What is the nature of the dispute between Klesta Eshja and Salah Masri in CFI 066/2024?
The litigation centers on a commercial dispute arising from the sale of a business entity. The First Claimant, Klesta Eshja, initiated proceedings against the First Defendant, Salah Masri, following the acquisition of the entire issued share capital of Hair Creators Salon LLC. The dispute involves complex allegations regarding the conduct of Mr. Masri both during and after the transaction.
It is unnecessary to set out the nature of the claim in any detail, but it arises out of the sale by the First Respondent, Mr Salah Masri, of the whole of the issued capital in the Company to the Claimant.
Beyond the contractual disputes regarding the share sale, the litigation has expanded to include allegations of corporate mismanagement. The Claimant asserts that Mr. Masri, in his former capacity as a director, breached fiduciary duties owed to the Company, specifically by allegedly withdrawing funds without authorization. These claims form the primary basis for the recent application to formalize the Company’s status as a party to the proceedings.
Which judge presided over the joinder application in CFI 066/2024?
The application for joinder was heard and determined by H.E. Justice Thomas Bathurst in the DIFC Court of First Instance. The order was issued on 28 April 2025, following a Case Management Conference held on 3 March 2025, where counsel for both the Claimant and the Defendants were present to address the procedural trajectory of the case.
What were the positions of Klesta Eshja and the Defendants regarding the joinder of Hair Creators Salon LLC?
The Claimant, Klesta Eshja, sought to formalize the participation of Hair Creators Salon LLC (the "Company") as a Second Claimant to ensure that the claims regarding breaches of fiduciary duty could be pursued directly by the entity to which those duties were owed. The Claimant’s position was supported by the fact that the Company had formally consented to the joinder.
By an application dated 20 March 2025, Ms Klesta Eshja (the “Claimant”), wrote to the Court for leave to add Hair Creators Salon LLC (the “Company”), a DIFC-registered entity, as an additional claimant in the proceedings.
The Defendants, including Salah Masri and Hair Crafters Company Ltd, were represented at the Case Management Conference. While the order does not detail specific objections from the Defendants, the Court’s decision to grant the application indicates that the procedural requirements under the Rules of the DIFC Courts (RDC) were satisfied, particularly regarding the Company’s consent and the sufficiency of the pleadings already on the record.
What was the specific jurisdictional and procedural question before Justice Bathurst regarding the joinder of the Company?
The Court was tasked with determining whether it was appropriate to join Hair Creators Salon LLC as a Second Claimant under the RDC, given that the Company had not been named in the original Part 7 Claim Form. The central issue was whether the existing Particulars of Claim, filed on 7 January 2025, sufficiently articulated the Company’s claims against Mr. Masri to justify its formal entry into the litigation.
The Court had to assess whether the allegations of breach of fiduciary duty—specifically the failure to act with loyalty, good faith, and due care—were properly pleaded such that the Company’s presence as a party was necessary for the effective resolution of the dispute. This required the Court to balance the procedural requirements of RDC Part 20 against the substantive allegations of director misconduct.
How did Justice Bathurst apply the test for joinder under the Rules of the DIFC Courts?
Justice Bathurst evaluated the application by reviewing the existing pleadings and the consent provided by the Company. The Court focused on whether the allegations of breach of fiduciary duty were clearly linked to the Company’s interests, noting that the Company had already provided its consent to be joined in accordance with the relevant rules.
I am satisfied that the particulars of claim properly plead allegations by the Company against the First Defendant and in those circumstances, it is appropriate I make the following order: (a) Pursuant to RDC r 20.11 I order that Hair Creators Salon LTD be joined as Second Claimant in the proceedings.
The Court’s reasoning emphasized that the Company was the proper party to pursue claims regarding the unauthorized withdrawal of funds and other breaches of director duties. By confirming that the Particulars of Claim already contained these allegations, the Court concluded that formalizing the Company’s status as a Second Claimant was the correct procedural step to ensure the litigation proceeded on a sound legal footing.
Which specific RDC rules and legal authorities were applied in this order?
The Court relied primarily on Part 20 of the Rules of the DIFC Courts (RDC), which governs the addition and substitution of parties. Specifically, the Court invoked RDC 20.11, which provides the mechanism for the Court to order the joinder of a party. Additionally, the Court referenced RDC 20.16, which outlines the requirement for a party to provide consent before being added to proceedings.
The order also referenced the Particulars of Claim filed on 7 January 2025, specifically paragraphs 106-114, which detailed the alleged breaches of fiduciary obligations by Mr. Masri. These pleadings served as the evidentiary basis for the Court’s satisfaction that the joinder was not only procedurally compliant but also substantively relevant to the ongoing commercial dispute.
How did the Court interpret the requirement for consent under RDC 20.16?
The Court treated the requirement for consent as a critical procedural safeguard. It noted that the Company had provided its consent through an undated letter delivered to the DIFC. This compliance with RDC 20.16 was a prerequisite for the Court to exercise its discretion under RDC 20.11. By verifying this consent, the Court ensured that the Company was a willing participant in the litigation, thereby mitigating potential future challenges regarding the authority of the proceedings.
What was the outcome of the application and the specific orders made by the Court?
The Court granted the application in its entirety. The primary outcome was the formal joinder of Hair Creators Salon LLC as the Second Claimant in the proceedings. Regarding the costs of the application, the Court exercised its discretion to make no order, meaning each party bears its own costs associated with this specific procedural motion.
What are the wider implications of this ruling for DIFC practitioners?
This order serves as a reminder to practitioners that while the Court may allow for the late addition of parties, the underlying pleadings must already clearly articulate the claims of the party seeking to join. Practitioners should ensure that if a corporate entity is intended to be a claimant, it is named from the outset to avoid the need for subsequent applications under RDC 20.11. Furthermore, the case highlights the necessity of obtaining and documenting formal consent under RDC 20.16 early in the process to facilitate smooth procedural management.
Where can I read the full judgment in Klesta Eshja v Salah Masri [2025] DIFC CFI 066?
The full order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0662024-1-klesta-eshja-2-hair-creators-salon-llc-v-1-salah-masri-k-salah-mohamed-adel-al-masri-2-hair-crafters-company-ltd-t
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external precedents cited in this order. |
Legislation referenced:
- Rules of the DIFC Courts (RDC) Part 20
- RDC 20.11
- RDC 20.16