Following a successful claim for over USD 33 million, the DIFC Court of First Instance issued a final order assessing the recoverable costs payable by the Fourth Defendant, Bavaguthu Raghuram Shetty, to the Claimant, Bank of Baroda (DIFC Branch).
What was the specific monetary dispute regarding the costs payable by Bavaguthu Raghuram Shetty to Bank of Baroda in CFI 043/2020?
The litigation concerned the enforcement of financial obligations, culminating in a judgment in favor of the Bank for USD 33,248,029.70. Following the trial, the Court ordered the Fourth Defendant, Mr. Shetty, to pay the Bank’s legal costs, which were subject to immediate assessment. The Bank submitted a revised Statement of Costs to account for the proceedings, leading to a contentious review of professional fees, court fees, and expert witness expenses.
At the conclusion of the trial on this matter on 25 November 2024, I ordered that judgment be entered in favour of the Claimant (the “Bank”) against the Fourth Defendant (“Mr Shetty”) in the amount of USD 33,248,029.70.
The dispute centered on whether the Bank’s claimed legal fees were proportionate to the complexity of the trial, which lasted only one day. Mr. Shetty challenged several line items, including "professional fees" that appeared duplicative of solicitor time, and specific expenses incurred after the trial concluded. The final assessment resulted in a significant reduction of the Bank's initial claims, settling the total liability at USD 344,104.74. Further context on the procedural history of this matter can be found in BANK OF BARODA v NEO PHARMA [2020] DIFC CFI 043 — Amendment of pleadings for non-payment (18 August 2020).
Which judge presided over the costs assessment in the DIFC Court of First Instance on 14 January 2025?
The costs assessment was conducted by H.E. Chief Justice Wayne Martin in the DIFC Court of First Instance. The order was issued on 14 January 2025, following the Court’s earlier substantive judgment delivered on 25 November 2024.
What were the primary arguments advanced by Bank of Baroda and Bavaguthu Raghuram Shetty regarding the revised Statement of Costs?
The Bank sought recovery of legal fees, court fees, senior counsel fees, and expert witness costs. Mr. Shetty did not contest the hourly rates charged by the Bank’s solicitors, acknowledging their alignment with Registrar’s Practice Direction No. 1 of 2023. However, he argued that the total hours claimed—approximately 220 hours—were excessive for a single-day trial involving limited witness testimony.
Mr. Shetty also challenged the Bank’s inclusion of "professional fees" as expenses, arguing that the distinction between these and standard legal fees was opaque. Additionally, Mr. Shetty objected to the inclusion of "wasted costs" that the Bank had previously been ordered to pay to him during the amendment of the Particulars of Claim. The Bank conceded the objection regarding the wasted costs, leading to the dismissal of that specific component of their claim.
What was the doctrinal issue the Court had to resolve regarding the recoverability of post-trial legal expenses?
The Court had to determine whether legal fees incurred by the Bank after the trial date, specifically those related to potential future claims against third parties, fell within the scope of the original costs order. The doctrinal issue involved the principle of finality in costs recovery: whether an order for costs "of the proceedings" extends to ancillary legal work performed after the court has rendered its judgment on the merits.
How did H.E. Chief Justice Wayne Martin apply the principle of proportionality to the Bank's legal fee claim?
Chief Justice Martin utilized a test of proportionality, weighing the total hours billed against the actual duration and complexity of the trial. He noted that while the Bank called only one witness of fact and one expert, the 220 hours claimed were disproportionate to the work required for a one-day resolution.
The total hours making up that claim are in the vicinity of 220, which appears to me to be excessive for a case which was resolved after a trial of one day, given that the Bank called only one witness of fact, whose evidence was essentially limited to the production of documents, and an expert witness whose fees are separately claimed.
By applying this reasoning, the Court discounted the legal fees from the requested USD 189,900 to an allowed amount of USD 150,000. The judge also strictly excluded costs related to post-trial work, reinforcing that costs orders are limited to the specific litigation tasks authorized by the court at the time of the judgment.
Which specific DIFC statutes and practice directions were applied during the assessment of costs?
The Court relied on Registrar’s Practice Direction No. 1 of 2023 to evaluate the reasonableness of the hourly rates charged by the Bank’s legal representatives. The assessment was governed by the general powers of the Court under the Rules of the DIFC Courts (RDC) to award and assess costs. The Court also referenced the specific Order of 25 November 2024, which provided the jurisdictional basis for the immediate assessment of costs following the entry of judgment against Mr. Shetty.
How did the Court treat the various categories of expenses claimed in the revised Statement of Costs?
The Court systematically reviewed the groupings in the revised Statement of Costs. It allowed the full amount of USD 91,426.37 for DIFC Court fees, as Mr. Shetty raised no objection. Regarding senior counsel fees, the Court found the engagement of senior counsel appropriate for the case but disallowed a portion of the fees related to post-trial work.
The revised Statement of Costs groups the costs claimed under various headings. It is convenient to deal with the contentious issues by reference to the various groupings of costs, in the order in which they are set out in the revised Statement.
The Bank claims USD 91,426.37 in relation to fees paid to the DIFC Courts. Mr Shetty has no objection to the amount claimed, which will be allowed in full.
However, counsel’s invoice indicates that her fees also include an amount of GBP 2,500 in respect of work done after the trial relating to the prospect of claims for costs against third parties. Those costs are not covered by the order which I made at trial and should be excluded.
What was the final disposition and the specific monetary relief ordered by the Court?
The Court ordered the Fourth Defendant, Mr. Shetty, to pay the Bank a total of USD 344,104.74 in costs. This figure represented the aggregate of the allowed legal fees, court fees, expert fees, and counsel fees, after the necessary deductions and the removal of the conceded "wasted costs" claim.
The costs payable to the Claimant by the Fourth Defendant pursuant to order 3 of the Order of 25 November 2024 are assessed in the amount of USD 344,104.74.
The amounts which I have allowed total USD 344,104.74, and Mr Shetty will be ordered to pay the Bank’s costs in that amount.
The Court further ordered that if the payment is not made within 14 days, interest will accrue on the outstanding balance at the rate applicable to DIFC Court judgments.
If the costs the subject of the preceding order are not paid within fourteen (14) days, interest will accrue on the amount outstanding from that date until the costs are paid in full at the rate applicable to judgments of the Court from time to time.
What are the wider implications of this ruling for practitioners regarding the submission of Statements of Costs?
This order serves as a reminder that the DIFC Court will rigorously scrutinize the proportionality of hours billed, even when hourly rates are compliant with Practice Directions. Practitioners must ensure that Statements of Costs are comprehensive and accurate prior to trial, as the Court will not permit the inclusion of costs incurred after the trial unless they are strictly related to the proceedings already adjudicated. Furthermore, the exclusion of post-trial work underscores the necessity of distinguishing between costs of the action and costs of potential future enforcement or ancillary litigation.
Where can I read the full judgment in Bank of Baroda v Neopharma [2025] DIFC CFI 043?
The full order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0432020-bank-baroda-difc-branch-v-1-neopharma-llc-2-nmc-healthcare-llc-3-new-medical-centre-llc-4-bavaguthu-raghuram-shetty-15 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-043-2020_20250114.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | N/A |
Legislation referenced:
- Rules of the DIFC Courts (RDC)
- Registrar’s Practice Direction No. 1 of 2023