CFI 015/2020 Mohammad Juma Khamis Buamaim v Falcon Golf Management Ltd

Claim No: CFI 015/2020

IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

MOHAMMAD JUMA KHAMIS BUAMAIM

Claimant/Defendant to Counterclaim

and

FALCON GOLF MANAGEMENT LTD

Defendant/Counterclaimant

ORDER OF H.E JUSTICE ALI AL MADHANI

UPON the Claim filed by the Claimant/Defendant to the Counterclaim (hereinafter the “Claimant”) dated 5 February 2020

AND UPON the Defence and Counterclaim filed by the Defendant/Counterclaimant (hereinafter the “Defendant”) dated 9 March 2020

AND UPON the Default Judgment of Judicial Officer Nassir Al Nasser dated 23 April 2020 (the “Default Judgment”) entered against the Claimant

AND UPON the Claimant’s Application No. CFI-015-2020/1 dated 28 April 2020 seeking an order setting aside the Default Judgment

IT IS HEREBY ORDERED THAT:

1. The Claimant’s Application is granted and the Default Judgment be set aside.

2. There be no order as to costs.

Issued by:
Ayesha Bin Kalban
Assistant Registrar
Date of Issue: 10 August 2020
Time: 12pm

SCHEDULE OF REASONS

Introduction

1. The question for determination in this application is whether the default judgment awarded against the defendant to the counterclaim, Mr Mohammad Juma Khamis Buamaim (“Mr Buamaim”), should be set aside (the “Application”).

Background

2. Mr Buamaim’s original claim and the counterclaim of the counterclaimant, Falcon Golf Management Ltd (“Falcon”), are in a sense the inverse of each other; indeed, and as will be shown, it may even be said that a decision in one will likely determine the outcome of the other. The dispute between the parties spans a period of nearly 4 years. At the start of this period, on 3 February 2017, Mr Buamaim and Falcon entered into an agreement by which Mr Buamaim agreed to provide Falcon with “strategic consultancy services” (the “Services”) in exchange for an annual payment – to be paid in two equal tranches on 1 April and October each year – of USD 1,000,000 (the “Contract”).

3. On 23 May 2019, Falcon purported to terminate the Contract. By that time, Falcon had paid Mr Buamaim USD 2,000,000.

4. On 5 February 2020, Mr Buamaim issued proceedings against Falcon in this Court, seeking an order that Falcon pay him a further USD 2,000,000 in satisfaction of invoices covering the period from 1 April 2019 to 1 October 2020.

5. On 9 March 2020, Falcon filed its defence to the claim along with a counterclaim. In the counterclaim, Falcon sought repayment of the USD 2,000,000 it had paid Mr Buamaim on the basis that, it submitted, he had failed to provide the Services under the Contract.

6. The defence and counterclaim were served on Mr Buamaim electronically on 9 March 2020 and by way of courier on 11 March 2020. Pursuant to Rules 16.15 and 16.16 of the Rules of the DIFC Courts (the “RDC”), a defence to counterclaim was due to be filed and served by Mr Buamaim 21 days after service of the counterclaim, that is, by 31 March 2020.

7. No defence to counterclaim was served. Falcon’s representatives emailed the office of Mr Buamaim’s legal representatives to enquire whether it was open. They received a reply stating, “we are currently generally open for business.”

8. On 14 April 2020, Falcon filed a request for default judgment with respect to its counterclaim and, on 23 April 2020, default judgment was awarded (the “Default Judgment”).

The Application

9. In an unlikely turn of events, then, and before the claim or the counterclaim had properly gotten off the ground, the Claimant in the original claim has found himself owing to the defendant the exact amount which he had sought from it. Unless the Default Judgment is set aside, Mr Buamaim will be USD 2,000,000 worse off than when he issued his claim and USD 4,000,000 worse off than he hoped he would be at its conclusion. By this Application, Mr Buamaim, in short, is seeking a second chance to pursue his claim and defend the counterclaim.

10. Before proceeding with determining the Application, a brief word should be said on some objections that Falcon has made with respect to Mr Buamaim’s legal representatives’ handling of his case prior to and in this Application. As Falcon has submitted, not only did Mr Buamaim’s legal representatives fail to file a defence to the counterclaim on time, but they also failed to apply for an extension of time to do so. Moreover, after the Default Judgment had been entered, instead of applying to have it set aside, as Falcon highlights, Mr Buamaim’s representatives embarked on an unusual exchange of correspondence with the DIFC Courts’ Registry in which they complained of “unprofessional and improper communication from the DIFC Court.” Needless to say, it was the counterclaimant, Falcon, and not the Court that was responsible for serving Falcon’s defence and counterclaim. Subsequently, Mr Buamaim’s representatives issued this Application, requesting that the Default Judgment be set aside under RDC 14.2. In breach of RDC 14.4, however, the Application was and remains unsupported by evidence.

11. These objections – and the several others that have been made – have been taken into account. Notwithstanding them, however, I will proceed with determining the Application. I do this, needless to say, with some reservation, but ultimately because I have concern that Mr Buamaim’s representation is not as well versed in the procedural rules of this Court as it is in those of the Dubai Courts and I do not wish for Mr Buamaim’s case to be unduly prejudiced if such is the case. The DIFC is a common law island in a civil law ocean, as the former Chief Justice Michael Hwang put it, and allowances, I think, where appropriate should be made to accommodate this unique situation. The overriding objective of the RDC designates “ensuring that the parties are on an equal footing” as being a component of “dealing with cases justly.” In my view, if Mr Buamaim’s representation is unfamiliar with the procedural rules of the DIFC Courts, the overriding objective encourages me to give it another opportunity to familiarise itself thereto or, alternatively, for Mr Buamaim to take any appropriate steps in the best interests of his cases. If Falcon wishes to apply to have Mr Buamaim’s claim or defence to the counterclaim struck out, it remains open to it to do so.

12. To proceed, the Default Judgment was regularly obtained. As such, it is a matter for the Court’s discretion whether to set the judgment aside. RDC 14.2 is the relevant provision in this regard and provides as follows:

In the White Book 2020, on page 561, the commentary of CPR Part 13, the English equivalent of RDC Part 14, explains that in applying to set aside a judgment in default “[t]he defendant is seeking to deprive the claimant of a regular judgment which the claimant has validly obtained…: this is not something which the court will do lightly.” (emphasis added) As such, it is for Mr Buamaim to establish that he has a real prospect of successfully defending the counterclaim or, alternatively, that there is some other good reason why the Default Judgment should be set aside, while the Court must not take this Application, which will deprive Falcon of the Default Judgment, lightly in as much as that judgment was validly obtained.

RDC 14.2(1): a real prospect of successfully defending the claim

13. If Mr Buamaim can demonstrate that he has a real prospect of successfully defending the counterclaim, his application will be granted. In Al Tamimi v Jorum Ltd & Anor [2016] DIFC CFI 028 (16 July 2017) at [10], the Court held that a “real prospect of success” means a “realistic” rather than a “fanciful” prospect of success.

14. The crux of Falcon’s counterclaim is that Mr Buamaim failed entirely to provide any of the Services under the Contract save for a single telephone call, justifying, it submits, both the termination of the Contract and repayment of the USD 2,000,000 it had paid to Mr Buamaim prior to the termination.

15. Mr Buamaim’s defence to the counterclaim is sparing, but on my reading, three main claims are made by him across both his Defence to the Counterclaim and his submissions for this Application. These are as follows.

16. The first claim is that Mr Buamaim did in fact perform the Contract. In written submissions, Mr Buamaim stated that he “worked on and added to ensure smooth and efficient continuation of the tournaments directly and indirectly [sic].” It has not been made clear to the Court how the examples Mr Buamaim has provided of alleged performance of the Contract – which do not need to be recounted here – might amount to performance of the Contract, but Falcon appears not to have denied that, if performed, they would so amount to performance of it.

17. As for the second claim, clause 4 of the Contract provides as follows:

“It is mutually agreed that neither party shall bring the other into disrepute and each party shall act in the best interests of the Tournaments and Falcon Golf at all times. In the event this term is not adhered to by you, Falcon Golf reserves the right to terminate this agreement, with no obligation to make any further payment under this letter, if the breach cannot be remedied to the satisfaction of Falcon Golf within thirty days. “(emphasis added)

Mr Buamaim submits that, if he had indeed failed to perform the Contract, Falcon was required to allocate a period of thirty days for remedy of the breach before terminating the Contract. Mr Buamaim says that no such period preceded Falcon’s purported termination and so Falcon itself is in breach of the Contract.

18. A third claim regards the payments which Mr Buamaim has already received from Falcon, namely, again, USD 2,000,000. In his submissions, Mr Buamaim queries why he has been paid this amount of money – which, it should be noted, satisfied four invoices across two years – if he had not met his obligations under the Contract.

19. Notwithstanding the lack of detail or indeed the sense of strong conviction in these three claims, in my view, it is probably the case that Mr Buamaim has at least a fanciful prospect of defending the counterclaim. The query regarding Falcon’s payment to Mr Buamaim strikes me as one which should be answered. That Mr Buamaim has been paid for two years in satisfaction of four invoices suggests, prima facie, that he has performed his obligations under the Contract. This in turn gives support to the first claim discussed above. As for the second claim, if Mr Buamaim had indeed failed to perform the Contract, this would likely amount to fundamental non-performance thereof and, in which case, clause 4 of the Contract would not bind Falcon. If, on the other hand, Mr Buamaim had performed the Contract, clause 4 may then of assistance to him. This question alone, which I think is impossible to determine at this early stage of the proceedings, weighs on the side, in my judgment, of allowing the matter to proceed to trial.

RDC 14.2(2): Some good reason why the Default Judgment should be set aside

20. Mr Buamaim’s legal representatives submit that the Covid-19 pandemic created circumstances which inhibited their ability to file a defence to the counterclaim within time and that this constitutes a good reason why the Default Judgment should be set aside. Falcon has highlighted various problems with taking this claim at face value, including the fact that, after no defence to the counterclaim was served, and after Falcon’s representatives emailed Mr Buamaim’s legal representatives to enquire whether their office was open, the former received a reply stating, “we are currently generally open for business.”

21. In my judgment, a decision of the High Court of England and Wales that was issued after the hearing of this application provides helpful guidance on how I should handle this aspect of the Application. The case is MS v A local authority [2020] EWHC 1622 (QB). The circumstances which led to default judgment in that case were different to those in the instant matter, but, in my view, the thrust of the decision is such that any points of distinction between the two cases are relatively trivial. After considering whether the default judgment in that case should be set aside under the English equivalent of RDC 14.2(1), CPR 13.3(1), the Honourable Mr Justice Julian Knowles considered the English equivalent of RDC 14.2(2). At [33], he said:

“I turn to the second limb. Even if I wrong about my earlier conclusion, I am satisfied that there is a good reason to set aside the default judgment. That reason is the unprecedented national health emergency which was unfolding at precisely the time Mr McConville posted his documents to the Council. From 23 March 2020 onwards the country was grinding to a halt and every employer and business in the UK – and indeed across the world – was suddenly having to develop new ways of working and to find ways of coping with employees not being able to travel into work. There were myriad problems and challenges to be faced, including, for example, establishing technological links and putting in place new systems of working. Parents had to worry about children no longer being able to go to school and all the associated child care issues related to that. Emergency plans were having to be implemented and rapid adjustments made across all sectors of the economy.”

A description of the situation in the UAE would of course be substantially identical to Knowles J’s description of the situation developing at the same time the UK.

22. Falcon’s email to Mr Buamaim’s representatives suggests rather conclusively, I think, that it was aware that the Covid-19 emergency might have impacted the latter’s ability to file a defence to the counterclaim within time. Moreover, Mr Buamaim’s representatives’ office’s reply – “we are currently generally open for business” (emphasis added) – could not have settled the question of whether the lawyers in charge of Mr Buamaim’s case specifically had in fact been so impacted. Indeed, as has come to light, the partner in charge of Mr Buamaim’s case travelled to and from Beirut twice in the month of March, requiring him under the regulations then in force to quarantine himself at home for fourteen days each time. Such being the circumstances, I think the findings of Knowles J at [34] of MS can be transposed to this case without qualification:

“Mr McConville’s witness statement is entirely silent as to why he thought it appropriate to post documents to the Council’s offices when he knew or should have known they were shut and the Council was highly unlikely to be in a position to respond. I take Mr Suterwalla’s point that the Council had not exactly covered itself in glory with how it had dealt with (or rather, not dealt with) the pre-action correspondence. Its non-responsiveness was not acceptable and I do not excuse it. However, that was history by the time of lockdown. Mr McConville took no steps to ascertain whether the papers had been received and were being processed. It is not good enough for him to say, as he does, that was because he was told in mid-February 2020 (some five weeks or so before lockdown) that service had to be by post, and so that is what he did. The world shifted on its axis on 23 March 2020 and it was incumbent on him as a responsible solicitor and an officer of the court to contact the Council to acknowledge that the situation had changed, and to discuss how proceedings could best and most effectively be served. In her witness statement Ms McDougall accused Mr McConville of ‘sharp practice.’ I do not find that he unscrupulously took advantage of the situation, but I do find he exercised poor judgement. A moment’s thought on his part would have shown that it was not fair or reasonable for him simply to place papers in the post to an office that he knew or should have known had been closed down two days before because of a national emergency.”

In my view, when Falcon’s representatives contacted the office of Mr Buamaim’s representatives, the email should have been directed to the lawyers handling Mr Buamaim’s case, it should have made reference to the matter and to the deadline which had been missed and it should have enquired as to the reason for this default. In MS Knowles J refrained from finding that the claimant’s representative had displayed sharp practice. In this case, I feel able to apply this description to Falcon’s representatives.

23. In conclusion, I find that the Covid-19 emergency and the situation it gave rise to are by themselves good reasons to set aside the Default Judgment. As Knowles J put it at [36]:

“I fully recognise the need to enforce compliance with the rules and the need to conduct litigation at proportionate cost. However, overall, I am satisfied that the interests of justice require judgment in default to be set aside. It would be unconscionable in my view for the Claimant to benefit from the unprecedented health emergency which prevailed at the end of March (and which is still subsisting today).”

A further good reason why the Default Judgment should be set aside

24. There is a further good reason, in my judgment, why the Application should be granted. Indeed, this reason by itself would have sufficed for me with respect to setting aside the Default Judgment. As stated above, the essence of Falcon’s counterclaim is that Mr Buamaim failed to provide any of the Services under the Contract apart from a single telephone call, justifying the termination of the Contract and repayment of the USD 2,000,000 it had previously paid him. This, at its core, is what Mr Buamaim was required to defend.

25. Under RDC 13.5(2):

In the absence of a defence filed, then, default judgment could be made in favour of Falcon. The crucial point here is that the default judgment is premised on an entirely technical default: it is irrelevant whether or not a defendant to a counterclaim has a defence or how much merit the defence might have, the question is whether or not a defence was filed within time.

26. In the instant matter, the vital elements of what might have been and indeed what became Mr Buamaim’s defence to the counterclaim were already pleaded – explicitly or implicitly – within his own claim. It is inconceivable that, when issuing his claim and when seeking Falcon’s reproach for allegedly breaching the Contract, that Mr Buamaim would be, on his own case, fundamentally in breach of the Contract. As for Mr Buamaim’s position that the Contract was not validly terminated by Falcon, this was explicitly challenged in his claim. As such, the difference between the circumstances in which Mr Buamaim now finds himself and other circumstances in which he would have been immune from default judgment boils down to his failure to formally say on time in one submission that which was already said, implicitly or explicitly, in another. It follows that if the Default Judgment is upheld, it could only be on the most technical of technical bases. I do not think that this is the approach the DIFC Courts should take.

27. Mr Buamaim’s claim and defence to the counterclaim leave a lot to the imagination and this can and no doubt will be exploited by Falcon, as is its right. In this Application, however, I am satisfied that by virtue of the substance of the counterclaim and of the claim, which, as stated at the start of this decision, I think are for all intents and purposes the inverse of each other, Mr Buamaim’s default was rendered so mild that it should not be the cause of default judgment against him.

Conclusion

28. For the reasons given above, the Application is granted.