September 06, 2023 court of first instance - Orders
Claim No. CFI 025/2023
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
(1) MARKO KRALJ
(2) BARBARA KRALJ
Claimants
and
(1) ROYAL VISION INTELLIGENT FUND LIMITED
(2) ROYAL VISION HOLDING
(3) ROYAL VISION HOLDING LIMITED
(4) ROYAL VISION CAPITAL (DIFC) LIMITED
(5) DANYLO SHAMATAVA
(6) STEFAN FRIEB
Defendants
ORDER OF JUSTICE MICHAEL BLACK
UPON the Request for Default Judgement dated 2 June 2023 (the “Request for Default Judgement”)
AND UPON the Order of H.E. Justice Nassir Al Nasser refusing the Request for Default Judgement dated 14 June 2023 (the “Order”)
AND UPON the Claimants’ Appeal Notice dated 19 July 2023 seeking permission to appeal against the Order (the “PTA”)
AND UPON the Claimants’ Application No. CFI-025-2023/1 dated 22 August 2023 seeking retrospective extension of time to file the PTA (the “Application”)
AND UPON the Order of Justice Michael Black dated 1 September 2023 granting the Application
IT IS HEREBY ORDERED THAT:
1. The PTA is allowed.
2. It is declared that the Defendants and each of them was properly served with the claim form on 28 April 2023.
3. In the alternative, under RDC 9.31 service on all of the Defendants by email is permitted and it is declared that the claim form was considered served on each of the Defendants on 28 April 2023.
4. The Defendants and each of them have failed to file an acknowledgement of service within the relevant time for doing so and the Claimants are entitled to default judgment under RDC 13.4.
5. The appeal against the Order is allowed and the Request for Default Judgment is granted
6. The Defendants shall jointly and severally pay to the Claimants within 14 days from the date of this Order the sum of USD 278,934.94.
7. The Defendants shall pay to the Claimants the costs of the proceedings to be assessed by the Registrar if not agreed and added to the sum of USD 278,934.94 (together, the "Judgment Sum”).
8. The Judgment Sum shall carry simple interest at the rate of 9% per annum from the date of this Order until payment in accordance with Practice Direction No 4 of 2017 – Interest on Judgments.
Issued by:
Delvin Sumo
Assistant Registrar
Date of Issue: 6 September 2023
At: 2pm
SCHEDULE OF REASONS
1. This is an application by Appeal Notice issued 19 July 2023 (which the Court has declared was filed within time by separate order) seeking permission to appeal the order of H.E. Justice Nassir Al Nasser made 14 June 2023 refusing the Claimant’s request for a Default Judgment under Rules 13.(1) and 13.1(2) of the Rules of the DIFC Courts (the “RDC”).
2. On 17 March 2023, the Claimants Marko Kralj and Barbara Kralj commenced proceedings by Claim Form and Particulars of Claim verified by Statement of Truth against (1) Royal Vision Intelligent Fund Limited, (Formerly) Royal Vision Capital Limited, a company registered in the British Virgin Islands, (2) Royal Vision Holding, an entity carrying on business in the DIFC, (3) Royal Vision Holding Limited, an British Virgin Islands entity carrying on business in the DIFC, (4) Royal Vision Capital (DIFC) Limited, a DIFC company, (5) Danylo Shamatava alleged to be the current owner and CEO of the First, Second, Third and Fourt Defendants, and (6) Matjaz Zadravec, alleged to be former owner and CEO of the First, Second, Third and Fourth Defendants, and (7) Stefan Frieb, alleged to be the former Director and Shareholder of the First, Second, Third and Fourth Defendants and still remaining Shareholder of part of the 10% of the remainder of the Shares.
3. In summary the Particulars of Claim allege:
1. The Claimants entered into a Capital Investment Management Proprietary Partnership Agreement given Contract No. CiM-MBK-04062017 dated 4 June 2017 (the “Agreement”) executed in the DIFC at the offices of ‘Royal Vision Holding’ and/or ‘Royal Vision Group’, which comprised the First, Second, Third and Fourth Defendants. Annexed to the Particulars of Claim is a copy of the Agreement, it named the First Defendant as Asset Manager, the Second Defendant as “Executor” with an address in the DIFC and directed payments into a Dubai bank account in the name of the Third Defendant. It was signed by the Sixth Defendant over a seal in the name of the Second Defendant with an address in the DIFC. Each page of the Agreement was printed on paper with an address in the DIFC.
2. The Agreement stated that the First, Second, Third and Fourth Defendants, carrying on business in the DIFC, in particular the Second Defendant and/or the Third Defendant (as the Executor), would co-invest funds into a “Proprietary Investment Account” managed by the First Defendant.
3. The Claimants, on the basis of the representations made by the First, Second, Third and Fourth Defendants, collectively referred to as the Royal Vision Group, invested sums with the First, Second, Third and Fourth Defendants. The Claimants received a welcome email in the name of the Royal Vison Group dated 6 July 2017 a copy of which is annexed to the Particulars of Claim.
4. The First, Second, Third and Fourth Defendants failed to honour the Claimants’ repayment requests. Responses to payment requests by email are exhibited to the Particulars of Claim. They are in the name of the First Defendant with an address in the DIFC and bear the words “Royal Vision Capital, Limited is a member of ROYAL VISION GROUP”.
5. The Sixth and Seventh Defendants were guilty of fraud. Annexed to the Particulars of Claim are investment statements and email exchanges between the First Claimant and the Sixth Defendant in a language the Court does not recognise and which (unhelpfully) have not been translated into English. The emails from the Sixth Defendant do however have a signature block in English including the words “Royal Vision Capital (DIFC)” above a DIFC address and “Royal Vision Capital (DIFC) is a member of ROYAL VISION GROUP”.
6. In March 2020, the Defendants purported to suspend redemptions and in May 2020 claimed that control of the Group had changed with the Fifth Defendant acquiring substantially all of the shares in the First, Second, Third and Fourth Defendant and becoming their CEO. There is exhibited to the Particulars of Claims a “To Whomever it may concern” notice from Ibrahim Al Banna Advocates & Legal Consultants, Office 402-403, al Saqr Business Tower, Sheikh Zayed Road, U.A.E. claiming that –
“This is to inform you that vide Share Purchase Agreement dated 16th day of January 2020, Royal Vision Capital Limited, Royal Vision intelligent Fund Limited, Royal Vision Capital DIFC Limited, Royal Vision Asset Management DIFC Limited sold 100% of their shares and Royal Vision Holding Limited sold 90% of their shares and 100% of IP Rights on an as is where is basis with all assets and liabilities to Mr. Danylo Shamatava.
With the signing of the Share Purchase Agreement and the transfer of the shares, the rights and liabilities of the Group was transferred to the new Board of Directors.”
7. In June 2020, the Fifth Defendant indicated that the Claimants would receive a payout of their investment.
8. On 18 July 2020, the Claimants received a draft Settlement Agreement pre-dated 15 July 2020 by email from the Fifth Defendant in the names of the First, Third, Fourth and Fifth Defendants in order to settle all disputes against Royal Vision Group on the basis that Royal Vision Group will pay the Claimants the sum of USD 276,100.00 inclusive of interest, costs and applicable taxes by wire transfer to registered bank account scheduled for 31 July 2020 but not later than 60 days after the signed agreement. It was signed by the Fifth Defendant.
9. The Claimants did not sign the Settlement Agreement as it meant that they would withdraw all regulatory complaints and indemnify the Defendants in respect of the same with no guarantee from the Defendants with respect to payment.
4. Accordingly, the Claimants, claimed payment of the sum of monies owed on 1 February 2020, calculated as USD 278,934.94 to include accrued interest and damages, legal costs, and expenses.
5. On 2 June 2023, the Claimants issued a Request for Default Judgment on the basis that the Defendants had not filed either an acknowledgment of service, an admission or a defence to the claim and the time for doing so had expired.
6. On 14 June 2023, H.E. Justice Nassir Al Nasser (the “Learned Judge”) refused the Request for Default Judgment without a hearing on the grounds that the Court was not satisfied that the conditions of RDC 13.22 and RDC 13.23 had been met and the Claimants had not submitted evidence, as required by RDC 13.24, that (i) the claim is one that the DIFC Courts have power to hear and decide; (ii) no other court has exclusive jurisdiction to hear and decide the claim; and (iii) the claim has been properly served in accordance with RDC 13.22/13.23.
7. The material parts of RDC Rule 13 provide:
“13.22
On a request for default judgment the Court must be satisfied that:
(1) the claim form has been served on the defendant (a certificate of service on the Court file will be sufficient evidence);
(2) either the defendant has not filed an acknowledgment of service or has not filed a defence and that in either case the relevant period for doing so has expired;
(3) the defendant has not satisfied the claim; and
(4) the defendant has not returned an admission to the claimant under Rule 15.14 or filed an admission with the Court under Rule 15.24.
13.23
On a request where the defendant was served with the claim outside the jurisdiction and the defendant has not acknowledged service, the evidence must establish that:
(1) the claim is one that the Court has power to hear and decide,
(2) no other court has exclusive jurisdiction to hear and decide the claim, and
(3) the claim has been properly served.
13.24
Evidence referred to in Rule 13.23 above must be by affidavit.”
8. The Learned Judge found:
1. The Defendants had failed to file an Acknowledgment of Service or a Defence to the claim (or any part of the claim) with the DIFC Courts and the relevant time for so doing had expired in accordance with RDC 13.4.
2. The Defendants had not: (i) applied to the DIFC Courts to have the Claimants’ statement of case struck out under RDC 4.16; or for immediate judgment under RDC Part 24 (RDC 13.6(1)); (ii) satisfied the whole claim (including any claim for costs) on which the Claimants were seeking judgment; or (iii) filed or served on the Claimants an admission under RDC 15.14 or 15.24 together with a request for time to pay in accordance with RDC 13.6(3).
3. The Claimants filed a Certificate of Service in accordance with RDC 9.43 on 19 May 2023.
4. The DIFC Courts were not satisfied that the conditions of RDC 13.22 and RDC 13.23 have been met.
5. The Claimants had not submitted evidence, as required by RDC 13.24, that (i) the claim is one that the DIFC Courts have power to hear and decide; (ii) no other court has exclusive jurisdiction to hear and decide the claim; and (iii) the claim has been properly served in accordance with RDC 13.22/13.23.
9. I regret that I differ with the Learned Judge’s overall conclusion:
1. He found that RDC 13.22(1) had not been satisfied. By RDC 9.2(4) a document may be served by means of electronic communication. By RDC 9.3(1)(a) the party who is to be served or his legal representative must previously have expressly indicated in writing to the party serving that he is willing to accept service by electronic means. By RDC 9.3(2)(b) the following shall be taken as sufficient written indication - e-mail address or electronic identification set out on a statement of case or a response to a claim filed with the Court. The Learned Judge was quite correct that these provisions had not been satisfied.
2. However, by RDC 9.8 a document to be served may be served personally except in circumstances that do not apply in the present case. By RDC 9.11 a document is served personally on an individual by leaving it with that individual and by RDC 9.12 a document is served personally on a company or other corporation by leaving it with a person holding a senior position within the company or corporation. By RDC 9.15 a party must give an address for service within the DIFC or Dubai. A physical address in Dubai or the UAE will not be required if an email address is given. By RDC 9.17(3) any document to be served by means of electronic communication must be transmitted to the address for service given by the party to be served. By RDC 9.19 where no legal representative is acting for the party to be served and the party has not given an address for service, the document must be transmitted in the case of an individual to the usual or last known residence, in the case of a Company registered in the DIFC to any place of business of the company within the DIFC or Dubai which has a real connection with the claim or any place within the DIFC or Dubai where the corporation carries on its activities, and in the case of any other company or corporation to any place of business of the company within the DIFC or Dubai.
3. In accordance with RDC 9.15, I read the places of service in RDC 9.19 to include transmittal by email to an email address provided by the individual or company. In the present case, each of the Defendants was served by email at an address provided by them as established by the Certificate of Service filed on 19 May 2023. By RDC 9.27 service was considered to have taken place on 28 April 2023 (not 27 April 2023 as shown in the Certificate). Accordingly, the date for Acknowledgement of Service under RDC 11.5 was 14 days later, namely 12 May 2023 (not 11 May 2023 as stated in the affidavit of Ms Grainger filed in support of the request for a default judgment on 12 June 2023). I am therefore of the view that service of the claim form on all Defendants was effected properly by email on 28 April 2023 and that RDC 13.22(1) was satisfied. I do not consider it was necessary to serve the First Defendant out of the jurisdiction as it is clear on the evidence that the First Defendant had a place of business in the DIFC within the meaning of RDC 9.19
4. If the First Defendant did have to be served out of the jurisdiction, I agree that the Learned Judge that the provisions of RDC 13.23(3) had not been satisfied. RDC 9.54 provides that where a claim form is to be served out of the DIFC or Dubai, it may be served by any method permitted by the law of the place in which it is to be served. The affidavit of Ms Grainger directed to service on the First Defendant does not address the question of whether the First Defendant was served by a method permitted by the law of the British Virgin Islands, being the place of its incorporation.
10. If I am wrong in my analysis that all Defendants were properly served by email and so the provisions of RDC 13.22(1) were satisfied, the evidence before the Court demonstrates a strongly arguable case of fraud by the individual Defendants utilising the corporate Defendants and pursuant to the Court’s power under RDC 4.2(13) to take steps or orders for the purpose of managing the case and furthering the overriding objective, I would be minded to make an order under RDC 9.31 permitting service on all of the Defendants by email and directing that the claim form was considered served on each of the Defendants on 28 April 2023.
11. In the circumstances I make the following orders:
1. The Claimants are given permission to appeal under RDC 44.19 in that the Court considers that the appeal has a real prospect of success;
2. The appeal is allowed and it is declared that the Defendants and each of them was properly served with the claim form on 28 April 2023;
3. In the alternative, under RDC 9.31 service on all of the Defendants by email is permitted and it is declared that the claim form was considered served on each of the Defendants on 28 April 2023;
4. The Defendants and each of them have failed to file an acknowledgement of service within the relevant time for doing so and the Claimants are entitled to default judgment under RDC 13.4;
5. The Defendants and each of them are jointly and severally liable to pay to the Claimants within 14 days from the date of this Order the sum of USD 278,934.94;
6. The Claimants are entitled to their costs of the proceedings to be assessed by the Registrar if not agreed, and added to the sum of USD 278,934.94;
7. The Judgment Sum shall carry simple interest at the rate of 9% per annum from the date of this Order until payment in accordance with Practice Direction No 4 of 2017 – Interest on Judgments.