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Claim No. SCT 024/2022

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

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

IN THE SMALL CLAIMS LEASING TRIBUNAL OF DIFC COURTS
BEFORE H.E. JUSTICE NASSIR AL NASSER

BETWEEN

(1) LISTON
(2) LAFTI

Claimants

and

LAET

Defendant

JUDGMENT OF H.E. JUSTICE NASSIR AL NASSER

UPON this claim having been called for a hearing, the Claimants attended the hearing and the Defendant was absent;

AND UPON reading the submissions and evidence filed and recorded on the Court file;

IT IS HEREBY ORDERED THAT:

1. The Claimants’ claim shall be dismissed.

2. Each party shall bear their own costs.

Issued by:
Ayesha Bin Kalban
SCT Judge and Registrar
Date of issue: 16 March 2022
At: 9am

THE REASONS

The Parties

1. The First Claimant is Liston (the “First Claimant”), a tenant of the ApartmentDIFC, Dubai, UAE (the “Apartment”).

2. The Second Claimant is Lafti (the “Second Claimant”), a tenant of the Apartment.

3. The Defendant is Laet (the “Defendant”), the owner of the Apartment.

Background and the Preceding History

4. The underlying dispute arises over a tenancy contract entered into between the parties dated 2 February 2021 to 1 February 2022 (the “Contract”). The Contract provided that the Claimants would rent the Apartment for 1 year in return for AED 120,000 to be paid to the Defendant in four cheques.

5. On 31 January 2022, the Claimants filed a claim in the DIFC Courts’ Small Claims Tribunal (the “SCT”) seeking the renewal of the Contract for one more year with the same terms and conditions.

6. On 9 February 2022, the Defendant filed his Acknowledgment of Service setting out his intention to defend all of the claim.

7. On 10 February 202, the Defendant filed a defence without a counterclaim.

8. The parties met for a Consultation on 14 February 2022 but were unable to reach a settlement.

9. In line with the processes and procedures of the Small Claims Tribunal (the “SCT”) this matter was referred to me for determination pursuant to a Hearing was scheduled before me on 2 March 2022.

The Claim

10. The Claimants rely on clause 2.16 of the Contract which provides that:

“The Lessor shall give the Lessee written notice of a proposed increase in rent for a new lease term at least ninety (90) calendar days prior to the expiry date of this lease in the event of failure to provide such notice the lessor shall be prohibited from increasing the Rent”.

11. The Claimants submit that they have not received any request from the Defendant to increase the rent during the contractual 90 days’ notice prior to the expiry date of the lease. Therefore, the Claimants’ position is that the Defendant has no legal right to increase the rent agreed upon in the Contract.

12. In addition, the Claimants refer to Article 31 of the Leasing Law DIFC Law No.1 of 2020 which provides that:

“Rent increase (1) A Lessor must give a Lessee written notice of a proposed rent increase at least ninety (90) days prior to the expiry of a Residential Lease. (2) unless expressly provided otherwise in a residential lease, a Lessor must not increase the rent before its term ends. (3) A Rent increase in contravention of this Article 31, or in contravention of any provision relating to increases in rent that may be specified under the regulations, is invalid”.

13. The Claimants submit that they were approached in October 2021 by Mr. Luftin who informed them of the rent increase, which they rejected at first but then accepted. However, the Claimants submit that when this was discussed with the Defendant, the Defendant stated by way of an email dated 15 December 2021 that the Contract will not be renewed citing his reasons below:

“thank you for your below email and noted but kindly note that I will not renew the contract as I need the apartment and I did not assign any agency to renew the rent, therefore, I decline your below content! Hope you understand and start finding another option in the days.”

14. Therefore, the Claimants submit that Mr. Luftin’s email cannot be considered as notice for rent increase as he was not authorised by the Defendant. Therefore, the Claimants submit that, pursuant to the Contract and Article 31 of the DIFC Leasing Law, the Defendant is prohibited from increasing the rent.

15. In addition, the Claimants rely on clause 4 of the Addendum which provides that:

“A 90 days or three (3) months notice in writing will be given to the tenant if the landlord does not wish to renew on expiry of the contract”.

16. The Claimants submit that the Defendant’s email dated 15 December 2021 must not be considered as notice since it was not communicated with the Claimants’ 90 days before the expiry of the contract. Therefore, the Claimants are seeking a renewal of the Contract on the existing terms.

Findings

17. The relationship between the parties is governed by the Contract along with the DIFC Leasing Law No. 1 of 2020 (“DIFC Leasing Law”).

18. I find that the Defendant is prohibited to increase the rent pursuant to the Contract and the DIFC Leasing Law, seeing as the rent increase was communicated with the Claimants within 90 days of the expiry and not 90 days before the expiry of the rental period.

19. In relation to the Notice period, the Defendant has an obligation to provide 90 days’ notice should he not be willing to renew the rent. The Defendant has only provided the Claimants a written notice of non-renewal on 15 December 2021 which is less than 90 days of the expiry of the rental period.

20. The Claimants submit that the lease should be automatically renewed as a result of the Defendant’s breach, however, I find that the Defendant’s email can be considered as a written notice, but the period of 90 days shall start from 15 December 2021 and the rent period shall continue until the last day, being on 15 March 2022 and shall be similar to the terms of the Contract.

21. I have reached to this conclusion because neither the DIFC Leasing Law nor the Contract provides that there shall be an automatic renewal on the same terms as a result of the landlord’s breach.

22. Therefore, I find that the Claimants’ claim shall be dismissed and each party shall bear their own costs.