CFI 030/2019 LARMAG HOLDING B.V. VS (1) FIRST ABU DHABI BANK PJSC (2) FAB SECURITIES LLC

Claim No. CFI-030-2019

DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN:

LARMAG HOLDING B.V.

Applicant

and

FIRST ABU DHABI BANK PJSC

First Respondent

FAB SECURITIES LLC

Second Respondent

IN AN INTENDED ACTION

BETWEEN:

LARMAG HOLDING B.V.

Intended Claimant

and

FIRST ABU DHABI BANK PJSC

Intended First Defendant

FAB SECURITIES LLC

Intended Second Defendant

MR ABDULLA SAEED ALJABRI

Intended Third Defendant

ELITE HOLDING GROUP LIMITED

Intended Fourth Defendant

AMENDED ORDER TO CONTINUE THE INJUNCTION ORDER OF JUSTICE SIR RICHARD FIELD DATED 19 JULY 2019

UPON the application of the Applicant by a Part 8 Claim Form dated 8 July 2019

AND UPON the Court hearing from the Applicant and the Respondents at a hearing on 17 and 18 July 2019

AND UPON the Court having received undertakings from the Applicant, inter alia, to pay into Court EUR 350,000 by no later than 24 July 2019 as security

AND UPON the Court issuing an injunction on 19 July 2019 (the “Original Injunction”) over to 4.00 pm on 8 August 2019 restraining the Respondents from disposing of, dealing with or diminishing the value of: (i) a parcel of 70 Million Nominal Reditum SA corporate bonds (the “Bonds”) held at any time in an account in the direct or indirect control of the Respondents; (ii) any interest paid in respect of the Bonds; and (iii) any assets received or derived from the Bonds.

AND UPON the Applicant having paid the sum of EUR 350,000 into Court

AND UPON the Applicant and the Respondents having requested a final determination on the question of the Court’s jurisdiction

AND UPON the Jurisdictional Ruling of Justice Sir Richard Field dated 4 August 2019 holding that the Court has jurisdiction over the Respondents in respect of the Applicant’s claim

AND UPON the application of the Claimant seeking a continuation of Original Injunction and the Court’s further directions made on 4 August 2019 in relation thereto

AND UPON the application of the Respondents made in their written submissions served on 8 August 2019 for permission to appeal the Jurisdictional Ruling made on 4 August 2019

IT IS HEREBY ORDERED THAT:

1. The Original Injunction granted herein is extended for 8 weeks from the date this Ruling is issued.
2. Paragraphs 3.1 to 3.7.5 of the Respondents’ written submissions served on 8 August 2019 shall stand as the Respondents’ Appellants Notice.
3. The Applicant must serve within 7 days of the date of the issue of this Ruling its submissions (if any) in opposition to the Respondent’s application for permission to appeal.
4. If the Respondents’ application for permission to appeal is granted, the hearing of the ensuing substantive appeal should be expedited to the extent feasible given the current state of the Court of Appeal’s list.
5. Costs reserved.

Issued by:

Nour Hineidi

Deputy Registrar

Date of issue: 18 August 2019

Date of re-issue: 26 August 2019

At: 3pm

  Introduction

1. On 19 July 2019, on the basis that there was an arguable case that the Court had the necessary jurisdiction, the Court issued a prohibitory proprietary injunction (being the Original Injunction) over to 4.00 pm on 8 August 2019 restraining the Respondents from disposing of, dealing with or diminishing the value of: (i) a parcel of 70 Million Nominal Reditum SA corporate bonds (being the Bonds) held at any time in an account in the direct or indirect control of the Respondents; (ii) any interest paid in respect of the Bonds; and (iii) any assets received or derived from the Bonds.
2. On 4 August 2019, the Court issued a Jurisdictional Ruling finally determining that the Court had jurisdiction under Article 5(A)(1)(a) of the Judicial Authority Law over the claim intended to made by the Applicant (“Larmag”) against the Respondents and to issue the Original Injunction.
3. The Court having directed that it would decide on the basis of written submissions without an oral hearing whether the Original Injunction should be extended, on 5 August 2019 Larmag served written submissions seeking the continuation of the Original Injunction until: (i) the final determination of its intended claim against the Respondents, a Mr Aljabri and Elite Holding Group Limited (“Elite”); or (ii) further order of the Court.
4. Larmag also sought an order (the “Disclosure Application”) requiring the Respondents to provide information about where, how and for whom the Bonds are held.
5. On 8 August 2019, the Court ordered that the Original Injunction should continue in full force and effect until Larmag’s application for the continuation of the Original Injunction (the “Continuation Application”) had been determined or further order of the Court.
6. On 8 August 2019, the Respondents served their submissions opposing the continuation application. In those submissions, the Respondents applied for permission to appeal the Jurisdictional Ruling. The RDC rules contemplate an application for permission to appeal being made orally to the court whose order is sought to be appealed but having directed that the continuation application be decided without a hearing unless the Court later orders a hearing, I shall treat the Respondents’ permission application as having been made in conformity with the RDC. I also direct that, given the need for expedition in this case, paragraphs 3.1 to 3.7.5 of the Respondents’ written submissions served on 8 August 2019 shall stand as the Respondents’ Appellants Notice and that Larmag must serve any submissions in opposition to the Respondent’s application for permission to appeal within 7 days of the date of this Ruling.
7. The Respondents go on to contend that the balance of convenience does not favour the granting of a continuation order, or alternatively there should be a stay pursuant to RDC 44.4 pending the intended appeal against the Jurisdictional Ruling. They also submit that if the Original Injunction is to continue they should not be required to provide banking information that is confidential to their customers.
8. Replying to the Respondents’ submissions, Larmag submits that the Original Injunction should continue pending the determination of the Respondents’ proposed appeal (i.e. either by refusal of permission by this Court or the Court of Appeal or, if permission be granted, by determination of the appeal). Larmag also agrees that its disclosure application can await the outcome of the proposed appeal.
9. In my judgment, if the Respondents’ proposed appeal is prosecuted expeditiously, it is appropriate within the meaning and effect of Article 32 of the DIFC Court Law to continue the Original Injunction until the appeal has been decided.
10. As Morris J had occasion to observe recently in Rogachev v Goryainov [2019] EWHC 1529 at [109], an applicant for a proprietary injunction must satisfy the Court as to the same three threshold requirements identified by Lord Diplock in American Cyanamid for the grant of an interlocutory injunction:

(1)        There is a serious issue to be tried on the merits.

(2)        The balance of convenience is in favour of the grant of an injunction.

(3)        It is just and convenient to grant the injunction.

11. As I held when issuing the Original Injunction, I find that there is a serious issue to be tried on the merits of Larmag’s intended claim against the Respondents, Mr Aljabri and Elite.
12. In my judgment, Larmag has a good arguable case that it was induced through a dishonest fraud practised by Mr Aljabri and Elite to transfer the Bonds to an account in the name of Elite with the Second Respondent (“FAB Securities”) (the “Elite Account”) on the basis that Elite would be entitled to two thirds of the Bonds and Larmag one third thereof. It was a term of the agreement between Larmag on the one hand, and Mr Aljabri and Elite on the other, that the Bonds would only be transferred into the Elite Account once Larmag had received AED 85.4 million (EUR 20 million) as an upfront payment. On 2 July 2018, a Mr Ali Mohamed, apparently representing Elite, sent to Larmag what appeared to be a Noor Bank statement showing that AED 85.4 million had been transferred to Larmag’s account held with ING Bank in the Netherlands. As a result of this Noor Bank statement, on 2 July 2018 Larmag duly transferred the Bonds into the Elite account. When Larmag failed to receive the AED 85.4 million and pressed for payment it was sent what appeared be a further Noor Bank statement showing that the payment of AED 85.4 million had been released by Noor Bank.
13. Larmag were then told by Mr Aljabri that the money had been frozen by the Abu Dhabi Central Bank and subsequently Noor Bank informed Larmag that the two statements and a letter purporting to come from Noor Bank and Elite were false documents.
14. It seems that the response of the police in Abu Dhabi to a complaint made by Larmag alleging criminal conduct against Mr Aljabri and Elite was to conclude that it was a civil rather than a criminal matter. The Respondents submit that it follows that Larmag’s case in fraud against Mr Aljabri and Elite is particularly weak. Whilst the response of the Abu Dhabi police to Larmag’s response is plainly something to be taken into account in determining whether Larmag has a sufficiently arguable case to justify the continuation of the injunction, I conclude on the evidence before me that Larmag does have a good prima facie case that it was induced by the dishonest fraud by Mr Aljabri and Elite to transfer the Bonds into the Elite Account.
15. The injunction sought to be continued is known as a proprietary injunction since it is an injunction the entitlement to which is founded on a claim that the Respondents are wrongfully refusing to recognise the Applicant’s title in the Bonds. In my judgment, Larmag has a good arguable case that the Bonds are effectively stolen property and remain in the ownership of Larmag. Larmag does not allege that the Respondents were parties to the fraud practised by Mr Aljabri and Elite ; nor does Larmag claim that the Respondents are asserting a proprietary right of their own in the Bonds against Larmag.
16. As submitted by Larmag, the applicable law is most likely to be the law of the DIFC or UAE law. In my judgment, whichever of these systems of law applies, Larmag’s claim raises a serious question to be tried. With respect to the claims against Mr Aljabri and Elite, Larmag has in my opinion good arguable claims in DIFC law in unjust enrichment, the tort of deceit, fraud and constructive trust. And as to the latter cause of action, Larmag is entitle to pray in aid Lord Browne-Wilkinson’s well-known dictum in Westdeutsche Landesbank Girozentrale v. London Borough of Islington [1996] UKHL 12) that a court can impose a constructive trust on a defendant who knowingly retains property of which the plaintiff has been unjustly deprived. This dictum is also applicable against the Respondents to the effect that they are obliged to restore the Bonds to Larmag their true owner and must not act on any instruction from Mr Abjabri and/or Elite to transfer or deal in the Bonds.
17. Turning to the law of the UAE, I accept Larmag’s contention that it has a good arguable case against Mr Aljabri and Elite for an order requiring restitution of the Bonds:

(1)          In an unjust enrichment claim pursuant to Articles 318-319 of the UAE Civil Code.

(2)          In a claim for unjustified expropriation pursuant to Articles 320 – 324 of the UAE Civil Code.

(3)          In a misrepresentation and cheating claim pursuant to Articles 185-187 of the UAE Civil Code.

18. Larmag also has a good arguable case in UAE law against the Respondents as custodians of the Bonds.

Balance of convenience

19. In National Commercial Bank Jamaica v Olint Corporation [2009] 1 WLR 1405, Lord Hoffmann said at [16]-[17]:

16.“The purpose of such an [interlocutory] injunction is to improve the chances of the court being able to do justice after a determination of the merits at the trial. At the interlocutory stage, the court must therefore assess whether granting or withholding an injunction is more likely to produce a just result. As the House of Lords pointed out in American Cyanamid Co v Ethicon Ltd [1975] AC 396, that means that if damages will be an adequate remedy for the plaintiff, there are no grounds for interference with the defendant’s freedom of action by the grant of an injunction. Likewise, if there is a serious issue to be tried and the plaintiff could be prejudiced by the acts or omissions of the defendant pending trial and the cross-undertaking in damages would provide the defendant with an adequate remedy if it turns out that his freedom of action should not have been restrained, then an injunction should ordinarily be granted.

17. In practice, however, it is often hard to tell whether either damages or the cross-undertaking will be an adequate remedy and the court has to engage in trying to predict whether granting or withholding an injunction is more or less likely to cause irremediable prejudice (and to what extent) if it turns out that the injunction should not have been granted or withheld, as the case may be. The basic principle is that the court should take whichever course seems likely to cause the least irremediable prejudice to one party or the other. This is an assessment in which, as Lord Diplock said in the American Cyanamid case [1975] AC 396, 408:

“It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them.”

20. I accept Larmag’s submission that damages would not be an adequate remedy because: (a) there is a real risk that any monetary award obtained against Mr Aljabri and Elite would not be honoured given the uncertainty as to the whereabouts of Mr Abjabri and as to the existence and viability of Elite ; and (b) Larmag, as the parent company of the issuer of the Bonds, has a good reason not to want fraudulently-obtained Bonds sold on the secondary market.
21. I propose to direct that if the Respondents’ application for permission to appeal succeeds, the hearing of the substantive appeal should be expedited to the extent feasible given the current state of the Court of Appeal’s list. In the light of this direction, I propose to continue the Original Injunction for a further period of 8 weeks during which time the application for permission to appeal will have been decided and if permission is granted there will be a reasonable chance that the appeal will also have been decided.
22. I am satisfied that that Larmag’s cross-undertaking in damages, fortified as it as by US$350,000 paid into court, provides an adequate remedy should it turn out that the extended injunction ought not to have been granted and the Respondents suffer any loss as a result.
23. I accordingly conclude that the grant of the injunction sought by Larmag is less likely to cause irremediable prejudice if it turns out that the injunction ought not to have been granted and that the balance of convenience is accordingly in favour of granting the injunction.
24. If permission to appeal is granted but the ensuing appeal has not been decided within the 8 week extension, Larmag will have to apply for a further extension and the Court will consider, amongst other relevant matters, whether the cross-undertaking should be further fortified.

Just and convenient [appropriate] to grant the injunction

25. The opening part of Article 32 of the DIFC Court Law 2004 uses the word “appropriate” and I agree with the view of DCJ Sir John Chadwick in Bocimar International NV v Emirates Trading Agency LLC [2015] DIFC CFI 008 at [7] that that test does not differ materially from the “just and convenient” test in the equivalent provisions in the law of England and Wales.
26. In my judgment, it is appropriate (i.e. just and convenient) to extend the Original Injunction by a further eight weeks given that I have concluded that Larmag has a good arguable proprietary claim against the Respondents and that the balance of convenience favours the extension.
27. In Republic of Haiti v Duvalier [1990] 1 QB 202 at 213,214 Staughton J (as he then was) said:

A proprietary claim is one by which the plaintiff seeks the return of chattels or land which are his property or claims that a specified debt is owed by a third party to him and not to the defendant.

Thus far there is no difficulty. A plaintiff who seeks to enforce a claim of that kind will more readily be afforded interim remedies, in order to preserve the asset which, he is seeking to recover, than one who merely seeks a judgment for debt or damages.

28. In the instant case I find myself to be in the same position as was Flaux J in Madoff Securities International Ltd v Raven [2011] EWHC 3102 (Comm) when said at [140]-[141]:

In my judgment, once the position has been reached, as it has in the present case, that the claimant shows a sufficiently arguable case for a proprietary remedy, then, as Staughton LJ stated in the Duvalier case, the court will more readily afford that claimant with interim remedies by way of injunction and disclosure orders. Not to do so might well, as Lord Hoffmann put it in Olint cause irremediable prejudice to the claimant…

Furthermore, I agree with Mr Weekes that, once the court has decided that the balance of convenience favours the granting of the proprietary injunction, as I have in the present case, although the question whether it is just and convenient to do so is a separate question, it is extremely unlikely that the court would say it was not just and convenient, having decided the balance of convenience in favour of the claimant. To the extent that it is necessary to make a separate finding, I find that it is just and convenient to grant an injunction.

Conclusion

29. The Original Injunction granted herein is extended for 8 weeks from the date this Ruling is issued.
30. Paragraphs 3.1 to 3.7.5 of the Respondents’ written submissions served on 8 August 2019 shall stand as the Respondents’ Appellants Notice.
31. The Applicant must serve within 7 days of the date of the issue of this Ruling its submissions (if any) in opposition to the Respondent’s application for permission to appeal made in Paragraphs 3.1 to 3.7.5 of the Respondents’ written submissions served on 8 August 2019.
32. If the Respondents’ application for permission to appeal is granted, the hearing of the ensuing substantive appeal should be expedited to the extent feasible given the current state of the Court of Appeal’s list.