This order addresses the procedural friction between the Claimants and Deloitte & Touche (M.E.) regarding the scope of amendments to the Particulars of Claim following an earlier judgment, specifically concerning the historical role of the defendant as an auditor for related entities.
How did the dispute between Nest Investments Holding Lebanon and Deloitte & Touche (M.E.) regarding the amendment of the Particulars of Claim arise in CFI-027-2016?
The litigation involves a complex claim brought by a group of eleven claimants, including Nest Investments Holding Lebanon S.A.L. and various insurance and investment entities, against Deloitte & Touche (M.E.) (DTME). Following a judgment delivered by Justice Roger Giles on 30 September 2018, the parties were tasked with finalizing the Re-Amended Particulars of Claim. While the Claimants moved to incorporate changes suggested by the Court, a dispute emerged over the extent to which references to DTME’s historical role as the auditor of Tabadul should be excised or qualified.
DTME argued that because the Claimants did not allege specific breaches of duty against them in their capacity as the auditor of Tabadul, all references to that role should be removed or restricted to prevent the introduction of "false issues." The Claimants maintained that while they were not asserting a breach of duty regarding the Tabadul audits, the historical fact of DTME’s role remained relevant to the broader context of the case, particularly regarding knowledge attribution. As noted in the court's reasoning:
The Claimants do not assert breaches of duties by DTME as auditor of Tabadul; hence that submission. But that does not exclude regard to the historical fact that DTME conducted the Tabadul audits
The disagreement necessitated a formal application for leave to amend, which became the subject of this specific order. The dispute highlights the tension between streamlining pleadings to avoid irrelevant issues and the necessity of maintaining a complete factual narrative for trial. Further details can be found at the DIFC Courts website.
Which judge presided over the application for leave to amend in the CFI-027-2016 proceedings?
The application was heard and determined by Justice Roger Giles in the DIFC Court of First Instance. The order was issued on 15 November 2018, following the parties' failure to reach an agreement on the draft amendments contemplated by the Court’s earlier judgment of 30 September 2018.
What were the specific legal arguments advanced by the Claimants and Deloitte & Touche (M.E.) regarding the proposed amendments?
The Claimants argued that their proposed amendments were consistent with the Court’s September judgment and that they had sufficiently clarified their position regarding the Tabadul audits. They contended that their acceptance—that the position regarding the Tabadul audits would remain unchanged even if a different auditor had been involved—did not necessitate the wholesale removal of references to DTME’s historical role. They sought to recover the costs of the amendment application, arguing that DTME’s opposition was unnecessary and misconceived.
Conversely, DTME argued that the Claimants’ amendments were insufficient. They sought the removal of various references to their role as the auditor of Tabadul and requested the insertion of language that would explicitly exclude any consideration of their knowledge as the Tabadul auditor from the assessment of alleged breaches in the audits of LCB/LCBIH. DTME contended that these further restrictions were essential to reflect the Claimants' own admissions and to prevent the trial from being clouded by irrelevant historical data.
What was the precise doctrinal issue the Court had to resolve regarding the scope of pleadings in CFI-027-2016?
The Court had to determine whether a party, by conceding that it does not allege a breach of duty in a specific historical capacity, is required to excise all factual references to that capacity from its pleadings. The doctrinal issue centered on the distinction between "allegations of breach" and "factual background." The Court had to decide if the defendant’s request to strike out references to its role as the auditor of Tabadul was a necessary procedural correction or an overreach that would improperly limit the Claimants' ability to present evidence relevant to knowledge attribution at trial.
How did Justice Roger Giles apply the test of relevance and procedural fairness to the disputed amendments?
Justice Giles rejected DTME’s attempt to further restrict the pleadings, finding that the defendant’s interpretation of the Claimants' position was overly narrow. The Court emphasized that the fact that a party does not allege a breach of duty in a specific role does not render the historical reality of that role irrelevant to the litigation. The judge reasoned that the relevance of DTME’s historical role as the auditor of Tabadul—particularly regarding knowledge that might be attributed to the defendant—was a matter for the trial judge to determine based on the evidence, not a matter to be excised at the pleading stage.
In the September judgment I invited consideration of reframing para 319 and Annex 4, lest there be raised as a false issue breaches of duties by DTME as auditor of Tabadul.
The Court further clarified that the Claimants' concession regarding the hypothetical involvement of another auditor did not strip the actual historical facts of their potential evidentiary value. Consequently, the Court found the defendant’s objections to be misconceived and granted the Claimants leave to proceed with their drafted amendments.
Which DIFC statutes and procedural rules were central to the Court’s determination in CFI-027-2016?
The Court’s decision was primarily governed by the Rules of the DIFC Courts (RDC), specifically those pertaining to the amendment of statements of case and the court's discretion regarding costs. While the order does not cite specific RDC numbers, it operates under the Court’s inherent case management powers to ensure that pleadings are focused on the real issues in dispute. The Court also relied on the principles established in its own previous judgment of 30 September 2018, which served as the foundational authority for the scope of the required reframing of paragraph 319 and Annex 4 of the Particulars of Claim.
How did the Court utilize the September judgment as a precedent for the current order?
The September judgment acted as the primary interpretive guide for the current dispute. Justice Giles used the earlier judgment to demonstrate that the Court had already provided a clear path for the parties to resolve the issue of the Tabadul audits. By referencing the September judgment, the Court was able to show that the Claimants had complied with the Court’s specific invitation to reframe their pleadings, whereas the defendant had attempted to unilaterally expand the scope of the Court’s instructions. The Court used the September judgment to establish that DTME’s insistence on further amendments was not supported by the Court’s own prior directives.
What was the final disposition of the application, and how were the costs allocated between the parties?
The Court granted the Claimants leave to amend their Particulars of Claim in the form presented in their 13 October 2018 correspondence. Regarding costs, the Court ordered that the Claimants pay DTME’s costs arising from the amendments themselves, but ordered DTME to pay the Claimants’ costs of the amendment application. The Court assessed these costs at $21,000.
DTME to pay the Claimants’ costs of the amendment application, assessed at $21,000.
The Court further directed that these costs could be set off against any costs payable by the Claimants to DTME. As the Court noted:
The costs may and should be set off against costs payable by the Claimants to DTME.
What are the wider implications of this order for practitioners regarding the pleading of auditor liability?
This order serves as a reminder that the DIFC Courts will not permit defendants to use the "false issue" doctrine to sanitize pleadings of all historical context. Practitioners should anticipate that even where a specific breach of duty is not alleged against a defendant in a particular capacity, factual references to that capacity may remain permissible if they are potentially relevant to broader issues such as knowledge, notice, or the context of the professional relationship. The decision reinforces that the Court prefers to leave the determination of the evidentiary weight of such historical facts to the trial judge rather than pre-emptively striking them from the record.
Where can I read the full judgment in Nest Investments Holding Lebanon v Deloitte & Touche [2018] DIFC CFI 027?
The full text of the order can be accessed via the official DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0272016-1-nest-investment-holding-lebanon-sl-2-jordanian-expatriates-investment-holding-company-3-qatar-general-insurance-an-10 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-027-2016_20181115.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| September judgment | N/A | Served as the foundational directive for the scope of amendments. |
Legislation referenced:
- Rules of the DIFC Courts (RDC) (General Case Management Powers)