THE INDUSTRIAL GROUP v ABDELAZIM EL SHIKH EL FADIL HAMID [2022] DIFC CFI 029 — Costs and interest allocation following employment and tort litigation (17 June 2022)

This order addresses the final allocation of costs and interest following the Court’s substantive judgment on 6 April 2022, balancing indemnity costs for employment claims against standard costs for dismissed tort claims.

What was the specific monetary value and nature of the dispute between The Industrial Group and Abdelazim El Shikh El Fadil Hamid?

The litigation centered on a complex employment dispute involving allegations of embezzlement, dismissal with cause, and subsequent tort claims for abuse of process and malicious prosecution. The Industrial Group (TIG) sought to hold the Defendant, Abdelazim El Shikh El Fadil Hamid, liable for alleged financial misconduct, while the Defendant counterclaimed for wrongful dismissal and damages arising from the Claimant's aggressive litigation tactics. The stakes were significant, with the Defendant initially seeking costs on an indemnity basis for his successful employment claims, while the Claimant sought to mitigate its liability by highlighting the dismissal of the Defendant's tort claims.

As noted in the court records:

In his Submission on Costs dated 14 April 2022, the Defendant applied for an immediate assessment of costs under RDC 38.3 in the sum of AED 1,456, 701 on the indemnity basis (RDC 38.17 (2) & PD 5/2014).

The Claimant attempted to offset these costs by pointing to the failed tort claims. The dispute over the final financial settlement was framed by the Claimant as follows:

The Claimant submits in its Interest and Costs Submissions dated 27 April 2022 that the Defendant is entitled at most to a proportion of his costs reflecting the fact that Claimant’s tort claims for damages totalling AED 34,51,773.80 for abuse of process and malicious prosecution were dismissed and excluding those parts of the proceedings in which costs orders have already been made.

This case is part of a long-running procedural history, including THE INDUSTRIAL GROUP v ABDELAZIM EL SHIKH EL FADIL HAMID [2018] DIFC CFI 029 — Procedural consolidation and case management (14 August 2018), THE INDUSTRIAL GROUP v ABDELAZIM EL SHIKH EL FADIL HAMID [2018] DIFC CFI 029 — Default judgment set-aside and stay of execution (25 October 2018), THE INDUSTRIAL GROUP v ABDELAZIM EL SHIKH EL FADIL HAMID [2019] DIFC CFI 029 — Refusal of permission to appeal default judgment (16 January 2019), THE INDUSTRIAL GROUP v ABDELAZIM EL SHIKH EL FADIL HAMID [2019] DIFC CFI 029 — Judicial Officer rejects procedural extension for pleadings (16 April 2019), and THE INDUSTRIAL GROUP v ABDELAZIM EL SHIKH EL FADIL HAMID [2019] DIFC CFI 029 — Compelling disclosure via Redfern Schedule (16 July 2019).

Which judge presided over the costs and interest hearing in the DIFC Court of First Instance on 17 June 2022?

The order was issued by Justice Sir Richard Field, sitting in the DIFC Court of First Instance. The decision followed the substantive judgment delivered on 6 April 2022 and considered various submissions filed by the parties throughout April and May 2022.

What were the specific legal arguments advanced by The Industrial Group and Abdelazim El Shikh El Fadil Hamid regarding costs?

The Defendant argued for indemnity costs, citing the "highly reprehensible" conduct of the Claimant’s senior management and legal representatives in attempting to have him charged with embezzlement and having his passport confiscated. He contended that he was the "overall winner" and that the evidence for the tort claims and the dismissal issue overlapped significantly, justifying a full recovery of costs. Conversely, the Claimant argued that the Defendant’s costs should be apportioned to exclude the dismissed tort claims. Furthermore, the Claimant challenged the Defendant’s reliance on a settlement offer, asserting it failed to meet the requirements of Part 32 of the Rules of the DIFC Courts (RDC).

What was the precise doctrinal issue regarding the validity of the settlement offer under Part 32 RDC?

The court had to determine whether a settlement offer made by the Defendant—which was not explicitly labeled as a "Part 32 Offer" and was limited in duration—could trigger the cost-shifting consequences typically associated with formal Part 32 offers. The Claimant successfully argued that the offer was procedurally deficient, thereby preventing the Defendant from relying on it to claim enhanced costs or interest penalties.

How did Justice Sir Richard Field apply the doctrine of indemnity costs to the Claimant’s conduct?

Justice Sir Richard Field determined that the Claimant's conduct, particularly the attempt to manufacture a criminal case against the Defendant, warranted the application of indemnity costs for the employment-related claims. The judge reasoned that the Claimant’s actions were not merely unsuccessful but were fundamentally tainted by bad faith.

The Defendant is awarded his costs in respect of his Employment Claims and in respect of the Dismissal with Cause Issue, such costs to be the subject of a detailed assessment on the indemnity basis by the Registrar.

The judge balanced this by awarding the Claimant standard costs for defending the tort claims, acknowledging that the Defendant had not succeeded on those specific heads of damage.

Which specific DIFC statutes and RDC rules were applied to determine the costs and interest awards?

The court relied heavily on RDC 38.3, which governs the assessment of costs, and RDC 38.17 (2), which provides the framework for awarding costs on an indemnity basis. Additionally, the court applied Part 32 RDC to evaluate the validity of the settlement offer. Regarding interest, the court utilized EIBOR plus 1% as the benchmark for pre-judgment interest, as reflected in the following:

I accept the daily rates of interest using this measure that are set out in Schedule 1 to the Claimant’s Costs Submissions dated 27th April 2022 which give a total of AED 71,532.54 as at 20 November 2020.

How did the court use cited precedents like Tavira Securities and Al Khorafi in its reasoning?

The court cited Tavira Securities Ltd v Point Ventures FZCO & Ors [2017] DIFC CFI 026 to support the rejection of baseless allegations of fraud, which served as a basis for awarding indemnity costs. Furthermore, the court considered the principles in Al Khorafi & Ors v Bank Sarasin Alpen (ME) Ltd & Anor [2009] DIFC CFI 026 regarding the "overall winner" principle, though it ultimately exercised its discretion to apportion costs between the successful employment claims and the unsuccessful tort claims.

What was the final disposition and the specific monetary relief ordered by the court?

The court ordered that the Defendant receive his costs for the Employment Claims and the Dismissal with Cause Issue on an indemnity basis. Simultaneously, the Claimant was awarded reasonable costs for defending the tort claims on a standard basis. The Defendant was awarded pre-judgment interest on the sum of AED 820,585, totaling AED 71,532.54 as of 20 November 2020.

The Defendant will have liberty to apply for an award of post judgment interest at the applicable rate on the said sum of AED 820,585 if there is a credible case for contending that judgment for the said sum has been given in advance of the date of the judgment herein dated 6 April 2022.

What are the wider implications for DIFC practitioners regarding settlement offers and indemnity costs?

This case serves as a stern reminder that settlement offers must strictly comply with Part 32 RDC to carry costs consequences. Practitioners must ensure that offers are clearly identified as Part 32 offers and do not contain restrictive time limits that deviate from the RDC framework. Furthermore, the ruling reinforces the court’s willingness to award indemnity costs when a party’s conduct is found to be "highly reprehensible," particularly in cases involving bad-faith litigation tactics or baseless allegations of fraud.

Where can I read the full judgment in The Industrial Group v Abdelazim El Shikh El Fadil Hamid [2022] DIFC CFI 029?

Full judgment available at the DIFC Courts website or via CDN link.

Cases referred to in this judgment:

Legislation referenced:

• RDC 38.3 (Immediate assessment of costs)
• RDC 38.17 (2) (Indemnity basis for costs)
• Part 32 RDC (Offers to settle)
• PD 5/2014 (Practice Direction on costs)