THE DUBAI FINANCIAL SERVICES AUTHORITY v THE COMMISSIONER OF DATA PROTECTION [2020] DIFC CFI 051 — Regulatory costs and appeal finality (28 October 2020)

How did the DFSA and the Commissioner of Data Protection end up in a costs dispute following the Contravention Decision in CFI 051/2018?

The litigation arose from a challenge by the Dubai Financial Services Authority (DFSA) against a "Contravention Decision" issued by the Commissioner of Data Protection on 20 June 2018. The DFSA initiated two concurrent proceedings: a statutory appeal under Article 37(1) of DIFC Law No. 1 of 2007 (the Data Protection Law) and a Judicial Review under Part 42 of the Rules of the DIFC Courts (RDC). The dispute centered on the Commissioner’s findings and the subsequent directions imposed, which the DFSA argued were disproportionate and legally flawed.

Following the Court’s judgment on 12 August 2020, which allowed the DFSA’s appeal, the parties returned to the Court to determine the allocation of legal costs. The DFSA sought a 100% recovery of its costs, arguing that it had succeeded in the litigation and that the Commissioner’s conduct had unnecessarily protracted the proceedings. The Commissioner resisted this, suggesting that as a regulatory body, it should be shielded from liability for costs. The Court had to balance the general rule that costs follow the event against the specific nature of regulatory oversight.

In my judgment, in the exercise of the discretion conferred by Article 45 (1) and RDC 38.6, it is open to the Court to award costs against the Commissioner in both sets of proceedings save in respect of the costs incurred in the Immediate Judgment Applications.

Which judge presided over the costs and permission to appeal hearing in CFI 051/2018 and CFI 085/2018?

The matter was heard before Justice Sir Richard Field in the Court of First Instance. The order with reasons was issued on 28 October 2020, following the substantive judgment delivered on 12 August 2020. The proceedings involved the DFSA as the Appellant/Claimant and the Commissioner of Data Protection as the First Respondent, with Anna Waterhouse involved as the Second Respondent and Interested Party.

What arguments did the DFSA and the Commissioner of Data Protection advance regarding the liability for costs in these proceedings?

The DFSA, represented by Mr. Pitt-Payne QC, argued that it was entitled to its costs because it had successfully challenged the Contravention Decision. Regarding the statutory appeal, the DFSA acknowledged it succeeded on one of eight grounds—specifically the disproportionality ground under Article 17 of the Data Protection Law—but maintained that this ground, along with the Article 39 ground, dominated the evidence and argument. The DFSA further contended that the Judicial Review was a necessary procedural step because the statutory appeal mechanism was limited in scope, leaving the DFSA with no alternative but to seek judicial review to challenge the Commissioner’s directions.

The Commissioner argued against a full costs order, implicitly relying on the status of the office as a regulatory body. The DFSA countered this by highlighting the Commissioner’s conduct during the litigation, specifically procedural difficulties encountered prior to the case management meeting on 6 February 2019, which the DFSA claimed made the litigation more complex and expensive than necessary.

It is common ground that there should be no order as to costs on the applications for immediate judgment made by the Commissioner in the statutory appeal and the Judicial Review (the “Immediate Judgment Application”).

What was the jurisdictional question regarding the Commissioner’s application for permission to appeal the CFI’s order?

The primary legal question was whether the Commissioner and Ms. Waterhouse could seek permission to appeal the Court of First Instance’s order to the DIFC Court of Appeal. The Court had to determine if a "second appeal" was permissible where the CFI had already acted as an appellate body reviewing the Commissioner’s initial Contravention Decision. The issue was whether the statutory framework allowed for a further layer of appeal from the CFI’s decision on a statutory appeal, or if the CFI’s ruling was final.

How did Justice Sir Richard Field apply the principles of fairness and justice to the Commissioner’s liability for costs?

Justice Sir Richard Field rejected the notion that a regulator should be exempt from costs simply by virtue of its public office. The judge emphasized that the Court’s discretion under RDC 38.6 must be exercised in accordance with the principles of fairness. He noted that while the DFSA did not succeed on every ground, it was the successful party overall, and the Commissioner’s resistance to the litigation had contributed to the costs incurred.

In these circumstances, I conclude that to exempt the Commissioner from any liability in costs would be contrary to what fairness and justice demands.

The Court ultimately ordered the Commissioner to pay 70% of the DFSA’s costs in the statutory appeal, reflecting the fact that the DFSA had not succeeded on all eight grounds, and 100% of the costs in the Judicial Review, as that proceeding was deemed a necessary response to the Commissioner's directions.

Which specific statutes and RDC rules governed the Court’s decision on costs?

The Court relied heavily on RDC 38.6, 38.7, and 38.8, which grant the Court broad discretion to determine whether costs are payable, the amount, and the timing of payment. The Court also considered Article 37(1) of DIFC Law No. 1 of 2007, which provided the statutory basis for the appeal against the Commissioner’s decision. The Court’s authority to award costs was further grounded in Article 45(1) of the DIFC Court Law.

How did the Court use English case law to interpret the appropriateness of awarding costs against a regulatory body?

The Court utilized City of Bradford Metropolitan District Council v Booth [2000] EWHC 444 (Admin) to address the principle of costs in regulatory appeals. In Booth, the court examined whether magistrates were correct in awarding costs against a council that had unsuccessfully defended its decision to refuse a license.

In Booth, the appellant Council appealed by way of a case stated by the West Yorkshire Magistrates against an award of costs made by the magistrates following a successful appeal by the Respondent against the non-renewal by the Council of his private hire operator’s licence.

Justice Sir Richard Field utilized this precedent to illustrate that regulatory bodies are not immune from costs orders when they act as a party to litigation. The Court noted that the justices in Booth had misdirected themselves by relying too heavily on the principle that costs follow the event without considering the broader context of what is "just and reasonable."

The Court held that the justices had misdirected themselves in relying on the principle that costs follow the event and in thinking that the reference in s.64 (1) to the order being just and reasonable applied to quantum only.

What was the final disposition of the Court regarding costs and the applications for permission to appeal?

The Court ordered that there be no order as to costs regarding the "Immediate Judgment Application." For the remaining proceedings, the Commissioner was ordered to pay 70% of the DFSA’s costs in the statutory appeal and 100% of the DFSA’s costs in the Judicial Review. Regarding the applications for permission to appeal, the Court dismissed them in their entirety. The Court ruled that it lacked the jurisdiction to grant permission for a second appeal, as the CFI had already exercised appellate jurisdiction over the Commissioner’s decision.

What are the wider implications of this ruling for practitioners dealing with DIFC regulatory bodies?

This decision serves as a significant warning to regulatory bodies in the DIFC that they are not shielded from the financial consequences of litigation. Practitioners should anticipate that regulatory decisions, if challenged, may result in adverse costs orders if the regulator’s conduct is found to have unnecessarily complicated the proceedings or if the regulator is the unsuccessful party. Furthermore, the ruling reinforces the principle of finality in statutory appeals; once the CFI has adjudicated an appeal from a regulatory decision, the path to the Court of Appeal is strictly limited, and parties should not assume that a second appeal is a matter of course.

Where can I read the full judgment in The Dubai Financial Services Authority v The Commissioner Of Data Protection [2020] DIFC CFI 051?

The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-051-2018-and-cfi-085-2018-the-dubai-financial-services-authority-v-1-the-commissioner-of-data-protection-2-anna-waterhouse

Cases referred to in this judgment:

Legislation referenced:

• DIFC Law No. 1 of 2007 (The Data Protection Law), Article 37(1)
• DIFC Court Law, Article 45(1)
• RDC 38.6, 38.7, 38.8
• RDC Part 42 (Judicial Review)