July 08, 2020 court of first instance - Orders
Claim No. CFI 036/2020
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
CREDIT EUROPE BANK (DUBAI) LTD
Claimants
and
(1) NEW MEDICAL CENTRE TRADING LLC
(2) NMC HEALTHCARE LLC
(3) BAVAGUTHU RAGHURAM SHETTY
Defendants
ORDER OF JUSTICE WAYNE MARTIN
UPON the First and Second Defendants’ application notice filed on 2 June 2020 (the “Application”)
UPON reading the relevant documents in the case file
IT IS HEREBY ORDERED THAT:
1. The Application is dismissed with costs.
Issued by:
Nour Hineidi
Deputy Registrar
Date of issue: 8 July 2020
Time: 12pm
The Application
1. New Medical Centre Trading LLC (the First Defendant) and NMC Healthcare LLC (the Second Defendant) have together applied for orders that:
a) these proceedings be treated as confidential and marked as private in the database maintained by the Registry of the Court; and
b) any hearings be held in private unless the Court otherwise orders.
2. The Application is brought in reliance upon the general case management powers of the court, specifically Rule 4.2(14) of the Rules of the DIFC Court (“RDC”) which empowers the court to make any order for the purpose of managing the case.
Outcome
3. For the reasons which follow the Application must be dismissed with costs.
The Proceedings
4. The proceedings have been brought by Credit Europe Bank (Dubai) Ltd (the Claimant) against the First and Second Defendants and Mr R B Shetty (the Third Defendant). The claim is for moneys said to have been advanced pursuant to a Framework Credit Agreement dated 30 December 2013, together with interest and other liabilities said to arise under the agreement and other associated agreements, together with damages for breach of those agreements. The claim is for an amount a little over USD 8 million.
The Grounds for the Application
5. No evidence has been filed in support of the Application. The only support for the Application takes the form of a series of unverified assertions in the Application itself to the following general effect:
a) the First and Second Defendants are part of the NMC group of companies;
b) the group is headed by NMC Health PLC, a public company incorporated in England;
c) that company was placed into administration by order of the High Court of England and Wales on 9 April 2020;
d) the group is said to have been the victim of a substantial fraud perpetrated over a number of years;
e) the fraud involved the unauthorised and unlawful borrowing of funds which have been dissipated on purposes other than those of the corporate group;
f) the administrators are investigating a large number of transactions to ascertain those which were part of the fraud;
g) the First and Second Defendants anticipate that if the existence of these proceedings becomes public knowledge, it will trigger a wave of claims against a number of companies in the group – variously described as a “floodgate of litigation and possible enforcement actions” and as “a wave of panicked lenders and creditors” filing proceedings “within a short space of time”;
h) if these claims eventuated, they would distract resources from the investigation of the fraud and the orderly conduct of the group businesses which include the provision of significant hospital and healthcare services in the UAE; and
i) it is therefore in the interests of justice for the proceedings to be conducted in private.
6. No information is provided as to the extent to which the matters asserted are already in the public domain. Obviously the appointment of administrators to the parent public company of the First and Second Defendants will be in the public domain, as it is essential that any person dealing with that company know of its status. It also seems reasonable to infer, in the absence of evidence to the contrary, that the fact that the financial difficulties and consequent administration of the parent company were occasioned by a widespread fraud (as asserted in the Application) would also be in the public domain.
7. In these circumstance it is difficult to conceive of any reason why an awareness of these proceedings is any more likely to trigger claims against the First and Second Defendants than public knowledge of the placement of their parent company into administration as a result of a widespread fraud. No attempt has been made in the assertions made in support of the Application to explain why knowledge of these proceedings, which are in effect for the recovery of funds advanced, would create any greater likelihood of the claims described in such colourful and hyperbolic language than the appointment of administrators to the parent company in the group as a result of a widespread fraud.
8. Put another way, the assertion that there will be a flood of claims if public awareness of these proceedings is not suppressed is at the heart of this Application. But no explanation is proffered as to why that would be so, when the parent company has been placed into administration as a result of fraud.
9. These observations are in themselves sufficient reason to dismiss the Application. However, brief reference to the applicable legal principles reinforces and compels that conclusion.
The Open Justice Principle at Common Law
10. Open justice is a fundamental common law principle. Its components include the conduct of hearings of the court in the presence of members of the public, and the right of the media to report whatever occurs in open court to members of the public who are not present in person.
11. The open justice principle serves a number of important public policy objectives, including:
a) maintaining public confidence in the administration of justice;
b) enabling the public to know that justice is being administered impartially;
c) deterring inappropriate behaviour by the court;
d) reducing the risk of uninformed or inaccurate comment about proceedings; and
e) the legitimate public interest in the administration of justice.
12. “The interest protected by the open justice principle is the public interest in the administration of justice rather than the private welfare of those involved in court proceedings” . Accordingly, “the fact that a hearing in open court may be painful, humiliating and a deterrent to either a party or a witness is not normally a basis for departing from the open justice principle” .
13. The English courts have promulgated guidelines for the Application of these principles. Those guidelines include the following propositions:
1. V v T & Anor [2014] EWHC 3432 at 13, per Morgan J
2. See I above
3. Practice Guidance (Interim non-disclosure orders) [2012]1 WLR 1003
a) derogations from the general principle can only be justified in exceptional circumstances, when they are strictly necessary to secure the proper administration of justice. They are wholly exceptional…. Derogations should … be no more than strictly necessary to achieve their purpose; and
b) the burden of establishing any derogation from the general principle lies on the person seeking it. It must be established by clear and cogent evidence.
The Open Justice Principle in this Court
14. The open justice principle has been adopted in the legislation creating this Court. Article 13(2) of the DIFC Court Law provides that “all proceedings before the Courts shall be …. open to the public unless otherwise conducted by the presiding judge in the interest of justice”.
15. The open justice principle finds further expression in the Rules of Court. RDC Rule 35 is in virtually identical terms to the corresponding English rules . RDC Rule 35.2 provides that “the general rule is that a hearing is to be in public” . Exceptions to that general rule are set out in RDC 35.4 . The correspondence between the English rules and the rules of this Court compels the conclusion that the common law principle of open justice should be applied in this Court, which in turn leads to the conclusion that the guidelines published for the Application of that principle are properly considered by the Court.
16. The only exception to the general rule contained in RDC 35.4 which could have any Application to this case is that which applies if the court considers that the exclusion of the public is necessary in the interests of justice, and which gives effect to Article 13 (2) of the DIFC Court Law.
17. I digress to observe that having regard to the express and detailed provisions of RDC 35 relating to the circumstances in which suppression orders may be made, the reliance upon the general case management powers of the Court in support of this Application is inexplicable.
4. At 10
5. At 13
6. Law no. 10 of 2004
7. Civil Procedure Rules (CPR) 39.2
8. CPR 39.2(1)
9. In terms virtually identical to CPR 39.2 (3).
18. The First and Second Defendants have manifestly failed to discharge the burden of proving by clear and cogent evidence that the orders which they seek are necessary to protect the public interest in the administration of justice. In fact, as I have noted, they have not adduced any evidence at all. Even if some evidence had been adduced to sustain their assertion that public awareness of these proceedings might stimulate a flood of claims, it is not at all clear that it would be concluded that the prospect of such claims would be detrimental to the public interest in the administration of justice, as compared to adversely affecting the commercial interests of the First and Second Defendants or other companies in their corporate group. However, it is unnecessary to resolve that question as there is no evidence capable of sustaining the unexplained assertions upon which this Application depends.
19. For these reasons the Application must be dismissed. The First and Second Defendants must pay the Claimant’s costs of the Application.
