CFI 028/2016 Essam Abdulamir Hamadi AlFadhli Al Tamimi v Jorum Limited & Another

Claim No. CFI-028-2016

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BEFORE H.E. JUSTICE SHAMLAN AL SAWALEHI

BETWEEN

ESSAM ABDULAMIR HAMADI ALFADHLI AL TAMIMI

Claimant

and

(1) JORUM LIMITED

(2) FIRST GRADE PROPERTIES LIMITED

Defendants

ORDER OF H.E. JUSTICE SHAMLAN AL SAWALEHI

UPON reviewing the Defendants Application Notice CFI-028-2016/2 dated 19 April 2017 (the “Application”) seeking to set aside the Default Judgment issued on 13 October 2016

AND UPON hearing Counsel for the Claimant and Counsel for the Defendants on 5 July 2017

AND UPON reading the relevant documents on the case file

AND PURSUANT TO Part 14.2 of the Rules of the DIFC Courts (“RDC”)

IT IS HEREBY ORDERED THAT:

1. The Application is granted.
2. The Default Judgment issued on 13 October 2016 be set aside.
3. Costs in the case.

Issued by:

Lema Hatim

Assistant Registrar

Date of Issue: 16 July 2017

At:11am

SCHEDULE OF REASONS:

1. This is an application by the Defendants that the default judgment dated 13 October 2016 made by Registrar Mark Beer (“Default Judgment”) be set aside in accordance with Rule 14.2 of the Rules of the DIFC Courts (“RDC”). These proceedings were commenced upon the Claimant’s Claim Form being issued on 24 July 2016 (the “DIFC Claim”). The Request for Default Judgment was made by the Claimant on 8 September 2016 and granted pursuant to RDC 13.4, as the Defendants failed to file an Acknowledgment of Service or a Defence to the Claimant’s DIFC Claim (or any part of the claim) with the DIFC Courts within the relevant time. The Defendants made an Application for the Default Judgment to be set aside on 19 April 2017, on the basis that they (through their sole director) were not properly served with the proceedings, only becoming aware on 27 February 2017, and that they have a full defence to the claim.
2. The Defendants are Jersey companies established in 2007 by the Claimant’s then wife, Ms Rouzin Al Chamaa, who became the legal owner of the shares of both companies in 2008. The Claimant and Ms Al Chamaa separated in 2012 and subsequently divorced in 2015. The Defendants have substantial property assets in central London and a dispute about the beneficial ownership of those properties was ultimately litigated before the Jersey Courts. The matter was determined in Ms Al Chamaa’s favour on 23 February 2017 (the “Jersey Judgment”).
3. It is the Claimant’s case that he made several payments to and on behalf of the Defendants. He claims that two interest free loan agreements between the Claimant and the Defendants were entered into on 9 July 2014 (the “Loan Agreements”) and he sought for the repayment of these loans in the DIFC Claim. The Defendants describe the Loan Agreements as ‘shams’ intended to deceive third parties, as payments made by the Claimant to the Defendants were in fact intended as gifts to Ms Rouzin Al Chamaa and furthermore, the Director purporting to sign the Loan Agreements on their behalf did not have the requisite authority to do so.
4. The Defendants seek to persuade the Court that they have a full defence to the DIFC Claim and, therefore, the Default Judgment ought to be set aside. Pursuant to RDC 14.2, the Default Judgment may be set aside or varied should the Defendants show they have ‘a real prospect of successfully defending the claim’:

“…the Court may, on such conditions as it sees fit, set aside or vary a judgment entered under Part 13 if:

(1) the defendant has a real prospect of successfully defending the claim; or

(2) it appears to the Court that there is some other good reason why:

(a) the judgment should be set aside or varied; or

(b) the defendant should be allowed to defend the claim.”

5. RDC 14.3 also requires consideration of when the application to set aside the Default Judgment was made:

“In considering whether to set aside or vary a judgment entered under Part 13, the matters to which the Court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly.”

6. In short, the Defendants present a twofold defence to the DIFC Claim. Firstly, it is submitted that this Court lacks jurisdiction to deal with the dispute under Article 5 of DIFC Law No. 12 OF 2004 as there is insufficient nexus between it and the DIFC and the parties have not opted-in. In support, the principle of res judicata is said to apply to preclude the Claimant from bringing the DIFC Claim as it relates to a matter already resolved in the Jersey Judgment. Secondly, in any event, the Defendants assert that the Loan Agreements are invalid and unenforceable due to their fraudulent nature. It is argued that the Claimant had made monetary gifts to Ms Al Chamaa and that any loans made to the Defendants stemmed from her, not the Claimant.
7. In my opinion, the question of jurisdiction is a legitimate one. In his witness statement, the Claimant asserts that the Defendants were run by him from the DIFC, that payments were made to the Defendants from the DIFC and that the Loan Agreements were entered into from the DIFC. However, at this stage there is a distinct lack of supporting evidence to convince me that the Defendants argument regarding jurisdiction are without merit.
8. The Defendants draw the Courts attention to clauses in the Loan Agreements which submit the parties to the jurisdiction of the Jersey Courts, however, the Claimant duly points out that if the Loan Agreements are invalid as the Defendants suggest, this argument is not persuasive.
9. With respect to the nature of the Loan Agreements, there remain questions regarding their validity, particularly whether they were signed by authorised representatives of the Defendants and whether they stemmed from Ms Al Chamaa or the Claimant. The Defendants point to the Jersey Judgments in relation to their finding of fact in this regard, however, although it is a possibility, it is not a certainty that this Court would necessarily follow the same procedures or come to the same conclusions regarding the Loan Agreements as the Jersey Court did.
10. ‘Real prospect of success’ means realistic rather than fanciful, Swain v Hillman (1999) EWCA Civ 3053. This is a matter of judgment in each case and I am inclined to find that the Defendants arguments regarding Jurisdiction and the nature of the Loan Agreements amount to a real prospect of successfully defending the DIFC Claim in the circumstances. I am also of the opinion that the application to set aside the Default Judgment was made by the Defendants sufficiently promptly to be considered.
11. At this stage, I am sufficiently satisfied that the Defendants have a realistic rather than fanciful prospect of success; however, I am not able or prepared to take a position on jurisdiction or the validity of the Loan Agreements. This type of dispute requires detailed consideration that shall be afforded to it by a trial judge following a full hearing in which complete arguments can be made by the parties, with evidence properly presented and tested.
12. The Claimant has suggested that if this Court finds the Defendants to have a realistic prospect of success, it should consider setting aside the Default Judgment in part, with only certain issues proceeding to trial. I am of the view that this would only serve to tie the hands of the eventual trial judge and would be inappropriate as I have determined a trial to be necessary to establish and test all aspects of this matter.

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