The Court of First Instance provides a clear application of the 'broad-brush' approach to costs assessment, emphasizing the non-recoverability of costs associated with previously dismissed interlocutory applications in a Part 8 enforcement context.
What were the primary factual disputes and the total amount at stake in SIG Middle East v Perfect Building Materials?
The litigation centered on the enforcement of a Final Settlement Agreement between the parties, which had been breached by the Defendant. The Claimant initiated the action to recover a substantial sum, ultimately securing a judgment for AED 2,841,000. Following this substantive success, the dispute shifted to the quantum of legal costs recoverable by the Claimant. The Claimant sought a total of AED 544,066.34 in legal fees, which the Defendant contested as excessive and procedurally unjustified.
The Claimant initiated proceedings under Part 8 of the Rules of the DIFC Courts (“RDC”) to enforce a Final Settlement Agreement dated 20 April 2022, following prior breaches of contract by the Defendant.
The core of the costs dispute involved the Claimant’s attempt to recover fees for a broad range of activities, including drafting, procedural compliance, and hearing preparation, while the Defendant argued that the procedural nature of a Part 8 claim did not warrant such high expenditure. The final determination required the Court to parse these costs against the backdrop of an earlier, unsuccessful interlocutory application.
Which judge presided over the costs assessment in CFI 057/2024 and when was the order issued?
H.E. Justice Rene Le Miere presided over the matter in the Court of First Instance. The order, which followed the Claimant’s costs submissions filed on 12 June 2025 and the Defendant’s reply on 22 July 2025, was issued on 24 July 2025.
How did the parties frame their respective arguments regarding the recoverability of legal fees?
The Claimant argued that its legal team—comprising a Partner, Lawyer, Trainee, and Paralegal—had acted with diligence and that the costs were reasonably and proportionately incurred. They maintained that the documentation provided in the Statement of Costs and the Declaration of Legal Fees sufficiently justified the total claim of AED 544,066.34.
On 12 June 2025, the Claimant filed a submission seeking a costs order for the amount of AED 544,066.34, supported by a Minute of Proposed Order, a Declaration of Legal Fees, and a Statement of Costs. The Claimant argues that the costs were reasonably and proportionately incurred in relation to legal drafting, procedural compliance, and client engagement.
Conversely, the Defendant challenged the claim on several fronts. They argued that the Part 8 procedure was relatively simple and did not justify the high volume of hours billed. Furthermore, the Defendant pointed to a lack of contemporaneous time records and alleged significant duplication of effort among the Claimant's fee earners.
The Defendant requests that the Court disallow the claim in full or alternatively reduce the recoverable costs by no less than 40%, excluding costs related to the failed application.
What was the jurisdictional and procedural basis for the Defendant’s objection to the Part 8 claim?
The Defendant argued that the nature of the dispute was not suitable for the Part 8 procedure under the RDC. They contended that the matter involved significant factual disputes that necessitated a more robust evidentiary process than that typically afforded by Part 8, which is generally reserved for claims where there is no substantial dispute of fact.
The Defendant opposed the Claim, arguing that it involved significant factual disputes and should not proceed under Part 8.
This objection served as the foundation for the Defendant's argument that the Claimant’s costs were inflated. By framing the case as one that should have been more complex, the Defendant sought to highlight that the Claimant's procedural approach was either unnecessarily aggressive or that the time spent on "procedural simplicity" was inherently excessive.
How did H.E. Justice Rene Le Miere apply the 'broad-brush' doctrine to the Claimant’s costs?
Justice Le Miere utilized a 'broad-brush' approach to address the issues of duplication and excessive time. Recognizing that the proceedings involved limited oral evidence and judicial management, the Court determined that the total time claimed was not commensurate with the work required.
Applying the principles of reasonableness and proportionality, and considering the Court’s previous costs order, the Court finds a reduction of approximately AED 140,000 in the claimed amount appropriate.
The Court specifically disallowed costs related to an unsuccessful application filed by the Claimant on 15 January 2025, noting that the Court had previously ordered each party to bear their own costs for that specific matter. Beyond this, the Court applied a 20% reduction to the remaining time spent by fee earners to account for the identified duplication of effort and excessive time entries.
Which specific RDC rules and judicial directions were central to the Court’s assessment?
The Court’s assessment was governed by Part 8 of the Rules of the DIFC Courts, which dictates the procedure for claims where there is unlikely to be a substantial dispute of fact. The Court also referenced Registrar’s Direction No. 1 of 2023, which sets out indicative hourly rates for legal representatives.
While the Defendant argued that the Claimant’s hourly rates exceeded these limits, Justice Le Miere noted that the rates charged did not, in fact, exceed the indicative limits. However, the Court relied on the general principles of reasonableness and proportionality inherent in the RDC to assess whether the total hours billed were justifiable. The Court also strictly enforced the previous order regarding Application No. CFI-057-2024/1, which had been filed to exclude evidence submitted by the Defendant.
The Claimant filed Application No. CFI-057-2024/1 on 15 January 2025 to exclude evidence submitted by the Defendant on 14 January 2025.
How did the Court treat the costs associated with the unsuccessful application in CFI-057-2024/1?
The Court maintained a strict adherence to its prior interlocutory ruling. Because the Court had previously ordered that each party bear their own costs regarding the application to exclude evidence, those costs were deemed entirely non-recoverable in the final assessment.
The costs associated with the Application dated 15 January 2025 are not recoverable, as the Court previously ordered each party to bear their own costs in relation to that application.
This included specific disbursements such as the filing fee of AED 1,121.75 and significant legal fees related to drafting the application, preparing the hearing bundle, and attending the second hearing. The Court explicitly disallowed AED 40,000 from the total claim specifically to account for these non-recoverable costs.
What was the final disposition and the total monetary relief awarded to the Claimant?
The Court concluded that the Claimant was entitled to recover costs, but at a significantly reduced level from the amount requested. After disallowing the costs related to the unsuccessful application and applying a broad-brush reduction for excessive time and duplication of effort, the Court ordered the Defendant to pay AED 400,000.
For the reasons outlined below the Court will order that the Defendant pay the Claimant’s costs in the sum of AED 400,000.
This amount represented a reduction of approximately AED 144,066.34 from the original claim of AED 544,066.34. The order was final, and no further adjustments were made to the assessment.
What are the practical implications for practitioners regarding costs submissions in the DIFC?
This ruling serves as a reminder that the DIFC Courts will rigorously scrutinize costs submissions, even in straightforward Part 8 enforcement proceedings. Practitioners must ensure that their costs claims are meticulously separated, particularly when there have been multiple interlocutory applications with varying costs orders.
The decision reinforces that the Court will not hesitate to use a 'broad-brush' reduction where it perceives duplication of effort or excessive time spent on procedural tasks. Practitioners should be prepared to provide detailed, contemporaneous time records to justify their claims, as the absence of such records—coupled with the Court's willingness to apply percentage reductions—can lead to significant shortfalls in recovered costs.
Where can I read the full judgment in SIG Middle East v Perfect Building Materials [2025] DIFC CFI 057?
The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0572024-sig-middle-east-llc-v-perfect-building-materials-llc-2
CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-057-2024_20250724.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), Part 8
- Registrar’s Direction No. 1 of 2023