Following a substantive judgment on the merits of an employment dispute, the DIFC Court of First Instance addressed the final ancillary matters of interest and costs, balancing the Claimant's status as the successful party against his proven breach of fiduciary duty.
What was the specific monetary dispute regarding costs and interest between Tarig H.A.G Rahamtalla and Expresso Telecom Group in CFI 069/2020?
The lawsuit originated from an employment dispute where the Claimant, Tarig H.A.G Rahamtalla (TR), sought various payments from his former employer, Expresso Telecom Group (ETG). Following the Court’s substantive judgment on 8 August 2021, which awarded TR USD 404,896.67 plus a daily payment declaration, the parties returned to the Court to resolve the final quantum of legal costs and the applicability of interest on the judgment sum. TR claimed total costs of AED 398,416.76, while ETG argued for a significant reduction, citing its own success on counterclaims and the Court’s finding that TR had breached his fiduciary duties.
The Court had to determine whether to award costs on a standard basis and how to apportion them given the mixed success of the parties. As noted in the judgment:
The substantive issues between the parties were dealt with in my judgment dated 8 August 2021 (the “Judgment”).
The dispute over interest centered on whether ETG should be penalized for failing to pay the judgment sum within the 28-day window provided in the original order. The Court ultimately had to reconcile these competing financial claims to reach a final, enforceable order.
Which judge presided over the costs and interest hearing in Tarig H.A.G Rahamtalla v Expresso Telecom Group in the DIFC Court of First Instance?
The matter was heard and determined by Justice Sir Peter Gross in the DIFC Court of First Instance. The judgment regarding interest and costs was issued on 22 November 2021, following the parties' submissions on the appropriate application of the Rules of the DIFC Courts (RDC) concerning cost recovery and interest accrual.
How did Tarig H.A.G Rahamtalla and Expresso Telecom Group argue their respective positions on cost recovery?
TR argued that he was the successful party and therefore entitled to the full amount of his claimed costs, AED 398,416.76. He contended that his costs were reasonably incurred and that ETG had unnecessarily inflated the proceedings through voluminous, irrelevant submissions and an exaggerated counterclaim. Conversely, ETG argued that the Court should adopt an issue-by-issue approach to costs. ETG highlighted that it had succeeded on significant portions of the litigation, particularly the serious finding that TR had breached his fiduciary duties to the company. ETG submitted that the Court should either award it a percentage of its own costs or significantly discount the costs awarded to TR, noting that its own legal spend was lower, at AED 282,765.00.
What was the precise doctrinal issue the Court had to resolve regarding the application of RDC r.38.7(1) in Tarig H.A.G Rahamtalla v Expresso Telecom Group?
The Court had to determine whether the "event" rule—which dictates that the successful party is generally entitled to costs—should be applied mechanistically or whether the Court’s discretion under RDC r.38.7(2) necessitated a departure from the starting point. The central doctrinal tension was how to reconcile TR's status as the overall successful party with the fact that ETG had successfully defended against certain claims and established a breach of fiduciary duty by the Claimant. The Court was tasked with deciding if a "broad brush" discount was the appropriate mechanism to do justice between the parties, rather than engaging in a granular, issue-by-issue assessment that might prove disproportionate.
How did Justice Sir Peter Gross apply the discretionary power under RDC r.38.7 to determine the final cost award?
Justice Sir Peter Gross exercised his discretion to deviate from a full recovery for the Claimant, opting for a significant discount to reflect the Defendant's success on specific, time-consuming issues. The judge rejected the idea of a mechanistic application of the rules, emphasizing that justice required an acknowledgment of the Claimant's breach of fiduciary duty. As stated in the judgment:
In my judgment, the simplest order, doing justice between the parties, is to order ETG to pay TR’s costs – but significantly discounted to reflect ETG’s measure of success in the proceedings, very much including the issue on breach of fiduciary duty and the counterclaim. In all the circumstances, I order that ETG is to pay TR 50% of its costs as assessed below.
The Court then performed a summary assessment of the total costs, fixing the 100% figure at AED 360,000 before applying the 50% reduction.
Which specific DIFC Court Rules and statutory provisions were applied by the Court to reach its decision on costs?
The Court relied heavily on the Rules of the DIFC Courts (RDC) Part 38. Specifically, the Court cited RDC r.38.6, r.38.7, and r.38.9 as the primary sources of its discretionary power. RDC r.38.7(1) provided the starting point that costs follow the event. The Court also invoked RDC r.38.17 to confirm that costs were to be awarded on a standard basis, explicitly rejecting any application for indemnity costs. Furthermore, the Court utilized RDC r.38.28 to justify the summary assessment of costs, noting that both parties had agreed to this approach rather than a detailed assessment.
How did the Court distinguish the application of RDC r.38.7(1) from the precedent of awarding costs to the successful party?
The Court acknowledged the general principle that costs follow the event but distinguished this case by highlighting the "serious" nature of the breach of fiduciary duty established by ETG. While acknowledging TR was the successful party, the Court utilized RDC r.38.7(2) to qualify that success. The judge noted that ETG's success on the counterclaim and the fiduciary duty issue was "time-consuming" and "serious," making a full award of costs inappropriate. The Court contrasted this with the Defendant's own claim for costs, as noted in the judgment:
In the circumstances, I should make an order in favour of ETG for a percentage of its costs and/or decline to make any order of costs in favour of TR and/or apply such discount as is appropriate to TR’s claim for costs. The total sum claimed by ETG in respect of its costs amounted to AED 282,765.00 – a significantly smaller sum than that claimed by TR.
What was the final disposition and monetary relief ordered by the Court in this matter?
The Court ordered ETG to pay TR 50% of the summarily assessed costs, which were fixed at AED 360,000. This resulted in a final payment order of AED 180,000. Regarding interest, the Court ruled that if the judgment sum was not paid by 5 September 2021, interest would accrue at 1% over the 3-month EIBOR rate from the date of the original judgment (8 August 2021) until payment. The Court clarified the interest condition as follows:
If, however, the judgment sum was not paid by 5 September 2021, then I agree with TR and order that interest should be paid on that sum at 1% over the Emirates Interbank Offer Rate (“EIBOR”) of 3 months reference, from the date of the Judgment, 8 August 2021 until payment is made.
What are the practical implications for DIFC practitioners regarding cost reductions in employment litigation involving fiduciary breaches?
This judgment serves as a reminder that the DIFC Courts will not apply the "costs follow the event" rule in a vacuum. Practitioners must anticipate that even a successful claimant may face significant cost reductions if they are found to have breached fiduciary duties or if the defendant successfully proves substantial counterclaims. The case highlights the Court’s preference for "broad brush" summary assessments over granular, issue-by-issue litigation, which saves time and judicial resources. Litigants should be prepared for the Court to exercise its discretion under RDC r.38.7(2) to balance the equities of the case, potentially resulting in a split of costs that reflects the relative success of each party on specific, high-stakes issues.
Where can I read the full judgment in Tarig H.A.G Rahamtalla v Expresso Telecom Group Ltd [2020] DIFC CFI 069?
The full judgment can be accessed via the official DIFC Courts website at: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/tarig-hg-rahamtalla-v-expresso-telecom-group-ltd-difc-2020-cfi-069 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-069-2020_20211122.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No specific case law precedents were cited in the text of this judgment. |
Legislation referenced:
- Rules of the DIFC Courts (RDC): r.38, r.38.6, r.38.7, r.38.7(1), r.38.7(2), r.38.9, r.38.17, r.38.28.