Claim No: CFI 032/2012
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai
IN THE COURT OF FIRST INSTANCE
BEFORE JUSTICE SIR ANTHONY COLMAN
AHMED ZAKI BEYDOUN
(1) DAMAN REAL ESTATE CAPITAL PARTNERS LIMITED
(2) ASTECO PROPERTY MANAGEMENT LLC
Hearing: 12 June 2014
Charles Buderi of Curtis, Mallet-Prevost Colt & Mosle LLP for the Defendant
Judgment: 10 July 2014
SECOND JUDGMENT OF JUSTICE SIR ANTHONY COLMAN
“Lease Term: Twenty (20) years as of the date of delivery by Amlak of the Leased Property to you. This period is subject to change depending on the actual completion date of the Leased Property. Total Fixed Rental Payment: represents the all/or portion of the value of the Leased Property financed by Amlak for AED 3,627,142.00 being 90% of such value.
Fixed Rental Payment: the proportion of each instalment of rental which is a fixed amount and calculated by dividing the Total Fixed Rental by the Lease Term.
Variable Rental Payment: All/or the proportion of each instalment of rental which is calculated by reference to 7.50% per annum on the outstanding balance of the Total Fixed Rental Payment and the Supplementary Rentals [if any].”
“Paragraph 10 provided:
“Promise to Sell the Leased Property & Registration Fee: Amlak promises to sell and transfer title to the Leased Property to you in accordance with the applicable laws in particular the Property Law on the expiry date of the Lease Period provided that you have paid the Rentals and fulfilled all your obligations and liabilities arising under the Lease Agreement to Amlak in full.”
Paragraph 11 provided:
“Promise to Take on Lease: You shall sign a promise to take on lease the Leased Property from Amlak immediately after it has been purchased or otherwise acquired by Amlak. The form of the promise is attached hereto.”
Paragraph 13 stated:
“The approval is subject to the execution of the enclosed Lease (or Forward Lease) Agreement between you and Amlak Finance PJSC Promise to Purchase, Assignment to sale Agreement and other documents pursuant to Amlak’s policy and within the given period mentioned in (12) above. This offer shall stand revoked and cancelled and shall be deemed null and void in the following instances:
a.) In case of any material change in the circumstances on the basis of which the facility has been approved.
b.) In case of any change in your average income or in your ability to pay your dues, or in case Amlak comes to find any undisclosed information that might have affected the decision of granting the facility.
c.) Any statement in the Facility Application was found to be false or uncertain.
d.) Failure to complete the documentation and avail the Facility within the given period.
e.) Upon request from relevant authorities or if Amlak had reasonable grounds to decide that the source of fund or the aim which the finance is requested for is illegal or in breach of the laws related to money laundering.”
Paragraph 14.1 and 14.2 stated:
“The Property will be registered in Amlak’s name; however, title deed will be transferred to your name upon expiry of the lease contract. Otherwise, and if Amlak accepted to register the property in your name, then you are required to establish first degree mortgage over the Property in favour of Amlak at your own cost and expense and deposit the original title and mortgage deeds with Amlak. You shall undertake not to mortgage, pledge, and charge, create security interest in the Property or otherwise encumber it in favour of a third party(s) without obtaining the prior written consent of Amlak.
Amlak will advice (sic) you of the new monthly instalment amount, which will fall due one month from the date of finance. You will then be required to set up Irrevocable Standing Order Instructions from your personal account with Emirates Bank-Dubai where Salary is being transferred (prior to final payment) for the transfer of the same to Amlak Finance’s account No 0022 404603-001 with Emirates Bank-Dubai.”
“You are also requested to review, understand and accept the enclosed documents:1. Forward Lease Agreement along with all schedules.
2. Assignment Agreement (if applicable).
3. The other documents as required by Amlak for this transaction.”
10. The structure of the loan was thus that Amlak was to become owner of the apartment for the period of the Lease Term, namely 20 years, from the date of physical delivery of the premises to the Claimant who would hold it as lessee paying rental in variable monthly instalments, thereby discharging the loan together with payment of applicable finance charges. The Lease Term was therefore to run for 20 years from Daman’s delivery of the premises upon completion under the SPA.
“I accept the Facility offer as defined in this offer letter and the accompanying documents.”
12. Those documents included specifically the Forward Lease Agreement and the Assignment.
“3.1 The Lessor shall lease and the Lessee shall take on lease the Leased Properties for a period of six months (the Lease Period) commencing from the date of delivery of the Leased Properties by the Lessor to the Lessee in the condition described in the preamble (the “Effective Date”).
3.2 The Lessee hereby undertakes to renew the Lease Period every six months the total of which equals 240 months (the Lease Term).”
14. The Assignment was dated 30 March 2008 and was, I infer, entered into and signed by the Claimant and on behalf of Daman and Amlak Finance on the same date. The Recitals, which by Clause 1 were stated to form an “integral part” of the Assignment, provided as follows:
“(a) The Seller has entered into a single unit residential sale and purchase agreement dated …/…/… with the Assignor attached hereto as “Appendix (1)” (the Agreement) to sell [Apartment] No. 10B, Floor No. 10 located in Building by Daman at the Dubai International Financial Centre (the “Unit”) constructed thereon/to be constructed thereon.
(b) The Assignor has since agreed to transfer the Agreement with the Seller in favour of the Assignee along with the transfer of all its deposits and down payments paid so far to the Seller.
(c) The Assignee has agreed to replace the Assignor as the purchaser in terms of the Agreement.
(d) The Seller has agreed to transfer the Agreement in favour of the Assignee and to sell the Unit to the Assignee.
(e) The Seller accepts that the new financial arrangement between the Seller and the Assignee would be on the basis of Islamic Sharia and pursuant to the provisions of this Assignment Agreement.”
15. Recital (a) did not include the date of the SPA because it had not yet been entered into. That did not happen until 24 April 2008. Consequently, as of the date when the Assignment was entered into, the agreement which underlay and gave rise to the chose in action sought to be assigned did not yet exist. Similarly, at the date when the Offer Letter was entered into, the SPA did not exist.
“In my view the starting point is that where a man starts proceedings knowing that the cause of action is vested in someone else, then it is hard to see why those proceedings are not an abuse. He has started proceedings in which, even if he proves all the facts he wants to prove and establishes all the law he wants to establish, he will still lose because he does not have a right to sue. It is hard to see how that cannot be an abuse. Only people who own causes of action, or who have an appropriate interest in proceedings, have any business asserting the cause of action or starting proceedings. Any other use of the court’s proceedings is improper. The position would be likely to be otherwise if the claimant does not know, or is uncertain, as to whether he has title to the relevant cause of action. In the present case the claimant is the wrong person to assert the cause of action, and knows that he is. The proceedings could immediately be subject to an irresistible application to strike out, precisely for that reason. If those are the only facts, the conclusion that the proceedings are an abuse is inevitable…Mr Flenley sought to argue that a claimant’s starting proceedings without having the cause of action in his hands at the time, but in ignorance of that fact, was not of itself an abuse; and that knowing that he did not have it did not turn it into an abuse…he hoped to acquire the cause of action but foresaw that if he waited he would be met by a limitation defence; so he started proceedings which he had no right to start hoping that he would get in the cause of action. I confess that seems to me to be a plain abuse of the process.”
“A purported assignment of a right expected to rise under a contract not in existence operates only as a promise to assign the right when it arises and not as a power to enforce it.”
“A contract to make a future assignment of a right, or to transfer proceeds to be received in the future by the obligor, is not an assignment.”
The SPA had not been entered into on 30 March 2008, the date of the Assignment Agreement. It was only on 24 April 2008 that the SPA was entered into.
“A new definition entitled “Ultimate Beneficiary” shall be inserted:
(c) ‘Ultimate Beneficiary means a person who is in the process of purchasing the Property and to whom the Assignee has extended, or will extend in the future, financing for the purchase of the Property and ultimately receives title to the Property upon satisfaction of any financing advanced by the Assignee from the same’.”
“(h) The word “Purchaser” shall be replaced by the term “Ultimate Beneficiary” as applicable in Clause (9) [Additional Undertakings of Purchaser].”
26. A further series of amendments to Clause 11 of the SPA appears to have been included in Clause 4(i):
“(i) Clause 11 [Default and Termination] of the Agreement shall be revised as follows:
(a) Clause 11-1(ii) has to be deleted and replaced by the words “to demand the Purchaser to pay the Compensation.
(b) Delete “Purchaser” shall have no further claim against Seller for any damages, compensation or costs” and insert “the Purchaser shall claim compensation from Seller” in Line (6) of Clause 11-3.”
27. The position seems to have been that the SPA entered into by Daman and the Claimant did not include the amendments to it previously set out as agreed by all parties, including Daman, in the Assignment Agreement. This was notwithstanding Clause 5(a) of the Assignment:
“Except as amended herein, the terms and conditions of the Agreement shall remain in full force and effect and rank parri passu with the conditions laid down in this Assignment Agreement. The amendments to the Agreement as set out in this Assignment Agreement shall be operative and binding on the parties hereto during the period the Assignee holds ownership interest in the Unit.”
34. In order to make good this application — which is based on abuse of process by the Claimant — Daman has got to make good two points:
35. In support of its case Daman has at first alleged that the Claimant ought to have disclosed the Assignment in the course of disclosure because it undermined his claims. That assumed that in the DIFC Courts there was the same principle of disclosure of relevant documents, including those adverse to the disclosing party’s case, as applies under the CPR. But that was a false assumption. The duty of disclosure in the DIFC Courts is set out in RDC 28.15 thus:
“Within the time ordered by the Court, each party shall submit to the other parties:
(1) All documents available to it on which it relies, including public documents and those in the public domain, except for any documents that have already been submitted by another party; and
(2) The documents which he is required to produce by any Law, Rule or Practice Direction.”
36. Thus, there was no requirement under the rules of disclosure for the Claimant to disclose the Assignment Agreement. Specifically, he did not rely on it and he was justified in assuming that it was in Daman’s possession.
46. This application is therefore refused with costs.
47. Any further submissions regarding costs should be addressed to the Court in writing.
Date: 10 July 2014
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