Privacy Settings

Claim No: CFI 083/2021

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

FIBERTECH FIBRE GLASS PRODUCT TR. LLC

Claimant

and

MINT CREATIVE PRODUCTION LLC

Defendant

ORDER WITH REASONS OF H.E JUSTICE ALI AL MADHANI

UPON reviewing the Claimant’s Application No. CFI-083-2021/2 dated 7 April 2022 for immediate judgment (the “Application”)

AND UPON considering the first witness statement of Lyju Jose dated 7 April 2022

AND UPON the Defendant failing to file a response to the Application

IT IS HEREBY ORDERED THAT:

1. The Application is granted.

2. Judgment is entered in favour of the Claimant in the sum of AED 774,692.49, together with simple interest from the date of the judgment at the rate of 9% pursuant to paragraph 3 of Practice Direction No. 4 of 2017.

3. The Defendant shall pay the Claimant’s costs of the Application to be assessed by the Registrar on the standard basis, if not agreed.

Issued by:
Maitha AlShehhi
Judicial Officer
Date of issue: 19 August 2022
At: 12pm

SCHEDULE OF REASONS

Introduction

1. The Claimant issued a debt claim on 10 October 2021 for the sum of AED 774,692.49. Default judgment was later entered against the Defendant on 8 November 2021 as it failed to file a defence. Default judgment was later set aside on 1 March 2022 and the Defendant filed a defence on 14 March 2022 (the “Defence”). The Claimant filed a Reply to Defence in response on 4 April 2022 (the “Reply”).

2. The Claimant then made an application for immediate judgment dated 7 April 2022 (the “Application”) which is before me to determine. The Defendant has not filed any response to the Application.

Factual Background

3. The Claimant is a company incorporated in the Emirate of Sharjah whose principal business is in the manufacture of fiberglass products. The Defendant is a company incorporated in the Emirate of Dubai whose principal business is manufacturing models for use in architecture, advertising and in decoration.

4. The parties entered into a written contract for the supply of custom-made fibre-retardant glass-reinforced plastic (the “GRP”) planters with pots by the Claimant (the “Goods”) for the sum of AED 1,404,158.21. The Defendant proposed terms of the contract in its purchase order dated 10 December 2019 to the Claimant (the “Purchase Order”).

5. The Purchase Order proposed the following terms:

6. Further, under the heading “Other Terms” the Purchase order proposed:

7. The Claimant did not agree to the terms of the Purchase Order and the parties set out in writing that the Purchase Order was accepted with the following varied and additional terms:

8. This written document was signed by the parties on 8 January 2020, incorporating the additional terms (the “Contract”).

9. The Goods were to be used in the construction of the Kingdom of Saudi Arabia’s pavilion at the Dubai Expo 2020 (the “Pavilion”). Gulf Landscape & Irrigation Systems LLC ( “Gulf Systems”) was subcontracted and appointed as the main contractor for the Pavilion by ALEC Engineering and Management LLC (the “Client”). Gulf Systems subcontracted an element of its contract to the Defendant. The Defendant then subcontracted an element of its contract with Gulf Systems to Claimant, which was for the manufacture of the Goods.

10. Between 4 January 2020 to 16 July 2020, the Claimant manufactured and delivered the Goods to the Defendant in accordance with the Contract. In receipt of the Goods the Defendant, through its employees, signed delivery notes confirming the receipt and condition of the Goods. Upon delivery, the Claimant issued a tax invoice with a corresponding delivery note to the Defendant.

11. In accordance with the additional terms of the Contract, on or around November 2020, the parties remeasured the areas of the Goods and according to the Claimant, agreed a variation of an additional AED 476,850.21. The Claimant alleges that the total value of the Goods in accordance with the Contract was AED 1,404,158.21.

12. Between December 2019 and August 2020, the Defendant paid the Claimant eight cheques totalling AED 699,673.64 but made no further payments. The Claimant’s claim is for the outstanding sum of AED 774,692.49.

The Application

13. The Application is made pursuant to Rule 24.1 of the Rules of the DIFC Courts (“RDC”) in which entitles the Court to grant immediate judgment where it considers that the Defendant has no real prospect of successfully defending the claim and that there is no other compelling reason why the matter should be disposed of at trial. In considering whether the Defendant has a real prospect of successfully defending the claim, I remind myself of the comments of Steel DCJ in The Estate of Christos Papadopoulos v Standard Chartered Bank [2017] DIFC DCI 004 (27 February 2018). Papadopoulos sets out that, when granting immediate judgment, the Court must consider the merits of any defence are merely fanciful, meaning entirely without substance as opposed to realistic. Further, a reasonable prospect of success requires that a defence has some degree of conviction and is not merely arguable.

14. The Defence was submitted putting forward a number of assertions on behalf of the Defendant. In determining the Application, I will look in turn to each of the assertions raised in the Defence. In determining this Application, I am assisted by the evidence of Lyju Jose which was submitted on behalf of the Claimant in support of the same. No evidence has been submitted on behalf of the Defendant.

The Retention

15. At paragraph 2 of the Defence, the Defendant has averred that it was a term of the Contract that the remaining 5% retention of the contract price was to be released 24 months after the final delivery of the Goods. The Claimant does not accept this and states that the retention was to be kept for only 12 months after the final delivery of the Goods. I agree with the Claimant on this point. While the original purchase order sought a period of 24 months for the final 5% retention, this was not agreed by the parties. In creating the Contract, the parties signed the written terms which incorporated the additional terms. The additional terms specified that the final 5% retention would be released 12 months after the final deliver.

16. Contractually, the Purchase Order constituted an offer of contractual terms to the Claimant. The Claimant did not accept these terms and the parties subsequently agreed to vary the same, which included shortening the final 5% retention. Although, some of the terms of the Purchase Order conflict with the additional terms, it is clear that the parties both discussed and agreed to the variations and signed the same. In the circumstances, the additional terms supersede any conflicting terms in the Purchase Order.

17. The final delivery was made by the Claimant and accepted by the Defendant on 16 July 2020. Twelve months after this date would be 15 July 2021. Therefore, the final 5% retention is due and owing now and was indeed at the time of issue of the claim form. As such, I reject this element of the Defence and find that it has no prospect of success on the evidence before me.

The Defects

18. In the Defence, the Defendant has asserted that due to defects within the works carried out by the Defendant, as subcontractor under their own contract with Gulf Systems, Gulf Systems was required to remedy such defects. And as a result, Gulf Systems charged the Defendant for the cost of remedying these defects.

19. From the evidence and the documents provided by the parties, the defects did not arise as a result of a breach of contract by the Claimant and the Goods were provided in accordance with the terms of the Contract. I note that the Defendant has not sought to set out what the alleged defects were or any alleged defects caused by the Claimant. At paragraph 9 of the Defence, the Defendant states that it had notified the Claimant that Gulf Systems had raised multiple issues with the overall scope of the Defendant including the GRP planters and pots (being the Goods) supplied by the Claimant. This contention is disputed by the Claimant. There is no evidence before me that the Defendant put the Claimant on notice of any purported defects with the Goods, nor is there any particular detail within the Defence as to how and when the Defendant allegedly put the Claimant on notice.

20. In considering this matter, I have been assisted by the exhibits to the Defence and Lyju Jose’s witness statement. Within the exhibits to the Defence is a document from Gulf Systems headed “Notice of Liquidation of Performance Bond” dated 8 March 2021 which sets out the various issues that Gulf Systems had with the performance of the Defendant. The matters complained of by Gulf Systems, from the documents provided, seem to relate to the installation of the Goods as opposed to the Goods themselves. It was the Defendant who was contracted to install the Goods, not the Claimant. The matters complained of include undulating paint, debris left in the Goods, various issues with the temporary access panels and the painting of the Goods in general, all of which do not fall to the Claimant and relate to the installation of the Goods as opposed to the Goods themselves. The Claimant has stated in the Reply and its supporting evidence that these matters were not incorporated in the Contract and as such were not its responsibility. I accept this contention, not only from the evidence submitted by both parties but also in looking at the terms of the Contract itself and direct allegations of breach of contract in this regard by the Defendant.

21. The Defendant further states that they approached the Claimant to seek what they considered to be a fair discount and a payment plan, but the Claimant refused. While I have sympathy for the Defendant’s financial challenges, this is not a matter of concern for the Claimant. The Claimant, as with the Defendant, is a company whose purpose is to conduct its business for the benefit of its shareholders. The Defendant was obliged under the terms of the contract they had with Gulf Systems to complete the works to an agreed standard and specification. In breach of said contract, several defects arose, and Gulf Systems sought the costs for remedying the same from the Defendant.

22. There is no evidence or submission before me to suggest that the Claimant did not manufacture the Goods other than in compliance with the terms of the Contract. The Goods were accepted by the Defendant and duly installed by them at the Pavilion.

23. In my view, the fact that the Defendant breached the terms of its contract with Gulf Systems is a separate matter and is not of concern to the Claimant. What is of concern to the Claimant is, again, to act in the best interests of its shareholders, and to give a discount where the price for the Goods were agreed and they were delivered in accordance with the agreed terms would not have been in the best interests of its shareholders. I do note that in email correspondence, the Claimant offered a discount of 10% as a gesture of goodwill and for quick settlement of the outstanding sum. However, the Defendant continued to fail to make payment and the discount was not accepted.

24. The Defendant had a responsibility to ensure that it complied with the terms of their contract with Gulf Systems. If the Defendant breached its contract that is a matter for it, and it should sustain the consequences of that breach, not the Claimant. In the absence of any agreement, breach of contract or duty by the Claimant, there was no obligation on it to give any discount or reduction in the amount owing. Therefore, this element of the Defence does not have a realistic prospect of success.

The Variation

25. At paragraph 11 of the Defence, the Defendant has stated that the Client and Gulf Systems rejected a request for a variation and referred to Exhibit R-6 of the Defence, a set of two letters, one from Gulf Systems and the other from the Client, both dated 19 September 2020 which concern the Defendant’s request for a variation of their contract in relation to the installation of temporary inspection doors to the GRP pots (which form part of the Goods). However, these letters do not assist the Defendant and state that the Defendant sought additional sums from the Client/Gulf Systems as the Contract did not provide for the mechanism for the temporary inspection doors as required by Gulf Systems in their contract with the Defendant. The letter from the Client further highlights that the requirement for the specific mechanism had not been specified or communicated with the Claimant and therefore was not incorporated as a term of the Contract.

26. Again, this is an issue for the Defendant. If the Defendant wishes to subcontract out a portion of the works that it has been contracted for, then it is up to it to ensure that the terms of that subcontract (in this case the Contract) meet the requirements of their original contract. Otherwise it will find itself in breach of contract or facing the cost of ensuring compliance with the original contact. As I have set out above, the Defendant’s failure to meet the terms of its contract with a third party is a separate matter and is not a basis for denying the Claimant payment in accordance with the terms of the Contract. Although practically linked, in the absence of any term to the contrary the original contract and the Contract are legally separate. Therefore, this element of the Defence also has no realistic prospect of success.

Work Inspection Requests (“WIR”), Certification and Delivery Notes

27. It seems at paragraph 4 of the Defence, the Defendant has sought to assert that it was agreed between the parties that a signed WIR must be provided with the invoices submitted by the Defendant in order for the Claimant to receive payment, as set out in the “Other Terms” of the Purchase Order. In my view, this is assertion was not expressly clear in the Defence but is a matter dealt with by the Claimant in their evidence.

28. I do not accept this assertion. The “Other Terms” of the Purchase Order state: “All invoices MUST quote the above PO number, accompany signed delivery note/WIR to ensure payment.” This term is not superseded by any of the additional terms. On an ordinary reading of this term, I consider that the parties intended that either a signed delivery note or a WIR should be provided with invoices in order for the Claimant to receive payment. The Claimant submitted the signed delivery notes and confirmed that the same was provided with the invoices for payment by the Defendant in its evidence. Seemingly, a signed delivery note confirming receipt and condition of the Goods would meet the same purpose as a WIR.

29. Then at paragraph 5 of the Defence, the Defendant quotes as follows: “The Invoice amount should match with the Payment Certificate issued by the Defendant”. Looking at the documentation, I am at a loss as to where this quote has been obtained from. I cannot see and do not agree that this was a term of the Contract. The term “Certification” is not specifically defined under the Contract, and there is no reference whatsoever to “Payment Certification”. However, the Defendant appears to contend such certification was not undertaken by the Claimant and therefore they are not entitled to payment.

30. The only reference to Certification in the original purchase order is “All payments will be by 45 days PDC from Certification. Invoicing shall take place every two weeks.” I note that the preceding term states “100% of Mint inspected and approved material on Mint Factory. Approval of the delivered items is based on the Approved control sample dimensions, shape thickness etc.” In my view, this seems to be the only reference of any form of approval or certification made within the Contract and seems to relate to the payment request process in which the Claimant was required to provide the signed (or certified) delivery note. Although the emails exhibited at Exhibit R-4 of the Defence refer to payment certificates, this does not necessarily mean that the same formed a binding term of the Contract. Such a term was not included in the contractual terms agreed between the parties as set out in the Contract. I, therefore, consider that the Defendant’s assertion does not have a realistic prospect of success.

31. The Defendant further asserts at paragraph 15 of the Defence that payment certificates must be signed by the finance manager, the commercial manager or a member of the management team. The Defendant asserts that the updated measurements dated 8 November 2020 for the area changes was signed by Ms Abeer Hamed, who was not a member of the management team. This document makes no reference to a payment certificate and seems to relate to the additional costs agreed for re-measurements under the variation of the Contract, which I shall consider below.

32. With regard to the payment certificates themselves, there does not appear to be any term in the Contract requiring a payment certificate or for the same to be signed by a specific person within the Defendant. Rather than a contractual term, this appears to be more a matter of the Defendant’s internal procedure for issuing payments. In the circumstances, I consider that this aspect of the Defence does not have a real prospect of success.

Re-Measurements

33. It was a term of the Contract, under the additional terms, that “The Local Purchase Order is measurable by area … Areas for each component should be mutually agreed.” This term was effectively the parties agreeing that the final measurements and the final price for the Contract would need to be varied in the future. In accordance with this term, the parties undertook re-measurements of the applicable areas. The parties then compiled a spreadsheet headed “Updated measurements – Fibertech area changes”. This document listed the items of the Goods, set out the updated measurements, whether such measurements were agreed by the parties and the proposed costs for the same (the “Variations”). The Variations were then signed by the parties on 8 November 2020. The signatures on the same are not easily identifiable but the parties seem to agree that Ms Hamed signed on behalf of the Defendant (whether with or without authority). The Variations state, “Agreed with difference of 5 items area [illegible]”. The parties therefore took the amount proposed by the Defendant of AED 1,404,158.21 (being the lower amount) as the total price for the Contract.

34. The Defendant sent the Claimant what it considered to be the final payment certificate on 21 December 2020 via email. The Claimant responded to state that the final payment certificate did not account for the Variations of AED 476,850.21. The Defendant responded to state the Variations were still awaiting certification by the Client. The Claimant chased this up and the Defendant stated that the discussion was ongoing with the Client as to the final account.

35. The Defendant seems to allege that the Variations were not valid because a payment certificate was not signed by a member of the management team. Firstly, I have already considered above that there was no requirement under the Contract for a payment certificate. The question in this case is whether the Contract was properly varied to incorporate the additional terms including the additional sum of money.

36. The future variation of the Contract was flagged up and included as a term of the same. Both parties undertook remeasurements with corresponding price increases. The consequential price increase was substantial and equated to almost an additional 50% of the Contract.

37. The Defendant alleges that Ms Hamed did not have authority to sign the payment certificate as she was not a finance manager or the commercial manager or a member of the management team. However, as already discussed, I do not need to concern myself with the provision of payment certificates.

38. There is no term within the Contract specifying who within the Defendant is entitled to agree the Variations. I note that the Defendant does not set out what Ms Hamed’s role was, only that she has resigned. The Claimant’s evidence states that Ms Hamed was the project co-ordinator. The Claimant further states that of the three signatures on the Variations, the first was that of Ms Hamed and the other was that of the Defendant’s quantity surveyor.

39. In the absence of any term in the Contract requiring a specific person from the Defendant to agree the re-measurements/Variations, as an employee and therefore acting on behalf of the Defendant in accordance with her employment, Ms Hamed was entitled to agree the Variations, as was the quantity surveyor. Furthermore, as project co-ordinator it was seemingly within Ms Hamed’s job title that her role was to co-ordinate completion of the Contract and ensure that standards were being maintained.

40. Even if Ms Hamed did not have express authority to agree to the Variations, which I consider unlikely due to her job title and role, it is highly likely that Ms Hamed had apparent authority. Apparent authority is created (as set out in Article 131 of DIFC Law No. 6 of 2004, being the DIFC Contract Law) where the principal, in this case the Defendant, by words or conduct reasonably leads the third party, in this case the Claimant, to believe that the principal consented to have the act undertaken on its behalf by the person purporting to act for the principal, in this case Ms Hamed.

41. Ms Hamed was appointed as project co-ordinator and was allowed by the Defendant to conduct activities in relation to the Contract on the Defendant’s behalf. In addition, Ms Hamed, as project co-ordinator and with the addition/assistance of the quantity surveyor was probably best placed to agree the Variations on behalf of the Defendant. The course of conduct undertaken by the Defendant through its employees, including agreeing that the Contract was subject to re-measurement, undertaking said re-measurements, agreeing to a price for the same and signing the Variations, demonstrates that the Contract was properly varied. Other than the technical matters raised by the Defendant as considered above, the Defendant has raised no further issue regarding the Variations that were undertaken to the Goods. The Defendant accepted the Goods as varied under the Contract and has not sought to raise an issue with the same. I, therefore, do not consider that this element of the Defence has a realistic prospect of success.

42. In relation to the absence of a stamp on behalf of the Defendant on the Variations, Johnson Arabia LLC v BIC Contracting LLC [2020] DIFC CFI 075 confirmed that it is not necessary for a contracting document to contain both a stamp and a signature. Nor was there any term in the Contract requiring all documents to be stamped and signed. As such, I do not consider that that this element of the Defence has a realistic prospect of success.

Key Documents

43. The Defendant states at paragraph 17 of the Defence that the Claimant has omitted to provide key documents to the Court in relation to its claim. The Defendant further alleges that the Court was provided with an incorrect overview as a result. The Defendant was given an opportunity to give the “full” overview to the Court from its perspective in the Defence. In coming to my decision and in considering the Defence, I have taken into account all of the documents submitted by the parties, but at the heart of this matter is the Contract itself. In my view, the terms of the Contract itself rebut a number of the arguments raised by the Defendant. Furthermore, the Defendant had an opportunity to refer to the documents or matters which it considered the Claimant had failed to include in the Defence but gave no further detail other than making this bare assertion. As such and in considering the matter as a whole, I do not consider this aspect of the Defence has a real prospect of success.

44. Within their evidence, the Claimant has alleged that the Defendant mixed up the emails it produced in order to confuse the Court. I have seen both sets of email trails produced by the parties, and have taken both of them into account in making this judgment. While I agree that the email trails seem to be muddled up, nothing turns on this and the Court has not been confused by the same. My decision remains that the Defence has no realistic prospect of success.

Compelling reason

45. Now turning to the second element of the test under RDC 24.1, whether there is any other compelling reason why the matter should not be disposed of at trial, the Defendant has been given an opportunity to put forward its Defence. The Defence fails to set out any breach of contract which would entitle the Defendant to withhold the sums owed to the Claimant. This matter has been ongoing for almost a year now and has barely progressed. The Defendant has also failed to adequately engage with the claim and failed to respond or communicate in relation to the Application. In considering the Overriding Objective, the merits of the arguments put forward by both parties, the likely costs of the matter going forward and the lack of engagement by the Defendant, I consider that there is no other compelling reason why the matter should be disposed of at trial.

Conclusion

46. In considering the pleadings and the evidence submitted by the Claimant, I find that the Defendant has no real prospect of success and there is no other compelling reason why the matter should be disposed of at trial. I, therefore, grant the Claimant’s application for immediate judgment and judgment is entered in favour of the Claimant in the sum of AED 774,692.49. And the Defendant shall pay simple interest on this sum from the date of this the judgment at the rate of 9% pursuant to Practice Direction No. 4 of 2017.