Claim No: CFI 073/2024

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

LXT REAL ESTATE BROKER L.L.C

Claimant

and

SIR REAL ESTATE LLC

Defendant

ORDER WITH REASONS OF H.E. DEPUTY CHIEF JUSTICE ALI AL MADHANI

UPON the claim having been filed on 17 October 2024 (the “Claim”)

AND UPON the Defendant’s Application No. CFI-073-2024/1 dated 10 December 2024 for the Claimant to provide security for the Defendant’s costs of these proceedings in the amount of USD 1,750,000 (the “Security Application”)

AND UPON the hearing for the Defendant’s Security for Costs Application before H.E. Deputy Chief Justice Ali Al Madhani dated 25 February 2025, with both the Claimant and the Defendant’s representatives in attendance (the “Hearing”)

AND UPON the Amended Order with Reason of H.E. Deputy Chief Justice Ali Al Madhani dated 26 March 2025 (the “Order”)

AND UPON the costs submissions filed by the parties on 24 February 2025.

AND UPON the additional submissions filed by the Defendant on 16 June 2025 on the instruction of the Court.

AND PURSUANT TO the Rules of the DIFC Courts (“RDC”).

IT IS HEREBY ORDERED THAT there shall be no order as to costs.

Issued by:
Delvin Sumo
Assistant Registrar
Date of issue: 2 July 2025
At: 12pm

SCHEDULE OF REASONS

Claimant’s Costs Submissions

1. The Claimant’s position on costs is that costs should be awarded against the Defendant, or in the alternative costs should be in the case or no order to costs should be issued.

2. The Claimant submits that the Defendant mislead the Court by submitting that no offers that were “capable of acceptance” had been made between the parties; counsel for the Claimant invited for this submission to be withdrawn, which was denied.

3. The Claimant asserts that a without-prejudice offer had been made on 13 February 2025 to the value of USD 700,000 (the “Offer”), which was filed with the court. No response was received, and it is the Claimant’s position that the Offer was capable of acceptance and would have provided a much higher security than what was ordered.

4. Subsequent to the Hearing, the Defendant wrote to the Claimant on 28 February 2025 to state that there was insufficient time for the Offer to be considered, that brief fees for the Hearing had already been incurred at the time of the Offer, and additional points to support the contention that the offer was not capable of acceptance. Any submission to the alternative by the Defendant is a mere attempt to save face.

5. The Defendant’s conduct in failing to engage with the Offer (nor the prior offer on 24 November 2024) which caused additional costs to the Defendant and a failure to achieve security at a quantum exceeding the Offer, ought to result in the Defendant being ordered to pay the Claimant’s costs in the Security Application.

6. Further, the Claimant submits that the Defendant is the losing party. The Defendant sought costs up until Trial – 67% of their overall costs – but were awarded security only up until the Strike Out Application and were prevented from making additional security applications: “the level and quantum of Security is not subject to change” [57 of the Order]. This outcome should not be considered a “win” for the Defendant for the purpose of calculating costs.

7. In the further alternative, the Claimant proposes that if costs are to be awarded, quantum should be reduced by 40%, at VAT should not be payable as the Defendant’s counsel are practitioners in the UK, and the hourly rates for both are exceedingly high; around 25% higher than the Claimant’s representatives. Additionally, an excessive amount of time was spent by the Senior Counsel (Mr Tarek Shrayh) on document-related work, which is not reasonable for someone of his seniority as this work is usually delegated to junior fee earners.

Defendant’s Costs Submissions

8. The Defendant seeks a payment of their costs totalling AED 440,792.82 within 10 days of issue of this Order, as the Claimant was the unsuccessful party as security was ordered, even if it was at a lower quantum than sought, as all the Claimant’s main arguments were rejected in the Order and the Security Application succeeded in ‘real life’ terms as well as per the language of the summary order. An unsuccessful party paying the costs of the successful party is pursuant to the general rule under RDC 38.7(1).

9. On quantum, and pursuant to the Statement of Costs filed prior to the Hearing, the total costs are AED 440,792.82. The Defendant submits that this is reasonable and proportionate considering the matters of the issue in the Security Application and the Claim generally, which is worth over AED 405 million. Significant expense was required to investigate the Claimant’s funding position and to explore all avenues in the pre-action protocol. Additionally, as per the Claimant’s statement of costs, its won costs were almost the same amount at AED 439,887.39.

10. In a submission filed in anticipation of the Claimant’s position on costs, the Defendant explains that the “without prejudice save as to costs” letter sent by the Claimant dated 13 February 2025 (the “Letter”), which was filed in evidence, did not contain the Offer that the Claimant relies on to undermine the Defendant’s position as the ‘offer’ was not made in compliance with RDC 32. The ‘offer’ was incomplete, unclear, without clarity as to who would be making the payment, and incapable of being accepted, hence the submission made at the Hearing. Therefore, the Offer is entirely irrelevant to a discussion on costs.

11. On 13 June 2025, the Court issued a direction by email ordering the Defendant to file further submissions on the Offer and the corresponding letters. In response, the Defendant denies that it “failed to engage” with the Claimant on “reasonable negotiations and offers on two occasions.” The Defendant submits that these arguments contain a number of material errors.

12. The Defendant submits that the Claimant refused to disclose its financial position despite reasonable requests sent in pre-application letters dated 1 July 2024 and 19 November 2024, despite requiring the Defendant to first disclose its own financial information unilaterally to both the Claimant and the Funder – the Defendant is not legally required to do so.

13. Additionally, the Claimant did not make any proposal as to any sum or amount of security, nor did it indicate what is a ‘reasonable’ level of security to form part of any offer, despite a request to clarify its position being sent by letter from the Defendant on 4 December 2024.

14. The Offer in the Letter was on the condition that the Security Application be withdrawn at the last minute; this was pointed out to not be an offer at all in the Defendant’s response dated 28 February 2025 as well as its submissions dated 2 April 2025 for the following reasons;

15. In conclusion, the Defendant invites the Court to disregard any notion of the Offer that would affect payment or quantum of costs, and reaffirms its entitlement to costs as per the general rule set in RDC 38.7(1) to the amount of AED 439,887.39.

Discussion and Conclusion

16. There shall be no order as to costs.

17. It is clear to me that the Offer was made without prejudice, though I concede with the Defendant that the timescale and ambiguity surrounding the Funder made accepting the Offer difficult. I do not concede that the Offer was unreasonable or not capable of acceptance; it is, at least, a solid starting point for negotiations to settle without prejudice that could have resulted in a higher security to the benefit of the Defendant, and so I must take the Offer into consideration when awarding costs of the Security Application.

18. Typically, the unsuccessful party pays the successful party’s costs. However, I disagree that the Defendant was successful on all matters – not least because the security ordered was far less than sought, but because the decision to order reduced security occurred because of the Claimant’s submissions during the Hearing.

19. Given that the Security has already been paid up until the Strike Out Application, which includes a consideration of the costs listed in the Defendant’s Submission on Costs, the most reasonable conclusion here is that no costs should be ordered.