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Claim No. TCD 009/2020

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

FIVE REAL ESTATE DEVELOPMENT LLC

Respondent/Claimant

and

REEM EMIRATES ALUMINIUM LLC

Applicant/Defendant

ORDER WITH REASONS OF JUSTICE SIR RICHARD FIELD

UPON considering the Claimant’s application for permission to appeal (the “Permission Application”) the order dated 31 May 2021 whereby the Claimant’s application to strike out the whole of the Counterclaim or for immediate judgment against the Counterclaim was dismissed (the “Second Order”)

AND UPON considering the reasons given for the Second Order

AND UPON considering the Claimant’s skeleton argument in support of the Permission Application

AND UPON considering the Defendant’s written submissions opposing the Permission Application

IT IS HEREBY ORDERED THAT:

1. The Permission Application is dismissed.

2. The Claimant shall pay the Defendant’s costs of this application to be assessed by the Registrar on the standard basis, if not agreed.

Issued by:
Nour Hineidi
Registrar
Date of issue: 22 August 2021
At: 2.30pm

SCHEDULE OF REASONS

1. The Permission Application is made on the basis that the proposed appeal has a real prospect of success as required under RDC 44.19 (a).

2. The reasons given for the Second Order have to be understood against the background of the parties’ submissions addressed to the Court on the Claimant’s application to strike out the Counterclaim.

3. The case made by the Claimant for striking out the Counterclaim was set out in two witness statements made by Mr Raj Kumar. In the first of these witness statements, Mr Kumar seized upon the Court’s acceptance in making the earlier order striking out the Claimant’s claim that it was beyond challenge that it was stated in the Engineer’s Determination that the Defendant was entitled to be paid AED 41,344,961.90 and the Court’s finding that, under the Determination, AED 1,811,884.48 remained due to the Defendant. Given the other determinations made by the Engineer it followed, submitted Mr Kumar, that AED 1,811,884.48 remained due as per the Determination to the Defendant, and not AED 17,200,000 as claimed by the Defendant. The said earlier order is hereafter referred to as (the “First Order”).

4. Mr Kumar further submitted that it appeared odd, in that it works an injustice against the Claimant, for the Defendant to be allowed to challenge the Determination to pursue its Counterclaim having taken the benefit of the First Order. In the light of the Court’s finding when making the First Order that the Determination was common ground and beyond challenge, Mr Kumar took it that the Determination applied to both the Claimant and the Defendant.

5. The Defendant’s submissions in reply were briefly stated in the witness statement of Mr Karvelis who pointed that whilst the numbers alleged to have been stated in the Determination were accepted as having been correctly stated in the pleadings and submissions, it was not accepted that these numbers were all correct. Indeed, the Defendant disputed the correctness of several of the Engineer’s decisions as part of its Counterclaim.

6. In reply, Mr Kumar submitted that the Defendant’s point that the correctness of the statements in the determination was not accepted was answered by the fact that, in paragraph 5 of the Reasons given for the First Order, it is stated that the Defendant served a counterclaim on the Claimant claiming, inter alia: (i) AED1, 811, 844.48. Mr Kumar further submitted that the Court’s “finding” in the First Order that the Counterclaim was AED 1,811,884.48 was res judicata and that the effect of the First Order is that the Counterclaim is merged in the judgment constituted by the First Order.

7. Mr Kumar made no reference to the common law doctrine of election or to the leading authorities on the circumstances in which it will be held that, having opted to pursue one of two alternative courses of action, the party making that choice is not allowed later to pursue the alternative course of action.

8. The key findings made in the reasons for the Second Order were: (i) the Court was faced with a strike-out, rather than the determination of a preliminary issue and therefore the strike out application must fail if the Defendant’s Counterclaim had a real prospect of success; (ii) the Defendant had a reasonable argument with a real prospect of success that, although in striking out the Claim it held the Claimant to its contention that the Determination was binding, it was none the less entitled to contest a number of the deductions made by the Engineer so as to increase its Counterclaim to a sum greater than AED 1,811,884.48; (iii) the Claimant’s res judicata contention was hopeless; (iv) the First Order did not prevent the Claimant from contending at trial that the Determination is binding on the Defendant; (iv) there was nothing in the Claimant’s contention that there had been a failure properly to attest to the truth of the Counterclaim; and (v) if it was going to be asserted that the Counterclaim should be decided by arbitration and not judicial decision, this had to be done by an application made under the Arbitration Law.

9. In support of the Permission Application, the Claimant cites a number of cases on the topic of election and contends that the Court should have held that the Defendant has elected to accept that the Determination was binding in all respects and could not now bring a claim in which it disputed certain parts of the Determination. I reject this contention. In my judgment, it is plain that the Defendant has a reasonably arguable case that it can proceed with its Counterclaim on the basis that it is not disputing the correctness of those elements in the Determination that give rise to at least a Counterclaim for AED 1,811,884.48, whilst at the same it is disputing the correctness of other elements contained in the Determination which, if properly determined, should have led to a larger overall entitlement than was awarded by the Engineer. I also think that the Defendant’s contention made in its submission opposing the Permission Application has a real prospect of success, namely, that in seeking and obtaining the First Order, it had been enough for it to show, as it did, that it had not been paid AED 49,079, 350 as asserted by the Claimant.

10. The Claimant also submits that it is has an unassailable case that, in making the First Order, the Court found that Defendant had a Counterclaim for AED 1,811,884.48 and that by reason of the doctrines of res judicata and merger, the Counterclaim has been determined and cannot be re-litigated. This case is founded on paragraph 5 of the Reasons given for the First Order which reads:

On 21 February 2021, the Defendant served a Counterclaim on the Claimant claiming, inter alia: (i) AED 1,811,884.48; (ii) damages for loss caused by the delay on the part of the Claimant in progressing the Works; (iii) damages for loss caused by the Claimant’s failure (a) to make timely payment of sums due to the Defendant; (b) to extend the performance guarantee; (iv) an order for the issuance of the Taking Over Certificate and the Defects Liability Certificate both deemed to have been issued on 16 September 2020; and (vii) an order that the performance guarantee AHLG1800329, and the advance payment guarantees AHLG1600217 and AHLG1600218, be released.

11. I remain of the view that this submission is hopeless. As is abundantly clear from this paragraph, the Court here was merely reciting what was pleaded in the Counterclaim and was not holding that the Defendant’s Counterclaim was for no more than AED 1,811,884.48. Thus, it is nothing to the point that the Court found that it was common ground when the First Order was made that the Determination contained the words and the sums relied upon by the Claimant. As already stated, paragraph 5 of the First Order makes it abundantly clear that the correctness of a number of findings by the Engineer are challenged by the Defendant.

12. It follows that the Claimant has failed to show that its proposed appeal has a real prospect of success. The Permission Application is accordingly dismissed, and the Claimant must pay the Defendant’s costs of the application to be assessed by the Registrar on the standard basis, if not agreed.