This consent order formalizes the withdrawal of Qatar General Insurance and Reinsurance Company from the multi-party litigation against Deloitte & Touche, establishing a precise framework for the apportionment of legal costs and future liability.
What were the specific terms of the discontinuance application filed by the Third Claimant in TCD 003/2020 against Deloitte & Touche?
The lawsuit involves a complex multi-party dispute brought by eleven claimants, including Nest Investments Holding Lebanon and Qatar General Insurance and Reinsurance Company, against Deloitte & Touche (M.E.) and Joseph El Fadl. The Third Claimant, Qatar General Insurance and Reinsurance Company, sought to exit the proceedings via an application notice dated 27 February 2020. The dispute centers on professional liability and audit-related claims, with the Third Claimant’s withdrawal necessitating a formal agreement to address the potential impact on the remaining litigation.
The court granted the application, effectively severing the Third Claimant from the ongoing action. The order specifically addresses the allocation of costs, ensuring that the Third Claimant is shielded from future financial exposure while preserving the Defendants' rights to seek recovery from the remaining parties. As noted in the order:
If any additional claimants are added to the Claim, the Defendants retain the right to pursue those claimants for any costs of the proceedings subsequently awarded to the Defendants from the date the additional claimants join the proceedings. 4.
For further context on the broader litigation, see the deep editorial analysis of this case: Nest Investments v Deloitte [2021] DIFC TCD 003: The High Cost of Procedural Missteps in Lebanese Law Disputes.
Which judge presided over the TCD 003/2020 consent order issued on 21 April 2020?
The consent order was issued by Deputy Registrar Nour Hineidi, sitting within the Technology and Construction Division (TCD) of the DIFC Court of First Instance. The order was formally issued at 4:00 PM on 21 April 2020, following the review of the Third Claimant’s application and the subsequent responses from the other Claimants and the Defendants.
What were the specific legal positions of the Claimants and Defendants regarding the Third Claimant’s exit in TCD 003/2020?
The parties reached a consensus following the Third Claimant’s February application. The Remaining Claimants and the Defendants submitted responses on 30 March 2020, which facilitated the negotiation of the cost-sharing arrangement. The Defendants’ primary objective was to ensure that the discontinuance did not prejudice their ability to recover costs from the remaining ten claimants.
The agreement reached reflects a compromise: the Third Claimant is released from liability for costs incurred after the date of the order, while the Defendants retain the right to pursue the Remaining Claimants for the entirety of costs from the date of the order forward, and for their respective 7/8ths share of costs incurred prior to the order. This structure prevents the Third Claimant from being held liable for the ongoing litigation expenses of the other parties.
What was the precise doctrinal issue the DIFC Court had to resolve regarding the Third Claimant’s liability for costs in TCD 003/2020?
The court was tasked with determining the extent to which a departing claimant in a multi-party action remains liable for costs under the Rules of the DIFC Courts (RDC) when a discontinuance is sought by consent. The doctrinal challenge lay in balancing the Third Claimant’s right to discontinue against the Defendants' right to recover costs from the remaining parties. The court had to define the "proportionate share" of liability for the period preceding the discontinuance and establish a "cut-off" point for future liability to ensure procedural certainty.
How did the court apply the principle of proportionate cost-sharing to the Third Claimant’s exit?
The court utilized a fractional approach to apportion liability, specifically designating the Third Claimant’s share as 1/8th of the costs incurred from the commencement of the claim until the date of the order. By formalizing this in a consent order, the court ensured that the Defendants could not pursue the Third Claimant for costs arising after 21 April 2020. The reasoning focused on providing a clear financial boundary for the departing party while maintaining the integrity of the Defendants' claims against the remaining parties. As stipulated in the order:
The Third Claimant will not be liable for any costs or Court fees incurred by the Remaining Claimants or the Defendants after the date of this Consent Order and the Remaining Claimants or the Defendants will not pursue the Third Claimant for any such costs. 5.
Which specific RDC rules and procedural frameworks governed the discontinuance in TCD 003/2020?
The order was issued under the procedural authority of the DIFC Court of First Instance, specifically exercising its power to manage multi-party litigation under the Rules of the DIFC Courts (RDC). While the order does not cite specific RDC numbers, it operates within the framework of RDC Part 38 (Discontinuance) and Part 40 (Costs), which govern the court's discretion to permit the withdrawal of a party and the subsequent allocation of legal expenses.
How did the court reconcile the Defendants' rights with the Third Claimant’s departure in TCD 003/2020?
The court relied on the principle of party autonomy, as the order was reached by consent. By incorporating the Defendants' right to pursue the "Remaining Claimants" for 7/8ths of the pre-order costs and 100% of post-order costs, the court ensured that the Defendants were not disadvantaged by the Third Claimant's exit. This approach aligns with the court's practice of facilitating settlements that resolve procedural hurdles without requiring a full trial on the merits of the discontinuance itself.
What was the final disposition and the specific order regarding costs in TCD 003/2020?
The court granted the Third Claimant’s application to discontinue its claims against the Defendants. Regarding costs, the court issued a "No order as to costs" directive, meaning each party bears their own costs associated with the application itself, while the underlying liability for the main proceedings remains governed by the specific proportionate sharing agreement outlined in the order. The Defendants are explicitly barred from pursuing the Third Claimant for any costs or court fees incurred after 21 April 2020.
What are the wider implications for multi-party litigation in the DIFC following TCD 003/2020?
This case serves as a template for practitioners managing the exit of individual claimants in complex, multi-party disputes. It demonstrates that the DIFC Court will readily approve discontinuance applications provided that the parties have clearly defined the "proportionate share" of liability and established a definitive cut-off date for cost exposure. Future litigants must anticipate that any withdrawal will require a granular breakdown of cost liability to avoid subsequent disputes over the recovery of legal fees. For further reading on the procedural history of this case, see the following sibling orders:
- NEST INVESTMENTS HOLDING LEBANON v DELOITTE & TOUCHE [2020] DIFC TCD 003 — Appeal against preliminary issues order (23 April 2020)
- NEST INVESTMENTS HOLDING LEBANON v DELOITTE & TOUCHE [2020] DIFC TCD 003 — procedural management of cost submissions (30 April 2020)
- NEST INVESTMENTS HOLDING LEBANON v DELOITTE & TOUCHE [2020] DIFC TCD 003 — Consent order regarding disclosure of audit reports (06 May 2020)
- NEST INVESTMENTS HOLDING LEBANON v DELOITTE & TOUCHE [2020] DIFC TCD 003 — Costs assessment following appeal (20 May 2020)
- NEST INVESTMENTS HOLDING LEBANON v DELOITTE & TOUCHE [2020] DIFC TCD 003 — Consent order regarding expert evidence deadlines (22 July 2020)
Where can I read the full judgment in NEST INVESTMENTS HOLDING LEBANON v DELOITTE & TOUCHE [2020] DIFC TCD 003?
The full text of the consent order is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/technology-and-construction-division/tcd-003-2020-1-nest-investments-holding-lebanon-sl-2-jordanian-expatriates-investment-holding-company-3-qatar-general-insurance-5 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/technology-and-construction-division/DIFC_TCD-003-2020_20200421.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | N/A |
Legislation referenced:
- Rules of the DIFC Courts (RDC) Part 38 (Discontinuance)
- Rules of the DIFC Courts (RDC) Part 40 (Costs)