March 10, 2023 COURT OF FIRST INSTANCE - ORDERS
Claim No: CFI 029/2018
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
THE INDUSTRIAL GROUP LTD
ABDELAZIM EL SHIKH EL FADIL HAMID
ORDER WITH REASONS OF JUSTICE SIR RICHARD FIELD
UPON considering the Defendant’s Application No. CFI-029-2018/16 dated 20 December 2022 (the “Said Application”) for: (i) an order awarding the Defendant interest on the sum of AED 2,444,640 awarded by the Court of Appeal in respect of his claim for a penalty under the Employment Law of 2005; (ii) a determination of the split of costs as between the Claimant’s costs in successfully opposing the Defendant’s claims in tort and employment claims; (iii) an order that the Claimant pay the costs of the detailed assessment ordered to be made of the parties’ costs and that that assessment process should not begin until the Claimant had paid these costs
AND UPON considering the Order with Reasons made by the Court of Appeal in CA-005-2022 dated 30 November 2022 that provided, inter alia, that the order as to costs made below be upheld and any application that the Defendant/Appellant wished to make as regards interest should be remitted to the judge below
AND UPON considering the Defendant’s 10th witness statement dated 15 December 2022 and the Memorandum of legal submissions dated 15 December 2022 each whereof was served in support of the Said Application
AND UPON considering the Claimant’s written submissions dated 30 January 2023 served in response to the Said Application
AND UPON considering the Defendant’s written reply submissions dated 6 February 2023
AND UPON considering the Procedural Order with Reasons of Justice Sir Richard Field dated 25 May 2022
AND UPON considering the Order with Reasons of Justice Sir Richard Field dated 17 June 2022
AND UPON considering the Order of Justice Sir Richard Field dated 4 August 2022
AND UPON considering the Consent Order dated 20 October 2022
IT IS HEREBY ORDERED THAT:
1. The Claimant shall pay the Defendant interest on the amount of AED 244,640 from 28 August 2019 to 6 April 2022, at the rate awarded in respect of the amount of AED 820,585 as set out in paragraph 3 of the Order with Reasons of Justice Sir Richard Field dated 17 June 2022
2. The Claimant shall pay the Defendant interest on the amount of AED 244,640 at the judgment rate of 9% per annum until the date of full payment.
3. The Claimant’s total reasonable costs represented by the costs dealing with the Tort Claims is 35%.
4. The Defendant’s application that the Claimant must pay the fee that would otherwise be payable by the Defendant to start costs assessment proceedings is refused.
5. The Claimant shall pay the Defendant 70% of his costs of the Said Application, to be subject of a detailed assessment by the Registrar on the standard basis, if not agreed.
Date of issue: 10 March 2023
SCHEDULE OF REASONS
1. On 3 March 2020, the Court ordered that unless the Claimant (“TIG”) paid certain sums in question into court within 28 days, the Defendant (“Mr. Hamid”) should have judgment for: (i) AED 820,585, which had been due on 22 January 2018; (ii) AED 84,333; and (iii) AED 104,876.71.
2. TIG was given the option of paying these sums into court having regard to a claim it was then seeking to make against Mr. Hamid (the “Merab Claim”). However, that claim was eventually struck out and any sums that had been paid into court were paid over to Mr. Hamid.
3. The Court received submissions as to whether interest was payable on the AED 820,585. In the result, the Court accepted TIG’s submission that the applicable rate was EIBOR plus 1% which had accrued in the total of AED 71,532.54 as at 20 November 2020. TIG contended in its submissions on costs following the trial of Mr. Hamid’s Counterclaim that judgment had still not been entered for that sum.
4. As a result of the order dated 3 March 2020, the claims underlying the award of the said three sums did not feature in the trial heard in September 2021. Instead, the employment-related claims brought by Mr. Hamid that were tried were for sums due in respect of: (a) the period of notice to which he was entitled; (b) an end of service gratuity; (c) vacation pay; and (d) a sum due as a penalty under Article 18 of the Employment Law 2005. These claims are referred to as “the Employment Claims”.
5. Mr. Hamid also brought claims in tort for abuse of process and malicious prosecution (the “Tort Claims”). The final issue tried was whether TIG had dismissed Mr. Hamid with cause (the “Dismissal with Cause Issue”).
6. Mr. Hamid succeeded at trial on the Dismissal with Cause Issue and on each of the Employment Claims. On 4 August 2022, the Court ordered that he was entitled to: (a) AED 110,000 for the period of notice claim; (b) AED 338,800 for the end of service gratuity; (c) AED 470,747.29 for vacation pay; and (d) AED 7,550,400 for the penalty. He was also awarded interest accruing at the rate of AED 226.74 per day on the sums awarded in (a), (b) & (c). He was not awarded interest on the sum in (d) because a stay pending appeal had been granted on 25 May 2022 in respect of the enforcement of that sum. In addition, Mr. Hamid lost on the Tort Claims.
7. By its order dated 17 June 2022, Mr. Hamid was awarded his costs in respect of the Employment Claims and the Dismissal with Cause issue, such costs to be the subject of a detailed assessment on the indemnity basis by the Registrar. For its part, TIG was awarded its reasonable costs in defending the Tort Claims, such costs to be the subject of a detailed assessment on the standard basis by the Registrar. Mr. Hamid was also awarded simple interest on the pre-judgment sum of AED 820,585 from 22 January 2018 to the date of the judgment at the rate of Eibor plus 1% giving a total of AED 71,532.54 as at 20 November 2020. The court also gave Mr. Hamid liberty to apply for an award of post judgment interest on AED 820,585 if there was a credible case for contending that judgment in that sum had been entered prior to the date of the post trial judgment dated 6 April 2022.
8. The Court of Appeal reduced the penalty award from AED 7,550,400.00 to the sum of AED 244,640.00, this being the figure at which Mr. Hamid’s accrued right to the penalty stood when the Employment Law came into force on 28 August 2019. Mr. Hamid’s appeals against the rejection of his Tort Claims below were dismissed and the Court of Appeal ordered on 30 November 2022 that TIG should be awarded: (i) 2/3rds of its costs of the appeal to be subject to detailed assessment by the Registrar, if not agreed; and (ii) an interim payment on account of the costs of the appeal due of USD 50,000 to be paid within 28 days. The Court of Appeal also remitted to the trial judge any application Mr. Hamid might wish to make with regard to interest and declared that it declined to interfere with the costs order made below.
9. Since interest had already been awarded below in respect of the Employment Claims in the sum of AED 820,585, but not in respect of the penalty sum, the Court of Appeal must have had in mind an application for interest on the penalty sum of AED 244,640.00 which the Court of Appeal awarded when remitting any application Mr. Hamid might make for interest.
Mr. Hamid’s claim for interest on the penalty sum awarded
10. Mr. Hamid seeks interest at 9% pa (the judgment rate) on the sum of AED 244,640.00 from the day after the Employment Law came into force, 28 August 2019. Relying on RDC 36.31 (2), he submits that the Court has a discretion to direct that interest should run from some date other than the date of the judgment. He contends that interest on the AED 244,640.00 has been accumulating at the rate of AED 602.79 per day.
11. TIG submits that it is far too late for Mr. Hamid to claim interest on the AED 244,640.00. They point out that it was ordered in the draft post trial judgment that within 8 days of the formal issuance of the judgment, Mr. Hamid was to file concise written submissions setting out his case on costs and interest on the sums awarded in that judgment. The post trial judgment was issued on 6 April 2022, but Mr. Hamid did not file submissions on interest until 19 April 2022, which he did by reference to submissions made on interest in a previous email as long ago as 24 February 2020. TIG then filed its submissions on interest on 27 April 2022 to which Mr. Hamid replied on 4 May 2022, substantially altering his interest calculations and the basis for them. The Court then intervened ordering on 25 May 2022 that Mr. Hamid was restricted to the claim for interest made back on 24 February 2020. No claim for interest on the penalty sum was included in these submissions and none was awarded in the Court’s order of 17 June 2022.
12. In his submissions dated 6 February 2023, Mr. Hamid contends that it was not open to him to claim interest on the penalty prior to the decision of the Court of Appeal because the penalty continued to accrue until judgment. In my view this contention holds good for the period down to 6 April 2022 when judgment was given for AED 7,550,400.00 and I am satisfied that no interest at the judgment rate was awarded on that sum by the order dated 4 August 2022 because of the stay in respect thereof pending appeal. In my judgment, in these circumstances it is fair and appropriate to award interest on the AED 244,640.00 from 28 August 2019 to 6 April 2022 at the rate awarded in respect of the AED 820,585 as set out in paragraph 3 of the Order dated 17 June 2022 and at the judgment rate of 9% pa from 6 April 2022 until payment.
Mr. Hamid’s application that the trial judge determine the split of costs between those referable to the Employment Claims and those referable to the Tort Claims
13. Mr. Hamid is fearful that TIG will seek to persuade the Registrar that as much as 70% of its costs below are attributable to rebutting Mr. Hamid’s Tort Claims. He contends that the trial judge is much better placed than the Registrar to determine the appropriate proportion of TIG’S costs that is attributable to the Tort Claims and seeks a ruling from the trial judge on the appropriate split of costs.
14. TIG contends that this application must fail because this Court has already made an order in respect of the parties’ costs leaving it to the Registrar to assess: (i) Mr. Hamid’s costs in respect of the Employment Claims and the Dismissal with Cause issue; and (ii) TIG’s reasonable costs of defending the Tort Claims. TIG further submits that this Court lacks sufficient information to determine Mr. Hamid’s application.
15. In my view, the orders already made regarding the parties’ costs do not preclude the Court from opining on the parameters in which the assessment of the parties’ costs ought to be undertaken by the Registrar. The irrefutable fact is that the trial judge, having been in charge of the proceedings from their inception to the conclusion of the trial, is in a particularly good position to give guidance to the Registrar to assist him or her in carrying out the assessment.
16. In my judgment, there are two points of major importance that go to put the trial judge in a position preferable to that occupied by the Registrar when it comes to the assessment of the costs relating to the Tort Claims. The first is that the trial judge is especially well placed to conclude that the facts underlying the Tort Claims were very largely part and parcel of the facts relevant to the Dismissal with Cause Issue and the issue as to whether Mr. Hamid’s costs of that issue and the Employment Claims should be assessed on the indemnity basis. It follows that the principal focus has to be on TIG’s costs in advancing their submissions as to the legal basis of the Tort Claims.
17. The second point of major importance is that the trial judge is fully cognisant of the issues underlying the legal basis of the Tort Claims and the depth of the analysis and learning that have gone into the submissions addressing that question.
18. I turn to consider what proportion of the total submissions advanced by the parties (particularly TIG) at the trial is represented by the submissions dealing with the Tort Claims. As the transcripts record for the first day (30 August 2021) and the last day of the trial (2 September 2021), very little time was spent orally on such submissions on the first day of the trial and no time at all was spent on them on the last day, since the parties had been directed that closing submissions should all be in writing to be served after the trial.
19. Mr. Hamid’s written opening consisted of 115 paragraphs of which 31 paragraphs (-) were concerned with the Tort Claims. TIG’s written opening consisted of 202 paragraphs of which 56 paragraphs (-) dealt with the Tort Claims (including damages).
20. Mr. Hamid served post trial a set of submissions relating to his Employment Claims running to 72 paragraphs. He also separately served a further set of submissions styled “Second Skeleton and Main Post Trial Submissions”. These consisted of 74 paragraphs, 36 of which were concerned with the Tort Claims.
21. TIG’s written closing submissions consisted of 278 paragraphs of which 158 were concerned with the Tort Claims.
22. Mr. Hamid’s submissions in reply to TIG’s closing submissions contained 58 paragraphs of which 57 paragraphs addressed the Tort Claims.
23. Turning to the second major point identified in paragraph 16 above, in my judgment the legal basis of the Tort Claims raised serious and difficult issues of law and Mr. Hamid’s submissions evidenced significantly less work and thought than did TIG’s submissions which exhibited a deep and profoundly thoughtful analysis of the legal position.
24. Stepping back and considering the question against the background of: (i) the extensive evidential overlap of the evidence relating to the Tort Claims and the evidence relating to the Dismissal with Cause and indemnity costs issues; (ii) the very small amount of time taken up at the trial in hearing submissions pertaining to the Tort Claims; (iii) the significance of the Tort Claims in terms of the quantum of damages sought be recovered under these claims; and (iv) the care and effort it is to be inferred was spent by the team representing TIG, including in particular Mr. Montagu-Smith KC, in producing the Claimant’s submissions in opposition to the Tort Claims, I conclude that the outer limit of the proportion of TIG’s total reasonable costs represented by the costs dealing with the Tort Claims is 35%. Precisely what costs are to be awarded to TIG in respect of their opposition to the Tort Claims within this parameter will be a matter for the Registrar.
Mr Hamid’s application that: (i) TIG should pay the court fee otherwise due from himself to initiate his detailed assessment of his costs of the proceedings down to the appeal to the Court of Appeal; and (ii) TIG should be restrained from starting its own cost assessment proceeding until it has paid the fee otherwise payable by himself.
25. Mr. Hamid states in his 10th witness statement that, due to TIG’s failure to pay any part of the judgment sums totaling AED 1,054,187.29 plus interest awarded him by orders of this Court and the Court of Appeal, he cannot afford the cost, estimated at USD 25,000, of bringing the necessary costs assessment proceedings or the cost of paying the USD 50,000 ordered by the Court of Appeal to be paid to TIG on account of the costs ordered to be paid to TIG.
26. The USD equivalent of AED 1,054,187.29 is approximately USD 287,000.
27. It is Mr. Hamid’s case that TIG’s failure to pay any of the AED 1,054,187.29 due to him is consistent with its dishonest and reprehensible conduct that led to him being awarded indemnity costs. He deposes, partly on information and belief, that in 2022, in order to insulate itself from the judgment debts it owes him, TIG has taken the following steps:
(1) TIG transferred the shares it held in Gulf Industrial Group, KSA (its operating subsidiary) to its Chairman, Mr. Hussein Al Banawi (the “Chairman”).
(2) TIG transferred its shares in Ashwa Technologies Egypt to Gulf Industrial Group in KSA, bringing its Egyptian assets under the control of the Chairman.
(3) At the same time as in (2), TIG transferred USD 50 million of the proceeds of the sale of the business in Saudi Arabia and Morocco to an entity called “Elopak” to entities associated with the Chairman.
28. Mr. Hamid also states that he understands that TIG, in breach of DIFC law, has not completed and issued its audited financial statements in the DIFC for the last two years with the likely intention of hiding the fact that the company has moved its assets out of the DIFC and reduced its capital from about USD 30 million without obtaining the permission of the DIFC Registrar of Companies. He goes on to state that: (i) whilst TIG is owed considerable receivables from the Chairman through his company in the DIFC, Urjuwan Investments Ltd, that company has no assets in the UAE and the extent of the receivables it owes to TIG is hidden by TIG’s failure to issue audited accounts; (ii) on the basis that he received sums due from TIG - one in 2021 and the other in 2022 – by way of payments by Gulf Industrial Group in KSA, he believes that TIG does not maintain any bank accounts in the DIFC or onshore Dubai; (iii) TIG has recently moved its servers and operating information technology systems and software from Sharja to KSA to avoid any “operating consequences” of an adverse monetary judgment on its on-going operations; (iv) notwithstanding that TIG remains registered in the DIFC, all staff have either been dismissed or moved and the company is only maintaining a desk office in the DIFC; and (v) the only reason that TIG has not completely vacated its DIFC offices is that it cannot obtain the necessary permission from the DIFCA to do so `because it is in arrears of the rent due on the offices.
29. On the basis of information obtained from TIG’s website which is exhibited to his 10th witness statement, Mr. Hamid goes on to list and comment on the following changes in TIG’s directorships and its shares:
(1) Until 19 July 2020, the shares of the company were held by another DIFC entity Urjuwan Investments Limited, itself owned by the Chairman.
(2) From 19 July 2020, until 5 August 2022, the Chairman was registered as the sole shareholder with 100% of the company’ shares.
(3) From 5 August 2022, Mr. Khaled Jaberah has been the sole shareholder and director of the company. He is also the Company Secretary.
(4) The likely purpose of making Mr. Jaberah the sole shareholder is to insulate TIG from the judgment. Mr. Jaberah does not possess any significant assets and any proceedings against him as a director or shareholder are pointless.
(5)(1) During the time (until 2018) that Mr. Hamid was the Secretary of the Company, and the company faced difficulties with its subsidiaries in the KSA, the exact same strategy was used, namely to appoint Mr. Jaberah as a sacrificial director of the companies in the event that TIG was forced into liquidation or that other actions were taken against the company.
30. TIG submits that: (i) the order sought by Mr. Hamid is unprecedented; (ii) the court fee to initiate an assessment of costs is in effect a preliminary fee since the Registrar will decide in the course of the assessment whether one party must pay the fee or part thereof paid by the other party; and (iii) the ultimate outcome of the assessment of both parties’ costs will be a net sum in favour of TIG.
31. In my judgment, the Court has no jurisdiction to make the orders Mr. Hamid seeks under this heading of his application. Judgment debts are enforceable through the execution procedures available in the jurisdiction chosen to take such action. No such procedures, such as a winding up petition or an application for a third party debt order or a charging order, have been initiated.
32. Further, if there is a good arguable case that assets are being dissipated to defeat execution on a judgment debt, the Court has jurisdiction to make a worldwide freezing order without ordering fortification of any cross-undertaking restraining such conduct where there is credible evidence that assets outside the jurisdiction are being dissipated to achieve this end. However, Mr. Hamid is not applying for such an order.
33. It follows that, for the reasons given in paragraphs 31 and 32 above, I decline to order that TIG must pay the fee that would otherwise be payable by Mr. Hamid to start costs assessment proceedings. Accordingly, as matters currently stand, TIG is under no restraint from starting its own costs assessment proceedings until it has made such a payment.
The costs of Mr. Hamid’s Said Application
34. TIG extravagantly submits that it should have its costs of resisting this application brought by Mr. Hamid to be assessed on the indemnity basis on the grounds that: (i) he is seeking to raise matters which he had previously decided not to pursue; (ii) he is seeking orders that are inconsistent with orders and findings previously made; (iii) his application is misconceived; and (iv) he originally referred to privileged without prejudice correspondence which required to be dealt with by inter-partes correspondence.
35. I have no hesitation in rejecting the submission that Mr. Hamid should pay TIG’s costs whether on the indemnity basis or the standard basis.
36. As things have turned out, Mr. Hamid has succeeded on his application for interest and on for a ruling on the split of costs but he failed on the third element of his application. In these circumstances, I award him 70% of his costs to be the subject of a detailed assessment by the Registrar on the standard basis, if not agreed.