This order concludes the protracted costs assessment phase of a high-stakes employment and tort dispute, resulting in a net monetary award in favor of the former employee, Mr. Hamid, after the Registrar applied percentage reductions for reasonableness and proportionality to the parties' respective bills of costs.
What was the nature of the dispute between The Industrial Group and Abdelazim El Shikh El Fadil Hamid that necessitated this costs assessment?
The litigation involved a complex interplay between employment law claims and tortious allegations. Mr. Hamid, the former employee, initiated a counterclaim against The Industrial Group (TIG) seeking compensation for notice pay, end-of-service gratuity, accrued vacation, and statutory penalties under Article 18 of the 2005 DIFC Employment Law. Simultaneously, he pursued tort claims for abuse of process and malicious prosecution. TIG, conversely, alleged that Mr. Hamid had engaged in embezzlement, leading to police involvement.
The underlying merits were adjudicated by Justice Sir Richard Field, who ruled in favor of Mr. Hamid regarding his employment claims while dismissing his tort claims. Subsequent appeals by both parties were dismissed by the Court of Appeal. The current proceedings represent the final stage of this dispute: the detailed assessment of costs arising from the CFI and Court of Appeal judgments. As noted in the Registrar's order:
The following extracts from these judgments (largely taken from the Defendant’s Points of Dispute for Costs, dated 24 July 2023) are relevant to the principles that I need to apply in making my assessment of costs:
Court of Appeal Costs decision dated 30 November 2022 (the “Appeal Costs Judgment”)
“4.
Which judge presided over the costs assessment hearing in The Industrial Group v Abdelazim El Shikh El Fadil Hamid?
Registrar Ayesha Bin Kalban presided over the costs assessment hearing held on 11 October 2023 within the Court of First Instance. The resulting order, issued on 30 October 2023, finalized the financial obligations between the parties following the earlier substantive rulings by Justice Sir Richard Field and the Court of Appeal.
What were the respective legal positions of The Industrial Group and Abdelazim El Shikh El Fadil Hamid regarding the quantum of costs?
Mr. David True, representing TIG, and Mr. Roger Bowden, representing Mr. Hamid, appeared before the Registrar. The parties submitted extensive Bills of Costs and Points of Dispute. TIG sought recovery of costs associated with its partial success in the litigation, while Mr. Hamid argued for the recovery of costs related to his successful employment claims. The dispute centered on the application of indemnity versus standard basis assessments, particularly in light of the court’s previous findings regarding TIG’s conduct. Mr. Hamid’s counsel emphasized that TIG’s attempt to prosecute him for embezzlement was "highly reprehensible," justifying an indemnity basis for his costs.
What was the precise doctrinal issue the Registrar had to determine regarding the assessment of costs on an indemnity basis?
The Registrar was tasked with determining whether the court’s previous order for indemnity costs entitled the receiving party to the entirety of their claimed costs, or whether the principles of reasonableness and proportionality remained applicable. The core issue was whether an indemnity order acts as a blanket entitlement or if the court retains the discretion to reduce claims that are deemed excessive or disproportionate to the issues at stake.
How did Registrar Ayesha Bin Kalban apply the test of reasonableness and proportionality to the bills of costs?
The Registrar adopted a pragmatic approach, declining to analyze every individual time entry in favor of a broader assessment. She applied percentage reductions to both parties' bills to reflect the reality of the litigation’s outcome and the necessity of the work performed. Regarding the Defendant’s costs, she stated:
Considering the Defendant’s Bill of Costs and the Claimant’s Points of Dispute, I use my discretion to reduce Mr Hamid’s claimed costs for the Court of First Instance proceedings by 20%.
Furthermore, the Registrar addressed the Claimant’s costs, noting that while proportionality was a factor, it did not necessitate a drastic reduction in TIG's reasonable costs, though she ultimately applied a 35% reduction to the Court of Appeal costs to reflect the specific success of the parties on appeal.
Which specific DIFC statutes and RDC rules governed the Registrar’s assessment of costs?
The assessment was primarily governed by the RDC Part 38, which outlines the procedure for detailed assessment of costs. Specifically, the Registrar relied on RDC 38.17, 38.18(1), and 38.19, which provide the framework for determining the amount of costs to be allowed. Additionally, the substantive employment claims were rooted in Article 18 of the 2005 DIFC Employment Law. The Registrar also referenced the principles established in Al Khorafi v Bank Sarasin [2009] CFI 026 regarding the distinction between standard and indemnity basis assessments.
How did the Registrar utilize the precedent set in Kazakhstan Kagazy PLC v Zhunus [2015] EWHC 404 (Comm)?
The Registrar utilized the principles from Kazakhstan Kagazy PLC v Zhunus to reinforce the court's discretion in assessing costs. This case was cited to support the holding that an indemnity costs order does not equate to an automatic recovery of all costs claimed. The Registrar affirmed that even under an indemnity basis, the receiving party must still satisfy the court that the costs were reasonably incurred and that the amount claimed is reasonable.
What was the final monetary outcome and the specific orders made by the Registrar?
The Registrar ordered a set-off between the parties' respective costs. TIG was ordered to pay Mr. Hamid USD 29,164.08 in respect of the underlying CFI and Appeal Orders. Additionally, TIG was ordered to pay USD 37,984.21 for the costs incurred specifically during the costs assessment proceedings. This resulted in a total net payment obligation from TIG to Mr. Hamid.
How does this ruling influence the practice of costs assessment in the DIFC for future litigants?
This case reinforces that an indemnity costs order is not a "blank check." Practitioners must anticipate that even when a court finds the opposing party's conduct "reprehensible," the Registrar will still apply a rigorous filter of reasonableness and proportionality. Litigants should be prepared to justify the time spent on every phase of litigation, as the Registrar will exercise discretion to reduce bills that do not align with the actual complexity or success of the claims. This decision serves as a reminder that the costs assessment process remains a substantive exercise in judicial oversight, not merely an administrative calculation.
Where can I read the full judgment in The Industrial Group v Abdelazim El Shikh El Fadil Hamid [2023] DIFC CFI 029?
The full order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0292018-ca-0052022-ca-0062022-industrial-group-ltd-v-abdelazim-el-shikh-el-fadil-hamid or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-029-2018_20231030.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Al Khorafi v Bank Sarasin | [2009] CFI 026 | Distinction between standard and indemnity basis assessment |
| Kazakhstan Kagazy PLC v Zhunus | [2015] EWHC 404 (Comm) | Principle that indemnity costs must still be reasonable |
Legislation referenced:
- 2005 DIFC Employment Law, Article 18
- RDC Part 38 (Detailed Assessment of Costs)
- RDC 38.17, 38.18(1), 38.19
- RDC 1.6(3)