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Claim No: XXXX

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

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

IN THE SMALL CLAIMS TRIBUNAL

BEFORE SCT JUDGE NATASHA BAKIRCI

BETWEEN 

GOTTLIEB LLC  

Claimant 

and

GRACA 

Defendant 

Hearing:          1 May 2016

Judgment:       26 May 2016

JUDGMENT OF SCT JUDGE NATASHA BAKIRCI

UPON hearing the Claimant’s representative and the Defendant

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

IT IS HEREBY ORDERED THAT:

1. The Claimant may retain AED 1,405.75 of the Defendant’s security deposit in respect of repairs.

2. The Claimant must return AED 5,094.25 of the Defendant’s security deposit to the Defendant.

3. The Claimant’s claim regarding overstay is granted in the amount of AED 5,072. The Defendant may pay this amount or have it deducted from his security deposit.

4. The parties shall bear their own costs.

THE REASONS

Parties

5. The Claimant, Gottlieb is a landlord renting apartments in the Building in the DIFC.

6. The Defendant, Graca, was a tenant of Unit 1211 of the Building.

Background and the Preceding History

7. The parties entered into a Tenancy Agreement for the period of 2 March 2015 until 1 March 2016. The landlord is listed as Gottlieb with the Managing Agent listed as SAM LLC, acting as agents for Gottlieb PJSC. The Tenant is listed as Graca. The rental amount is listed as AED 132,600 with a security deposit of AED 6,500.

8. As the expiration of the Tenancy Agreement neared, there was a dispute about the move-out inspection, security deposit and return of the keys and security card. The Defendant retained the keys and access card to the apartment as the Claimant did not agree to inspect the property according to his terms (see paragraph 9 below) and informed him that he would likely be charged for repainting.

9. On 29 February 2016, the Defendant sent an email to the Claimant’s Managing Agent, SAM LLC, stating that he was ready to complete his move-out process but wanted to receive his security deposit back at the time of the inspection. The Defendant also mentions in this email that the Managing Agent already inspected the apartment on a preliminary basis. He rejected any charge for repainting and stated that he would keep possession of the property and leave the utility accounts unpaid if the Managing Agent refused to comply with his terms.

10. The Managing Agent responded on 1 March 2016 and there was a series of back and forth emails between the Defendant and the Claimant’s Managing Agent regarding the move-out procedure. In this exchange, the Claimant’s managing agent informed the Defendant that he would be responsible for overstay rent if he retained possession of the apartment beyond his lease term, which expired on 1 March 2016. In an email dated 2 March 2016, the Managing Agent informed the Defendant that the landlord was filing a case in the DIFC Courts and that official communication would follow shortly.

11. There was no further communication submitted to the SCT Registry until 10 March 2016 at which time the Managing Agent sent the Defendant a notice of breach of contract for illegally occupying the apartment beyond the expired lease term.

12. The Defendant then continued to email the Claimant’s Managing Agent from 15 March until 20 March 2016 attempting to resolve the dispute. The Defendant asked for a contact person at the Claimant’s office to speak with about the dispute. The Managing Agent informed the Defendant via email on 15 March and 20 March 2016 that the landlord was initiating a legal case in the DIFC Courts to resolve the dispute.

13. The Claimant filed a claim with the DIFC Courts’ Small Claims Tribunal on 5 April 2016 seeking AED 10,898.63 in overstay rent for the period until 31 March 2016, settlement of maintenance costs to be deducted from the Defendant’s security deposit, eviction of the Defendant, and settlement of all utility bills. The Defendant responded, admitting the claim for eviction and settlement of the utility bills and defending against the overstay rent and maintenance claims.

14. The parties attended a Consultation before Judicial Officer Maha Al Mehairi on 14 April 2016. The parties were unable to reach a settlement at the Consultation and did not reach a settlement in the weeks after the Consultation, although the Defendant did turn over the keys and access card and the Claimant was able to do a full inspection.

15. Upon inspection, the Claimant provided the SCT Registry with a snag report and with quotations for the damage to be repaired in the apartment. The submissions totalled AED 6,703.50 for repairs as against the Defendant’s AED 6,500 security deposit. The Claimant agreed to cover the costs equivalent to AED 3,365 of the snag report repairs. The Claimant therefore amended the claim form to seek AED 3,339.50 from the Defendant for repairs to the apartment and to seek an additional AED 5,086.03 for overstay for the period of 1 April 2016 until 14 April 2016, adding to the AED 10,898.63 already claimed. The total amended claim amount was AED 19,323.16.

16. As there was no settlement, a hearing was scheduled before me, SCT Judge Natasha Bakirci, on 1 May 2016. I heard the submissions of both parties and directed them to attempt to settle the dispute after the hearing. The Claimant provided an updated inspection report to the SCT Registry and the Defendant on 3 May 2016. The Defendant provided his response to the Amended Claim Form along with evidence of his contentious relationship with the Claimant to the SCT Registry on 8 May 2016. The Claimant was provided with the Defendant’s response to the Amended Claim Form on 18 May 2016.

17. As the parties were unable to settle the dispute, I render the following judgment as to the issues in the case.

Particulars and Defence

18. The Claimant argues that the Defendant was informed that he would be charged overstay if he failed to turn over the apartment on time, pursuant to Clause 8.1.2 of the Tenancy Agreement. The Defendant did not provide the Claimant with the keys and access card to the Unit until 14 April 2016 and thus, should be required to pay overstay rent for the period from 2 March 2016 until 14 April 2016 as the Claimant could not access the apartment during this time.

19. The Claimant further argues that the Defendant is responsible for all of the alleged damage repairs in the apartment, including the AED 1,200 charge for painting. The Claimant relies on Clause 8, which details the procedure to be followed upon a tenant moving out, including that the Unit should be returned “in the same condition that it was received.”

20. The Claimant has provided a snag report, including photographs, attempting to detail the damage that must be repaired in the Unit. The Claimant has also provided the move-in report, detailing the condition of the apartment upon the Defendant moving in and detailed quotations of the price of the repairs to be done. The Claimant has submitted that it will cover the cost of the door and tile repair in the amount of AED 3,365.

21. The Defendant initially argued that the main source of the dispute was the indication from the Managing Agent that he would be charged for repainting upon move-out. He determined that based on the condition of the walls, they would need to be repainted before a new tenant moved in but maintained that such repainting should be covered by the Claimant as “reasonable wear and tear” as indicated in Clause 8.1.2 of the Tenancy Agreement. He argued that he should not be held responsible for such maintenance, but only for the repair required to fix damage beyond “reasonable wear and tear.”

22. The Defendant further argues that the inclusion in Clause 6.2.3 of the requirement that the tenant “Re-paint and clean the Unit(s)” if the tenant terminates the Tenancy Agreement early supports his argument that repainting is not covered under Clause 8.1.2. He argues that inclusion of repainting in one clause and not the other must be intentional in a sophisticated and lengthy Tenancy Agreement.

23. Finally, the Defendant argues that, according to relevant regulations and precedents in the UK, interior paint has an estimated useful life of two years and he has lived in this apartment for two years. Thus, the Claimant should be required to cover this charge as part of “reasonable wear and tear.”

24. As to the claim for overstay rent, the Defendant argues that he had no choice but to retain the keys and access card to retain his full rights to his security deposit. The Claimant indicated no willingness to settle the dispute over whether repainting was included in “reasonable wear and tear” or not. The Defendant further argues that due to a number of issues throughout his tenancy, he had no reason to expect good faith behaviour on the part of the Claimant. Thus, he retained the keys and access card in an attempt to retain his rights but did not remain in the apartment beyond the expiration of his Tenancy Agreement. Furthermore, he claims that once legal proceedings had been initiated, no further overstay for the Unit should be charged.

25. In further communications with the SCT Registry, both the Claimant and the Defendant reiterated their arguments. After the Consultation, the Defendant released the keys and access card and the Claimant performed an inspection. The Claimant then amended its Claim Form to reflect the updated maintenance charges and additional overstay rent.

26. The Defendant argued that the increase in the claim amount as to the overstay rent was punitive and unnecessary. The Defendant asserts that the Claimant initiated legal proceedings regarding the Unit and needs to wait until resolution of the case, thus additional overstay rent is not fair. Furthermore, as the Defendant claims that he did move out by 1 March 2016, the Unit was empty and available for use since that time.

27. Once the snag report and repair quotations were provided, the Defendant provided specific responses to some of the charges including the ceiling repair, tile repair, cabinet and panel repair and hose repair. Furthermore, the Defendant questions the accuracy of the move-in report due to its poor viewing quality and the fact that a damaged ceiling panel was still marked as in “good” condition. The Claimant provided a more detailed report after the hearing to which the Defendant provided additional arguments, which will be discussed below.

Finding

28. First and foremost, the relevant Tenancy Agreement states at Clause 9.1 that the “Agreement shall be governed by the prevailing law of the DIFC, United Arab Emirates” and that upon failure to resolve any disputes connected to the Tenancy Agreement, the “dispute shall be referred to the DIFC Courts.” Therefore, it is clear and undisputed that the DIFC Courts have jurisdiction to decide this matter. As the claim value is less than AED 500,000, this claim is properly before the Small Claims Tribunal of the DIFC Courts.

29. As to the Claimant’s request that the Defendant vacate the apartment and settle all utility bills, the Defendant admitted the claim and has vacated and settled all utility bills. The Claimant has not contested the Defendant’s performance on these issues and thus the claims for vacating the apartment and settling the utility bills are no longer at issue in the case. It is undisputed that the Defendant did, in fact, vacate the property at the expiration of his Tenancy Agreement. The dispute remains over his failure to return the keys and access card and the security deposit charges.

30. Thus, the main questions to be resolved in this case are twofold. First, there is the dispute over the Defendant’s security deposit and the repairs which can and cannot be deducted against his deposit. Second, there is the issue of overstay rent and whether the Defendant should be required to reimburse the Claimant for overstay.

A. The Defendant’s Security Deposit and the Claimant’s Claims for Repairs

31. As regards the first issue, upon inspection, the Claimant amended the Claim Form to reflect their claim of AED 3,338.50 against the Defendant for repairs to the apartment. This claim was based on a number of quotations showing AED 550 for appliance repair, AED 1,200 for repainting, and AED 1,588.50 for other repairs detailed in a repair quotation. The Claimant agreed to waive an additional AED 3,190 for repair of two doors and AED 175 for repair of a tile in the bedroom. The Defendant continues to adamantly contest the charges for repainting and emphasised that he should only be charged for damage beyond “reasonable wear and tear.”

32. As the Defendant points out, the relevant Tenancy Agreement states in Clause 8.1.2 that “[i]f the Unit(s) is not returned to the Landlord in the same condition that it was received by the Tenant on the Commencement Date, including the garden and landscaping, save and except for reasonable wear and tear, the Managing Agent and/or Landlord has the right to deduct the necessary amount from the Security Deposit and as provided under clause 8.1.4 to return the Unit(s) to its initial condition.”

33. There is therefore no dispute that the Claimant is able, under the terms of the Tenancy Agreement, to deduct appropriate repairs from the Defendant’s security deposit. The dispute remains over what qualifies as “reasonable wear and tear.” Repairs of what would amount to “reasonable wear and tear” are meant to be covered by the Landlord under the terms of the Tenancy Agreement and the Landlord is specifically disallowed from making deductions against the security deposit to repair “reasonable wear and tear.”

34. Thus, the Court is tasked with reviewing the evidence provided to determine whether the charges being made against the security deposit are repairs that lie within or outside of “reasonable wear and tear.” The Claimant, as the applicant in this case, bears the burden of proving that each repair is within its right to deduct. This means that the Claimant must both prove that the item is damaged, requiring repair, and that the damage lies outside of “reasonable wear and tear.” It is for the Court to assess whether the Claimant has met this burden of proof on each deduction from the security deposit.

35. The charges that the Claimant seeks to deduct from the Defendant’s security deposit comprise three items. There is the charge of AED 550 for the appliance repair, the charge of AED 1,200 for repainting and the charge of AED 1,588.50 for other snag repairs. The Court will take each of these items in turn.

1) Appliance Repair

36. The Claimant submitted pictures of a cracked washing machine door and an askew freezer shelf along with a quotation for repair reflecting a cost of AED 550 to repair the washing machine, repair the “freezer flap” and cover a service fee. It is reasonable to conclude that a cracked washing machine door is outside of the realm of “reasonable wear and tear.” As for the AED 75 charge towards repair of the “freezer flap,” the pictures provided of the freezer shelf depict that the shelf is not in place and AED 75 is a reasonable enough charge to either repair or replace the shelf and thus can be deducted against the security deposit. Thus the full AED 550 charge is properly deducted against the Defendant’s security deposit including the service fee required to conduct the repair.

2) Repainting Charges

37. As regards the repainting charges, the Defendant argues that repainting the entire apartment amounts to repairing “reasonable wear and tear” as it is to be expected after a tenancy period that there will be some scuffs and marks on the walls. The quotation provided by the Claimant regarding the painting charges states that it will cost AED 1,200 for “Supply and applying of white emulsion water paint.” The quotation does not indicate which areas will be painted or how many coats of paint. The Claimant has not provided pictures or other evidence to indicate that the walls are in such bad repair as to require repainting the entire apartment. Rather, the Claimant only provided one picture of some holes in one area of the wall.

38. The Claimant has also stated that the apartment was left “very shabby, and with several holes and scratches etc., which has resulted in need for repainting” and that the apartment was left with “shabby walls, scratches & smudges.” These statements, without further pictures or further confirmation of what repair must be done beyond “reasonable wear and tear” do not meet the standard of proof required and therefore the Claimant cannot deduct the full repainting charges against the Defendant’s security deposit. Instead, the Court deems it appropriate to deduct AED 200 for repair of the holes in the portion of the wall indicated in the snag report provided after the hearing.

3) Remaining Repairs

39. As for the remaining individual charges on the snag report, there are a number which have not been substantiated by the Claimant. As previously mentioned, the Claimant bears the burden of proof to show that any deductions against the Defendant’s security deposit are for repair of damage beyond “reasonable wear and tear.”

40. The Claimant has provided two versions of a snag report with a number of pictures of damage, without further explanation as to what each picture reflects. The Claimant further provided a quotation of the work allegedly to be done, without any attempt to connect the claimed repair costs with the pictures of alleged damage. Thus, the Court has attempted, through careful review of the pictures in the snag report and the listed repairs on the quotation provided, to find substantiation for each repair claimed.

41. The two charges entitled “Supply and replacement of Hand shattaf set grohe” and “Supply and replacement of shower hose 5feet” are not acceptable for deduction from the Defendant’s security deposit for two reasons. First, the pictures provided show no obvious damage or reason for replacement. Furthermore, unless there is evidence of neglect or misuse on the part of the tenant, replacement of these plumbing fixtures would be required as part of “reasonable wear and tear.”

42. Furthermore, the two charges entitled “Supply and applying of white paint fen mastic emulsion water paint touch up ceiling bathroom” and “Repairing of ceiling gypsm cracks with applying putty bathroom area” are also not acceptable for deduction from the Defendant’s security deposit. This is because ceiling damage, unless the Claimant can show otherwise, is unlikely to be caused by tenant neglect or misuse. Furthermore, the Defendant points to the move-in report which reflects additional ceiling damage and alleges that he sought repair of ceiling damage during his tenancy. It follows that this damage is most likely due to “reasonable wear and tear.”

43. The picture reflecting “Supply and replacement of Bathtub overflow stopper normal,” shows that the stopper is missing and thus this is an appropriate charge outside of the realm of “reasonable wear and tear”. The picture reflecting “Supply and replacement of kitchen sink waste coupling,” shows that the waste basket is detached from the wall and lid. While the Defendant claimed that this was “reasonable wear and tear” and that he attempted to have this fixed, the disrepair shown could be considered to be beyond “reasonable wear and tear” and thus this is an appropriate charge. Finally, the picture of “Supply and replacement of shower glass rubber bidding with necessary fittings,” shows that the rubber binding is hanging off the shower door. While the Defendant contests this is “reasonable wear and tear”, the extent of the damage is beyond what is “reasonable wear and tear” and thus this is an appropriate charge.

44. This leaves two charges, “Supply and replacement of kitchen cupboard door with necessary fittings” and “Supply and fixing of matching bottom wooden skirting for kitchen cupboards.” The Claimant has provided pictures showing this damage, especially with regard to the wooden skirting damage which shows damage beyond “reasonable wear and tear.”

45. As for the replacement of a kitchen cupboard, the only seemingly relevant pictures are the picture in the third row and third column or the fourth row and third column of the original snag report but it is not clear that the damage depicted is in fact a kitchen cupboard door or that the repair requires replacement fittings. As these pictures depict some damage that is beyond “reasonable wear and tear” but the Claimant has not documented the damage enough to show that the listed repair was in fact necessary, the Court finds it reasonable to split the cost and allow half of the line item to be deducted from the security deposit.

46. In total, it is appropriate for the Claimant to deduct a total of AED 1405.75 from the Claimant’s security deposit of AED 6,500. This deduction includes AED 550 for appliance repair, AED 200 for wall and paint repair and AED 655.75 for items 3, 6, 8, 9, and one half of item 7 of the quotation provided by the Claimant. Thus, the Claimant is responsible to return AED 5,094.25 to the Defendant to reimburse his security deposit.

B. The Defendant’s claim for overstay rent

47. Moving on to the claim for overstay rent, the parties are in stark disagreement. Based on submission of final utility bills and the statements of the Defendant, it is not in dispute that the Defendant did in fact vacate the apartment by the expiration of his Tenancy Agreement. The dispute is over his failure to provide the landlord with his keys and access card in order that they perform an inspection to assess damage and charges against the security deposit.

48. The Claimant argues that by retaining the access card and keys to the Unit, the Defendant overstayed beyond the expiration of his Tenancy Agreement and thus should be responsible for overstay rent until the point at which he returned the keys and access card on 14 April 2016. The Claimant contends that they were unable to make use of this apartment during this time due to the Defendant’s actions.

49. It is clear that the Defendant was not in his right to retain the keys and access card to the apartment beyond the expiration of the Tenancy Agreement. The Defendant admits as such in his response to the Amended Claim Form. He contends that he had no choice but to do so in order to retain his legal rights to his security deposit. He knew that if the Claimant insisted in charging him for repainting, he would have no recourse to defend his rights as he contends he did not have the funds to initiate a court case himself. Finally, the Defendant reiterates that he vacated the property a few days prior to the expiration of the Tenancy Agreement and therefore did not actually overstay.

50. There are a number of Clauses in the Tenancy Agreement that are relevant to this dispute about overstay rent and return of the access card and keys:

a. Clause 8.1.1 provides that “[p]ro-rata rent shall be charged to the Tenant for any delay to the final inspection date.”

b. Clause 3.37 states that the Landlord undertakes to “[r]eturn all keys, access cards, remote controls etc to the Managing Agent upon termination or Expiration of the Tenancy Agreement. In the event Tenant fails to comply with this clause, such amounts necessary to replace the above items shall be deducted from the Security Deposit without further notice.”

c. Clause 3.13 states that the tenant shall “[n]ot change the locks. The loss of any or all keys, security passes and remotes shall be reported to security staff immediately and to the Managing Agent in writing. The charges of replacement of keys, security passes and remotes will be borne by the Tenant.”

51. Additionally, it is important to note that the Tenancy Agreement at issue here is governed by DIFC Law and therefore subject to the DIFC Contract Law, DIFC Law No. 6 of 2004 (“the DIFC Contract Law”). Section 117 of the DIFC Contract law provides as follows:

“117. Mitigation of harm (1) The non-performing party is not liable for harm suffered by the aggrieved party to the extent that the harm could have been reduced by the latter party’s taking reasonable steps. (2) The aggrieved party is entitled to recover any expenses reasonably incurred in attempting to reduce the harm.”

52. Taking the DIFC Contract law and the Tenancy Agreement together, it is quite clear that the Claimant had the right to re-enter the apartment upon expiration of the Tenancy Agreement in order to change the locks, pursuant to Clause 3.37 of the Agreement. In fact, under the DIFC Contract Law, the Claimant should re-enter in order to mitigate their damages.

53. Still, it is not clear whether the Claimant believed the Defendant to have vacated the Unit, and just retain the keys and access card. From the correspondence provided to the SCT, the Defendant states that he will “keep possession of the property” and “retain possession of the property” in emails dated 29 February 2016 and 1 March 2016 respectively. The breach letter provided by the Claimant’s Managing Agent to the Defendant on 10 March 2016 also reflects the impression that the Defendant was “illegally occupy[ing] the Unit.”

54. It is not until 15 March 2016, via email, that the Defendant informs the Claimant’s Managing Agent that he has ensured completion of the move-out procedure and settled all utility accounts prior to the expiration of the Tenancy Agreement. He informs that the move-out procedure was otherwise complete as of two weeks ago.

55. Thus, until 15 March 2016, Clause 8.1.1 of the Tenancy Agreement may validly apply as the Defendant was delaying a final inspection by retaining the keys and access card and giving the impression that he was occupying the Unit beyond the expiration of his Tenancy Agreement.

56. Taking all of these facts into account and making reference to the terms of the Tenancy Agreement and the DIFC Contract Law, it is reasonable to charge the Defendant for overstay up until 15 March 2016 and no later. There are evidentiary factors pulling in both directions considering that the Claimant reasonably believed the Defendant to be occupying the Unit until 15 March 2016 and therefore it could not reasonably be expected that the Claimant would re-enter the Unit, change the locks, and mitigate their damages until this time. On 15 March 2016, it would have been reasonable to incur that expense and charge it to the Defendant, pursuant to Section 117 of the DIFC Contract Law. In fact, the Claimant should have taken that action in order to avoid further damages.

57. Still, it is relevant that the Claimant’s Managing Agent, acting for the Claimant, continued to tell the Defendant that the Claimant was filing a DIFC Courts case as early as 2 March 2016. From this first mention, there was over a month’s delay on the Claimant’s part in filing this claim. These statements misled the Defendant into expecting resolution of the matter much quicker than actually occurred. Of course, the Defendant could have brought his own case to speed up the process but the ensuing delay should not be held against him.

58. The overstay rental amount for the fourteen days including 2 March 2016 until 15 March 2016 is calculated as AED 5,072. The Defendant can pay this amount to the Claimant or have it deducted from his security deposit.

59. Each party shall bear their own costs.

Issued by:

Maha Al Mehairi

Judicial Officer

Date of issue: 26 May 2016

At: 4 pm