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- Tom Ogg represented the Defendant in Pernella v Pearson [2026] CFI 018/2026, which is a significant decision that explains: (1) The relationship between practice directions and the Rules of the DIFC Courts or “RDC”. (2) The legal basis for the Chief Justice of the DIFC Courts’ power to issue practice directions. (3) The scope of application of Practice Direction No. 1 of 2025: Access to Justice in Employment Disputes (the “Practice Direction”).
- In this case, the Defendant sought its costs arising from amendments to the Particulars of Claim. Pernella is an employment case, and so as to costs: (1) RDC 18.27 provides that a party applying for an amendment will “usually” pay the costs of and arising from the amendment. (2) The Practice Direction provides that the general rule in employment cases is that each party bears its own costs, but the court has a discretion to order costs if one or more of three gateways are available: bringing/conducting proceedings unreasonably, acting vexatiously/in bad faith, or it is otherwise in the interests of justice.
- Tom submitted in Pernella on behalf of the Defendant that: (1) RDC 18.27 is a rule of the DIFC Courts, and accordingly, has priority over a practice direction: see ¶6 of Pernella. (2) The Practice Direction was confined in its application to the general discretion as to costs in RDC 38.6 and did not apply where the RDC makes specific provision as to costs: see ¶5.
- The Court did not accept those submissions, finding that: (1) The Practice Direction qualifies what would otherwise be the effect of the RDC: ¶10. (2) The Practice Direction sets out a comprehensive code for costs in employment cases in the DIFC Courts: ¶3, 9.
- The Court held that practice directions are issued pursuant to the Chief Justice of the DIFC Court’s powers under Law No. 2 of 2025 Concerning the DIFC Courts (the “Courts Law”), namely Article (10) B 3, which refers to “… directives on relevant action, as found appropriate…”. The Court then held that Articles 23 and 25 of the Courts Law require the Courts to apply any practice direction issued under Article (10) B 3 of the Courts Law, “because it has been issued by the Chief Justice in accordance with the powers conferred upon him (or her) by the Courts Law”. See ¶10.
- As to RDC 32.28, which provides for cost consequences that follow when a Part 32 offer is accepted, the Court considered that the point should be considered in a case in which the issue arises on the facts: see ¶12. It accordingly remains uncertain whether RDC Part 32 applies in employment cases in the DIFC, or whether the Practice Direction governs the award of costs in such a scenario. The Court also noted a similar issue under RDC 31.26.
- The Court did, however, award costs to the Defendant in relation to a separate earlier draft of the amended Particulars of Claim, which was subsequently withdrawn. The Court held at ¶16: “It has been at least implicitly accepted by the Claimant that this document was unsatisfactory because ultimately, it was abandoned and replaced with the amendment proposed by the Claimant’s current advisors. In my judgment this part of the exercise added unreasonably to the Defendant’s costs burden and ought not to have occurred.”
- By contrast, the Court held at ¶15 in relation to the amended Particulars of Claim that was ultimately relied upon that: “The amendment of pleadings as claims progress is generally simply part of the process” and that awarding costs for such amendments “would set the threshold that the Practice Direction applies at an unduly low level.” The Court also made no order as to the costs of the CMC.
- The Court determined that the Claimant should pay the costs arising from the earlier draft on the indemnity basis. The Court held at ¶17: “This necessarily follows from the basis on which I have concluded that the Claimant must meet those costs – that is that the conduct of the Claimant in seeking permission to amend in the terms of and then withdrawing the draft Laktineh APoC was conduct that was unreasonable to a high degree.”
- Pernella is believed to be the first published decision of the DIFC Courts in which indemnity costs have been awarded under the Practice Direction. The case is illustrative of where the Courts will draw the line in relation to awarding costs under the Practice Direction: putting forward a deficient pleading and then abandoning it risks indemnity costs, even in an employment claim.
- Tom is instructed for the Defendant in these proceedings by Lisa Bryson of Eversheds Sutherland (International) LLP’s Dubai office.
