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Claim No: CFI-009-2016

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

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

IN THE COURT OF FIRST INSTANCE

BEFORE H.E. JUSTICE OMAR AL MUHAIRI

BETWEEN

VEGIE BAR LLC A DULY INCORPORATED COMPANY,

REGISTERED IN THE DIFC REGD NO 0907

Claimant

and

EMIRATES NATIONAL BANK OF DUBAI PROPERTIES LLC

Defendant

JUDGMENT OF H.E. JUSTICE OMAR AL MUHAIRI

Hearing: 28 & 29 May 2019

Counsel:  Mr Roger Bowden instructed by Hamdan Al Shamsi Lawyers & Legal Consultants for the Claimant.

Mr Tom Montagu-Smith QC instructed by Taylor Wessing (Middle East) LLP for the Defendant.

Further submissions from DIFC Registrar of Real Estate Property on 30 July 2019 and commentary from the Defendant on 18 August 2019 and the Claimant on 28 August 2019.

Judgment:       4 September 2019

UPON reviewing the Claimant’s Part 23 Application Notice dated 21 November 2018 seeking Document Production Orders under DIFC RDC 28.36

UPON reviewing the First Witness Statements of Noran Al Mekhlefi and Naki Alkalejleh, both dated 20 November 2018

UPON reviewing Defendant’s Application for Immediate Judgment dated 14 February 2019

UPON hearing Counsel for the Claimant and Defendant on 28 & 29 May 2019

UPON further submissions being submitted by DIFC Registrar of Real Estate Property on 30 July 2019 and subsequent comments from the Defendant on 18 August 2019 and the Claimant on 28 August 2019.

AND UPON reviewing the Claimant’s Witness Summons application submitted 27 May 2019.

IT IS HEREBY ORDERED THAT:

1.The Claimant’s application to amend the Claim Form and Particulars of Claim is dismissed.

2. The Claimant’s application to join Zain Capital LLC as a Second Defendant to these proceedings is dismissed.

3. The Claimant’s application for Immediate Judgment against the Defendant is dismissed.

4. The Claimant’s application dated 27 May 2019 for Witness Summons is dismissed.

5. The Defendant’s application for Immediate Judgment against the Claimant is granted.

6. The Defendant is awarded their costs, to be assessed by the Registrar if not agreed between the parties.

Issued by:

Amna Al Owais

Registrar

Date of Issue: 4 September 2019

At: 1pm

JUDGMENT

Summary

1. This case concerns a long-standing dispute over the alleged existence of a lease for two units named LP5 and LP6 (later renamed 17a & 17b) within Limestone House, DIFC, and is characterised by a relatively long history and a considerable amount of applications before the Court.

2.This judgment follows the hearing of 28 & 29 May 2019, which dealt with the following matters:

a. the Claimant’s application to amend the Claim Form and Particulars of Claim;

a. the Claimant’s application to join Zain Capital LLC as Second Defendant;

c. the Claimant’s application for Immediate judgment against the Defendant;

d. the Defendant’s application for Immediate Judgment against the Claimant; and

e. the Claimant’s application for Document Production Orders;

3. One day prior to the hearing, on 27 May 2018, the Claimant applied for a Witness Summons, the application for which is also dealt with here.

4. The Defendant seeks a dismissal of the Claimant’s claims as well as an order for legal costs and penalties.

5. Upon hearing the case, I find the Claimant’s applications to be dismissed in their entirety, and I grant the Defendant’s application for Immediate Judgment against the Claimant, the reasons for which I set out in my judgment forthwith.

Background

6. This case goes back some 9 years; indeed, it was on 5 April 2010 the Claimant entered into a 10-year lease (the “Original Lease”) with Union Properties PJSC (“UP”) for units LP5 and LP6. Almost two years later, on 11 January 2012, the Defendant Emirates National Bank of Dubai Properties (“Emirates NBDP”) purchased multiple units in Limestone House (312 units across 2 buildings). Within the bulk of units sold by UP were units 17a and 17b, previously named as units LP5 and LP6 (the “Units”). The main matter of contention in this dispute is whether or not the Lease existed, and indeed whether or not the Lease was transferred.

7. On 5 April 2011, the Claimant and UP agreed to terminate the original Lease and signed a new Lease (the “Amended Lease” or “Lease”) for the Units. At this stage, the owner of the adjoining property Ritz-Carlton, (whom at the time was named “AUH Properties LLC”) was in the process of agreeing the terms with UP of a combined Strata Management Plan (the “SMS”) for Limestone House in which Ritz-Carlton set out specific restrictions on the use of the units, i.e. not allowing clubs, bars, cafes or restaurants in the vicinity. This is pertinent as the proposed business “Vegie Bar’ is in fact a bar and café hybrid which aims to sell alcohol, food and other beverages.

8. In late 2011, UP and the Emirates NBDP began negotiations for the sale of UP’s interest in Limestone House and subsequently sold the Units to the Emirates NBDP, the Defendant. The purchase of the units is recorded by two Sale and Purchase Agreements (the “SPAs”) dated 11 January 2012 which clearly indicate 17a and 17b (i.e. LP5 and LP6) being transferred from UP to the Defendant. At this point, UP confirmed vacant possession of the Units and the Defendant was not aware of the Lease at the point of purchase.

9. On 28 May 2012, the Claimant filed a lease registration form with the DIFC Registrar of Real Property (the “RORP”). The form was signed by an employee of Emirates NBDP named Ms. Melanie Fernandes, however it was not possible to register the Lease before completion of the buildings and their subdivision, as the Units’ numbers in the SMS did not match those in the Lease.

10. Therefore, on 29 March 2012, the freehold in the Units were transferred to Emirates NBDP and registered yet the Lease was not.

11. On the 30 April 2012 the Claimant requested a handover of the Units, to which the Defendant refused. Subsequently, on 28 May 2012, the Claimant attempted to register the Amended Lease retrospectively.

12. It was not until over three years after the Claimant had requested a handover of the Units that the Claimant’s lawyers pursued the matter, on 15 June 2015, sending a ‘before action’ letter to UP and the Defendant. The letter demanded handover of the Units LP5 and claimed damages for losses incurred, though these were unspecified.

13. Thereafter, on 6 March 2016, Emirates agreed to sell the Units to the proposed Second Defendant Zain Capital LLC (“Zain”). The transfer was registered on 31 March 2016 and therefore Zain is now the legal owner of the Units.

Relevant Procedural History

14. The procedural history to this case is relatively dense and thus for clarity I shall only overview only the most relevant aspects of the case here, not the entirety.

15. On 3 March 2016, the Claimant filed a Part 7 Claim Form against the Defendant, seeking orders for specific performance, enquiry into the Claimant’s damages, and third-party document production orders against the Registrar of Real Property and UP. The Claimant thus served these documents on the Defendant on 13 March 2016.

16. H.E. Justice Shamlan Al Sawalehi denied the third-party document production orders and ordered the Claimant to pay costs to the Defendant in the amount of USD 86,864.50. The Claimant subsequently appealed.

17. Those matters were to be dealt with in the Court of Appeal hearing dated 6 March 2017. The hearing was adjourned to allow document production to take place pursuant to the Court of Appeal Order dated 23 March 2017 (the “March Order”). The Claimant’s appeal against the order for security for costs was adjourned pending the disclosure of the said documents.

18. The Defendant failed to produce documents pursuant to that Order, and subsequently the Claimant filed an application seeking further document production against Emirates NBDP and the DIFC Register of Real Property (the “RORP”), a Mr Jaber Al Suwaidi. On 20 September 2017, an Order was issued granting the same (the “September Order”). The September Order was later stayed pending the appeal filed by the Defendant against it, and the adjourned appeal against the Order for security for costs.

19. Thereafter, following the hearing on 21 November 2017, the Court of Appeal issued its judgment on 18 December 2017 (the “CoA Judgment”) together with the Order (amended on 24 January 2018) (the “CoA Order”) which ordered that the Claimant provide security for costs for the Defendant, and also ordered that Emirates NBDP were to provide standard disclosure of documents within 35 days. The Court of Appeal did not overturn the September Order.

20. Almost one year later, on 21 November 2018, the Claimant filed Application(s) seeking the following:

a. permission to make amendments to the original Claim Form and that these may be effective immediately upon leave being granted so that further Orders sought may be granted forthwith;

b. permission to add Zain Capital LLC as the Second Defendant to these proceedings;

c. Immediate Judgment on either the existing Original Claim or (if leave to amend is granted) the first three causes of action the Amended Claim Form.

d. Document Production Orders against the Defendant and (proposed) Second Defendant, as set out in the draft order attached to the Claimant’s Application Notice.

21. On the 14 February 2019, the Defendant then applied for Immediate Judgment on the Claimant’s claim, on the basis the claim has no real prospect of succeeding nor is there any compelling reason why the claim should proceed to trial.

22. The day before the hearing commenced, (i.e. 27 May 2019), the Claimant submitted a further application to the Court, which requested a Witness Summons of Ms Fernandes, an ex-employee of Emirates NBDP who was involved with the original lease registration, as mentioned in paragraph 10 above.

23. Though the Witness Summons Application was not dealt with at the Hearing of 28 and 29 May 2019, I shall deal with this application here also, on the papers, as it simply makes sense to provide a full and comprehensive order with reasons on all outstanding applications in this case.

24. Since the Hearing, I have written to the Registrar of Real Property (RORP) Mr Jaber A Suwaidi, with the permission of both parties, in an effort to clarify the matters at hand. On the 30 July 2019 the RORP replied. I refer in full to the information provided by the RORP, and the responses from both parties, from paragraph 45 of this judgment.

25. The information provided by RORP is given as much weight as the various evidence already in existence on the Court file.

26. Taking into consideration all documentary evidence, previous orders, current pleadings, applications and submissions, this judgment addresses all 6 applications mentioned above in paragraphs 21 – 23, and is sub-divided as follows:

a. the Claimant’s application for permission amend the original Claim Form and Particulars of Claim;

b. the Claimant’s application for permission to add Zain as the Second Defendant;

c. the Claimant’s application for Immediate Judgment on either the existing Original Claim or (if leave to amend is granted) the first three causes of action the Amended Claim Form;

d. the Claimant’s application for Document Production Orders against the Defendant and the proposed Second Defendant;

e. the Claimant’s application for a Witness Summons of Ms Fernandes; and

f. the Defendant’s application for Immediate Judgment against the Defendant.

The Claimant’s position

27. Part A of the Application (or the “Claim”) seeks permission to amend its Claim Form and Particulars of Claim against the Defendant. This application is made on the basis that the document production in these proceedings has allegedly illuminated evidence to which the Claimants were not previously privy, (i.e. prior to submitting their original Claim Form dated 3 March 2016). On the Claimant’s account, the Defendant’s document production of 28 February 2018, pursuant to the Order of the Court of Appeal dated 24 January 2018, as well as the document production made on behalf of the DIFC Registrar of Real Property pursuant to the Order dated 20 September 2017, uncovered new information that changes the Claimant’s position.

28. With regards to part B, adding a  Second Defendant to the proceedings, the Claimant argues that Zain Capital LLC purchased the Units ‘with knowledge or constructive knowledge (either directly or through its membership of Lakhraim Group) of the Lease held by the Claimant’; or  that ‘through its alter ego Lakhraim Group consented to the Lease’ and is therefore bound by its consent.

29. Part C of the Claim seeks Immediate Judgment to be entered on behalf of the Claimant against the Defendant in respect of liability on the existing claim dated 3 March 2016, or, as an alternative, the first three causes of action of the Amended Claim Form. The argument in support of this application is as follows; that the Defendant purchased the assignment of the Lease with its purchase of the Subject Units; that the Court should exercise of its discretion, enter immediate judgment on the First Witness Statements of Noran Al Mekhlefi and Naki Alkalejleh, both dated 20 November 2018. The authority relied on for this application is Walsh v Lonsdale (1882), in that "[e]quity regards as done that which ought to be done".

30. Turning to the Document Production Orders against the Defendant and proposed Second Defendant, part D, the Claimant’s application focuses predominantly on the Defendant’s alleged non‐compliance with the Court of Appeal Order for Document Production dated 24 January 2018 and the Defendant’s alleged failure to obey the Order in that they have filed redacted documents without providing explanation. The Claimant contends that it requires further documentation. The damages are, however, unparticularised and unquantified by the Claimant.

The Defendant’s Position

31. The Defendant’s position is that these proceedings have lasted long enough, and at a disproportionate expense to both parties. They contend that even with extensive disclosure the Claimant has been unable to present an arguable case thus far, and that this claim should be drawn to a close as it has no prospect of success.

32. Here, I run the risk of paraphrasing, however it is the Defendant’s case that the documents by which UP sold the units in question clearly demonstrate that the Lease was not assigned, and in any event the Lease was invalid for numerous reasons (as summarised below), therefore the Defendant’s ownership is not subject to the Lease.

33. Firstly, briefly, with regards to the first part of the Claimant’s application regarding amendment of the original claim form, the Defendant highlights than the amendment must be properly pleaded and have a real prospect of success. Here, the Defendant cites Orion Holdings Overseas Ltd v Al Haj and ors (CFI-033-2015) (8 February 2018) and highlights the fact that the Court may reject an amendment proposal if they believe the case is inherently ‘implausible, self-contradictory or is not supported by contemporaneous documents’. [ Defendant’s Skeleton Argument, paragraph 36].

34. Secondly, turning to the issue of Immediate Judgment, they rightly note that RDC 24.2 applies, and that this test was neatly summarised by H.H. Justice Roger Giles in Nest Investments [CFI-027-2016] (12 February 2018) at paragraph 22. The defense is that the proposed amendments have no real prospects of success.

35. Notably, there is the issue of land registration in the DIFC, which is subject to laws introduced in 2007, specifically the Real Property Law and Strata Title Law. On this specific issue, the Defendant makes their case that Emirates NBDP (as a party purchasing real property in the DIFC) is indeed only bound by prior interests which are in fact registered and are not affected by actual or constructive notice of any unregistered interest affecting the property.

36. The Defendant’s argument is that the Claimant relies on the exception at Article 31(h), which is that a “registered owner does not obtain the benefit of Article 30 in relation to the following interests or rights affecting the lot”, and “an equitable obligation binding the registered owner as a result of the registered owner’s conduct” but this reliance is weak, as the position in the DIFC is in fact fundamentally different from English law ‘where, subject to exceptions, the status of landlord and tenant survived transfer of ownership of the land and bound the incoming owner’ […]. ‘As one commentator puts it, under the Torrens system, unregistered rights are protected by liability rules, not property rules: Arietta-Sevilla, A Comparative Approach to the Torrens Title System (2012) Australian Property Law Journal 203, p.208. [ Defendant’s Skeleton Argument, paragraph 46-48].

37. With regards to the prospects of success, the Defendant highlights the simple fact that the Claimant has not provided a marked-up version of the proposed Amended Particulars of Claim and that substantial parts of the pleading are new. Counsel for the Defendant underscores the way in which the Claimant does not actually assert that the Lease was registered at the time that Emirates NBDP acquired its interest in the units. ‘Prima facie, then, Emirates acquired its interest in the Units free from any unregistered interest, including the Lease.’ [Defendant’s Skeleton Argument, paragraph 50].

38. The Defendant responds to each part of the Claimant’s argument that there are seemingly many reasons why the Lease is binding. In response to the argument put forth by the Claimant that the burden of the Lease was assigned from UP to Emirates NBDP when Emirates NBDP purchased the Units, the Defendant states that this is clearly not the case, as even if an incoming purchaser has notice of an unregistered interest this does not mean that the purchaser shall be bound by that interest.

39. The Defendant states that even if for argument’s sake, the Lease was in fact assigned, the Units were sold pursuant to the SPAs and that the terms of those SPAs were ‘unequivocal’; indeed the ‘express terms of the SPAs were wholly inconsistent with Emirates NBDP taking an assignment of the Lease as they contained entire agreement clauses [AB2/17/149] [AB2/18/188]’.

40. The second aspect of the Claimant’s argument is that a Master Sales Agreement (MSA) must exist for the retail units in Limestone House. The Defendant’s simple response is that if one existed, it surely would have been found by now. They argue that for completeness, Emirates NBDP has carried out further searches of Ms Fernandes’ emails, which has found nothing. On their account, nothing exists. They argue that the draft does not prove anything, and in fact on the contrary: clause 3.1(a) of the draft provided that “possession and occupation of the Units shall be given to the Purchaser and all risk in and benefit in respect of the Units shall pass to the Purchaser…” (2) Clause 3.6 [2/20/442] provided that, in the event of contradiction between the Master SPA and the individual SPAs for the Units, the latter would prevail. They argue that even if the draft had in fact been executed, the terms would have ruled out any prospect of the Lease being transferred anyway.

41. The next issue is that of the Lease amendment which allegedly took place on 15 March 2012 between the Claimant and UP. The Defendant’s argument is that the amendment did not purport to alter the parties to the agreement, and that the amendment of the Lease is in reality likely to have rendered the Lease invalid in and of itself.

42. On the final issue of registration of the Lease, it is the Defendant’s account that the units in question could not exist until completion of the building and registration of the Strata Management Plan and SMS. The rationale for this defense is as follows: The Unit(s) do not legally exist as legally distinct property, it is just part of the existing batch. Though there was a “provisional registration” (i.e. a record/spreadsheet), when the Strata Management Plans were submitted the unit numbers had changed and therefore the Lease could not be registered. The Defendant contends that the Claimant appears to have submitted a lease registration form (signed by UP), but they failed to complete the registration process, and as a result the Lease was never been registered. No legal interest in the units in question thus arises, and indeed a spreadsheet proves nothing as there is no legal concept of provisional registration here in the DIFC.

43. With regards to equitable estoppel, the Defendant further rejects the claims of the Claimant. In terms of the 60% issue, they contend that even if the threshold were “60% of the surrounding shops”, ‘there is no objective mechanism to determine which shops are “surrounding” any more than there was in Landmark Brickwork to determine which counties were “to the South”’ [Defendant Skeleton argument, paragraph 106]. Their case is that there was uncertainty in the contract, and this cannot be cured by waiver, and indeed that the terms of the Lease were inconsistent with the SMS. As a result, the Lease is void for illegality. Here the Defendant’s cite Chitty, paragraph 16-015; Patel v Mirza [2016] UKSC 42; [2017] AC 467. See also Ting Siew May v Boon Lay Choo [2014] SGCA 28 at [75]. They argue the contract would be illegal and unenforceable and as a result, even if the Lease could be binding, it would be unenforceable.

44. The Defendant put forth a persuasive argument to dismiss the Claimant’s claims in their entirety.

Submissions of the Registrar of Real Property

45. In my letter of 26 June 2019 to the RORP, I requested clarification of the following:

a. whether there was in fact a Lease registered during UP’s period of possession of the Units, i.e. before the sale of the Units to Emirates NBDP (paragraph 8(a));

b. whether a Lease was registered on or around 28 May 2012 (paragraph 8(b));

c. to obtain any details of any removal of a Lease (paragraph 8(c));

d. for any details of any Master Service (or Sale) Agreement relating to the Units (paragraph 8(d));

In addition, I asked the RORP more generally if they were in the position to provide any further information about the matters in the case, and particularly about the registration of 1 and 10 year leases.

46. In their detailed and comprehensive letter of 30^th July 2019 in response, (the “RORP Letter”) the RORP stated three pertinent points in this case. Firstly, he confirms there was no Lease between the Claimant and UP, nor indeed between the Claimant and Emirates NBDP. Secondly, he confirmed that no such Lease has ever been removed from the Register. Thirdly, he confirmed (as we already knew), that the Claimant had indeed tried to retrospectively register a Lease, but that the attempt had been rejected.

47. The RORP Letter outlines with great detail the relevant law, and stresses that no folios existed for the Units prior to 16 January 2014, and that the Law doesn’t provide for ‘interim’ registration. He reiterates that DIFC Real Property have complied with previous orders of this Court and shall continue to make themselves available for any further comment or clarification that may be required.

48. In response to the submissions of the RORP both parties sent letters of their own, voicing their comment on the content of the RORP Letter.

49. The Claimant’s somewhat impolite response to the RORP Letter suggests that the ‘important points in the letter are buried in a morass of excuse and unevidenced assertion’ (paragraph 3). The Claimant alleges fraud on behalf of Emirates NBDP, and their interpretation of the RORP Letter is that there was in fact a valid Lease between the Claimant and the Defendant, that the parties intended that a formal record of the existence of the Lease to be kept, and that the ‘reason why the Lease is not registered now, is that the Defendant told the RORP that there was no [L]ease in existence (i.e. it defrauded both the Registrar and the Claimant) (paragraph 2, my italics).

50. How such conclusions can be reached from the content of the RORP Letter is beyond comprehension. The information provided by the RORP clearly supports Emirates NBDP’s position, and to reach the polar opposite conclusion defies all logic.

51. The Defendant’s letter in response notes that the Lease was not and could not have been registered within the meaning of the Real Property Law in May 2012. In their letter of response, they rightly state that the terms of the RORP Letter reinforces the case that the Lease was not and could not have been registered as has been alleged by the Claimant.

52. As per paragraphs 19 and 20 of the Defendant’s letter, although ‘the Claimant’s position was that an estoppel arose as a result of Emirates’ alleged knowledge of the Lease when it purchased the Units’, such an argument is unsustainable for the reasons explained at the hearing (see Defendant’s Skeleton, paragraphs 80 - 95; transcript, Day 2, pp.82 - 95.) Indeed, ‘[t]he argument based on English equity caselaw requires the existence of a prior equitable interest in the Units. That is not possible under the DIFC system, based on the Torrens system’.

53. Rather than reiterate the numerous points raised in the RORP Letter, the Claimant’s Response, or indeed the Defendant’s Response, by way of simple summary it can be neatly concluded as per paragraph 46, that the RORP confirms there was no Lease between the Claimant and UP, nor indeed between the Claimant and Emirates NBDP; moreover, no such Lease has ever been removed from the Register. Though the Defendant sees that this information clearly supports their case, by some stretch of the imagination, the Claimant concludes that somehow this proves their case that a Lease existed.

54. Whatever elaborate interpretations offered by the Claimant, the fact of the matter remains; the RORP submissions clarify that no Lease exists, and no Lease was removed.

55. With regard to the allegations of fraud, these are of course not to be taken lightly, however this Court cannot act on the angry assertions of the Claimant, only upon evidence. Before the Court is no evidence of wrongdoing nor fraud, only evidence from the RORP supporting the Defendant’s case.

56. Finally, I must record my disproval for the lengthy commentary provided on behalf of the Claimant via Hamdan AlShamsi Lawyers & Legal Consultants in their letter of response to the RORP; providing topical opinion new stories and drawing parallels with fraud scandals in the press entirely inappropriate and has no place here.

57. I would like to take this opportunity to remind parties that this is a Court of Law, not a forum for unfounded allegations nor debate. Communication should be limited solely to the content of this case. Cited authorities should be case law, not scandalous newspaper articles. Refer to the RDC and relevant Practice Directions if clarification is required.

Discussion

58. This Court is being asked by the Claimant to determine applications which hinge on the very assumption of significant losses from not being able to run a business in the Limestone House locale, and that assumption of significant loss stemming from lost business opportunity, and thus prima facie, the argument put forth for these applications is lacking, even before one has fully considered the details of the dispute and the relevant legal principles.

59. As a mini-prologue to my substantive judgment, there are three very pertinent and particularly simple matters which illuminate the flawed rationale of the Claimant’s argument regarding loss. Firstly, on the Claimant’s own account, the Lease has not yet commenced, and thus for the entirety of the period in question – which is indeed almost a decade – the Lease was not in fact in existence. Secondly, also on the Claimant’s own account, the Lease would in fact only come into effect once 60% of the surrounding units were occupied. Thirdly, as was highlighted in the Defendant’s submissions, the operation of a bar or café such as the proposed “Vegie Bar’ business is in fact prohibited by the Strata Management Statement (SMS) for the building and thus by law.

60. Therefore, even if the Lease was in existence, and even if the surrounding units were occupied to bring the Lease into effect, it would have been highly improbable the business would have been granted permission to operate in its full capacity of selling beers and cocktails. The lost business opportunity argument, on its face, thus lacks credibility even before we have considered each sole application upon on its own merits.

61. I shall consider each of the various applications one-by-one. Firstly, I shall deal with the most simple of issues: the Claimant’s application to amend the Claim Form and Particulars of Claim and the application to join Zain to proceedings as the proposed Second Defendant. Thirdly, I shall deal with the Claimant’s Immediate Judgment application, followed by its application for Document Production Orders. Thereafter, I shall turn to the separate matter of the Claimant’s ex-parte application for Witness Summons. Finally, I shall deal with the Defendant’s application for Immediate Judgment against the Claimant.

62. Under RDC 18.2(2), any party seeking to amend a statement of case must obtain the Court’s permission. In many circumstances we grant permission for minor amendments. However, the Court may reject an amendment proposal if it believes the case to be inherently implausible or is not supported by the required contemporaneous documents.

63. In considering this application, it cannot be ignored that the Claimant has not provided a marked-up version of the Amended Particulars of Claim. As the Defendant rightly notes, there are only parts of the draft which are broadly reflected in the existing pleading (paragraphs 1, 3, 6, 8-10, 23, 25, 48-49 & 61); all other sections of the pleading are new.

64. The Claimant’s rewritten case is that the Lease became binding on Emirates NBDP, either due to i) Emirates NBDP being aware of the Lease when it purchased the Units; and/or ii) there was an extension to the Lease agreed in March 2012; and/or iii) the Lease was in fact registered with the RORP in May 2012; and/or iv) Emirates NDBP had notice of the Claimant’s interest in the Units. Seemingly, there are no proposed amendments, but, rather, substantial rewritings of the original pleading.

65. To grant the amendments, the proposed alterations must be only minor changes, but also the case must be properly pleaded and have a real prospect of success, (see Orion Holdings Overseas Ltd v Al Haj and ors (CFI-033-2015) (8 February 2018) at [22]).

66. I therefore cannot grant the application for amendments to be made; I dismiss this application not solely on the lack of clarity and contemporaneous documents, but on the basis that these are not proposed amendments but major rewritings. Moreover, as I shall come to explain in part 3 of this judgment, I also find the case to be inherently implausible, and find it lacking in terms of prospects of success.

67. At the hearing, Counsel for the Claimant expressed the sentiment that the application for joining Zain Capital LLC to the proceedings is in fact no longer a priority and may be left to one side, or indeed ignored altogether. I shall therefore dismiss the application.

68. In any event, to my mind it would seem nonsensical to add Zain Capital LLC as the Second Defendant to these proceedings as they played no role in the history of this dispute, and indeed simply purchased the Units from Emirates NBDP; a transfer which was legally registered on 31 March 2016. To drag Zain into proceedings at this stage would be entirely unjust and cause Zain to incur significant legal fees to defend what is quite a complex and long-stranding litigation between the Claimant and Defendant.

69. Though strictly speaking, a separate matter, and not one which is to be determined here, it may be the case that it was in fact UP who bore the original obligation to apply for the registration of the Units, in accordance with Article 38 and 39 of the DIFC Property Law, by virtue of Limestone House being a building that was designed or intended to be divided into multiple units for separate occupation or single use, and thus it may be that UP should have made arrangements for the Lease of the Units to be transferred. I cannot make a finding in this respect, I only make this observation on the facts before me, to show that there are evidently much more culpable parties, and indeed there is no merit in pointing a finger at Zain, who are simply purchasers and had no involvement in the Lease.

70. I therefore reject the application to join Zain to these proceedings.

71. Moving to the more substantive issues at hand, the Claimant seeks Immediate Judgement on either the existing Original Claim or (if leave to amend is granted), an Order for Document Production from the Court, so as to enquire into the alleged losses suffered. I shall deal solely the application for Immediate Judgement here, and the Document Production Order in the next section of my judgment.

72. As set out in paragraph 50, the Claimant’s new case is that the Lease became binding on Emirates NBDP, either due to i) Emirates NBDP being aware of the Lease when it purchased the Units; and/or ii) there was an extension to the Lease agreed in March 2012; and/or iii) the Lease was in fact registered with the RORP in May 2012; and/or iv) Emirates NDBP had notice of the Claimant’s interest in the Units.

73. Here, the burden is on the Claimant to establish that its proposed amendments have a real prospect of success; and that the Defendant’s proposed defence to these amended claims have no real prospect of success. I shall not painstakingly address each of the above arguments one-by-one; the Defendant does that very thoroughly and persuasively in its defence. Rather, I shall pick out the most pertinent parts of the pleadings to demonstrate why this case has no more than a fanciful prospect of success at trial.

74. In my consideration of this application I shall assess whether the Claimant has a real prospect of succeeding in the claim with reference to RDC 24.2 and the applicable test, which is indeed nicely summarised by Justice Roger Giles in the well-known Nest Investments Holding Lebanon S.A.L. and ors v Deloitte & Touche (M.E) case. Whilst I am of course not to conduct a mini-trial, nor to take the facts on face value, I am required to face the issues in this dispute head-on.

75. Firstly, I emphasise the very simple fact that the Lease was not registered prior to the Defendant’s purchase of the units and thus, pursuant to various articles of the DIFC Real Property Law No. 4 of 2007 (as amended by DIFC Law 4 of 2012) (the “DIFC Property Law”), notably, Articles 26, 27 and 29, the Defendant is not required to hand over the units to the Claimant, and there is no real evidence before the Court that suggests otherwise.

76. Pursuant to Article 30 (1) of the DIFC Property Law, an owner of a DIFC property holds it subject only to prior interests which have been registered with the Property Registry. Further, as the Defendant rightly states:

under Article 30(2)(a) and (d), ‘such ownership is not affected by actual or constructive notice of any unregistered interest and the owner cannot be liable to possession proceedings in respect of an unregistered interest. Articles 30 (1) and (2) of the DIFC Property Law provide: (1) Subject to this Law, a registered owner holds the registered interest subject to all prior interests registered or recorded in the folio of the Register for the relevant lot but free from all other interests. (2) In particular, the registered owner: a) is not affected by actual or constructive notice of any trust or unregistered interest affecting the lot; b) is not affected by any interest that, but for this Law, might be held to be paramount or to have priority; c) is not affected by any error or informality in any application or proceedings; and d) is not liable to proceedings for possession unless the proceedings are brought by a person claiming a registered interest in the lot (my emphasis.)

77. As is well-established, DIFC law is quite unlike English law. Counsel for the Defendant has rightly argued that the position in the DIFC is fundamentally different from the English law where the status of landlord and tenant survives the transfer of any ownership; even if the incoming purchaser has notice of an unregistered interest this does not mean that the incoming purchaser shall be bound by that interest. It appears to me that throughout the hearing, this fundamental difference seemed to be somewhat misunderstood or indeed overlooked by Counsel for the Claimant, whose argument (insofar as point iv argues that Emirates NBDP has notice of the Claimant’s alleged interest in the Lease) centers on the very presumption that any knowledge Emirates NBDP may have had of unregistered interest was pertinent.

78. The Claimant’s argument that Emirates NBDP knew of the Lease when it purchased the Units and it purchased them “expressly subject to” the terms of the lease is uncompelling for the very reason that, pursuant to Article 30 (2) of the DIFC Property Law, specifically (a) and (d), ‘such ownership is not affected by actual or constructive notice of any unregistered interest and the owner cannot be liable to possession proceedings in respect of an unregistered interest’ (my emphasis).

79. It is undisputed between the parties that the Defendant had been provided with information pertaining to a potential Lease; the Defendant accepts that UP provided a spreadsheet to Emirates prior to the sale of the units, in which the units were described as “leased”. However, it remains Emirates NBDP’s position that they were never provided a copy of the Lease. Regardless, the notion that Emirates NBDP purchased the assignment of the Lease is simply wrong, and such an assumption is not based on the DIFC Real Estate laws, nor indeed on the reality of the statutes and principles that govern this dispute. The RORP submissions support this case.

80. Ultimately, as the Defendant rightly argues, whether Emirates NBDP had notice of the Claimant’s interest in the units does not give rise to an exception under Article 31(h) of the Law of Real Property, as notice of any unregistered interest and does not deem the owner (i.e. Emirates NBDP) liable to possession proceedings.

81.The second main reason this claim lacks a real prospect of success is due to the very nature of the Units themselves, and the rules governing the registration of the Lease. It is true that the Units did not ‘legally’ exist as a distinct piece of real estate until completion of the building, and the registration of the Strata Management Plan and SMS. Although there may indeed be a document showing a “provisional registration” (i.e. the record/spreadsheet), this is not a legally recognised category, and the fact of the matter is that the Lease was never registered. Furthermore, even if, as the Claimant contends, that Lease was then subject to amendment (which allegedly took place on 15 March 2012 between the Claimant and UP) it is indeed viable that the amendment of the Lease would likely have rendered the Lease invalid as of itself in any case.

82. In my consideration of the weight of this claim, and in my assessment of its realistic prospects of success, I find the Claimant cannot establish that its proposed amendments have the substance to succeed; nor can they disprove or discredit the Defendant’s proposed defence, and show that the defence has no real prospect of success.

83. Ultimately, the Claimant’s application must rest on the relevant legal principles which govern this dispute, and in order for it to succeed at trial it would have to provide evidence or an indication to the Court that it would be convinced. So far, all I see if a fanciful prospect of success. Indeed the Claimant has not provided any proof that; i) the Units were registered in the DIFC Real Property Register to enable UP to grant a legally binding lease of those units to the Claimant; nor that ii) the Lease had been registered in the DIFC Real Property Register to affect the legal transfer of the leasehold interest to the Claimant; nor that iii) that the Lease was assigned to (or was an encumbrance disclosed to) the Defendant under the Sale and Purchase Agreements for the Units. There is nothing of weight to show this claim would succeed at trial. Moreover, the Counsel for the Claimant did not dismantle the Defendant’s proposed defence to these amended claims.

84. I therefore dismiss the Claimant’s application for Immediate Judgement.

85. Turning to the proposed Document Production Order against the Defendant and proposed Defendant, I shall now address part D of the Claimant’s application, which is of course only relevant if other parts of the claim survived the applicable tests and cross-applications, but I shall address for completeness.

86. On hearing this case, even if the issue were in isolation, I am simply not convinced by the argument that Document Production in these proceedings has uncovered new evidence to which the Claimants were not previously privy, (i.e. information they did not know prior to submitting their original Claim Form dated 3 March 2016). All I see before me is the much-contested spreadsheet, not new nor compelling evidence that there is something of substance to be found which may affect the outcome of these proceedings.

87. The application is made upon reliance of the argument that the recent Document Production in these proceedings has uncovered new evidence to which the Claimants were not previously privy, (i.e. information they did not know prior to submitting their original Claim Form dated 3 March 2016).

88. On the Claimant’s account, it was the Defendant’s Document Production of 28 February 2018, pursuant to the Order of the Court of Appeal dated 24 January 2018, as well as the document production made on behalf of the DIFC Registrar of Real Property pursuant to the Order dated 20 September 2017, which unearthed new information that now changes their position, an argument to which I am not persuaded.

89. Neither do I find that the Defendant was non‐compliant with the Court of Appeal’s Order for Document Production dated 24 January 2018 and nor do I find that the Defendant’s disobeyed the Order by filing redacted documents without providing proper explanation.

90. Most pertinently, the loss upon which the Claimant’s argument predicates are to date unparticularized and unquantified by the Claimant. It is the Claimant’s contention that further Document Production Orders are required in order for them to enquire into these losses. However, as illuminated at the beginning of this judgment at paragraphs 44-46, the circumstances of this dispute make the likelihood of significant losses highly questionable. I must agree with the Defendant that I find this document production request to be nothing more than a ‘fishing expedition’; an exercise is dressed up as an investigation into alleged losses suffered by the Claimant for lost business opportunity, yet the facts of this case alone point towards implausibility.

91. To my mind, these proceedings have lasted long enough, and at a disproportionate expense to both parties. I find that the continual requests for document production are unhelpful and only further exacerbate the time and money spent on this case.

92. We are nearly a decade down the line from the signing of the Lease in the first instance, and three years into litigation. The Claimant has already had extensive disclosure and still, has not been able to put together a weighty case with any real prospects of success. I thus find the argument there is some new information inherently implausible.

93. For reasons cited above, I would dismiss the Claimant’s Document Production Order, even if the application did not rest upon the success of the others.

94. The Claimant’s application notice dated 27 May 2019 seeks a witness summons of Ms Melanie Fernandes and stipulates that the instructions given to and communication received from the IT team at Emirates NDBP for the retrieval of documents in relation to Document Production Order dated 24 January 2018 relate to the prospective witness. Though this matter was not dealt with in full at the hearing, it was discussed in brief, and shall be assessed here both on the papers and on the substance of the conversations with Counsel at the hearing.

95. As per RDC 30.3 a witness summons may be issued by the Court requiring a witness to (1) attend the Court or a tribunal to give evidence; or (2) produce documents to the Court or a tribunal.

96. However, in these circumstances, to summons Ms Fernandes would be entirely unnecessary and moreover, entirely inappropriate. Counsel for the Defendant has informed the Court that Ms Fernandes is no longer an employee of Emirates NBDP, and that she is currently suffering from cancer. Though Counsel for the Defendant did not object to summonsing Ms Fernandes to Court, he did highlight that to do so would be very disruptive for Ms Fernandes, and indeed to ask her to attend Court would be unusual in such circumstances. Indeed, this Court is not a criminal court, and we seldom summons witnesses to matters such as these.

97. In any event, Counsel for the Claimant communicated that it does not necessarily wish to proceed with this particular application, and that the other applications are to take priority. In essence, the Claimant is willing to abandon the application.

98. I do not find it necessary nor appropriate to summons Ms Fernandes’ due to her grave health issues. I do not dismiss the application on these grounds alone, rather, also on the basis that Counsel for the Defendant did not wish to proceed with said application and that summonsing any witness, notwithstanding any health problems, would only be permitted in exceptional circumstances in these type of proceedings anyway.

99. Therefore, the application for witness summons dated 27 May 2019 is dismissed.

100. This Court will either grant Immediate Judgment against the Claimant or Defendant depending on whom it considers not to have a real prospect of succeeding or indeed in defending the claim, and taking into consideration if there is any other compelling reason why the case should be disposed of at trial

101. As I have clearly outlined in section 3 of this judgment with reference to RDC 24.2 and the applicable test, (see also the aforementioned summary in Nest Investments), I have found the Claimant’s amended claims lack the weight and substance to succeed at trial.

102. The Defendant’s application for Immediate Judgement succeeds; I find the defence put forth well-reasoned, well-argued, and thorough. Though comments on the entirety of the submissions made by Counsel is well outside of the scope of this judgment, I would like to make a few specific comments with regard to the ‘Invalidity of the Lease’ argument put forth by Counsel for the Claimant, which I find to be particularly compelling if this case would have gone to trial.

103. I am convinced by the defense from para 96 of the Defendant’s submissions, that whether or not the Lease could have be binding on Emirates NBDP, the Lease was in any event void due to two crucial factors: (i) the amendment in March 2012; and (ii) the Lease’s terms being inconsistent with the SMS. With reference to the first point, I am convinced that the contract would indeed be unenforceable because it did not state the timeframe (here the Defendant cites Blue v Ashley [2017] EWHC 1928 (Comm) at [136]), nor a date. With regards to the inconsistency with the SMS aspect of this argument it is indeed true that the Lease required the Claimant to operate the Units as a restaurant and bar, which was prohibited by the terms of the SMS. This was wrong by law.

104. This latter point is particularly compelling, and to my mind would be a strong enough defence to stand up if this case were to go to trial. Indeed, in accordance with Strata Title Law 2007, Article 9(6); Strata Title Law 2018, Article 9(9), operation of the Units as a bar and restaurant is unlawful. Amendment of the SMS would only be permitted only by application of the Higher Body Corporate, and whilst I cannot speculate on whether or not such an amendment would be granted, my point is that the argument for the Lease being void for illegality is a strong one. (Here, I refer to the Defendant’s citations, see Chitty, paragraph 16-015; Patel v Mirza [2016] UKSC 42; [2017] AC 467; Ting Siew May v Boon Lay Choo [2014] SGCA 28 at [75]).

105. I find that the Defendant puts forward a very compelling case that performance of the Lease was impossible in law and as a result, even if the Lease was binding on Emirates, it would be unenforceable. Indeed, it is a well-known tenant of contract law that a contract entered into for the purpose of doing an act prohibited by statute would be illegal and unenforceable. This argument, at the apex of the defence, it well thought out and clearly the correct application of the law. It demonstrates that such pleadings would likely succeed should this case have gone to trial.

106. The application for Immediate Judgment against the Claimant succeeds for reasons cited above, and for reasons detailed in part 3 of this judgement; I find that the Claimant’s amended claim has no real prospects of case, and it has not been able to show the defence would not succeed. The Defendant has made a plausible and persuasive case that if indeed this were to go to trial, they would succeed. I find that even if it were to be found that the Lease was binding on Emirates (which I find highly improbable given the facts of the case, for reasons previously outlined), that the inconsistency with the SMS would render the Lease would be found to be illegal, invalid and unenforceable. Almost a decade since the signing of the lease in question, this dispute still continues. I find that the Claimant has had ample opportunity to plead his case and to provide the weight to its applications required for the high threshold which would be required for proceedings go further.

 Costs

107. The final issue to be decided is the question of costs. According to RDC 38.7, if the Court decides to make an order on costs, the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party. I am satisfied that the Claimant, as the unsuccessful party in this case, should pay the costs, and be subject to a detailed assessment if not agreed.

 Conclusion

108.Upon hearing the case, I find the Claimant’s applications to be dismissed in their entirety. The operation of a bar/café such as Vegie Bar in the vicinity is indeed prohibited due to the serving alcohol and thus, I find it highly improbably, that the Lease had been properly registered and transferred. For reasons cited above, I hereby order that:

a. Claimant’s application to amend the Claim Form and Particulars of Claim is dismissed;

b. The Claimant’s application to join Zain Capital LLC as a Second Defendant to these proceedings is dismissed;

c. The Claimant’s application for Immediate Judgment against the Defendant is dismissed;

d. The Claimant’s application for Document Production is dismissed;

e. The Claimant’s application dated 27 May 2019 for Witness Summons is dismissed.

f. The Defendant’s application for Immediate Judgment against the Claimant is granted;

g. The Defendant is awarded their costs to be assessed by the Registrar if not agreed.

Issued by:

Amna Al Owais

Registrar

Date of Issue: 4 September 2019

At: 1pm