December 15, 2022 COURT OF FIRST INSTANCE - ORDERS
Claim No. CFI 054/2019
IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
LARMAG HOLDING B.V.
Claimant
and
(1) FIRST ABU DHABI BANK PJSC
(2) FAB SECURITIES LLC
(3) MR ABDULLA SAEED BAKHEET OBAID ALJABERI
(4) MR ALI MOHAMMED
(5) ELITE HOLDING GROUP LIMITED
Defendants
ORDER WITH REASONS OF JUSTICE SIR RICHARD FIELD
UPON the Injunction and Provision of Information Order of Justice Sir Richard Field dated 19 July 2019 (as continued on 13 October 2019) in CFI-030-2019 (the "Original Injunction")
AND UPON payment of EUR 350,000 made by the Claimant to the DIFC Court on or around 24 July 2019 in accordance with the undertaking at Schedule B, paragraph (2) of the Original Injunction
AND UPON the consolidation order of Justice Sir Richard Field dated 21 November 2021
AND UPON the Freezing Injunction and Provision of Information Order dated 21 November 2019 (as amended and continued on 24 November 2019) restraining the Defendants from (a) removing from the DIFC any of their assets which are in the DIFC up to the value of EUR 7,181,506.81, or (b) in any way disposing of, dealing with or diminishing the value of any of their assets whether they are in or outside the DIFC up to the same value
AND UPON the Judgment of Justice Sir Richard Field dated 15 August 2021 after trial of the action, re-issued on 30 August 2021 (the “Judgment”)
AND UPON the Freezing Injunction and Provision of Information Order of Justice Sir Richard Field dated 16 September 2021 (the "Post Judgment Freezing Order") restraining the Third, Fourth and Fifth Defendants from (a) removing from the DIFC any of their assets which are in the DIFC up to the value of EUR 64,352,669, or (b) in any way disposing of, dealing with or diminishing the value of any of their assets whether they are in or outside the DIFC up to the same value (as continued by the Order of Justice Sir Richard Field dated 2 September 2022)
AND UPON the Order of Justice Sir Richard Field dated 19 January 2022 ordering the First and Second Defendants to transfer 65,000 corporate bonds with International Securities Identification Number XS1257166956 (the “Bonds”) to the Claimant
AND UPON the First and Second Defendants transferring back the Bonds to the Claimant on 9 February 2022
AND UPON the Claimant’s application on notice (CFI-054-2019/24) dated 23 September 2022 (the “Application”) and reading the Sixth Affidavit of Keith Lyall Hutchison dated 23 September 2022
AND UPON considering the Preliminary Ruling issued on 9 November 2022 in respect of the Application herein
AND UPON review of Rules 33.5 – 33.8 of the Rules of the DIFC Court (“RDC“)
IT IS HEREBY ORDERED THAT:
1. The sum of EUR 350,000 paid by the Claimant to the DIFC Court as fortification of (i) the undertaking given by the Claimant at paragraph (1) of the Original Injunction and (ii) the undertaking given by the Claimant at paragraph (1) of Schedule B of the Post Judgment Freezing Order (the Fortification Sum) is to be returned to the Claimant together with any interest accrued thereon by payment to the Claimant’s legal representatives, Clyde & Co LLP.
2. The Claimant is released from any continuing undertakings under paragraph (2) of Schedule B to the Original Injunction or paragraph (2) of Schedule B to the Post Judgment Freezing Order to provide or maintain the sum of EUR 350,000 in Court as security for the Claimant’s undertakings at paragraph (1) of Schedule B to the Original Injunction and paragraph (1) of Schedule B to the Post Judgment Freezing Order.
3. Schedule B to the Post Judgment Freezing Order is varied to delete paragraph (2).
4. The Third to Fifth Defendants shall pay the Claimant’s costs of the Application, to be assessed by the Registrar on the standard basis if not agreed.
5. There shall otherwise be no order as to costs.
Issued by:
Delvin Sumo
Assistant Registrar
Date of issue: 15 December 2022
At: 9am
SCHEDULE OF REASONS
Introduction
1. The Claimant (“Larmag”) applies by an Application Notice dated 23 September 2022 for: (1) the return of the sum of EUR 350,000, paid into court on or around 24 July 2019 as fortification for the undertaking given at paragraph (1) of Schedule B to the Proprietary Injunction and Provision of Information Order dated 19 July 2019 in CFI-030-2019 (as continued on 13 October 2019, after which CFI-030-2019 was consolidated with the present proceedings CFI-054– 2019) (the “Original Injunction”); and (2) for the varying of the Freezing Order and Provision of Information Order dated 16 September 2021, as continued on 2 September 022 (the “Post Judgment Freezing Order) by deletion of paragraph (2) of Schedule B to the Post Judgment Freezing Order, which requires the provision of security by Larmag for its undertaking at paragraph (1) of schedule B to the same order.
The background to the application
2. On 19 July 2019, the Court issued the Original Injunction (as continued on 13 October 2019) prohibiting the First and Second Defendants from, inter alia, disposing of, dealing with or diminishing the value of 65,000 corporate bonds with international securities identification number XS1257166956 (“the Bonds”).
3. Lamag undertook in paragraph (2) of schedule B to the Original Injunction to pay into court, the sum of EUR 350,000 as security for Larmag’s undertaking at paragraph (1) of Schedule B in relation to any loss suffered by the First and Second Defendants as a result of the Original Injunction (the “Fortification Sum”). On or around 24 July 2019, Larmag paid into court the Fortification Sum and thereby complied with its undertaking to do so.
4. On 21 November 2021, the Court ordered the consolidation of CFI-030-2019 and CFI-054-2019.
5. On 15 August 2021 the Court issued its judgment after the trial of the action in CFI-054-2019 in favour of Larmag (“the Judgment”). On 30 August 2021 a slightly corrected version of the Judgment was issued.
6. On 16 September 2021, the Court issued the Post Judgment Freezing Order (as continued by an order of the Court dated 2 September 2022), restraining the Third, Fourth and Fifth Defendants from (a) removing from the DIFC any of their assets which are in the DIFC up to the value of EUR 64,352,669, or (b) in any way disposing or dealing with or diminishing the value of any of their assets, whether they are in or outside the DIFC up to the same value. Paragraph (2) of Schedule B to the Post Judgment Freezing Order provided that the Fortification Sum shall stand as security for Larmag’s undertakings given in paragraph (1) of Schedule B to the Post Judgment Freezing Order.
7. On 19 January 2022, the Court ordered the First and Second Defendants to transfer the Bonds to Larmag. On 9 February 2022 the First and Second Defendants duly complied with that order.
8. On 10 March 2022, Larmag’s legal representatives wrote to the First and Second Defendants’ legal representatives (Al Tamimi & Co) requesting the First and Second Defendants consent to the unconditional release of the Fortification Sum. On 13 May 2022, Al Tamimi & Co stated that the First and Second Defendants had no objection to the unconditional release of the Fortification Sum to Larmag.
9. On 9 November 2022, the Court issued a Preliminary Ruling directing, for the reasons stated therein, that the Third Defendant be debarred from advancing any contentions in opposition to the application now before the Court that challenged the final and binding character of the Judgment. The Third Defendant was given nine days in which to serve submissions that were in compliance with that direction. That 9 day period has now expired and the Third Party has not served any submissions opposing the instant Application.
Discussion and decision
10. RDC 33.5 – 33.8 provide as follows:
“33.5
Any application relating to money or securities which have been paid into Court, other than an application for the payment out of the money or securities (for example, an application for money to be invested, or for payment of interest to any person):
(1) must be made in accordance with Part 23; and
(2) may be made without notice, but the Court may direct notice to be served on any person.
33.6
Money paid into Court under a Court order or in support of a defence of tender before claim may not be paid out without the Court’s permission except where:
(1) a Part 32 offer is accepted without needing the permission of the Court; and
(2) the defendant agrees that a sum paid into Court by him should be used to satisfy the offer (in whole or in part).
33.7
Permission may be obtained by making an application in accordance with Part 23. The application notice must state the grounds on which the order for payment out is sought. Evidence of any facts on which the applicant relies may also be necessary.
33.8
Where the Court gives permission under Rule 33.6, it will include a direction for the payment out of any money in Court, including any interest accrued.”
11. In my judgment, the Application should be granted for the following reasons:
Return of the Fortification Sum
12. Larmag was successful in its claim against the Third, Fourth and Fifth Defendants at trial;
13. There is no appeal against the Judgment, which is final and executable;
14. The Bonds have been returned to Larmag by the Second Defendant;
15. The requirement for the undertaking given in paragraph (1) of Schedule B to the Original Injunction and fortification thereof is now redundant;
16. The First and Second Defendants have no objection to the return of the Fortification Sum; and
17. The Third, Fourth and Fifth Defendants, as judgment debtors jointly and severally liable to Larmag in damages for an amount in excess of EUR 13 million, are more than adequately protected by Larmag’s undertaking in paragraph (1) of Schedule B to the Post Judgment Freezing Order without any requirement for security to be provided in respect thereof.
Variation of the Post Judgment Freezing Order
18. There is no longer any good reason for security to be provided in respect of the undertaking at paragraph (1) of Schedule B to the Post Judgment Freezing Order, whether by way of the Fortification Sum or otherwise, such that paragraph (2) may be deleted without causing any unfair prejudice to the Third, Fourth and Fifth Defendants.
It is in the interests of justice that Larmag, as the successful party at trial and as judgment creditor for an aggregate sum in damages for an amount in excess of EUR 13 million, be no longer required to provide or maintain security in respect of its undertaking given in paragraph (1) Schedule B of the Post Judgment Freezing Order.
19. Finally, I agree with the view expressed in paragraph 17 of Mr Hutchison’s 6th affidavit that there is no need for there to be any variation of the Original Injunction expressly to release Larmag from any undertaking recorded therein for the Fortification Sum to be repaid to Larmag since the First and Second Defendants (as the Respondents to the Original Injunction) have confirmed in writing that they have no objections to the payment of the Fortification Sum to Larmag.