March 03, 2021 COURT OF APPEAL - JUDGMENT
Claim No: CA 009/2020
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai
IN THE COURT OF APPEAL
BEFORE CHIEF JUSTICE ZAKI AZMI, JUSTICE SIR RICHARD FIELD AND H.E JUSTICE ALI AL MADHANI
BETWEEN
MR. SALEM DWELA
Appellant
and
DAMAC PARK TOWERS COMPANY LIMITED
Respondent
JUDGMENT
Hearing : | 17 November 2020 |
---|---|
Counsel : | The Appellant is a litigant in person with Waleed Dwela, the Appellant’s son, representing him as a “McKenzie friend”. The Respondent is a litigant in person, represented by Julian De Lange, a member of the Respondent’s legal team. |
Judgment : | 3 March 2021 |
ORDER
UPON the Order of H.E Justice Omar Al Muhairi granting permission to appeal on 16 September 2020 against the Order of H.E Justice Omar Al Muhairi dated 22 July 2020
AND UPON hearing the Appellant as a litigant in person and the Respondent as a litigant in person at the appeal hearing on 17 November 2020
AND UPON reading the submissions and evidence filed and recorded in the Court file
IT IS HEREBY ORDERED THAT:
1. Mr Dwela has pleaded an arguable case for misrepresentation giving rise to an entitlement to rescind the SPA and to damages in respect of the expenditures he has made in reliance on the alleged misrepresentations or restitutio in integrum.
2. Mr Dwela’s claim was not made contrary to the 15-year limitation period stipulated in Article 9 (2) of the Law of Obligations.
3. Accordingly, Mr Dwela’s appeal succeeds and Damac must pay the costs of the appeal and the hearing below to be assessed, if not agreed, on the standard basis by the Registrar or Deputy Registrar.
4. Given the time that has already elapsed since Mr Dwela issued his Claim Form, there must be a Case Management hearing in the near future at which Mr Dewla should be given permission to amend his Points of Claim in the light of this judgment, if so advised, and a timetable is promulgated for the completion of all necessary steps leading to a trial to come on as speedily as is practicable. In particular, no order should be made for the determination of preliminary matters of law or fact prior to trial. Instead, all such issues should be determined at the trial.
Issued by:
Nour Hineidi
Registrar
Date of issue: 3 March 2021
At: 1.30pm
JUDGMENT
CHIEF JUSTICE ZAKI AZMI
1. I agree with the judgment below and have nothing further to add.
JUSTICE SIR RICHARD FIELD
Introduction
2. The Appellant (“Mr Dwela”) appeals against the order made by HE Justice Omar Al Muhairi (the “judge”) dated 1 July 2020 striking out Mr Dwela’s claim on that ground that it was statute-barred under Article 123 of the DIFC Contract Law (No.6 of 2004) having been issued more than six years after the contract at the centre of the claim had been breached1 .
1. Article 22 of the DIFC Law on Damages and Remedies (Law No.7 of 2005) is to similar effect.
3. Mr Dwela’s Claim Form was issued on 19 December 2018. This pleads that Mr Dwela and the Respondent (“Damac”) concluded a Sale and Purchase Agreement on 18 May 2010 (the “SPA”) under which Mr Dwela agreed to purchase and Damac agreed to sell a unit (the “Unit”) measuring 2402.53 sq. ft. on the seventh floor of Park Towers, with a pool view and two parking bays, for the total base price of AED 3,844,048 which was fully paid by July 2011. It is further pleaded that: (a) the SPA stated the Contemplated Completion Date was June 2011 and this date could be extended by 12 months; (b) in communications sent by Damac to Mr Dwela in January, February, November 2012 and August 2015 the figures given for the size of the Unit were respectively 976.83 sq. ft.; 2402.53 sq.ft.; (“Total Area (Sold)”) 2402.53 sq.ft. (“Total Area (As Built)”) 2136.63 and 1588.44 sq.ft.; (c) in 2013 Damac showed Mr Dwela what it said was the unit he had purchased which unit was below pool level and without a pool view or any daylight and was notably smaller than 2402.53 sq.ft.
4. The pleading continues:
The Respondent made misrepresentations contrary to Article 29 of DIFC Law No. 5 Article 77 of the DIFC Law No. 6 of 2004 defines non-performance as “failure by a party to perform any one or more of its obligations under the contract, including defective performance or late performance”.
5. Under the heading “Remedy Sought”, the first three remedies pleaded were: (1) The purchase price of AED 3,844,048. (2) Registration fee of AED 134,541.68 (representing 3.5% of the purchase price). (3) AED 330,000 for the cost of return travel to Dubai from Italy on 30 occasions between 2008 and 2014. Remedies (4) and (5) sought respectively loss of profit damages due to the fact that had Mr Dwela taken possession of the Unit by the anticipated completion date and damages representing Mr Dwela’s loss of opportunities regarding alternative investments since 2010.
6. Mr Dwela’s Particulars of Claim cover the same ground as is covered in the Claim Form but set the claim out at somewhat greater length. In paragraph 29, together with a reference to Article 77 of the DIFC Contract Law, it is pleaded that Mr Dwela has not got the Unit on the terms set out in the SPA and the time for completion had extended beyond reasonable acceptance. Paragraph 30 pleads an entitlement to recover the purchase price under Article 81 of the DIFC Contract Law. Paragraphs 31 and 32 plead:
31.The Seller made grave misrepresentations to the Claimant contrary to article 29 of DIFC Law No 5 of 2005, The Law of Obligations, concerning the stage of construction and the time in which the Unit would be ready for occupation, the location of the Unit within the Project, the lack of pool view, and more poignantly, the unacceptable size difference and wrongly induced to the Claimant to sign the SPA. (sic)
32. As a consequence of the foregoing, our Client wishes to rescind the contract and be fully reimbursed and compensated for his losses. Article 86 of DIFC Law No 6 of 2006, the Law of Contract explains the party’s right to terminate “the contract whereby failure of the other party to perform an obligation under the contract amounts to a fundamental non-performance”. Article 77 states that no performance is failure by a party to perform any one or more of its obligations under the contract, including defective performance or late performance”.
7. These paragraphs are all pleaded under the heading “Particulars of Breach Committed by the Defendant.”
The hearing below and the judge’s reasons for striking out the claim
8. Mr Dwela was not legally represented in the hearing below and it is reasonably clear that he concentrated on presenting a case for breach of contract and fraud.
9. The judge correctly concluded that no claim for fraudulent misrepresentation had been pleaded and it was now too late to do so. He also held that the only other cause of action discernible from the Points of Claim was for breach of contract and went on to hold that the claim was statute barred pursuant to Article 123 of the DIFC Contract Law (No.6 of 2004).
The decision in this appeal
10. A litigant is entitled to plead alternative as well as additional claims and in my judgment Mr Dwela’s Claim Form and Particulars of Claim are to be construed as pleading an alternative claim for misrepresention for which the limitation period of 15 years as provided for in Article 9 (2) of DIFC Law of Obligations (No 5 of 2005) (the “LO”) had not expired at the time Mr Dwela issued his Claim Form.
11. Article 29 (1) of the LO defines a misrepresentation as an incorrect statement of fact, past or present, or a statement of opinion falling within Article 9 (3), which is made in order to induce, and does induce a person to enter a contract.
12. Article 29 (4) of the LO states that a representation may be made in writing (electronically or otherwise), orally, by implication, by conduct, by means of a mark, trade name, get up, image, slogan, an advertising method or otherwise. [Italics supplied]
13. Article 30 of the LO provides that a person is liable for misrepresentation to a representee if: (a) he is the representor in relation to a misrepresentation; (b) the representee entered into a contract after the misrepresentation has been made; (c) the misrepresentation influences the representee to enter into a contract or affects the terms upon which he agrees to enter upon which he agrees to enter into it; and (d) the representee suffers loss as a result of entering into the contract.
14. In my view, it is distinctly arguable that the effect of Article 29 (1) is that a misrepresentation can be a term of the resulting contract. However, the misrepresentation must still be an incorrect statement of fact and the statements Mr Dwela says induced him to enter into the SPA are prima facie promissory statements as to the future. However, in my opinion, it is reasonably arguable that the representations pleaded by Mr Dwela give rise to an implied representation of fact that: (a) Damac had reasonable grounds for making the statements complained of; or (b) Damac did not know of facts that would make it impossible to comply with the statements; and that given the alleged failure to provide a unit in accordance with these statements, the implied representation was a misrepresentation. In expressing this view, I have in mind, as to (a): the English decisions of Brown v Raphael [1958] Ch 636 and Barings plc (in liquidation) v Coopers and Lybrand [2002] EWHC 461 (Ch) at [50] – [51] which are considered in para 7-010 in Volume 1 of Chitty on Contracts (33rd ed) (“Chitty”); and as to (b): Spice Girls Ltd v Aprilia World Service BV [2002] EWCA (Civ) 15 which is referred to in para 7-014 of Volume 1 of the same edition of Chitty.
2. For the purposes of an action brought under Chapters 2 [Negligence], 3 [Occupier’s Liability], or 4 [Misrepresentation], a cause of action arises on the earliest date on which the Claimant knows or ought reasonably to know about the loss that gives rise to the cause of action, provided that any action is brought within 15 years of the date that the cause of action in fact arose.
15. Under Article 30 of the LO, the representor will only “be liable” in respect of a misrepresentation if the representee has suffered loss by reason thereof. It is to be noted that in this respect, the DIFC law of misrepresentation appears, at least at first sight, to be different from the law of England and Wales on misrepresentation which allows for rescission of a contract induced by a misrepresentation and restitutio in integrum whether or not the misrepresentee has suffered financial loss by reason of the misrepresentation. I say “at first sight” because, in my judgment, it is reasonably arguable that a payment by a purchaser of the stipulated price for a property that is not in accord with what it was represented to be, would constitute a “loss” for the purposes of Article 30, even though the property is as valuable in its actual state as it would be in its represented state.
16. Article 23 of the DIFC Law of Damages and Remedies (No. 7 of 2005) (the “D & R Law”) confers a right in damages for breach of an “obligation”, which I think would include the making of a misrepresentation since misrepresentation is dealt with in Chapter 4 of the LO. However, the damages recoverable for a misrepresentation of existing fact would only compensate the representee for the expenditure he made having been induced by the misrepresentation to enter into the contract (the “reliance interest”) and would not compensate him for what he was entitled to expect would be his gain from entering into the contract (the “expectancy interest”). In the result therefore the damages recoverable for a misrepresentation of fact would be closely equivalent to what would be obtained under the English law of rescission which entitles the rescinding party to restitutio in integrum.
17. In paragraph 32 of his Points of Claim, Mr Dwela’s seeks to rescind the SPA and to be fully reimbursed and compensated for his losses. Neither the DIFC Contract Law nor the D & R Law specifically provides for the remedy of rescission of a contract entered into in reliance on an actionable misrepresentation. However, I think the Court can probably order rescission of the SPA with restitutio in integrum under Article 35 (1) (g)3 of the D & R Law if Mr Dwela establishes his misrepresentation case at trial and he seeks such an order.
3. “Where a person commits a breach of any requirement, duty or obligation which is imposed under any DIFC Law the Court may, on application of any person who is aggrieved by such conduct or has suffered loss or damage arising from such conduct, make one or more of the following: (a) … (f), (g) any other order that the court thinks fit.”
18. In a closing written submission dated 30th January 2021, Damac contends that it has a complete defence to Mr Dwela’s claim in misrepresentation by reason of clause 17.6 of the SPA which is pleaded in paragraph 4.4 of Damac’s Defence as follows:
This Agreement constitutes the entire agreement between the Parties relating to the subject matter of this Agreement and supersedes all previous verbal or written agreements, negotiations between the Parties including but not limited (sic) representations made in the marketing material, sales brochures, models, view sets, showroom displays, photographs, videos, illustrations and revenue projections and financial statements made available to the Purchaser.
19. In my opinion the effect of this clause, if any, on Mr Dwela’s claim must be determined at trial. In Axa Sun Life Services Plc v Campell Martin Ltd [2011] EWCA Civ 133, it was held that a clause in closely similar wording to that of clause 17.6 of the SPA was effective to exclude collateral warranties i.e. promissory statements as to the future, and not misrepresentations of existing fact. Thus, if this decision is followed by the trial judge, it may well be held that clause 17.6 is inapplicable to Mr Dewa’s claim for misrepresentations of existing fact.
Conclusion
20. For the reasons given above, I am of the opinion that:
(1) Mr Dwela has pleaded an arguable case for misrepresentation giving rise to an entitlement to rescind the SPA and to damages in respect of the expenditures he has made in reliance on the alleged misrepresentations or restitutio in integrum.
(2) Mr Dwela’s claim was not made contrary to the 15-year limitation period stipulated in Article 9 (2) of the Law of Obligations.
(3) Accordingly, Mr Dwela’s appeal succeeds and Damac must pay the costs of the appeal and the hearing below to be assessed, if not agreed, on the standard basis by the Registrar or Deputy Registrar.
(4) Given the time that has already elapsed since Mr Dwela issued his Claim Form, there must be a Case Management hearing in the near future at which Mr Dewla should be given permission to amend his Points of Claim in the light of this judgment, if so advised, and a timetable is promulgated for the completion of all necessary steps leading to a trial to come on as speedily as is practicable. In particular, no order should be made for the determination of preliminary matters of law or fact prior to trial. Instead, all such issues should be determined at the trial.
H.E JUSTICE ALI AL MADHANI
21. I agree and have nothing further to add.
Issued by:
Nour Hineidi
Registrar
Date of issue: 3 March 2021
At: 1.30pm