What is the nature of the dispute between Zuzana Kapova and Miloslav Makovini regarding the USD 4,268,000 claim?
The litigation arises from a complex breakdown of a professional and business relationship between the Claimant, Zuzana Kapova, and the First Defendant, Miloslav Makovini. The Claimant, a Slovakian businesswoman based in Dubai, alleges that she engaged the First Defendant, a Slovak-registered lawyer, for tax optimization and legal advice. The dispute centers on the formation of the Second Defendant, Pharm Trade Holding Ltd, a DIFC-incorporated entity intended to act as a holding company for the Claimant’s European business interests.
The Claimant asserts that the First Defendant leveraged his position as her trusted advisor to orchestrate a scheme that diverted her assets and avoided agreed-upon payments. Specifically, the Claimant claims that the First Defendant failed to pay a EUR 800,000 joining fee for a joint venture and instead facilitated the issuance of fraudulent invoices to extract funds from her companies.
By a Claim Form issued on 11 January 2023, the Claimant, Zuzana Kapova (the “Claimant”) sought an order for the payment of USD 4,268,000.
The Claimant further contends that the First Defendant breached his fiduciary duties by removing her as a director of the Second Defendant and initiating hostile litigation in Slovakia. For further background on the procedural history of this dispute, see Zuzana Kapova v Miloslav Makovini [2023] DIFC CFI 004 — procedural fairness for litigants in person (10 March 2023).
Which judge presided over the application to exclude the Fourth Witness Statement in CFI 004/2023?
The application was heard by Justice Robert French in the Court of First Instance. The order, issued on 19 September 2023, followed the Claimant’s request to strike out evidence submitted by the First Defendant in support of his ongoing challenge to the DIFC Court’s jurisdiction.
What arguments did Zuzana Kapova and Miloslav Makovini advance regarding the admissibility of Exhibit MM4?
The Claimant argued that the Fourth Witness Statement of the First Defendant and the accompanying Exhibit MM4 should be excluded from the record entirely. Her position was predicated on the assertion that the evidence was improperly procured and that its inclusion would fundamentally undermine the overriding objectives of the Rules of the DIFC Courts (RDC).
The Claimant alleges that they were illegally procured by the First Defendant and their production as evidence in these proceedings would violate the overriding objectives of Rule 1.6 of the RDC.
The Claimant further maintained that the First Defendant’s conduct throughout the business relationship constituted a severe breach of trust.
The Claimant alleged that the First Defendant was in breach of his obligations as a fiduciary of the Claimant and had abused his status as a fiduciary for his personal gain at the expense of the Claimant.
Conversely, the First Defendant sought to rely on the Fourth Witness Statement and Exhibit MM4 as essential components of his defense against the Claimant’s allegations, specifically to support his contention that the DIFC Court lacked jurisdiction to hear the matter. The First Defendant maintained that the evidence was relevant to the jurisdictional challenge and that the Claimant’s attempt to exclude it was a premature procedural maneuver designed to prejudice his defense.
What was the precise legal question Justice French had to answer regarding the admissibility of evidence in a jurisdiction challenge?
The court was tasked with determining whether it should rule on the admissibility of specific witness evidence and exhibits—namely the Fourth Witness Statement and Exhibit MM4—before the substantive hearing on the jurisdiction challenge had taken place. The doctrinal issue was whether the Court should engage in a "trial within a trial" regarding the provenance and admissibility of evidence when the relevance of that evidence to the jurisdictional question had not yet been fully ventilated.
How did Justice French apply the test of relevance to the Claimant’s application to exclude evidence?
Justice French adopted a pragmatic approach, prioritizing the orderly conduct of the jurisdiction hearing over piecemeal interlocutory applications. He reasoned that the court could not properly assess the admissibility of the evidence without first understanding its relevance to the specific jurisdictional arguments being raised. By deferring the decision, the Court ensured that the parties would address the evidence in its proper context.
I am not prepared to reject the statement as inadmissible in advance of the jurisdiction hearing itself when its relevance can first be determined before questions of admissibility, if any remain, nee
The judge concluded that the Claimant’s application was premature. The Court’s reasoning reflects a commitment to the RDC’s overriding objective of dealing with cases justly and proportionately, avoiding the unnecessary expenditure of judicial resources on evidence that might ultimately prove peripheral to the jurisdictional determination.
Which DIFC laws and RDC rules were central to the court’s decision in CFI 004/2023?
The court’s decision was grounded in the procedural framework provided by the Rules of the DIFC Courts (RDC). Specifically, the court considered:
- RDC Rule 1.6: The overriding objective of the Court to deal with cases justly and proportionately.
- RDC Rule 2.3: The court’s general case management powers.
- RDC Rule 28.4: Provisions relating to the filing and service of witness statements.
- DIFC Court Law Article 19(1)(a): The jurisdictional authority of the Court of First Instance.
The Claimant’s reliance on these rules was intended to demonstrate that the First Defendant’s evidence violated the standards of fairness and disclosure required in DIFC proceedings.
How did the court interpret the interplay between RDC rules and the admissibility of evidence?
The court interpreted the RDC as providing a flexible mechanism for case management rather than a rigid set of exclusionary rules that must be applied in a vacuum. Justice French’s approach aligns with the principle that the Court of First Instance retains broad discretion to manage evidence in a manner that facilitates a fair hearing. By citing the overriding objective under RDC 1.6, the Court signaled that it would not allow procedural applications to be used as a tactical tool to suppress evidence before its relevance to the core issue—in this case, the jurisdiction challenge—could be established.
What was the final disposition of the Claimant’s application?
Justice French dismissed the Claimant’s application to declare the First Defendant’s Fourth Witness Statement and Exhibit MM4 inadmissible. The Court ordered that the costs of the application be reserved for the substantive Jurisdiction Application hearing. This means that the question of who bears the legal costs for this specific interlocutory battle will be decided only after the Court has heard the full arguments regarding its jurisdiction over the dispute.
What are the wider implications of this ruling for practitioners in the DIFC?
This decision serves as a clear warning to litigants that the DIFC Court is unlikely to entertain interlocutory applications aimed at excluding evidence on the grounds of admissibility or "illegal procurement" before the substantive hearing. Practitioners should anticipate that the Court will prefer to hear evidence in the context of the main application, where the judge can better evaluate its relevance and weight.
Litigants attempting to exclude evidence must be prepared to demonstrate why such evidence is so fundamentally prejudicial or irrelevant that it cannot wait for the main hearing. This ruling reinforces the Court’s preference for efficiency and its reluctance to engage in "piecemeal" litigation, which can increase costs and delay the resolution of the primary dispute.
Where can I read the full judgment in Zuzana Kapova v Miloslav Makovini [2023] DIFC CFI 004?
The full text of the order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0042023-zuzana-kapova-v-1-miloslav-makovini-2-pharm-trade-holding-ltd-6 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-004-2023_20230919.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external case law was cited in this specific order. |
Legislation referenced:
- DIFC Court Law Article 19(1)(a)
- DIFC Court Law
- RDC Rule 1.6
- RDC Rule 2.3
- RDC Rule 28.4