What was the specific monetary dispute and the total costs claimed in Anastasiia Denisova v Aleksei Galtcev [2025] DIFC CFI 041?
The lawsuit centered on a preliminary issue regarding whether the Claimant, Anastasiia Denisova, had successfully paid a sum of USD 1,000 for claimed shares. This narrow factual dispute served as the basis for a significant costs application following the Court’s determination of the preliminary issue. The Claimant sought to recover legal costs that vastly exceeded the underlying amount in dispute, leading to a contentious assessment process before the Court.
As noted in the judgment:
The Claimant has submitted a schedule of costs in relation to the preliminary issue which sets out costs totalling USD 76,591.50, including disbursements of USD 1,200.
The Defendants argued that this figure was grossly disproportionate, representing over 76 times the value of the actual amount in dispute. The Claimant maintained that these costs were reasonably incurred due to the Defendants' procedural non-compliance and the complexity of the evidentiary requirements, which necessitated extensive legal analysis and preparation.
Which judge presided over the costs assessment in the DIFC Court of First Instance on 26 May 2025?
The assessment was conducted by H.E. Justice Sapna Jhangiani, sitting in the DIFC Court of First Instance. The order was issued on 26 May 2025, following a previous order dated 15 May 2025, which had established the Defendants' liability for the Claimant’s costs on a standard basis.
How did the parties frame their competing arguments regarding the reasonableness of the USD 76,591.50 costs claim?
The Claimant argued that her costs were properly and reasonably incurred, asserting that the Defendants' procedural conduct—specifically their non-compliance—forced her to undertake multiple applications and corrective work. She contended that the witness statements provided by the Defendants were unclear, requiring disproportionate preparation, and that the legal framework necessitated a high level of case analysis.
Conversely, the Defendants argued that the costs were entirely disproportionate to the simplicity of the preliminary issue. They contended that the Claimant’s legal team utilized hourly rates exceeding DIFC market norms and that the Claimant had pursued meritless procedural applications. As the Court summarized the Defendants' position:
Their arguments may be summarised as follows: (1) The preliminary issue was straightforward; it required a determination of whether USD 1,000 was paid by the Claimant.
The Defendants further argued that the Claimant’s preparation for cross-examination was excessive, particularly regarding evidence that was ultimately struck from the record, and requested a 50% reduction in the total costs claimed.
What was the precise doctrinal issue the Court had to resolve regarding the assessment of costs under RDC 38.2?
The Court was tasked with determining whether the Claimant’s costs were "proportionate and reasonable" under RDC 38.2, given that the costs claimed were significantly higher than the value of the underlying dispute. The doctrinal challenge lay in balancing the principle of proportionality against the reality that procedural misconduct by an opposing party can necessitate costs that appear high relative to the nominal value of a claim. The Court had to decide how to filter out costs associated with unsuccessful or unnecessary procedural steps while upholding the standard basis of assessment.
How did Justice Sapna Jhangiani apply the 'broadbrush' approach to reach the final assessment of USD 50,000?
Justice Jhangiani opted not to perform a line-by-line reduction, noting that the Claimant’s schedule lacked the granularity required for such an exercise. Instead, the Court utilized a discretionary assessment method to ensure the final figure reflected the actual work necessary for the preliminary issue, excluding tasks that were deemed unproductive or unrelated to the core dispute.
As stated in the reasoning:
Taking into account all the matters set out above, and bearing in mind that the Claimant’s costs schedule does not set out the Claimant’s costs relating to each application or discrete task, I apply a broadbrush approach in assessing the Claimant’s costs, and in applying an appropriate discount to the full costs claimed such that the costs recovered are both reasonable and proportionate in accordance with RDC 38.2.
The Court specifically excluded costs related to the application for default judgment and the second application to exclude witness evidence, finding the latter to be unnecessary.
Which specific RDC rules and DIFC statutes were applied by the Court to determine the recoverability of the costs?
The Court relied heavily on the Rules of the DIFC Courts (RDC) governing costs assessment. Specifically, RDC 38.2 was the primary test for whether costs were proportionately and reasonably incurred. The Court also referenced RDC 38.23, which lists factors such as the conduct of the parties, the amount involved, the importance of the matter, and the complexity of the questions raised. Additionally, the Court considered the benchmark hourly rates established in Practice Direction No. 1 of 2023, rejecting the Defendants' request to reduce the Claimant's hourly rates on the basis that they were within the acceptable market range.
How did the Court treat the Defendants' arguments regarding investigative expenses and unsuccessful procedural applications?
The Court dismissed the Defendants' attempts to introduce their own investigative costs as a factor in assessing the Claimant’s entitlement. Furthermore, the Court was firm in its refusal to allow the recovery of costs for procedural steps that did not advance the litigation effectively.
Regarding the Defendants' investigative costs, the Court noted:
I do not consider that the Defendants’ costs of investigation relating to the preliminary issue are relevant to my determination of the Claimant’s costs of the preliminary issue.
Regarding the Claimant's unsuccessful procedural attempts, the Court observed:
In addition to the arguments raised by the Defendants, I note that the Claimant’s costs schedule includes costs for the Claimant’s application for judgment in default.
The Court concluded that such costs were not recoverable, stating:
The costs of that application are therefore not recoverable as part of the Claimant’s costs relating to the preliminary issue.
What was the final disposition and the specific order for payment made by the Court?
The Court ordered the Defendants to pay the Claimant the sum of USD 50,000 in respect of the costs for the preliminary issue. This amount was to be paid within 14 days of the order. Additionally, the Court mandated that judgment interest at a rate of 9 percent per annum would accrue on this sum from 26 May 2025 until the date of payment.
As the order concluded:
The Claimant’s costs in relation to the preliminary issue are immediately assessed in the sum of USD 50,000.
How does this ruling change the landscape for practitioners regarding costs recovery in the DIFC?
This case reinforces the Court’s wide discretion to employ a 'broadbrush' approach when parties fail to provide detailed, task-based costs schedules. It serves as a warning that while proportionality is a key factor under RDC 38.2, the Court will not automatically slash costs simply because they exceed the nominal value of the claim, especially if the opposing party’s conduct necessitated the expenditure. Practitioners must ensure that every procedural application is strictly necessary; otherwise, the Court will exclude those costs entirely, regardless of the overall success of the party in the main dispute.
Where can I read the full judgment in Anastasiia Denisova v Aleksei Galtcev [2025] DIFC CFI 041?
The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0412024-anastasiia-denisova-v-1-aleksei-galtcev-2-realiste-holding-ltd-1 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-041-2024_20250526.txt
Legislation referenced:
- RDC 38.2 (Standard basis of assessment)
- RDC 38.7 (Reasonableness and proportionality)
- RDC 38.23 (Factors for costs assessment)
- RDC 38.24 (Test of proportionality)
- Practice Direction No. 1 of 2023 (Benchmark hourly rates)
- DIFC Law No. 2 of 2025 Article 9(C)