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Claim No. : CFI 007/2009

THE JUDICIAL AUTHORITY OF THE DUBAI INTERNATIONAL FINANCIAL CENTRE

In the name of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Ruler of Dubai

IN THE COURT OF FIRST INSTANCE

Between

IBRAHIM SAAD

Claimant

-v-

RASMALA INVESTMENTS LIMITED

Defendant

Hearing Date: 24 September 2009

Counsel: Mr Robert Lewsley (Afridi & Angell), PO Box 9371, for the Claimant

Mr Graham Lovett (Clifford Chance), PO Box 9380, Dubai for the Defendant

REASONS FOR JUDGMENT OF DAVID WILLIAMS 

INTRODUCTION - PROCEDURAL HISTORY

2. The Court finds on the evidence that the procedural history of the case is as follows. The Claimant was formerly employed as the Head of Private Equity by the Defendant. In these proceedings, which were commenced on 29 January 2009 he sued to recover a bonus of USD500,000 which he claimed was due to him under his employment contract and certain Addendum emails. Liability is denied by the Defendant.

The Case Management Conference

3. There was a Case Management Conference ("CMC") on 15 June 2009. In the Defendant's Case Management Information Sheet dated 8 June 2009, the Defendant stated that it intended to rely on the evidence of Mr Ali al Shihabi (the then CEO of the Defendant), Mr Tamer Bazzari (the then Head of Banking of the Defendant) and Mr Ali Khalaf (a lawyer employed by the Defendant). The Claimant was not in a position to inform the Court of its proposed witnesses and requested more time to do so.

4. At the CMC the Chief Justice made an Order as to the future conduct of this case and the particular steps which the parties were required to take prior to trial. These steps included the notification by the Claimant of its witnesses within 21 days and the completion by the Defendant of specific disclosure by 13 July 2009. The first direction was complied with. As to the second direction, the Defendant required more time to comply. The Claimant agreed to a one week extension. Disclosure took place on 20 July 2009.

5. The Defendant duly briefed its witnesses and prepared witness statements. This involved the review of 20 lever arch files of documents.

6. On 25 August 2009 the Defendant's lawyers (Clifford Chance) wrote to the Claimant's lawyers (Afridi and Angell) to inform them that they intended to substitute a witness named at the Case Management Conference for another witness, Mr Avinash D'Souza, whose evidence the Defendant considered would be more relevant to the issues in the case.

7. By letter dated 26 August 2009, Afridi and Angell wrote advising that the Claimant objected to the inclusion of the evidence of the witness concerned.

Time for Exchange of Witness Statements

8. On the morning of 30 August 2009, the Claimant's lawyer telephoned Clifford Chance to explain that the Claimant would like additional time to complete his witness statements. Clifford Chance asked for confirmation of the request in writing together with the reasons. On the same day, 30 August 2009, Afridi and Angell replied saying that they would be unable to prepare a request until Tuesday, 1 September 2009. As 1 September 2009 was the date that the Court had originally ordered for the exchange of witness statements, Clifford Chance again requested the reasons for the extension to be put into writing.

9. By e-mail dated 31 August 2009, Afridi and Angell wrote to Clifford Chance and requested a three week extension for the exchange of witness statements. This represented 50 per cent of the time already allowed for the preparation of such statements. Four reasons were given:

10. As a result of the e-mail, but without recognizing or accepting the reason for the delay, the Defendant granted the Claimant an additional week (i.e., until 8 September 2009) in which to exchange witness statements. The Defendant did not agree to a longer extension for a number of reasons. First, the issue of shorter working hours had been recognized at the CMC and time was built into the timetable to allow for that. Secondly, the personal and business commitments of the Claimant were not regarded as a justification for requesting extra time. The Defendant's witnesses (who also had personal and business commitments) had been imposed upon to ensure that their statements were ready for exchange on 1 September 2009. Thirdly, the Defendant's witnesses and Clifford Chance had had to review the documents disclosed. They were not familiar with the detailed content of those documents prior to disclosure. Clifford Chance and Afridi and Angell had had the same resources to review the e-mails and so there was no inequality of arms. Fourthly, the change in the identity of the Defendant's witness, even if it were a material and valid objection to the calling of a witness at trial, should not have prevented the exchange of witness statements. Objections as to the use to which that evidence could be put at trial could have been dealt with at the next hearing, which was set for 24 September 2009. The Defendant believed that the Claimant's application seeking the exclusion of the evidence of Mr D'Souza was in any event misguided and bound to fail.

11. The Claimant's lawyers did not, at that point, object to the length of the agreed extension, nor was any application made to this Court to extend further the time for exchange of witness statements.

Claimant's Application to Exclude Evidence of Witness

12. On 31 August 2009, the Claimant served an Application Notice on the Defendant seeking an order excluding the evidence of Mr D'Souza from trial. The grounds of the application were:

13. The Defendant was ready to exchange witness statements on 1 September 2009; the Claimant was not.

14. Following a direction from the Court on 3 September 2009, the Claimant served a draft Order in support of its application to exclude the Defendant's witness. The draft Order made it clear on its face that the Claimant did not in fact intend to exchange any witness statements until after the hearing of its application to exclude the evidence of Mr D'Souza. However, no formal application was made to extend the date for such exchange. As noted earlier, the Defendant granted a week's extension of time for the exchange of witness statements. It therefore expected the exchange to take place on 8 September 2009.

15. The Claimant did not observe the Order of the Chief Justice since it was not ready and willing to exchange witness statements on 1 September 2009 or the agreed extended date of 8 September 2009. Prior to the date agreed between the parties for the exchange of witness statements, the Claimant had made no application to the Court for an extension of time for the exchange of witness statements.

Defendant's Application for an "Unless Order" in respect of Exchange of Witness Statements

16. On 7 September 2009, the Defendant filed an application for an "unless order". It was in the following form:

Claimant's Application for Retraction of Amended Defence

19. In the skeleton argument for the 24 September 2009 hearing the Claimant objected to the form of the Re-Amended Defence.

The Three Applications

20. The Court was required to determine three applications, namely the Claimant's application of 31 August 2009 to exclude the evidence of Mr D'Souza, the Defendant's application of 7 September 2009 for an "unless order" (which was subsequently amended so as to invite the Court to deal only with the costs consequences of that application), and the application made in the Claimant's skeleton argument for the 24 September 2009 hearing for an order that the Defendant "be ordered to retract the version of the Re-Amended Defence which it had lodged and submit one which accurately reflects the changes agreed between the parties".

AMENDMENT OF DEFENCE

21. It is convenient to deal first with the third application since it may be disposed of shortly. The background to that application may be best explained by first referring to that part of the Defendant's Amended Statement of Defence of 19 April 2009 where it was said that the bonus was not payable for certain specified reasons. The final three sentences of paragraph 3.1 of the Amended Defence stated:

22. At the CMC on 15 June 2009, the Chief Justice ordered that both parties could call an expert witness concerning the issue raised in the penultimate sentence of paragraph 3.1 of the Amended Defence.

23. Following the CMC, the Defendant decided to further amend the Defence by deleting the penultimate sentence of paragraph 3.1, thereby negating the need for expert evidence on this point.

24. Clifford Chance wrote to Afridi and Angell on 2 July 2009 to formally request the Claimant's consent to the proposed amendment (i.e., the deletion of the penultimate sentence of paragraph 3.1). Mr Lewsley responded on the same day confirming the Claimant's consent. A copy of the Re-Amended Defence was filed at Court on 6 July 2009.

25. On 12 July 2009 Mr Lewsley wrote to Clifford Chance complaining that the amendments to the Defence did not reflect the changes that had been agreed. This was because a change had been made to the final sentence of paragraph 3.1. The final two sentences of paragraph 3.1 were now as follows:

Thus, the wording of the last sentence was changed from that underlined in the 19 April 2009 version as set out in paragraph 21 above.

26. Ms Shaw, a solicitor of Clifford Chance called Mr Lewsley of Afridi and Angell on 13 July 2009 to explain that when a final copy of the Re-Amended Defence had been prepared for the Court, it became apparent that the final sentence of paragraph 3.1 no longer made sense since it started with the words "This did not occur" and the previous sentence had been deleted. She advised that she had therefore made the further change simply to aid comprehension and replace the word "this". Ms Shaw in her affidavit of 17 September 2009 acknowledged that in hindsight, technically this should have been raised with the Claimant prior to making the additional change. However, as it was simply a small comprehension point she had not anticipated that the Claimant would have considered the change to be controversial, and did not understand his concern. She said in her affidavit, and the Court accepts, that there was certainly no intention to mislead the Court or to introduce new arguments into the Defence as has since been suggested. Ms Shaw explained to Mr Lewsley that the Defendant would seek to accommodate the Claimant's concern and suggested that his client propose alternative wording that he found acceptable and, more importantly, that would still make the final sentence of paragraph 3.1 comprehensible.

27. The Claimant did not accept that invitation and insisted that the Defendant delete the final sentence of paragraph 3.1. The only reason given was that the point was already contained elsewhere in the Defence. Ms Shaw engaged in further email correspondence with Mr Lewsley to again explain that the change was merely to aid comprehension and that the Defendant did not wish to delete the final sentence of paragraph 3.1 since this was the Defendant's Defence and it should be able to plead in the way it thought fit. No resolution was reached. Ms Shaw then suggested that this point be raised as a preliminary issue at the trial in December 2009 to avoid further costs being incurred unnecessarily.

28. It is technically correct that the consent of the Claimant did not encompass the amended final sentence. But Ms Shaw explained the situation to Mr Lewsley in a courteous way. The Court upholds Ms Shaw's view that in terms of the overall meaning of the amended paragraph, the grammatical change makes no substantial difference. The explanation offered by Ms Shaw on the part of the Defendant should have been accepted and the objection dropped. The Court rejects the Claimant's application for an order that the Statement of Defence be redrawn so as to return to the ungrammatical original version. It dismisses as unfounded the suggestion made by Mr Lewsley in argument that Clifford Chance had engaged in misleading conduct. The RDC, in line with the traditions of the legal profession, requires parties and their lawyers to behave co-operatively: see Rules 1.7 and 1.8 of the RDC and paragraph 13 of DIFC Courts' Code of Professional Conduct for Legal Practitioners. Mr Lewsley failed to do so and instead pursued an application as unnecessary as it was unmeritorious. The Court should not have been required to deal with such a trifling and senseless objection. The Re-Amended Defence filed on 6 July 2009 will stand.

DEFENDANT'S APPLICATION TO EXCLUDE EVIDENCE OF WITNESS

29. The grounds advanced to support the Claimant's application were that:

31. The Claimant further noted that during the CMC the Claimant requested and received, amongst other things, specific disclosure from the Defendant relating to Avinash D'Souza. Mr D'Souza, who remains an employee of the Defendant, was at the time of the events in dispute the Vice-President of Private Equity. He was the most senior person in the Claimant's team (after the Claimant himself), and worked closely with the Claimant throughout his time at Rasmala, as well as having direct dealings with Investor A. He could sensibly be described as the Claimant's 'right-hand man' throughout the process of securing Investor A's commitment.

32. The Claimant then referred to the fact that on 25 August 2009, one week before the parties were due exchange witness statements, the Defendant informed the Claimant that it no longer wished to rely upon the evidence of Mr Khalaf, and would instead be relying upon the evidence of Mr D'Souza. The reason given by the Defendant for the change was that the need for Mr D'Souza's evidence was not apparent until after the Defendant had been able to review the disclosure documents and had spoken to its proposed witnesses for the purpose of taking their statements.

33. The Claimant advanced the following reasons in support of its application for the order excluding the evidence of Mr D'Souza from trial for the following reasons:

34. The Defendant, in response first noted the Order of the Chief Justice on 18 June 2009 in relation to witness statements, stated as follows:

35. As to the complaint that it would now be required to seek disclosure from Investor A as a result of the inclusion of Mr D'Souza's witness evidence, it had been admitted by the Claimant that by the time of the CMC he recognized the importance of Mr D'Souza's role. This was demonstrated by the fact that a specific disclosure application was made in relation to communications between the Claimant and Mr D'Souza and of "the track record of the first fund as prepared by the Claimant and Mr Avinash D'Souza". The Defendant therefore submitted that if the Claimant considered that Investor A's documents were important, an appropriate application should have been made at that time.

36. The general disclosure ordered at the CMC included:

37. The Defendant suggested that the application therefore seemed to have less to do with documents relating to Mr D'Souza than it did about documents in the possession of Investor A. Put another way, it would appear that the Claimant was using his objection to Mr D'Souza's witness evidence as a smokescreen for a fishing expedition against Investor A, hoping to find a document that would either discredit Mr D'Souza, or otherwise advance his own case in terms of Investor A's readiness to invest in the fund.

38. The Claimant could have made an application for disclosure against Investor A weeks ago. Given that an application could already have been made against Investor A to disclose documents relating to its readiness to invest, but no such application has yet been made, he Court could assume that the inclusion of Mr D'Souza as a witness at the CMC stage would similarly have resulted in no such application having been made to date. At best, it was submitted that the Claimant would have considered the evidence of Mr D'Souza first before making an application for specific disclosure against Investor A - so he was in no worse position in learning that Mr D'Souza is now a witness.

39. In addition it was also questionable as to why documents from Investor A were relevant to Mr D'Souza's evidence. It was difficult to see what documentation that Investor A might have that would discredit Mr D'Souza's evidence, even if issues of credit were justification for requesting disclosure (the Defendant believed such reasons are not sufficient). The issues in this case related to (i) the Claimant's contribution to the raising of funds and (ii) the time when such commitment was made by Investor A. Mr D'Souza's evidence in relation to (i) is "internal" evidence - the efforts that the Claimant made are internal matters that were not relevant to Investor A's disclosure. In the unlikely event that there is relevant documentation held by Investor A that reflected the efforts made by the Claimant, such arguments for disclosure have always been open for the Claimant to make. Mr D'Souza's evidence made no difference. As for (ii) - if the Claimant wanted disclosure on this issue he could also have asked weeks ago. It was not relevant whether Mr D'Souza files a witness statement or not.

40. Whilst breaches of the RDC were alleged by the Claimant, the Defendant noted that it could not point to a single Rule that justified that allegation. On the other hand, the Claimant himself was in breach of the RDC through his failure to exchange witness statements by the date ordered in the CMC.

41. As to the complaint that the Claimant would have to consider Mr D'Souza's inclusion as a witness in his case preparation, not only did he have all of the relevant documents disclosed by the Defendant, but he had since had a full three additional weeks to consider and include the role of Mr D'Souza in his own witness evidence.

42. The Defendant concluded by submitting that there was absolutely no prejudice suffered to the Defendant other than the prospect that Mr D'Souza's evidence might be wholly accepted by the Court and the Claimant's case fail. That was not a proper basis upon which to make such an application. There was no ground for excluding the evidence of Mr D'Souza, having regard to all the circumstances. The application was so flawed that it could not have the faintest prospect of ever succeeding. The Defendant requested that the application be dismissed, with costs.

43. The Court accepts the Defendant's submissions and considers that the application was indeed bound to fail.

44. First, the Claimant misconceived the primary purpose of the inclusion of a list of witnesses in the Case Management Information Sheet (paragraph 7). Although not stated explicitly it may readily be inferred that the primary purpose is to allow the Judge to form a view of the likely length of the case. A secondary purpose is to inform each party of the witnesses likely to be called by the opposing party.

45. While in most cases the parties will call their identified witnesses, there is no Rule excluding the later addition of witnesses to the list or their exclusion so long as the proceedings are not thereby disrupted or unduly delayed. This is consistent with the "starting point that parties may adduce all evidence that is relevant and not excluded pursuant to any exclusionary rule of evidence, unless there is good reason for excluding such otherwise admissible evidence." This is, of course, subject to the Court's case management powers pursuant to Rules 29.9 to 29.11 of the RDC.

46. It follows that where a witness is added to those listed at the CMC there is no reason for prohibiting it in the general run of cases. However, under Rule 26.74 of the RDC the Registrar must be informed if the addition of a witness or witnesses will affect the estimated length of trial. It is also possible that the addition of a witness or witnesses may necessitate a Pre-Trial Review and a rescheduling under Rules 26.76 - 26.79 of the RDC.

47. It follows from the foregoing that there was no breach of the CMC Order by adding the new witnesses at that comparatively early stage of the proceedings. It equally follows that it will be only in rare cases - perhaps, for example, in the case of the purported inclusion of a peripheral witness very close to the trial date - where a party will be deprived of the right to call a witness.

48. In the present case there was no possible basis for an exclusion of the additional witness. His evidence is clearly material to the issues in the case. The trial is some months away. The Claimant must know a great deal about his likely evidence from the extensive disclosure of documents which has already taken place.

49. The Court finds that the Claimant's application is meritless. It should never have been brought. No prejudice was shown especially since the witness statement of Mr D'Souza was shortly to be exchanged. It was for these reasons that the sum of USD7,000 was ordered to be paid by the Claimant to the Defendant as a contribution towards costs incurred by the Defendant in successfully resisting the application.

THE DEFENDANT'S APPLICATION FOR AN "UNLESS ORDER"

50. As at 7 September 2009 when the Application was filed there is no question that the Defendant was entitled to the order. The CMC directions were explicit as to the exchange of witness statements. As permitted by Rule 26.50 of the RDC the parties had agreed to a seven day extension. The Claimant was not in a position to exchange. He may have had sufficient grounds to obtain a two week extension but instead of applying at once for an extension he simply ignored the CMC direction. The Defendant suggested that its application raised a point of general interest to practitioners in the DIFC Courts, namely: the approach that should be taken against parties who deliberately disregard Orders of this Court.

51. Case Management is a central feature of the RDC. Rule 1.8 of the RDC makes this explicit:

52. As to the need for expedition in commercial litigation, I respectfully endorse the observation of Heydon J of the High Court of Australia in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 at paragraph [137]:

53. The submissions of the Defendant accurately stated the position as at 7 September 2009:

54. This Court must indicate as clearly as possible that the cavalier disregard of timetable orders will not be tolerated. For it to allow such disregard would undermine the aims of case management and defeat the statutory objectives of the RDC, which include ensuring that cases are dealt with expeditiously and fairly (Rule 1.5 (4) of the RDC), saving expense (Rule 1.5 (2) of the RDC) and ensuring that the parties are on an equal footing (Rule 1.5 (1) of the RDC). It is also abundantly clear that the parties have a duty to assist the Court in furthering the statutory objectives of the RDC (Rule 1.7 of the RDC) and that lawyers are under a separate duty to behave co-operatively (paragraph 13 of DIFC Courts' Code of Professional Conduct for Legal Practitioners). In addition, the conduct of litigation is not merely a matter for the parties. The claims of other litigants and the public interest in achieving the most efficient use of resources must also be taken into account. The Court must avoid "the waste of public resources and the inefficiency occasioned by the need to revisit interlocutory processes…".

55. To allow such conduct to go unnoticed and unpunished would be unwise. As observed by another Australian judge, Bryson J in Maronis Holdings Ltd v Nippon Credit Australia Pty Ltd [2000] NSWSC 753 at [15], there are likely to be adverse consequences if procedural defaulters are treated with "uncomplaining supine liberality". The Court must take into account "the obvious impact of forbearance and liberality on the behaviour of litigants" for:

56. The Claimant's response to its obvious delinquency was curious. In its skeleton it said nothing about its non-compliance. This was all that was said:

44. There is enough time before trial for the application against Investor A to be heard; disclosure to be completed; and for the exchange of witness statements. Both parties will be affected equally."

57. However, in oral argument regret was expressed that the Claimant had not applied for an extension and it was said that no disrespect had been intended. It was also said that when the "unless order" was filed there was no necessity to make such an application. The latter assertion is not accepted.

David Williams J

22 November 2009