This order addresses the judicial assessment of legal costs following the strike out of pleadings that were found to contain misleading material generated by artificial intelligence.
What was the total amount claimed by Klesta Eshja and Hair Creators Salon in their Statement of Costs following the strike out of the Defendants' AI-assisted pleadings in CFI 066/2024?
The dispute arose from the Defendants' submission of amended defences that were found to be heavily reliant on artificial intelligence, resulting in the inclusion of false legal references and misleading content. Following the Court’s decision to strike out these pleadings, the Claimants sought to recover the costs associated with the strike-out application and the preceding procedural amendments.
The Claimants submitted a significant bill for these interlocutory matters, which the Court subsequently scrutinized for proportionality. As noted in the judgment:
On 9 September 2025, the Claimants filed a Statement of Costs claiming a total amount of AED 735,299.25 comprising AED 722,275.50 for professional fees and AED 12,953.75 for disbursements.
The Claimants’ request was met with strong opposition from the First Defendant, who argued that the bill was excessive and improperly included costs related to the general conduct of the litigation rather than being strictly confined to the specific applications for which costs had been awarded. The discrepancy between the amount claimed and the amount ultimately awarded highlights the Court's rigorous approach to assessing costs in the context of procedural misconduct.
Which judge presided over the costs assessment in CFI 066/2024 and in which division of the DIFC Courts was the matter heard?
The matter was heard before H.E. Justice Thomas Bathurst in the DIFC Court of First Instance. The assessment of costs followed a series of Case Management Conferences held throughout 2025, culminating in the final order issued on 24 March 2026.
What arguments did the First Defendant, Salah Masri, raise regarding the Claimants' Statement of Costs in CFI 066/2024?
The First Defendant challenged the Claimants' Statement of Costs on the basis that the requested sum of AED 735,299.25 was disproportionate to the scope of the work performed. Specifically, the First Defendant contended that the Claimants were attempting to recover costs for the entirety of their legal representation and general litigation conduct, rather than limiting the claim to the specific costs arising from the strike-out application and the amendment of the pleadings.
Furthermore, the First Defendant highlighted the Claimants' previous tactical maneuvers, noting that in their earlier skeleton argument, they had sought a deposit of AED 300,000 as security for costs. As stated in the judgment:
The First Defendant also pointed out that in its Skeleton Argument of 22 August 2025 in support of the application to strike out the amended defence, the Claimants sought an order that the Defendant pay AED 300,000 into court on deposit of such costs within 7 days by way of security until the wasted costs have been assessed.
The First Defendant argued that this prior figure served as a benchmark for what the Claimants themselves considered reasonable, contrasting sharply with the significantly higher amount ultimately claimed in the Statement of Costs.
What was the primary legal question H.E. Justice Thomas Bathurst had to resolve regarding the assessment of costs under the RDC?
The Court was required to determine the appropriate quantum of costs to be awarded to the Claimants on a standard basis, given that the Defendants had been ordered to pay wasted costs. The central doctrinal issue was whether the costs claimed were "proportionate" and "reasonably incurred" under the Rules of the DIFC Courts (RDC). The Court had to decide how to reconcile the Claimants' high professional fee claims with the limited scope of the interlocutory applications—specifically the strike-out of the AI-generated defences—while ensuring that any doubts regarding the reasonableness of the costs were resolved in favor of the paying party.
How did H.E. Justice Thomas Bathurst apply the principle of proportionality when assessing the costs in CFI 066/2024?
Justice Bathurst applied a strict test of proportionality, emphasizing that the Court is not bound to accept a party's statement of costs at face value, particularly when the amount appears disconnected from the procedural steps taken. The judge noted that the absence of an indemnity costs order necessitated a careful review of the standard basis of assessment.
The reasoning process involved a critical evaluation of the time spent by the legal team against the actual complexity of the strike-out application. As the judge explained:
First, there was no order that the costs be paid on an indemnity basis. Second, in assessing the costs, the Court is required by Rule 38.18 of the Rules of the DIFC Courts 2014 (“RDC”) to only allow costs which are proportionate to the matters in issue and to resolve any doubts which it may have as to whether the costs claimed were reasonably incurred or reasonable and proportionate in amount in favour of the paying party.
Ultimately, the Court concluded that the claimed amount was excessive. By breaking down the assessment into specific hourly rates for partners and trainees, the Court arrived at a figure that it deemed reflective of the actual work required to address the Defendants' procedural failures.
Which specific RDC rules and legal principles governed the Court's assessment of the Claimants' costs?
The Court relied heavily on RDC 38.18, which mandates that the Court only allow costs that are proportionate to the matters in issue. Furthermore, the Court invoked RDC 38.21, which provides the framework for assessing costs on the standard basis.
The Court emphasized the following rule:
It should also be noted that RDC 38.21 provides if the Court is assessing costs on the standard basis it is to have regard to all the circumstances in deciding whether such costs were proportionately and reasonably incurred and proportionate and reasonable in amount.
These rules collectively empower the Court to resolve any doubts regarding the reasonableness of costs in favor of the paying party, a principle that proved decisive in reducing the Claimants' recovery from over AED 735,000 to approximately AED 343,953.
How did the Court utilize the principles of reasonableness and proportionality to distinguish between the Claimants' requested amount and the final award?
The Court utilized the principle of proportionality to filter out costs that were not directly attributable to the strike-out application. By examining the hourly rates—specifically AED 3,500 per hour for partners and AED 1,800 per hour for trainees—the Court determined that the total award should be capped at a level that reflected the actual time necessary to address the AI-generated pleadings.
The Court’s reasoning for the final assessment was as follows:
In the circumstances, I would assess the costs payable under the two costs orders in a total amount of AED 331,000 comprised of AED 196,000 in respect of the partner’s time at AED 3,500 per hour and AED 135,000 in respect of the legal trainees’ time at AED 1,800 per hour.
This calculation, when combined with other disbursements, led to the final figure of AED 343,953.75, which the Court deemed the maximum amount that could be considered "proportionately and reasonably incurred."
What was the final disposition and the specific monetary relief ordered by H.E. Justice Thomas Bathurst?
The Court ordered the First, Second, and Third Defendants to pay the costs associated with the orders dated 7 August 2025 and 4 September 2025. The final amount was assessed at AED 343,953.75.
The formal order was stated as follows:
In the result I would make the following order: (a) Order that the First, Second and Third Defendants pay the costs ordered by the Court on 7 August 2025 and 4 September 2025 assessed in an amount of AED 343,953.75.
This amount represented a significant reduction from the Claimants' initial request, reinforcing the Court's authority to regulate the costs of litigation even when the underlying procedural failure—the use of AI-generated misleading pleadings—was egregious.
What are the wider implications of this ruling for DIFC practitioners regarding AI-generated pleadings and costs recovery?
This judgment serves as a stern warning to practitioners regarding the risks of utilizing artificial intelligence in the preparation of pleadings. The Court’s decision to strike out the defences and subsequently slash the associated costs indicates that the DIFC Courts will not tolerate the submission of misleading material, regardless of the technology used to generate it.
Practitioners must anticipate that any costs claimed in relation to correcting such procedural failures will be subject to intense scrutiny. The decision reinforces that costs must be strictly proportionate to the specific issues addressed. If a party attempts to inflate their costs by including general litigation expenses in an interlocutory application, the Court will exercise its powers under RDC 38.18 to reduce the award, ensuring that the paying party is not unfairly burdened by excessive or unreasonable legal fees.
Where can I read the full judgment in Klesta Eshja v Salah Masri [2026] DIFC CFI 066?
The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0662024-1-klesta-eshja-2-hair-creators-salon-llc-v-1-salah-masri-aka-salah-mohamed-adel-al-masri-2-hair-crafters-company-ltd
CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-066-2024_20260324.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | N/A |
Legislation referenced:
- Rules of the DIFC Courts 2014 (RDC): Rule 38.18, Rule 38.21