Skip to Content

(1) Hormuzd Mana (2) Shireen Mana v Clariden Leu Asset Management (Dubai) Ltd [2011] DIFC CFI 030

(1) Hormuzd Mana (2) Shireen Mana v Clariden Leu Asset Management (Dubai) Ltd [2011] DIFC CFI 030

August 29, 2013

image_pdfimage_print

Claim No. CFI 030/2011

IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

ON APPEAL FROM THE REGISTRAR IN DETAILED ASSESSMENT PROCEEDINGS

BETWEEN


(1) MR HORMUZD MANA
(2) MRS SHIREEN MANA
Claimants/Appellants
and

CLARIDEN LEU ASSET MANAGEMENT (DUBAI) LTD

Defendant/Respondent
Hearing: 7 April 2013
Council: Kaashif Basit (KBH Kaanum) for the Claimants/Appellants

Timothy Killen (Al Tamimi & Co) for Defendant/Respondent

Judgment: 29 August 2013

JUDGMENT OF JUSTICE TAN SRI SITI NORMA YAAKOB

1. Proceedings before me were in the nature of an appeal against three orders granted by the Registrar dated 3 October 2012 (first order), 24 October 2012 (second order), and 10 January 2013 (third order). The Claimants (Appellants) seek to set aside all three orders.

 

2. To appreciate the nature and scope of the appeal, I need to outline the background of the case leading to the appeal.

 

3. The Appellants are Pakistani nationals ordinarily resident in Karachi, Pakistan. They are husband and wife and whilst the husband manages a freight forwarding company, the wife is a teacher.

 

4. The Respondent, a private bank, with its headquarters in Zurich, Switzerland, has a registered office within the Dubai International Financial Centre (DIFC) and provides financial advisory services and asset management for private clients. Since 2006, the Respondent has been licensed and regulated by the Dubai Financial Services Authority (DFSA) to provide financial services in or from the DIFC.

 

5. The Appellants became clients of the Respondent in 2007 when the former deposited US$150,000 with the latter for investment purposes. Unfortunately the investments resulted in almost total loss to the Appellants and in their effort to get compensation for their losses, they lodged a formal complaint with DFSA on 6 September 2010 and following investigations by DFSA, the latter concluded that the Respondent had breached its regulatory obligations under the Conduct of Business Module and General Modules of the DFSA Rulebook.

 

6. As DFSA did not make any provision to compensate the Appellants’ losses, the Appellants sued the Respondent in December 2011 and in their Particulars of Claim dated 1 February 2012 averred (to) the following three causes of action against the Respondent:
 

(1) False representation made by an employee of the Respondent which induced the Appellants to open an account and empowering the Respondent to operate an investment strategy for the Appellants.

 

(2) Breach of contract in respect of an Investment Advisory Agreement dated 11 June 2007 executed by the Appellants.

 

(3) An alternative claim for negligence based on a duty of care owed by the Respondent to the Appellants.

 

7. Based on those causes of action the Appellants seek declaratory orders that the Respondent had breached the provisions of the DIFC Regulatory Law 2004 and the DFSA General Modules and Conduct of Business and that the Respondent is required to compensate the Appellants for the loss and damage suffered. Additionally, they seek that the Respondent be ordered to compensate the Appellants for breaches of statutory duty and/or misrepresentation and/or negligence or alternatively for breaches of contract.

 

8. At about the same time the Claim Form was filed, the Respondent made two Part 32 Offers to the Appellants. The first for a global sum of US$250,000 inclusive of costs and damages was rejected by the Appellants. The second Part 32 Offer dated 30 April 2012 offering the sum of US$150,000 in full and final settlement of the Appellants’ claims was accepted by the Appellants by their letter dated 20 May 2012 pursuant to RDC 32.24. Under RDC 40.10, the Appellants had three months from the date of acceptance to commence detailed assessment proceedings. This means that the Appellants had until 20 August 2012 to do so.

 

9. This they failed to do and in their application dated 3 September 2012 (the 03 application), the Respondent required the Appellants to commence detailed assessment proceedings by 10 October 2012.

 

10. In response to that application, the Appellants filed an unsigned witness statement dated 17 September 2012 seeking an extension of one month to file the notice of commencement of detailed assessment proceedings. Pursuant to the 03 application and in the absence of the legal representatives of both parties, the Registrar granted the first order with the following provisions:
 

(1) The Claimants are to commence detailed assessment proceedings in accordance with RDC Part 40 by 4pm on Wednesday, 17 October 2012.

 

(2) Unless the Claimants commence Detailed Assessment proceedings by 4pm on Wednesday, 17 October 2012, the proceedings shall be dismissed with no order as to costs, save that the Claimants shall pay the Defendant’s costs of the Application to be assessed if not agreed.

 

11. In their effort to comply with paragraph (1) of the first order, the Appellants served the Respondent with an unsigned notice of commencement in Form P40/01 and a copy of an unsigned draft bill of costs on 17 October 2012 at 3:53 p.m. and a notification that the signed copies of both documents would be dispatched to the Respondent later the same day. This did not happen and in its email dated 23 October 2012, the Respondent notified the Registrar that there had been non-compliance of paragraph (1) of the first order and requested the Registrar to act on paragraph (2) of the first order and dismiss the proceedings with no order as to costs.

 

12. The Registrar acted on the Respondent’s request and issued the second order containing the following provisions:

(1) These proceedings are dismissed with no order as to costs, save that the Claimants shall pay the Defendant’s costs of Application number CFI 030/2011/3 to be assessed if not agreed.
(2) The Claimant is given leave to apply for relief from the provisions of paragraph (1) of this Order. Any such application must be made within 14 days of this order and supported by evidence.

 

13. The Appellants challenged the second order by their application dated 6 November 2012 (application 05) and pursuant to that application, the Registrar issued the third order with the following provisions:
 

(1) The Registry allocate a Detailed Cost Assessment hearing before the Registrar.

 

(2) The Applicants pay the Respondent in respect of the latter’s costs in preparation for Application CFI 030/2011/3, to be assessed on a standard basis.

 

(3) All costs – both in respect of the bill of costs purportedly filed by the Applicants on 17 October 2012 and in respect of Applicant CFI 030/2011/3 to be assessed at the Detailed Cost Assessment hearing.

 

14. The first issue raised by the Appellants is that the Registrar had no power to make the Unless Order at paragraph (2) of the first order as it amounts to a sanction for delay in commencing detailed assessment proceedings which under RDC 40.3(2)(b) he had no power to make. RDC 40.3(2)(b) contains the following provisions:

“40.3. The Registrar or a judicial officer of the Court appointed for the purpose by the Chief Justice under Article 14 of the Court Law (referred to as “an authorised Court Officer” in this Part) has all the powers of the Court when making a detailed assessment, except
 

(1) …………………………………………..…..

 

(2) power to make an order under
 

(a) ………………………………………

 

(b) RDC 40.12 (sanction for delay in commencing detailed assessment proceedings)”

 

15. The corresponding RDC 40.12 contains the following provisions:

“40.12. On an application under Rule 40.11, the Court may direct that unless the receiving party commences detailed assessment proceedings within the time specified by the Court, all or part of the costs to which the receiving party would otherwise be entitled will be disallowed”

 

16. It is the Appellants’ submission that there has been a procedural irregularity in that the Registrar had exceeded his powers to include the Unless Order and that makes the first order null and void and unenforceable.

 

17. Whilst I agree that the Registrar has no power to make the Unless Order, this has no effect on the validity of the direction given in paragraph (1) of the first order. That mandatory direction remains good and requires strict compliance on the part of the Appellants. Under these circumstances there is no merit in the Appellants’ contention that the procedural irregularity found in the first order had tainted the subsequent second and third orders.

 

18. The next issue raised is whether there has been compliance with paragraph (1) of the first order in that the Appellants had to commence detailed assessment proceedings by 4:00 p.m. on Wednesday 17 October 2012.

 

19. What actually happened was that at 3:53 p.m. that day, the Appellants served a dated but an unsigned Form P 40/01, notice of commencement of assessment of bill of costs and a draft bill of costs which was also unsigned, together with a notification that the signed copies of the notice and bill of costs would be delivered to the Respondent later the same day. This did not happen as the signed copies of the two documents only reached the Respondent on 23 October 2012.

 

20. Under these circumstances the Respondent submitted that there had been non-compliance with paragraph (1) of the first order whilst the Appellants maintained otherwise and gave the reason that both signatories from the Appellants’ firm of solicitors had been out of Dubai at that particular point in time and as such, failure to comply had been an oversight rather than intentional. In any event, the unsigned copies of the notice and unsigned bill of costs have not prejudiced the Respondent in any way.

 

21. Under RDC 40.5, “Detailed assessment proceedings are commenced by the receiving party serving on the paying party:

(1) notice of commencement in Form P 40/01 and
(2) a copy of the bill of costs”
The issue raised is whether the unsigned notice and unsigned bill of costs are sufficient to satisfy the requirements of RDC 40.5.

 

22. A perusal of Form 40/01 shows that not only must it be dated, it must also be signed by the legal representatives of the receiving party. The Appellants solicitors were very much aware of this as on their own admission they had undertaken to serve the signed copy of the notice the very same day the dated but unsigned copy was sent to the Respondent.

 

23. The same situation too must govern the bill of costs. RDC 38 outlines the general rules on costs and under RDC 38.2 those rules are equally applicable to bills of costs in detailed assessment proceedings. It is my understanding that under RDC 38.36, the statement of costs or bill of costs in detailed assessment proceedings must be signed by the receiving party or legal representative.

 

24. In any event RDC 40.5(2) must be interpreted to refer to a signed bill of costs to authenticate the finality in the amounts claimed in the bill and to give due notice to the paying party of the case it is required to meet. In the present case, the total sum claimed in the draft bill submitted on 17 October 2012 amounted to AED 918,868.75, but this sum rose to AED 1,223,433.75 in the signed bill submitted on 23 October 2012.

 

25. Under these circumstances I find that the Registrar was right when he concluded that the unsigned notice and unsigned bill of costs submitted on 17 October 2012 were insufficient to constitute compliance with paragraph (1) of the first order. Based on this conclusion the Registrar proceeded to issue the second order and also refused to grant relief from sanctions pursuant to RDC 4.49 as he found no acceptable explanation for the Appellants’ conduct in their failure to comply with paragraph (1) of the first order.

 

26. As I have already pointed out, the Registrar had grounds to issue the second order, the Appellants’ attempt at challenging it must therefore fail.

 

27. As for the Registrar’s refusal to grant relief from sanctions under RDC 4.49, regard must be had to the consideration of all circumstances including those specified in the Rules.

 

28. The Appellants contend that in the interests of justice, they had to seek legal Counsel to pursue their claim for costs. What is being considered under RDC 4.49(1) is the interests of the administration of justice and consideration of such an interest must encompass the bigger picture of the timely conduct of the Appellants in adhering to time frames set by the Rules and by Court. Failure to commence assessment proceedings within the three months required by the Rules and failure to commence such proceedings when so ordered by the Court are just two of the examples where the Appellants have been dragging their feet in total disregard of due process in the administration of justice.

 

29. The Appellants also contend that the failure to comply with the second order was an “oversight rather than an intentional failure”. This contention cannot be taken in isolation but must be weighed against the other breaches committed by the Appellants, namely the failure to secure the signed copies of the notice of commencement of assessment and the bill of costs within the time stipulated in the first order. Mention must also be made of the fact that when the signed bill of costs reached the Respondent, substantive amendments had been made to the figures that appeared in the unsigned copy. In these circumstances I find that the Registrar was right when he concluded that there had been no acceptable explanation for the Appellants’ dilatoriness under RDC 4.49(3).

 

30. The Registrar has accepted that other than stating that the failure to comply was due to an oversight, no acceptable explanation has been put forward by the Appellants to justify consideration of circumstances under RDC 4.49(4). On the contrary the Appellants’ conduct in dragging matters well after 20 May, 2012, when the Part 32 offer was accepted, amounted to further costs being incurred for which the Respondent should not be held liable.

 

31. The Court also cannot speculate as to whether the failure to comply was caused by the Appellants or by their legal representatives. In any event both parties have only themselves to blame and they should bear the consequences of their actions.

 

32. I now come to the substantive issue as to whether the Appellants require permission to appeal against all three orders. In this instance the Appellants had already obtained permission to appeal against the third order on 5 March 2013 from Justice H. E. Omar Almuhairi. That being the case, the Appellants contend that if indeed permission to appeal is required, they should be given an extension of time to do so for the first and second orders.

 

33. The confusion concerning the necessity to obtain permission to appeal arose following amendments made to the RDC in 2011. Pre 2011, separate rules governed appeals in detailed assessment proceedings as opposed to other appeals. In an effort to streamline a uniform procedure for all appeals, the Rules were amended in 2011 to bring the appeal process in detailed assessment proceedings in line with the provisions of other appeals in RDC 44.

 

34. Pre 2011, the provisions of RDC 40.48 and 44.2 governed appeals in detailed assessment proceedings. I reproduce the provisions of those two rules for ease of reference.

“Right to appeal
 

40.48. Any party to detailed assessment proceedings may appeal against a decision of an authorised Court Officer in those proceedings.

 

44.2. This Part does not apply to an appeal in detailed assessment proceedings against a decision of an Authorised Court Officer appointed in accordance with Rule 40.3.”

It is abundantly clear from these two rules that permission to appeal was not required in detailed assessment proceedings pre 2011.

 

35. Post 2011, RDC 40.50 provided the following:

“40.50. An appeal against a decision of an authorised Court Officer in detailed assessment proceedings should be made in accordance with the provisions of Part 44 of the Rules of the Court.”

 

36. Unfortunately RDC 44.2 which is in direct conflict with RDC 40.50 has not been deleted from the RDC and therein lies the confusion.

 

37. Giving effect to the intention and purpose of the amendments, it is my finding that the Appellants require permission to appeal against the first and second orders under RDC 44.6(2) in the same way that they had done for the third order.

 

38. Under RDC 44.36(2), the Appellants had 14 days from the date of decision of the lower Court to file the notice of appeal. The first order is dated 3 October 2012 and the second, 24 October 2012. Since no notices of appeal have been filed by the Appellants against any of these decisions within the time limit provided by the Rules, the Appellants are barred from proceeding with the merits of their appeal against those two orders.

 

39. In this respect I will not exercise my discretion to extend the time to appeal as more than five months have elapsed since the dates of the decisions and taking into consideration the Appellants’ conduct throughout these proceedings, they appear to have no respect for timelines and the Rules.

 

40. Following my finding the provisions of both the first and second orders must stand. However in respect of the first order, only paragraph (1) is applicable as I have already ruled that the Registrar had no power to make the Unless Order in paragraph (2).

 

41. That leaves arguments to be heard only on the Appellants’ appeal to set aside the third order and the hearing of the Respondent’s notice of appeal (Form 44/02) dated 19 March 2013.

 

42. In granting the third order, the Registrar had also supplied nine paragraphs or reasons in an accompanying document titled “Background/Reasons for Order”. The Respondent seeks permission to appeal against the conclusions reached by the Registrar in his Background/Reasons, and clarification of the terms of the third order.

 

43. I see no practical purpose in the Respondent filing a separate application for permission to appeal. Any objections or doubts concerning the third order can easily be raised by the Respondent by way of rebuttal of the Appellants’ appeal. As such I make no order on the Respondent’s notice of appeal dated 19 March 2013 and in any event the notice of appeal was filed well after the 14 days limit under by RDC 44.36.

 

44. In the first eight paragraphs of his Background/Reasons, the Registrar sets out the factual background and his reasons for granting all the three orders. Then at paragraph 9, he concludes that the Appellants’ application to have the second order set aside stands. This conclusion reaffirms paragraph 1 of the second order that “These proceedings are dismissed with no order as to costs ……………..”. Yet when drawing up the third order, direction is given that “The Registry allocate a detailed cost assessment hearing before the Registrar”.

 

45. If indeed the proceedings have been dismissed in accordance with the second order, and the subsequent application by the Appellants to have it set aside has been denied, there is therefore no necessity to direct a detailed assessment hearing before the Registrar. Under these circumstances that direction as contained in paragraph 1 of the third order is superfluous.

 

46. For the reasons stated in this judgment I make the following orders:
 

(1) The Appellants’ appeal against the first, second and third orders dated 3 October 2012, 24 October 2012 and 10 January 2013 is dismissed.

 

(2) The Appellants shall pay the following costs to the Respondent in relation to:
 

(i) their appeal dated 23 January 2013;

 

(ii) Applications 03 and 05, namely CFI-030-2011/3 dated 3 September 2012 and CFI-030-2011/5 dated 6 November 2012;

 

(iii) the submissions concerning Permission to appeal under RDC 44.29
to be assessed if not agreed.

 
Issued by:
Maha AlMehairi
Judicial Officer
Date of Issue: 29 August 2013
At: 11 am

X

Privacy Policy

The Dispute Resolution Authority and all its affiliates are committed to preserve the confidentiality, integrity and availability of client data and personal information.

Dispute Resolution Authority and all its affiliates employees, vendors, contract workers, shall follow Information Security Management System in all the processes and technology.

  1. DRA's Top Management is committed to secure information of all our interested parties.
  2. Information security controls the policies, processes, and measures that are implemented by DRA in order to mitigate risks to an acceptable level, and to maximize opportunities in order to achieve its information security objectives.
  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.