July 25, 2024 COURT OF FIRST INSTANCE - ORDERS
Claim No: CFI 056/2022
IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURT
IN THE COURT OF APPEAL
BETWEEN
FURSA CONSULTING
Claimant/Appellant
and
AJAY SETHI SHAKTI CHAND SETHI
Defendant/Respondent
ORDER WITH REASONS OF CHIEF JUSTICE ZAKI AZMI
UPON the Judgment of H.E. Deputy Chief Justice Ali Al Madhani dated 5 October 2023 (the “Judge”)
AND UPON the Claimant’s application seeking permission to appeal dated 25 October 2023 (the “First Permission to Appeal Application”)
AND UPON the Judge’s Order with Reasons dismissing the First Permission to Appeal Application dated 21 May 2024
AND UPON the Claimant’s renewed application seeking permission to appeal dated 12 June 2024 (the “Renewed Permission to Appeal Application”)
AND UPON the Claimant’s Application No. CFI-056-2022/5 filed on 5 June 2024 (the “Stay Application”)
AND UPON the Respondent’s submissions in opposition of the Renewed Permission to Appeal Application dated 18 July 2024
AND UPON review of the court file and submissions contained therein
IT IS HEREBY ORDERED THAT:
1. The Renewed Permission to Appeal Application is dismissed.
2. The Stay Application is dismissed.
3. The Claimant shall pay the Defendant’s costs of the Renewed Permission to Appeal Application and the Stay Application, to be assessed by the Registrar, if not agreed.
Issued by:
Hayley Norton
Assistant Registrar
Date: 25 July 2024
At: 8am
SCHEDULE OF REASONS
1. This is a renewed application to appeal against the decision of the judge at first instance.
2. The judge in his reasoning had gone into detail as to the facts as well as the arguments put forward by both parties.
3. I shall be referring to the parties as they were referred to in the judgment i.e. the Claimant and the Defendant.
4. In his appeal, the Claimant set out 13 grounds for why permission to appeal should be allowed. The judge had also given reasons for why he refused permission to appeal. I have considered all of these grounds although I may deal with them individually in this judgment.
5. As to the facts of this case, the Defendant had engaged the Claimant to help him get a financial institution or a bank to buy out the Defendant’s debt obligation towards his current lender bank from which he was owing AED 45 million as well as to get new financing of AED 28 million for him to acquire 49 apartments and working capital for a company called Channel Two Group Corporation. The Claimant claimed that he performed his part of the bargain because the Defendant had accepted and signed off on the facility agreement issued by another bank, ENBD and, as such, he therefore claimed the success fee of 2%, which amounts to AED 966,000. The Defendant, on the other hand, submitted that his obligation to pay the success fee had not arisen because the terms of the facility agreement had not been activated. In fact, according to the judgment, the facility agreement which the Defendant had signed was revoked by the bank, although the parties disputed as to whether the notification by the Claimant to the bank that he had terminated the agreement with the Defendant, had contributed to the bank withdrawing that facility letter.
6. The Claimant’s case against the Defendant is reliant strictly on the wording of the agreement or Letter of Engagement entered into between the Claimant and the Defendant. The term, which the Claimant is relying on, reads as follows:
“The Client agrees to pay Fursa Capital Success Fees in the case of a Successful Transaction maximum within 30 days from the date of signing of Facility Offer Letter facility or draw-down, whichever is earlier. For the purposes of this Engagement Letter, a “Successful Capital Transaction” means the acceptance and signing of the Facility Offer Letter by the Client issued by the banks.”
“It is further agreed between Parties that in the event of the Advisor shall have signed a facility offer letter for the project facilities, from any bank(s)/financial institution(s) with the agreed terms and conditions as per the information memorandum of the Transaction, and: (i) the Client unilaterally decides to withdraw(back out) or cancels the Transaction or this LOM; and/or (ii) the Client performs some act or omits to perform some act, time also being the important essence of the understanding hereof, voluntarily or otherwise which results in the failure of achieving the financial closure of the Transaction as agreed in this LOM, whether in part or full, the Advisor shall be entitled to claim full compensation, as per the terms of this LOM, for its efforts.”
7. The judge in his judgment at paragraph 45 decided that the term “Successful Transaction” could clearly have two different meanings in the light of the party’s relationship to achieve a commercial purpose of the proposed transaction and conduct of the Defendant subsequent to the termination of the agreement. However, the wording that appears in the agreement or engagement letter seems to be quite strict i.e. whatever happens after the signing of the facility agreement, whether the deal goes through or not, the fees have to be paid. The term “Successful Transaction” had been defined in the engagement letter to mean the acceptance and the signing off of the Facility Letter Offer. The Defendant on the other hand referred to the DIFC Contract Law where at Article 49 it is provided that a contract shall be interpreted according to the common intention of the parties and if such intention cannot be established the contract shall be interpreted according to the meaning that reasonable persons of the same kind as the parties would give it in the circumstances. Article 51 goes on to provide that in determining the intention of the party, regard shall be had to all circumstances including: (a) preliminary negotiation between the parties; (b) practices which the party established between themselves; (c) conduct of the parties subsequent to the conclusion of the contract; (d) the nature and purpose of the contract; (e) the meaning commonly given to terms and expression in trade concern; and (f) usages. This is where the dispute arises as to how the interpretation should be. The judge, in arriving at his conclusion to dismiss the claim, also took into consideration the previous relationship between the Claimant and the Defendant. Of course, if we are to consider the parties’ intention, I am quite sure that the Claimant should be paid that Success Fee only when the Defendant receives from the bank, ENBD, payment to the previous bank as well as payment for the 49 apartments. But then that goes against the strict wording of the Letter of Engagement. It would also seem unconscionable to require the payment of the fees to be made in these circumstances. Looking at Article 49 of the DIFC Contract Law there arises the question as to whether the court should take the definition of “Successful Transaction” appearing in that Letter of Engagement because it was clearly worded or in these circumstances, can the court conclude, as had been done by the Court of First Instance, that the intention of the parties cannot still be established just by those words. It is difficult to say that the Claimant’s contention that the Engagement Letter should be strictly read and applied as reflecting the common intention of the parties because the Defendant would then have to pay the Success Fee to the Claimant, although he has not benefited anything from the transaction.
8. Under RDC 44.9, before permission to appeal is given the court must be satisfied that there is a real prospect of success, and this term “the real prospect of success” has been discussed in many cases, in England as well as in the DIFC Courts. Parties need only to refer to Justice Sir Richard Field's judgment in Vannin PCC PLC v Mr. Rafael Abdel Mohsen and others. The Claimant has to show that the court was plainly wrong or wholly wrong, and since this is a finding of fact, he must show that no judge in the same circumstances would have arrived at the same reason which the learned judge did in this case. He must show “No person acting judicially or properly instructed as to the relevant law could have come to the determination under appeal.” I am strongly persuaded by the submission put forward by the Defendant at paragraphs 12 to 17 of his submission and I therefore conclude that reading through the judge’s judgment, I do not see any real prospect of success even if permission to appeal is given. In my opinion, the judge had gone into great depth discussing the facts of the case in detail, as well as the arguments put forward by the Claimant and he was not plainly wrong in his finding of facts. The judge concluded that the Claimant failed to achieve the primary commercial objective of the agreement, i.e. to transfer the loan to another bank and to get financing to purchase the 49 apartments. He concluded that the Claimant had not performed his part of the bargain. He also held, (which is difficult to disagree), that the Defendant contemplated that he would be liable to pay the Claimant the success fee only if and when the facility was actually approved or sanctioned by the new lender, ENBD. The evidence of Mr. Farooq and Mr. Khan are very relevant. Both admitted in their oral evidence that the Defendant’s commercial purpose was to have access to the facility as well as for him to acquire the 49 apartments. The judge also applied the Contra Proferentum rule finding the interpretation against the maker, i.e. the Claimant.
9. I therefore dismiss this renewed application to appeal with costs. Costs shall be determined by the Registrar unless agreed to by the parties.
10. The application for a stay is therefore dismissed with costs as well.
