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You are here: BAILII >> Databases >> The Dubai International Financial Centre >> Vision Investment and Holdings Limited v Mahdi Amjad [2025] DIFC CFI 053 (09 April 2025) URL: https://www.bailii.org/ae/cases/DIFC/2025/DCFI_053.html Cite as: [2025] DIFC CFI 53, [2025] DIFC CFI 053 |
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Vision Investment and Holdings Limited v Mahdi Amjad [2022] DIFC CFI 053
April 09, 2025 court of first instance - Judgments
Claim No: CFI 053/2022
IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
VISION INVESTMENT AND HOLDINGS LIMITED
Claimant
and
MAHDI AMJAD
Defendant
Hearing : 8 April 2025 Counsel : Mohammed Alsuwaidi instructed by Al Suwaidi & Company for the Claimant Raza Mithani instructed by Conselis Law for the Defendant Judgment : 9 April 2025 JUDGMENT OF H.E. JUSTICE SIR JEREMY COOKE
UPON the Claimant’s Part 7 Claim form dated 15 August 2022 (the “Claim”)
AND UPON the Acknowledgement of Service dated 29 August 2022
AND UPON the Amended Defence without Counterclaim dated 15 December 2022
AND UPON hearing Counsel for the Claimant and Counsel for the Defendant at the trial held before H.E. Justice Sir Jeremy Cooke on 8 April 2025 (the “Trial”)
IT IS HEREBY ORDERED THAT:
1. The Claim is dismissed
2. The Defendant has liberty to apply in relation to any order sought for assessment of costs.
Issued by:
Delvin Sumo
Assistant Registrar
Date of issue: 9 April 2025
At: 3pmSCHEDULE OF REASONS
1. By its Particulars of Claim, the Claimant (“Vision”) claimed AED 26,668,646 plus interest at 10%, various costs and remedies relating to a Unit in a development at the Palm Jumeirah (the “Claim”). By the time of the trial which took place on 8 April 2025 (the “Trial”), without evidence other than the documents, the Claim was restricted to the monetary claims, with agreement that the governing law is that of the UAE.
2. The Claim arises out of a “Loan Settlement Agreement” dated 12 April 2018 and an “Addendum to Amendment of Loan Settlement Contract” dated 28 June 2018 (the “Addendum”), both of which were in Arabic. The parties to each of these were Town Square Investment LLC (“Town Square”), described in each agreement as the First Party, and Khaldoun Rashid Saeed Al Tabari (“Mr Al Tabari”), described in each agreement as the Second Party. The address of the latter was given as “Vision Investments and Holdings Ltd Company: (37185), Dubai UAE”.
3. The Preamble to the Loan Settlement Agreement refers to a prior loan of AED 30 million concluded through the Investment Bank, where Mr Al Tabari was described as “the Facilitator” and Town Square was the borrower. Reference was also made to payment and promissory notes which had been provided in relation to that loan and the desire of Town Square to reschedule the remaining amount of the loan and interest which amounted in total to AED 32,139,009 as at 31 March 2019. Under the terms of the Loan Settlement Agreement, Town Square was to pay:
(a) AED 32,139,009 by a payment of AED 4,870,081 for Mr Al Tabari ’s account with Luxury Development LLC in relation to the purchase of a Unit at One Palm Jumeirah.
(b) A total of AED 27,268,928 in four postdated cheques dated 1 May 2018, 31 July 2018, 31 October 2018 and 31 March 2019,“drawn on the United Arab Bank under the name of Vision Investments and Holdings Ltd”.
4. The Loan Settlement Agreement included the following wording, in translation, following the payment obligations set out above;
“Resultantly, the total sum of hereinabove payments shall be (Dhs 32,139,009) which represents remaining amount of the loan and interest thereof in favour of (Vision Investments and Holdings Ltd) at the Second Party’s request.
The First Party Authorised Signatory good sign all of those cheques the Second Party enjoys the right to deposit those cheques, endorsing or debiting them from the bank.
In the event of any of the above-mentioned cheques bounced, (Mr Mahadi Amjad) shall be the Grantor [sic], personally responsible and undertake to pay the amount of bounced cheques within 90 days of their maturity date, where the First Party did not make such payment.”
5. In the Addendum, the preamble referred to the desire of both Parties to amend it at the request of Mr Al Tabari with the replacement of the Unit with a different unit in the same Project but to be registered under the name of another company associated with Mr Al Tabari (namely KRT IV Limited) and an adjustment of the settlement amount from AED 32,139,009 to AED 32,178,818, (a small increase). The Parties declared their legal capacity to contract and agreed that the“First Party’s Obligations shall be amended to read as hereunder”. The Addendum then provided that the First Party should pay AED 32,178,818 by:
(a) payment of AED 4,474,161, at Mr Al Tabari’s request to the account of KRT IV Limited for a different unit at One Palm Jumeirah.
(b) Five postdated cheques, including four cheques of the same amounts and with the same dates as the four cheques payable under the Loan Settlement Agreement, and a fifth cheque for AED 435,729 dated 31 March 2019, all“drawn on the United Arab Bank under the name of Vision Investments and Holdings Ltd”.
6. The claim is made by Vision on the basis of the provision in the Loan Settlement Agreement set out in the third paragraph of the citation in paragraph 4 above, (referred to in shorthand hereafter as “the personal undertaking”). It is submitted that the effect of the personal undertaking was to create a right in Vision to payment by the Defendant, as guarantor of the sums claimed. There are a considerable number of hurdles for Vision to overcome in order to make this claim good and I consider that Vision cannot do so
7. The first and most obvious point is that neither Vision nor the Defendant are a party to either the Loan Settlement Agreement or the Addendum which were concluded between Mr Al Tabari and Town Square.
(a) The Defendant signed both the Loan Settlement Agreement and the Addendum as the authorised representative of Town Square but not in a personal capacity. Whilst his signature appears on each page, that cannot change the character of the signature as that of Town Square’s representative. No issue can arise in that respect because, in order for there to be a primary obligation to be guaranteed, the Defendant had to be an authorised signatory for Town Square.
(b) Vision was not a party to the Loan Settlement Agreement or the Addendum, whereas Mr Al Tabari was.
8. Whilst it may have been arguable for the purpose of disposing of the Defendant’s application for reverse summary judgement, I cannot see how it can properly be said that the Defendant signed either the Loan Settlement Agreement or the Addendum in a personal capacity so as to render himself personally liable in relation to the alleged personal undertaking set out above. Although the provision itself refers to personal responsibility and an undertaking by the Defendant to pay the amount of bounced cheques, it is hard to see how, when signing in such a way as to bind Town Square, he could also be signing in such a way as to bind himself personally. That is unattractive but if that is right, the Claim cannot succeed. If that were not the case, however, there are other insurmountable defences which preclude Vision succeeding.
9. The first of these is that the alleged personal undertaking appears only in the Loan Settlement Agreement and not in the Addendum. As a matter of construction of the Loan Settlement Agreement, the alleged personal undertaking was“to pay the amount” of “any of the above-mentioned cheques”which bounced and to do so within 90 days of their maturity date. That obligation, if such it was related to four specific cheques. As a matter of construction of the Addendum, it plainly replaced the debtor’s obligations under the Loan Settlement Agreement so that, on execution of the Addendum, Town Square’s obligations under the former were substituted by the obligations imposed on it in the latter. The latter contained no guarantee provision of any kind and provided for five postdated cheques without guarantee instead of the original “guaranteed” four.
10. There therefore remained no extant rights under the Loan Settlement Agreement at all because of the replacement of the obligations by the Addendum. The personal undertaking which only appeared in the Loan Settlement Agreement was therefore superseded by the arrangements made in the Addendum.
11. It is significant to note that the form of words used, as translated, in the personal undertaking, amounted to an undertaking to pay the amount of bounced cheques and not a guarantee that the cheques would be met on presentation. This has significance because the undertaking appears in an agreement between Mr Al Tabari and Town Square in the context of repayment of the remaining balance of the loan, with the result that any obligation to pay which the Defendant did undertake was owed to Mr Al Tabari and not to Vision. It is common ground between the parties that the cheques were no more than a mechanism for repayment of the loan. This means that there was no obligation assumed by the Defendant to Vision, if any obligation was assumed at all.
12. It also means that there can be no question of any entitlement by Vision, as commonly referred to, as a “third-party beneficiary”. The Court was referred to Article 252 the Civil Code which states that“a contract may not impose an obligation upon a third party but it may vest a right in him”. It was argued on behalf of the Defendant that no right was vested in Vision by the personal undertaking whether or not a benefit was apparently conferred on Vision. There was no express provision stating that Vision was entitled to enforce the personal undertaking, even though it would, prima facie, be able to sue Town Square on the cheques. In my judgement, had the personal undertaking used words to the effect that there was personal responsibility to pay the amount of the bounced checks to Vision, it would more readily be open to argue that Vision had a vested right, but in the absence of any such wording, if a personal obligation was undertaken by the Defendant, it was an obligation which was owed to, and enforceable by, Mr Al Tabari.
13. Furthermore, in accordance with Articles 1088 and 1099 of the Civil Code, any “guarantee”, which is what Vision claims the personal undertaking to be, would be discharged by the variation of the obligations set out in the Loan Settlement Agreement to those set out in the Addendum. Article 1088 provides that:“if a creditor receives satisfaction of his debt by (accepting) another thing, the principal obligor and the surety shall both be discharged”…….. Article 1099 also provides that suretyship terminates on the cessation of the contract by virtue of which the right against the principal obligor arose. If this personal undertaking is construed as a guarantee, the debt owed to Mr Al Tabari under the Loan Settlement Agreement was satisfied by his acceptance of the replacement obligations in the Addendum and the Addendum necessarily meant the cessation of the Loan Settlement agreement and any guarantee of it which was to be found within it.
14. The effect of the Addendum was not only to change the indebtedness of Town Square but to impose a greater debt, with an additional postdated cheque as well as an increase in the total amount, despite the lower figure payable in respect of the different unit at Palm Jumeirah. The Defendant relied upon the decision of the Dubai Commercial Cassation Court in Case No. 299 of 2020 dated 5 July 2020 which sets out the principles which are of direct application here. In that decision, the following appears:
“A guarantee cannot be vague or indeterminate; it must be explicitly limited to the contemporaneous facilities for which it was created. If the underlying debts are settled or renewed, the guarantee must also be renewed accordingly; otherwise, the guarantor shall not be liable for any renewed or modified debt or for any newly granted facilities. A guarantee is not presumed; it must be explicit, clearly defining the guarantor’s obligations, and it cannot be interpreted in a manner which expands its scope concerning either the debtor or the secured debt. A guarantee cannot be perpetual or indefinite, nor can it extend to a new, modified, or renewed debt unless the guarantor expressly consents to a new guarantee or to the renewal of the previous one, treating it as a new guarantee for a new debt requiring fresh acceptance. Moreover, it has been the established practice between the Appellants and the First Appellee Bank that a separate guarantee issued for each new credit facility granted in accordance with customary practice, which holds the force of an express condition”.
15. In these circumstances, there is no basis upon which any claims for unjust enrichment or breach of a duty of good faith can avail Vision. Vision simply has no rights to enforce against the Defendant.
16. Furthermore, I need not decide whether the Claim is statute barred under article 1092 of the Civil Code or Article 670 (1) of Federal Decree Law No. 50 of 2022, nor whether the underlying loan was unlawful, as alleged by the Defendant. Whether or not Vision could sue on the cheques or Mr Al Tabari could sue on the Loan Settlement Agreement are not matters I need to decide. The only question for me is whether Vision is entitled to sue the Defendant under the Loan Settlement Agreement.
(a) To my mind, this was a commercial transaction to which the Commercial Transactions Law applies and is not a claim on a cheque to which would be governed by different limitation provisions. In such circumstances, the 10 year or 5 year limitation applies and the proceedings were brought in time.
(b) It did not seem to me that either the Loan Settlement Agreement or the Addendum were unlawful, whether or not the original Credit Agreement might be so characterised. It appeared to me that the original Credit Agreement was drafted in such a way that a licensed bank made the loan so that there was no unlawfulness in the facilitation by Mr Al Tabari but I make no determination on that issue nor whether the loan Settlement Agreement and the Addendum would have been infected by any unlawfulness.
(c) I also make no findings on the allegations put forward by the Defendant to the effect that the suit brought amounted in some way to a fraud on the creditors of Mr Al Tabari. There was no evidence of any fraud before me which could impact on my decision.
17. For all these reasons, the Claim must fail and be dismissed. It seems to me inevitable that costs must follow the event although I make no order save to give liberty to the Defendant to apply for an order for costs in his favour.