Mashreq Al Islami Finance Company Pjsc v Mr Babar Rehman [2019] DIFC CA 002 (02 October 2019)

Claim No. CA-002-2019




In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler

of Dubai





Chief Justice



Respondent ( Claimant




                                                                                           Appellant ( Defendant




Hearing:26 August 2019

Counsel:Ms Jouslin Khairallah of Khairallah Advocates and Legal Consultants for the Appellant

Mr Peter Smith of Al Tamimi and Company for the Respondent

Judgment:2 October 2019


UPONreviewing the Appellant’s application for permission to appeal dated 17 April 2019

AND UPONreviewing the Respondent’s submissions in response dated 25 April 2019

AND UPONhearing Counsel for the Appellant and Counsel for the Respondent on 26 August 2019

AND UPONreading the submissions and evidence filed and recorded on the Court



1.The Appeal is allowed in part.

2.Vary the Order of H.E Justice Omar Al Muhairi issued on 8 April 2019 (the “Order”) by:

a. deleting “AED 884,635.92” set out in paragraph 3 of the Order and substituting it with “AED 575,311.92”; and

b. deleting the phrase “of this order” at the end of paragraph 3 and substituting it with “2 October 2019”.

3. No order as to costs.


Issued by:

Nour Hineidi

Deputy Registrar

Deputy Registrar

Date of issue: 2 October 2019

Time: 11am





1.The Defendant (“Mr Rehman”) purchased a residential unit in the DIFC

. He obtained finance from the Claimant (“Mashreq”) under an Ijara Mosufa agreement (the “Agreement”). He defaulted in payments under the agreement. In a judgment issued on 24 March 2019, H.E. Justice Omar Al Muhairi (the “ Judge
”) held that Mashreq had validly terminated the agreement and was the legal and beneficial owner of the unit, and that Mr Rehman was obliged to pay to Mashreq a total of AED 321,427.12. Orders were made accordingly. On 8 April 2014, the Judge ordered that Mr Rehman pay Mashreq’s costs on the indemnity basis and assessed them at AED 884,635.92.

2. In this appeal, brought by permission granted on 6 May 2019, Mr Rehman relies on two grounds:

(a) that in arriving at the judgment amount the Judge failed to consider AED 495,485.80 paid to Mashreq; and

(b) that the Judge erred in ordering costs on the indemnity basis, and/or in assessing the costs at the sum above-mentioned.

3. A further ground concerning a payment of AED 80,424 made to the vendor of the unit was abandoned in the course of the hearing.


4. Finance was obtained in July 2007. Mr Rehman fell into default in June 2009. Some time went by with desultory payments, until in September 2016 - Mashreq terminated the agreement.

5. Mashreq filed its claim on 30 March 2017. Default judgment was given against Mr Rehman on 7 May 2017. On 5 April 2018 it was ordered that the default judgment be set aside

Set aside
, following which Particulars of Claim, a Defence and a Reply were filed. The trial was listed for 12 March 2019.

6. On 6 March 2019, Mr Rehman applied to adjourn the trial. The Judge refused the application. Mr Rehman did not appear, in person or by counsel, on the trial date. The Judge ordered that the Defence be struck out and heard Mashreq’s proof of its claim.

The AED 495,485.

7. When describing Mashreq’s submissions, the Judge said:

“17. The Claimant argues that it has carefully calculated the total sums due from the Defendant pursuant to the various schedules of payments, taking into account the payments actually received from the Defendant from 3 September 2007 through 24 March 2016. The Claimant contends that there is no reason to disbelieve the Claimant’s representation of the payments made by the Defendant considering that the Claimant has calculated that the Defendant paid significantly more than the Defendant himself claims.”

8. In relation to the judgment amount, the Judge said:

“32. As to the specific sums owed by the Defendant to the Claimant, the Claimant has submitted that the total judgment sum is AED 321,427.12, based upon the Defendant’s history of payments and the schedule of payments required in the Ijara Agreement. The Claimant’s calculations are deemed valid based upon a preponderance of the evidence, and I therefore find in favour of the Claimant as against the Defendant in the sum of AED 321,427.12…. comprising:

a. AED 4,639.41 in satisfaction of outstanding Advance Rental Payment;

b. AED 152,815.44 in satisfaction of outstanding Ijara fixed rent;

c. AED 159,119.36 in satisfaction of outstanding Ijara variable rent;

d. AED 4,852.91 in satisfaction of outstanding insurance charges”.

9. These figures came from a table headed “Outstanding Breakup as on 09/03/19” in a document provided to the Judge, being the updated version of a corresponding document in evidence through the witness statement of Rabia Aslam, a Recovery Officer in Mashreq. Ms Aslam exhibited to her witness statement statements of account and a “reconciliation schedule”, the latter containing a table “Outstanding Breakup as on 29/12/18”. She said, referring to the statements of account, that Mr Rehman had paid a total of AED 422,616.50.

10. There were some difficulties on appeal in sourcing the figures in the tables from the statements and the “reconciliation schedule”, but the evidence of Ms Aslam was explicit that, in arriving at the figures in the table, payments totalling AED 422,616.50 had been made by and were credited to Mr Rehman.

11. The ground of appeal was founded on a Mashreq letter dated 1 March 2018, headed as an “Ijara Home Finance Statement” for Mr Rehman’s finance (“the statement”). It included as “Total of the paid instalments [sic]” a figure of AED 495,485.80. The case on appeal, put in the terms that the Judge had failed to consider AED 495,485.80 paid to Mashreq, was that he should have found that payments totalling AED 495,485.80 had been made by Mr Rehman, and credited to him that sum rather than AED 422,616.50.

12. The statement was an exhibit to the witness statement of Asif Sheik dated 5 March 2018, made for the purposes of the application to set aside the default judgment. It was included in the papers before the Judge, but Mashreq did not rely on it. It relied on the evidence of Ms Aslam, as updated.

13. It is clear enough that the Judge did not act upon the statement in arriving at the judgment amount. That is not to say that he did not consider it, in the sense of pay regard to it. The proper question is whether the Judge erred in failing to credit Mr Rehman with AED 495, 485.80 instead of AED 422,616.50.

14. No error has been shown. Assuming in Mr Rehman’s favour that the statement was to be regarded as evidence at the trial, it was the not uncommon situation of a discrepancy in the evidence, which was resolved in favour of the evidence of Ms Aslam. The Judge was entitled to see the figure for payments in the statement as overtaken by subsequent examination of the statements of account, or to prefer Ms Aslam’s figure for payments backed up by the statements of account. This was a finding of fact, as to which Mr Rehman bore the heavy burden on appeal of showing that the Judge was clearly wrong: Al Khorafi v Bank Sarasin-Alpen (ME) LtdCA-003-2016, 3 March 2016 at [168]-[169]. He has not done so.

The Costs

15. In the judgment issued on 24 March 2019, the Judge ordered that Mr Rehman pay Mashreq’s costs “on such a basis and in such specific amount or amounts as this Court shall determine following consideration of the Claimant’s costs submissions to be filed”. Mashreq filed submissions and three Statements of Costs, one for AED 392,606.81, one AED 381,149.14, and one for AED 110,879.99: the total was AED 884.635.94. The submissions and the Statements of Costs were served on Mr Rehman. He did not file submissions or otherwise contest the amounts in the Statement of Costs.

16. The costs orders made on 8 April 2019 were not accompanied by written reasons. The order recited review of Mashreq’s written submissions and “regard to all the circumstances”, and said that Mr Rehman should pay costs on the indemnity basis and that the costs were immediately assessed in the amount of AED 884,635.92.

17. The thrust of Mashreq’s written submissions before the Judge was that costs on the indemnity basis were warranted because Mr Rehman’s conduct of the litigation was ”unreasonable to a high degree”, within the guide

The Guide
in those terms in Practice Direction No 5 of 2014 (“PD 5”). An account of Mashreq’s incurring of costs from time of Mr Rehman’s default, and of the course of the litigation, was given. In the latter respect, the costs submissions were to the effect that in the litigation Mr Rehman had made serious but wholly unfounded charges (which were detailed) against Mashreq; had raised but not supported a defence that the agreement was not Sharia compliant; and had in a number of respects not genuinely engaged with the litigation, but rather deliberately delayed.

18. Costs are discretionary (RDC 38.6). They may be awarded on the indemnity basis (RDC 38.17, subject to being reasonably incurred at reasonable amount), in which case any doubt as to reasonableness will be resolved in favour of the receiving party (RDC 38.20). PD 5 includes in the factors taken into account in determining whether costs will be awarded on the indemnity basis, in this respect reflecting factors established in the general law in England and Wales, that the facts of the case and/or the conduct of the paying party are such as to take the situation away from the normal, for example where the Court has found “unreasonable conduct to a high degree in connection with the litigation”; or that there was “otherwise inappropriate conduct in its wider sense in relation to a paying party’s pre-litigation dealing with the receiving party, or in relation to the commencement or conduct of the litigation itself”.

19. Mr Rehman’s submissions had two limbs. The first was that the factors stated in PD 5 were not met, and in particular that indemnity costs were normally reserved to where the Court wished to indicate disapproval of the conduct of the litigation. The second was that the amount assessed was more than the amount of costs reasonably

20. As to the first limb, the Judge must have accepted, on the basis of the account in the costs submissions, that Mr Rehman’s conduct in the litigation had been unreasonable or otherwise inappropriate to a degree warranting indemnity costs. It was necessary that Mr Rehman show that this conclusion was not one which could reasonably be arrived at. The submissions on his behalf failed to do so. It was open to the Judge to conclude as he did, and no error has been shown in exercise of his discretion. On the particular matter, while sometimes the Court’s disapproval may be expressed, or be seen in such a conclusion, it is not a necessary element in awarding costs on the indemnity basis.

21. As to the second limb, save in one respect Mr Rehman did not show error in the Judge’s assessment. He made a generalized complaint that the costs were high in relation to the judgment amount (which Mashreq had acknowledged and defended in the costs submissions), but proportionality plays little if any part when it comes to costs on the indemnity basis, see RDC 38.21. Mr Rehman did not engage with unreasonableness of the items in the Statements of Costs.

22. With respect, however, the Judge erred in including in the assessment costs incurred by Mashreq well prior to filing its claim. The costs described in subparagraphs (a) and (b) of para 12 of Mashreq’s costs submissions were incurred in relation to a combination of termination of the agreement and protection of its title to the unit. Mashreq submitted on appeal that these costs were incurred as a result of Mr Rehmans default, but that is not the criterion. They were not costs of the proceedings.

23. The amounts in the subparagraphs above-mentioned are AED 132,804 and AED 176,520. These amounts should be deducted from the assessment, leaving it at AED 575,311.92.

Costs of the appeal

24. Mr Rehman has succeeded on one of three points, and the success has been in a not insignificant amount, he has failed on two points and abandoned another. Each party has been partially successful and no order for costs should be made to the intent that each party pays his and its own costs.


25. I propose the following orders:

26. The Appeal is allowed in part.

27. Vary the Order of H.E Justice Omar Al Muhairi issued on 8 April 2019 by:

(a) deleting “AED 884,635.92” set out in paragraph 3 of the Order and substituting it with “AED 575,311.92”; and

(b) deleting the phrase “of this order” at the end of paragraph 3 and substituting it with “2 October 2019”.

28. No order as to the costs


Issued by:

Nour Hineidi

Deputy Registrar


Date of issue: 2 October 2019

Time: 11am