November 07, 2022 COURT OF FIRST INSTANCE - ORDERS
Claim No. CFI 025/2022
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
DR OTHMAN ABDULLAH O ALSWAYEH
Claimant
and
GII ISLAMIC REIT (CEIC) LIMITED
Defendant
ORDER WITH REASONS OF H.E. JUSTICE NASSIR AL NASSER
UPON reviewing the Defendant’s Application No. CFI-025-2022/2 dated 11 October 2022 seeking an order to set aside the Default Judgment of H.E. Justice Nassir Al Nasser dated 22 September 2022 (the “Application”)
AND UPON the Defendant filing an Acknowledgment of Service admitting the claim dated 10 October 2022
AND UPON the Defendant filing an Admission with a request for time to pay the Judgment Amount dated 10 October 2022 (the “Request”)
AND UPON reviewing the evidence and submissions filed and recorded on the Court file
IT IS HEREBY ORDERED THAT:
1. The Application is refused.
2. The Defendant shall pay the costs of this Application.
Issued by:
Delvin Sumo
Assistant Registrar
Date of issue: 7 November 2022
At: 9:30am
Schedule of Reasons
1. The Claimant (‘‘Dr Othman’’) is a Saudi national. The Defendant (“GII”) is an investment company incorporated in the DIFC.
2. By a written sale and purchase agreement (‘‘SPA’’) dated 22 September 2019, Dr Othman agreed to sell to GII a property (the “Property”) known as Binghatti Horizons. The property, comprising of 160 residential apartments and two shops, is located in Silicon Oasis in onshore Dubai.
3. In terms of the Particulars set out in the SPA, the Purchase Price payable for the Property (the “Purchase Price”) was AED 110 million (‘‘exclusive of applicable VAT’’) comprising of he Cash Balance in the sum of AED 66 million (the “Cash Balance”) and the Subscription Amount in the sum of AED 44 million (the ‘‘Subscription Amount’’) “payable by way of issuance and allotment of the Subscription Shares to the Subscriber, such Subscription Shares to be issued on the Transfer Date”. The Subscription Shares were defined to be 13,431,224 Participating Shares, i.e. shares in GII.
4. Clause 4.1 of the SPA provided inter alia as follows:
“4. Purchase Price
4.1 The consideration payable for the sale of the Property to the Purchaser shall be the Purchase Price, which shall be satisfied and discharged in full as follows:
4.1.1 the settlement of the SIB Repayment Amount by way of Bank Manager’s Cheque issued in favour of SIB payable on the Transfer Date;
4.1.2 the Remaining Cash Balance shall be paid by the Purchaser on the Transfer Date, by way of Bank Manager’s Cheque issued in favour of the Seller; and
4.1.3 the allotment and issue of the Subscription Shares to the Subscriber on the Transfer Date.”
Clause 5 of the SPA provided that the Seller (‘‘Dr Othman’’) would transfer the Property to the Purchaser (‘‘GII’’) on the Transfer Date.
5. Clause 17.13 of the SPA provided that if GII was not listed on a stock exchange within 18 months of the Transfer Date (‘‘i.e. within 18 months after the transfer of the Property to GII under the SPA’’), GII would pay Dr Othman AED 44 million and the Participating Shares would be transferred back to GII.
6. On 26 April 2022, the Defendant filed an Application contesting the jurisdiction of the DIFC Courts (the “Jurisdiction Application”).On 31 August 2022, Justice Lord Angus Glennie issued an order dismissing the Jurisdiction Application and decided that the DIFC Courts has the Jurisdiction to hear and determine the claim.
7. On 16 September 2022, the Claimant filed a request for Default Judgment as the Defendant have failed to file its defence to the claim (the “Default Judgment”). The Default Judgment was granted in favour of the Claimant on 23 September 2022 by H.E. Justice Nassir Al Nasser.
8. The third witness statement of Mr Mohamed Thamer Yagub AlSerkal dated 11 October 2022 provides that due to the Defendant’s financial situation, the Defendant has limited available cash balance and it does not have the means to pay the Judgment Amount in one lump sum. The assets held by the Defendant are properties located onshore and are all subject to mortgages by various banks. The Defendant’s only source of income is rental income which is held in collection accounts and are subject to pledges and/or assignments in favour of the commercial bank of Dubai and Ajman Bank.
9. In the light of the aforesaid and its lack of means, the Defendant is seeking time to pay the Judgment Amount. The Defendant proposes to pay the Claimant an initial payment of AED 2,000,000 (two million dirhams) within ten (10) days of the order in partial satisfaction of the Judgment Amount. Moreover, the Defendant requests a further twelve months to raise funds by way of selling certain properties to pay the remainder Judgment Amount AED 42,000,000 (forty-two million Dirhams) by 1 October 2023.
10. The Defendant intends to put up for sale at least two of its properties from which it will use the proceeds of sale to satisfy the mortgage and the Judgment Amount. Should a sale occur before 1 October 2023, the Defendant shall pay the remainder Judgment Amount prior to 1 October 2023 and within a reasonable time of receiving the sale proceeds.
11. Rule 14.2 of the Rules of the DIFC Courts (the “RDC”) provides the following: “in any other case, the Court, on such conditions as it sees fit, set aside or vary a judgment entered under part 13 if:
1. The defendant has real prospect of successfully defending the claim; or
2. It appears to the Court that there is some other good reason why:
a. The judgment should be set aside or varied; or
b. The defendant should be allowed to defend the claim.
12. I find that the defendant has no real prospect of success for the courts to set aside the Default Judgment nor does it appear to the Court that there is some other good reason.
13. Pursuant to Part 15 of the RDC, when an admission is filed by the Defendant, the Claimant may apply for a judgment pursuant to RDC Part 13. Hence, if the Courts sets aside the Default Judgment, the Claimant has the right to re-apply for Default Judgment and it will be granted again. Therefore, setting aside the Default Judgment will only delay the process.
14. Therefore, instead of delaying the process of justice, I find that the Application shall be dismissed.