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Natixis S.A. v Fast Telecom General Trading LLC [2016] DIFC CFI 047

Natixis S.A. v Fast Telecom General Trading LLC [2016] DIFC CFI 047

May 15, 2018

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Claim No: CFI 047/2016

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 H.E. JUSTICE ALI AL MADHANI

BETWEEN

NATIXIS S.A.

                                                                                                Claimant

and

 

FAST TELECOM GENERAL TRADING LLC

                                                                                                Defendant

 

Hearing: 16 November 2017

Counsel: Yacine Francis with Arash Koozehkanani assisting (Allen & Overy LLP) for the Claimant

Robert Mitchley (BSA Ahmad Bin Hezeem & Associates) for the Defendant

Judgment: 27 November 2017

Issued: 15 January 2018

Amended: 15 May 2018


AMENDED JUDGMENT OF H.E. JUSTICE ALI AL MADHANI


ORDER

UPON hearing Counsel for the Claimant and Counsel for the Defendant on 16 November 2017

AND UPON reading the submissions and evidence filed and recorded on the Court file

AND UPON reviewing the Claimant’s letter dated 17 April 2018 requesting an amendment to this Judgment

PURSUANT TO Rule 36.40 of the Rules of the DIFC Courts, paragraph 1 of the Order attached to this judgment is amended.

IT IS HEREBY ORDERED THAT:

1.Immediate Judgment be entered for the Claimant in the following amounts:

  • USD 10,610,065.00; and
  • contractual interest accrued as of the date of this Judgment, in the amount of USD 1,067,696.15.

2. Contractual interest shall continue to accrue from the date of this Judgment until the above sums have been paid by the Defendant in full, at a rate of USD 1,404.26 per day.

3. The Defendant shall pay the Claimant’s costs of the proceedings (including the application for immediate judgment), plus simple interest at a rate of 1% above EIBOR.

 

Issued by:

Ayesha Bin Kalban

Assistant Registrar

Date of Issue: 15 January 2018

Date of re-issue: 15 May 2018

At: 4pm

 

REASONING

PARTIES

1.The Claimant is Natixis S.A., a financial services firm incorporated in France, whose activities include providing loan facilities to commercial businesses (hereafter the “Claimant”).

2. The Defendant is Fast Telecom General Trading LLC, a distributor of mobile phones in the GCC and MENA regions, incorporated in the United Arab Emirates (hereafter the “Defendant”).

BACKGROUND

3. The parties entered into an agreement pursuant to the terms of a facility offer letter dated 22 December 2015, (the “Facility Agreement”) under which the Claimant agreed to provide an uncommitted loan facility to the Defendant of up to USD 30,000,000.00. This was for the purpose of facilitating the Defendant’s procurement activities, particularly purchases made by the Defendant from certain trade suppliers pre-approved by the Claimant.

4. Clause 28.1 of the Facility Agreement provided that the Facility Agreement is governed by English law.

5. The Defendant made three utilisations under the Facility Agreement, totaling USD 29,971,065.00 (the “Utilisation(s)”). These were made pursuant to three utilisation requests by the Defendant dated 21 January 2016, 24 January 2016 and 28 January 2016 respectively (the “Utilisation Requests”).

6. The Claimant transferred the amounts requested (the “Principal Amount(s)”) directly to the relevant approved supplier, on 25 January 2016, 27 January 2016 and 2 February 2016 respectively.

7. Pursuant to Clauses 8.1 and 11.2 of the Facility Agreement and the Utilisation Requests, the Principal Amounts advanced under each Utilisation became repayable in full (together with accrued interest) on Thursday 24 March 2016, Tuesday 29 March 2016 and Friday 1 April 2016 respectively (the “Maturity Date(s)”). However, no repayments were made by the Maturity Dates.

8. The Defendant made certain late repayments in respect of the Principal Amounts, totaling USD 19,361,000.00 (the “Repayments”). These were made by way of 32 separate repayments, between 3 May 2016 and 21 October 2016.

9. Accordingly, the Principal Amounts remaining due and payable by the Defendant under the Facility Agreement amount to USD 10,610,065.00.

10. The Claimant submitted that pursuant to Clauses 4.3, 7.1 and 7.4, interest accrued on each Utilisation at a rate of 3.75% per annum above applicable LIBOR (together with the Claimant’s mandatory costs) (the “Utilisation Interest”) for a period of 60 days, beginning on the relevant Utilisation Date (adjusted, where necessary, to end on the next business day in that calendar month).

11. The total Utilisation Interest accrued under the Facility Agreement amounts to USD 211,978.99. Pursuant to Clause 7.3 of the Facility Agreement, Utilisation Interest became payable on each Utilisation in full on 24 March 2016, 29 March 2016 and 1 April 2016 respectively (the “Interest Payment Dates”). However, no payments in respect of Utilisation Interest were made by the Defendant prior to the Interest Payment Dates or thereafter. Therefore, USD 211,978.99 remains outstanding.

12. As the Defendant did not repay the Principal Amounts and did not pay Utilisation Interest by the Maturity Dates and Interest Payment Dates (the “Payment Dates”), the Claimant submitted that pursuant to Clause 7.5 of the Facility Agreement, interest began to accrue on the unpaid Principal Amounts and Utilisation Interest at a rate per annum, comprising the aggregate of:

(i) 2% per annum;

(ii) the Claimant’s costs of funding the unpaid sum; and

(iii) its mandatory costs (the “Default Interest”), from the relevant Payment Dates.

13. The Claimant submitted that the total Default Interest accrued under the Facility Agreement from the relevant Payment Dates to 17 November 2016 amounts to USD 330,552.53, of which none has been paid by the Defendant. Following 17 November 2016, a different interest rate began to accrue on outstanding amounts under the Facility Agreement.

14. Accordingly, it is alleged that unpaid Default Interest due and payable by the Defendant under the Facility Agreement amounts to USD 330,552.53.

15. Pursuant to Clause 18.1(a) of the Facility Agreement, the Claimant submitted that a failure by the Defendant to pay any amount under the Facility Agreement by its due date constitutes an event of default under the Facility Agreement. Clause 18.1(iii) of the Facility Agreement provided that following an event of default, the Claimant may, on notice to the Defendant, require that interest is payable on any unpaid amount at a rate which is 2% per annum higher than the rate that would otherwise be payable. On 17 November 2016, Counsel for the Claimant gave notice to the Defendant that the Facility had been accelerated and that the interest rate payable on outstanding amounts would “be payable at a rate which is two per cent (2.0%) per annum higher than the Interest Rate” (the “Notice of Acceleration”).

16. As at the date of the Notice of Acceleration, the applicable interest rate was the Default Interest rate. Accordingly, the Claimant submitted that it is entitled to apply an interest rate of 2% per annum above the Default Interest rate on all outstanding amounts until such sums are paid in full (the “Acceleration Interest”).

17. Total Acceleration Interest accrued under the Facility Agreement from 17 November 2016 (the date of the Notice of Acceleration) to 16 November 2017 (the date of the Application hearing) amounts to USD 511,151.99. It is alleged that no payments in respect of Acceleration Interest have been made by the Defendant.

18. A detailed calculation of the total damages and contractual interest claimed by the Claimant was provided in the Annex to its Skeleton Argument. The Claimant also claims its legal costs pursuant to Clauses 10 and 12 of the Facility Agreement which provide that the Claimant may be indemnified against liability, loss or expense incurred by a consequence of any default in payment by the Defendant.

19. During the proceedings, the Defendant challenged the Claim Form by submitting a Defence Statement. The Defendant then requested that an expert be appointed by the Court to examine the payments made by the Defendant, specifically the interest calculation and late payment fees.

20. In reply to the Defence Statement, the Claimant filed amended calculations of the contractual interest claimed along with a reply to the Defence in which the Claimant amended and reduced the amount claimed as we can see from paragraphs 38 and 39 of the Reply to Defence (“Amended Claim”):

 “CORRECTIONS TO PRIOR INTEREST CALCULATIONS

38. In the Particulars of Claim, the Claimant’s calculation of contractual interest had applied:

(a) 29 March 2016 as the Maturity Date of the first Utilisation, and 4 April 2016 as the Maturity Date of the third Utilisation. As set out at paragraph 13 of this Reply above, the Maturity Dates for these Utilisations were 24 March 2016 and 1 April 2016 respectively. The contractual interest calculations, including the relevant LIBOR rates, have been amended accordingly;

(b) incorrect rates for the 1 day USD LIBOR rates effective 29 March 2016 and 17 November 2016. The relevant LIBOR rates and contractual interest calculations have been amended accordingly; and

(c) in respect of the Default Interest Rate and Acceleration Interest Rate, a rate of 1.12% per annum in respect of its costs of funding unpaid sums and Mandatory Costs (labelled “Additional Funding and Mandatory Costs” in ANNEX 2 to the Particulars of Claim). As set out at paragraph 31, that rate has been reduced to 0.10% per annum to reflect interbank lending premiums. The contractual interest calculations have been amended accordingly.

39. Such corrections have led to a decrease in the amount of contractual interest claimed to 21 December 2016 (i.e. that set out in the Particulars of Claim), totaling US 148,356.82.

21. The witness Statement of Mr Seow Fei Tee confirms the reduced amounts of the interest claimed as stated in the Reply to Defence, quoted above.

22. The Respondent submits that the errors in the calculation of the contractual interest
claimed are relevant to the question of the costs in the matter; in that, if costs are awarded to the Claimant, the Respondent should not be liable for the additional costs incurred by the Claimant in rectifying its interest calculations.

DISCUSSION

23. Rule 24.1 of the DIFC Courts Rules (“RDC”) sets out the Grounds for immediate judgment:

“The Court may give immediate judgment against a claimant or defendant on the whole of a claim, part of a claim or on a particular issue if:

(1) it considers that:

(a) that claimant has no real prospect of succeeding on the claim or issue; or

(b) that defendant has no real prospect of successfully defending the claim or issue; and

(2) there is no other compelling reason why the case or issue should be disposed of at a trial.”

24. In the absence of a substantial defence being forwarded by the Defendant with respect to the Amended Claim, I am inclined to find that the Defendant has no real prospect of successfully defending the Claim and there is no other compelling reason why the case or matter should be disposed of at trial.

25. I am of the opinion that the Claimant’s Application satisfies both limbs of the test set out in RDC 24.1. The Claimant has established the contractual and factual basis of its Claim, with an explanation of its calculations in respect of damages and contractual interest. It has also provided evidence of the principal amounts advanced to the Defendant and of the repayments made by the Defendant under the Facility Agreement.

26. The Defendant did not deny any aspect of the Claim but requested that the Court “appoint an Expert as per part 31 of the court rules, to examine all the payment was made by Fast Telecom and the interest rate calculation and the late fee”. However, I find there to be no reason to appoint an expert for the purposes of determining the claimed amount, since the Claimant responded to the Defendant’s request for an expert by providing further clarification and revisions of its calculations in respect of damages and contractual interest, which I am satisfied with.

27. Finally, I can find no other compelling reason why this case should be disposed of at trial. Essentially, the Claim arises out of a breach of the Facility Agreement entered into by the parties. The Defendant failed to comply with its obligations and the Claimant has claimed losses in respect of the Defendant’s breach of contract, including damages and contractual interest, as well as its legal costs. There are no disputed issues of fact or law and the Claim can be determined on the basis of the evidence submitted to the Court by the Claimant.

Costs

28. With respect to the Claimant’s application to recover costs, my decision is that the Claimant is to recover its costs on the standard basis, to be assessed by the Registrar if not agreed, excluding any costs or additional costs incurred by the Claimant in rectifying its interest calculations as a result of its own mistake, whether in the submissions or the evidence.

 

Issued by:

Ayesha Bin Kalban

Assistant Registrar

Date of Issue: 15 January 2018

Date of re-issue: 15 May 2018

At: 4pm

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