The DIFC Court of First Instance formalizes the conclusion of proceedings following a unilateral notice of discontinuance, clarifying the recovery of interlocutory filing fees.
What was the nature of the dispute between Perridon Holdings and Rafiq Ghassan Rafiq Shabib that necessitated a Notice of Discontinuance?
The litigation originated from a Part 7 Claim Form filed by Perridon Holdings Limited on 26 June 2023. The proceedings were initially marked by a Default Judgment issued by H.E. Nassir Al Nasser on 9 August 2023. However, the trajectory of the case shifted significantly when the defendant, Rafiq Ghassan Rafiq Shabib, successfully challenged the procedural standing of the claim through a series of interlocutory applications.
The dispute involved multiple procedural layers, including a successful application to set aside the initial default judgment, a request for a retrospective extension of time to file a defence, and a subsequent application regarding alleged unpaid employment entitlements and visa cancellation. Following these procedural developments, the claimant opted to terminate the litigation entirely.
"UPON the Claimant filing a Notice of Discontinuance dated 17 October 2024"
The filing of this notice effectively brought the substantive matter to a close, leaving the court to resolve the outstanding issue of costs associated with the various applications filed by the defendant throughout the life of the case.
Which judge presided over the final order in CFI 044/2023 and in what capacity did they act?
The order dated 14 November 2024 was issued by Assistant Registrar Hayley Norton. Sitting within the Court of First Instance, the Assistant Registrar exercised the court's authority to manage the procedural conclusion of the claim and determine the allocation of costs under the Rules of the DIFC Courts (RDC).
What were the respective positions of Perridon Holdings and Rafiq Ghassan Rafiq Shabib regarding the costs of the interlocutory applications?
The parties submitted email representations to the court on 1 and 4 November 2024 to address the cost consequences of the discontinuance. Perridon Holdings, as the claimant, sought to manage the financial fallout of its decision to discontinue the claim. Conversely, the defendant, Rafiq Ghassan Rafiq Shabib, sought recovery of the costs incurred in defending the action, specifically targeting the filing fees associated with the various applications he was forced to bring to protect his position.
The defendant’s position was that the claimant should bear the financial burden of the procedural hurdles created by the initial default judgment and the subsequent need for extensions and witness evidence. The claimant’s position, while not explicitly detailed in the final order, was balanced against the defendant’s successful applications. The court ultimately had to weigh these competing submissions to determine which specific filing fees were recoverable under the RDC framework.
What was the precise legal question regarding the application of RDC Rule 34.15 that the court had to resolve?
The court was tasked with determining the cost consequences of a claimant’s unilateral decision to discontinue a claim under RDC Rule 34.15. Specifically, the court had to decide whether the defendant was entitled to recover the filing fees for multiple interlocutory applications—namely the Set Aside Application, the Extension Application, and the Witness Evidence Application—as part of the costs of the discontinued proceedings.
Furthermore, the court had to determine if the defendant was entitled to recover costs for the "Alleged Employment Entitlements Application," particularly given the procedural failure of the defendant to serve that specific application upon the claimant. The legal question was whether the court should exercise its discretion to award costs for all applications or if the failure to serve one specific application necessitated a departure from the general rule that a discontinuing claimant pays the defendant's costs.
How did Assistant Registrar Hayley Norton apply the principles of cost recovery in the context of a Rule 34.15 discontinuance?
Assistant Registrar Hayley Norton applied a granular approach to the cost assessment, distinguishing between applications that were successfully prosecuted and those that suffered from procedural defects. By reviewing the history of the case, the court identified which filing fees were directly attributable to the claimant's procedural actions and which were the result of the defendant's own procedural lapses.
"The Claimant shall within 14 days from the date of this Order pay the Defendant’s costs in the amount of USD 900, comprising: (a) the sum of USD 300 being the filing fee for the Set Aside Application; (b) the sum of USD 300 being the filing fee for the Extension Application; and (c) the sum of USD 300 being the filing fee for the Witness Evidence Application."
The reasoning followed a clear logic: the claimant was responsible for the costs of the applications that were necessary to rectify the claimant's initial default and subsequent procedural requirements. However, the court applied a different standard to the application that was not properly served, effectively penalizing the defendant for that specific procedural failure by ordering him to bear his own costs for that portion of the litigation.
Which specific RDC rules and procedural authorities were applied to reach the final order?
The primary authority governing the discontinuance was Rule 34.15 of the Rules of the DIFC Courts. This rule provides the framework for the court to manage the cessation of a claim and the subsequent liability for costs. The court also relied on its inherent jurisdiction to manage the costs of interlocutory applications, ensuring that the financial burden of litigation is allocated fairly based on the conduct of the parties.
The court referenced the specific filing fees associated with the Set Aside Application, the Extension Application, and the Witness Evidence Application, totaling USD 900. These figures were derived from the standard DIFC Court fee schedule applicable to such procedural filings. The court’s order reflects a strict adherence to the principle that while a defendant is generally entitled to costs upon discontinuance, such entitlement is subject to the court’s assessment of the necessity and procedural validity of each individual application.
How did the court distinguish between the recoverable costs and the non-recoverable costs in this order?
The court utilized a "necessity and service" test to distinguish between the recoverable and non-recoverable costs. The Set Aside, Extension, and Witness Evidence applications were deemed necessary and properly executed, justifying the recovery of the USD 300 filing fee for each. The court treated these as part of the "costs of the action" that the claimant must bear upon discontinuance.
In contrast, the Alleged Employment Entitlements Application was treated differently due to the defendant’s failure to serve it upon the claimant. By explicitly stating that the defendant must bear his own costs for this specific application, the court signaled that procedural compliance is a prerequisite for cost recovery. This distinction ensures that parties cannot recover costs for applications that were procedurally deficient, even if the overall claim is discontinued by the opposing party.
What was the final disposition of the claim and the specific monetary orders made by the court?
The court ordered the formal discontinuance of the claim. Regarding the financial relief, the court ordered the claimant to pay the defendant a total of USD 900 within 14 days of the order. This amount was clearly itemized to reflect the three successful applications: USD 300 for the Set Aside Application, USD 300 for the Extension Application, and USD 300 for the Witness Evidence Application.
Regarding the Alleged Employment Entitlements Application, the court ordered that the defendant bear his own costs. This disposition effectively closed the case file, ensuring that the claimant’s withdrawal from the litigation resulted in a defined and limited cost liability to the defendant, while simultaneously holding the defendant accountable for his own procedural oversight regarding the service of the employment entitlements application.
What are the practical implications for litigants considering a notice of discontinuance in the DIFC?
This order serves as a reminder that the DIFC Courts will apply a rigorous, application-by-application analysis when determining costs following a notice of discontinuance. Litigants should anticipate that while RDC Rule 34.15 provides a pathway to end proceedings, it does not grant a "blanket" immunity from costs. Instead, the court will scrutinize the procedural history of every application filed during the case.
Practitioners must ensure that all applications are not only substantively sound but also procedurally compliant—specifically regarding service requirements—to ensure that costs can be recovered. The case demonstrates that even when a claimant discontinues, a defendant’s failure to serve an application can result in the loss of the right to recover costs for that specific part of the proceeding. Future litigants must therefore maintain meticulous records of service and procedural compliance to avoid similar cost-allocation outcomes.
Where can I read the full judgment in Perridon Holdings Limited v Rafiq Ghassan Rafiq Shabib [2024] DIFC CFI 044?
The full order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0442023-perridon-holdings-limited-v-rafiq-ghassan-rafiq-shabib-4
CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-044-2023_20241114.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external case law was cited in this procedural order. |
Legislation referenced:
- Rules of the DIFC Courts (RDC), Rule 34.15