This order addresses the residual costs disputes arising from the Pre-Trial Review (PTR) in the ongoing litigation between Huobi OTC DMCC and the defendants, Tabarak Investment Capital Limited and Mr. Christian Thurner, specifically regarding security for costs and amendment applications.
What were the specific cost disputes between Huobi OTC DMCC and Mr. Christian Thurner regarding the security for costs and lost opportunity amendment applications?
The litigation involves a complex dispute between the Claimant, Huobi OTC DMCC, and the Defendants, Tabarak Investment Capital Limited and Mr. Christian Thurner (D2). Following the Pre-Trial Review, the Court was tasked with resolving two distinct cost applications brought by D2. The first concerned D2’s successful application for security for costs, while the second involved D2’s opposition to the Claimant’s attempt to amend its pleadings to include a claim for "lost opportunity" damages.
Regarding the security for costs application, the Court noted that while D2 was successful in principle, the actual order for security was directed at the Claimant rather than the individuals originally named as respondents to the application. Regarding the amendment application, the Court found that D2’s objections were largely unsustainable, as the validity of the alternative plea was a matter for trial rather than a preliminary procedural hurdle. As noted in the judgment:
In principle, having in substance succeeded on its second application for security for costs, D2 is entitled to its reasonable costs notwithstanding that in the result the order for the provision of security was made against the Claimant and not Sultan Al Ali and Mr Davar who were the respondent’s to D2’s application.
Which judge presided over the TCD 001/2020 PTR and when was this specific order issued?
Justice Sir Richard Field presided over the Technology and Construction Division (TCD) of the DIFC Courts for this matter. The order, which addressed the outstanding costs issues following the Pre-Trial Review, was issued on 16 November 2021. This order forms part of a series of procedural rulings in the TCD 001/2020 case family, which has seen extensive case management to address the unique challenges of cryptocurrency-related litigation and document production disputes.
What were the respective positions of Huobi OTC DMCC and Mr. Christian Thurner regarding the quantum of costs and the timing of payment?
D2 sought recovery of costs for both the security for costs application and the resistance to the Claimant’s amendment. D2 argued that as the successful party on the security application, they were entitled to their reasonable legal expenses. Conversely, the Claimant argued against the quantum claimed, suggesting that the time spent by D2’s legal team was excessive and disproportionate to the tasks performed.
The Claimant also highlighted D2’s prior procedural conduct, including a "misconceived" joinder application and the destruction of evidence (laptops returned by police), as grounds to deny or defer any immediate payment of costs. The Court agreed with the Claimant’s assessment of D2’s conduct, noting that D2 had taken an "aggressive and unreasonable stance" regarding document production and redactions. Consequently, the Court balanced D2’s success on the specific interlocutory applications against their broader procedural failures.
What was the primary legal question regarding the Court’s discretion to defer cost payments under the Rules of the DIFC Courts (RDC)?
The Court had to determine whether a party who succeeds on specific interlocutory applications (such as security for costs) remains entitled to immediate payment of those costs if that same party has engaged in "wholly unjustified" procedural conduct elsewhere in the proceedings. The doctrinal issue centered on the Court’s inherent power to manage costs under the RDC to ensure fairness, specifically whether the Court could order a deferral of payment and mandate a set-off against future costs that might be awarded to the opposing party.
How did Justice Sir Richard Field apply the principle of set-off to balance the competing cost claims between the parties?
Justice Sir Richard Field utilized his discretion to ensure that the costs awarded to D2 did not result in an immediate financial windfall, given D2’s previous procedural misconduct. By ordering that the costs be deferred until after the trial, the Court ensured that the final accounting of costs would be comprehensive. This approach allows the Court to account for the Claimant’s existing and future cost awards against D2, effectively creating a "net" position. The reasoning is captured in the following directive:
With these considerations in mind, I direct that the above awards of costs in D2’s favour shall only become payable once all questions of costs as between the Claimant and D2 have been determined following the trial of the action and that in addition the Claimant will be entitled to set off against these costs awards, awards of costs that have been made in its favour against D2.
Which specific RDC rules and judicial principles governed the Court’s assessment of the AED 65,000 and AED 17,000 cost awards?
The Court’s assessment was governed by the principles of proportionality and reasonableness under the RDC. Regarding the security for costs application, the Court found the hours claimed by D2 to be excessive, particularly the appearance of two advocates at the PTR, leading to an award of AED 65,000. Regarding the amendment application, the Court found the time spent by D2 to be unjustified, noting:
The proposed amendment to plead lost opportunity damages was on the stocks for eight days. I can see scant evidence to justify the time said to have been spent on this aspect of the damages amendment.
The Court also referenced the fact that D2’s objections to the amendment were "unsustainable," as they attempted to litigate the merits of the claim at the amendment stage rather than at trial.
How did the Court distinguish the merits of the security for costs application from the procedural conduct of the parties?
The Court distinguished between the "in principle" success of D2 on the security application and the "misconceived" nature of D2’s other procedural maneuvers. While D2 was technically the prevailing party on the security application, the Court explicitly linked the payment of those costs to D2’s broader conduct, including the "wholly unjustified discarding of the laptops" and the "aggressive and unreasonable stance" taken regarding document production. The Court effectively used the costs order as a tool to penalize procedural obstructionism, even while acknowledging D2’s success on the specific application.
What was the final disposition of the costs application and the specific orders made by Justice Sir Richard Field?
The Court awarded D2 a total of AED 82,000 in costs (AED 65,000 for the security for costs application and AED 17,000 for resisting the amendment). However, the Court ordered that these payments be deferred until after the trial. The order also mandated that the parties agree on a draft order reflecting these costs and the updated trial timetable, to be submitted to the Court by 4pm on 17 November 2021. This ensures that the final costs position is settled only after the trial, allowing for a full set-off against any costs awarded to the Claimant.
How does this ruling influence the management of procedural conduct in the DIFC Technology and Construction Division?
This ruling serves as a warning to litigants that success on interlocutory applications does not grant immunity from the consequences of broader procedural misconduct. Practitioners must anticipate that the DIFC Courts will actively use their discretion to defer cost payments and enforce set-offs where a party has engaged in unreasonable behavior, such as the destruction of evidence or obstructive document production. This case reinforces the importance of maintaining procedural integrity throughout the lifecycle of a dispute, as the Court will look at the "big picture" of a party's conduct when determining the timing and enforceability of cost awards. For further context on the TCD's procedural evolution, see HUOBI OTC DMCC v TABARAK INVESTMENT CAPITAL [2021] DIFC TCD 001 — Procedural framework for cryptocurrency litigation.
Where can I read the full judgment in TCD 001/2020?
The full order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/technology-and-construction-division/tcd-001-2020-huobi-otc-dmcc-v-1-tabarak-investment-capital-limited-2-mr-christian-thurner-12 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/technology-and-construction-division/DIFC_TCD-001-2020_20211116.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external case law cited in this specific order. |
Legislation referenced:
- Rules of the DIFC Courts (RDC) - General provisions on costs and case management.