This order provides a practical illustration of the Registrar’s discretion in performing a summary assessment of costs under the Rules of the DIFC Courts (RDC) when parties have reached a settlement via a Consent Order.
What was the specific monetary dispute regarding the First Defendant’s costs in IGCF General Partner v KPMG Lower Gulf?
The litigation, registered under CFI 080/2019, involved a dispute between IGCF General Partner Limited (the Claimant) and KPMG Lower Gulf Limited (the First Defendant) alongside KPMG LLP (the Second Defendant). Following the resolution of the underlying substantive dispute through a Consent Order dated 25 August 2021, the parties remained at odds over the quantum of legal costs to be paid by the Claimant to the First Defendant. The First Defendant submitted a Statement of Costs seeking a total of AED 209,094.16.
The Claimant challenged the full amount, necessitating an assessment by the Registrar. The Registrar noted that the Claimant had entered into the settlement agreement with full knowledge of the potential cost exposure. As the Registrar observed:
The First Defendant claimed a total of AED 209.094.16 in costs. A fair assessment, in my view, was to grant the First Defendant 80% of its costs, having regard to the reasonableness and proportionality of costs incurred as against the complexity of this claim.
The final determination resulted in a downward adjustment of the claimed amount, reflecting the Registrar's assessment of what was proportionate to the complexity of the proceedings.
How did Registrar Nour Hineidi exercise her authority in the Court of First Instance to assess these costs?
The assessment was conducted by Registrar Nour Hineidi within the DIFC Court of First Instance. The order was issued on 21 February 2022, following a review process that included the First Defendant’s Statement of Costs (dated 8 July 2021), the Claimant’s Response (filed 8 September 2021), and the First Defendant’s subsequent reply (filed 16 September 2021). The Registrar acted in her capacity to resolve the outstanding ancillary issue of costs that remained after the parties had settled the primary claim.
What were the specific arguments advanced by IGCF General Partner and KPMG Lower Gulf regarding the Statement of Costs?
The Claimant’s position, articulated in its response to the Statement of Costs, sought to limit the recovery of the First Defendant’s legal expenses. While the specific legal arguments were not detailed in the final order, the Registrar noted that the Claimant was fully cognizant of the First Defendant's cost position at the time the Consent Order was executed.
Conversely, the First Defendant maintained that the costs incurred were necessary and reasonable in the context of the litigation. The Registrar highlighted the Claimant's awareness of the financial implications of the settlement:
In entering into the Consent Order, the Claimant was aware of the quantum of costs claimed by the First Defendant.
This awareness served as a foundational element for the Registrar’s decision to proceed with a summary assessment rather than requiring a more protracted or detailed assessment process.
What was the precise doctrinal issue the Registrar had to resolve regarding the basis of cost assessment?
The central legal question before the Registrar was whether the costs should be assessed on a standard basis or an indemnity basis, and how to apply the RDC criteria for summary assessment in the absence of an express agreement between the parties. Because the Consent Order did not specify an indemnity basis for the recovery of costs, the Registrar was required to apply the default standard basis. The issue was not merely the calculation of figures, but the application of the proportionality test under the RDC to ensure that the final award was fair and reasonable given the nature of the claim.
How did Registrar Nour Hineidi apply the RDC r.38.21 test to determine the final cost award?
The Registrar opted for an immediate, summary assessment rather than a detailed assessment. In doing so, she relied upon the factors enumerated in RDC r.38.21 to evaluate the reasonableness and proportionality of the costs claimed. By weighing the complexity of the claim against the total amount sought, the Registrar determined that a reduction was appropriate to align the award with the court's expectations of proportionality.
Given that the basis of my assessment was immediate and not detailed, I have applied the factors set out at RDC r.38.21 to broadly arrive to a fair and reasonable assessment of the First Defendant’s costs.
This approach allowed the court to dispose of the costs issue efficiently without the need for a full-scale taxation of the bill of costs, effectively balancing the First Defendant's right to recover costs with the Claimant's right to pay only what is reasonable.
Which specific RDC rules and legal principles governed the Registrar’s assessment in CFI 080/2019?
The Registrar’s decision was primarily governed by the Rules of the DIFC Courts (RDC). Specifically, the Registrar cited RDC r.38.20(1), which establishes that in the absence of an order or agreement for indemnity costs, the standard basis of assessment applies. Furthermore, the Registrar utilized RDC r.38.21 as the primary framework for the summary assessment. This rule requires the court to consider the proportionality of the costs to the complexity of the case, ensuring that the amount awarded is not excessive relative to the work performed.
How did the Registrar interpret the standard basis of assessment in the absence of an indemnity order?
The Registrar interpreted the standard basis as a requirement to resolve any doubt as to whether costs were reasonably incurred or reasonable in amount in favor of the paying party. By applying RDC r.38.21, the Registrar effectively filtered out costs that did not meet the threshold of proportionality. The decision reinforces that the standard basis is the default position in DIFC litigation, and parties seeking indemnity costs must ensure such terms are explicitly included in their settlement agreements or Consent Orders to avoid the Registrar’s discretionary reduction during a summary assessment.
What was the final disposition and the specific monetary relief ordered by the Registrar?
The Registrar ordered the Claimant to pay the First Defendant’s costs in a reduced amount, reflecting the 80% assessment of the total claim. The final order mandated the payment within a strict timeframe.
The Claimant shall pay the First Defendant’s costs in the amount of AED 167,275.32 within 14 days from the date of this order.
This figure represents exactly 80% of the original AED 209,094.16 claimed by the First Defendant. No further interest or additional costs were awarded in this specific order, and the matter of costs was effectively concluded upon the issuance of this ruling.
How does this order influence future practice regarding cost recovery in DIFC Consent Orders?
This case serves as a reminder to practitioners that the execution of a Consent Order does not automatically guarantee the recovery of the full amount of costs listed in a Statement of Costs. Litigants must anticipate that the Registrar will exercise independent judgment under RDC r.38.21 to assess the proportionality of those costs. Practitioners should be prepared to justify the reasonableness of their costs even when a settlement has been reached, and should explicitly negotiate the basis of cost recovery (e.g., indemnity basis) within the Consent Order if they wish to avoid a summary assessment that may result in a percentage reduction.
Where can I read the full judgment in IGCF General Partner v KPMG Lower Gulf [2022] DIFC CFI 080?
The full order can be accessed via the official DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-080-2019-igcf-general-partner-limited-v-1-kpmg-lower-gulf-limited-2-kpmg-llp-2
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external case law cited in the order. |
Legislation referenced:
- Rules of the DIFC Courts (RDC) r.38.20(1)
- Rules of the DIFC Courts (RDC) r.38.21