DELOITTE PROFESSIONAL SERVICES v ABWAB REAL ESTATE LIMITED CO [2020] DIFC CFI 018 — Finality of litigation and the high threshold for reopening appeals (26 November 2020)

Why did ZMZ Investments LLC seek to reopen the final decision in CFI 018/2019 after its previous appeals were dismissed?

The dispute originated from an immediate judgment entered against the Second and Third Defendants on 30 September 2019. Following the dismissal of its first application for permission to appeal in May 2020 and a subsequent dismissal of a second appeal application by Chief Justice Zaki Azmi in August 2020, the Second Defendant, ZMZ Investments LLC, filed an application to reopen the decision. The Second Defendant argued that it had exhausted all other avenues, leaving this application as its final recourse.

The Second Defendant’s application was predicated on three primary grounds: that the Claimant lacked standing, that the Second Defendant was improperly sued, and that the underlying claim involved breaches of regulation and public policy. As noted in the judgment:

As the Second Defendant correctly observed in a witness statement submitted with the Application, “the Claimant’s claim, in so far as the Appellant is concerned, has come to an end and the Appellant has no other avenues opened to it other than the current application”.

The Second Defendant specifically contended that it was not the correct counterparty to the Letters of Engagement (LOEs) and that the Claimant had engaged in business outside the DIFC before such activities were permitted. The court had to determine whether these late-stage arguments satisfied the stringent criteria required to disturb a final judgment.

Which judge presided over the application to reopen the decision in CFI 018/2019?

The application was heard and determined by Chief Justice Zaki Azmi in the DIFC Court of First Instance. The order was issued on 26 November 2020, following a series of prior procedural steps, including an initial judgment by Justice Ali Al Madhani and a subsequent dismissal of an appeal application by the Chief Justice himself.

What specific legal arguments did ZMZ Investments LLC advance to justify reopening the litigation?

The Second Defendant, ZMZ Investments LLC, sought to introduce new defenses that had not been fully ventilated in the earlier stages of the proceedings. These arguments focused on the legitimacy of the Claimant’s standing and the propriety of the parties involved. The Second Defendant argued that the court had inadvertently supported a claim that violated regulatory standards. As detailed in the court's summary of the arguments:

Second, the Second Defendant says that it is improperly sued by the Claimant in as much as Mr Zaal Mohamed Zaal is the Claimant’s counterparty under the LOEs, not the Second Defendant.

Furthermore, the Second Defendant challenged the validity of the business activities underlying the claim. The argument was framed as follows:

Third, the Second Defendant pleads that the Court may have “unwittingly lent aid to a claim was based on breaches of regulation and public policy,” in as much as, it submits, the Claimant and Deloitte Corporate carried on business outside of the DIFC while both being at all material times DIFC-registered entities, crucially before DIFC entities were permitted to do so.

The Second Defendant essentially argued that these substantive issues were of such gravity that the court should exercise its discretion to reopen the matter to prevent an injustice, despite the fact that these points were not raised during the initial trial or the subsequent appeal applications.

What is the doctrinal threshold for reopening a final appeal under RDC r. 44.154?

The court was required to address the jurisdictional and doctrinal requirements of RDC r. 44.154. The central issue was whether the Second Defendant could demonstrate that reopening the appeal was necessary to avoid "real injustice" and that "exceptional circumstances" existed. The court had to determine if the rule could be used to rectify a party's failure to raise arguments earlier or if it was strictly reserved for cases where the integrity of the judicial process itself had been corrupted. The court focused on whether the "finality of litigation" could be overridden by the specific grievances raised by the Second Defendant.

How did Chief Justice Zaki Azmi apply the test for reopening a final determination?

Chief Justice Zaki Azmi emphasized that RDC r. 44.154 is a "safety valve" that is rarely invoked and requires more than a mere showing that a decision was wrong. The Chief Justice applied the test by evaluating whether the Second Defendant had demonstrated that the litigation process had been corrupted or that the injustice was so severe it outweighed the public interest in finality. He concluded that the Second Defendant’s failure to raise these arguments earlier meant they were effectively the authors of their own misfortune.

It follows that the vast majority of grievances litigants might have with decisions of the Court of Appeal – whether the grievances are due to disagreement with the Court’s jurisprudence or, instead, stem from previous misunderstandings of the relevant laws or procedural rules on the part of an aggrieved litigant or a bad strategy deployed by him or his representatives in the litigation, and so on – vast majority of grievances will not be justiciable under RDC r. 44.154.

The court further noted that allowing the application would create a perverse incentive for litigants to withhold arguments until later stages of the proceedings.

To indulge the Second Defendant in this way would, in my judgment, incentivise litigants to keep their cards close to their chests and to try plan A before plans B and C and so on.

Which statutes and rules were central to the court’s analysis of the application?

The court’s analysis was primarily governed by the Rules of the DIFC Courts (RDC), specifically RDC r. 44.154 and RDC r. 44.155. These rules provide the framework for the reopening of final appeals. Additionally, the court relied on the Overriding Objective found in RDC r. 1.6(4), which mandates that cases be dealt with expeditiously. The court also referenced the historical context of these rules, noting their alignment with English procedural standards.

How did the court utilize the precedent of Taylor v Lawrence and Silva v United Investment Bank?

The court utilized Silva v United Investment Bank [2014] CA 004 to interpret the scope of RDC r. 44.154, noting that it was modeled on the English CPR 52.17. The court relied on Taylor v Lawrence [2002] EWCA Civ 90 to establish that the jurisdiction to reopen an appeal is inherent and limited to instances where the integrity of the litigation process has been critically undermined. By citing these authorities, the Chief Justice reinforced that the bar for reopening a case is exceptionally high and that the Second Defendant’s arguments regarding standing and public policy did not meet the "exceptional circumstances" threshold established in these precedents.

What was the final outcome of the application and the court's order regarding costs?

The court dismissed the application in its entirety, confirming that the Second Defendant had failed to satisfy the criteria set out in RDC r. 44.154. The Chief Justice found that the grounds raised were capable of being submitted to the Court of First Instance during the initial proceedings. Consequently, the court made no order as to costs, effectively leaving the parties to bear their own expenses for this specific application. The court’s reasoning was clear:

In my judgment, the Second Defendant’s may even have faced difficulty in introducing the Grounds on appeal, but in the context of an application to reopen an appeal, I think it has failed altogether to satisfy the criteria of RDC r. 44.154 – no injustice so grave as to overbear the claim of finality in litigation has been demonstrated – and so, in my view, the Court is unable to accede to its request.

What are the wider implications of this ruling for DIFC practitioners?

This decision serves as a stern warning to practitioners regarding the importance of "putting all cards on the table" at the earliest possible stage. It clarifies that the DIFC Courts will not permit the reopening of final decisions to accommodate "bad strategy" or the late introduction of defenses that could have been raised earlier. Practitioners must anticipate that the court will prioritize the finality of litigation over the desire to re-argue points, even those touching upon standing or public policy, if those points were not diligently pursued during the trial.

This ratio sets a high bar for the Second Defendant which, in my judgment, it has not cleared.

Litigants should be aware that the "safety valve" of RDC r. 44.154 is not a mechanism for a second chance, and failure to raise arguments in a timely manner will likely result in the court viewing the litigant as the author of their own misfortune.

Where can I read the full judgment in Deloitte Professional Services v Abwab Real Estate Limited Co [2020] DIFC CFI 018?

The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-018-2019-deloitte-professional-services-difc-limited-v-1-abwab-real-estate-limited-co-llc-2-zmz-investments-llc-3-al-barari

Cases referred to in this judgment:

Legislation referenced:

• Rules of the DIFC Courts (RDC): r. 1.6(4), r. 44.154, r. 44.155.
• English Civil Procedure Rules (CPR): 52.17.