How did the dispute between NS Investments and Ajay Sethi evolve from a principal loan claim into a contest over interest and costs?
The litigation between NS Investments Limited and Ajay Sethi originated as a claim for the repayment of a principal loan amount. However, the nature of the dispute shifted significantly during the proceedings. As the procedural history unfolded, the Defendant conceded the claim regarding the principal loan amount, narrowing the scope of the remaining conflict to the recovery of interest.
The parties’ shifting positions were formalized through a series of procedural milestones, including a Consent Order dated 15 June 2023 and a subsequent Judgment by H.E. Deputy Chief Justice Ali Al Madhani on 27 September 2023. The core of the current dispute concerns the "unfortunate syntax" of these orders, which failed to clearly delineate which party was responsible for the costs associated with the different segments of the claim. As noted in the court's findings:
In an email dated 8 May 2023, the Defendant confirmed that it no longer intended to contest the claim for the principal loan amount, and instead focus the determinative issue on the outstanding interest.
This concession effectively bifurcated the cost liability, yet the subsequent drafting of the court orders did not explicitly reflect this separation, leading to the necessity of the current Variation Application to align the orders with the parties' actual settlement agreement.
Which judge presided over the Variation and Extension Applications in CFI 055/2020?
H.E. Deputy Chief Justice Ali Al Madhani presided over the Court of First Instance in this matter. The order, issued on 12 February 2026, addressed two distinct applications: the Claimant’s Variation Application (filed 6 February 2025) and the Extension Application (filed 30 December 2025).
What arguments did NS Investments and Ajay Sethi advance regarding the scope of recoverable costs?
The Claimant, NS Investments, argued that the existing orders—specifically the June Consent Order and the September 2023 Judgment—contained drafting errors that obscured the parties' clear intent. The Claimant contended that because the Defendant had conceded the principal loan claim, the Claimant should be entitled to costs for that portion of the proceedings. Conversely, the Claimant acknowledged that they were liable for the Defendant's costs regarding the interest claim, which remained the only contested issue at trial.
The Claimant emphasized that the procedural history necessitated a correction to avoid a scenario where costs were unfairly suspended or misallocated. As the court observed:
Additionally, the Claimant highlights that the Costs Order does not address the Claimant’s entitlement to costs under the procedural history of the case; this is determined below for the Variation Application.
The Defendant’s position was characterized by a lack of active opposition to the Claimant’s Extension Application, which sought more time to file a detailed costs assessment. By failing to file evidence in answer to the Extension Application, the Defendant effectively allowed the court to proceed on an uncontested basis regarding the procedural timeline.
What was the precise doctrinal issue regarding the Court’s jurisdiction to vary the June Consent Order?
The court was tasked with determining whether it possessed the jurisdictional authority to amend a Consent Order and a prior Judgment to correct drafting errors that did not reflect the parties' original intentions. The doctrinal issue centered on the scope of the Court’s inherent powers versus its codified powers under the Rules of the DIFC Courts (RDC). Specifically, the court had to decide if the "unfortunate syntax" of the June Consent Order could be retroactively corrected to ensure that the cost liabilities were strictly limited to the specific issues (principal vs. interest) that each party had respectively won or lost.
How did H.E. Deputy Chief Justice Ali Al Madhani apply the test for correcting accidental slips in court orders?
The court relied upon its inherent power and the specific provisions of the RDC to rectify the drafting inconsistencies. The judge reasoned that because a Consent Order is intended to encapsulate the settlement terms agreed upon by the parties, the court has a duty to ensure the order accurately reflects that agreement. The judge applied the test for correcting "accidental slips" to ensure the final orders were consistent with the reality of the litigation's outcome.
The Court may at any time correct an accidental slip or omission in a judgment or order.
The court further reasoned that the interpretation of the Judgment must be guided by the logical division of the claim. By examining the history of the case, the judge concluded that the Defendant’s success was limited solely to the interest claim, and the orders should be varied to reflect this limitation, thereby preventing the Claimant from being unfairly burdened with costs for a principal claim that the Defendant had conceded.
Which specific RDC rules and statutes were applied to resolve the cost assessment and variation issues?
The court relied on several key provisions of the Rules of the DIFC Courts (RDC) and the DIFC Court Law. For the Variation Application, the court cited RDC 36.41, which allows for the correction of accidental slips, and RDC 36.45, which confirms the court's inherent power to clarify the meaning and intention of its own orders.
Regarding the Extension Application, the court utilized RDC 4.2(1), which grants the court broad case management powers to adjust time limits for compliance, and RDC 4.2(14), which allows the court to act on its own initiative. Furthermore, the court referenced RDC 40.13 and Article 39 of the Court Law, No. 10 of 2004, in the context of interest on costs and the potential sanctions for failing to commence detailed assessment proceedings within the prescribed timeframes.
How did the court utilize the cited precedents to interpret the parties' intentions?
The court utilized the procedural history of the case as a primary interpretive tool. By referencing the Defendant’s email from 8 May 2023, the court established that the parties had reached a clear understanding that the principal loan claim was no longer in dispute. The court used this as a benchmark to interpret the "unfortunate syntax" of the June Consent Order. The court reasoned that the liability for costs must follow the success of the underlying claims, and that any wording to the contrary was a drafting error rather than a reflection of the parties' agreement.
Therefore, the proper construction of the Judgment is that the Claimant is liable for the Defendant's costs on the interest claim only; any other wording is solely the consequence of the unfortunate syntax of the June Consent Order.
This approach ensured that the court’s final orders were not merely literal interpretations of potentially flawed text, but were instead aligned with the substantive resolution of the dispute.
What was the final disposition of the applications and the specific orders made regarding costs?
The court granted both the Variation Application and the Extension Application. Regarding the Variation Application, the court ordered that the June Consent Order be amended to state that the Defendant shall pay the Claimant’s costs for the principal loan claim. Similarly, the court varied the September 2023 Judgment to specify that the Claimant shall pay the Defendant’s costs only for the interest claim.
Deputy Chief Justice Ali Al Madhani dated 27 September 2023 (the “Judgment”) is varied to read as follows: “The Claimant shall pay the Defendant’s costs of the claim for interest on the Loan, to be assessed if not agreed.”
The Extension Application was also granted, providing the Claimant until 27 February 2026 to file its Detailed Costs Assessment. The court made no order as to the costs of the applications themselves.
What are the wider implications for DIFC practitioners regarding the drafting of consent orders?
This case serves as a reminder to practitioners that the DIFC Court will prioritize the clear intention of the parties over the literal syntax of a Consent Order if that syntax is demonstrably erroneous. Practitioners should ensure that Consent Orders explicitly link cost liabilities to specific heads of claim, especially in cases where claims are bifurcated or partially conceded.
The ruling confirms that the court will not hesitate to use its inherent powers under RDC 36.41 and 36.45 to rectify drafting errors that would otherwise lead to an inequitable distribution of costs. Litigants must be precise in their drafting to avoid the need for subsequent variation applications, which, while successful here, necessitate additional court time and resources.
Where can I read the full judgment in NS Investments Limited v Ajay Sethi [2026] DIFC CFI 055?
The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0552020-ns-investments-limited-v-ajay-sethi-6 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-055-2020_20260212.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| CFI 055/2020 | N/A | Procedural history and context for the variation of the Consent Order and Judgment. |
Legislation referenced:
- Court Law, No. 10 of 2004, Article 39
- Rules of the DIFC Courts (RDC):
- RDC 4.2(1)
- RDC 4.2(14)
- RDC 23.41(2)
- RDC 36.41
- RDC 36.45
- RDC 40.13