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You are here: BAILII >> Databases >> The Dubai International Financial Centre >> Fursa Consulting v Ajay Sethi Shakti Chand Sethi [2024] DIFC CFI 056 (21 May 2024) URL: http://www.bailii.org/ae/cases/DIFC/2024/DCFI_056.html Cite as: [2024] DIFC CFI 56, [2024] DIFC CFI 056 |
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CFI 056/2022 Fursa Consulting v Ajay Sethi Shakti Chand Sethi
May 21, 2024 COURT OF FIRST INSTANCE - ORDERS
Claim No CFI 056/2022
IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF THE FIRST INSTANCE
BETWEEN
FURSA CONSULTING
Claimant/Appellant
and
AJAY SETHI SHAKTI CHAND SETHI
Defendant/Respondent
ORDER WITH REASONS OF H.E. DEPUTY CHIEF JUSTICE ALI AL MADHANI
UPON the Judgment of H.E. Deputy Chief Justice Ali Al Madhani dated 5 October 2023 (the “Judgment”)
AND UPON the Order with Reasons of H.E. Deputy Chief Justice Ali Al Madhani dated 31 October 2023 (the “Costs Order”)
AND UPON the Claimant’s application dated 25 October 2023 seeking permission to appeal the Judgment (the “Application for Permission to Appeal”)
AND UPON the Defendant’s Application No. CFI-056-2022/3 dated 18 December 2023 seeking an extension of time to file its written submissions in opposition of the Application for Permission to Appeal (the “Extension of Time Application”)
AND UPON the Claimant’s Application No. CFI-056-2022/4 dated 9 February 2024 seeking a stay of the Costs Order (the “Stay Request”)
AND UPON hearing Counsel for the Claimant and Counsel for the Defendant at a hearing held on 15 May 2024
IT IS HEREBY ORDERED THAT:
1. The Judgment and the Costs Order are to be upheld.
2. The Application for Permission to Appeal is dismissed.
3. The Stay Request is dismissed.
4. The Claimant shall pay the Defendant’s costs of the Application for Permission to Appeal and the Stay Request. Costs shall be paid on the standard basis, to be assessed by the Registrar if not agreed.
Issued by:
Hayley Norton
Assistant Registrar
Date of issue: 21 May 2024
At: 11amSCHEDULE OF REASONS
1. This Application for Permission to Appeal and the Stay Request are brought by the Claimant under rule 44.1 of the DIFC Court Rules (“RDC”), in that the Claimant submits that I erred on a matter of law or fact in the Judgment, and if successful, the Claimant requests a Stay of the Costs Order as a form of intermediary relief.
2. By way of background, the claim was brought in pursuant of a Success Fee arising from an agreement (the “Engagement Letter”) whereby the Claimant acted as the exclusive financial advisor for the Defendant. The intended transaction involved a buy-out of existing debt liabilities from Dubai Islamic Bank (“DIB”) of up to AED 45,000,000 and new financing of up to AED 28,000,000 for the acquisition of 49 apartments in Barsha Heights. The underlying issue in the proceedings was the interpretation of clause 2.2, the Success Fee Provision, which obligated the Respondent to pay the Claimant a Success Fee of 2% of the total debt facility amount approved by the Lender, Emirates NBD.
3. The Claimant submitted in the Trial that they successfully negotiated a debt from the Lender, and the Facility Offer Letter between the Lender and the Respondent totalled AED 46,000,000; this amount included a liability buy-out from DIB of AED 18,000,000 and a separate tranche of AED 28,000,000 for the apartment acquisition. As the Respondent accepted and signed the Facility Offer Letter, the Claimant asserts that a successful transaction occurred, triggering clause 2.2 of the Engagement Letter. The Respondent defended this by submitting that clause 2 cannot be construed to mean that the Success Fee was payable upon signing the Facility Offer Letter, as the Engagement Letter specified that the credit facility had to be drawn down first, which the Facility Offer Letter did not authorise as this offer was conditional. Even after signing the full Facility Letter, the Respondent had to fulfil a long list of conditions precedent before being able to draw down the amount, making the Facility Letter a contingent contract. The Facility Letter lapsed before the Respondent could satisfy the conditions precedent, therefore clause 2.2 was never triggered.
4. Ultimately, I found in favour of the Defendant. Applying Article 49 of the DIFC Contract Law, I determined that the reasonable interpretation of clause 2.2 was that a successful transaction meant the Respondent obtained the drawdown payment they applied for. This is in accordance with the contra proferentem principle; ambiguous terms are interpreted against the drafter of the contract. Therefore, the Success Fee was not chargeable, and if it was, the fee amounted to 2% of 0.0 in accordance with clause 2.2 of the Engagement Letter. Other considerations and reasonings were made, but as the overarching point the appeal is not to challenge the wider evidence but to address the alleged misdirection of interpretation which led to a wrongful judgement, it is this issue I will focus on.
5. The Claimant submitted one large ground of appeal, split into thirteen paragraphs, and incorporated the Stay Request as part of the remedy sought if their appeal was accepted. I will address the points of appeal first, then the Respondent’s submissions, leaving the Stay Request until last.
The Application for Permission to Appeal
6. Before I begin, I believe it is worth noting that, generally, counsel should use all the time offered in a hearing to divulge their client’s case properly and wholly, beyond what is written in the skeleton. This gives the judiciary the opportunity to ask questions for clarification or further investigation, rather than to coax the submissions from counsel. It is perhaps best practice and within the interest of clients to ensure that the best arguments are put forward in a way that does not leave the judiciary to search for the meat of the party’s position in the skeleton arguments.
7. In my judgement, RDC 44.19 has been the driving factor of my deliberation. The rule reads:
“Permission to appeal may only be given where the lower Court or the appeal Court considers that:
(1) the appeal would have a real prospect of success; or
(2) there is some other compelling reason why the appeal should be heard.”
8. Additionally, the prospect of success must be beyond fanciful and more than reasonably legally arguable.
9. RDC 44.31 also forms my opinion on the appeal:
“The grounds of appeal must:
(1) Set out clearly the reasons why it is said the decision of the lower Court was:
a. Wrong; or
b. Unjust because of a serious procedural or other irregularity in the proceedings in the lower Court;
(2) Specify, in respect of each ground, whether the ground raises an appeal on a point of law or is an appeal against a finding of fact; and
(3) State the orders sought on appeal.”
10. The Claimant provides thirteen points of contention within their grounds of appeal, which can be summarised to be that I erred in the road map of interpretation, which lead me to the wrong conclusion. Essentially, the Claimant argues that I did not stick to the strict construction of clause 2.2 and looked elsewhere in the contract to interpret what the Success Fee is and how it is calculated. However, the interpretation was assessed based on the natural meaning of clause 2.2 as an isolated clause and did not stray to other clauses or different agreements. I applied the Court’s authority to use discretion to determine the party’s intention.
11. The Claimant also failed to pinpoint exactly where in the Judgment I lacked consistency, failed to consider material fact, or wrongfully applied the law. I will concede to give the benefit of the doubt that the intention was to address the Judgment as a whole.
12. The Respondent to the Application contested each paragraph as a separate ground of appeal, but as this was not the intention of the Claimant, and most of the paragraphs can be grouped as general statements, I will not address each paragraph individually.
13. The majority of the Application for Permission to Appeal repeats the submissions made in the first hearing; the Claimant performed its obligations within the scope of work dictated by the Engagement Letter, which lead to a successful transaction, and so they are owed the Success Fee, which is 2% of the facility limit (AED 18,000,000) found at clause 3.1.3. The ground is developed through pinpointing exactly which obligations were performed and how they evidence this, though again there is no cross-reference to the Judgment as to where these submissions were not originally dealt with appropriately. The Respondent highlights that the appeal is an attempt to relitigate, as no points of law or fact are contended.
14. On this matter, while I do not necessarily agree that the Claimant is attempting to relitigate by using the appeal route, I do contend that the sub-points of the appeal ground that address performance, obligations and fee entitlement do not meet the threshold under RDC 44.19.
15. The eleventh paragraph strays from this overarching point by introducing force majeure. The Claimant submits that if the Respondent had completed their obligations as per the Facility Letter, which are outside the control of the Claimant, the loan would have been drawn. It is unclear as to whether this is a repackaged old submission or something new entirely, but in either case it does not meet the RDC 44.19 requirements. As a repackaged submission, I find the point to be behind the remit of Force Majeure as the inability for the Respondent to fulfil the obligations of the Facility Letter was the fault of Emirates NBD’s ambiguous terms and conditions. Because of the difficulty, in my view the Respondent’s inability to perform was not an unforeseeable circumstance; this matter has no real prospect of success. If this point was to be considered new, I could not include it in my deliberations as new evidence or submissions are not permitted to be heard in appeals without permission, as per RDC 44.114(2).
16. For the rest, there is no actual reference to an error in law or fact for me to consider. The appeal is similar enough to the submissions initially raised that I would be repeating the initial judgment in this Order with Reasons, as there is nothing to amend. Therefore, the appeal is rejected.
The Stay Request
17. In accordance with RDC 44.4, an appeal shall not operate as a stay of any decision of the lower Court, and so the Claimant was right to make this request separately. However, as the Stay Request was made as a secondary remedy to the success of the appeal, and as I have rejected the Application for Permission to Appeal entirely, the Stay Request fails.
18. It is important to note, however, that in my view the Stay Request fails on merit as well. I do not find the Claimant’s submission that the Costs Order places a high financial burden on the Claimant to be an appropriate submission to exercise court discretion, as per Article 33 of the Courts Law. It would be wrong to permit a Stay Request on these terms, as it prejudices the successful party and deprives them of their right to recompense and could amount to an abuse of procedure.
Conclusion
19. The Claimant failed to demonstrate where I erred in fact or law, in accordance with RDC 44, in the Judgment. Therefore, the Application for Permission to Appeal is rejected entirely. The Stay Request is also consequently rejected.