The DIFC Court of First Instance denied the Claimants' request to appeal a prior ruling that excluded the Fourth Witness Statement of Mr Rafed Al Khorafi (RAK 4) from the upcoming quantum hearing, affirming that the "RAFCO losses" were outside the scope of the court-defined compensable losses.
What was the specific dispute regarding the Fourth Witness Statement (RAK 4) in the Al Khorafi v Bank Sarasin-Alpen quantum proceedings?
The litigation concerns the Claimants' efforts to recover losses stemming from the purchase of "Sarasin Investments," which were funded through borrowing from Al Ahli Bank of Kuwait (ABK). Following a judgment on liability, the parties moved to a quantum phase to determine the compensation owed by the Defendants for breaches of the Regulatory Law. The dispute centered on whether the Claimants could introduce a new witness statement, RAK 4, which sought to introduce evidence regarding "RAFCO losses."
The Defendants argued, and the Court agreed, that these losses were distinct from the losses previously identified as arising from the relationship with ABK. The Court held that the Claimants were attempting to expand the scope of the quantum hearing beyond what had been established in the Court’s earlier orders. As noted in the judgment:
As to the Claimants’ remaining submission that in any event the DCJ should not have excluded RAK 4 as he did, effectively as a strike out, but should have considered whether the RAFCO losses were recoverable at the quantum hearing, in my opinion there is nothing in this contention.
The Court maintained that the RAFCO losses were fundamentally different from the losses arising out of the ABK lending used to fund the Sarasin investments, and therefore, the evidence was inadmissible for the purposes of the quantum assessment. Source: DIFC Courts
Which judge presided over the application for reconsideration and permission to appeal in CFI-026-2009 on 21 May 2015?
Justice Sir Richard Field presided over the Court of First Instance for this specific order. The hearing, which addressed the Claimants' application for an extension of time and the substantive request for permission to appeal the ruling of Deputy Chief Justice Sir John Chadwick, took place on 4 May 2015, with the final order issued on 21 May 2015.
What were the specific legal arguments advanced by Mr Roger Bowden for the Claimants versus the Defendants regarding the late filing of the reconsideration application?
Mr Roger Bowden, representing the Claimants, argued that the Court should grant an extension of time for the reconsideration application, which had been filed 27 days late due to a procedural error where the Claimants initially filed an Appeal Notice instead of a reconsideration application. The Claimants sought relief against sanctions under RDC 44.17, asserting that the delay did not cause material prejudice to the Defendants.
Conversely, the Defendants, through the Fifth Witness Statement of Rita Catherine Jaballah, highlighted the procedural breach and the delay in the filing. While the Court ultimately granted the extension, it did so on the condition that the Claimants bear the costs associated with the production of Ms Jaballah’s evidence. Regarding the substantive appeal, the Claimants contended that the DCJ erred in excluding RAK 4, arguing that the Court should have allowed the evidence to be tested at the quantum hearing rather than striking it out at an interlocutory stage.
Did the Court have the authority to determine the merits of the construction argument during an application for permission to appeal?
The legal question before Justice Sir Richard Field was whether the Court could, at the permission-to-appeal stage, determine that the Claimants' construction of the "losses" was "doomed to fail." The Court had to decide if it was appropriate to resolve this point of construction without a full trial, given the interlocutory nature of the application.
The Court concluded that it was empowered to assess the merits of the construction argument if the necessary background evidence was available and the point was sufficiently narrow. By applying this standard, the Court determined that the Claimants' arguments regarding the inclusion of RAFCO losses were legally unsustainable, thereby justifying the refusal of permission to appeal.
How did Justice Sir Richard Field apply the "real prospect of success" test to the Claimants' application?
Justice Sir Richard Field utilized the "real prospect of success" test to evaluate whether the appeal had any merit. He reasoned that if the underlying construction argument—that the RAFCO losses fell within the scope of the ABK-related losses—was bound to fail, then the appeal itself lacked a real prospect of success.
The words “real prospect of success” also appear in RDC 24.1 which empowers the Court to give immediate judgment if the Claimant or the Defendant has no real prospect of succeeding on their claim or defence as the case maybe.
The Court emphasized that it could reach this conclusion without prolonged consideration, as the definition of the losses was a matter of interpreting previous court orders. Consequently, the Court found that the Claimants' interpretation was legally flawed and that the appeal would not succeed.
Which specific DIFC Regulatory Law provisions and RDC rules were central to the Court's decision?
The Court’s reasoning was heavily grounded in the DIFC Regulatory Law and the Rules of the DIFC Courts (RDC). Specifically, the Court referenced:
- Regulatory Law Article 41: Regarding the Financial Services Prohibition.
- Regulatory Law Article 65(2)(b) and Article 94: Concerning the Defendants' liability to pay compensation.
- RDC 44.8: Governing the criteria for granting permission to appeal.
- RDC 44.17: Regarding the time limits for filing reconsideration applications.
- RDC 24.1: Concerning the "real prospect of success" standard.
How did the Court utilize the precedent of Swain v Hillman in the context of this DIFC appeal?
The Court relied on the principles established in Swain v Hillman [2001] 1 All ER 91 to interpret the "real prospect of success" threshold. This English authority was used to support the Court's power to dispose of matters where the applicant’s case is clearly unsustainable. By aligning the DIFC’s RDC 44.8 with the principles in Swain v Hillman, Justice Sir Richard Field confirmed that the Court is not required to allow an appeal to proceed to a full hearing if the legal argument is "doomed to fail."
What was the final disposition of the application, and what costs were awarded?
The Court granted the Claimants' application for an extension of time and relief against sanctions, allowing the reconsideration application to be heard. However, the Court ultimately refused permission to appeal the DCJ’s ruling that excluded RAK 4.
It follows that in accordance with RDC 44.8 this renewed oral application for permission to appeal the ruling of the DCJ excluding RAK 4 from the quantum hearing must be and is refused.
Regarding costs, the Court ordered the Claimants to pay the Defendants the costs incurred in the production of the Fifth Witness Statement of Rita Catherine Jaballah, as a condition for the relief granted.
What are the wider implications of this ruling for practitioners regarding quantum hearings in the DIFC?
This decision serves as a reminder that the DIFC Courts will strictly enforce the scope of issues defined in previous orders during quantum hearings. Practitioners must ensure that all evidence submitted for quantum assessment is strictly tethered to the losses as defined by the court in earlier liability judgments. Attempts to introduce "new" categories of losses, such as the RAFCO losses in this case, will likely be rejected if they fall outside the court's established parameters. Furthermore, the ruling confirms that the Court will not hesitate to use its power under RDC 44.8 to dismiss appeals at an early stage if the underlying legal construction is found to be unsustainable.
Where can I read the full judgment in Rafed Abdel Mohsen Bader Al Khorafi v Bank Sarasin-Alpen [2015] DIFC CFI 026?
The full judgment can be accessed via the official DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0262009-1-rafed-abdel-mohsen-bader-al-khorafi-2-amrah-ali-abdel-latif-al-hamad-3-alia-mohamed-sulaiman-al-rifai-v-1-bank-sar-4
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Swain v Hillman | [2001] 1 All ER 91 | Establishing the "real prospect of success" test for permission to appeal. |
Legislation referenced:
- Regulatory Law Article 41
- Regulatory Law Article 65(2)(b)
- Regulatory Law Article 94
- Law of Damages and Remedies 2005 Article 40(2)
- RDC 24.1
- RDC 44
- RDC 44.8
- RDC 44.14
- RDC 44.17