July 11, 2024 SCT - JUDGMENTS AND ORDERS
Claim No: SCT 051/2024
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
NOEL
Claimant/ Respondent
and
NORBERT
Defendant/ Applicant
ORDER WITH REASONS OF JUSTICE MICHAEL BLACK KC
UPON reviewing the Judgment of Small Claims Tribunal Judge Maitha AlShehhi dated 5 June 2024 (the “Judgment”)
AND UPON reviewing the Defendant’s Appeal Notice dated 14 June 2024 seeking permission to appeal the Judgment (the “Application”)
AND UPON considering the documents and submissions filed by both parties and recorded on the case file
AND UPON hearing and considering the oral submissions of the Defendant/Applicant and the Claimant/Respondent made at a hearing held on 10 July 2024
IT IS HEREBY ORDERED THAT:
1. The Application is refused.
2. Each party shall bear their own costs of the Application.
Issued by:
Delvin Sumo
SCT Judge and Assistant Registrar
Date of Issue: 11 July 2024
At: 8am
SCHEDULE OF REASONS
1. On 10 July 2024, I heard an application for permission to appeal by the Dependent on the basis that if I granted permission I would go on and determine the appeal.
2. The Judgment under appeal was given by SCT Judge Maitha Alshehhi on 5 June 2024 whereby she ordered the Defendant to pay the sum of USD 31,926.24 plus the Court filing fee of USD 1,596.31 to the Claimant.
3. The Claimant carries on business as a provider of Security Trustee, Delegate Administration and Accounting Services. The Defendant is a company registered in the DIFC.
4. By an agreement in writing dated 6 November 2022, the Claimant agreed to provide Security Trustee, Delegate Administration/Paying Agent services and accounting services to the Defendant in connection with a proposed capital raising exercise. There were terms of the agreement:
(1) Noel’s role as Security Trustee included:
(a) Set-up Security Trustee Services
(i) Initial discussions and security documentation review and sign off
(ii) Procuring receipt of executed agreements (if applicable)
(iii) Coordinating and liaising with legal advisors
(iv) Review of all applicable transactional and security legal opinions
(v) Coordinating and liaising with legal advisors on registration of security assets on the relevant registry, if applicable
(vi) Registering security assets on the EIRC (Emirates Integrated Registries Company L.L.C.)
(vii) Issuing EIRC reports
(viii) Review and execution of transaction and security documentation
(ix) Ensuring compliance with transaction documentation
(x) Obtaining authorisations, approvals, licenses, and consents as required by local regulations
(xi) Full KYC and internal compliance checks on relevant parties; (Clause 1.1.1)
(b) Set up – Delegate Administration Services
(i) Review and execution of all transaction agreements, including the Agency and the Murabaha Agreement
(ii) Loading relevant files and information onto relevant systems
(iii) Onboarding with necessary parties, onboarding relevant counterparties for the transaction
(iv) Assisting with obtaining authorisations, approvals, licenses and consents as required by local regulations; (Clause 1.4.1)
(2) There were one off Set-Up Fees of USD 18,750 in respect of the establishment of Security Trustee and Delegate Administration Services (Clause 2.1);
(3) The Set-Up Fees are payable in four equal instalments for a period of four months. The first instalment is payable upon signing this proposal. The remaining instalments shall be invoiced monthly from the date of execution of this proposal. The Set-Up Fees and any related legal fees and expenses are due even if the transaction does not close (Clause 2.4.2);
(4) All fees exclude VAT and disbursement Expenses (Clause 2.4.5);
(5) Expenses are those incurred in connection with the provision of Services, including but not limited to business travel, accommodation, transportation, couriers, chamber of commerce fees, company seal, legalization costs, translation costs or any other costs, either invoiced to the Client or to Noel and paid by us to the third-party provider, and added to the invoice for the services to the Client (Clause 2.4.6); and
(6) Fees and/or Expenses are quoted and will be billed in USD. Noel’s standard payment period is 14 days from date of invoicing. Any prices, fees and charges are denominated, invoiced and payable in the billing currency of our Company that provides the Services. Any amounts, prices, fees or charges provided in currency other than the Noel company billing currency is provided for indicative purposes only. (Clause 2.4.7).
5. On 28 February 2023, the Claimant invoiced the Defendant for USD 18,750 plus VAT of USD 937.50 in respect of the Set-Up Fees, to be paid by 14 March 2023.
6. By an email dated 1 September 2023, the Claimant threatened to commence proceedings unless its outstanding invoices were paid. On 4 September 2023, the Defendant replied. It did not query the invoices but neither did make any offer of payment. The Claimant asked when it might receive payment on 13 September 2023. The Defendant gave a non-committal reply on 14 September 2023. On 18 September 2023, the Claimant asked for a draft payment plan and repeated its request on 3 October 2023. On 11 October 2023, the Defendant replied that “we are happy to take call and confirm the Payment Schedules”. A call took place that day and the Claimant asked for the promised payment plan for review and consideration. On 18 October 2023, the Claimant provided DIFC and EIRC payment confirmations that had been requested by the Defendant. On 20 October 2023 the Defendant proposed a payment plan and stated:
“We are committed to meeting our financial obligations and ensuring a smooth resolution of these outstanding payments”.
On 30 October 2023, the Claimant provided its payment plan.
7. On 5 December 2023, the Claimant wrote to the Defendant with a revised payment plan.
8. On 30 January 2024, the Claimant invoiced the Defendant for USD 11,655.94 plus VAT of USD 582.80 in respect of:
(1) Registration of Notice of Security Right for UAE Movable Assets registered with EIRC: x5 Certificates – USD 272.29;
(2) Registration of Notice of Security Right for UAE Movable Assets registered with EIRC: x5 Notice, 50 – USD 136.15;
(3) Registration Fee for DIFC Securities (DIFC Share Pledge and DIFC Debenture) – USD 10,000;
(4) KYC compliance fees – USD 290.00; and
(5) Appointment of Noel as Noel Process Agent in relation to the Agency Agreement (GBP770@1.24 Fx) – USD 957.50.
All items dated from 26 April 2023.
9. The Claimant issued its Claim Form on 31 January 2024. On 7 February 2024, the Defendant issued its Defence stating:
“NORBERT’s Submission to Honorable DIFC Court: With the aforementioned series of events occurred with NORBERT, could not able to move forward for the issuance of SUKUK and NORBERT incurred huge loss of the HALS’s set up cost for the issuance and has no income generating entity, However wants to settle with NOEL for whatever NOEL incurred expenses for EIRC services”
10. In addition, and for the first time, the Defendant denied liability for the Set-Up Fees claiming an unspecified defect in the Security Pack.
11. On 6 March 2023, the Defendant applied for an order contesting the Court’s jurisdiction. That application was dismissed by H.E. Justice Maha Al Mheiri on 6 May 2024.
12. The Claimant submitted detailed Particulars of Claim on 22 May 2024.
13. On 28 May 2024, the Defendant served an Application Notice claiming:
“1) The Proposal, which was not communicated directly to NORBERT, was compelled to get signed by NORBERT from the Issuer, while in the exercise of Issuance 50 million USD SUKUK. (where NORBERT has no idea of the issuance, as its Acting as Obligor).( The signed Proposal never got executed).
2) The Raised Invoice, was never mentioned in the Proposal, however NORBERT have agreed to pay in good Faith in the submitted Payment Plan but never accepted by NOEL. ( Submitted Plan for the Evidence)
3) The Submitted Security Pack changed due to the sudden changes in board and due to time delays happened in the Process of issuance, NORBERT tried several times to communicate the same to NOEL, but NOEL response to the matter was not valid and rather more focused to collect the payment from NORBERT , for which NORBERT has no clarity that to be paid for what & what is the future course of action. (Change in Security Pack & Mail Communication Attached).
4) Claimant is claiming that services are rendered but not Paid, in the event of course of the Transaction period NORBERT has supported for holding Security for NOEL & making NOEL as Delegate in this entire exercise NORBERT has incurred its own expenses & efforts (Mail Supportive Evidences are attached).
5) Even after NOEL reaches DIFC court, NORBERT has Communicated to come across the table to get way forward but NOEL Never agreed to give us clarification on way forwar (Mail Communication Attached).
6) Despite holding NORBERT’s Security Pack & Controlling NORBERT’s Bank accounts for the period of One Year, NORBERT’s BUSINESS become stuck without the issuance of SUKUK with communication gap created by NOEL intern NORBERT went dormant without any income & NORBERT incurred the Major loss of the Project which is also loss to the UAE because the Project Stake Holders are Dubai TAXI which is part of Smart Nation Project. And NORBERT object and denies to pay the raised Invoice because NORBERT has not received any services what NORBERT actually requires.
7) Hence NORBERT Requests the Honorable DIFC Court to hand over the NORBERT’s Bank Accounts and shares to revamp the Business and could be able to Pay the Invoice to NOEL with in Three Months Period from the Date of Discharge of shares & Bank Accounts to NORBERT.”
14. Having heard the parties on 30 May 2024, the SCT Judge gave judgment in favour of the Claimant on 5 June 2024.
15. On 14 June 2024, the Defendant filed an Appeal Notice. The Grounds of Appeal are:
“With the reference to the Raised Invoice on 28th February, the required Services are not being met by Norbert, the Proof of Evidence is not looked at thoroughly. The way of creating Security Pack which is mentioned in the Proposal by Noel got deviated and the same was communicated by NORBERT, the Evidence is not taken into consideration. Norbert requests Honorable DIFC Court to look into this Financial Transaction Matter with the sequel of operations along with Expertise and give us the proper way forward to settle the agreed Invoice, by revamping the business As Norbert’s Bank Accounts and shares under the custodial of Noel. Hence Norbert could be able to Pay the Invoice to Noel within Three Months Period from the Date of Discharge of shares & Bank Accounts to operate.”
16. On 27 June 2024 the Claimant responded:
“The Claimant [Respondent/Noel] objects to the Defendant's argument for the request for an appeal as the Claimant submits that the Defendant's argument lacks legal grounds for an appeal.
The Defendant's assertions have already been addressed by the Honorable Judge Maitha AlShehhi and the Defendant has not raised any new evidence.
The Defendant has requested the honorable court to "give us the proper way forward to settle the agreed ”. The defendant further in its particulars of claim asserts "but unfortunately our issuance got stuck with CREST Regulatory Issue. The Defendant claims they cannot pay Invoice as the required services are not met by Norbert.
In accordance with clause 2.4.2 of the Proposal [Respondent] Evidence No. 1B], Noel’s Set-Up Fees and any related legal fees and expenses are due even if the transaction does not close. The failure of the client’s transaction does not in anyway affect Noel’s right to claim payment for work done inrespect of its services as the Security Trustee and Delegate.
The Claimant requests that the Honorable Courts decision take by Judge Maitha AlShehhi hereby stays and that the Defendants request for an appeal be denied as this request for an appeal is unfounded, without legal merit and in the Claimant's opinion a further delaying tactic as the total outstanding invoices are now overdue for nearly 2 years.
The claimant hereby requests that the undisputed invoice be paid in full immediately and without any further delay, pending the determination by the Honorable Court for a request for appeal by the Defendant.”
17. The Court would normally deal with an application for permission to appeal a decision of the SCT on the papers, but I have found the Defendant’s written submissions difficult to follow and wished to give it an opportunity to explain them orally in order to determine whether or not there is any substance in them. I therefore instructed the Court to direct an oral hearing on the basis that I would decide the application for permission to appeal and if permission were granted, I would decide the appeal.
18. Regrettably, the Defendant’s oral submissions at the hearing on 10 July 2024 did not cast much light on the Defendant's criticisms of the Claimant’s services or why the Defendant should not be liable to make payment in accordance with the terms of the written agreement signed by the Defendant. The Defendant first alleged that the Dubai Government entity registering the Security Pack would not recognise a Share Pledge and required a mortgage, but then disclosed that the mortgage had in fact been executed. The Defendant then claimed that Noel operated certain bank accounts as the Defendant’s Delegate and when the Defendant regained control of the bank accounts payment would be made. It was however then disclosed that there was no money in those bank accounts. Finally, the Defendant asserted that the Claimant (which the Defendant acknowledged is a large global service provider) did not understand the issuance process. No details were provided to substantiate this allegation.
19. In response the Claimant made the following points:
(1) Clause 1.4.1 of the agreement set out the one-off services;
(2) Clause 2.4.7 of the agreement provided that fees for the one-off services shall be paid within 14 days but the Defendant has not paid the fees some 16 months later;
(3) The Defendant did not dispute the invoices until the Court proceedings and on 20 October 2023 had proposed a payment plan whereby the invoices would be discharged by the end of January 2024;
(4) Clause 2.4.2 provides that the Set-Up Fees and expenses are due even if the transaction does not close. The Claimant is a service provider and does not guarantee successful achievement of the transaction; and
(5) The Defendant has not produced any new evidence, nor any suggestion of procedural irregularity, nor any new legal submissions.
20. Having heard the parties I am satisfied that there is no substance in the Defendant’s complaints, and they are the latest example in a long line of classic and transparent conduct of a debtor who is not willing to pay his debts, namely failure to engage, delay, excuses for non-payment and belated attempts to dispute the debt.
21. Under RDC 53.87, the Court will allow an appeal where the decision was:
(1) wrong;
(2) unjust because of a serious procedural or other irregularity in the proceedings; or
(3) wrong in relation to any other matter provided for or under any law.
22. By RDC 53.90 permission to appeal may be given only where:
(1) the Court considers that the appeal would have a real prospect of success; or
(2) there is some other compelling reason why the appeal should be heard.
“A real prospect of success” means one that is more than fanciful.
23. In her judgment of 5 June 2024, the SCT Judge carefully recorded the parties’ submissions, including an allegation by the Defendant (rejected by the SCT Judge) that it was compelled or forced to sign the agreement, which was not repeated before me. That allegation does however reinforce my impression that the Defendant would say anything to avoid paying the Claimant’s invoices.
24. Apparently, the Defendant told the SCT Judge (as was repeated before me) that it was willing to pay the expenses. I note that, notwithstanding, the Defendant has made no effort to do so.
25. The SCT Judge correctly directed herself to the relevant provisions of the agreement.
26. Not only do I consider that there is no basis to find that the SCT Judge was wrong either in her analysis of the facts or the law, but I am of the firm view that she was entirely correct in giving judgment against the Defendant, on the basis of my own findings. I agree with the Claimant that there is no evidence of a procedural irregularity. Consequently, I do not consider that the proposed appeal has a realistic, or indeed any, prospect of success, nor is there any other compelling reason why the appeal should be heard. Permission to appeal is therefore refused.
