October 20, 2021 court of first instance - Judgments
Claim No. CFI 054/2019
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
LARMAG HOLDING BV
Claimant/Applicant
and
ABDULLA SAEED BAKHEET OBAID ALJABERI
Third Defendant/Respondent
ALI MOHAMED
Fourth Defendant/Respondent
ELITE HOLDING GROUP
Fifth Defendant/Respondent
JUDGMENT OF JUSTICE SIR RICHARD FIELD ON THE CLAIMANT’S APPLICATION FOR A POST JUDGMENT FREEZING ORDER AND OTHER RELIEF HEARD OF 16 SEPTEMBER 2021
Introduction
1. On 14 September 2021, the Claimant applied ex parte on the papers for the continuation of a freezing order against the Third Defendant (“D3”) which had been made “until trial or further order of the Court” prior to the judgment issued on 15 August 2021 which upheld the Claimants and awarded the Claimant damages in the sum of circa Euros 64,352,669. In the skeleton argument served in support of the Application, the view was expressed that it was appropriate in the circumstances for the Court to proceed without a hearing. However, in a section headed “Full and Frank Disclosure” it was recognised that D3 might contend that the freezing order had lapsed once the judgment had been issued and that the Court might conclude that the Claimant was constrained to apply for a new post judgment-freezing order to be determined following an ex parte hearing.
2. On 15 September 2021, the Claimant was informed by the Court that it should apply for a new freezing injunction and that the Court would hear the application the following day, 16 September 2021.
3. After having heard on the appointed day the submissions advanced by Mr Black QC in support of the application for a fresh freezing order in respect of euros 64,352,669, I made the order applied for, indicating that I would give my reasons in writing later. What follows are those reasons.
4. As Mr Black observed, the Court has jurisdiction to make a post-judgment freezing order under Article 32(b) of the DIFC Court Law which provides:
The DIFC Court has the power to make orders and give directions as to the conduct of any proceedings before the DIC Court that it considers appropriate, including:
(a) …
(b) injunctions, including requiring an action to be done;
(c) …
…
5. Further, RDC 25.6(2) specifically provides that an order for an interim remedy can be made at any time, including after judgment has been given.
6. In Bocimar International N.V. v Emirates Trading Agency LLC [2015] DIFC CFI 008 (28 January 2016), Deputy Chief Justice Sir John Chadwick held at [7] that the question for the Court on an application for a post-judgment freezing order was whether, in all the circumstances, it is satisfied that it is appropriate to make a freezing order in the terms sought (or at all).
7. In making the post-judgment freezing order applied for in Bocimar, Sir John Chadwick DCJ had regard, inter alia, to the following factors at [8] – [15]:
(1) The claimant had a judgment debt from the Court which it was prima facie entitled to enforce against the defendant’s assets. The claimant therefore did not need to establish a good arguable case for the substantive relief sought against the defendant.
(2) The starting point was that the claimant was a judgment creditor and was entitled to ask for the assistance of the Court in enabling that judgment to be enforced against assets which were or may be available to satisfy it.
(3) The relevant legal principle in determining whether there has been sufficient risk of dissipation was conveniently stated at paragraph 49 of the judgment of Mr Justice Flaux in Congentra AG v Sixteen Thirteen Marine SA (the “Nicholas M”) [2008] EWHC 1615 (Comm), namely:
(i) there is a real risk that a judgment or award will go unsatisfied, in the sense of a real risk that, unless restrained by injunction, the defendant will dissipate or dispose of his assets other than in the ordinary course of business: The Niedersachsen [1983] 2 Lloyd's Rep 600 per Mustill J as interpreted by Christopher Clarke J in TTMI v ASM Shipping [2006] 1 Lloyd's Rep 401 at 406 (paragraphs 24-27); or
(ii) (ii) unless the defendant is restrained by injunction, assets are likely to be dealt with in such a way as to make enforcement of any award or judgment more difficult, unless those dealings can be justified for normal and proper business purposes: Stronghold Insurance v Overseas Union [1996] LRLR 13 at 18-19 per Potter J and Motorola Credit Corporation v Uzan (No 2) [2004] 1 WLR 113 at 153 (paragraphs 142-146) where the Court of Appeal was applying the same principle in the context of disclosure of assets by the defendant.
(4) A defendant’s previous conduct in the proceedings, which could be described as demonstrating “an unacceptably low standard of commercial morality”, can show a real risk of dissipation.
8. Mr Black also drew my attention to the following decisions of the English courts in which there are articulated a set of guiding principles for when the Court is exercising its discretion whether to make a post-judgment freezing order.
9. In Babanaft International Co S.A. v Bassatne [1990] Ch 13 at 37 Kerr LJ observed that the Court will more readily grant a freezing injunction as an aid to enforcement of a judgment that has been entered than on an interim application made before the claim on which such an injunction is predicated has been decided.
10. In Masri v Consolidated Contractors International Co SAL [2008] EWHC 2492 (Comm) at [34] Tomlinson J said that: (a) it was sufficient for the grant of relief that there is a real risk that the judgment will remain unsatisfied if injunctive relief is refused; and (b) the injunction must be sought for a legitimate purpose (namely the process of ultimate collection of the debt) and there must therefore be some prospect that the injunction will aid the judgment creditor in execution (as opposed to place illegitimate pressure on him):
11. In Michael Wilson and Partners v Emmott [2019] EWCA Civ 219, the EWCA held at [56] that, because the policy of the law was strongly in favour of the enforcement of judgments, it will sometimes and perhaps usually be inappropriate to include an “ordinary course of business” exception in the post-judgment environment.
12. In my judgment, the Claimant has clearly demonstrated that it is appropriate (that is to say, that it is fair and just in the circumstances) to make the worldwide freezing order asked for, in particular because there is strong evidence of a real risk that, unless restrained by an order of the Court, D3 would dissipate and/or conceal his assets so as to deprive the Claimant of the value of the judgment obtained against him. The strong evidence referred to is the evidence heard at the trial that led the Court to find that D3 had dishonestly and fraudulently misappropriated 70 million euros worth of Reditum bonds belonging to the Claimant in the course of which he was responsible for the production of forged documents that were intended to, and did, induce the Claimant to transfer the bonds to D3 in the belief that a pre-payment of 20 million euros had been sent to the Claimant’s bank account for the purchase of the bonds, when in fact no such payment had been paid. In addition, D3 has failed to comply with: (i) an order of the Court dated 3 August 2021 requiring him to deliver up his passports to the Registry of these Courts; (ii) a direction made in the judgment to give all necessary instructions and arrangements for the transfer to the Claimant of 65,000 Reditum bonds held in his account with the First Defendant; (iii) another direction in the judgment that within 14 days he serve an affidavit exhibiting all relevant documents accounting for various aspects of the transfer of 5000 of the Reditum bonds to a company called Zoya.
13. Following the approach articulated by the EWCA in Michael Wilson and Partners v Emmott, I directed that the usual “ordinary course of business” exception that is included in pre-judgment orders need not be included in the order but the usual exception for a specified sum for living expenses and a reasonable sum for legal advice and legal representation was included.
14. Given that a worldwide freezing order was being granted, it contained the standard Babanaft1 and Baltic2 provisos.
15. Finally, I should make it clear that, in directing that a fresh application be made for the proposed freezing order, I am not to be taken as having finally determined that the pre-judgment freezing order had come to an end once the judgment had been issued. Whether it had come to end was arguable either way and Mr Black made it clear when moving for a fresh order that he was doing so without prejudice to the Claimant’s case that the pre-judgment had order had not ceased to apply.
Issued by:
Nour Hineidi
Registrar
Date of issue: 20 October 2021
Time: 8am
