September 05, 2024 court of first instance - Orders
Claim No: CFI 051/2017
IN THE COURTS OF DUBAI INTERNATIONAL FINANCIAL CENTRE
IN THE COURT OF FIRST INSTANCE
BETWEEN
GLOBEMED GULF HEALTHCARE SOLUTIONS L.L.C.
Claimant
and
OMAN INSURANCE COMPANY PSC
Defendant
ORDER WITH REASONS OF H.E. JUSTICE SHAMLAN AL SAWALEHI
UPON the Judgment of H.E. Justice Shamlan Al Sawalehi dated 30 January 2024 (the “Judgment”)
AND UPON the Order with Reasons of H.E. Justice Shamlan Al Sawalehi dated 31 July 2024 (the “Order”)
AND UPON the request of the parties to determine the quantum of the case
IT IS HEREBY ORDERED THAT:
1. The quantum of the case will be calculated as AED 66,847,024 (USD 18,199,571).
2. The updated interest calculations to the date of the judgment shall be prepared and agreed by the parties.
3. There shall be no order as to costs.
Issued by:
Delvin Sumo
Assistant Registrar
Date of Issue: 5 September 2024
At: 8am
SCHEDULE OF REASONS
1. The reason for this Order is to respond to the parties’ query regarding the quantum of the case, which is disputed. As there was no formal application on this matter, I will dispense with the usual structure of response and delve directly into issues on quantum. I will also refrain from addressing anything from the main cause of action, or what has already been decided in the previous Order.
2. Experts were called by both parties - Mr. Cottle and Mr. Burrows for the Claimant and Defendant respectively – and agreed to a schedule dated 30 May 2024 setting out the points of disagreement between the parties and their consequences on quantum, using the same arithmetical methods (the “Schedule”). The Schedule is therefore the focus of my deliberations.
3. The Schedule itself is very long and is it is not needed to be repeated here, but the conclusion of the experts’ findings as to the differences between the parties in two scenarios:
| Claimant’s position Scenario AC1 |
Claimant’s position Scenario AC2 |
Defendant’s position Scenario CB1 |
Defendant’s position Scenario CB2 |
|
| Total OIC (AED) | 65,699,469 | 57,852,201 | 29,011,015 | 35,024,530 |
| Total Non-OIC (AED) | 1,147,554 | 1,166,892 | 1,636,132 | 1,638,017 |
| Total OIC and NonOIC (AED) | 66,847,024 | 59,019,093 | 30,647,147 | 36,662,547 |
| Total OIC and NonOIC (USD) | 18,199,571 | 16,068,362 | 8,343,901 | 9,981,635 |
It is important to note that the parties stressed that the experts agreed with each other’s arithmetical accuracy of their respective calculations.
4. For clarification on the following discussion, my understanding of the key terms used by the experts are:
a) Ramp Up – the period over which the portfolio of lives would have been transferred from the Defendant to the Claimant at the start of the TPA Agreement;
b) Ramp Down – the return of the lives to the Defendant after the end of the contractual period; and
c) The scenarios differ due to the contested transfer and termination dates of the BUPA and non-BUPA lives.
5. The experts agree on four principal areas of differences:
a) The duration of the Ramp Up period:
i. The Claimant’s position is that the transfer of non-BUPA lives would have started from June 2015, and BUPA lives from September 2015, and all lives would have been transferred by 31 December 2015.
ii. The Defendant’s position is that the transfer of non-BUPA lives would have started from June 2015, and BUPA lives would have transferred over a 12-month period by 14 January 2017 under Scenario CB1, and 31 August 2016 under Scenario CB2.
b) The duration of the Ramp Down period:
i. The Claimant’s position is that under Scenario AC1 there would be no Ramp Down period and a six month Run Off period, but in Scenario AC2 the Run Off period is the same with a five month Ramp Down period.
ii. The Defendant’s position is that there would be six-month Run Off period with both calculations, but in Scenarios CB1 and CB2 there would be a Ramp Down of all lives per the renewal dates over a 12-month period.
c) The number of Defendant lives that the Claimant could manage:
i. Claimant’s position: 276, 460 lives.
ii. Defendant’s position: 205,076 lives.
d) The profile over which staff would be terminated once the Agreement has ended:
i. The Claimant’s position under Scenario AC1 all staff (excluding Run Off staff) would cease to be paid, and under Scenario AC2 there would be a gradual reduction from the first month of the Ramp down period.
ii. The Defendant’s position is that additional staff would be reduced in line with the reduction in lives, and base staff would be reduced gradually over the Ramp Down period. To note, I do not consider any comment of Mr. Burrows’ legal opinion to be appropriate to incorporate into my decision making, as this is outside the scope of his expertise. I will only consider legal arguments submitted by the parties.
Ramp Up Period
6. In my Judgment, at paragraph 86, I state that “15 January 2016… is the date that shall be assumed for the transfer of the Bupa portfolio.”. I see no reason why I ought to contradict or stray from my previous findings, so as the Claimant’s calculations assume there would have been a transfer by the end of 2015 (and the additional 16 days would have no impact on the expert’s calculations, in accordance with Mr. Cottle), I will take this calendar year approach as the accurate approach for the Ramp Up period. I also see no contention for the Claimant’s understanding that paragraphs 85 and 86 of the Judgement find that both the BUPA and non-BUPA portfolios would have been transferred by that date.
Ramp Down Period
7. Given that the Ramp Down Period is understood to run until the end of contractual obligations, it only makes sense to apply the natural meaning of this to the understood date of termination of the TPA Agreement, which was in 2019. As the calculations use calendar years, it seems to me that the exact date is not relevant to the experts.
8. Clause 13.3 of the TPA Agreement states that “Termination shall enter into effect at the end of the notice period or non-renewal period”, and 13.5 states “The effects of this Agreement shall remain valid for a Run-Off Period to serve the Beneficiaries and Healthcare Programs issued prior to effective Termination date and until settlement of all the pending claims…”. As “Run-Off Period” was determined to be 24 months from the date of termination, but this includes a separate calculation that is less than the Ramp Down Period.
9. I concur that the Claimant would have no contractual obligation to continue performing its services after Termination, and as the Run Off Period incorporates the leftover administration (after all the lives have been transferred back), there is no need to include the Ramp Down Period in quantum.
10. On this, I favour the Claimant’s position, as the Defendants include an additional years’ costs relating to the Ramp Down Period, which should be the Run Off Period.
11. The AC1 scenario adopts the understanding that the lives were transferred to the Defendant on termination. As there is no difference between the parties on the duration of nor volume rebates of the Run Off Period, and therefore the difference is between the administration fees, in my view the AC1 scenario is the most appropriate to apply for quantum calculation.
Payroll
12. The parties present a substantial difference on the calculation of the cost of payroll. The payroll relates to the Claimant’s staff capacity to manage the transferred lives. As the Claimant carried the obligation of managing the lives, I deem it appropriate to favour their calculation of cost, as there is no evidence of the Claimant increasing staff power for the portfolio.
13. Given that I have already determined that the Ramp Down Period ought not to be included in the calculation, I will adopt the approach that costs stop on the Termination date, and therefore favour Mr. Cottle’s conservative figure.
Rental
14. To repeat, I favour the AC1 scenario and so will adopt the appropriate rental cost to reflect this.
Depreciation
15. The difference in the depreciation calculations (203,998 AED) is based on the proportion of staff employed in each part of the business (OIC and non-OIC). As the calculated ratio depends on the final calculation of the other elements, I see no significant reason to stray from the AC1 scenario as the impact of the dates is minimal. The AC1 scenario is favoured here.
General Costs
16. To repeat, I favour the AC1 scenario and so will adopt the appropriate general costs to reflect this, as the general costs are impacted by the duration of the Ramp-Down period which I have already stated follow the Claimant’s interpretation of the Judgement.
ASP Hosting Fees
17. To repeat, I favour the AC1 scenario and so will adopt the appropriate Hosting Fees (no fees post termination) to reflect this.
Royalties and Actual Costs
18. As I have determined that the Ramp Up Period commenced from the end of 2015/start of 2016, I will adopt the calculation that reflects this.
19. As actual costs are agreed, there is no need for further consideration.
Non-OIC Award
20. I confirm that Claimant is correct in their interpretation of the Judgement that the non-OIC losses ought to be calculated for the three years the TPA Agreement was active, with the 25% adjustment.
Calculation
21. As the AC1 scenario is favoured, the appropriate quantum to apply is AED 66,847,024 (USD 18,199,571).
22. The updated interest calculations to the date of the judgement shall be prepared and agreed by the parties.
