Claim No: CA-006-2014
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai
IN THE COURT OF APPEAL
BEFORE THE DEPUTY CHIEF JUSTICE SIR JOHN CHADWICK, JUSTICE SIR DAVID STEEL AND H.E. JUSTICE OMAR AL MUHAIRI
TVM CAPITAL HEALTHCARE PARTNERS LTD
ALI AKBAR HASHEMI
Hearing: 11 December 2014
Counsel: Neal Brendel, Nazanin Aleyaseen and Jennifer Garn (K&L Gates LLP) for the Appellant
Mark Beeley, Sarah Stockley and Georgina Barlow (Vinson & Elkins LLP) for the Respondent
Judgment: 16 December 2014
Transcribed from the oral judgment delivered on 16 December 2014, revised and approved by the Judges.
Summary of Judgment
|The Defendant, Mr Hashemi, appealed against the Order made on 22 May 2014 by Justice Roger Giles in which he held that the Defendant was in breach of the confidentiality agreement entered into between the parties and in breach of the obligations imposed by Article 37 of DIFC Law No. 5 of 2005, awarding damages against the Defendant in the sum of AED 250,000 as well as costs.The Defendant sought to challenge Justice Giles’ conclusions in three respects: (i) that the judge was wrong to hold that neither res judicata nor abuse of process prevented the Respondent (TVM Capital) from re-litigating or otherwise reopening issues that had already been conclusively determined in the Defendant’s favour in joint criminal and civil proceedings in courts of Abu Dhabi, a court of competent jurisdiction; (ii) that the judge was wrong to hold that an award of damages on the Wrotham Park basis enabled the Court to “guess” the amount of damages, despite there being no evidence in the record upon which damages could have been calculated; and (iii) that the judge was wrong to make what is described as an “oppressive” costs award; without any consideration of what is described as “a grossly exaggerated and wholly unsubstantiated damages claim,” of which less than 1 percent of the original USD $29 million claim was ultimately awarded by the Court.
The Court of Appeal held as regards (i): In the relevant criminal proceedings before the Bani Yas Court of First Instance in Abu Dhabi – first, none of the first, second or third defendants had been charged in relation to information disclosed by the Defendant himself or used by him for his own purposes; second, the Defendant had not been charged with the disclosure of information obtained under the confidentiality agreement and third, the Defendant had been acquitted because he could not have been held to have instigated the commission of a crime by the first, second and third defendants in circumstances where those defendants had been acquitted of that crime. Further, the claim against the Defendant in the present proceedings was not limited to the disclosure of trade secrets within the meaning of Article 379 of the Federal Penal Code, but rather was a claim in relation to the disclosure of information provided pursuant to the confidentiality agreement entered into by the parties. The Court of Appeal was not bound under Article 269 of the Federal Penal Code by any finding that the Defendant had not disclosed or misused information supplied to him under the confidentiality agreement, as that had not been an issue before the CFI in Abu Dhabi. Furthermore, issue estoppel had never been raised before the judge at trial, and he had consequently made no findings in relation to it, neither was there any issue between the Defendant and anyone in those proceedings relating to the information which he disclosed in breach of the confidentiality agreement as found by Justice Giles in the present case.
As regards ground (ii) of the appeal – the Court of Appeal held that Justice Giles’ task had been to ask himself how much the Defendant would have been prepared to pay in order to be released from the confidentiality obligation that he had undertaken – and had assessed that at the sum of AED 250,000. Though the trial judge may have put too high a value on the Defendant’s commercial credibility and reputation, his Counsel had not been prepared to advance that contention at trial and this ground was therefore also rejected.
Lastly, as regards ground (iii) – the challenge concerning the judge’s award of costs – the Court of Appeal was not constrained by the usual deference that an appeal court should pay to a judge’s conclusion on a question of costs, as, in this case, costs had been decided without having heard argument by the parties’ representatives. The trial judge’s order in relation to costs was to be varied (i) to restrict the Defendant’s liability in respect of the Claimant to 80% of those costs and (ii) to allow the Defendant to deduct from the costs payable to the Claimant an amount equal to 30% of his costs incurred in relation to attendances at trial incidental to having called Dr Asher as a witness at trial. The Defendant should not have to bear the Claimant’s trial costs insofar as they were increased by that additional wasted time. Furthermore, the Defendant should not have to bear his own trial costs in relation to that wasted period.
As an aside, the Deputy Chief Justice indicated that the taxing officer take into consideration the disproportionality between the costs expended by the Claimant and the actual amount of damages ultimately awarded when undertaking a costs assessment. The Court of Appeal expressed the provisional view that the Appellant should pay 85 percent of the Respondent’s costs of this appeal – but that the Respondent should have 7 days in which to make written representation should it wish to seek a different order. In that event the Appellant would have a further 7 days in which to respond to those representations.
This summary is not part of the Judgment and should not be cited as such
DEPUTY CHIEF JUSTICE SIR JOHN CHADWICK:
1. This is an appeal from the order made on 22 May 2014 by Justice Roger Giles in proceedings brought by TVM Capital Healthcare Partners Ltd against Ali Akbar Hashemi. The claim in the proceedings was for damages for breach of a confidentiality agreement and for breaches of the duty of confidence imposed by Article 37 of the DIFC Law of Obligations (DIFC Law No. 5 of 2005). The judge found that the Defendant, Mr Hashemi, was in breach of the confidentiality agreement and in breach of the obligations imposed by the Law, in many but not in all of the respects alleged by the Claimant; and he awarded damages against Mr Hashemi in the sum of AED 250,000. It is against that order, and the order for costs made by the judge, that Mr Hashemi appeals to this Court.
2. The underlying facts are not in dispute on this appeal: they may be taken from the judgment, which the judge handed down in writing on 22 May 2014:
(a) The Claimant, TVM Capital Healthcare Partners Ltd, to which the judge referred as “TVM Capital”, is part of the TVM Capital Group and is an investor in the healthcare markets in the UAE and elsewhere. It is based in the DIFC. TVM Capital holds all the shares in TVM Healthcare (CEIC) Ltd, (“TVM Healthcare”), an investment fund of which TVM Capital is manager. TVM Healthcare holds 39.94 per cent of the shares in PVHC Ltd, a Cypriot company; which, in turn, holds 49.9 per cent of the shares in ProVita International Medical Centre LLC (“ProVita”), an Abu Dhabi company. TVM Capital exercises de facto control over PVHC and ProVita. The Chairman and Chief Executive Officer of TVM Capital is Dr Helmut Schuehsler, who is also the Chairman of ProVita.
(b) From March 2010, the Chief Executive Officer of PVHC and its subsidiaries, including ProVita, was Mr Mark McGourty. TVM Capital wished to expand the ProVita business to elsewhere in the GCC and in 2011 it engaged Dr Peyvand Khaleghian as consultant to advise and assist in its expansion plans.
(c) Mr Hashemi is a United States national, resident in Dubai. He holds the qualification of a joint MD/MBA degree from McGill University in Canada and he has had a number of years/’ experience in healthcare investment in the United States, Europe and the Middle East; leading a team providing consultation services to a range of clients including investors in the healthcare industry.
(d) In November 2011 Dr Khaleghian, at Mr Hashemi’s request, spoke and then wrote to Dr Schuehsler, introducing Mr Hashemi as a person who had called him “to enquire about ProVita”. Dr Khaleghian told Dr Schuehsler that Mr Hashemi was interested in purchasing, or investing in ProVita.
(e) Dr Schuehsler and Mr Hashemi met on 17 November 2011. At that meeting, Mr Hashemi told Dr Schuehsler that he was acting in his own capacity; representing a wealthy UAE family which was looking to acquire an investment in the healthcare sector and had approximately US$80 million to invest. Mr Hashemi expressed interest, on behalf of the UAE family, in purchasing TVM Capital’s interest in PVHC or its interest in ProVita or in purchasing ProVita itself. Dr Schuehsler asked the identity of the UAE family which was the potential investor, but Mr Hashemi declined to disclose that information.
(f) In order that matters could proceed, TVM Capital and Mr Hashemi entered into a confidentiality agreement dated 26 November 2011, which was intended to provide protection to TVM Capital in relation to the information which it would provide to Mr Hashemi in following through the interest which he had expressed.
(g) On 30 November 2011 Mr Hashemi was provided by TVM Capital with a PowerPoint presentation by TVM Capital concerning the business and financial affairs of ProVita. That PowerPoint presentation, when reduced to paper, became a substantial document comprising some 34 pages.
3. The judge found that there had been breaches by Mr Hashemi of Clauses 1.1 and 1.2 of the confidentiality agreement. Those clauses were in these terms:
“1.1. The counterparty [Mr Hashemi] shall hold the information in strict confidence and will not disclose, copy, reproduce or distribute any of it or otherwise make it available to any person other than an authorised recipient (on condition that they will not disclose, copy, reproduce, distribute or otherwise make it available to any other person who is not an authorised recipient) without TVM’s specific prior written approval (which may be withheld, delayed or conditioned in TVM’s absolute discretion).
1.2. The counterparty and its authorised recipients shall use the information solely for the purpose of evaluating the interest and not for any other purpose.”
4. The judge then turned to address what he described as Mr Hashemi’s “general defence” to the claims made against him. He explained at paragraphs 125 to 127 of his judgment that Mr Hashemi relied upon res judicata and, as developed, abuse of process. He explained:
“ProVita initiated criminal proceedings in Abu Dhabi against Mr Hashemi, Dr Khaleghian, Mr McGourty and another former employee, alleging conspiracy to disclose or otherwise use confidential information of ProVita. The criminal proceedings were continued by the prosecuting authorities, but a claim to compensation accompanied them: it was described as a claim to AED 21,000 ‘as recompense’ and as a claim to damage ‘resulting from the crime’. The Abu Dhabi Bani Yas Court of First Instance dismissed all claims and an appeal to the Court of Appeal was dismissed. ProVita took the compensation claim to the Court of Cassation, without success.”
It was on that basis, as the judge explained, that Mr Hashemi raised his defences of res judicata and abuse of process.
5. The judge rejected those defences, saying this at paragraph 128:
“Mr Hashemi’s reliance on res judicata was misplaced: there have been no other civil proceedings between TVM Capital and Mr Hashemi in relation to misuse of confidential information or at all.”
He went on, at paragraph 129 of his judgment, to say this:
“What has sometimes been called the extended principle of res judicata, stemming from Henderson v Henderson  2 Hare 100, has been recast in Johnson v Gore Wood  2 AC 1 to a question of abuse of process. It is asked whether in all the circumstances a party’s conduct is an abuse of process: it was there held that there was not an abuse of process when a company’s proceedings against solicitors were followed by proceedings against those solicitors brought by a director and majority shareholder in the company. The burden of establishing abuse of process rests upon the party alleging it.”
The judge held that abuse of process had not been established in the present case. He explained his reasons for that conclusion at paragraphs 131 to 136 of his judgment.
6. The judge then turned to the question: what damages had been sustained by TVM Capital in consequence of the breaches of duty which he had found to be committed by Mr Hashemi. He explained that TVM Capital’s primary claim to damages was advanced on the basis adopted in Wrotham Park Estate Company Ltd v Parkside Homes Ltd  1 WLR 798 and which had become known as “Wrotham Park damages”: or, as more recently described by Mr Justice Arnold in Force India Formula One Team Ltd v 1 Malaysia Racing Team Sdn Bhd  EWHC (Ch) 616, “negotiating damages”.The judge took, as a summary of the principles, a passage from the judgment of Mr Justice Arnold in the Force India case:
“(i) The overriding principle is that the damages are compensatory: see Attorney-General v Blake  1 AC 268 at 298 (Lord Hobhouse of Woodborough, dissenting but not on this point), Experience Hendrix LLC v PPX Enterprises Inc  EWCA Civ 323;  1 All ER (Comm) 830 at 26 (Mance LJ, as he then was) and World Wide Fund for Nature v World Wrestling Federation Entertainment Inc  EWCA Civ 286;  1 WLR 455 at 56 (Chadwick LJ).
(ii) The primary basis for the assessment is to consider what sum would have been arrived at in negotiations between the parties, had each been making reasonable use of their respective bargaining positions, bearing in mind the information available to the parties and the commercial context at the time that notional negotiation should have taken place. See PPX v Hendrix at 45; WWF v World Wrestling at 55; Lunn Poly Ltd & Anr v Liverpool & Lancashire Properties Ltd & Anr  EWCA Civ 430 at 25 and Pell Frischmann Engineering Ltd v Bow Valley Iran Ltd  UK PC 045;  1 WLR 2370 at 48-49, 51 (Lord Walker of Gestingthorpe).
(iii) The fact that one or both of the parties would not in practice have agreed to make a deal is irrelevant; see Pell v Bow at 49.
(iv) As a general rule, the assessment is to be made as at the date of the breach: see Lunn Poly at 29 and Pell v Bow at 50.
(v) Where there has been nothing like an actual negotiation between the parties, it is reasonable for the court to look at the eventual outcome and to consider whether or not that is a useful guide to what the parties would have thought at the time of their hypothetical bargain: see Pell v Bow at 51.
(vi) The court can take into account other relevant factors and in particular delay on the part of the Claimant in asserting its rights: see Pell v Bow at 54”.
7. The judge then addressed, and rejected, the submission advanced on behalf of Mr Hashemi that damages on a Wrotham Park or negotiating basis could not be awarded under DIFC Law. There is, I think, no challenge to that conclusion on this appeal; but, if I am wrong on that, then I take the opportunity here to say that I am satisfied that the judge was correct to hold that damages on a Wrotham Park basis fall squarely within Articles 11 and 27 of the DIFC Damages Law.
8. Article 11 of the Damages Law is in part 2 of that Law. It relates to damages arising under the law of contract. It is in these terms:
“11. Certainty of Harm.
(1) Compensation is due only for loss, including future loss, that is established with a reasonable degree of certainty.
(2) Compensation may be due for the loss of an opportunity in proportion to the probability of its occurrence.
(3) Where the amount of damages cannot be established with a sufficient degree of certainty, the assessment is at the discretion of the court.”
Article 27 of the Damages Law is in part 3 and it relates to damages arising under the Law of Obligations. It is in much the same terms as Article 11. In particular, Article 27(3) provides, again:
“Where the amount of damages cannot be established with a sufficient degree of certainty, the assessment is at the discretion of the court.”
In the present case, there is no doubt that, on the judge’s finding of breach, TVM Capital suffered loss. The loss was the value to TVM Capital of the restriction contained in the confidentiality agreement, or imposed under the Law of Obligations, on the use of information which it, TVM Capital, had provided to Mr Hashemi under the terms of the confidentiality agreement. If, as the judge found to be the case, the amount of damages in respect of that loss could not be measured with sufficient degree of certainty, then the assessment had to be at the discretion of the court. That is what Articles 11(3) and 27(3) require.
9. After reviewing the authorities, the judge concluded at paragraph 167 of his judgment that the negotiating damages in the present case represented the price for which TVM Capital might have released or relaxed the confidentiality undertakings or consented to disclosure of the confidential information and so TVM Capital was a proper Claimant to damages to be assessed under the Wrotham Park principle.
10. The judge then turned to the task of assessing what that price might have been: that is to say, for what price might TVM Capital have been willing to release or relax the undertakings? The judge rejected the primary claim advanced on behalf of TVM Capital on the basis of the opinion of an expert witness, Dr James Asher, experienced in the valuation of intellectual property, that the value of the right lost was AED 14.5 million: that is to say, a sum of US$4.1 million or thereabouts. He rejected that evidence for the reasons which he set out at paragraphs 170 to 187 of his judgment. There is no cross-appeal by TVM Capital against the judge’s findings on this point and so it is unnecessary to consider those reasons in any detail.
11. The judge went on to make his own assessment. He explained the basis for that assessment at paragraphs 190 to 193 of his judgment. Those paragraphs are of obvious importance in the context of this appeal; and I should read them in full:
“190. Under the Damages Law loss must be established with a reasonable degree of certainty (Articles 11(1), 27(1)), but this must be read subject to the direction that ‘[w]here the amount of damages cannot be established with a sufficient degree of certainty, the assessment is at the discretion of the court’ (Articles 11(3), 27(3)). This reflects the common law position, and making a best estimate has been regarded as ‘a jury question’ (Thompson v Smith’s Shiprepairers Ltd  1 QB 405 at 444 per Mustill J). I note that in Force India the plaintiff claimed compensation of £13,771,419, but the judge concluded that ‘[l]ooking at matters in the round’ the negotiated fee would have been £25,000.
191. Negotiating damages need not attempt to reflect the gain to be made, or made, by the Defendant (in the leading detention of goods case of Strand Electric and Engineering Co Ltd v Brisford Entertainments Ltd  2 QB 246 the damages were the market rate of hire regardless of whether the Defendant made a profit from the use of the goods). In the Canadian case of Arbetus Park Estates v Fuller  74 DLR (3d) 257 the Defendant carried out building works in breach of a covenant requiring that the plans be approved by the plaintiff, and the damages were the amount saved by not having to draw up plans.
192. In the present case, the ProVita Presentation does not seem to have given Mr Hashemi any particular financing advantage. The approaches to [three other companies] did not bear fruit, investment finance was still being sought in July 2012 and the evidence did not disclose what investment or other finance was obtained for the … facilities or otherwise what was done and by whom in bringing them into operation. It is likely that any advantage to Mr Hashemi in establishing his own venture came more from the involvement of Mr McGourty and Dr Khaleghian, and perhaps others, than from the use of confidential information as I have found it. There would be some advantage from a business model and financial information from ProVita’s business, but otherwise a negotiated price for that use would reflect a saving of time and cost to Mr Hashemi in doing [the] work for himself.
193. For its part, TVM Capital would not have been prepared to sell the use of the information to a person who would be seen as a would-be competitor at a low price. (I doubt that it would have sold at all but, as I have said, I must assume that it would). But the dominant factor would be how much Mr Hashemi was prepared to pay. He went to some trouble to obtain it illicitly, including misrepresenting to TVM Capital the interest of a wealthy UAE family; ordinarily, high worth is placed on one’s credibility and he must have seen a not-insignificant value in having the information. The forecast profits to the platform company … after a start-up period, were not inconsiderable, so the contribution of having the information was to an end which Mr Hashemi must have seen as valuable. On a broad assessment, the price at which the parties would have arrived is AED 250,000.”
It was on that basis that the judge awarded damages of AED 250,000 in respect of the loss to TVM Capital arising from breaches of the confidentiality agreement which he found to have been committed by Mr Hashemi, with interest from 29 January 2012 ( which was the date on or about which those breaches were committed.
12. In the final paragraph of his judgment, the judge addressed the question of costs. He said this at paragraph 204:
“TVM Capital has largely succeeded in the proceedings, but I have not accepted its case on quantum. In my opinion, a just result is that Mr Hashemi pay the costs of TVM Capital except the costs of and incidental to obtaining Mr Asher’s reports and calling him as a witness.”
13. Mr Hashemi, in a document described as “Appellant’s notice of appeal and skeleton arguments“, seeks to challenge the judge’s conclusions in three respects:
(1) First, it is said that the judge was wrong to hold that neither res judicata nor abuse of process prevented the respondent (that is TVM Capital) from re-litigating or otherwise reopening issues that had already been conclusively determined in the appellant’s favour in joint criminal and civil proceedings in the courts of Abu Dhabi, a court of competent jurisdiction.
(2) Second, it is said the judge was wrong to hold that an assessment under Wrotham Park enabled the court to “guess” the amount of damages, despite there being no evidence in the record upon which damages could have been calculated.
(3) Third, it is said that the judge was wrong to make what is described as an “oppressive” costs award; without any consideration of what is described as “a grossly exaggerated and wholly unsubstantiated damages claim”, of which less than 1 per cent of the original US$29 million claim was ultimately awarded by the court.
14. In support of the first of those grounds, Mr Hashemi seeks to rely in this court on Article 269 of the UAE Federal Criminal Procedure Code, UAE Federal Law No 35 of 1992. No reliance was placed on that article in the court below and it is unsurprising, therefore, that the judge does not refer to it. The article is in these terms:
“269. The conclusive criminal judgment rendered on the merits of a criminal action declaring innocence or guilt has res judicata and is binding on the civil courts in cases not yet settled by a conclusive judgment as concerns the perpetration of the crime, its legal characterisation and its imputation to its perpetrator. The judgment declaring innocence has the same res judicata whether based on the negation of the charge or lack of sufficient proof, but not if grounded on the basis that the fact is not penalised by law.”
15. In that context, the court was taken to observations in the judgment of the Court of Cassation in Petition 50 of 2012, a petition in the proceedings of Dabas & Anr v Tameer Holdings Investment & Anr. In the course of its judgment, the Court of Cassation said this:
“It is also a rule of law pursuant to Article 50 of the Evidence Law and Article 269 of the Criminal Procedures Law that a criminal judgment issued in the criminal claim shall be considered or deemed conclusive before the civil court in the matters which were necessarily resolved by it and any matter that relates to the occurrence of the act constituting the common basis between the criminal claim and the civil claim and in the legal characterisation and attributing it to the doer. If the criminal court resolved the said matters, the civil court must comply with them in the civil claims relating to them and shall not address them again as this would result in the issuance of a judgment that is inconsistent with the finality of the judgment issued in the criminal claim, which finality is enforceable against all.”
16. I turn, therefore, to examine the proceedings brought before the Bani Yas Court of First Instance sitting in the Emirate of Abu Dhabi. As indicated by the judge, those proceedings arose out of a criminal claim brought against Mr McGourty, Dr Khaleghian, a Miss Theresa Livartis and Mr Hashemi. The first three defendants – Mr McGourty, Dr Khaleghian and Miss Livartis – were charged with disclosure of trade secrets contrary to Article 379 of the Federal Penal Code. The fourth defendant, Mr Hashemi, was charged with instigating and assisting in the disclosure of secrets by the first three defendants.
17. In the course of its judgment, the Court of First Instance set out the four elements that the prosecution needed to establish in order to found a charge under Article 379. The Court said this:
“The crime of disclosure of secrets provided by Article 379 of the Penal Code requires four elements to be measured: first, the material element represented in disclosure and use of secrets for a personal benefit or for the benefit of another person; second, that there is a secret, whether by its nature or by the circumstances surrounding it; third, that the defendant knew the secret by virtue of his profession; fourth, that the secret was disclosed intentionally.”
18. In addressing the charge against the first and second defendants, and dismissing it, the Court said this:
“Was the information disclosed by the first and second Defendants confidential information relating to the claimant company? The answer is no as the first and second defendants are experts in the field of provision of advice and management and the nature of their work is similar to that of the claimant. Thus they provided the information they gained from their experience and the information concerning a medical centre is not confidential information because all medical centres of a similar nature have similar plans and programmes and such plans were provided to the claimant company by the said defendants, which means that the said defendants did not have access to such plans by virtue of the nature of their work but rather they were prepared by them. They were not secrets in view of the fact that they were reviewed by the board of directors during regular meetings.”
The Court went on to address the position of the third defendant; and found that the information and data was deleted from her laptop without identifying the type of information transferred or deleted by her and whether the information was sent to corporate or natural persons to cause damage. So it found that no charge was established against any of the first three defendants.
19. The court then turned to the case against the fourth defendant, Mr Hashemi. It said this:
“As to the charge addressed to the fourth defendant, we find that the charge is connected to the charge addressed to the first, second and third defendants and the court decides that the evidence submitted in the claimant’s statement, supported by the statement of the witness Adal al Zarumi and the witness Wissam Safi Darwish is insufficient to convict the first, second and third defendants in view of the fact that the witness Adal al Zarumi is a shareholder of the Claimant company and that the second witness did not submit evidence against the first, second and third defendants and his statement against the fourth defendant does not constitute evidence as he failed to support the facts of accusation of instigation by the fourth defendant.”
20. It can be seen, therefore, first, that none of the first, second or third defendants were charged in relation to information disclosed by Mr Hashemi himself or used by Mr Hashemi for his own purposes; second, that Mr Hashemi was not charged with the disclosure of information obtained under the confidentiality agreement; and third, that Mr Hashemi was acquitted because he could not be held to have instigated the commission of a crime by the first, second and third defendants in circumstances where those defendants had been acquitted of that crime.
21. It must be kept in mind, further, that the claim against Mr Hashemi in the present proceedings is not the disclosure of trade secrets within the meaning of Article 379 of the Federal Penal Code. It is a claim in relation to the disclosure of information provided pursuant to the confidentiality agreement. “Information” is a defined term for the purposes of the confidentiality agreement made between TVM Capital and Mr Hashemi. It means:
“…all information of whatever nature relating wholly or partly to TVM or the Fund or the affairs of any members of TVM’s Group (including the Fund and its Group) or relating to a third party to which TVM or the Fund is under confidentiality obligations, which:
(a) is supplied by or on behalf of any member of TVM’s Group (including the Fund and its Group) to the counterparty or its respective authorised recipients whether orally, in writing or otherwise and whether before or after the date of this letter;
(b) is obtained by the counterparty or its authorised recipients in writing or orally, through or following discussions with the management, employees, agents or advisers of any member of TVM’s Group;
(c) is acquired by observation or attendance by the counterparty or its authorised recipients at the offices or other premises of any member of TVM’s Group (including the Fund and its Group); or
(d) consists of any reports, analyses, compilations, studies or other documents prepared by, on behalf of or for the counterparty and which contain, derive from or otherwise reflect any information described in (a), (b) and (c) above.”
“Information” as defined for the purposes of the confidentiality agreement may include trade secrets; but it is not restricted to trade secrets. It covers any information provided by TVM Capital to Mr Hashemi pursuant to the confidentiality agreement, subject to certain exceptions set out in clause 2 which are not material in the present context.
22. Returning, therefore, to Article 269 of the Federal Criminal Procedure Code, the question posed is in respect of which matters is the judgment of the Abu Dhabi Bani Yas Court binding on the civil courts of the UAE, including this Court. In answer to that question, I would hold, first, that the Court is bound by the finding that Mr McGourty, Dr Khaleghian and Miss Livartis were not guilty of themselves disclosing trade secrets; and, second, that the Court is bound by the finding that Mr Hashemi did not commit the crime with which he was charged (that is to say, he did not instigate Mr McGourty, Dr Khaleghian or Miss Livartis to commit the crimes of disclosing trade secrets with which they were charged). But this Court is not bound under Article 269 by any finding that Mr Hashemi did not disclose or misuse information supplied to him under the confidentiality agreement. That was not an issue that was before the Court of First Instance in Abu Dhabi. It was unnecessary for that Court to make any finding on that question; and it did not do so.
23. In those circumstances, I am satisfied that the attempt to rely on Article 269 of the Federal Criminal Procedural Code – which, as I have said, was raised for the first time in this Court – must be rejected.
24. I am satisfied, also, that there is no substance in the alternative way in which this ground is put: that is to say, by reliance upon issue estoppel. Again, issue estoppel was never raised before the judge at the trial; and he made no findings in relation to it. But, as he pointed out, there was no issue between TVM Capital and Mr Hashemi to be decided before the CFI Court in Abu Dhabi. Those were proceedings brought by the prosecutor and ProVita and they were proceedings essentially relating to the disclosure of material by Mr McGourty, Dr Khaleghian and Miss Livartis. There was no issue between Mr Hashemi and anyone in those proceedings relating to the information which he disclosed in breach of the confidentiality agreement as found by the judge in this case. That, as I would emphasise, is information which was provided to him by ProVita at the time of the presentation in January. So I reject that first challenge.
25. The second challenge was to the basis upon which the judge assessed quantum. As I have indicated, there is, in my view, no doubt that the judge was entitled – indeed, required – to make the best estimate that he could of the price that would have been agreed in the course of a hypothetical negotiation which, as the judge correctly observed, would not ever have taken place in reality. The judge’s task, as he observed at paragraph 193 of his judgment, was to ask himself how much Mr Hashemi would be prepared to pay in order to be released from the confidentiality obligation that he had undertaken.
26. As the judge pointed out, Mr Hashemi was prepared to lie in order to obtain the information which was the subject of that confidentiality restriction. He was prepared to lie because he told TVM Capital – wrongly – that he was acting in the interests of a wealthy UAE family. In fact, he was acting entirely in his own interests. There was no wealthy UAE family interested at the time. The judge had to ask himself, therefore, how much it was worth to Mr Hashemi to tell lies. He took the view that commercial credibility usually has a value; and that a person would not be expected to put his credibility – and so his own commercial integrity – at risk unless the prize to be obtained by the telling of he lies was worth something to him. If a businessman tells lies in the course of negotiations with another party, he runs the risk that future parties dealing with him will regard him as dishonest. That is likely to make it difficult for him to gain the trust of future parties with whom he wishes to negotiate. So, in order to run that risk, there has to be a financial incentive.
27. When Counsel was asked in this Court what price Mr Hashemi put on his own credibility and integrity, unsurprisingly, he declined to answer. The judge put AED 250,000 on that feature. I would not myself disagree with the judge’s view; even if this were not essentially a jury question and it were open to this Court to take a different view. Mr Hashemi is, in effect, complaining because the judge found that he would not be prepared to lie for less than AED 250,000. It may be that the judge put too high a value to Mr Hashemi of his commercial credibility and reputation. But his Counsel is not prepared to advance that contention; and I reject it.
28. The third challenge is to the judge’s award of costs. In this respect, it does seem to me that the judge fell into error: in that he handed down his judgment on an occasion where there was no scope for argument. The judge did not consider the question of costs at a hearing: he reached a conclusion as to costs without having heard argument on the question of costs. In that situation, we are not, I think, constrained by the usual deference that an appeal court should pay to a judge’s conclusion on a question of costs reached after argument. It seems to me that this is a case in which the question of costs below is enlarged in this Court.
29. It would be more satisfactory in cases of this nature if the trial judge, when handing down a written judgment, simply indicated his provisional view as to how costs should be awarded; and invited the parties to make representations within a limited time – perhaps 7 or 14 days – if they wished to challenge that provisional view. It is necessary to balance the inconvenience and expense of requiring the parties to come to court and argue costs against the need for fairness which gives each party an opportunity to make representations about costs before a court makes its ruling. If the practice that I have indicated is not followed; then the likely outcome is the matter comes before this Court – in order to have the argument about costs which should have taken place in the court below – which involves further expenditure of time and costs which could have been avoided.
30. Addressing the question of costs de novo, therefore, we were invited to take the view that RDC 38.8 requires that the court must have regard to all the circumstances, including the conduct of all the parties. Rule 38.9(4) provides that “conduct” includes a case where the Claimant who has succeeded in his claim has exaggerated that claim. It also includes the conduct of both parties in the course of the proceedings.
31. There are two striking features about this case in this context. The first is that the Claimant ended up with an award of damages which was very substantially less than the amount that had been claimed. The original damages claim was in the region of US$29 million. By the time Dr Asher had made his final report, the claim had come down to about US$4.1 million. The outcome was an award of damages of AED 250,000 (about US$68,000): an amount which, as I have said, was very substantially less than what had originally been claimed.
32. The second very striking feature is that the Defendant, at no stage, thought it sensible to put in a Part 32 offer indicating what he would be willing to pay by way of damages. Rather, he chose to fight the action; without, it seems, any thought of compromise. So the Defendant failed to protect his position as to costs by the means for which the rules of court provide. It is pertinent to have in mind that, under Rule 32.49, a Claimant who fails to obtain a judgment which was more advantageous than a Part 32 offer made by the Defendant runs the risk that the offeror obtains all the costs from the date upon which the offer expires, together with interest at a substantial rate.
33. The judge did recognise that some allowance should be made in recognition of the time wasted by the Claimant’s decision to call Dr Asher as a witness; in that his evidence was rejected. In my view, the appropriate order for costs in this case would be to vary the order made by the judge so that paragraph 2 of that order reads as follows:
“2. Subject to paragraph 3 below, the Defendant shall pay the Claimant its costs of these proceedings, to be assessed if not agreed; and that in assessing those costs, the court shall disallow (i) the costs of and incidental to obtaining the reports of Dr Asher and calling him as a witness at trial and (ii) 20 per cent of the costs incurred by the Claimant in relation to its attendances at the trial.”
And by adding a further paragraph in these terms
“3. The Defendant may deduct from the costs payable to the Claimant under paragraph 2 above an amount equal to 30 per cent of his costs incurred in relation to attendances at the trial.”
34. The basis for that variation is this. The time spent in hearing and challenging Dr Asher’s evidence at trial was, we were told, some two-and-a-half hours out of a total time spent at the trial of about two-and-a-half days. That is to say, about 20 per cent of the time at trial was spent in relation to the evidence of Dr Asher. The Defendant, in my view, should not have to bear the Claimant’s trial costs insofar as they were increased by that additional wasted time. But, further, the Defendant should not have to bear his own trial costs in relation to that wasted period; and should have some allowance for the time likely to have been spent in preparing for the cross-examination of Dr Asher. It is for that reason that I would disallow 20 per cent of the Claimant’s trial costs; but allow a deduction by the Defendant of a rather higher figure – 30 per cent of his trial costs – in order to achieve a fair balance without the need for a detailed point-by-point investigation of what time was actually spent in preparation.
JUSTICE SIR DAVID STEEL:
35. I agree. I have nothing useful to add.
H.E. JUSTICE OMAR AL MUHAIRI:
36. I agree. I have nothing to add.
DEPUTY CHIEF JUSTICE SIR JOHN CHADWICK:
37. I would add this; although not as part of the order. The Taxing Officer should have regard when assessing costs in this matter to the fact that costs incurred by the Claimant – which are said to amount to some US$880,000 excluding the Dr Asher costs – were expended in recovering AED 250,000. There is an obvious disproportionality between the costs expended and the amount recovered. That ought to be reflected in the process of assessment.
38. We said, at the conclusion of the argument when the matter was before us, that we would indicate our provisional view as to how the costs of this appeal should fall; recognising that there would be no advocate appearing on behalf of the respondent who would address us on that matter when judgment was delivered. Our provisional view is that the partial success of the appellant should be reflected in a discount from the usual order that would be made on an unsuccessful appeal. The appellant has succeeded in obtaining a variation of the costs order; although not the variation which he sought (which was an order that there should be no order as to costs). In my view, the appropriate discount would be 15 per cent. Accordingly, my provisional view is that the appellant should pay 85 per cent of the respondent’s costs of this appeal; but I would direct that the respondent should have seven days in which to make written representations if it seeks a different order from that which I have indicated. If it does so, then the appellant will have a further seven days in which to respond to those representations.
Date of Issue: 27 January 2015