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Claim No. CFI 050/2023

IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

LXT REAL ESATE BROKER LLC

Claimant/Applicant

and

SIR REAL ESTATE LLC

Defendant/Respondent

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JUDGMENT OF JUSTICE ROBERT FRENCH

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UPON the Part 8 Claim Form dated 20 July 2023 and amended on 26 July 2023

AND UPON the Claimant’s Urgent Application No. CFI-050-2023/1 dated 20 July 2023 seeking injunctive relief (the “Application for Interim Relief”)

AND UPON the Orders of Justice Robert French dated 25 July 2023 (as amended and re-issued on 26 July 2023) and 28 July 2023

AND UPON a Consent Order dated 2 August 2023

AND UPON hearing from Counsel for the Claimant and Counsel for the Defendant and the Defendant giving an undertaking to the Court in a hearing on 22 September 2023

AND UPON reviewing documents on the Court file

IT IS HEREBY ORDERED THAT:

1. The claim for interim relief is dismissed.

2. The parties have liberty to make written submissions not exceeding five (5) pages in length on the issue of costs within the next fourteen (14) days.

3. There will be liberty to the parties to apply in respect of the undertaking and crossundertaking.

Issued by:
Hayley Norton
Assistant Registrar
Date of Issue: 27 September 2023
At: 5pm

SCHEDULE OF REASONS

Introduction

1. On 20 July 2023, the Claimant lodged a claim against the Defendant under Part 8 of the Rules of the Dubai International Financial Centre Courts (“RDC”).

2. The Claimant and the Defendant had been competitors in the sale of luxury real estate until the Claimant sold its business to the Defendant under an agreement dated 14 June 2020 (the “Agreement”). The Claimant continued to provide marketing services to the Defendant and entered into a co-branding strategy under which its brand name ‘LUXHABITAT’ was conjoined with the Defendant’s ‘Sotheby’s’. The Claimant sought an interim injunction against the Defendant to restrain the Defendant from discontinuing the use of the Claimant’s brand name. In the Claim as issued no final relief was sought. A claim for interim relief may be brought as a stand-alone proceeding as appears from Article 36(3) of the DIFC Law of Damages and Remedies

3. An urgent ex parte application for an interim injunction was filed on the same day as the Claim. In the event, the ex parte application was refused. The Claimant required to give notice of its Claim for Interim Relief to the Defendant. The Claim for Interim Relief came on for hearing on 22 September 2023. The procedural history is set out in more detail below.

The Parties

4. The Claimant is incorporated in Dubai and holds a commercial license, issued on 16 November 2009 and expiring on 15 November 2023. The commercial license issued by the Government of Dubai described the business of the Claimant as “Real Estate Buying and Selling Brokerage, Leasing Property Brokerage Agents”. According to the First Witness Statement of Mr Orial Font Mante, the Chief Executive Officer of the Claimant, it has carried on business under the brand name LUXHABITAT in the UAE since 2009. The Defendant is also incorporated in Dubai, with a commercial license and was originally known as High End Real Estate LLC t/a ‘Gulf Sotheby’s International Realty’. It later changed its name to ‘LUXHABITAT Real Estate LLC t/a LUXHABITAT Sotheby’s’. That change followed the agreement with the Claimant, which has led to this litigation. Until the Agreement, the two companies competed with each other in real estate brokerage in luxury markets in Dubai.

5. According to Mr Mante, the Defendant has again changed its name to SIR Real Estate LLC and intends to trade as Sotheby’s UAE. The Agreement entered into on 14 June 2020 was an agreement to combine their operations, which was amended on 1 September 2021. According to clause 20.2, the Agreement is governed by DIFC Law and by virtue of clause 20.1 is subject to an exclusive jurisdiction agreement in favour of the DIFC Courts.

The Claim

6. In the Particulars of Claim, the Claimant alleged that it had entered into the Agreement with the Defendant, then known as High End Real Estate LLC and trading as Gulf Sotheby’s International Realty. The effect of the Agreement was said to be to merge the two businesses of the Claimant and the Defendant. Under clause 5.1(g), the parties agreed to implement a co-branding strategy within three months of the signing date of the Agreement. Under that strategy the Defendant would use the Claimant’s brand in conjunction with its own. That strategy was completed and implemented. The continuing business traded as Lux Habitat Sotheby’s.

7. The Claimant contended that the Agreement was effective for a term of ten years and did not permit further rebranding without an agreed variation.

8. The Claimant alleged that on 15 April 2023 in breach of the Agreement the Defendant sent it a notice that effective immediately its branding going forward would be under the designation “UAE Sotheby’s”. Discussions ensued about the proposed rebranding but they became “intractable”.

9. The Defendant informed the Claimant that it would proceed regardless of the Claimant’s position and intended to do so by the end of July 2023. The Claimant stated its belief that if the Defendant carried out its intentions, it would cause irreparable damage to the Claimant’s brand.

10. The Claimant sought by interim injunction to have the Defendant restrained from rebranding its business until the resolution of their dispute or further order. A brief outline of the procedural history follows.

Procedural history

11. As noted in the Introduction, an ex parte hearing on the Claimant’s urgent application was held on 24 July 2023. An order was made that the application for interim relief be adjourned to 1.00 pm (GST) on Friday, 18 July 2023. The Claimant was directed to serve the application and its supporting documents upon the Defendant within 48 hours. The Claimant was given liberty to seek interim relief in the event that the Defendant proceeded to adopt the proposed rebranding in the meantime. The Order issued on 25 July 2023. It was amended by a further Order on 26 July 2023 to reflect a minor amendment made on 26 July 2023 to the Part 8 Claim Form.

12. On 28 July 2023, after hearing from counsel for the Claimant and the Defendant, the Application for Interim Relief was adjourned to 1 August 2023 upon the Defendant’s undertaking to the Court to preserve the status quo between 28 July 2023 and 3.00 pm (GST) on Tuesday, 1 August 2023 by pausing, temporarily, any further external rebranding steps or further external rebranding communications. The parties were directed to endeavour to agree further orders in relation to the continuation of the undertaking and any cross-undertaking and directions, including timetabling directions leading to a hearing. An Order issued accordingly on 28 July 2023 adjourning the Application for Interim Relief to 1 August 2023 with an undertaking from the Defendant to the Court to preserve the status quo between 28 July 2023 and 3pm (GST) on Tuesday 1 August 2023. On 2 August 2023 a Consent Order was made adjourning the hearing of the matter to 22 September 2023. The Defendant was to file and serve its evidence in response to the application for interim relief by 18 August 2023 and the Claimant to file and serve any evidence in reply by 5 September 2023. The Claimant was to prepare an agreed hearing bundle to be filed with the Court and the Defendant five working days prior to the return date. The parties were to exchange Skeleton Arguments and the Claimant was to prepare and file with the Court an agreed bundle of authorities a day prior to the return date. All costs of the proceedings were reserved for determination at the return date. Undertakings were given by the Claimant and the Defendant.

Interim Undertakings provided by the Defendant and Undertakings provided by the Claimant

13. Interim undertakings provided by the Defendant were:

14. The Claimant’s undertakings were:

The Agreement

15. In a recital under the heading ‘Background’, the Agreement recited that the parties had executed a Memorandum of Understanding (“MOU”) on 14 May 2020 outlining their initial intentions to enter into a commercial arrangement and into the Agreement in accordance with Recital C of the MOU. The Recital then stated:

16. There were a number of defined terms set out in clause 1.1, including the following:

17. Clause 2 set out under the heading ‘Excluded Business’:

18. Clause 4 set out the consideration for the acquisition of the Business, which was said to be AED 5,000,000. Terms of payment were also set out, including a payment of AED 1,000,000 which had already been received by the Seller from the Buyer. It is unnecessary for the present purposes to set out further details of the mode of payment of the consideration.

19. It is convenient to set out clause 5 headed ‘Marketing and Branding Partnership’ in full:

20. Clause 19 set out a ‘Protocol to Solve Conflicts’. It was in the following terms:

21. Clause 20 is headed ‘Governing Law and Jurisdiction’ and provides:

22. The reference to a ‘decision of the mediator” in clause 19.3 is presumably intended to be an agreement reached pursuant to mediation. Otherwise it would be an arbitral provision leaving no room for subsequent litigation.

23. Schedule 1 to the Agreement set out current investment transactions and pending transactions in which the Parties were involved. Schedule 2 provided a List of the Team Members of the Seller that would move to the Buyer’s company. Schedule 3 set out warranties.

The Amendment to the Agreement

24. The Agreement was amended on 31 August 2021. There was a variation of the annual Partnership Fees to be paid by the Defendant to the Claimant. There was also provision for website development by the Claimant which would appoint a team of design and development professionals. A project scope for the website design was set out in Schedule 1 to the Amendment Agreement. Tasks and goals for website design were set out in Schedule 2, which identified three phases designated ‘Audit’, ‘Vision’ and ‘Design’ respectively. A project roadmap for website design was set out in Schedule 3.

The Co-branding Strategy

25. According to Mr Mante’s statement, in accordance with the Co-branding Strategy, a branding study was conducted by a Spanish branding agency, FASE, and was sent to the Defendant on 30 June 2020. The study suggested that the brand continue as LUXHABITAT Sotheby’s. That was how the business has been operating ever since. Mr Mante exhibited a number of examples illustrating LUXHABITAT Sotheby’s combined brand appearing at the Defendant’s physical offices, the email addresses of the Defendant’s employees, social media channels, property marketing brochures, the Defendant’s website, marketing materials, reports and business cards.

The Rebranding Decision

26. On 25 April 2023, Mr George Azar of the Defendant, sent a letter to Mr Mante headed ‘Expansion of the Business under the Brand Name of UAE Sotheby’s’. The letter stated:

27. Discussions, meetings and correspondence ensued between the parties with the Claimant resisting the rebranding plan.

28. On 2 May 2023, Elie Khourie, one of the Defendant’s two shareholders, said that the decision was based on what made sense for the Defendant’s business as it was expanding to KSA and the UK and there was a mismatch between using a purely Sotheby’s logo and one with LUXHABITAT in it. This was said to by no means hamper the partnership and collaboration on marketing. It was stated in the email:

29. In a further email dated 28 May 2023, Mr Khourie said:

30. In an email on 8 June 2023, Mr Khourie said the new branding could be launched effective from 15 June 2023 and the website in 2024. He proposed finalising a new agreement which would cancel the Agreement and pave the way for a new collaboration for a specified period of time. He sought, before proceeding, a new proposal for the three markets. He stated “the rebranding of the UAE business is unfortunately non negotiable and is our right so this cannot enter the negotiations and discussions.” He also stated:

31. Further emails were exchanged. Their effect was to reassert the Defendant’s intention to rebrand.

32. On 27 June 2023, Mr Khourie wrote to Mr Mante setting out what he called:

Mr Khourie asserted that they were working within the framework of the Agreement and that their position had been validated by three lawyers whom they had consulted. They needed a final answer within two days regarding the rebranding by 15 July as they need to put things in motion between both teams.

33. In Mr Mante’s first witness statement he referred to a telephone conversation on 14 July 2023 with the Defendant’s Chief Operating Officer, Benedict Texeira. He was informed in that conversation that in the absence of agreement the Defendant would proceed with the rebranding.

34. The Claimant retains control of the domain website LUXHABITAT Sotheby’s. The Defendant has already acquired and set up a new domain “sotheby’srealty.ae”.

35. Mr Mante stated his belief that the Defendant will go ahead whether or not he agrees. There is no doubt about the correctness of that belief.

36. Mr Mante went on, in his first witness statement, to allege understatements by the Defendant of its sales revenue. On the basis of those understatements, the Claimant had been asking and the Defendant had been paying figures significantly lower than those to which the Claimant was entitled under the Agreement.

The Witness Statement of Benedict Texeira

37. Mr Texeira is the Chief Operating Officer of the Defendant and duly authorised to make a witness statement which was dated 17 August 2023 and which has been filed.

38. Mr Texeira stated that he has been Chief Operating Officer of the Defendant since 2018. He has worked in Dubai since 2007 when he joined the National Bank of Dubai. After four and a half years he moved into the real estate business and worked for Betterhomes as a Customer Care Manager from 2010 to 2014. In 2014 he accepted a role as Operations Manager for Sotheby’s new established office in Dubai. He remained there until he was approached by Mr Mante on 20 March 2016. He joined the Claimant as an employee in August 2016 and remained there until May 2017. He left the Claimant in May 2017 – he said on amicable terms. He has remained in contact with Mr Mante and has continued to work with him on projects since he left the company. He joined the Defendant in October 2018.

39. The Defendant was described as a Dubai-based limited liability company specialising in luxury real estate and operating under the Sotheby’s brand. It has two shareholders, the CEO Mr Azar and Mr Elie Khouri, both of whom carry on business in the field of luxury real estate, mainly in Dubai.

40. Mr Texeira described the Claimant as a Dubai-based limited liability company which was formerly a real estate brokerage in Dubai. Since the sale of the real estate brokerage to the Defendant, the Claimant was said by Mr Texeira to be “essentially now just a digital and marketing services provider to the Defendant”.

41. Mr Texeira referred to the agreement of 14 June 2020. He said Mr Mante was the main driver of the agreement, having sent his original proposal on behalf of the Claimant on or around 27 February 2019. He referred to a Memorandum of Understanding executed on 14 May 2020 and two Addenda to the MOU being Addendum No 1 and Addendum No 2, also both dated 14 May 2020. He stated his belief, apparently upon advice that the Agreement did not give rise to a general partnership within the meaning of the DIFC’s General Partnership Law. That appears to be common ground.

42. Mr Texeira then set out the Defendants’ purposes and intentions in entering into the Agreement. The Court is not concerned with the subjective intentions of either party. Nor is it concerned with argumentative contentions in witness statements about the proper construction of the Agreement.

43. Mr Texeira acknowledged that LUXHABITAT was a recognised real estate trading name in Dubai at the time of the Agreement but said it was never going to be comparable to the 15 of 29 internationally recognised Sotheby’s brand that the Defendant was and remained licensed to operate in Dubai. The word and logo relating to LUXHABITAT were not the subject of any formal trademark registration or associated legal protection as a matter of trademark law in the UAE or the DIFC.

44. Mr Texeira said that the parties were not commercial equals. The Defendant’s business was much bigger than the Claimant’s. The Defendant viewed the Claimant post-acquisition as a service provider to the Defendant.

45. The Defendant does not agree with the Claimant’s apparent interpretation of clause 5.1(g) of the Agreement and does not agree that it is capable of being enforced by the Claimant in the way now suggested, whether by way of injunction or an order for specific performance.

46. Mr Texeira described the Defendant’s exclusive right to use the Sotheby’s brand in the UAE under license as a valuable asset. LUXHABITAT was not a registered brand in the UAE at the time the Agreement was signed. One of the Defendant’s shareholders, through one of his other companies, registered LUXHABIAT as a trademark in the UAE on a precautionary basis in 2021. That trademark was assigned to Mr Mante personally rather than the Claimant for nominal value in around January 2022.

47. Mr Texeira said that in early 2023 the Defendant had reached the conclusion that the LUXHABITAT brand was not of significant value in Dubai and that a rebranding to UAE Sotheby’s was preferable and would lead to a significant improvement in the Defendant’s business. They sent a letter dated 25 April 2023 to Mr Mante notifying him of the planned rebranding. It explained that the Defendant’s business would in future trade as UAE Sotheby’s due to the internationally recognised Sotheby’s brand. The domain name, that is their website address, would remain LUXHABITAT. Mr Texeira then went on to refer to further exchanges with Mr Mante and his contention that the co-branding was “at the core of our partnership” and a “pillar of the partnership”. That was never how the Defendant interpreted the Agreement. From the Defendant’s perspective, they were paying the Claimant and Mr Mante for certain rights and services, but not to have the LUXHABITAT brand associated with the Sotheby’s brand.

48. According to Mr Texeira, Mr Mante has been willing in principle to accept a rebranding of the Defendant. He had set out a proposed timeline for rebranding. He had recommended 16 of 29 that the Defendant rebrand to Dubai Sotheby’s rather than UAE Sotheby’s. The Defendant began rebranding its business in accordance with that recommendation, only for Mr Mante then to make an application for an interim injunction.

49. Much communication ensued and is set out in some detail in Mr Texeira’s statement which includes argumentative comment on Mr Mante’s communications and conduct. That is not particularly material to the question whether the Claimant has a contractual right which is capable of protection by way of injunction.

50. Mr Texeira’s position was that Mr Mante is seeking to use the rebranding argument as leverage to pressure the Defendant into new commercial agreements, including entirely unrelated fields such as new ventures in Spain and elsewhere.

51. Mr Texeira also made reference to the Claimant’s failure to provide details or evidence about its financial circumstances, its assets and liabilities in the UAE or in the DIFC. Absent security within the DIFC, the Defendant, according to Mr Texeira, is concerned that the Claimant would not be in a position to satisfy any financial liability to the Defendant in the event that the Defendant suffered substantial loss and damage associated with delays and disruption to its rebranding exercise.

52. It was said to be difficult to quantify with precision how much financial loss the Defendant would suffer in the event that its rebranding exercise were delayed or disrupted. This would be likely to be substantial.

53. Mr Texeira pointed to the Claimant’s delay in bringing an interim injunction application. The Defendant had already commenced implementation of its rebranding exercise and had notified the Claimant to that effect of its decision to do so sometime ago.

54. Mr Texeira also referred to allegations by the Claimant that the Defendant had dishonestly understated and underpaid commission due to it under the Agreement. He denied the allegation and said it was unclear to what extent the allegation was relevant to the claim for an interim injunction. However the Defendant has engaged Ernst & Young to review and audit the Defendant’s accounts including its commission income. Those findings will be shared with the Claimant. Mr Texeira said that based on his current understanding it is possible that the Claimant might be entitled to some commission in excess of the sums it has been paid to date. They are likely to be relatively modest. He dismissed as absurd the 17 of 29 suggestion in Mr Mante’s witness statement that the Claimant may be owed USD6,000,000 in commission.

Second Witness Statement of Oriol Font Mante

55. Mr Mante filed a further witness statement dated 5 September 2023. That witness statement was made in response to Mr Texeira’s statement of 17 August 2023. He put to one side, as was appropriate, reference to pre-contractual negotiations, observing that Mr Texeira had never been part of any commercial discussions in respect of the agreement.

56. Mr Mante accepted that the Defendant was the larger organisation at the time of the agreement, but according to him the Claimant had better performance in key metrics including net profit, EBITDA and digital presence. It was difficult to compare the strength and weaknesses of the two parties with hindsight. According to Mr Mante, both brands were equally strong. LUXHABITA was the pioneer and strongly recognised in the UAE market. The Defendant was launched years later but had a strong global presence.

57. Mr Azar had approached him a number of times between 2014 and 2017. Those approaches culminated in an acquisition offer made on 19 March 2019. Mr Mante prepared most of the analysis and presentations that followed. He dismissed the relevance of the MOU and its two Addenda. The MOU had been superseded by the Agreement. He did rely upon a recital in the MOU which referred to:

He contended in his statement that there was no doubt the transaction had two parts — the Claimant’s business and a partnership with respect to branding and marketing between Claimant and Defendant. The key component of the branding was the brand itself. Absent the LUXHABITAT brand there would be no partnership. That position was said to be consistent with the use of ‘partnership’ in clause 5.1 of the Agreement.

58. Mr Mante set out to refute Mr Texeira’s statements about the Defendant’s purpose in acquiring the business and his arguments. As Mr Texeira’s statements of subjective intention and argumentative statements are disregarded, so too are Mr Mante’s responses to them.

59. Mr Mante said that co-branding is an accepted term in the marketing world. It means the use of two brands together without changing them so that each is still clearly recognisable. He rejected the suggestion by Mr Texeira that the Claimant was merely a “service provider”.

60. Mr Mante then referred to the trademark registration of LUXHABITAT, asserting that it was unclear how the registration was relevant to the dispute and the injunction sought. I think, with respect, that that is correct, that the registration of the brand is not material to the nature of the co-branding arrangements under the Agreement.

61. Mr Mante went on to refer to Mr Texeira’s account of correspondence and negotiations between the parties. All of the correspondence was said to show that Mr Mante considered co-branding to be an integral part of the relationship.

62. In relation to Mr Texeira’s statement that any loss suffered by the Claimant can be compensated by money, Mr Mante said that the value of the brand itself, if lost, would be extremely difficult to quantify particularly when taking into account future opportunities. He then essayed further argumentative statements in relation to the risk of losses, referring to his concern that the business would lose a significant amount of traffic or leads as a result of the proposed rebranding. The proposed mismatch between the branding and the domain name would result in confusion in the market. This, it was said, would be hugely damaging not only to the Claimant’s brand but also to the Defendant’s business.

63. Mr Mante expressed his concern that the Defendant made no reference to the stage of rebranding that it had reached or the preparations that it had already put in place such that it would be able to execute at short notice. He asserted his belief that there was a clearer case of urgency now that favours granting an interim injunction.

64. As to the alleged delay in initiating the claim, he said the rebranding notice sent in April 2023 was the first time that the Claimant was informed of the Defendant’s intention. This prompted further discussions set out in Mr Texeira’s statement. As the final deadline of July 2023 approached, discussions came to an impasse. Mr Mante said he realised there was no possibility of compromise and that the Defendant would press ahead with the rebranding.

65. In relation to the underpayment of commissions, he asserted his belief that they are the main driver behind the rebranding strategy. This could not be saved by an external audit.

66. As to the Claimant’s financial position, he contended that the Claimant has a very substantial money claim for partnership fees supported by the Defendant’s own data. If necessary, that claim, said to be partly admitted by the Defendant in Texeira’s statement, could effectively stand as security for any liability under a cross undertaking.

67. The Claimant was willing to have a hearing for final relief on 22 September 2023. The Defendant opposed that suggestion. The Claimant confirmed that it would provide security if necessary, but that such security should be protected by way of a cross-indemnity from the Defendant for any losses sustained by the Claimant as a result of providing the security. At this stage the Claimant has not filed any claim for final relief.

Stautory Framework — Contract Law, DIFC Law No 6 of 2004

68. The Claimant referred to Articles 49 to 51 in Part 5 of the Contract Law relating to interpretation. Relevantly, they include:

Statutory Framework — Law of Damages and Remedies DIFC Law No 7 of 2005

69. The Defendant drew the Court’s attention to provisions of the DIFC Law of Damages and Remedies relating to the grant of interim remedies, injunctions and specific performance.

70. Article 36, Orders for interim remedies, provides relevantly as follows:

71. Article 38 relevant to the grant of final injunctive relief provides:

72. The Defendant contended that the relief sought by the Claimant is in the nature of specific performance of alleged contractual obligations. In that connection the Defendant referred to Article 39 and the need for specificity of the obligation to be performed:

73. Article 40 provides for the award of damages as an additional or substitute remedy in an application for injunction or specific performance.

The criteria for the grant of an interim injunction

74. The Claimant set out a number of propositions about the criteria for the grant of an interim injunction. They may be wrapped up in the proposition that the applicant for interim relief must demonstrate a serious case to be tried and that the court will usually need to be satisfied that the balance of convenience favours granting an order.

75. The Court was referred to the decision of the House of Lords in American Cyanamid Co v Ethicon Ltd [1975] AC 396. Unlike the present case, which concerns a disputed construction of a contract, that was a case in which the court was concerned with an application for interlocutory relief on disputed facts. Lord Diplock observed:

He went on:

76. With one qualification, the position in Australia aligns with what was said in American Cyanamid. In Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618, the High Court said that such applications require two main inquiries:

The Court continued:

77. In Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, Gummow and Hayne JJ, with whom Gleeson CJ and Crennan J agreed, referred to the expression of various views and assumptions about the relationship between the judgment in Beecham delivered in 1968 and the speech of Lord Diplock in American Cyanamid in 1975. As they observed, Lord Diplock was at pains to dispel a notion which apparently had persuaded the Court of Appeal to refuse interlocutory relief, that to establish a prima facie case of infringement it was necessary for the plaintiff to demonstrate a more than a 50% chance of ultimate success. Their Honours quoted Lord Diplock’s remark (at 406) that:

Gummow and Hayne JJ observed that when Beecham and American Cyanamid are read with an understanding of the issues for determination and an appreciation of the similarity in outcome, much of the assumed disparity in principle loses its force. There is no objection to the use of the phrase “serious question” if it is understood as conveying the notion that the seriousness of the question, like the strength of the probability referred to in Beecham depends upon the considerations emphasised in Beecham (at 70). Their Honours identified a difference, however, in the apparent statement by Lord Diplock that provided the court is satisfied that the plaintiff’s claim is not “frivolous or vexatious” there would be a serious question to be tried and that would be sufficient. Their Honours held to be inconsistent with the Australian doctrine the statement that:

Their Honours observed:

78. Gleeson CJ and Crennan J expressly agreed with Gummow and Hayne JJ that the twostage Beecham test should provide the “organising principles” for the grant of interlocutory injunctive relief in Australian law.

79. That said, the American Cyanamid test continues to be accepted in the United Kingdom and has been reflected in some judgments in the DIFC Courts. A later statement of the test for interim relief appeared in the judgment of Cranston J in Ashworth v Royal National Theatre [2014] 4 All ER 238 [2014] EWHC 1176 (QB). It was closer to the present case as it concerned the disputed construction of a contract. In that case, the claimants were professional musicians who had been engaged by the defendant theatre to play their instruments in one of its plays. The defendant decided to change to a production in which the music was recorded and gave the claimants notice of termination. The claimants sought remedies for breach of contract and applied for interim relief requiring the defendant to continue to engage them until the trial of their claim. The Court held that although there was a serious issue to be tried on the interpretation of the contracts, there was no real prospect that the claimants would obtain specific performance or a final injunction in substantially the form of the interim relief sought. Cranston J at [2] stated:

80. That case, like the present, involved construction of a contract. Its words did not cover the defendant’s actions. The defendants in the case contended that a term could be implied conferring power on it to give notice of termination in the event of a creative decision such as dispensation with an orchestra. The claimants’ construction, it argued, would have had a highly unreasonable result.

81. Cranston J held that none of the arguments overcame the plain words of the contract. It expressly set out the circumstances in which the claimants’ engagement might be terminated. It did not seem possible to imply any further circumstances in which the giving of notice would be permitted. It was therefore a serious case to be tried on the question whether the defendant was contractually entitled to terminate the claimants’ contracts. Cranston J said:

82. The strength of the claimant’s case seems to have been a relevant factor. It was not suggested that it was sufficient that the case not be hopeless.

83. That judgment then turned to the question whether the claimants had real prospects of obtaining at trial an order for specific performance of the contracts or an injunction to like effect. Cranston J held that it would be inappropriate in the circumstances for the court to enforce the contract by specific performance or analogous injunction. There was clearly an absence of personal confidence on the part of the defendant. The claimants themselves would be affected by knowing that the defendant did not want them and believed that the play would be better without them.

84. The present case turns upon the disputed construction or effect of clause 5.1(g) of the contract in relation to the adoption and continuance of a co-branding strategy. A serious case to be tried on a disputed contractual provision may be established where there is more than one constructional choice reasonably open to the Court. If the constructional 25 of 29 choice for which the Claimant contends is not reasonably open, then there is not a serious case to be tried.

The Claimant’s contentions

85. The Claimant contended that there is a clear contractual obligation to maintain the existing branding which the Defendant is threatening to breach.

86. The Claimant contended that in principle the Court can have regard to a wide range of circumstances in determining the meaning of a DIFC Law contract. In practice, it was submitted, the objective meaning of the words agreed would be of most significance. That submission can be accepted.

87. The words of clause 5.1(g) were said to contain an agreement to implement a co-branding strategy during the term of the Partnership. The parties were said to have thereby agreed that for the duration of the Agreement both brands would be used in marketing the Defendant’s business. Co-branding is a well-known marketing term and means a combination of brands without changing them, in a way that each brand is still clearly recognisable. Both parties were aware of the meaning of co-branding. The Claimant submitted that the parties had agreed on a mechanism to decide on the branding strategy which was to be implemented within three months of the Agreement. This demonstrated that this was not simply an option that the Defendant could exercise or not at its leisure.

88. Obvious commercial reasons for this approach were:

89. The Claimant’s position about the meaning and interplay of clauses 5.1(f) and 5.1(g) was said to be supported by the structural order in which the parties chose to present them. Under clause 5.1(f) the Defendant had a right to use the Claimant’s brand but no payment or consideration was specified. Clause 5.1(g) set out the basis upon which the right in clause 5.1(f) had been granted. This was said to be a logical order to present the bargain between two parties to the effect that one has (a) the right; and (b) the obligation to use the other’s brand for the duration of the agreement.

90. The Claimant pointed to the opening words of each of the provisions “during the term of the Partnership”. They were the only two clauses within clause 5.1 to begin in that way. The right and obligation were said to be coterminous.

91. The Claimant submitted that there was a very clear contractual obligation on the Defendant to co-brand and to implement the findings of the external branding study. Rebranding would be a breach of those obligations. The Defendant’s position that it was rebranding because it asserted that co-branding was bad for business, was a clear threat that it would breach the Agreement and as appeared from Mr Texeira’s witness statement, had already done so. The submissions then went on to deal with various argumentative contentions made by Mr Texeira about the Defendant’s intention.

The Defendant’s contentions

92. The Defendant submitted that the Claimant’s case hinged upon the false proposition that clause 5.1(g) of the Agreement (if read in isolation) required the Defendant to trade under the name of “Luxhabitat Sotheby’s International Realty” for either a minimum five-year “lock-in period” until 14 June 2025 or for a ten-year period until 14 June 2030. This was not, however, what clause 5.1(g) actually said, either expressly or by implication. It had to be read in its commercial context and its linguistic context having regard to the totality of the Agreement and the admissible factual matrix.

93. The Defendant made four points against the Claimant’s proposed interpretation:

No serious case to be tried

94. Under the Agreement the parties agreed to “implement a co-branding strategy to combine the market strength of both companies and increase brand awareness, market share and customer loyalty.” They agreed to do so in a context in which the Claimant had sold its 28 of 29 real estate brokerage business to the Defendant. It was the Defendant who was to benefit from the co-branding strategy, carrying on with what was its original business combined with that it had acquired from the Claimant. The purpose of the co-branding strategy, as appears from clause 5.1(g) included “to combine the market strength of both companies”. That must be read as a reference to the market strengths of the businesses — that previously carried on by the Claimant and that now to be carried on by the Defendant. The market strength of the Claimant’s brand derived from a business which it no longer carried on. The purpose of increasing brand awareness, market share and customer loyalty plainly referred to the increase of the brand, market share and customer loyalty attaching to the expanded real estate brokerage business carried on by the Defendant. For that purpose it had the right to use the brand and domain name of the Claimant under clause 5.1(f). Additionally, it was entitled to call upon the cooperation of the Claimant in the implementation of a co-branding strategy.

95. The co-branding strategy was, on its face, intended to benefit the business carried on by the Defendant. A construction which would oblige the Defendant, regardless of its business interests, to continue the co-branding strategy for the period of the Agreement, up to ten years, does not make commercial sense and, in my respectful opinion, is untenable. Counsel for the Claimant has pressed his constructional arguments with nicety. However, in my opinion the construction for which he contends has no real prospect of being accepted in a contest for final relief.

96. There is something inherently uncommercial about the proposition that the Defendant agreed to be locked in, for the term of the Agreement, to co-branding with the Claimant whose role under the Agreement was essentially a provider of marketing services to the Defendant.

97. Despite co-branding being an accepted marketing term, the co-branding strategy contemplated by clause 5.1(g) could have taken a variety of forms. The independent study referred to in clause 5.1(g) cannot be characterised as some sort of third party determination binding the Claimant and the Defendant to its recommendations. The study was intended to “set the best branding direction going forward …”. A “branding direction” may encompass a variety of possibilities, including time-limited co-branding. It cannot define the content of a contractual obligation binding the parties together for a period of up to ten years. In my opinion the application for an interim injunction should be dismissed

Costs and the undertakings.

98. Ordinarily, when an application for interim relief is dismissed, the finding being provisional in character absent a trial for final relief, the costs of the application may be stood over for a final hearing. In this case the claim for interim relief was brought as a stand alone proceeding and not as an application in aid of a claim for final relief. I am presently inclined to the view that the claim for interim relief having been brought as a stand alone proceeding the costs should follow the event. However, as that question has not been fully explored with the parties, I will allow them to make short written submissions on that aspect. The parties also have leave to apply, in writing, in respect of their undertakings.