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(1) Rafed Abdel Mohsen Abdel Al Khorafi, (2) Amrah Ali Abdel Latif Al Hamad, (3) Alia Mohamed Sulaiman Al Rifal v (1) Bank Sarasin—Alpen (ME) Limited (2) Bank Sarasin & Co. Limited [2009] DIFC CFI 026

(1) Rafed Abdel Mohsen Abdel Al Khorafi, (2) Amrah Ali Abdel Latif Al Hamad, (3) Alia Mohamed Sulaiman Al Rifal v (1) Bank Sarasin—Alpen (ME) Limited (2) Bank Sarasin & Co. Limited [2009] DIFC CFI 026

July 7, 2010

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Claim No: CFI 26/2009

THE JUDICIAL AUTHORITY OF THE DUBAI INTERNATIONAL FINANCIAL CENTRE

In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai

IN THE COURT OF FIRST INSTANCE BEFORE JUSTICE TAN SRI SITI NORMA YAAKOB

BETWEEN


(1) Rafed Abdel Mohsen Abdel Al Khorafi
(2) Amrah Ali Abdel Latif Al Hamad
(3) Alia Mohamed Sulaiman Al Rifal
Claimants

-v-

(1) Bank Sarasin—Alpen (ME) Limited
(2) Bank Sarasin & Co. Limited

Defendants
Hearing: 18 & 19 April 2010
Counsel: Kaashif Basit, JSA Law/Eversheds for the Claimants
Mark Hoyle, Al Tamimi & Co for the First Defendant
Judgment: 7 July 2010

JUDGMENT

1. The factual matrix of this case is as follows. The three Claimants are related to each other. The First Claimant is the son of the Second Claimant, she being his mother and the Third Claimant is the wife of the First Claimant and daughter-in-law to the Second Claimant. All three Claimants are Kuwaiti nationals and at all material times reside in Kuwait.

 

2. The two defendants are banking institutions. The First Defendant, a private bank, was incorporated as a company in Dubai, licensed and regulated by the Dubai Financial Services Authority (DFSA) and authorised to provide financial services in and from the Dubai International Financial Centre (DIFC). The Second Defendant is also a private bank and is based in Basel, Switzerland with branches in Europe, Asia and the Middle East.

 

3. The First Claimant is a businessman and together with the Second and the Third Claimants had a business relationship with the Defendants and which has now become a bone of contention between them.

 

4. That business relationship relates to various investments made by the Claimants with the Defendants during the period of 28 June 2007 to 21 February 2008 involving the sum of well over US$74 million. Unfortunately the structured financial products that the Claimants invested in resulted in heavy losses to the Claimants and they bring the present suit against the Defendants for damages for breach of contract and/or negligence and/or misrepresentation. There is also a plea of a breach of a statutory duty against the Defendants and, in the course of his arguments, Mr Basit, counsel for the Claimants, clarified that that breach refers to a breach of Article 94 of the Regulatory Law, DIFC Law No.1 of 2004 which is pleaded solely against the First Defendant. A further claim for additional damages is also pleaded against the First Defendant pursuant to section 40(2) of the Law of Damages and Remedies, DIFC Law No.7 of 2005.

 

5. The Claim Form was filed by the Claimants on 7 October 2009 and it was served on the First Defendant on 29 October 2009. The Claimants then filed and served the Particulars of Claim on the First Defendant on 10 December 2009 and what followed next was the filing of the Claimants’ case summary to the Particulars of Claim dated 23 January 2010 pursuant to RDC 17.47.

 

6. The First Defendant responded by filing Application Notice 6/2010 on 21 January 2010 applying to set aside the Claimants’ statement of case under RDC 4.16 with costs.

 

7. Pursuant to the Order of the Registrar dated 4 February 2010, the First Defendant filed their Statement of Defence, which termed it as their Holding Defence, on 14 February 2010.

 

8. Before me, there were three separate Application Notices filed by the Parties. In point of time, the First Defendant filed Application Notice 6/2010 on 21 January 2010 to strike out the Claimants’ statement of case under RDC 4.16. Together with this striking out application, the First Defendant seeks alternative orders that proceedings be stayed under RDC 4.2 (6)

(a) until service of proceedings be effected on the Second Defendant; and
(b) pending provision of security for costs to be made by the Claimants under RDC 25.97.

 

9. The second application, Application Notice 11/2010 dated 12 April 2010, is filed by the Claimants seeking an Order to dismiss the First Defendant’s Application Notice 6/2010. I consider this application to be quite unnecessary as the same could be obtained at the hearing of Application Notice 6/2010 when the Claimants would be given every opportunity to submit to the dismissal of the First Defendant’s application.

 

10. The third, Application Notice 30/2010 is also filed by the Claimants seeking to amend their Claim Form and Particulars of Claim and bearing the same date as their Application Notice 11/2010.

 

11. With the agreement of all parties, I gave priority to Application Notice 6/2010 i.e. the First Defendant’s striking out application together with the alternative application for security for costs.

 

12. I need to mention that, at the date of the hearing of the striking out application, the Second Defendant has yet to be served with the Claim Form and the other necessary papers in this suit. In this respect, two Court Orders, both dated 25 March 2010 have been obtained by the Claimants, one to effect service on the Second Defendant out of the jurisdiction and the other for the extension of the period of such service to 7 October 2010.

 

13. The First Defendant relies on the provisions of RDC 4.16 and 4.19 to strike out the Claimants’ statement of case whether in whole or in part and for ease of reference those Rules are reproduced.

“4.16 The Court may strike out a statement of case if it appears to the Court—

(1) that the statement of case discloses no reasonable grounds for bringing or defending the claim;
(2) that the statement of case is an abuse of the Court’s process or is otherwise likely to obstruct the just disposal of the proceedings; or
(3) that there has been failure to comply with a Rule, Practice Direction or Court Order.

4.19 Rule 4.16 does not limit any other power of the Court to strike out a statement of case.”

 

14. The first issue raised by Mr Hoyle, counsel for the First Defendant, is that the cause of action under Article 94 has not yet crystallised to enable the Claimants to sue the First Defendant in the DIFC Court as the DFSA has yet to make a finding that there had been an identified breach by the First Defendant of the Regulatory Law, DIFC Rules of other legislation administered and enforced by DFSA. As such, the cause of action is premature and is an abuse of process and should be struck out.

 

15. The response to that argument by the Claimants is that Article 94 cannot be raised as a preliminary issue as it is an arguable question of law and cannot be brought in a striking out application. Furthermore, if a finding of breach by the DFSA is intended to be a pre-requisite for a claim under Article 94 it would say so either expressly or by implication. Article 94 is silent on this.

 

16. It is pleaded that as a regulatory body, DFSA is subject to the Regulatory Law and the rules introduced by the Regulatory Law which inter alia, includes the DFSA Rulebook.

 

17. There are pleaded allegations in the Particulars of Claim (and these appear at paragraphs 92 to 115) that the First Defendant, through its employees had not discharged its regulatory obligations and, in particular, had failed to analyse and determine that the Claimants had the necessary financial experience and understanding to participate in the type of investments recommended to them and the risks involved. The other negative aspect of the First Defendant’s conduct relied upon was the First Defendant’s failure to assess the suitability of the investment products. The Claimants allege that they were advised to invest in financial products with high risk profiles, which were wholly unsuitable.

 

18. For starters, I consider the Claimants’ objection to raise the availability of a cause of action under Article 94 as a preliminary issue to be without merit. The issue, as conceded by the Claimants, is very much a question of law for which no evidence is necessary and, as such, objection as to its availability as a cause of action can be questioned at any step of the proceedings, the earlier the better so that a defendant like the First Defendant is warned well in advance of the cause of action it has to answer. Under these circumstances I see nothing objectionable to the issue being raised as a preliminary issue in an RDC 4.16 and 4.19 application.

 

19. I now come to the more substantial objection that there must be read into Article 94 the requirement that the DFSA is statutorily bound to make a finding that a breach of any of its laws or rules had been committed by the First Defendant before the Claimants can claim damages against the First Defendant in the DIFC Court. Expressed in another way, the Claimants have no freestanding right under Article 94 to come to the DIFC Court directly to obtain relief. There must first be a breach established by the DFSA, before an aggrieved party such as the Claimants can claim damages in the DIFC Court.

 

20. In this respect, it is not disputed that the Claimants had lodged a complaint of the First Defendant’s conduct with the DFSA in December 2009 but, up to the date of hearing before me, the Claimants had not received any response from the regulatory body.

 

21. The DFSA is the independent regulator for the DIFC, a free trade zone established in Dubai, United Arab Emirates (UAE). Its objectives are to foster and maintain fairness, transparency, efficiency, confidence and stability in the financial services industry in the DIFC.

 

22. In discharging its regulatory mandate, its website explains its role to be as follows:


“The DFSA administers the Regulatory Law 2004 which is the cornerstone legislation of the regulatory regime. The Law establishes the constitution of the DFSA and enables the creation of the regulatory framework within which entities may be licensed, authorised, registered and supervised by the DFSA.

Under the Law, the DFSA has the power to enforce the Law and Rules that apply to all regulated participants within the DIFC.”

The First Defendant is one of those participants which has been licensed and is regulated by the DFSA.

 

23. In return, DFSA expects high standards of ethical conduct and integrity from its regulated participants and, when these high standards are not met, the DFSA is empowered to enforce the Law and the Rules that it administers against them.

 

24. In enforcing the Law and the Rules, the DFSA’s role is described by its website to be as follows:

“The DFSA is empowered to conduct investigations into suspected contraventions of the legislation it administers, and may exercise its powers to conduct inspections, compulsorily obtain books and records, or require individuals to participate in interviews under oath or affirmation. The DFSA refers any conduct which could contribute a breach of criminal law to the relevant local, federal or international authority.”

 

25. It would appear that the DFSA has very extensive investigative powers and this is not surprising as by the very nature of its establishment and existence as an internationally respected regulator and the role that it plays in developing, administering and enforcing the regulation of financial services within the DIFC; it requires those powers to achieve its objectives.

 

26. It is in the exercise of these investigative powers that the DFSA deals with all allegations of misconduct and contraventions of the Law and Rules lodged by any person against any registered participant.

 

27. I now come to Article 94 and this is found in Part 7 of the Regulatory Law which is the Enforcement section and in substance it reads as follows:

“94. Civil Proceedings

(1) Where a person:

(a) intentionally, recklessly or negligently commits a breach of duty, requirement, prohibition, obligation or responsibility imposed under the Law or Rules or other legislation administered by the DFSA; or

(b) commits fraud or other dishonest conduct in connection with a matter arising under such Law, Rules or legislation;

the person is liable to compensate any other person for any loss or damage caused to that other person as a result of such conduct, and otherwise is liable to restore such other person to the position they were in prior to such conduct.

(2) The Court may, on application of the DFSA or of a person who has suffered loss or damage caused as a result of conduct described in Article 94(1), make orders for the recovery of damages or for compensation or for the recovery of property or for any other order as the Court sees fit, except where such liability is excluded under the Law or Rules or other legislation administered by the DFSA.”

 

28. Section 7.16 of the Enforcement Module of the DFSA Rulebook headed “Civil Proceedings” provides the necessary guidance as to the power and the policy of Article 94 in the following manner:

“The Article 94 power

(3) The power of the Court to make an order for the recovery of damages, compensation, recovery of property or other order is premised on the applicant establishing that the Person either:

(a) intentionally, recklessly or negligently committed a breach of duty requirement, prohibition, obligation or responsibility imposed under the Regulatory Law 2004 or Rules or other legislation administered by the DFSA; or
(b) committed a fraud or other dishonest conduct in connection with the matter arising under the Regulatory Law 2004, Rules or legislation.

(4) Accordingly, the power is expressed broadly and may be used by the DFSA or an aggrieved Person to recover loss or damage in a variety of circumstances.

Policy on civil proceedings

(5) Article 94 gives the DFSA, and aggrieved Persons, broad powers to make application for recovery of damages and other orders where there has been an identified breach of the Regulatory Law 2004, Rules or other legislation administered by the DFSA.
(6) The DFSA will not commence proceedings in every case where there may have been a relevant breach of the Regulatory Law 2004. In fact, it will only do so in the most exceptional of cases. In most cases, it will be more appropriate for the party who has suffered loss or damage to commence their own proceedings in the Court for recovery.”

 

29. The First Defendant argues that it is the policy of the DFSA that there will have to be a finding by the regulator before a civil claim for damages or compensation can be resorted to. For this, reliance is placed on section 7.16 (3) of the Enforcement Module where it states: “The power of the Court to make an order for recovery of damages, compensation, recovery of property or other order is premised on the applicant establishing that the Person either: ….” (Emphasis is mine).

The reference to “establishing” is an act done by the DFSA and not by the DIFC Court. The First Defendant further maintains that once the applicant before the DFSA has provided the necessary evidence to enable the DFSA to conclude that there has been an established breach, jurisdiction is given to the DIFC Court to entertain a claim for damages by the applicant under Article 94.

 

30. Although I find the argument to be a novel and attractive one, I find it difficult to accept for the following reasons.

 

31. Firstly, the authority giving rise to the First Defendant’s submission is not found in the Regulatory Law or the Rules administered by the DFSA. It is only found in the Enforcement Module of the Rulebook, which by its very name as a module is nothing more than a practice note or direction defining what the DFSA can or cannot do. It is only administrative in nature and not one that has the force of law.

 

32. Secondly, if indeed the framers of the Regulatory Law had wanted Article 94 to operate in the manner as described by the First Defendant i.e. jurisdiction is only given to this Court once the DFSA has established a finding of a breach, that requirement could easily have been incorporated into sub-section (2) of Article 94. As it is, the sub-section contains no such provision as it merely states that the “Court may, on application … of a person who has suffered losses or damages caused as a result of conduct described in Article 94 (1) ….”

 

33. Thirdly, if the argument of the First Defendant can be accepted, this Court will be placed in the position of just assessing damages for the party wronged. Liability need not be proven or established as the finding of the DFSA itself is a finding of liability. This conclusion cannot be correct as Article 94 (2) clearly makes reference to “a person who has suffered loss or damage caused as a result of conduct described in Article 94 (1).” Evidence on the conduct described in Article 94 (1) has to be introduced and proven before the Court can consider assessing any damages for the party wronged.

 

34. For the above reasons, the First Defendant’s application to have the plea of Article 94 struck out from the Claim Form and Particulars of Claim is hereby dismissed.

 

35. The second remedy that is sought by the Claimants is for additional damages pursuant to the Law of Damages and Remedies, DIFC Law No. 7 of 2005.

 

36. Whilst the Claim Form states Section 40 as the specific relief that is relied upon, paragraph 116 of the Particulars of Claim go further to identify that specific relief to be section 40(2).

 

37. The Claimants’ cause of action for which relief is sought under section 40(2) is found at paragraph 117 of the Particulars of Claim, where the following averment appears:

“It is further averred that it was a term of the contract between the First Defendant and the Claimants that the First Defendant would comply in all respects with its regulatory obligations. By reason of the First Defendant’s failure to so comply the First Defendant was in breach of contract and is liable to the Claimants for the loss and damage suffered as a consequence.”

 

38. Reading that particular paragraph it is clear that there is a contract between the parties whereby the First Defendant undertook to comply with all its regulatory obligations but failed to do so giving rise to a claim for additional damages under section 40(2).

 

39. The objection taken by the First Defendant on this plea is that there is insufficient information disclosed as to the terms of the contract alleged to have been breached.

 

40. I do not consider that observation to be absolutely correct as can be seen from paragraph 55 of the Claimants’ Witness Statement, given by Jonathon Richard Crook dated 18 February 2010 which reads as follows:


“55. The Claimants’ claim

The Claimants’ claim against the First Defendant is predominantly a regulatory claim pursuant to Article 94 of the DIFC Regulatory Law (No. 1 of 2004) (“the Law”). However, the Particulars of Claim clearly explain that the Claimants also entered into Additional General Business Conditions (“AGBCs”) with the First Defendant. These plainly gave rise to a contractual arrangement, the form of which I assume the First Defendant will say complied with its strict regulatory obligation under Rule 3.2.2 of the Conduct of Business (“COB”) Module of the DFSA Rulebook (COB Version 8) to enter into a Client Agreement (as defined therein) with each of the Claimants.”

 

41. From my understanding of that evidence it would appear that there is a separate agreement between the parties the terms of which are contained in a document known as Additional General Business Conditions (AGBCs) which is alleged to have been breached by the First Defendant.

 

42. Additionally references to the AGBCs are found in the Particulars of Claim at:
 

(1) paragraph 31.1.6 where it is stated that that particular document was signed by the First and Second Claimants in Kuwait on 6 June 2007;

 

(2) paragraph 34 confirming the laws applicable in relation to that document to be the DIFC laws;

 

(3) paragraph 61.1.6 where there is the notification that the Third Claimant signed a similar document on 17 January 2008 in Kuwait; and

 

(4) paragraph 64 which contains similar provisions as in paragraph 34 but this time in relation to the Third Claimant;

 

(5) paragraph 105 wherein there is the statement that the Claimants’ signed declarations in the AGBCs that they had “sufficient financial experience and understanding to participate in financial markets”. This is then followed by the allegations that the document was signed by the Claimants in blank and was not fully completed by them. That paragraph goes further to particularise the following allegations:

“In particular, the Individual Client Analyses contained at Annex 1A of the General Business Conditions were not completed by the Claimants. Whilst it appears from the copy documents provided by the First and Second Defendants that Individual Client Analyses were completed subsequently by someone other than the Claimants on their behalf, the information contained therein was both inaccurate and also did not, in any event, show that the Claimants were suitable investors.”

 

(6) paragraph 106 where it is also pleaded that “the purpose and intended effect of the General Business Conditions documents were not explained to any of the Claimants by the First Defendant. The First Defendant nonetheless remained under an obligation to analyse each of the Claimant’s financial experience and their understanding to participate in financial markets. As the First Defendant failed to do so, in conducting Investment Business with or for the Claimants, the First Defendant’s actions were in breach of the restrictions set out at paragraphs 94 to 95 and 97 above.”

 

43. The restrictions pleaded at paragraphs 94, 95 and 97 of the Particulars of Claim refer to breaches of the Core Principles of the Rulebook, which the Claimants allege had been committed by the First Defendant against them.

 

44. The alleged offensive conduct identified in paragraph 94 relate to the First Defendant’s omission “to observe high standards of integrity and fair dealing and to act with due skill, care and diligence.” Further there is also the failure on the part of the First Defendant “to pay due regard to the interests of the Claimants and to communicate information to them in a way which is clear, fair and not misleading.” Furthermore the First Defendant must take “reasonable care to ensure the suitability of its advice and discretionary decisions for customers who are entitled to rely upon its judgment.”

 

45. Paragraph 95 refers to breaches committed by an employee of the First Defendant for failing to ensure “(i) that the Claimants’ needs and risk profiles were properly scoped and identified and (ii) that sufficient care was taken to ensure that the instruments advised upon, subsequently recommended and entered into by the Claimants were suitable for their needs.”

 

46. Finally the restriction identified by paragraph 97 is the blanket restriction preventing the First Defendant from conducting investment business with anyone but their “Client” within the permitted meaning of the Rules. The Claimants regard themselves as only “Retail Customers.”

 

47. From the pleadings I consider there is sufficient information disclosed to establish the presence of separate contractual obligations imposed on the First Defendant the terms of which are contained in the AGBCs, the breaches of which have been identified and for which the First Defendant has no cause to complain. If indeed this information, as disclosed do not appear to be sufficient to the First Defendant, it can apply for further information under RDC 19. To say that the contract claim should be struck out for lack of particulars appear to be too drastic a view to be taken. On that finding, the First Defendant’s submission that the cause of action on the contract claim should be struck out, fails.

 

48. I now come to the remaining causes of action that are pleaded against the First Defendant namely the misrepresentation and negligence claims. Before dealing with them, I need to consider the manner in which the Particulars of Claim have been drafted in view of the objections expressed by the First Defendant.

 

49. To begin with the Particulars of Claim run into 30 pages with 149 numbered paragraphs. They are divided into four parts with the last two paragraphs confined to the various reliefs sought:
 

(1) Part A at paragraphs 1 to 3 identifies and introduces the parties.

 

(2) Part B at paragraphs 4 to 84 gives a background as to the factual matrix of the case, the various meetings held with the employees of the First Defendant, the discussions as to the different types of investment products that the Claimants had been recommended and the various documents that were executed by the Claimants as a result.

 

(3) Part C at paragraphs 85 to 117 covers the regulatory and contract claims against the First Defendant, outlining the conduct of the First Defendant, the specific laws that had been breached and the consequences of such breaches.

 

(4) Part D at paragraphs 118 to 142 relates to the Claimants’ remaining causes of action namely the misrepresentation and negligence claims.

 

50. The First Defendant says that the Particulars of Claim suffer from many defects. They are narrative in form and fail to identify relevant facts that form the legal basis of each claim. They fail to differentiate between the Claimants as well as between the two Defendants. They are not pleadings as such as they are more narrative in form and this makes it difficult for the First Defendant to answer to each claim.

 

51. I must confess that even after a few readings of the Particulars of Claim, if there is every intention that the drafting was done for the sole purpose of confusing the reader, I must say the Particulars of Claim have that desired effect. In any event, after going through it with a fine tooth comb, I was able with much difficulty to appreciate what the Claimants were trying to plead in their Particulars of Claim. I must say the Particulars of Claim as they stand have not been happily drafted.

 

52. In this respect my attention was drawn to the fact that even the Claim Form suffered from many defects in that it contravenes specific rules of the RDC.

 

53. In particular the Claimants omit to include the Claimants’ mailing, residential or business addresses in accordance with RDC 17.5.

 

54. The Claimants have also failed to give an address for service within the DIFC or Dubai under RDC 9.15. Instead the Claim Form states an address for service in London, United Kingdom.

 

55. The Claimants through their affidavit evidence admit that these omissions are in breach of the RDC; and whilst they do not offer any reason, they have sought to remedy those omissions by applying to amend their Claim Form and I will not say anymore as that application is pending.

 

56. The Claimants remaining causes of action on the misrepresentation and/or negligence claims are pleaded at paragraphs 118, 121 and 132 of the Particulars of Claim.

 

57. In summary, paragraph 118 refers to the fact that oral representations were made by an employee of the First Defendant to induce the Claimants to invest in the products introduced by him. What these representations are, are not clearly and specifically pleaded apart from an assurance from the First Defendant that the Claimants would “never lose money” in the investments recommended.

 

58. The oral representations were allegedly made at the various meetings with the Claimants and they now allege that those representatives were false and made intentionally and recklessly. However, what is lacking in the pleadings is the basis how that conclusion can be reached.

 

59. All that the Particulars of Claim have set out to do is to list the various investments that were recommended and taken up by the Claimants. When those investments proved to be disastrous the Claimants look to the First Defendant and relying on the assurance that they would not lose money, they now allege that the First Defendant had misrepresented the soundness of the investments they made. What those misrepresentations are that can form the basis of a cause of action are not clearly spelt out in the Particulars of Claim and for that very reason, the First Defendant’s application to have it struck out is allowed under RDC 4.16 (2).

 

60. As for the negligence claim, paragraphs 121 and 132 of the Particulars of Claim aver to a duty of care assumed by an employee of the First Defendant to explain adequately the nature of the investments that were recommended and taken up by the Claimants.

 

61. Like the misrepresentation claim, the negligence claim is also founded on omissions allegedly committed by an employee of the First Defendant.

 

62. Like the misrepresentation claim, the negligence claim also suffers the same fate for lack of particulars in disclosing the basis on which the duty of care arises.

 

63. On that finding the negligence claim is also struck out under RDC 4.16 (2).

 

64. Finally, I come to the First Defendant’s application for an alternative relief that the Claimants provide security for the First Defendant’s costs of these proceedings under RDC 25.97.

 

65. Whilst RDC 25.97 empowers a defendant like the First Defendant to apply for such relief RDC 25.100, 25.101 and 25.102 make provisions as to the Court’s jurisdiction to grant such relief and for ease of reference those provisions are reproduced insofar and they are applicable to this application.

“25.100 Where the Court makes an order for security for costs, it will—

(1) determine the amount of security; and
(2) direct—

(a) the manner in which; and
(b) the time within which the security must be given.

Conditions to be satisfied
 

25.101 The Court may make an order for security for costs under Rule 25.100 if it is satisfied, having regard to all the circumstances of the case that it is just to make such an order; and
 

(1) one or more of the conditions in Rule 25.102 applies, or

 

(2) ……………………………………………….………………

 

25.102 The conditions are—
 

(1) the claimant is resident out of the UAE;

 

(2)–(6) …………………….…………………….”

 

66. It is not disputed that all the three Claimants reside outside the UAE. Paragraph 1 of the Particulars of Claim testifies to that when they aver that they are “Kuwaiti nationals and are and have been at all material times resident or ordinarily resident in Kuwait.”

 

67. That leaves the only issue raised which is whether there is justification in the exercise of my discretion to make the order asked for by the First Defendant.

 

68. That issue must necessarily rests on the ability of the Claimants to satisfy any costs that may be ordered against them.

 

69. This brings into question the Claimants’ financial standing and evidence on this is not forthcoming from the Claimants themselves as neither of them has filed any witness statement as to their means. Instead their instructing counsel in England, Jonathon Richard Crook, has deposed at paragraph 90.10 of his Witness Statement that “the Claimants are of substantial means and are able to meet any future costs liability that they may be ordered to meet.”

 

70. Apart from this bare assertion, there is also no evidence that the Claimants have any assets in the UAE liable to be executed.

 

71. Instead the Witness Statement of Rita Catherine Jaballah, a lawyer employed by the First Defendant’s solicitors, deposes that:
 

(1) the First Claimant has seven civil and four municipal misdemeanors filed against him in the Civil and Municipal Courts in Kuwait;

 

(2) additionally, he is also a defendant in two pending civil cases, being mortgage enforcement cases for which travel bans were enforced against him. These travel bans were only lifted when the First Claimant provided personal guarantees in sum of US$237 million;

 

(3) the Second Claimant is also a defendant in four civil suits filed against her in the Kuwait Civil Courts;

 

(4) additionally she is also a defendant in three other civil cases, these being mortgage enforcement cases and like her son, she has had travel bans enforced against her and these were only lifted when she provided personal guarantees for the total sum of US$200 million.

 

(5) the Third Claimant also suffers a similar fate following the filing of a mortgage enforcement case against her, for which a travel ban was also enforced against her and she had to provide a personal guarantee for the sum of US$96 million to have the travel ban lifted.

 

(6) the total sum of personal guarantees provided by the Claimants in all the pending civil and criminal misdemeanor cases comes to a hefty US$533 million or AED 1.936 billion.

 

72. In an effort to play down the extent of their liabilities in the number of contentions suits that they are facing in the Kuwait Courts, the Claimants produced evidence to show that the enforcement of any foreign judgment on costs in the Kuwait Courts is only limited to the minimum amount of US$700 as there is no reciprocal arrangements between Kuwait and the UAE as to the enforcement of foreign judgments.

 

73. That may well be so but I am not concerned with the enforcement of any judgment that or may not be entered against the Claimants at this point of time. What I am concerned is whether the circumstances of this case merit the exercise of my discretion to order security for costs against the Claimants.

 

74. I answer that affirmatively as the Claimants have failed to show that they have assets in the UAE which the First Defendant can turn to in the event the Claimants failed to honour any judgment as to costs which may be entered against them.

 

75. There is no direct evidence to establish that the Claimants are of substantial means as none of the Claimants have come forward with a statement as to their financial standing. Since all the conditions required by RDC 25.101 and 25.102 have been met, the First Defendant succeeds in its application to have security for costs.

 

76. The First Defendant has submitted that the amount of security to be provided by the Claimants should be in the sum of AED 5 million. This amount takes into account that on the pleadings the trial will run into not less than four weeks with 10 witnesses including experts testifying and legal fees estimated at AED 6.5 to AED 7 million. The security asked for makes up 75% of the First Defendant’s total costs of defending this suit.

 

77. Following my judgment, the First Defendant is now left with only two causes of action to answer to and, as such, the estimated time for the trial is now lessened. The Claimants have not quantified the amount of damages they are claiming apart from the heavy losses they suffered.

 

78. Under these circumstances, I consider a sum of AED 3 million to be appropriate as security for costs to be furnished by the Claimants by way of a Bank Guarantee for that amount issued by a Bank in Dubai in favour of the First Defendant, such Guarantee to continue till the final judgment or earlier Order of this Court. The Guarantee is to be deposited into Court two months from the date of this judgment and, in the event of default, the First Defendant is at liberty to apply.

 

79. On the whole:
 

(1) the application of the First Defendant to have the Claim Form and Particulars of Claim struck out is allowed in part as it has succeeded to have the mis-representation and negligence claims struck out.

 

(2) the application of the First Defendant for security for costs is allowed on terms expressed in paragraph 78 of this judgment.

 

80. The question of costs of both applications will be dealt with subsequently.

 
 

Justice Tan Sri Siti Norma Yaakob
Date of Issue: 7 July 2010

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  3. DRA and all its affiliates shall adopt a systematic approach to risk assessment and risk treatment.
  4. DRA is committed to provide information security awareness among team members and evaluate the competency of all its employees.
  5. DRA and all its affiliates shall protect personal information held by them in all its form.
  6. DRA and all its affiliates shall comply with all regulatory, legal and contractual requirements.
  7. DRA and all its affiliates shall provide a comprehensive Business Continuity Plan encompassing the locations within the scope of the ISMS.
  8. Information shall be made available to authorised persons as and when required.
  9. DRA’s Top Management is committed towards continual improvement in information security in all our processes through regular review of our information security management system.