December 15, 2021 court of first instance - Orders
Claim No. CFI 031/2021
IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
HIS EXCELLENCY HAMAD SUHAIL AL KHAILI
Claimant
and
BNP PARIBAS WEALTH MANAGEMENT (DIFC) LIMITED
Defendant
ORDER OF JUSTICE SIR JEREMY COOKE
UPON the Defendant’s Application No. CFI-031-2021/1 dated 30 September 2021 seeking the Claimant’s claim be dismissed by way of an immediate judgment (the “Application”)
AND UPON reviewing the Defendant’s evidence in support of the Application and the Claimant’s response in opposition to the Application
AND UPON hearing from the Defendant’s counsel and the Claimant’s counsel at a hearing on 8 December 2021
IT IS HEREBY ORDERED THAT:
1. The Claimant’s claim is dismissed, and judgment is entered for the Defendant.
2. The Claimant shall pay the Defendant’s costs of this proceeding, including the Application, within 14 days immediately assessed in the sum of AED 250,000.
Issued by:
Amna Al Owais
Chief Registrar
Date of issue: 15 December 2021
Time: 12pm
Reasons
1. These are the reasons for my decision of 8 December 2021 to grant the Defendant immediate judgement against the Claimant.
2. In this action, the Claim Form of 24 February 2021 was supported by Amended Particulars of Claim dated 25 April 2021 with various exhibits. A Defence was served on 16 May 2021 and a Reply to that Defence on 31 May 2021. The Claimant’s pleadings contained only a statement of truth signed by a lawyer on behalf of the Claimant, whereas the Defence contained a statement of truth signed by a Senior Executive Officer. More importantly perhaps is the fact that no evidence has been served by the Claimant in relation to this application for immediate judgement by the Defendant. A trial date with a duration of 2 days was set for February 2022 and a deadline for the service of witness statements which passed without the Claimant serving any witness statements in support of its case.
3. The Defendant served a witness statement of Roula Baajour (“RJ”) dated 5 September 2021 in support of its application of the same date for immediate judgement. Exhibited to the witness statement was a bundle of documents in support, to which detailed reference was made in that witness statement.
4. The claim made by the Claimant is, in essence, very simple. It is that the Defendant acted without his authority in giving instructions for investments in two Islamic Products and for the conversion of a sum of AED into USD. The Defendant is a private company registered in the Dubai International Financial Centre (“DIFC”) and is regulated by the Dubai Financial Services Authority (“DFSA”). It provided wealth management services to the Claimant and acted as its agent in giving instructions to its parent company, BNP Paribas (Suisse) SA (the “Bank”), which was the entity which carried out the investments and the currency exchange. It is common ground that the Defendant had no management discretion of investments for the Claimant and could only act on instructions given by him when authorising the conclusion of transactions by its parent company.
5. It was common ground between the parties that the sum of AED 175 million was paid on 28 June 2019 into the Claimant’s account with the Bank for the purpose of investment. Initially, this was intended for the purchase of property in London, but it is the Defendant’s case that the Claimant changed his mind and gave the instructions which are at the root of the dispute between the parties.
6. Little purpose would be served by a detailed recitation of the matters which are set out in RJ’s witness statement, but the following points can be made, by way of summary, in relation to the authority given by the Claimant to the Defendant:
(1) The Claimant entered into a “Client Agreement” dated 26 March 2014 with the Defendant which provided that the latter would only receive instructions or orders from the Claimant “or those persons authorised to operate the Client’s relationship with [the Defendant] in accordance with existing arrangements (which will remain effective until such time as [the Defendant] receives written cancellation of such person’s authority)”.
(2) The Claimant also signed a document entitled “Investment Authority in Favour of Third Parties’” dated 16 June 2014 which gave authority to Mr Ibrahim Jaffal (“MJ”), who is a long-standing adviser to the Claimant:
“to manage in his own discretion the assets and securities, which are and will be deposited in the above-mentioned accounts …. with [the Bank] without any restriction on the Bank. “
“Consequently, [the Claimant] authorises [MJ] to order, as he deems appropriate and convenient, any transaction or operation, in particular, orders for the purchase and sale of securities…derivatives, currencies or… subscriptions to units in any investment fund… and further grants [MJ] the power to request and receive any information about the account including all documentation pertaining to it.”
“The undersigned expressly declare that they shall ratify any written order, whatever means of transmission is used, or oral orders which are or will be identified by the Bank as being given by [MJ] and shall be solely liable for any ensuing error and loss.”
“The present authority shall not terminate upon the death or incapacity of the undersigned. It shall remain in force until formal termination of [MJ’s] authority is notified in writing to the Bank.”.
(3) On 26 March 2014, the Claimant signed a Transaction Order Transmission (including Third Party Brokers) and Account Disclosure Authority by which the Claimant appointed the Defendant as its duly authorised agent and representative in dealing with the Bank, which was apt to provide authority to transmit instructions given by the Claimant, or MJ on his behalf, to the Bank and to obtain information from the Bank relating to his account with it.
7. No challenge was made at the hearing to the obvious effect of these documents save to take an unpleaded point relating to the Rules and Guidance issued by the DFSA, none of which have any bearing on the authority given by the Claimant to MJ or to the Defendant. Contrary to the Claimant’s submissions, there is nothing in those rules which would operate to prevent the Defendant taking instructions either from the Claimant or from MJ, acting as the Claimant’s authorised agent, nor any reason for the Defendant to carry out further investigation or enquiry before putting into effect the instructions given by either of them.
8. Without any evidence to support the submissions made, the Claimant asserted that no express instructions were ever given by the Claimant or MJ to the Defendant for investment in the two Islamic Products or the currency conversion. The evidence of RJ establishes to the Court’s satisfaction that instructions were given for these transactions on 3 July 2019. On that date a meeting took place at the Claimant’s offices between RJ and MJ, with the Claimant personally joining by telephone on the speakerphone in MJ’s office. A schedule of potential investments had been prepared by RJ which was then discussed in detail, one by one. The Claimant confirmed the products that he was interested in which were Sukuk issues and two Islamic Products -a three year Islamic Floating Profit Note and a five year Islamic Callable Range Accrual Note (“the Islamic Notes”). At the meeting RJ said that she would get in touch with MJ later that evening to confirm the actual trades.
9. At paragraphs 34 – 42 of her witness statement, RJ sets out the history of what occurred that evening. At 5:30 PM she emailed MJ from the Defendant’s DIFC office attaching a list of the Sukuk issues with a total value of USD 36 million which had been discussed earlier in the day. She asked him to confirm that the orders should be placed for the Claimant and said she would call him so that he could give authority and that she would send a separate email about the Islamic Notes.
10. It should be noted, at this point, that no dispute arises in relation to the Sukuk issues, since, because of the price restriction agreed between RJ and MJ, no actual purchases were made.
11. At 5:47 PM she telephoned MJ in a call which lasted 6 minutes and 12 seconds. That call was recorded on the Defendant’s system, and she exhibited a translated transcript of it. It is clear from that transcript that, as she says in her witness statement, authority was given to purchase the Sukuks. During the course of the call, at 5:53PM she sent MJ an email with details of the Islamic Notes, and they then discussed them. He said that he had print offs of the details which she talked through with him. Towards the end of the call, he said that there was no need for further telephone discussion and that she should take this forward, as agreed. The authorisation to give instructions for this investment appears clearly from the transcript which she exhibited as well as from her evidence. The calls took place in Arabic on a recorded line and the transcripts which she exhibited are English translations of those records prepared by an independent team within the Defendant’s offices. There is no reason to doubt the accuracy of the transcription or the translation.
12. Attached to its skeleton argument for the hearing, the Claimant produced documents which were said to represent English translations of these same calls, the tapes of which had been provided to the Claimant at his request. No evidence was adduced by the Claimant as to the provenance of these documents and whether the translations, which were made by a local translator, were translations of a document provided to them by someone who had listened to the tapes or whether the translators listened to the tapes themselves or what had happened to give rise to these versions. The documents provided by the Claimant were, in places, incoherent and in other places inconsistent with the translated transcripts provided by the Defendant. In particular, the passages which showed authorisation of the Islamic Notes in the Defendant’s transcript read entirely differently in the Claimant’s document.
13. There are good reasons why the Court should disregard the inconsistencies in the Claimant’s documents relating to the telephone calls.
(1) The Defendant has produced evidence about the content of the calls in the form of the witness statement from RJ. The Claimant has produced none.
(2) The provenance of the Claimant’s versions is not in evidence and their accuracy unvouched.
(3) RJ has evidenced the basis upon which the translated record of those calls was produced. The Claimant has produced none.
(4) The contemporary documents, including the emails preceding and following the conversations are entirely consistent with her evidence and the transcripts of the recorded call which she produced.
(5) The transcripts produced by the Defendant are consistent and make sense whereas those produced by the Claimant are, in places, incoherent and unsatisfactory.
14. On RJ’s evidence, and as shown in the documents, at 6:06 PM she sent an email to MJ confirming the instructions in the call to purchase the Sukuk issues “at limit or better”, saying that she would confirm the position once the purchasers had been executed. At 6:09 PM she telephoned MJ again saying that conversion of the AED to USD would take place because the currency of the Islamic Notes and the Sukuks was USD. The transcript of the recorded call shows MJ giving instructions to RJ for the conversion into USD, asking her to get a good rate. The document produced by the Claimant in relation to the same call contains the same instruction.
15. At 6:35 PM, RJ emailed MJ confirming the call at 5:54 PM authorising the purchase of the Islamic Notes, once again saying that she would confirm once execution had taken place. The email was a continuation of the chain in which the details of the Islamic Notes had been set out preceding the discussion which had taken place between them. At 6:48 PM, she sent a further email to MJ in which she confirmed the discussion about conversion of the AED to the USD.
16. Following the telephone calls on 3 July 2019, RJ gave instructions to effect the orders which had been authorised and on 4 July 2019 the orders were placed for the Islamic Notes and the currency conversion. No Sukuks were ever purchased because the price never fell below the limit which was agreed on 3 July 2019. On 7 July 2019, one of RJ’s colleagues sent an email to MJ setting out the orders that had been executed.
17. It was not until 10 July 2019 that MJ rang RJ on her mobile phone (with the result that the call was not recorded) saying that the Claimant wished to cancel the trades that had been placed on 3 July 2019 and have his money at the Bank returned to First Abu Dhabi Bank from which it had come at the end of June. This gave rise to further discussions between RJ and MJ on 10 and 11 July 2019 and calls between RJ, MJ and the Claimant himself on 14 July 2019, and the loss which would result from reversing the transactions, all of which are consistent with RJ’s evidence. On 14 July 2019, the claimant said that he had not expected his instructions to have been executed immediately. In subsequent discussions with MJ, it appeared that he was saying that he might have to bear the loss himself because he could not oppose the Claimant who by then was saying that the transactions were not authorised.
18. As already mentioned, there is no evidence from the Claimant to gainsay any of RJ’s evidence and the assertions made in the pleadings or in submissions which challenge or seek to cast doubt on her evidence can have no force. It was said that the matter should go to trial so that her evidence could be tested on cross examination but in the absence of any evidence from either the Claimant or MJ to the contrary effect, there is no reason at all to doubt the truth of what she says, particularly as all the documents support her. It was her practice to confirm in emails the oral instructions given to her and the absence of any response to say that her emails had inaccurately recorded the instructions given, when combined with her evidence and the Defendant’s transcripts is compelling. There is simply no room for challenge when the Defendant has not adduced any evidence on this application nor served witness statements for the purpose of the scheduled trial.
19. There is no issue as to the subsequent instructions given by or on behalf of the Claimant to sell the Islamic Notes and reconvert the currency into USD and the resultant loss which occurred in effecting these transactions. It was these amounts which were the subject of the Claim Form and Amended Particulars of Claim.
20. In the circumstances the Claimant has no realistic prospect of success at trial and there is no other good reason why the matter should be allowed to go to trial. As the Defendant submitted, I am in as good a position as the trial judge would be because of the absence of any evidence from the Claimant.
21. It follows that the Defendant is entitled to immediate judgement and is entitled to the costs of the action which I summarily assess in the sum of AED 250,000.
