Skip to Content

CFI 016/2017 Mashreq Al Islami Finance Company Pjsc v Babar Rehman

CFI 016/2017 Mashreq Al Islami Finance Company Pjsc v Babar Rehman

April 15, 2018


Claim No: CFI-016-2017












UPON reviewing the Defendant’s Application No. CFI-16-2017/2 dated 28 January 2018 seeking to set aside the Default Judgment of Judicial Officer Maha Al Mehairi dated 7 May 2017 (the “Application”)

AND UPON reading the relevant material in the case file

AND PURSUANT TO Part 14.2 of the Rules of the DIFC Courts


1.The Application is granted on the basis that the Defendant has a real prospect of successfully defending the claim.

2. The Default Judgment dated 7 May 2017 issued by Judicial Officer Maha Al Mehairi is set aside.

3. The Claimant file and serve its statement of case and particulars of claim within 14 days from the date of this Order.

4. The Defendant shall file and serve its defence to the statement of case and particulars of claim within 28 days after service of the particulars of claim.

Issued by:

Ayesha Bin Kalban

Assistant Registrar

Date of issue: 15 April 2018

At: 2pm



Procedural Background

1.The Claimant/Respondent (hereafter “Claimant”) filed its claim on 30 March 2017 seeking declaratory relief regarding the alleged termination of an Ijara Mosufa Agreement entered into between the parties for the rental/ownership of a DIFC property located at 1513 Liberty House, DIFC, Dubai (the “Unit”), as well as monetary sums allegedly owed by the Defendant. The Claimant subsequently filed for Default Judgment on 26 April 2017 after providing a Certificate of Service on 6 April 2017. The Defendant had not yet participated in the proceedings having been served at an address in Deira, Dubai, according to the Certificate of Service. Having determined that the requirements of RDC Part 13 were met, Default Judgment was issued on 7 May 2017 via the Order of Judicial Officer Maha Al Mehairi (the “Order”). That Order provided the following:

a. The Ijara Agreement dated 19 July 2007 was declared terminated by notice on 25 September 2016.

b. The Defendant was declared not to have any interest in the relevant Unit effective from 25 September 2016.

c. The Claimant was declared the sole legal and beneficial owner of the Unit.

d. The DIFC Real Property Registrar was declared to have relevant authority to deregister any and all interests in the name of the Defendant with respect to the Unit and may issue a new title deed in the name of the Claimant alone.

e. The Defendant was found liable to the Claimant various sums payable within 14 days of issuance of the Order, to include:

i. AED 161,602.00 being the unpaid rent due under the Ijara Agreement.

ii. Interest at a rate of 2.47% in the sum of AED 7,826.32 as of 26 April 2017 and accruing at a daily rate of AED 10.94 from that day forward.

iii. AED 392,828.62 being the Claimant’s legal costs.

2. It was not until 28 January 2018 that the Defendant filed his Application seeking to set aside the Default Judgment Order and seeking an order for the production of documents. However, the Defendant did begin participation in the matter on 24 September 2017 by filing for Change of Legal Representative and then on 26 December 2017 by filing a Defence out of time.

3. After submissions from the parties, a Hearing on the Application was scheduled for 27 March 2018. At this Hearing, it came to my attention that the Defendant’s counsel did not have rights to appear before the DIFC Courts. As a result, I adjourned the Hearing until 3 April 2017. However, the parties came to an agreement that the Application be decided on the papers and so the Hearing scheduled for 3 April 2017 was also adjourned. I therefore reserved the Application for decision based on the papers submitted by both parties.

The Parties’ Arguments

4. The Defendant has argued that he did not become aware of the claim until October 2017. The Defendant alleges that the Claimant has omitted certain documents from its chronology, resulting in an incomplete view of the circumstances relevant to the case. The Defendant denies receipt of or knowledge of any termination of the Ijara Agreement which was allegedly made on 25 September 2016. Such notice has not been submitted by the Claimant.

5. As to service of the original Claim, the Defendant alleges that the Claimant served the incorrect address and that he informed the Claimant of his correct contact details in an email on 5 August 2012. The Defendant alleges that the Claimant received this email and thus there is question as to why he was not served at his preferred address.

6. Additionally, the Defendant has voiced concern about the legal costs awarded in the Default Judgment being quite high considering that the Claim concluded without trial or significant legal proceedings. For these reasons, including the alleged failure to terminate the Ijara Agreement as claimed, the failure to provide adequate service, and the exorbitant legal costs claimed, the Defendant seeks to set aside the Default Judgment Order.

7. As for his request for a document production order, the Defendant seeks to rely on the case of Black v Sumimoto Corporation [2001] EWCA Civ 1819. The Defendant argues that the criteria required by RDC 28.48(1) and 28.48(2) are satisfied in this case and thus the Claimant ought to be ordered to produce documents pursuant to RDC 28.49 about the current status of the Unit and including bank statements.

8. In his Application Notice, the Defendant also argues “In Agreement executed between the Applicant and the Respondent Parties expressly agreed to apply Laws of Dubai and the Federal Laws of United Arab Emirates and for any dispute Parties agreed to exclusively refer such dispute to the courts of the United Arab Emirates. Hence the Applicant challenges jurisdiction of the DIFC Courts.” The Defendant did not otherwise elaborate on this claim in submissions.

9. The Claimant first alleges numerous defects in the Defendant’s Application, including the failure to properly include evidence, failure to provide a statement of truth, and failure to timely bring the Application. Beyond this, the Claimant argues that there are no grounds for mandatory setting aside of the Default Judgment Order under RDC 14.1. The Default Judgment Order should not be set aside pursuant to RDC 14.2, according to the Claimant, because the Defendant does not have a real prospect of successfully defending the claim in part or in whole. Furthermore, the Defendant has shown no good reason why the Default Judgment Order should be set aside or varied or why he should be allowed to defend the claim. The Claimant continues that valid service was provided for both the Termination Notice and the Claim Form, and that the sums included in the Claim and resulting Default Judgement are “unimpeachable”.

10. As to the document request, the Claimant alleges that it has provided all documentation to prove its claim, to the satisfaction of the Judicial Officer when issuing the Default Judgment Order. Regarding service of the Claim, the Claimant points out that the Defendant only updated his phone number, not address, in 2012. Thus, the Claimant used the proper four addresses it had on file to serve the Defendant.

11. As to the briefly mentioned jurisdiction argument, the Claimant argues that the DIFC Courts clearly have jurisdiction to hear the claim for a number of reasons.


A. Application to Set Aside the Default Judgment

12. It is imperative to keep in mind the standard of review required in assessing an Application to Set Aside a Default Judgment. RDC Part 14 states in relevant part:



The Court must set aside a judgment entered under Part 13 if judgment was wrongly entered because:

(1) in the case of a judgment in default without an acknowledgment of service, any conditions in Rules 13.4 and 13.6 was not satisfied;

(2) in the case of a judgment in default of a defence, any of the conditions in Rules 13.5 and 13.6 was not satisfied; or

(3) the whole of the claim was satisfied before judgment was entered.



In any other case, the Court may, on such conditions as it sees fit, set asdie or vary a judgment entered under Part 13 if:

(1) the defendant has a real prospect of scuccessfully defending the claim; or

(2) it appears to the Court that there is some other good reason why:

(a) the judgment should be set aside or varied; or

(b) the defendant should be allowed to defend the claim.


In considering whether to set aside or vary a judgment entered under Part 13, the matters to which the Court must have regard include whether the person seeking to set aside the judgment made an application to do so promply.



An application under Rule 14.2 (cases where the Court may set aside or vary judgment) must be supported by evidence.”

13. In this case, it is clear that the requirements for RDC 14.1 are not met and thus, this is not a case where the Court must set aside the Default Judgment Order. However, the Court may still set aside or vary the Order pursuant to RDC 14.2, provided that the Defendant has a real prospect of successfully defending the claim, or there is some other good reason why the Order should be set aside or varied, or some other good reason why the Defendant should be allowed to defend the Claim.

14. First, I must address the timeliness of the Application, pursuant to RDC 14.3. While it does seem that the Defendant took a considerable amount of time from discovering the proceedings until filing his Application, I do not find this time significant enough to preclude the Defendant from being successful on his Application. As was apparent from the Hearing held on 27 April 2018, his counsel had not properly sought audience rights before the DIFC Courts, seems unfamiliar with the rules of the DIFC Courts, and the Defendant lives at considerable distance. Furthermore, the Defendant did attempt to file a Defence in December 2017. While such Defence was out of time, it showed his attempts to engage with the process. Thus, it is my view that the delay should not bar further consideration of the Defendant’s Application.

15. Second, I will address the Defendant’s alleged failure to support his Application with evidence, pursuant to RDC 14.4. It is true that the Defendant’s Application does not take usual form. However, the Application Notice is accompanied by a signed Statement of Truth and the appended documents, while objected to in their form of submission by the Claimant, are not alleged false in any way. Therefore, I will accept the Defendant’s Application in its current form with a note to Defendant’s counsel to properly adhere to the DIFC Courts’ rules in future.

16. This brings me to an assessment of the Defendant’s Application pursuant to RDC 14.2. I find it appropriate to grant the Defendant’s Application to Set Aside the Default Judgment because the Defendant has a real prospect of successfully defending the claim. I find this upon careful review of the circumstances of this case.

17. The Parties entered into an Ijara Agreement with a promise to sell, a structure created to adhere to the principles of Shariah law. The function of this Ijara Agreement is for the Claimant to finance the purchase of the Unit via a leasing arrangement and, at the end of the lease period, ownership of the Unit would transfer to the Defendant. In this type of Ijara, the full cost of the property is remunerated during the lease period; thus, the agreement is often called a “full payment lease.” This type of leasing cannot be canceled except if the Claimant is compensated for any losses.

18. The arrangement is the combination of two different contracts to be executed at different stages. The first contract is the leasing contract (the Ijara Agreement) with a unilateral promise (Wa’ad) to sell the Unit to the Defendant at a predetermined price. Once the lease expires and the Defendant has made all payments, the Claimant is obligated to fulfil the promise to sell by executing the second contract, a contract of sale. Such a promise is made as an additional agreement to the main Ijara Agreement. The Claimant remains the owner of the Unit until the very end, bearing all risks and responsibilities associated with the property, and the Defendant is responsible for only the rentals as long as he uses the property. The Claimant would then transfer ownership of the Unit to the Defendant at the end of the Ijara period.

19. In cases of termination of the Ijara Agreement, the asset should be taken back by the lessor, i.e. the Claimant. The Defendant/lessee should be asked to pay the rent as due up to the date of termination. If the termination has been affected due to misuse or negligence on the part of the lessee, he can also be asked to compensate the lessor for the loss caused by such misuse or negligence. However, the lessee cannot be compelled to pay the rent of the remaining period as this would be against the principles of Shariah law and the principles of equity and justice. Without this limitation, the agreement would function as if it were an interest-bearing loan under the ostensible cover of a lease; such cannot be acceptable under Shariah law. Thus, the Defendant would not be appropriately charged with rental payments beyond the termination date.

20. Based on this reading of the workings of the Ijara Agreement, it is necessary for the Court to make an assessment of a number of issues to determine the correct amount owed by the Defendant. It is important to assess when the Defendant stopped paying the installments (event of default), when the Claimant terminated the Agreement, whether the Claimant had a right to terminate the Agreement, why the Claimant waited so long to terminate the Agreement, and how the Defendant was in default as of April 2009 when the installments were to start in June 2009 (according to the finance statement submitted). It is my view that the documentation and explanation provided thus far do not properly rule out the Defendant’s ability to realistically defend the claim, or at least part of the claim, based the above reading of the function and workings of the Ijara Agreement. Thus, the Defendant does have a realistic prospect of successfully defending the claim, in whole or in part. In this regard, realistic shall mean a non-fanciful prospect of success, with the Defendant’s potential arguments carrying some degree of conviction. For this reason, it is appropriate to grant the Defendant’s request to set aside the Default Judgment Order and allow him a chance to defend the claim.

21. As to service of the Claim, the 5 August 2012 email by which the Defendant alleges he informed the Claimant of his new address only included a phone number and an email signature stating “Virginia, USA,” without any additional mailing information. Based on this email, I cannot see that the Claimant had any ability or responsibility to serve the Defendant at his abode in Virginia. Thus, I do not find the issue of service relevant to the Application.

22. Finally, as to the Defendant’s brief mention of his claim that the DIFC Courts do not have jurisdiction to hear this Claim, I will note that the Defendant has not pursued this argument in further and subsequent submissions. Furthermore, as I have already determined to set aside the Default Judgment Order based upon the above reasoning, it is unnecessary to discuss this argument further at this time. In any event, it is clear to me that the DIFC Courts do have jurisdiction over the matter, as it relates to property within the DIFC and as the Ijara Agreement’s jurisdiction clause does not preclude use of the DIFC Courts or DIFC Law, being Courts of the United Arab Emirates and being laws of the Emirate of Dubai. The DIFC Courts are fully capable of determining cases dealing with Shariah law.

B. Application for Production of Documents

23. As to the Defendant’s request for Production of Documents, I must state that this request has been put forth in an unusual manner, framed as a pre-action disclosure request at a time when the case is in fact closed. As I have determined to grant the Defendant’s Application to Set Aside the Default Judgment Order, I find that it is inappropriate at this juncture to consider the Defendant’s request for document production as articulated in his Application.

24. The Defendant has requested “documents required to confirm the total amount paid to the Claimant particularly bank statements,” and “document about the current status of the Property.” However, as the case will progress through the proper stages based on the Defendant’s submission of a Statement of Defence, the time for document production shall progress in the normal fashion, pursuant to the Rules of the DIFC Courts.


25. At this stage, it is appropriate to assign costs of this Application to the case, with parties able to make further submissions on costs at the appropriate time.


26. In sum, the Defendant’s Application Set Aside the Default Judgment is granted, with costs in the case. The Defendant’s Application for a Document Production Order is dismissed.


Privacy Policy

The Dubai International Financial Centre and all its affiliates are committed to preserve the confidentiality, integrity and availability of client data and personal information.

Dubai International Financial Centre and all its affiliates employees, vendors, contract workers, shall follow Information Security Management System in all the processes and technology.

  1. DIFC Courts'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 DIFC Courts in order to mitigate risks to an acceptable level, and to maximize opportunities in order to achieve its information security objectives.
  3. DIFC Courts and all its affiliates shall adopt a systematic approach to risk assessment and risk treatment.
  4. DIFC Courts is committed to provide information security awareness among team members and evaluate the competency of all its employees.
  5. DIFC Courts and all its affiliates shall protect personal information held by them in all its form.
  6. DIFC Courts and all its affiliates shall comply with all regulatory, legal and contractual requirements.
  7. DIFC Courts 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. DIFC Courts’s Top Management is committed towards continual improvement in information security in all our processes through regular review of our information security management system.


The content of the DIFC Courts website is provided for information purposes only and should be disregarded when making decisions on inheritance and any other matters. Whilst every reasonable effort is made to make the information and commentary accurate and up to date, the DIFC Courts makes no warranties or representations to you as to the accuracy, authenticity or completeness of the content on this website, which is subject to change at any time without notice. The information and commentary does not, and is not intended to, constitute legal advice by the DIFC Courts or any person employed or connected with it or formerly so employed or connected, to any person on any matter, be it in relation to inheritance, succession planning or otherwise. You are strongly advised to obtain specific, personal advice from a suitably qualified lawyer in relation to your personal circumstances and your objectives. The DIFC Courts does not assume any liability and shall not be liable to you for any damages, including but not limited to, direct or indirect, special, incidental or consequential damages, losses or expenses arising in connection with this website, its administration and any content or lack thereof found on it. The information on this web site is not to be displayed except in full screen format. Although care has been taken to provide links to suitable material from this site, no guarantee can be given about the suitability, completeness or accuracy of any of the material that this site may be linked to or other material on the internet. The DIFC Courts cannot accept any responsibility for the content of material that may be encountered therein.