Claim No: CFI 073/2024

IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

LXT REAL ESTATE BROKER L.L.C

Claimant/Respondent

and

SIR REAL ESTATE L.L.C

Defendant/Applicant

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

UPON the Claim Form filed on 17 October 2024 (the “Claim”)

AND UPON the Defendant’s Application No. CFI-073-2024/1 seeking security for costs dated 10 December 2024 (the “Security for Costs Application”)

AND UPON the Order with Reasons of H.E. Deputy Chief Justice Ali Al Madhani dated 19 March 2025 and re-issued on 26 March 2025 granting Security for Costs until the Strike Out Application (the “Order”).

AND UPON the Order of H.E Deputy Chief Justice Ali Al Madhani dated 2 July 2025 ordering that there shall be no order as to costs (the “Costs Order”)

AND UPON the Defendant’s Appeal Notice dated 22 July 2025 seeking permission to appeal the Costs Order (the “Permission to Appeal Application”)

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

IT IS HEREBY ORDERED THAT

1. The Permission to Appeal Application is rejected.

2. There shall be no order as to costs.

Issued by:
Delvin Sumo
Assistant Registrar
Date of Issue: 15 January 2026
At: 3pm

SCHEDULE OF REASONS

1. This Appeal Notice is brought by the Defendant seeking permission to appeal the Costs Order dated 2 July 2025 following the Order granting the Security for Costs Application (the “Permission to Appeal Application”).

2. By the Costs Order, no order was made for costs on the basis that the Defendant was not successful in all matters, the security quantum granted was far less than sought, and that the Claimant had paid the relevant security by the date of issue of the Costs Order.

3. In its “Permission to Appeal Application, the Defendant files three grounds to submit that the Costs Order erred in principle and/or law. Each ground will be addressed separately. To note, I will dispense with a reiteration of the background, context and litigation history of these proceedings unless where necessary to repeat.

First Ground

4. First, the Defendant submits that the Court erred in principle for failing to conclude that the Defendant was the successful party overall, which caused unnecessary departure from the general rule that the ‘winning’ party is awarded costs under Rule 38.7 of the DIFC Courts (“RDC”). The fact that the Defendant was not awarded the entire quantum it sought does not negate this, as analysis should begin with who is “dominantly successful” and that “the money value of the outcome is not a sound guide to disposal of costs” according to Justice Giles’ judgment in Adil v Frontline Development Partners Limited [2014] DIFC CFI 015.

5. The Defendant maintains that its only ‘failure’ is that it was awarded less quantum than sought and was successful in every other issue in dispute. Therefore, RDC 38.7 should be adhered to as there was no good reason to make a different order.

6. The Claimant’s overarching position is that the Court retains a “wide discretion” which should not be disturbed unless there has been a departure from the “margin of appreciation” available to the judge, as per Al Khorafi v. Bank Sarasin-Alpen (ME) Ltd [2015] DIFC CA 003, and granting permission to appeal from costs assessments was warranted only in “exceptional circumstances” as per Melody v. Melance [2020] DIFC CA 010.

7. Further, the Claimant relies on RDC 38.7(2). The rule reads in whole:

H.E. Justice Le Miere KC in Gulf Petrochem v Pterochina [2023] CFI 048 characterised this provision as having the underlying policy that costs should be paid in a way that is fair, having regard to the responsibility of each party for the incurring of the costs.

8. The Claimant also rejects that the Court found the Defendant to be unsuccessful; rather, the Court recognised success for both parties, and neither party was “dominantly successful”. Hence, the natural conclusion was that no costs should be awarded. Nonetheless, as per the wording of RDC 38.7, the Court is entitled to make a different order from the general rule, which it did in consideration of the outcome of all issues, including that the Defendant was not awarded security remotely within the level sought.

9. Simply put, this ground is rejected on the basis that the Court is entitled to “make a different order” away from the general rule under RDC 38.7. The decision to make no order as to costs reflected that the parties were materially balanced in the success of their submissions on the outcome of the Security for Costs application. The Defendant was successful, but only in securing 14% of what it sought, less than what the Claimant was prepared to pay. The Defendant acted unreasonably in disproportionately overestimating its security requirements. Had the Defendant acted reasonably at the pre-application stage, the Claimant would have had the opportunity to mirror the same; the Defendant’s inquiries for further information on the Claimant’s funder and security for costs could have operated within different margins. However, the Defendant’s pursuit of excessive security led to unnecessary discourse, resulting in the Costs Order which ultimately acted in favour of both parties. The Defendant was awarded security, but at a much lower quantum.

10. Further, security was only awarded up to the Strike Out Application, not the trial, which it sought. Therefore, there is no “dominant” winner here; in essence, both parties succeeded, even if it was the Claimant making a payment to the Court.

11. Making no order as to costs was the fairest outcome pursuant to the Overriding Objective and within the scope of discretion awarded by RDC 38.7. The Defendant has failed to show a procedural error made in this regard. Hence, this ground is rejected.

Second Ground

12. In its second ground, the Defendant submits that there was an error in principle and/or law in placing weight upon the Claimant’s without-prejudice offer made on 13 February 2025 to the value of USD 700,000 (the “Offer”) as the Offer was non-compliance with RDC 32, and so it did not amount to an offer to be considered under RDC 38.8.

13. RDC 32 reads:

14. RDC 38.8 reads:

15. The Defendant’s complaint is that the Offer was not supported by any undertakings and was sent shortly before the hearing for the Security for Costs application, which was listed on 25 February 2025, while simultaneously demanding an answer within 24 hours of receipt. Therefore, it is the Defendant’s position that the Offer was incapable of acceptance and did not stand as an official offer the Court ought to take into consideration when reaching a decision on costs, objecting to the Court’s position that the Offer was a “solid starting point for negotiations” and “could have resulted in a higher security to the benefit of [the Defendant]” [17].

16. The Defendant advances that the standard rule is that the ‘loser’ pays the costs of the ‘winner’, and though the Court must have regard to all the circumstances of the case including offers to settle, the Defendant relies on MAG Financial Services LLC v Theron Entertainment LLC [2017] DIFC CA 006 to submit that the offer to settle must be “sufficiently definite” to engage RDC 38.8(3).

17. The Defendant objects that the Offer is sufficiently definite on the basis that:

18. It is the Defendant's position that, if the context had been considered, the Court would not have placed any significant weight on it when reaching a decision on costs.

19. In its response, the Claimant objects to the Defendant's complaints of the Offer, characterising their position as “wholly overblown”. The Claimant instead describes the Offer as realistic and only made in response to the Security for Costs application on the condition that the application would be withdrawn. It submits that the Offer did not need to detail the source of funds, payment method or date as non-payment following acceptance of the Offer would carry the natural consequences, nonetheless. The Defendant in these circumstances had the negotiating power and could have agreed to an order that the Claimant would pay the USD 700,000 into the Court as security, and the corresponding application be withdrawn. Other details are irrelevant and do not make the Offer insufficiently detailed.

20. The Claimant also interprets the Court’s approach to the Offer as an example of the Defendant’s unreasonable conduct in rejecting that it; “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.” [emphasis added]. The Defendant was awarded less than half of the Offer in security and no award of costs due to its own conduct. Nonetheless, the Claimant maintains that the Court was within its right to take into account the Offer as part of “all the circumstances” under RDC 38.8.

21. In my view, the Defendant has unfortunately misinterpreted RDC 38, the Court’s discretion on costs, and the reasons in the Costs Order concerning this specific matter.

22. The Offer is not a Part 32 offer. This is on the basis that it does not follow the format of a Part 32 offer. RDC 38.8 clearly states that “all the circumstances” include non-Part 32 offers, and, in my view, the Offer is sufficiently definite to be included under RDC 38.8.

23. The Offer itself was made by the Claimant in response to the application, and was intended to cover Security sought with consideration to the costs up to trial. This is not denied by either party; the dispute is over the quantum of the Offer, not the intention or what it was for.

24. As the Offer is not a Part 32 offer, it does not require the same level of detail. I also reject, on these specific circumstances, that Justice Sir Richard Field’s approach in MAG Financial Services applies on the basis that the potential proposals in that case were offers of settlement, not security. Hence, the scope of what is “sufficiently definite” runs wider, as payments for security are a much smaller part of the overall proceedings and do not act to end, diminish, reduce or circumvent material issues or the case in whole.

25. It is maintained that the Offer is a “starting point for negotiations”, which constitute an “admissible offer” under RDC 38.8. The Court was within its right to consider the Offer when making a decision on costs.

26. This ground is rejected.

Third Ground

27. Finally, the Defendant’s third ground is that there was an error in considering that the Claimant had paid its security by the time the Costs Order was issued, as this had no relevance on the Court’s decision on costs.

28. The Defendant advances that whether the Claimant paid the security had no bearing on which party was successful on the application, and so the Court’s approach circumvented the general rule without reason and acted beyond the scope of its discretion.

29. The Claimant rejects this ground on the basis that it interprets the Costs Order to have addressed the contention that the Defendant was justified in accusing the Claimant of not being able to provide security, which it did. Therefore, this submission to the contrary is nullified.

30. As stated at paragraph 19 of the Costs Order, the consideration taken into account was that security quantum included costs listed in the Defendant’s Submission on Costs dated 24 February 2025, not that the payment date held any weight over the decision to grant costs or not. Essentially, the Defendant will be paid its costs for the Security for Costs application within said security, if those funds are released at the conclusion of these proceedings. It would be procedurally incorrect to order costs twice for the same application, particularly as the Claimant has demonstrated that it has the capacity to pay. Therefore, this ground is rejected.

Conclusion

31. The Defendant has failed to demonstrate any exceptional circumstances in procedural, legal or factual error that would warrant granting permission to appeal the Costs Order. It is maintained that granting no order as to costs is the fairest conclusion to make considering the outcome of the Security for Costs application. Neither party was dominantly successful, the Offer was sufficiently detailed to be considered independently and part of the parties’ overall conduct under RDC 38.8, and the Costs Order is sufficiently clear in explaining how the final conclusion was reached. Therefore, permission to appeal the Costs Order is rejected.