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Claim No. CFI 049/2022

IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

VISION CONSTRUCTION LLC

Claimant/Respondent

and

BANQUE MISR UAE

Defendant/Applicant

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JUDGMENT OF JUSTICE RENE LE MIERE

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UPON the Part 7 Claim Form dated 22 July 2022 and amended on 30 August 2022 (the “Claim”)

AND UPON the Defendant’s Application No. CFI-049-2022/1 dated 3 October 2023 seeking an Order that the Claim be struck out (the “Defendant’s Application” or “Application”)

AND UPON hearing counsel for the Claimant and counsel for the Defendant at a hearing held before me on 16 November 2023 (the “Hearing”)

AND UPON reviewing all relevant material added onto the Court file

AND UPON reviewing the Rules of the DIFC Courts (the “RDC”)

IT IS HEREBY ORDERED THAT:

1. The Defendant’s Application that the Claim be struck out under RDC 4.16 is dismissed.

2. The Claimant shall pay the Defendant’s costs of the application on an indemnity basis except that such costs shall not include the costs incurred by the Defendant in relation to its Claim that the Claim be dismissed because the statement of case discloses no reasonable grounds for bringing the Claim.

Issued by:
Hayley Norton
Assistant Registrar
Date of issue: 5 December 2023
At: 3pm

SCHEDULE OF REASONS

Summary

1. The Claimant, Vision Construction LLC (the Claimant), is a limited liability company registered with and the holder of a licence from the Dubai Department of Economic Development and carrying on building contracting activities in Dubai.

2. The Defendant, Banque Misr UAE (the Defendant), is a branch of a foreign bank licensed by the Central Bank of UAE to operate banking activities within the United Arab Emirates with its registered address in Dubai.

3. The Claimant has or had two current accounts with the Defendant.

4. The Claimant made investments through the Defendant under the terms of a Master Agreement for over-the-counter Foreign Exchange Transactions (the “Master Agreement”), a General Risk Disclaimer, and Conditions for Multi Account Clients.

5. The Claimant invested through the Defendant in Egyptian Government Treasury Bills issued in Egyptian Pounds (the “Bills”).

6. The Master Agreement provides that the DIFC Courts shall have non-exclusive jurisdiction to settle any dispute arising from or in connection with the Master Agreement and all legal relationships between the Claimant and the Defendant are governed by DIFC law.

7. The Claimant instructed the Defendant to redeem the Bills early, that is sell them before their maturity date. The Claimant says that the Defendant delayed the payment of the redemption amount which caused the Claimant to suffer a loss for which the Defendant is liable.

8. On 22 July 2022, the Claimant commenced this Claim.

9. The Claim was set down for trial for two days commencing on 28 November 2023.

10. At a Pre-Trial Review H.E. Justice Shamlan Al Sawalehi ordered the trial dates be vacated. This was confirmed in the Judge’s Order on 25 October 2023.

11. The Defendant says that the trial dates were lost, and the Claim has failed to proceed because the Claimant has failed to comply with case management orders and has failed to engage with or proceed with the Claim.

12. The Defendant has applied for the Claim to be dismissed.

13. For the reasons that follow I find:

Defendant’s application

14. By application notice of 3 October 2023, the Defendant has applied for orders:

15. The grounds of the Defendant’s application are:

Claim is commenced

16. It is necessary to set out the procedural history in some detail.

17. On 22 July 2022, the Claimant filed its Part 7 Claim Form to commence the Claim.

18. On 30 August 2022 the Claimant filed an amended Claim Form.

19. The Claimant served the amended Claim Form on the Defendant on 28 September 2022.

20. The Defendant filed an acknowledgment of service on 30 September 2022. The Defendant indicated that it intends to defend the Claim.

21. On 27 October 2022, the Claimant filed its amended Particulars of Claim. The Claimant asserts that by delaying the payment from the sale of the Bills and not performing its obligations, the Defendant has breached the Master Agreement. Alternatively, the Claimant says that the Defendant owed a duty of care to the Claimant by virtue of the Master Agreement and to the extent that the Defendant acted negligently and or omitted to fulfil the instructions of the Claimant timeously, the Claimant has suffered a loss as a direct result thereof.

22. On 22 November 2022, the Defendant filed its defence to the amended Particulars of Claim.

23. On 14 December 2022, the Claimant filed its reply to the Statement of Defence.

The case management conference

24. Following correspondence on the availability of the Claimant and Defendant, the Registry fixed the Case Management Conference for 9 February 2023 and informed the Claimant and the Defendant by email, which states:

25. By 31 January 2023, the Defendant’s legal representatives had not received any correspondence from the Claimant or Claimant’s counsel in respect of the Case Management Conference documents.

26. On 31 January 2023, the Claimant’s counsel requested from the Registry that the Case Management Conference be postponed to a later date to complete its Part 2 DIFC Courts Registration. The Defendant’s legal representatives informed the Registry that it did not object to postpone the conference until 23 or 24 February 2023.

27. Following correspondence on the availability of the Claimant and the Defendant, the Registry fixed the Case Management Conference for 23 February 2023 and informed the Claimant and the Defendant by email of 2 February 2023. In the email, the Registry again informed the parties of the documents they were required to prepare for the conference and when they were to be lodged with the Registry.

28. The Defendant did not receive any correspondence from the Claimant or the Claimant’s counsel in respect of the Case Management Conference documents by 20 February 2023.

29. On 20 February 2023, the Defendant’s legal representative submitted a Case Information Management Sheet on behalf of the Defendant and sent an email to the Claimant’s counsel in respect of the Case Management Conference and reminded the Claimant’s counsel of its responsibilities under the DIFC Courts Rules.

30. Also on 20 February 2023, in response to an email from the DIFC Courts’ Registry of 15 February 2023, the Claimant’s counsel requested that the Case Management Conference be postponed to a later date to enable the Claimant’s counsel to register as a legal practitioner under Part 2.

31. The Defendant’s legal representative informed the Registry that it had no objection to a further delay subject to their existing engagements.

32. Following further correspondence on the availability of the Claimant and Defendant, the Registry set the Case Management Conference for 9 March 2023 and informed the Claimant and Defendant by email of 23 February 2023. The Registry again informed the parties of the documents they were required to prepare for the conference and when they were to be lodged with the Registry.

33. The Defendant’s legal representative sent an email to the Claimant’s counsel on 24 February 2023 in which they set out their desire to agree the documents required for the Case Management Conference before 6 March 2023 and attached a draft case management order template and the DIFC E-Bundle Manual.

34. On 28 February 2023, the Claimant’s counsel responded that they would be in contact with the Defendant’s legal representative “shortly in order that we may compile the required documents”.

35. Through correspondence between 3 and 6 March 2023, the Claimant’s counsel and Defendant’s legal representatives agreed the case memorandum for the Claim.

36. In an email of 5 March 2023 to the Claimant’s counsel, the Defendant’s legal representative requested an update on the status of the case bundle compilation. In response, the Claimant’s counsel in an email of 6 March 2023 informed the Defendant’s legal representatives:

37. The Claimant did not upload a case management bundle to the portal by 4pm on 6 March 2023.

38. In an email of 6 March 2023, the Claimant’s counsel informed the Defendant’s legal representatives that the Claimant was unable to complete the draft order or case management information sheet and would be requesting further time from the DIFC Registry.

39. No case bundles had been filed by the Case Bundle deadline. The Defendant’s legal representatives informed the Registry that:

40. The Defendant’s legal representatives received the Claimant's case memorandum on 3 March. The document did not meet the requirements as set out in RDC 26.8 - 26.15.

41. The Defendant’s legal representatives amended the Case Memorandum and prepared a draft form of case management conference order.

42. Following receipt of the Registry’s email of 7 March 2023, the Defendant’s legal representatives received a confirmation that the Claimant had prepared a trial bundle for the Case Management Conference of 9 March 2023. Upon checking the bundle, the Defendant’s legal representatives concluded that the Claimant had failed to upload all documents necessary for a Case Management Conference bundle and the Defendant’s legal representatives uploaded the draft documents that the Defendant’s legal representatives had prepared for this purpose, which had not been agreed to by the Claimant.

43. The Defendant’s legal representatives received a further email from the Claimant’s counsel on 7 March 2023, addressed to the Registry, requesting a “final postponement” in order to “finalize details for the conference”. The email also requested that additional time be provided to “secure a representative at the conference”. The Defendant’s legal representatives sent an email questioning the repeated delays requested by the Claimant and why the Claimant had filed a Claim that it was not prepared to appear in or act on.

44. On 8 March 2023:

45. On 9 March 2023, the Case Management Conference was presided over by H.E. Justice Nassir Al Nasser and attended by Mr. Raza Mithani on behalf of the Claimant. The Claimant and Defendant agreed a draft Case Management Conference order, and, on 15 March 2023, H.E. Justice Nassir Al Nasser issued a Case Management Order,

Conduct after case management conference

46. In accordance with the Case Management Order, the Claimant filed re-amended Particulars of Claim on 30 March 2023.

47. The Defendant forwarded to the Registry an amended Statement of Defence on 20 April 2023 which was deemed received by the DIFC Courts on 24 April 2023.

48. The Claimant’s Reply to the Amended Statement of Defence was filed on 11 May 2023, which was one week later than the deadline set in the Case Management Order.

No further progress before pre-trial review conference

49. Since 11 May 2023, the Defendant’s legal representatives have not been contacted by the Claimant or Claimant’s counsel in respect of a revised List of Issues that must be agreed, in accordance with the Case Management Order. The Defendant’s legal representatives sent an email to the Claimant and Claimant’s counsel on 25 May 2023, stating that the Claimant had not contacted the Defendant in relation to the revised List of Issues. The Defendant’s legal representatives provided a draft case memorandum outlining a List of Issues for the Claimant’s review and feedback. The Claimant has made no response.

50. The Defendant submits that the Claimant has not complied with several orders or directions in the Case Management Order.

51. Some of the directions in the Case Management Order are mandatory in the sense that they oblige the parties to do something by a specified date. Other directions are permissive in the sense that they specify that if the party is to do something it is to be done by a certain date, but the parties are not obliged to do it. An example of a mandatory order is order 6 – “Standard production of documents shall be made by each party by no later than 4:00 pm on 12 May 2023”. The Claimant acknowledges that it relies on documents and must produce those documents. An example of a permissive order is order 7 – “The parties shall file and serve a request to produce, if any, by no later than 4:00 pm on 9 June 2023”. Neither party is obliged to file and serve a request to produce, but if they wish to make such a request it must be done by the specified time.

52. Case Management Order 3 is that the Claimant shall file and serve an amended reply by no later than 4 May, if so advised. That is a permissive order in the sense I have described. The Claimant filed an amended reply on 11 May 2023, which was 7 days after the date specified in the case management order. The Claimant was not authorised to file an amended reply after 4 May 2023. However, the parties treated the filing of the amended reply as an effective step in the proceedings notwithstanding that it was out of time. The 7-day delay did not of itself cause any significant prejudice to the Defendant.

53. The Claimant did not comply with case management order 6 which required each party to make standard production of documents by 12 May 2023. The Claimant has still not complied with that order.

54. The Claimant has not complied with any of the case management orders beyond filing and serving an amended reply on 11 May 2023. Some of those orders are permissive rather than mandatory. However, the gravamen of the Claimant’s failure to comply with the case management orders is that the Claimant has failed to take the steps necessary for the case to proceed to trial. That led to the trial dates being vacated.

55. The Defendant has not produced any documents pursuant to case management order 6 which required each party to make standard production of documents by 12 May 2023. The Defendant’s position in relation to the order for standard production of documents is not clear. On the one hand, counsel submitted the Defendant does not rely on any documents other than documents that have already been produced by the Claimant. On the other hand, the Claimant says that in light of the continued noncompliance of the Claimant in respect of deadlines, the Defendant took “the conservative approach of not producing documents in order to reserve its rights until such time as the Claimant is an active participant in a litigation process which it had started”. The Defendant’s legal representatives submit this is reflected in the Progress Information Sheet that the Defendant had filed with the DIFC Courts on 19 September 2023.

56. The Claimant has missed the deadline to file a Progress Information Sheet by 19 September 2023 and has still not done so. As far as I am aware, the Claimant has continued to fail to comply with case management orders.

57. On 26 September 2023, the Defendant’s legal representatives received an email from the Registry with the hearing link and time of the Pre-Trial Review set for 28 September 2023, and an email from Mr. Raza Mithani stating that he was only involved in the previous case management conference for the Claimant and had not been instructed further.

58. On 27 September 2023, the Defendant’s legal representatives received an email from Mr. Abdullah Metwalli, stating as follows:

59. The Defendant’s legal representatives responded to the email expressing alarm that the Claimant was seeking to introduce new evidence following the close of discovery and that such information must be shared with the Defendant in accordance with RDC Part 28.

60. On 27 September 2023, the Defendant’s legal representatives received an email from the Courts’ Registry confirming that the Pre-Trial Review would proceed on 28 September 2023.

Pre-Trial Review

61. The Pre-Trial Review was presided over by H.E. Justice Shamlan Al Sawalehi. Mr. Abdullah Metwalli attended on behalf of the Claimant. However, both H.E. Justice Shamlan Al Sawalehi and the Courts’ Registry representative in attendance made clear that Mr. Abdullah Metwalli does not hold a Part 2 DIFC Courts’ Registration.

62. Counsel for the Defendant’s recollection of the Pre-Trial Review is as follows:

Defendant’s skeleton argument

63. The Defendant filed its skeleton argument on 14 November 2023, that is one clear day before the hearing of the application.

64. In its skeleton argument the Defendant said that its application is made under RDC 4.16(1), (2) and (3), that is:

65. The Claimant objected to the Defendant relying on the ground that the statement of case discloses no reasonable grounds for bringing the Claim (RDC 4.16(1)) because that was not a ground stated in the application.

66. The Defendant applied to amend the grounds of its application to rely on the ground that the statement of case discloses no reasonable grounds for bringing the Claim.

67. The Claimant opposed the amendment application on the basis that it had no notice of the proposed ground until the Defendant served its skeleton argument one clear day before the hearing and after the Claimant had filed its evidence and skeleton argument. Counsel for the Claimant confirmed that he had not come prepared to answer the ground that the statement of case discloses no reasonable grounds for bringing the Claim.

68. I refused the amendment application for the following reasons. The amendment was made 6 weeks after the application had been filed and served with no adequate explanation for the delay. The Claimant had had no real opportunity to respond to the new ground and the real prejudice to the Claimant could not be compensated in costs.

Delay and non-compliance by the Claimant

69. The Defendant submits that since the Claim was filed by the Claimant, it has shown a pattern of repeated non-compliance and non-cooperation in the litigation process, as follows:

70. The Defendant submits that the Claimant’s continued non-cooperation, lack of engagement and non-compliance in the Claim:

71. The Defendant submits the Court should dismiss the Claim on the ground that the Claimant has failed to comply with the Case Management Order of H.E. Justice Nassir Al Nasser issued on 15 March 2023, without providing adequate justification.

72. In so far as the Defendant’s application is based on the Claimant having failed to comply with Court orders, counsel for the Defendant relied primarily on the Claimant’s failure to comply with the case management order to make standard production of documents by 12 May 2023.

73. Rule 26.82 provides that when a party fails to comply with a direction given by the court any other party may apply for an order that he must do so or for a sanction to be imposed or both of those.

74. Rule 26.83 provides that the party entitled to apply for such an order must do so without delay but should first warn the other party of his intention to do so.

75. The Court may strike out a Claim for noncompliance with a court order or orders, but that is an extreme step which the Court will only take in exceptional circumstances. In general, this summary procedure should only be used in clear and obvious cases where the defaulting party by their conduct shows that they do not intend to comply with court orders or undue prejudice has been caused to the innocent party by the defaulting party’s noncompliance with court orders.

76. In considering an application to strike out a Claim for noncompliance with a court order or orders, the Court may consider the three stages identified in Denton v TH White Ltd¹, a case concerning an application for relief from sanctions. The first stage is to consider whether the failure to comply with the case management order (e.g. making standard production of documents) was serious and significant. The second stage is to consider why the default occurred to see if there is a good reason for it. The third stage involves a consideration of all the circumstances of the case.

77. The Claimant’s failure to comply with the case management order to make standard production of documents by 12 May 2023 is a serious and significant breach. It is an important step in the litigation process and the Claimant has still not complied 6 months after it was ordered to do so.

78. No adequate explanation has been offered. The principal reason for delay appears to be the Claimant’s misconceived need to obtain part 2 registration and its desultory efforts to do so.

79. However, on considering all the circumstances of the case, I am not persuaded that the Claim should be struck out. The Defendant has not shown that it has suffered prejudice beyond the resolution of the Claim being delayed for 6 months or so. The Defendant took no steps to compel the Claimant to progress the Claim or to itself progress the Claim until the Pre-trial Review. The Defendant may take this “conservative approach” and delay 6 months in taking any step to compel the Claimant to comply with the case management order until the Pre-trial review and then apply for an order that the Claim be dismissed. But the Defendant should not expect the Court to take the nuclear option of dismissing the Claim in those circumstances.

80. The Claimant's more compelling argument is that the Claim should be dismissed because of the Claimant’s continued lack of engagement and progressing the case.

81. The Defendant referred to the two-stage test for determining a strike out application for an abuse of process set out by Lord Justice Coulson in Cable v Victoria Insurance Co. Ltd²:

82. This two-stage approach was endorsed by H.E. Deputy Chief Justice Ali Al Madhani in First Middle East Distribution DMCC v Orange Chameleon Ltd³ . As H.E Deputy Chief Justice Ali Al Madhani noted, there is no concise definition of the phrase “abuse of process” noting however that an abuse of process is:

83. On the issue of “proper use”, the Defendant referred to the opinion of Master Matthews in Phelps v Button⁴. In that case, it was held that an abuse of process under CPR Rule 3.4(2)(b), which corresponds to RDC 4.16(2), is not engaged merely because of delay but may arise if a party embarks on litigation intending never to conclude it or if there is significant prejudice to the other side.

84. The Claimant has delayed in pursuing the Claim, but I am not persuaded the Claimant commenced the Claim intending never to conclude it or that the Claimant now does not intend to pursue its Claim to judgment. Counsel for the Claimant submitted that the Claimant is now ready, willing, and able to pursue the Claim to trial with proper expedition.

85. The Claimant has failed to take any steps to agree a list of issues in accordance with the Case Management Order of 15 March 2023. The Claimant has not filed any witness statement or filed a Progress Information Monitoring Sheet. In summary, the Claimant has failed to take any step to progress the Claim it initiated for more than 6 months. The Claimant has offered no adequate explanation for that failure.

86. That conduct is an abuse of the process of the Court. RDC 1.8 requires the parties to help the Courts to further the overriding objective to deal with cases justly, which includes, so far as is practicable, ensuring that the case is dealt with expeditiously and fairly. The disregard of case management timetable orders and in effect putting a claim on hold for more than six months for no good reason is an abuse of the process of the Court.

87. The Court has to exercise its discretion whether to strike out the Claim. This involves a balancing exercise, including considerations of prejudice and proportionality.

88. As I have said earlier in these reasons, I am not persuaded that there is prejudice to the Defendant sufficient to strike out the Claim. Further, striking out the Claim is disproportionate to the Claimant’s default in conducting the proceedings and the prejudice to the Defendant.

89. The more appropriate course is that implicit in rules 26.82 and 26.83. The Court should take steps to compel the Claimant to comply with the case management orders. Counsel for the Claimant assured the Court that the Claimant will, when ordered to do so, give standard production of documents within 14 days, and comply with the other case management orders within a relatively short time thereafter.

90. Counsel for the Defendant submitted that if the Court decides not to dismiss the Claim, it should make an unless order, that is a self-executing order that the Claim will be dismissed unless the Claimant makes standard production of documents within 14 days of the issue of the order.

91. I will not make such an order for a number of reasons.

92. First, there may be a dispute about whether the Claimant has complied with the order. A standard production order is defined by RDC 28.15. There may at some time be a genuine dispute about whether the Claimant complied with the order. For example, there may be a dispute whether documents on which it relies have already been submitted by the other party or that it is required to produce the documents by a law, rule, or practise direction. Secondly, the order may take effect in circumstances that were not foreseen when the order was made. Thirdly, since the agreed timelines in the Case Management Order made by H.E. Justice Nassir Al Nasser on 15 March 2023 have already passed and the parties have not complied with such orders, the overriding objective is best advanced by the Court scheduling as soon as practicable a further case management conference for the parties to agree on new timelines and trial dates.

93. If the Claimant again fails to comply with the Court’s case management orders, the Court may order that the Claim be dismissed. If the Claimant again fails to comply, the Claimant cannot say that it has not been warned of the possible consequences of noncompliance.

94. I will dismiss the Defendant’s application that the Claim be dismissed. The Registry will schedule a further case management conference as soon as possible.

95. The Defendant has applied for the Court to impose sanction(s) against the Claimant pursuant to RDC 26.82.

96. The court will not tolerate a party disregarding case management orders and failing to conduct the proceedings in accordance with the overriding objective for no, or no adequate, reason.

97. An appropriate sanction is that the Claimant pay the Defendant’s costs of the application notwithstanding that the Claimant succeeded and the Defendant failed in its application that the Claim be dismissed. The costs should be assessed on an indemnity basis because the Defendant has been put to the cost of bringing this application by the Claimant failing to follow the case management timetable and not taking any step for more than 6 months for no, or no adequate, reason in a proceeding which it initiated. The conduct of the Claimant takes the situation away from the norm⁵. However, the Defendant should not recover its costs in so far as they were incurred in its submission that the Claim should be dismissed because the statement of case discloses no reasonable grounds for bringing the Claim.

Orders

98. The Court will order: