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CFI 014/2010 Taaleem P.J.S.C. v (1) National Bonds Corporation P.J.S.C. (2) Deyaar Development P.J.S.C.

CFI 014/2010 Taaleem P.J.S.C. v (1) National Bonds Corporation P.J.S.C. (2) Deyaar Development P.J.S.C.

August 3, 2015

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Claim No: CFI 014/2010

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

 

IN THE COURT OF APPEAL

BETWEEN

TAALEEM P.J.S.C.

                                                                              Claimant

and

(1) NATIONAL BONDS CORPORATION P.J.S.C.

First Defendant

(2) DEYAAR DEVELOPMENT P.J.S.C.

Second Defendant


  ORDER OF CHIEF JUSTICE MICHAEL HWANG SC


UPON reviewing the Second Defendant’s Appeal Notice and supporting documents dated 6 April 2015, seeking permission to appeal the Second Judgment of Justice Sir David Steel dated 23 March 2015

AND UPON reviewing the relevant documents in the case file

IT IS HEREBY ORDERED THAT:

  1. The Second Defendant is denied leave to appeal against the Second Judgment of Justice Sir David Steel dated 23 March 2015.
  2. The Second Defendant shall pay the Claimant’s and First Defendant’s cost of the appeal, to be assessed by the Registrar if not agreed. 

REASONS:

  1. This is an application for permission to appeal against the Second Judgment of Justice Sir David Steel in Taaleem PJSC v National Bonds Corporation PJSC(CFI 014/2010, 23 March 2015) (the “Second Judgment”). The applicant is the Second Defendant, Deyaar Developments PJSC (“Deyaar”).
  2. Justice Sir David Steel first issued a judgment against Deyaar on 19 February 2014 (the “First Judgment”), and found that there was a concluded legal agreement between the Claimant, Taaleem PJSC (“Taaleem”) and Deyaar for the sale or transfer of Taaleem’s interest in Sky Gardens to Deyaar. However, Justice Sir David Steel did not issue any orders in his judgment, instead leaving it open to the parties to prepare an order in the light of his judgment. Subsequently, before an order was issued, Deyaar applied for permission to appeal on 15 grounds, but all of these were rejected by Justice Roger Giles. Instead, Justice Roger Giles expressed the view that, since the orders had yet to be made, the trial judge could be asked to resolve the parties’ dispute in settling the orders if the parties could not agree on translating Justice Sir David Steel’s orders into declarations as to whether Taaleem or Deyaar is liable to repay the First Defendant, National Bond Corporation P.J.S.C (“NBC”). It is Justice Sir David Steel’s Second Judgment, given for the purposes of clarifying the legal situation between Deyaar and NBC and finalising the dispositive orders resolving the dispute, which is currently under application for permission to appeal.
  3. There are four grounds of appeal on which Deyaar relies in seeking permission to appeal. Grounds 1 and 2 raise issues of liability regarding Justice Sir David Steel’s failure to provide reasons in the Second Judgment, and his wrongful finding that Deyaar had committed an abuse of process. Grounds 3 and 4 raise issues of quantum with respect to the instalment paid to Taaleem by NBC on 12 September 2008 (the “September Instalment”) and recurring Murabaha profit payments.
  4. My decision is that this application for permission is denied. My reasons are set out below.
  5. Permission to appeal against Justice Sir David Steel’s findings in his First Judgment was denied in the decision of Justice Roger Giles delivered on 24 April 2014. Justice Roger Giles refused leave to appeal on all the 15 grounds placed before him, but he felt that Ground 15 voiced a valid complaint in that the legal relationship between NBC and Deyaar was left unclear in the First Judgment.
  6. I find that Grounds 1, 2 and 3 go beyond mere requests for clarification and raise substantive grounds of appeal. If any one of these grounds were to be accepted, there would have to be findings of liability which would be contrary to the First Judgment, in respect of which permission to appeal has already been denied by Justice Roger Giles. Justice Sir David Steel delivered the requisite clarification as to the legal relationship between NBC and Deyaar in the Second Judgment, and such clarification cannot itself be the subject of appeal, nor can it be used as a vehicle for further appeal against the First Judgment.
  7. In particular, although Ground 3 is put forward by Deyaar as an issue of quantum, I find that it is in reality a matter concerning liability. Paragraph 76 of the First Judgment shows that Justice Sir David Steel had already decided that a transfer of all Taaleem’s rights and obligations to repay NBC in respect of financing provided by NBC (which include the September Instalment) was implicit in the finding of a legally binding agreement between Deyaar and Taaleem for the acquisition of Taaleem’s rights and obligations in respect of Sky Gardens. Ground 3 is in reality an attempt by the Appellant to raise a substantive ground of appeal on an issue which has already been decided by Justice Sir David Steel, and was further dealt with by Justice Roger Giles on appeal. It therefore cannot be the subject of further appeal.
  8. In any event, I find that Justice Sir David Steel has already clarified how he resolved issues 5 and 6, in that a valid transfer of Taaleem’s financial obligations towards NBC was inherent in his finding in paragraph 9 the First Judgment of a concluded agreement between Taaleem and Deyaar, given that “inferentially [a valid transfer of Taaleem’s obligations to Deyaar] is only consistent with Deyaar being liable to repay NBC since otherwise there would be no commercial value to Taaleem in concluding the transfer of Sky Gardens to Deyaar”.
  9. As for Ground 4, Justice Sir David Steel’s implicit finding in the First Judgment that Deyaar had agreed to assume the burden of the Murabaha profits otherwise payable by Taaleem compels the Court of Appeal to dismiss any attempt to re-argue that finding, given Justice Roger Giles’ dismissal of the appeal against the First Judgment. While the validity of the calculation of the Murabaha profits at 5.5% per annum is a new point only raised by Deyaar at the hearing before Justice Sir David Steel on 23-24 November (the “Second Hearing”), the fact is that NBC had, as early as its Defence and Counterclaim on 15 September 2011 (“NBC’s Defence and Counterclaim”), claimed the total Murabaha profits in a sum of AED 19,530,586 which was well above the profit sum of AED 1,492,699 mentioned in the Murabaha Agreement. Justice Sir David Steel has clarified his decision on the legal relationship between NBC and Deyaar, and no further appeal can lie from his clarification or his original findings as the underlying decisions have been appealed against to Justice Roger Giles, who has denied all the 15 grounds of appeal. Neither the sum of AED 19,530,586 claimed in NBC’s Defence and Counterclaim nor the 5.5% rate was expressly challenged by Deyaar. Up until the Second Hearing, Deyaar had only directed its arguments at the question of its liability to pay any Murabaha profits at all, and did not address the issue of quantum. It never raised the issue of Sharia law as a defence, nor did it raise any alternative arguments against the ongoing 5.5% profit rate until the exchange of written submissions subsequent to the Second Hearing. In summary, Deyaar did not challenge the validity of NBC’s method of calculation when it should have, even though it would have been clear to Deyaar from NBC’s Defence and Counterclaim that NBC was claiming Murabaha profits well beyond AED 1,492,699.
  10. In any event, it is clear that Ground 4, insofar as it deals with the effect of Sharia law, does not have a real prospect of success on the issue of Sharia law on the basis of the current evidence. There is a lack of expert evidence provided as to the effect of Sharia law on the validity of Justice Sir David Steel’s findings of an ongoing 5.5% per annum profit rate, and I find that, on that point, Deyaar has failed to overcome the burden of persuasion. All the evidence considered by Justice Sir David Steel in his Second Judgment indicates that a 5.5% profit rate was agreed upon between Deyaar and NBC. Given the absence of credible evidence to the contrary (including any expert evidence on Sharia law), Deyaar has failed to persuade me that such a method of calculation violated Sharia law and was therefore illegal under the applicable law of the contract.
  11. I have considered all of Deyaar’s Grounds of Appeal, and find that Grounds 1, 2, 3 and part of Ground 4 concern matters which have already been decided, and the remaining part of Ground 4 does not have a real prospect of success.
  12. Accordingly, I order that the application for permission to appeal filed on 6 April 2015 be denied, with costs to be assessed if not agreed.

Issued by:

Mark Beer

Registrar

Date of issue: 3 August 2015

At: 11am

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