Following a successful default judgment, the DIFC Court of First Instance addressed the procedural mechanism for securing an interim payment of legal costs pending the final assessment of the bill of costs.
What was the specific financial dispute regarding the interim payment of costs in Five Holding v Orient Unb Takaful?
The dispute arose following the successful entry of a Default Judgment on 14 March 2021 in favor of the Claimants, Five Holding Limited and Five Hotel Jumeirah Village LLC, against the Defendant, Orient Unb Takaful PJSC. Having secured the substantive judgment, the Claimants sought to recover their legal costs incurred during the proceedings. To facilitate this, the Claimants filed a Notice of Commencement of Assessment of Bill of Costs on 12 September 2021.
The core of the dispute at this stage was the Claimants' request for an immediate payment on account, representing 50% of the total costs claimed in their Bill of Costs. This request was made to ensure that the Claimants were not unduly prejudiced by the delay inherent in the full assessment process. The Registrar, Nour Hineidi, evaluated the request under the framework of the DIFC Courts’ Costs Regime and determined that an interim payment was appropriate. The final order mandated the specific sum to be paid into the Court's Escrow Account.
The Defendant is ordered to pay a total AED 82,942.50 (the
“Amount Payable”
) into Court by 26 September 2021.
Which DIFC judicial officer presided over the costs assessment order in CFI 027/2021?
The order was issued by Registrar Nour Hineidi of the DIFC Court of First Instance. The decision was rendered on 13 September 2021, following the Claimants' submission of their request for payment on account on 12 September 2021.
What legal arguments did the Claimants advance to justify the 50% payment on account under the DIFC Costs Regime?
The Claimants relied upon the procedural entitlement provided by Practice Direction No. 5 of 2014, which governs the DIFC Courts’ Costs Regime. Specifically, they invoked paragraph 5 of the Practice Direction, which allows a party to seek an interim payment on account of costs before the final assessment of a bill of costs is completed.
The Claimants argued that since the Default Judgment had already established their entitlement to costs—including legal fees incurred until the date the request was fully pleaded and the associated Court filing fees—it was equitable to receive a portion of those costs immediately. By requesting 50% of the total amount set out in their Bill of Costs, the Claimants sought to mitigate the financial burden of the litigation while the formal assessment process remained ongoing. The Defendant did not successfully contest the principle of this interim payment, leading the Registrar to grant the request in full.
What was the precise doctrinal issue regarding the application of Part 40 of the Rules of the DIFC Court in this matter?
The court was required to determine whether the Claimants had satisfied the procedural requirements to trigger an interim payment on account of costs. The doctrinal issue centered on the interaction between the substantive entitlement to costs established in the Default Judgment and the procedural mechanism for quantifying that entitlement under Part 40 of the Rules of the DIFC Court (RDC).
The Registrar had to decide if the evidence provided in the Claimants' Notice of Commencement of Assessment of Bill of Costs was sufficient to justify a 50% interim payment. The court examined whether the request aligned with the principles of proportionality and the efficient management of costs as outlined in the DIFC Courts’ Costs Regime. The issue was not the final determination of the total costs payable, but rather the court's discretionary power to order a partial payment to prevent the Claimants from being kept out of pocket while the final bill was being scrutinized.
How did Registrar Nour Hineidi apply the test for interim payments under Practice Direction No. 5 of 2014?
Registrar Hineidi exercised the court's discretion by evaluating the Claimants' request against the established criteria for interim payments. The Registrar reviewed the Bill of Costs and the supporting documentation provided in the Costs Assessment Notice. By confirming that the request was consistent with the Practice Direction, the Registrar ensured that the interim payment reflected a reasonable estimate of the costs likely to be awarded upon final assessment.
The reasoning followed a standard procedural path: acknowledging the prior Default Judgment, verifying the filing of the Bill of Costs, and applying the 50% threshold as a reasonable interim measure. This approach serves to balance the interests of the prevailing party in receiving compensation with the need for the court to maintain oversight of the final quantum.
The Defendant must contact the Court before 19 September 2021 to obtain details for the Courts’ Escrow Account for transfer of the Amount Payable.
Which specific statutes and RDC rules were applied by the Registrar in CFI 027/2021?
The Registrar’s decision was primarily grounded in the following legal instruments:
- Practice Direction No. 5 of 2014 (DIFC Courts’ Costs Regime): Specifically paragraph 5, which provides the authority for the court to order a payment on account of costs.
- Part 40 of the Rules of the DIFC Court (RDC): This section governs the general procedure for the assessment of costs, providing the framework within which the Claimants filed their Notice of Commencement of Assessment of Bill of Costs.
- Default Judgment dated 14 March 2021: This served as the foundational order establishing the Claimants' right to recover legal costs and filing fees from the Defendant.
How did the court utilize the DIFC Courts’ Costs Regime to facilitate the payment of AED 82,942.50?
The court utilized the Costs Regime as a procedural tool to ensure compliance and efficiency. By ordering the payment into the Court's Escrow Account rather than directly to the Claimants, the Registrar maintained judicial control over the funds. This ensures that the money is held securely until the final assessment is concluded, at which point the court can reconcile the interim payment with the final amount awarded. This methodology prevents potential disputes over the return of funds should the final assessed costs be lower than the interim payment, thereby streamlining the enforcement process.
What was the final disposition and the specific monetary relief ordered by the Registrar?
The Registrar granted the Claimants' request in its entirety. The Defendant, Orient Unb Takaful PJSC, was ordered to pay a total of AED 82,942.50 into the Court's Escrow Account. This amount was explicitly defined as 50% of the total costs claimed by the Claimants in their Bill of Costs. The Defendant was given a strict deadline of 26 September 2021 to complete this payment, with a prior requirement to contact the court by 19 September 2021 to obtain the necessary escrow account details.
What are the practical implications for litigants seeking interim costs in the DIFC following this order?
This order reinforces the standard practice that prevailing parties in the DIFC should not hesitate to utilize Practice Direction No. 5 of 2014 to seek interim payments on account of costs. For practitioners, the case highlights the importance of filing a detailed Bill of Costs and a formal Notice of Commencement of Assessment promptly after a judgment is entered.
Litigants should anticipate that the court will generally support reasonable requests for interim payments (such as the 50% requested here) provided the underlying entitlement to costs is clear. Furthermore, the use of the Court's Escrow Account as the mechanism for payment underscores the court's preference for secure, transparent financial transactions during the assessment phase. Future litigants must ensure they adhere strictly to the timelines set by the Registrar, as failure to contact the court for payment details or to meet the transfer deadline could lead to further enforcement proceedings.
Where can I read the full judgment in Five Holding v Orient Unb Takaful [2021] DIFC CFI 027?
The full order can be accessed via the official DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-027-2021-1-five-holding-limited-2-five-hotel-jumeirah-village-llc-v-orient-unb-takaful-pjsc-3
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | N/A |
Legislation referenced:
- Practice Direction No. 5 of 2014 (DIFC Courts’ Costs Regime)
- Part 40 of the Rules of the DIFC Court (RDC)