The DIFC Court of First Instance has clarified the stringent evidentiary requirements for securing wasted costs orders, dismissing a high-stakes application brought by Bank of Baroda against former legal representatives and a handwriting expert.
How did Bank of Baroda attempt to hold Baker Tilly and Mr Ahmed Al Bah liable for costs in CFI 043/2020?
The Bank of Baroda (DIFC Branch) initiated this application following a successful judgment against Mr Bavaguthu Raghuram Shetty for USD 33,248,029.70. Seeking to recover legal expenses incurred after an unsuccessful immediate judgment application on 15 January 2024, the Bank targeted the defendants' former legal representatives, Baker Tilly JFC Law Corporation, and the handwriting expert, Mr Ahmed Al Bah. The Bank alleged that Baker Tilly engaged in improper and unreasonable conduct, while asserting that Mr Al Bah committed a reckless and flagrant breach of his duties to the Court.
The core of the Bank’s argument was that these actions directly caused the Bank to incur unnecessary costs during the litigation. However, the Court found the evidence insufficient to support these claims. As noted in the judgment:
For these reasons the Bank has failed to establish that any improper or unreasonable conduct on the part of either Baker Tilly or Mr Al Bah caused it to incur costs which would not otherwise have been incurred.
This ruling serves as a significant barrier for litigants seeking to shift the financial burden of litigation onto opposing counsel or experts. Further procedural history regarding this case can be found in BANK OF BARODA v NEO PHARMA [2020] DIFC CFI 043 — Procedural non-compliance in pleading amendments (07 March 2020), BANK OF BARODA v NEO PHARMA [2020] DIFC CFI 043 — Alternative service via email (08 June 2020), BANK OF BARODA v NEO PHARMA [2020] DIFC CFI 043 — Alternative service via email (11 July 2020), BANK OF BARODA v NEO PHARMA [2020] DIFC CFI 043 — Amendment of pleadings for non-payment (18 August 2020), and BANK OF BARODA v NEO PHARMA [2020] DIFC CFI 043 — Interim stay of proceedings pending ADGM administration (06 December 2020).
Which judge presided over the Bank of Baroda v Neopharma wasted costs hearing?
The application was heard and determined by H.E. Chief Justice Wayne Martin in the DIFC Court of First Instance. The hearing took place on 18 June 2025, with the final Order with Reasons issued on 22 August 2025.
What were the specific legal arguments advanced by Bank of Baroda and the respondents in CFI 043/2020?
The Bank of Baroda argued that the conduct of Baker Tilly fell below the standards required by the RDC, specifically citing unreasonable or improper behavior that inhibited the Court from furthering the Overriding Objective. Regarding Mr Al Bah, the Bank contended that his expert reports were fundamentally flawed and that these inadequacies were the direct cause of the failure of the Bank’s initial immediate judgment application.
Conversely, the respondents maintained that their conduct did not meet the threshold for a wasted costs order. They argued that the Bank failed to establish a causal link between their actions and the specific costs claimed. The defense emphasized that the Bank’s inability to secure immediate judgment was not solely attributable to the expert evidence provided by Mr Al Bah, but rather to the broader complexities of the litigation.
What is the doctrinal test for determining if a legal representative should be held liable for wasted costs under RDC 38.60?
The Court had to determine whether the conduct of the legal representative was "unreasonable or improper" and, crucially, whether that conduct caused the applicant to incur unnecessary costs. The legal question centers on the causal nexus: even if conduct is deemed improper, the Court must be satisfied that the costs would not have been incurred "but for" that specific conduct. Furthermore, the Court addressed the distinction between negligence and improper conduct, noting the limitations of the Rules in addressing purely negligent acts by legal representatives.
How did Chief Justice Wayne Martin apply the causation test to the Bank’s claims against Mr Al Bah?
Chief Justice Martin applied a strict "but for" test to the expert evidence provided by Mr Al Bah. The Court reasoned that for the Bank to succeed, it had to prove that the specific deficiencies in the expert's report were the decisive factor in the failure of the immediate judgment application. The Court found that the Bank failed to meet this burden, noting:
In order to succeed in the claim against Mr Al Bah, it is necessary for the Bank to establish that the inadequacies of his first report caused the Immediate Judgment Application to fail, when it would otherwise have succeeded.
The Court further observed that had the Bank’s own counsel complied with the Overriding Objective and allowed the expert sufficient time for inspection, the outcome regarding the disputed signature would likely have remained unchanged, thereby negating the Bank's claim of causation.
Which DIFC Rules and statutes were central to the Court’s analysis of wasted costs?
The Court’s jurisdiction to award wasted costs is primarily derived from RDC Part 38. Specifically, the Court examined RDC 38.59, which allows for orders where a party or representative fails to comply with a Rule or acts in an unreasonable or improper manner. RDC 38.60 provides the mechanism for disallowing costs or ordering the representative to pay costs caused to another party. Additionally, RDC 38.83 and 38.84 were cited regarding the Court's power to order representatives to meet wasted costs and the requirement to provide a reasonable opportunity for the representative to be heard. Article 14.7 of the DIFC Courts Law was also referenced as part of the broader jurisdictional framework.
How did the Court utilize English and DIFC precedents to interpret the wasted costs regime?
The Court relied on established English authorities to define the boundaries of "unreasonable or improper" conduct. Ridehalgh v Horsefield and Myers v Elman were instrumental in guiding the Court's understanding of the high threshold required for such orders. The Court also considered Phillips v Symes and Mengiste and Anor v Endowment Fund for the Rehabilitation of Tigray and Ors to evaluate the application of these principles in complex commercial litigation. Within the DIFC context, the Court referenced Greenwood v ISA Bin Haider and Bin Haider Advocates and Legal Consultants to contrast the current facts with instances where lawyer conduct was found to be sufficiently improper to justify an order.
What was the final disposition of the Bank of Baroda’s application and the associated costs order?
The Court dismissed the application in its entirety. Chief Justice Wayne Martin concluded that the Bank failed to establish that the conduct of either Baker Tilly or Mr Al Bah caused the relevant costs to be unnecessarily incurred. Consequently, the Court made no order as to costs, meaning each party was left to bear their own legal expenses for the application.
What are the wider implications for DIFC practitioners regarding wasted costs applications?
This judgment reinforces the high threshold for obtaining wasted costs orders in the DIFC Courts. Practitioners must anticipate that the Court will strictly scrutinize the causal link between a representative's conduct and the alleged wasted costs. The decision serves as a warning that applications for wasted costs cannot be used as a tactical tool to recover losses from unsuccessful procedural applications unless there is clear, compelling evidence of improper or unreasonable conduct that directly caused the financial loss. Future litigants must ensure they can demonstrate that the costs would not have been incurred but for the specific conduct complained of.
Where can I read the full judgment in Bank of Baroda (DIFC Branch) v Neopharma LLC [2025] DIFC CFI 043?
The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0432020-bank-baroda-difc-branch-v-1-neopharma-llc-2-nmc-healthcare-llc-3-new-medical-centre-llc-4-bavaguthu-raghuram-shetty-18 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-043-2020_20250822.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Phillips v Symes | [2004] UKHL 36 | Defining the scope of wasted costs. |
| Ridehalgh v Horsefield | [1994] Ch 205 | Establishing the threshold for unreasonable/improper conduct. |
| Myers v Elman | [1940] AC 282 | Principles of professional conduct and costs. |
| Mengiste and Anor v Endowment Fund for the Rehabilitation of Tigray and Ors | [2019] EWCA Civ 1004 | Causation in wasted costs applications. |
| Bocimar International NV v Emirates Trading Agency LLC | [2016] DIFC CA 002 | Procedural fairness in costs orders. |
| Greenwood v ISA Bin Haider and Bin Haider Advocates and Legal Consultants | [2017] DIFC CFI 017 | Precedent for improper conduct justifying costs. |
Legislation referenced:
- DIFC Courts Law Article 14.7
- RDC Part 38
- RDC 38.59
- RDC 38.60
- RDC 38.62
- RDC 38.83
- RDC 38.84