Haley LLC v Hakon [2016] DIFC SCT 199

January 30, 2017 Judgments,SCT - Judgments and Orders

laim No: SCT 199/2016

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 OF DIFC COURTS

BEFORE SCT JUDGE MAHA AL MEHAIRI

BETWEEN

HALEY LLC

Claimant

and

HAKON

Defendant

Hearing: 3 January 2017

Judgment: 30 January 2017

JUDGMENT OF SCT JUDGE MAHA AL MEHAIRI

UPON the Claim Form being filed on 16 November 2016;

AND UPON the Defendant filing an application to contest jurisdiction on 23 November 2016;

AND UPON a Jurisdiction Hearing being held before SCT Judge Mariam Deen on 28 November, with the Claimant in attendance but the Defendant failing to attend despite receiving sufficient notice of the Hearing;

AND UPON an Order being issued by SCT Judge Mariam Deen on 28 November 2016 finding the Small Claims Tribunal of the DIFC Courts to have jurisdiction to hear the dispute;

AND UPON the parties being called on 5 December 2016 for a Consultation and 12 December 2016 for a Second Consultation with SCT Officer Ayesha Bin Kalban, with the Claimant’s representative and the Defendant in attendance;

AND UPON the parties not having reached settlement;

AND UPON a Hearing having been scheduled before SCT Judge Mariam Deen on 21 December 2016, with the Claimant’s representative in attendance and the Defendant participating via telephone;

AND UPON a Second Hearing having been scheduled before SCT Judge Maha Al Mehairi on 3 January 2016, with the Claimant’s representative in attendance and the Defendant attending by phone;

AND UPON reviewing all documents and evidence submitted in the Court file;

IT IS HEREBY ORDERED THAT:

1.The Defendant shall pay the Claimant the amount AED 50,030.56 being the service charge for the Defendant’s Property.

2. The Defendant shall reimburse the Claimant for the Court fee in the sum of AED 2,382.

Issued by:

Maha AlMehairi

SCT Judge

Date of issue: 30 January 2017

At: 12pm

THE REASONS

Parties

1.Haley (hereafter the “Claimant”) is a legal entity filing a claim against the Defendant regarding the alleged non-payment of service charges.

2. Hakon (hereafter the “Defendant”) is the owner of Unit, DIFC, Dubai, UAE (the “Property”).

Background and the Preceding History

3. On 16 November 2016 the Claimant filed a claim in the DIFC Courts’ Small Claims Tribunal (the “SCT”) seeking payment by the Defendant of service charges and penalties amounting to AED 50,030.58, relating to the Defendant’s ownership of the Property. The Claimant also sought reimbursement of the Court fee.

4. The Defendant responded to the claim on 23 November 2016 by contesting the jurisdiction of the DIFC Courts and the Small Claims Tribunal over the dispute. A Jurisdiction Hearing was held before SCT Judge Mariam Deen on 28 November with the Claimant’s representative’s oral submissions being heard and the Defendant’s written submissions being considered due to his failure to attend despite receiving sufficient notice of the Hearing. SCT Judge Mariam Deen issued an Order on 28 November 2016 finding the Small Claims Tribunal of the DIFC Courts to have jurisdiction to hear the dispute.

5. The parties were called for a Consultation with SCT Officer Ayesha Bin Kalban on 5 December 2016, and a Second Consultation on 12 December 2016, with the Claimant’s representative and the Defendant in attendance, however, a settlement could not be reached.

6. A Hearing was scheduled before SCT Judge Mariam Deen on 21 December 2016, with the Claimant’s representative attending in person and the Defendant attending via telephone, although due to sickness, the Defendant was unable to give significant oral submissions. Both parties were allowed additional time to make further written submissions and a Second Hearing was scheduled before me on 3 January 2016.

The Claim

7. The Claimant argues that, on 7 October 2013, pursuant to Strata Title Law (DIFC Law No. 5 of 2007), Haley was established to manage the building Haley LLC, DIFC and this entity is therefore responsible for invoicing all unit owners to pay service charges in order to manage the building.

8. The dispute arising between the parties is in regards to the Defendant’s alleged failure to pay the service charge in relation to the residential in DIFC. The Claimant contends that the Defendant, despite a number of follow-ups and letters, has failed to pay the service charges totalling an amount of AED 50,030.56 which comprises as follows: (the “Service Charge”)

(a) Service charges in the amount of AED 49,109.

(b) Penalty for late payment 12% per annum in the amount of AED 920.89.

9. This led the Claimant to file a Small Claim against the Defendant for the payment of the Service Charge, as well as the DIFC Courts Fee in the amount of AED 2,382.

The Defence

10. The Defendant filed the Acknowledgment of Service dated 23 November 2017 indicating his intention to defend the whole claim. In his argument at the hearing the Defendant contends that the amount submitted for the service charge are exaggerated and the quality of service does not meet the amount paid. He also added that Claimant did not submit an audit statement of account by a certified accounting office to prove that the expenses have been spent for the maintenance of the building in the previous years. The Defendant did not submit any evidence or documentation in support of his defence.

Hearing

11. In the hearing the Defendant reiterated his arguments, he contends that the numbers provided by the Defendant are not reliable and should come from an auditing company rather than from the Claimant itself.

12. The Claimant replied to those allegations by explaining the procedures the company uses to produce the numbers, as required by the adopted Strata Management System (SMS). The Claimant submitted a copy of the “Strata Management Statement for Hayley LLC” in support of its arguments. This document details that a meeting of the Building Committee may constitute a General Meeting of the Building Body Corporate. At this meeting, Ordinary Resolutions may be issued and then must be approved by each Component Committee. Such Ordinary Resolutions, to include the Annual Budget of the Building Body Corporate, will be sent to all unit owners along with the minutes of the General meeting of the Building Body Corporate.

13. The Claimant pointed out, as indicated on page 5 of the SMS:

“Owners within each Component will pay Service Charges to the Component Body Corporate in relation to Component Common Property and related goods and services. Owners will also benefit from the Principal Common Property and related services and facilities. The Building Body Corporate will charge Building Service Charges to each Component Body Corporate who will pass these costs on to Owners in the form of Component Service Charges.”

14. The Claimant highlighted that the calculations for the service charges had already been submitted to the Defendant during the Consultation phase of the SCT case and even prior to that were sent to the Defendant along with the relevant invoices. The Claimant has also relied on Schedule C of the SMS Document, which states that:

“Component Bodies Corporate and Owners must promptly pay Service Charges and the relevant Committee pursuant to the Strata Title Law has the power to enforce By-laws, or to enforce payment of Service Charges or any other sums properly payable by Component Bodies Corporate or Owners, through the use of the By-laws Compliance Notice procedure and other dispute resolution mechanisms set down in the Strata Title Law.”

Discussion

15. The question put before the Court is, are the amounts invoiced by the Claimant bound legally to be paid by the Defendant or not.

16. Based on the arguments put forward at the Hearing, and based on consideration of the DIFC Strata Law and the SMS Document applicable in this dispute, I am satisfied that the Claimant has proven its position.

17. The Haley LLC Committee of Management at the Annual General Assembly “AGA” prepares the Service Charge Budget with the Body Corporate Manager for each year. This budget includes anticipated expenditures and is shared with the DIFC Registrar at the AGA, and then adopted by simple majority through a resolution with the approval of the DIFC Registrar of Real Property. Such approval would not be granted had the process not been conducted as per the requirements of the DIFC Strata Title Law.

18. The service charge budget of AED 24.64 per sq. ft. for the Defendant’s Property for the financial year 01/06/2015 to 31/05/2016 was approved by the Haley and adopted at the AGA meeting. The Minutes of the meeting have been signed by the Haley LLC Members and have been approved by the DIFC Registrar of Real Property. As such, the service charge calculations go through a lengthy and transparent process to become certified and then these calculations are circulated to all owners.

19. As to the Defendant’s obligation to pay the service charge, as mentioned above, Schedule C of the SMS Document requires that:

20. Therefore, it is clear that the Defendant, as an owner in the building, is required to pay the service charges relevant to his Property. The Defendant has not submitted any evidence to suggest or support his allegation that the calculations provided by the Claimant are incorrect or exaggerated. While the Defendant has expressed dissatisfaction with how the service charges have previously been spent and how the building has been maintained, he has not brought any counterclaim and such dissatisfaction does not justify failure to pay. The Defendant has not provided any other defence in support of his failure to pay and therefore it is clear that he must pay the service charges.

Conclusion

21. For the above-mentioned reasons, the Defendant is liable to pay the sum of AED 50,030.56 in addition to AED 2,382 as Court fees.