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Claim No. CFI 057/2021

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

KHALED SALEM MUSABEH HUMAID ALMHEIRI

Claimant

and

(1) MOHAMMAD EZELDDINE EL ARAJ
(2) JOHN CAMERON

Defendants

ORDER OF JUSTICE WAYNE MARTIN

UPON reviewing the Claimant’s Application No. CFI-057-2021/3 dated 29 June 2021 for a de novo review filed pursuant to Practice Direction 3 of 2015 of the Registrar’s direction in an email sent on 22 June 2021 ( the “Application”)

AND UPON reviewing the First Defendant’s evidence in answer to the Application dated 5 July 2021

AND UPON reviewing the Claimant’s evidence in reply dated 8 July 2021

IT IS HEREBY ORDERED THAT:

1. Time will be extended to enable the Application to be heard.

2. The Application is dismissed and the Registrar’s decision is affirmed.

3. The Claimant will pay the First Defendant’s costs of the Application in the amount of USD4,736.25.

4. The parties will have fourteen (14) days from the date of publication of these reasons to provide submissions to the Court on the question of whether the Court should make a direction pursuant to RDC 8.4 to the effect that the claim continue as if the Part 8 procedure had not been used and if so, what other directions would be appropriately made with that order.

Issued by:
Nour Hineidi
Registrar
Date of issue: 28 July 2021
At: 11am

SCHEDULE OF REASONS

Summary

1. The Claimant has applied for review de novo¹ of the decision of the Registrar to direct that the Acknowledgement of Service filed on 17 June 2021 by the First Defendant be treated as accepted by the Court and filed in accordance with the Rules of the Court.

2. For the reasons which follow, the application should be dismissed and the decision of the Registrar affirmed.

Procedural history

3. On 30 May 2021, the Claimant commenced proceedings against the first and second defendants claiming an amount of USD30,414,489.71 from each defendant, together with interest, default interest and all costs payable by the principal debtor accruing since 23 May 2019. Each defendant is said to be liable in that amount under various security agreements particularized in the Particulars of Claim which were allegedly executed in connection with a series of commercial transactions also particularized in the Particulars of Claim.

4. Proceedings were commenced using the procedure under RDC Part 8. That procedure is only available where a claimant “seeks the Court’s decision on a question which is unlikely to involve a substantial dispute of fact”.² The amount of the claims against each defendant and the complexity of the matters particularized in the Particulars of Claim suggest, on their face, that the Claimant is using the Part 8 procedure inappropriately. I will direct that the parties have fourteen (14) days from the date of publication of these reasons to provide any submissions on the question of whether I should exercise the power conferred by RDC 8.4 to order that the claim continue as if the Claimant had not used the Part 8 procedure and if so, what directions would be appropriate.

5. The Claim Form and associated documents were served on the First Defendant on 1 June 2021. It follows that the First Defendant was required to file an Acknowledgement of Service no later than 15 June 2021.

6. On 14 June 2021 the First Defendant applied for an order extending the time limit for submission of his Acknowledgment of Service from 15 June 2021 to 29 June 2021. That application was supported by a witness statement provided by the First Defendant. In that witness statement the First Defendant asserted that although he was served with the Claim Form outside the DIFC, he was not provided with an Arabic translation of the Claim Form as required by the RDC. However, the First Defendant elected to take no issue with the Claimant’s apparent failure to comply with the requirements of the RDC in this respect.³

7. The First Defendant also asserted in that witness statement that the Particulars of Claim did not “present the complete and accurate picture in relation to all of the relevant background and circumstances” as between the parties.⁴

8. The First Defendant further asserted that material information is conspicuously absent from the Particulars of Claim.⁵ He asserted that it was therefore necessary for him to search for various documents which go back over many years and, in some instances, well over a decade.⁶

9. The First Defendant met with his legal advisors on 6 June 2021. Following the receipt of legal advice, the First Defendant asserted that he needed additional time in which to fully investigate and analyse matters with the assistance of his legal advisors after locating documents dating back many years.

10. The First Defendant’s legal advisors wrote to the Claimant’s legal advisors on 9 June 2021 requesting an extension of time of 14 days within which to file the relevant Acknowledgement of Service. That request was denied by letter dated 10 June 2021.

11. The First Defendant further asserted in his witness statement that the extension of time sought would not occasion any prejudice to the Claimant, given that the demand for payment had been issued by the Claimant more than two years earlier. The First Defendant suggested that the extension of 14 days which he requested should be viewed in the context of the delay of two years in commencing the proceedings against him.⁷

12. Given the imminent expiry of the period within which the Acknowledgement of Service had to be filed, the Court directed the Claimant to file any submissions in opposition to the application for an extension of time forthwith. In response to that direction the Claimant filed submissions in opposition to the application for an extension of time on 15 June 2021.

13. In those submissions, the Claimant asserted that the First Defendant had misconceived the nature of the application for an extension of time, and that the First Defendant was required to make an application for relief from a sanction imposed for failure to comply with a Rule.

14. That submission was misconceived. At the time it was made the time for filing an Acknowledgement of Service had not expired and nothing in the nature of a sanction had been imposed upon the First Defendant.

15. In those submissions the Claimant also challenged the reasons given by the First Defendant in support of his application for an extension.

16. The First Defendant responded to those submissions by email to the Court Registry and copied to the Claimant’s lawyers during the afternoon of 15 June 2021.

17. On 16 June 2021, after the expiry of the time within the First Defendant’s Acknowledgement of Service had to be filed, a Judge of the Court made orders with respect to the First Defendant’s application in the following terms:

18. No reasons were given for the orders made. It is therefore impossible to ascertain from the Court record which, if any, of the various propositions advanced by the Claimant in opposition to the application for an extension of time were accepted by the Judge, or whether the application was rejected for some other reason.

19. This is of significance because, with respect, in the absence of reasons or other explanation, the effect of the second order made by the Judge is very difficult to ascertain. By that order the Judge directed the First Defendant to file the Acknowledgement of Service “as permitted by the RDC”. However, by the time that order was made, the time within which the First Defendant was permitted to serve his Acknowledgement of Service under the RDC had expired. On the face of it, it was impossible for the First Defendant to comply with the Judge’s order at the time it was made.

20. The Claimant submits that the Judge’s second order should be construed as imposing a requirement that the First Defendant apply for relief from sanction pursuant to RDC 4.49. That submission must be rejected as it is contrary to the clear wording of the order. By that order the Judge directed the First Defendant to file an Acknowledgement of Service. If the Judge had in mind RDC 4.49, his order would have directed the First Defendant to apply for relief under that provision of the Rules. Further, if that was what the Judge had in mind, he would no doubt have been aware that if such an application was made, the Court would be required to consider the nine matters specified in RDC 4.49 before deciding whether or not to grant the relief sought and extend the time for filing the Acknowledgement of Service. Whether or not the relief would be granted would be a matter for the Court to determine after taking into account those various matters. The process of seeking relief from the Court under RDC 4.49 cannot be any stretched process of construction be characterised as filing a document “as permitted by the RDC”.

21. In the absence of reasons, the Judge’s motivation for making the second order must be a matter of speculation. However, the most likely explanation is that the Judge was not aware that the time within which the First Defendant was permitted to file an Acknowledgement of Service had expired the day before he made his order. If that inference is correct, it might also shed some light on the reasons for the Judge’s rejection of the application of an extension of time for 14 days – namely, the erroneous belief that there was still time within which the First Defendant could file an Acknowledgment of Service without suffering any adverse consequences under Part 8. However, I repeat that these suppositions must remain speculative.

22. The First Defendant’s lawyers were notified of the Judge’s orders during 16 June 2021. In an endeavor to comply with those orders, during the evening of 16 June 2021, after the Court Registry had closed, the First Defendant’s lawyers sent an Acknowledgement of Service to the Court by electronic means. That document was received and filed by the Registry on the case file when the Registry reopened on 17 June 2021.

23. After the Claimant’s lawyers became aware that the First Defendant had filed an Acknowledgement of Service, they sent an email to the First Defendant’s lawyers asserting that the Acknowledgement of Service had not been validly filed, that an application for relief from sanction pursuant to RDC 4.49 was required, and advising that the Claimant would proceed to enter judgment against the First Defendant.

24. As a result, on 21 June 2021, the First Defendant’s lawyers sent an email to the Court Registry, reciting the sequence of events in relation to the application for an extension of time, asserting that the First Defendant filed his Acknowledgement of Service as soon as reasonably practicable following receipt of the order made by the Judge on 16 June 2021, and requesting:

... the Court Registrar to issue a direction of the Court confirming that the first defendant’s Acknowledgement of Service is treated as accepted by the Court and filed in accordance with the Rules of the Court.

25. That email was not copied to the Claimant’s lawyers. That omission was bad practice, as the Court pointed out in the responsive email. In that email the Court advised that the Registrar had directed:

I am happy to allow it on this one occasion. Typically, the application would seek an immediate stay pending the determination of the application.

26. This direction should be construed by reference to the email which preceded it, and as a direction in the terms requested in that email – namely, as a decision to the effect that the Acknowledgement of Service filed by the First Defendant had been accepted by the Court and in accordance with the Rules of the Court. That is the decision which the Claimant asks the Court to review de novo.

27. In the absence of reasons for the Registrar’s decision, it is difficult to be certain as to the basis upon which she was proceeding. However, given her reference to a typical application seeking “an immediate stay pending the determination of the application” it seems reasonable to infer that she considered that she was exercising the power conferred upon the Court by RDC 4.2 to extend the time for compliance with any Rule (even if the application for extension is made after the time for compliance has expired).

28. In any event, because I am considering the matter de novo, it is unnecessary to speculate as to the Registrar’s reasoning. Rather, the question for me is whether, on all the information now available, the decision should be maintained. That question is properly addressed by reference to the power conferred upon the Court by RDC 4.2. The First Defendant has filed an Acknowledgement of Service outside the time permitted by the Rules. Unless the order of the Judge is construed as the grant of an extension of time within which to file that Acknowledgement, which is difficult given the absence of any words to that effect, an extension of time is required. The question which must now be addressed is whether an extension of time should be granted to enable the Acknowledgement of Service to be filed on 17 June 2021, two days after the time permitted by the Rules.

29. The Claimant submits that the Court does not have power to extend the time for filing an Acknowledgement of Service by the First Defendant pursuant to RDC 4.2, because the First Defendant is “in sanction” and must apply for relief from that sanction under RDC 4.49. As I understand the Claimant’s submissions, there are two alternative grounds for this assertion. The first is based upon the second order made by the Judge rejecting the First Defendant’s application for an extension of time. The second ground is based upon the operation of the Rules.

30. Dealing firstly with the order made by the Judge, I have addressed above the difficulty of construing that order in the absence of any reasons or explanation of its terms. However, for the reasons I have already given, there is no reasonable basis upon which the order could be construed as a direction requiring the First Defendant to apply for relief under RDC 4.49.

31. Turning now to the Claimant’s contentions based upon the Rules of Court, the relevant rules are:

32. It is convenient to deal first with the First Defendant’s submission that RDC 8.16 does not apply because the First Defendant has not failed to file an Acknowledgement of Service. Implicit in this submission is the proposition that a defendant to proceedings brought pursuant to Part 8 can file an Acknowledgement of Service without the leave or permission of the Court at any time before judgment is entered and thereby avoid the operation of RDC 8.16.

33. This submission ignores RDC 8.13, which is expressed in imperative language, and provides that a defendant “must” file an Acknowledgement of Service within the time specified. Acceptance of the First Defendant’s submission would deprive RDC 8.13 of any effect, and render RDC 8.16 largely ineffective. It would also have a significant adverse impact upon the management of proceedings under Part 8 if there are, in effect, as the First Defendant implicitly contends, no time limits upon the capacity of a defendant to file an Acknowledgement of Service and thereafter participate fully in the proceedings. It would be entirely inconsistent with the expeditious process inherent in Part 8 to construe the relevant Rules in the manner suggested by the First Defendant.

34. Returning to the Claimant’s contention that RDC 4.2 does not apply to these circumstances, although not expressly enunciated in these terms by either party in their submissions, the central question is whether RDC 4.46-4.49 exclude the operation of RDC 4.2 in any circumstance in which a sanction attaches following the expiry of a time limit.

35. There are at least four reasons why the provisions of RDC 4.46-4.49 do not exclude the operation of RDC 4.2.

36. First, there are no words in RDC 4.46-4.49 which provide that RDC 4.2 shall not apply.

37. Second, RDC 4.48 refers expressly to extensions of time, and precludes such extensions by agreement between the parties. It is implicit in that limited exclusion that the Court retains the power to extend time conferred by RDC 4.2.

38. Third, it is difficult to imagine any circumstance in which the expiry of time for compliance with a Rule or order of the Court will not have a consequence which can be characterized as a “sanction” within the meaning of that term in RDC 4.46-4.49. If those Rules have the effect for which the Claimant contends, RDC 4.2 would have little or no practical application. However, the express terms of RDC 4.2 clearly indicate that it is intended to be a provision of general application unless excluded, and that is to operate notwithstanding the expiry of the relevant time limit, and the consequent imposition of any sanction for non-compliance within the time specified in the relevant Rule or order.

39. Fourth, RDC 4.46-4.49 potentially apply to a very broad range of sanctions imposed for a broad range of failures to comply with Rules or orders. Failure to perform an act within a specified time is only one of the many potential failures to which those Rules might apply. By contrast, failure to perform within a specified time is the specific subject of RDC 4.2. There is a general rule of legislative interpretation to the effect that in the event of inconsistency, specific provisions prevail over provisions of more general application. That rule should be applied so that RDC 4.2 applies notwithstanding that the general provisions of RDC 4.46-4.49 might also apply in the case of a failure to perform within a specified time.

40. It follows from these observations that on the proper construction of the Rules, if in a particular case the Court exercises the power conferred by RDC 4.2 to extend the time for performing any act and the act is or has been performed within the extended time, RDC 4.46-4.49 will have no application because there will be no relevant failure to comply, nor any sanction imposed by reason of any such failure.

41. For these reasons, as I have already noted, the essential question which arises on this review de novo is whether the time within which the First Defendant was required to file his Acknowledgement of Service should be extended by two days, from 15 June 2021 to 17 June 2021.

42. It is appropriate to now turn to the submissions of the parties which are relevant to that issue, other than those which have already been addressed in these reasons. Both parties have placed before the Court a lengthy series of communications between the legal representatives of the parties in which various propositions are advanced and refuted in terms which generate more heat than light. I do not propose to canvass the issues addressed in that correspondence but rather to focus only upon the written submissions which have been filed with respect to the application for review.

The Claimant’s submissions

43. A number of the Claimant’s submissions misconceive the nature of the process of review de novo. The essence of that process is the re-exercise, afresh, of the relevant power of decision on the basis of all the information and evidence before the Court at the time of the review. It follows that there is no point or purpose to be served in any inquiry into the adequacy of the information available at the time of the decision under review, or as to the procedure which preceded that decision, or as to whether that decision was vitiated by error. All of those matters are simply irrelevant.

44. It follows that the Claimant’s assertion that the process preceding the Registrar’s decision was defective because the email to the Court was not copied to the Claimant’s lawyers, and did not attach the emails which those lawyers had sent to the First Defendant’s lawyers, or did not apprise the Registrar of all pertinent circumstances, miss the point. The Claimant has now had every opportunity to place all relevant facts, circumstances and submissions before the Court, and to the extent they are relevant, those matters will be taken into account when the question is considered afresh, as I am now doing.

45. The Claimant also submits that the First Defendant is attempting to gain an unfair advantage by avoiding the need to make an application under RDC 4.49 and address the nine factors specified in that Rule. It follows from the views I have already expressed that this submission must be rejected. If time is extended for the filing of the Acknowledgement of Service, RDC 4.49 will have no application. This is not unfair in any meaningful sense, it is simply the consequence of the First Defendant making out a case for the extension of time.

46. It follows that the Claimant’s subsidiary submission to the effect that this review should be deferred until the substantive hearing of the First Defendant’s objection to jurisdiction on the ground that the outcome of that objection will overlap significantly with the factors to be considered in an application under RDC 4.49 must also be rejected.

47. In summary, the various submissions advanced by the Claimant in support of the application for review are either irrelevant or depend upon an erroneous view as to necessity of an application under RDC 4.49.

The First Defendant’s submissions

48. I have already considered and rejected the First Defendant’s submission⁸ to the effect that he is not subject to RDC 8.16 as he has filed an Acknowledgement of Service, irrespective of whether or not that document was filed within the time prescribed by RDC 8.13.

49. The First Defendant has also provided submissions in opposition to the various submissions advanced by the Claimant. It is unnecessary to deal with those submissions, as I have essentially rejected the submissions made by the Claimant in any event.

50. On behalf of the First Defendant it is also submitted that he has behaved reasonably at all times and acted as quickly as he could in all of the circumstances and should not therefore be prejudiced by the inflexible operation of the Rules. I accept that submission and will elaborate upon my reasons for doing so.

51. The First Defendant applied for an extension of time within which to file his Acknowledgement of Service before that time had expired. The witness statement provided in support of that application provided plausible and coherent justification for the short extension sought. There is force in the observations in that statement to the effect that no tangible prejudice to the Claimant would ensue from the short extension sought. It remains the fact that the Claimant has not identified any prejudice flowing from the fact that the Acknowledgement of Service was filed two days later than prescribed, other than the erroneous assertion that he is thereby denied the opportunity to respond to an application made under RDC 4.49.

52. The First Defendant’s application was not determined by the Court before the time for filing his Acknowledgement of Service had expired. That cannot be said to be the fault of the First Defendant. When the application was determined by the Court, no reasons for its rejection were provided. It is therefore impossible to know whether the Judge rejected the apparently plausible and coherent reasons given by the First Defendant for the extension of time, and if so, on what basis. Nor is it possible to ascertain whether the Judge might have accepted the Claimant’s erroneous submission that the First Defendant was obliged to apply for relief under RDC 4.49 before the time for filing the Acknowledgement of Service had expired.

53. Further, the order made by the Judge at the time the application was rejected is extremely difficult to comprehend, in the absence of reasons or explanation. It leaves open the distinct possibility that the Judge may have been under the erroneous impression that there was still time within which the First Defendant could file an Acknowledgment of Service in accordance with the Rules.

54. At all events, the order made by the Judge clearly and explicitly directed the fFirst Defendant to file an Acknowledgement of Service, and he did so at the earliest reasonable opportunity.

55. In these circumstances, given:

there is an overwhelming case in support of the extension of time for the filing of the First Defendant’s Acknowledgement of Service from 15 July 2021 to 17 July 2021, which is, in effect, what the Registrar ordered.

56. For these reasons, having considered the matter de novo, I can see no reason to interfere with the decision made by the Registrar, which should be affirmed.

57. For the sake of completeness, I note that the Claimant’s application for de novo review was brought one or perhaps two days outside the time limited for the making of such an application by the Practice Direction. Although the First Defendant objected to the application on that ground, given the brevity of the extension sought, the proffer of some explanation for the delay, and the absence of any prejudice by reason of the short delay, I would not dismiss the application for review on that basis and will order that the time for commencement of the application for review be extended until the date upon which the application was brought, pursuant to RDC 4.2.

Costs

58. There is no reason why costs should not follow the event, and the Claimant will be ordered to pay the First Defendant’s costs of the application. A statement of those costs has been filed claiming an amount of USD4,736.25. I have reviewed the rates and times claimed, which appear to me to be reasonable.

Conclusion

59. For these reasons there will be orders that: