October 26, 2023 court of first instance - Orders
Claim No. CFI 043/2023
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
F3O SHIPBROKERS DMCC
Claimant
and
VAHANA MARINE SOLUTIONS DMCC
Defendant
ORDER WITH REASONS OF JUSTICE MICHAEL BLACK
UPON the Part 8 Claim form dated 20 June 2023 (the “Claim”)
AND UPON the Claimant’s Application No. CFI-043-2023/1 dated 12 July 2023 seeking an Immediate Judgment (the “Claimant’s Application” or “Application”)
AND UPON reviewing all relevant material added onto the Court file
AND UPON reviewing the Rules of the DIFC Courts (the “RDC”)
IT IS HEREBY ORDERED THAT:
1. The Claimant is entitled to judgment in the sum of USD 299,690.00.
2. The Defendant has permission to defend as to AED 130,401.81.
3. The Defendant shall pay simple interest on the sum awarded from 22 August 2022 until payment at the rate of 9% p.a.
4. The Defendant shall pay the Claimant’s costs of the Application assessed at AED 99,225.51.
Issued By:
Delvin Sumo
Assistant Registrar
Date of issue: 26 October 2023
At: 2pm
SCHEDULE OF REASONS
1. This is a straightforward application for immediate judgment in respect of an uncontested debt under RDC Part 24 due under a contract whereby the parties have agreed to the exclusive jurisdiction of the DIFC Courts.
2. There a two preliminary procedural matters before addressing the merits. First, the Claimant has used the Part 8 procedure. RDC 8.1 provides that a Claimant may use Part 8 procedure where the Claimant seeks the Court ’s decision on a question which is unlikely to involve a substantial dispute of fact. The Claimant refers me to DIFC Investments Limited v Dubai Islamic Bank CFI-016-2020, 3 June 2020 in which H.E. Justice Shamlan Al Sawalehi considered that Part 8 procedure was particularly suitable in the case of the enforcement of documentary credits having a status equivalent to cash. I am not sure that such a situation is analogous to a claim for a commercial debt, but where (as here) the Claimant has every reason to believe that the debt is not disputed, I consider that the Claimant may properly use Part 8 procedure on the basis that there is unlikely to be a substantial dispute of fact.
3. The second preliminary procedural matter is that by RDC 24.4, a claimant may not apply for immediate judgment until the defendant against whom the application is made has filed either an acknowledgment of service or a defence unless the Court gives permission. In the present case, the Claimant filed its claim on 20 June 2023. The claim form and supporting documents together with a certified Arabic translation (notwithstanding that all dealings between the parties were in English and their contract is subject to English law) were served on the Defendant in Dubai on 26 June 2023. The Defendant was accordingly required to file an acknowledgment of service by 11 July 2023 under RDC 8.13 but did not do so. A Certificate of Service was filed on 12 July 2023.
4. RDC 11.4, which allows a claimant to enter judgment in default of an acknowledgment of service and the filing of a defence, does not apply to Part 8 procedure. Instead RDC 8.16 provides that where the defendant has failed to file an acknowledgment of service and the time period for doing so has expired, the defendant may attend the hearing of the claim but may not take part in the hearing unless the Court gives permission. It follows that even if a defendant fails to acknowledge service in a Part 8 claim, the Court must still adjudicate on the claim. It is however open (as here) to a claimant to adopt RDC Part 24 procedure if the claimant is able to persuade the Court that (a) if should give permission to make the application under RDC 24.4(a), and (b) the defendant has no real prospect of successfully defending the claim and there is no other compelling reason why the case should be disposed of at a trial. Alternatively, the Claimant could simply list the Part 8 hearing.
5. The Claimant seeks permission under RDC 24.4(a), but unknown to the Claimant the Defendant did in fact file an acknowledgement of service on 10 October 2023 rendering permission unnecessary. I will return the contents of the acknowledgement of service and accompanying documents below.
6. Turning to the facts of the present case. There is before me the First Witness Statement of Frank Robert Holck, the Managing Partner of the Claimant dated 15 June 2023. As its name suggests, the Claimant carried on business as a shipbroker. The Claimant and the Defendant entered into a Commission Agreement (the “Agreement”) dated 6 October 2018 in connection with brokerage services rendered by the Claimant to the Defendant as the disponent owner of the accommodation barge “VAHANA ARYAN” (IMO no 9761920) (the “Vessel”) in respect of the time charter of the Vessel to Zamil Offshore Services Company, Saudi Arabia (the “Zamil” or the “Charterer”). Mr Holck signed the Agreement on behalf of the Claimant.
7. The Vessel was chartered to Zamil under a BIMCO Supply time 2005 Time Charterparty for Offshore Service Vessels dated 6 October 2018 (the “Charterparty”), the duration of which was extended by 6 Addenda. By clause 2 of the Agreement, the Claimant is entitled to commission for brokerage services rendered by it by reference to the amount of charter hire due from the Charterer to the Defendant under the Charterparty. Clause 5 of the Agreement provides that the Claimant is entitled to receive its commission or brokerage fees for as long as the Charterparty is in effect, “including any options/extensions”.
8. The Claimant issued monthly invoices to the Defendant by reference to the Charter Hire and the number of on-hire days in each month, based on the Defendant’s written confirmation. The Claimant’s Statement of Account (the “SOA”) reflects the sums owed on invoices issued up to 2 May 2023.
9. The Vessel remains on charter to Zamil up to 16 December 2023 at a daily rate of USD 46,100. Accordingly, commission continues to be earned at a daily rate of USD 806.75. However, in these proceedings, the Claimant does not seek to recover any sums that have not already become due or for which invoices were yet to be issued as of the date of the SOA. The Claimant only seeks to recover the invoiced amounts listed in the SOA, which the Defendant is required to pay under to clause 3 of the Agreement on receipt of the Charter Hire from the Charterer and 30 days after the receipt of the Claimant’s invoice.
10. On 8 June 2023, the Claimant’s solicitors and UAE legal consultants, Nimble Legal, wrote to the Defendant to seek payment in sum of USD 335,198.30 set out in the accompanying SOA as of 5 June 2023.
11. Mr Holck says that on 14 June 2023 he asked Zamil whether it had paid all charter hire due to the Defendant under the Charterparty. Zamil confirmed by email on the same day that all invoices up to May 2023 had been settled and paid to the Defendant.
12. On 10 July 2023 an Arun Pushkarna of the Defendant replied by email to the letter from Nimble Legal in the following terms:
“Apologies for not getting back to you earlier.
This was initially due to operational constraints and thereafter, simply the fact that your mail got overlooked with other pressing operational matters. Let me start with first informing you that I am serving in the capacity of the Chief Operating Officer. As such, my responsibilities include merely managing the operating aspects of the vessel.
I do not deal with payments.
However, as a mark of respect and professional courtesy to your email, I think it is only fair to let you know that Frank Holck has indeed provided brokerage services to Vahana and never in the duration of the last several years has Vahana denied the fact that there are payments owed to F3O Brokers.
It is also a fact that the company has had cashflow issues and various discussions have been had between the Finance Department of Vahana and your client, Frank to agree revised payment timelines, superseding the timelines of the Brokerage agreement.
Unfortunately, most of the revised payment timelines that were mutually agreed between F3O and Vahana could not be met and had to be again rescheduled. This is something that is known to F3O.
Never has there been any malfide intentions on either side – F3O or Vahana.
We keep updating F3O every month on the chargeable days and this is clearly with the intent to ensure that payment, though delayed, will not be denied to F3O.
Regarding the actual revised payment dates, as mentioned above, are not within my remit and therefore I am unable to comment on these.
But we will discuss with F3O and deal with the matter in a spirit of mutual trust and goodwill.”
13. On a plain reading of that email it is apparent that the Defendant does not deny liability for the brokerage fees due to the Claimant but is merely seeking time to pay.
14. As noted above, the Defendant served an acknowledgment of service on 10 October 2023. In that document the Defendant stated that “The Defendant intends to defend part of this claim … We have drafted a settlement agreement and hopefully it will be concluded before the set hearing … We are settling it out of court.”
15. Accompanying the acknowledgement of service are what appeared to be 2 SWIFT/BIC messages showing payments to the Claimant by a company called Eversendai Offshore RMC FZE dated respectively 26 July 2023 and 21 September 2023 in the sums of AED 50,000 and AED 80,401.81, AED 130,401.81 in total, or approximately USD 35,508 at the exchange rate of AED 1 = USD 0.272. I therefore read the Defendant’s statement to mean that it intends to defend part of the claim relating to these sums.
16. The hearing took place remotely on 19 October 2023. Mr Hari Krishna of Nimble Legal attended on behalf of the Claimant. The Defendant did not attend. I am satisfied from enquiries made with the Registry that the Defendant was informed of the hearing and chose not to attend.
17. I asked Mr Krisha about the two payments. He had some knowledge of them but was very properly anxious not to give evidence outside that submitted to the Court. He asked me to note that the payments had been made by a third party and informed me on instructions that the Claimant had not yet given credit for them. It seems to me that there is at least a dispute as to whether or not those payments should be credited against the undisputed debt. I will therefore deduct USD 35,508 from the amount claimed, giving a figure of USD 299,690.
18. During the hearing a letter was received from the Defendant which came to my attention after the hearing. It was in the following terms:
“This is to formally appoint Ms. Katherine De Dios, Finance Manager as our Representative to attend the hearing before the court today, 19th October 2023.
In view of above case, this is to formally inform you that we do not refute the amount mentioned in the dispute as of June 20,2023. However, we have made 2 payments approximately USD35,000 after the mentioned date based on the proposals given to Claimant.
Furthermore, we are in a discussion with Claimant on how to settle this amicably outside of court. Will share the Settlement Agreement as soon as concluded.”
19. This letter clearly confirms the analysis set out above.
20. In those circumstances I am satisfied that the Claimant is entitled to immediate judgment in the sum of USD 299,690.00 under RDC Rule 24.1 on the grounds that the that the Defendant has no real prospect of successfully defending the claim and there is no other compelling reason why the case or issue should be disposed of at a trial.
21. In addition the Claimant claims simple interest both before and after judgment at the rate of 9% p.a. The Claimant prays in aid Practice Direction No 4 of 2017 – Interest on Judgments which provides that any judgment of the DIFC Courts issued after the date of the Practice Direction shall carry simple interest, from the date the judgment is entered, at the rate of 9% or such other rate as the judge may prescribe. The Claimant submits this is an undisputed debt and there is no reason in principle why the same rate of interest should not apply both before and after judgment. The Claimant also submits that this agreement is governed by English law and that under legislation in the UK (which does not apply in the DIFC) unpaid commercial debts carry interest at 8% above the Bank of England base rate (currently 5.25%).
22. I am satisfied that 9% simple interest is an appropriate rate for an undisputed commercial debt both before and after judgment. The Claimant’s SOA shows invoices dated 8 July 2020 to 22 May 2023, all in differing sums. Payment of each invoice was due within 30 days. I am not provided with an invoice-by-invoice calculation, instead the Claimant asks for interest from 22 August 2022. It is not clear to me how the date is ascertained. On looking at the SOA the larger invoices are weighted towards the end of the period – August 2022 does appear to be midway on the basis of accumulated fees as opposed to chronologically. I will therefore direct that interest shall start to run from the date requested, 22 August 2022.
23. The Claimant has served a Statement of Costs in the sum of AED 99,255.51. The hourly rates for Mr Krisha and his trainee, Ms Sushmita Chowdhury, are respectively AED 2,500 and AED 1,150. These are clearly significantly discounted from the applicable indicative hourly rates in Registrar’s Direction No. 1 of 2023 namely AED 3,746 and 2,391, and therefore reasonable. I find the number of hours reasonably incurred and the overall sum claimed to be proportionate. I see no reason to reduce the sum because of a late (albeit successful) defence raised by the Defendant as to approximately 10% of the claim. The Claimant shall therefore be entitled to recover its costs of Application in the sum AED 99,225.51.
24. In the circumstances, the Claimant is entitled to judgment in the sum of USD 299,690.00 and the Defendant has permission to defend as to AED 130,401.81. The Defendant shall pay simple interest on the sum awarded from 22 August 2022 until payment at the rate of 9% p.a. The Defendant shall pay the Claimant’s costs of the Application assessed at AED 99,225.51.