LXT REAL ESTATE BROKER v SIR REAL ESTATE [2026] DIFC CA 005 — Security for costs appellate review (13 January 2026)

What were the specific grounds for the dispute between LXT Real Estate Broker and SIR Real Estate regarding the security for costs order?

The dispute centers on a procedural battle over the provision of security for costs in the underlying proceedings, CFI-073-2024. LXT Real Estate Broker L.L.C (the Claimant) sought to resist or minimize the security requirements imposed for the benefit of SIR Real Estate LLC (the Defendant). The core of the disagreement involved the CFI’s initial assessment of whether security should be capped, how it should be staged, and whether the presence of a litigation funder should automatically entitle the Claimant to a reduction in the security amount.

The Court of Appeal’s intervention was necessitated by the Defendant’s challenge to the CFI’s restrictive findings. The appellate court found it necessary to vacate the lower court’s conclusions on several critical factors, including the risk of stifling the claim and the impact of the Claimant’s prior success on a strike-out application. As noted in the order:

The Appeal is allowed and the application for security is remitted to the Court of First Instance (CFI) for reconsideration on the terms set out in these orders.

Which judges presided over the Court of Appeal hearing in CA 005/2025 and when was the order issued?

The appeal was heard by a distinguished bench comprising H.E. Chief Justice Wayne Martin, H.E. Justice Rene Le Miere, and H.E. Justice Sir Peter Gross. The Court of Appeal issued its formal order on 13 January 2026, following the hearing of arguments from counsel for both the Appellant (SIR Real Estate) and the Respondent (LXT Real Estate Broker).

What legal arguments did LXT Real Estate Broker and SIR Real Estate advance during the appeal proceedings?

SIR Real Estate, as the Appellant, argued that the CFI had erred in law and principle by imposing arbitrary barriers to the security for costs, specifically regarding the quantum and the staging of payments. They contended that the CFI’s findings—such as the notion that a litigation funder automatically warrants a reduction in security—were inconsistent with the principles governing the protection of a defendant’s potential costs.

LXT Real Estate Broker, as the Respondent, sought to defend the CFI’s original order, arguing that the security requirements were sufficient and that any further increase would risk stifling their claim. Furthermore, LXT attempted to initiate a cross-appeal, which the Court of Appeal ultimately dismissed. The Claimant also sought to maintain the CFI’s original stance on the costs of the security application, which the Court of Appeal subsequently reversed.

What was the precise jurisdictional and doctrinal question the Court of Appeal had to resolve regarding the CFI’s security for costs order?

The Court of Appeal was tasked with determining whether the CFI had exceeded its discretion by making definitive, restrictive findings on the mechanics of security for costs that effectively constrained the court's ability to assess the risk and quantum fairly. The doctrinal issue was whether the CFI’s findings on matters such as "natural barriers" to security, the impact of litigation funding, and the staging of payments were legally sound or if they improperly fettered the court’s discretion in future applications. The Court had to decide if these findings should be set aside to allow for a fresh, unconstrained assessment of the security required to protect the Defendant.

How did the Court of Appeal apply the test for remitting the security for costs application to the CFI?

The Court of Appeal adopted a corrective approach, determining that the CFI’s previous findings were fundamentally flawed in their approach to the assessment of security. By setting aside the CFI’s conclusions on seven specific sub-issues—ranging from the scope of proceedings covered to the impact of litigation funding—the Court of Appeal ensured that the CFI would approach the remitted application with a clean slate. The Court explicitly directed the CFI on how to proceed:

The CFI is to deal with the remitted application for security on the basis that: (a) the jurisdictional conditions for the grant of security have been satisfied; and (b) the issues identified in Order 3 and the issues pertaining to the proposed cross appeal have been determined adversely to the Claimant as at the time of the original application for security.

This directive effectively removes the previous "pro-Claimant" constraints, requiring the CFI to reconsider the quantum and terms of security without being bound by the earlier, set-aside findings.

Which DIFC statutes and RDC rules were central to the Court of Appeal’s decision in CA 005/2025?

The decision primarily concerns the application of the Rules of the DIFC Courts (RDC), specifically those governing security for costs. While the order does not cite specific RDC numbers in the text, the underlying application is governed by the principles of RDC Part 25, which provides the court with the power to order security for costs where it is just to do so. The Court of Appeal also referenced the "Crabtree principle," a common law doctrine often invoked in the context of security for costs and counterclaims, ensuring that the Claimant retains the right to raise arguments based on this principle during the remitted hearing.

How did the Court of Appeal utilize the precedent of CFI-073-2024 in its reasoning?

CFI-073-2024 represents the original proceedings where the security for costs application was first heard. The Court of Appeal used this case not as a binding precedent to be followed, but as the source of the errors that required correction. By identifying specific findings within the CFI-073-2024 order—such as the assessment of quantum and the effect of the strike-out application—the Court of Appeal systematically dismantled the reasoning that had led to the initial, unsatisfactory security order.

What was the final outcome of the appeal and the specific monetary relief awarded to SIR Real Estate?

The Court of Appeal allowed the appeal, set aside the CFI’s findings on the security for costs, and remitted the application for reconsideration. The Claimant’s cross-appeal was dismissed. Regarding costs, the Court ordered the Claimant to pay the Defendant’s costs for the initial application, the renewed application, the cross-appeal application, and the appeal itself. These costs were assessed and fixed at AED 550,000, payable within 14 days, with interest accruing thereafter. As stated in the order:

The order that there be no order in respect of the costs of the application for security is set aside and it is ordered that the costs of the application for security up to and including the determination by the judge at first instance will be costs in the case.

What are the wider implications for DIFC practitioners regarding security for costs applications?

Practitioners must anticipate that the DIFC Court of Appeal will not tolerate "fettered discretion" in security for costs applications. The decision serves as a warning that findings regarding the "stifling" of claims or the impact of litigation funding must be robustly evidenced and not based on generalized propositions. Furthermore, the ruling clarifies that if a CFI order is found to be based on flawed premises, the Court of Appeal will not hesitate to set aside those findings entirely and remit the matter for a fresh assessment. Litigants should be prepared for the possibility that security orders are subject to rigorous appellate scrutiny, particularly when the lower court imposes artificial caps or staging requirements without sufficient justification.

Where can I read the full judgment in LXT Real Estate Broker v SIR Real Estate [2026] DIFC CA 005?

The full order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-appeal/ca-0052025-lxt-real-estate-broker-llc-v-sir-real-estate-llc or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-appeal/DIFC_COA_CA_005_2025_LXT_Real_Estate_Broker_L_L_C_v_SIR_Real_Estate_LLC_20260113.txt

Cases referred to in this judgment:

Legislation referenced:

• Rules of the DIFC Courts (RDC) – Part 25 (Security for Costs)
• Common Law Doctrine (Crabtree principle)