The DIFC Court of First Instance has dismissed a significant application for security for costs, clarifying the evidentiary threshold required to prove asset dissipation under RDC Rule 25.102(6) and emphasizing the court's intolerance for applications made on the eve of trial.
What was the nature of the dispute and the specific financial stakes in the application for security for costs filed by Mr John Cameron against Mr Khaled Salem Musabeh Humaid Al Mheiri?
The litigation concerns a claim brought by Mr Khaled Salem Musabeh Humaid Al Mheiri against two respondents, Mr Mohammad Ezelddine El Araj and Mr John Cameron. The current dispute centers on an interlocutory application filed by the Second Defendant, Mr John Cameron, seeking to compel the Claimant to provide security for costs. The Second Defendant sought a substantial sum, arguing that the Claimant’s financial conduct necessitated protection for the potential costs of the proceedings.
The application was framed around the significant financial exposure the Claimant faced in separate, parallel litigation in the Dubai Courts. As noted in the court's reasoning:
The application is for security for costs in an amount just short of USD 1 million, covering past costs as well as cost to be incurred from here on in.
The Second Defendant’s request for USD 945,000 was predicated on the assertion that the Claimant was actively reorganizing his assets to avoid potential enforcement of a costs order, a claim the court ultimately found to be unsupported by the evidence presented.
Which judge presided over the application for security for costs in CFI 057/2021 and when was the hearing held?
The application was heard by H.E. Justice Lord Angus Glennie in the DIFC Court of First Instance. The hearing took place on 15 April 2025, during the Pre-Trial Review, with the formal order and written reasons issued on 24 April 2025.
What specific legal arguments did the Second Defendant, Mr John Cameron, advance to justify the security for costs application under RDC Rule 25.102(6)?
The Second Defendant, represented by Mr Nils de Wolff, argued that the Claimant had taken deliberate steps to insulate his assets from potential enforcement. The primary pillar of this argument was the Claimant’s involvement in the "Marka" litigation, where Dubai Courts had previously held him liable for debts exceeding AED 265 million. The Second Defendant contended that this massive liability created a strong incentive for the Claimant to dissipate assets.
Furthermore, the Second Defendant pointed to two specific behaviors as evidence of asset shielding: the transition from using personal account cheques to third-party or managers’ cheques, and the transfer of a company known as EVL. The Second Defendant argued that these actions were calculated to make it difficult for a successful party to enforce a costs order, thereby satisfying the requirements of RDC Rule 25.102(6).
What was the precise doctrinal issue the Court had to resolve regarding the application of RDC Rule 25.102(6) in the context of the Marka litigation?
The Court was tasked with determining whether the Claimant’s actions met the threshold for "taking steps in relation to his assets" that would render the enforcement of a costs order difficult. The doctrinal challenge lay in whether the mere existence of a large, disputed liability in a separate jurisdiction (the Dubai Courts) and the use of standard banking instruments like managers' cheques could satisfy the high burden of proof required to trigger security for costs. The Court had to decide if these factors created a legitimate inference of dissipation or if they were merely neutral financial activities that failed to meet the statutory requirement for an order under the Rules of the DIFC Courts.
How did H.E. Justice Lord Angus Glennie apply the test for asset dissipation to the Claimant’s use of third-party cheques and the Marka litigation outcomes?
Justice Glennie adopted a rigorous approach to the evidence, finding that the Second Defendant failed to establish the necessary nexus between the Claimant's actions and an intent to evade costs. Regarding the Marka litigation, the judge noted that the recent decision by the Dubai Court of Appeal to remit the matter for reconsideration fundamentally altered the landscape.
To my mind that neutralises any suggested inference from Mr Almheiri’s potential indebtedness in that litigation.
On the issue of banking practices, the Court was equally dismissive of the Second Defendant's characterization of the Claimant's financial behavior. The judge held that the use of managers' cheques is a common commercial practice and does not, in itself, indicate an attempt to hide assets. As the Court reasoned:
it is difficult to see how the use of such cheques amounts to the taking of steps in relation to his assets making it difficult to enforce an order for costs against him.
Which specific RDC rules and statutory provisions were central to the Court’s determination in CFI 057/2021?
The application was brought exclusively under RDC Rule 25.102(6). This rule provides the jurisdictional basis for the Court to order security for costs where a claimant has taken steps in relation to their assets that would make it difficult to enforce a costs order. The Court’s analysis focused on the interpretation of "taking steps" and whether the evidence provided by the Second Defendant reached the threshold required by this rule. The Court also relied on its inherent case management powers to assess the timing and fairness of the application, particularly given the proximity to the trial date.
How did the Court’s reasoning regarding the timing of the application influence the final outcome?
The Court placed significant weight on the fact that the application was made only days before the scheduled trial. Justice Glennie characterized the timing as "oppressively late," noting that such applications, when brought on the eve of trial, risk being perceived as tactical maneuvers intended to stifle a claim rather than genuine attempts to secure costs. The judge clarified that even if the requirements of RDC Rule 25.102(6) had been met, he would have exercised his discretion to refuse security for past costs due to the delay.
The trial of this matter is listed for Monday, 28 April 2025, with an estimate duration of three days.
This proximity to the trial date served as a secondary, yet powerful, justification for the refusal of the application.
What was the final disposition of the application and what orders were made regarding costs?
The Court refused the Second Defendant’s application in its entirety. Consequently, the Claimant was not required to provide security for costs. Furthermore, the Court ordered the Second Defendant to bear the costs of the application.
The Second Defendant shall pay the Claimant’s costs of the Application on the standard basis, to be summarily assessed in accordance with paragraph 3 of this Order.
The Court established a strict timeline for the filing of cost statements and submissions, ensuring the matter would be resolved on paper without further oral argument.
What are the wider implications of this ruling for practitioners seeking security for costs in the DIFC?
This decision serves as a stern warning to practitioners that security for costs applications under RDC Rule 25.102(6) require concrete evidence of asset dissipation, not merely speculative inferences drawn from a party’s other legal liabilities. The ruling clarifies that the DIFC Court will not view standard financial instruments, such as managers' cheques, as evidence of bad faith. Furthermore, the case underscores that the Court is highly sensitive to the timing of such applications; bringing a security for costs application shortly before trial is likely to be viewed as oppressive and may, in itself, be a ground for refusal. Litigants must ensure that any such application is supported by robust, specific evidence of a deliberate attempt to evade enforcement, rather than relying on the existence of external litigation.
Where can I read the full judgment in Khaled Salem Musabeh Humaid Al Mheiri v (1) Mr Mohammad Ezelddine El Araj (2) Mr John Cameron [2025] DIFC CFI 057?
The full order and reasons can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0572021-khaled-salem-musabeh-humaid-al-mheiri-v-1-mr-mohammad-ezelddine-el-araj-2-mr-john-cameron-1
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external precedents cited in the order. |
Legislation referenced:
- Rules of the DIFC Courts (RDC): Part 25
- RDC Rule 25.102(6)