7(1) (Costs follow the event)
• RDC 38.13 (Interim payments on account of costs)
• Dubai Decree 19 of 2016 (Joint Judicial Council)