October 10, 2019 court of first instance - Orders
Claim No. CFI-047-2017
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN:
COMMERCIAL BANK OF DUBAI P.S.C.
Claimants
and
(1) M/S TOTORA RESTAURANT & LOUNGE LLC
(2) MR AHMAD MOHAMED RAMADHAN AL RAFEI
(3) MR ALI ABDULLAH AL SIDANI
(4) SHAIKHA RANEYA HAMAD MUBARAK AL KHALIFA
Defendants
ORDER WITH REASONS OF H.E JUSTICE ALI AL MADHANI
UPON reviewing the Claimant’s application to lift the stay, dated 2 September 2019 (“Application to Lift”)
AND UPON considering the Fourth Defendant’s application for permission to appeal (“Application for Permission”)
AND UPON reviewing the Fourth Defendant’s Evidence in Answer, dated 16 September 2019, and reviewing the Claimant’s Evidence in Reply, dated 23 September 2019
AND UPON reviewing all other relevant case documents filed in this matter
IT IS HEREBY ORDERED THAT:
1.The stay order dated 4 April 2019 (“Stay Order”), be lifted.
2. The Fourth Defendant’s Application for Permission dated 14 February 2019 is dismissed.
3. The Fourth Defendant shall file and serve her defence within 21 days from the date of this Order.
4. The Fourth Defendant shall pay the Claimant’s costs of the Application for Permission and the Application to Lift, the amount of which shall be assessed by the Registrar on a standard basis, if not agreed between the parties.
Issued by:
Nour Hineidi
Date of issue: 10 October 2019
Time: 3pm
SCHEDULE OF REASONS
Background
1.On 18 October 2017, the Claimant issued proceedings against each the four Defendants in this claim in the DIFC Courts.
2. On 7 December 2017, the Fourth Defendant submitted an application disputing the jurisdiction of the DIFC Courts to hear the claim.
3. On 17 April 2018, the Court held a hearing to determine the Fourth Defendant’s application on jurisdiction (amongst other matters).
4. On 23 January 2019, H.E Justice Ali Al Madhani dismissed, amongst other matters , the Fourth Defendant’s application disputing jurisdiction dated 17 April 2018 and concluded that the case related to the DIFC (specifically that it fell within the gateway set out at Article 5(A)(1)(b) of the judicial authority law, Law 12 of 2004). Accordingly, the Fourth Defendant was ordered to pay the costs of her failed Application, to be assessed if not agreed and to file and serve her defence within 21 days from the date of judgment dated 23 January 2019.
5. The Fourth Defendant then served an appeal notice and grounds of appeal, in respect of the Judgment dated 23 January 2019, seeking permission to appeal. The deemed date of service of these documents was 18 February 2019 (as a result of the documents being served by email on 17 February 2019 at 17.05). The appeal notice and grounds of appeal included a request for a stay of the judgment dated 23 January 2019, including a stay of the deadline to file the defence pending the hearing and outcome of the Application for permission to appeal, and if successful, the hearing and outcome of the appeal itself.
6. On 3 March 2019, the Claimant filed and served its response to the appeal notice and grounds of appeal, asking the Court to dismiss, amongst other things, the request for the stay of: (a) the judgment dated 23 January 2019; and (b) the deadline to file the defence. RDC 44.4 appeals do not operate as stays of any lower court decisions and the Fourth Defendant had failed to put forward any case as to why the request to stay should succeed or identify grounds for a stay.
7. On 10 March 2019, the Fourth Defendant filed her skeleton argument in support of her Application for Permission (page 26 of Appendix). On 24 March 2019 she then referred the case to the Joint Judicial Committee (the “JJC Referral”) and filed an Application to the DIFC Courts dated 26 March 2019, seeking a stay of the proceedings pending the outcome of the JJC Referral. The Fourth Defendant’s Application was granted on 4 April 2019 pursuant to the order of H.E Justice Ali Al Madhani which stated that:
7.1 “The proceedings before the Court against the Fourth Defendant only, including any and all outstanding applications, be stayed pending the final determination by the JJC of the Fourth Defendant’s application before them.”
8. On 20 June 2019, the JJC issued its decision confirming that that the DIFC Courts shall be the competent Court to hear the claim.
The Claimant’s Application
9. The Claimant refers to Article 7 of the Dubai Decree No.19/2016 (“Article 7”):
8.1 “The Decision issued by the Judicial Tribunal with respect to the determination of a competent court of an applicable judgment shall be final and incontestable”
10. The Claimant’s argument is that since the JJC has issued its final determination of the Fourth Defendant’s Application, pursuant to Article 7, the determination is uncontestable and as a result the Fourth Defendant’s Application for Permission before the DIFC Courts should therefore be dismissed and the Stay Order be lifted.
11. The Claimant issued this claim for recovery of AED 4,500,000 from the Fourth Defendant (on a joint and several basis) almost two years ago. It has never received any substantive explanation as to why the monies have not been paid.
12. The Claimant therefore submits that it is entitled to pursue the claim and applies for an Order lifting the stay, dismissing the Application for Permission, with the Fourth Defendant to pay the Claimant’s costs incurred and occasioned by her Application for permission to appeal and this Application to Lift, the Appeal, plus those costs outstanding from the judgment dated on 23 January 2019.
The Defendant Evidence in Answer
13. As regards to the Claimant request of lifting the Stay Order, the Fourth Defendant has no objection to lifting the Stay Order relating to these proceedings before the DIFC Courts.
14. The Fourth Defendant argues that the judgment dated 23 January 2019 states, at paragraph 65, that the DIFC Court of First Instance dismissed Ms AI Khalifa's application to contest the jurisdiction of the DIFC Courts but allowed her to file and serve her defence within 21 days from the date of the said judgment. The Fourth Defendant asserts in its right to defend the claim accordingly.
15. The Stay Order did in fact grant a stay of the judgment dated 23 January 2019 and all outstanding applications, including the deadline to file a defence.
16. On the basis that Article 7 provides for the JJC's determination to be final and uncontestable, the Fourth Defendant consents to the dismissal of her Application for Permission.
Costs
17. The Fourth Defendant objects to the Claimant's request to pay the Claimant's costs of: (a) the Application for Permission; and (b) the Application to Lift (assessed by the Claimant to be USD 8,106.74).
18. The Fourth Defendant argued that pursuant to RDC 38.7(1), the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party. At this stage in the proceedings, it is not clear who the successful party is. Therefore, the Fourth Defendant requests that there be no order as to costs at this time.
19. The Fourth Defendant requests that if the Court does decide to make an order as to costs the Court should order that both the Claimant and the Fourth Defendant bear their own costs in relation to the Application for Permission and that the Claimant bears the costs of the Application dated 2 September 2019 to lift the Stay Order.
20. As to the costs surrounding the Fourth Defendant’s Application for Permission, the Fourth Defendant argues that Pursuant to RDC 38.8, in deciding what order to make about costs, the Court must have regard to the conduct of the parties, which according to RDC 38.9(2), includes whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue.
21. The Fourth Defendant’s view is that she disputed the judgment dated 23 January 2019 in relation to the jurisdiction of the DIFC Courts using logical and reasonable grounds:
21.1 The Court of First Instance gave no weight to the fact that the Fourth Defendant is not a party to the facility agreement. Furthermore, the guarantee was neither partly nor wholly concluded or finalised within the DIFC and the guarantee was neither performed, nor supposed to be performed, within the DIFC pursuant to its express or implied terms.
21.2 The Court of First Instance erred as a matter of law by concluding that the DIFC Courts have jurisdiction over the dispute unless the Fourth Defendant can establish a valid opt-out of the jurisdiction. The guarantee contains the term "United Arab Emirates courts" and while it is settled law that the DIFC Courts are included as part of the courts of the United Arab Emirates, the requirement however stands that an opt-in clause must be specific and clear as to the intention of the parties to have their disputes heard in the DIFC Courts specifically.
22. The Fourth Defendant contends that it is clear from the grounds of appeal, that it was reasonable for her to pursue the issue of jurisdiction before the DIFC Courts, by filing a notice of appeal. For these reasons the Fourth Defendant requests that the Court orders both parties bear their own costs in relation to the Application for Permission.
23. In relation to the costs of the current application dated 2 September 2019 to lift the Stay Order, the Fourth Defendant submitted that the Claimant should bear the costs of that application pursuant to RDC 38.9(3); the Court must consider the manner in which a party has pursued a case or issue in deciding what order (if any) to make about costs.
24. The Fourth Defendant says that on 20 June 2019, the JJC's determination was issued, but on 2 September 2019, the Claimant applied to lift the stay granted by the Order dated 4 April 2019. There appears to be no reason why the Claimant waited for more than ten weeks to submit the Application dated 2 September 2019 to lift the Stay Order.
25. The Fourth Defendant finally argued that it can hardly be said that the Claimant, in allowing more than ten weeks to pass before submitting the Application to Lift, complied with its duty under ROC 1.8, and consequently should bear the costs of the application dated 2 September 2019.
Order
26. The Claimant’s request that the Fourth Defendant’s Application for Permission before the DIFC Courts should therefore be dismissed and the Stay Order of 4 April 2019 lifted, in light of the Fourth Defendant’s consent, the request is therefore granted.
27. The Fourth Defendant requested the right to submit a defence to the substantial claim, as stated in the judgment dated 23 January 2019, the Court confirms the Defendant ‘s right to submit its defence within 21 days from the date of this order.
28. With regards to the Claimant’s request for costs of the Application for Permission, the court’s view is that the Fourth Defendant’s conduct was not reasonable, since she submitted the Application for Permission and allowed her opponent to incur costs as to the reply and preparation of the application. As well as bringing proceedings before the JJC on same grounds without any alert to the Court or to the Claimant. Therefore, the Fourth Defendant’s conduct warrants the order that she is liable for the costs to be assessed by the Registrar on the standard basis, if not agreed by parties.
