Hathai v Hansel [2017] DIFC SCT 083

May 22, 2017 Judgments,SCT - Judgments and Orders

Claim No: SCT 083/2017

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 MAHA AL MEHAIRI

BETWEEN

HATHAI

Claimant

and

HANSEL

Defendant

Hearing:15 May 2017

Judgment: 22 May 2017

JUDGMENT OF SCT JUDGE MAHA AL MEHAIRI

UPON hearing the Claimant and the Defendant

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

AND UPON review of the Judgment of SCT Judge Natasha Bakirci in Gert v Germaine [2016] DIFC SCT 097

IT IS HEREBY ORDERED THAT:

1.The Defendants shall pay the Claimant AED 20,832 as damages covering the period from the date that the Claim was filed to the date the Judgement is issued.

2. The Claimant is free to vacate the Premises on any day after release of this Judgment without imposition of the early termination penalties outline in the Tenancy Contract.

3. The Claimant shall pay the amount of AED 333 per day as rent to the Defendants from 23 May 2017 to the date that the actual evacuation of the Premises is completed, after which the Defendant will reimburse the remainder of the pre-paid rent to the Claimant.

4. The Defendant shall submit the following listed documents to the SCT Registry, by no later than 5 June 2017:

a) A documented inspection of the Premises, including photographs of necessary repairs;

b) A list of proposed necessary repairs; and

c) Quotes from qualified service providers for completion of the necessary repairs.

5. Upon approval of the submitted documents by the SCT Registry, the Defendant shall transfer the remainder of the AED 6,000 security deposit, if any, to the Claimant within 15 days.

6. The Claimant’s additional claims are dismissed.

7. The parties shall bear their own costs.

Issued by:

Nassir Al Nasser

SCT Judge

Date of issue: 22 May 2017

At: 4pm

THE REASONS

Parties

1.The Claimant is Hathai (the “Claimant”), the tenant of Unit 562 in Residential Building in the DIFC (the “Premises”).

2. The Defendant is Hansel (the “Defendant” or the “Landlord”), the Claimant’s landlord.

Background and the Preceding History

3. The Claimant and Defendant entered into a “Tenancy Contract” for the period of 17 January 2017 until 17 January 2018 with a rental amount of AED 120,000 for the year, payable in one cheque.

4. Before settling in the Premises the Claimant noticed a few issues with the Premises, namely the broken dishwasher cover, holes in the wall and a large stain in the left sink, all of which the Defendant promised would be fixed before the Claimant moved in. On 21 January 2017, after settling in the Premises, the Claimant noticed that the issues were not fixed as promised. The Claimant notified the Defendant with photos to verify that the issues persisted. The Landlord confirmed again that he would send his maintenance team to address these issues as well as any other issues that may arise during the inspection including the smell originating from underneath the kitchen sink. The maintenance team called the Claimant on 22 January 2017 and agreed to visit the Premises on 23 January 2017. However the maintenance team failed to attend.

5. On 23 January 2017, the Claimant requested from the Landlord the contact details of the maintenance team but the Landlord was not responsive. On 24 January 2017, the Claimant contacted another maintenance company under the name Hearn.

6. As the water and electricity were not connected at the time of the initial viewing of the Premises, the Claimant did not notice the following issues, which were subsequently discovered, documented and reported to the Landlord (the “Issues”):

a) Damp floorboards in kitchen cupboards

b) Fungal growth in kitchen cupboards

c) Insect infestation (which is currently ongoing) underneath the kitchen sink plus nearby cupboards and on work surfaces

d) Dirty air conditioner filters were not cleaned

e) Faulty lightbulbs that needed replacement

f) Water sprinkler tap in the guest toilet was rusted and did not rotate and thus also needed replacement

g) Sewage odour originating from three floor-traps in the flat, requiring cleaning

h) Leaky washing machine, which needed to be fixed

7. On 28 January 2017, the Claimant operated the washing machine for the first time and soon after noticed that it was leaking. A photo was sent to the Landlord showing the leak from the washing machine, damaged wood/fungal infestation under the sink, as well as the defect in the cupboard above the sink which was also covered with insects. The Landlord was then contacted by telephone to inquire when the issues would be resolved, but no definite answer was given.

8. The pest control team came to the Premises five times. However, the pest infestation remained and more work was needed to eradicate the problem. The Claimant was informed that the wood under the kitchen sink required replacement to completely resolve the issue.

9. On 29 January 2017, the Claimant received a quotation from Hearn and sent it to the Landlord to inform him that the Hearn team were arriving the next day and that they required payment prior to starting their job in order to buy the necessary parts for the job. Due to the fact that the Landlord was late in his response, the Claimant paid the whole amount to Hearn for their services. Once the Landlord was sent the invoice of AED 1,000, he requested a detailed invoice that itemized each service, alleging that the services provided were not approved by the Landlord.

10. From the period of February until April the Claimant complained about the Issues to the Landlord and sent pictures as proof of their ongoing status. These complaints resulted in considerable phone and WhatsApp exchanges between the Claimant and the Landlord. There were attempts from the maintenance company to solve the issues but without any success.

11. The Claimant then filed a claim with the DIFC Courts’ Small Claims Tribunal (the “SCT”) on 12 April 2017, seeking the following remedies (the “Remedies”) totalling AED 149,059.

a) A refund of his rent in the amount of AED 120,000;

b) Reimbursement of the Security Deposit of AED 6,000;

c) Reimbursement of broker commissions of AED 6,000;

d) Reimbursement of DEWA invoice in the amount AED 4,565;

e) Reimbursement of DU invoice in the amount AED 1,416;

f) Reimbursement of Empower invoice in the amount AED 3,974;

g) Reimbursement of moving company invoice in the amount AED 4,400;

h) Reimbursement of Hearn invoices totalling AED 1,000;

i) Reimbursement of pest control bill in the amount of AED 250;

j) Reimbursement of mould inspection report bill of AED 500; and

k) Additional cleaning bills expected to amount to AED 1,000.

12. The parties attended the Consultation before SCT Officer Nasser Al Nassir on 30 April 2017, but were unable to reach a settlement. Thus, a Hearing was scheduled before me on 15 May 2017.

Particulars and Defence

13. The Claimant argued in his Claim Form that there has been an ongoing maintenance problem in the Premises, citing the Issues detailed and documented. While the Claimant acknowledged that many attempts of communication had been made to remedy these problems, he claimed that they persisted such that he sought to be released from his Tenancy Contract, sought return of his full rental amount, and sought reimbursement of his other expenses related to the Issues. The Claimant stated that the Defendant responded to his requests stating that any termination of the Tenancy Contract would be as per the penalties included therein, in spite of the ongoing maintenance issues. The Claimant asserted that he has not been able to fully use the Premises, and that he and his wife were unable to fully enjoy the Premises due to the smell of the apartment and the ongoing issues. As such the Claimant argues that he should receive compensation based on his inability to use the full extent of his apartment during the period of his tenancy.

14. The Defendant responded to the Claim, indicating his intent to defend against it. In his submission, he pointed out that the Premises were given to the Claimant in very good condition, and that the only issues in the Premises were the three points that the Claimant highlighted before he moved in: (1) the holes in the wall, (2) the stain in the left sink, and (3) the broken door of the dishwasher. The Defendant contended that these issues were fixed by Hearn as indicated by the Claimant and confirmed by the Defendant. The Defendant also asserted that the building in which the Premises are located is considered one of the most well-maintained buildings in the DIFC. The Premises were handed to the Defendant one year ago, in good condition, and thus the rest of the Issues that have arisen in the Premises are a result of the improper care of the Claimant.

15. The Defendant argues that the bill that the Claimant paid from Hearn did not match with the items that the Claimant originally requested maintenance for, being the dishwasher door, the sink, and the holes in the wall. The Defendant requested an itemized bill be provided from Hearn, however the Claimant failed to provide one. The invoice from Hearn included installation of valves and bulbs, installation of transformers and halogens lights, replacement of a wooden piece, and cleaning floor traps. The total amount of the invoice was AED 1,000 and the Defendant argued that, pursuant to Clause 2.3 of the Tenancy Contract, any repairs amounting to more than AED 500 must be approved by the Defendant before the Claimant is allowed to proceed. Clause 2.3 states:

“2.3 Except for defects in the property structure or fittings, minor maintenance job worth less than or equal to AED 500/- will be paid by Tenant and the Major repair works costing more than this amount will be paid by the Landlord. Such maintenance requests are expected to be carried out in reasonable time. [sic]”

16. The Defendant also argued that if the Issues were originally in the Premises, the Claimant would not have stayed in the Premises for ten days before pointing them out to the Defendant. On 19 February 2017 the Claimant, for the first time, complained about the fungus and the insect infestation. The Defendant believes that these issues are caused by the Claimant’s lifestyle.

17. In his defence the Defendant pointed out that he arranged for maintenance to come and fix the Issues on several occasions, but the Claimant refused to answer his phone or let the maintenance team into the Premises to fix the Issues.

18. At the Hearing, both parties reiterated their arguments. The Claimant argued that he is owed compensation for the Defendants’ failure to maintain the Premises in living condition. The Claimant also argued that the fungus problem is an old problem, as evidenced by the Claimant’s expert report, and it should have been taken care of by the Defendant before the Claimant rented the Premises. The Defendant argued that the problems that occurred in the Premises are due to the fact that the Claimant did not take care of the Premises. The Landlord reiterated that his duty toward the Premises has been properly fulfilled.

Finding

19. First and foremost, the relevant Tenancy Contract falls under DIFC Courts’ jurisdiction as it concerns the Premises which are located within the DIFC. Therefore, it is clear and undisputed that the DIFC Courts have jurisdiction to decide this matter and should apply DIFC Law in doing so. As the claim value is less than AED 500,000, this claim is properly before the Small Claims Tribunal of the DIFC Courts.

20. There is just one issue to be decided in this dispute: whether the Defendant upheld his responsibilities under the Tenancy Contract and if not, what remedy is appropriate. This issue is governed by the DIFC Contract Law, DIFC Law No. 6 of 2004 (hereafter the “DIFC Contract Law”).

21. The relevant provisions of the DIFC Contract Law are as follows:

(a) Article 77 of the DIFC Contract Law states that “Non-performance [of a contract] is failure by a party to perform any one or more of its obligations under the contract, including defective performance or late performance.” Article 78 states that “A party may not rely on the non-performance of the other party to the extent that such non-performance was caused by the first party’s act or omission or by another event as to which the first party bears the risk.”

(b) Article 82(1) of the DIFC Contract Law states that “Except with respect to a mere obligation to pay, non-performance by a party is excused if that party proves that the non-performance was due to an impediment beyond its control and that it could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences.” Article 82(3) goes on to state that “The party who fails to perform must give notice to the other party of the impediment and its effect on its ability to perform. If the notice is not received by the other party within a reasonable time after the party who fails to perform knew or ought to have known of the impediment, it is liable for damages resulting from such non-receipt.” Furthermore, Article 82(4) states that “Nothing in this Article prevents a party from exercising a right to terminate the contract or to withhold performance or request interest on money due.”

(c) Article 86(1) of the DIFC Contract Law states “A party may terminate the contract where the failure of the other party to perform an obligation under the contract amounts to a fundamental non-performance.” Article 86(2) states that:

“In determining whether a failure to perform an obligation amounts to a fundamental non-performance regard shall be had, in particular, to whether:

a. the non-performance substantially deprives the aggrieved party of what it was entitled to expect under the contract;

b. . . .;

c. . . .;

d. the non-performance gives the aggrieved party reason to believe that it cannot rely on the other party’s future performance.”

d. Article 87(1) of the DIFC Contract Law provides that “The right of a party to terminate the contract is exercised by notice to the other party.” Article 89(1) states that “Termination of the contract releases both parties from their obligation to effect and to receive future performance.” Article 89(2) states that “Termination does not preclude a claim for damages for non-performance.”

e. Article 90(1) of the DIFC Contract Law provides that “On termination of contract pursuant to Articles 86 or 88 either party may claim restitution of whatever it has supplied, provided that such party concurrently makes restitution of whatever it has received. If restitution in kind is not possible or appropriate allowance should be made in money whenever reasonable.” Article 90(2) states “However, if performance of the contract has extended over a period of time and the contract is divisible, such restitution can only be claimed for the period after termination has taken effect.”

22. It is understood from the Tenancy Contract that major maintenance is the sole responsibility of the Defendant to address, pursuant to Clause 2 of the Tenancy Contract, which states that:

“2.2 All general maintenance work in the property is the responsibility of the Tenant.

2.3 Except for defects in the property structure or fittings, minor maintenance job worth less than or equal to AED 500/- will be paid by Tenant and the Major repair works costing more than this amount will be paid by the Landlord. Such maintenance requests are expected to be carried out in reasonable time. [sic]”

23. It was never substantially contended by the Defendant that the mould problem did not qualify as major maintenance especially as the resolution of such problem needs a couple of days to fix. The parties were given a chance to provide expert reports on the matter, the Claimant provided an expert report that stated that the mould had spread into the kitchen area and into the AC ducts. The Defendant also provided an expert report that did not address the mould issue and instead provided a general inspection. I am satisfied that the mould issue is considered a “major maintenance” issue and that it needs quick intervention before it spreads in the Premises. I am also satisfied that the Defendant’s failure to provide resolution of the mould problem within a “reasonable time” would constitute a violation of the Tenancy Contract.

24. The mould issue was pointed out by the Claimant as early as 28 January 2017, when he sent a picture through WhatsApp and complaining about the smell. As such, it is not a problem that was caused in the ten days that the Claimant stayed in the Premises or by the inappropriate care of the Claimant. Therefore, I am satisfied that the mould and the bad smell caused by it qualifies as a major maintenance problem that has not been remedied within reasonable time, as it has been ongoing almost throughout the term of the Tenancy Contract, at least since January 2017.

25. Thus, it follows that as major maintenance is the Defendant’s responsibility as Landlord and as the problem has not been remedied, the Defendant is in breach of the Tenancy Contract due to non-performance of Clause 2.2 regarding major maintenance.

26. Pursuant to Article 86(1) of the DIFC Contract Law, the Claimant is able to terminate the Tenancy Contract if the Defendants’ non-performance amounted to a “fundamental non-performance.” In considering the factors listed in Article 86(2), it is relevant to assess how intrusive the mould and bad smell that was caused by it were and whether these issues deprived the Claimant of “what [he] was entitled to expect under the contract” (Article 86(2)(a)). It was clear upon hearing the parties that the smell was quite intrusive and deprived the Claimant of the full use of his Premises. The Claimant was entitled to the use of the full Premises at all times during the term of his tenancy with reasonable allowances for maintenance and repair. I consider that the frequent maintenance requests and the inability to use the Premises as expected deprived the Claimant of what was expected under the contract.

27. Furthermore, the Defendant did not provide proof that he contacted the maintenance team or that they showed up in the building. Furthermore, ongoing non-performance gave the Claimant reason to believe that he could not rely on the Defendant to ultimately fix the problem. This further qualifies as fundamental non-performance under Article 86(2)(d) of the DIFC Contract Law. Therefore, the Claimant had the right to terminate the Tenancy Contract pursuant to Article 86 of the DIFC Contract Law and shall not be subject to the penalty terms of the Tenancy Contract applicable to early termination.

28. This leaves the question of the appropriate remedy to grant the Claimant for the Defendant’s non-performance of the Tenancy Contract. Part 2 of the DIFC Law of Damages and Remedies, Law No. 7 of 2005, states:

“8. Right to damages

Any non-performance gives the aggrieved party a right to damages either exclusively or in conjunction with any other remedies except where the non-performance is excused under the Law of Contract.

. . .

10. Measure of damages

Subject to the limitations stated in this Part 2 of the Law, the injured party has a right to damages as measured by:

(a) the loss in the value to him of the other party’s performance caused by its failure or deficiency, plus

(b) any other loss, including incidental or consequential loss, caused by the breach, less

11. Certainty of harm

(1) Compensation is due only for loss, including future loss, that is established with a reasonable degree of certainty.

(2) Compensation may be due for the loss of an opportunity in proportion to the probability of its occurrence.

(3) Where the amount of damages cannot be established with a sufficient degree of certainty, the assessment is at the discretion of the Court.”

29. As the loss to the Claimant of full enjoyment of the Premises cannot be established with certainty and as the Court has the discretion to assess appropriate calculation of damages in these circumstances, pursuant to Article 11(3) of the DIFC Law of Damages and Remedies, I find that the Defendant shall reimburse half of the monthly rent amount to the Claimant from the period of 17 January 2017 to 22 May 2017. I find that the Claimant did benefit from use of the Premises and thus he is required to pay half of the rent incurred from signing the Tenancy Contract to the issuance of this Judgment.

30. The Claimant’s rent for one year is AED 120,000. He thus pays AED 10,000 a month and AED 333 per day. The Claimant has lived in the Premises for 4 months and 5 days, amounting to AED 41,665 of rent paid, half of which comes to AED 20,832. As such, the Defendant shall pay the Claimant AED 20,832 as reimbursement of half of the rent paid for this time period.

31. The Claimant shall continue to pay the amount of AED 333 per day as rent to the Defendant from 24 May 2017 until the date that the actual evacuation of the Premises is completed, after which the Defendant will reimburse the remainder of the rental amount to the Claimant. As the Claimant has already pre-paid the entire rent due up until 17 January 2018, this direction will not require the Claimant to pay the Defendant any additional amounts for rent but instead will determine the total amount that the Defendant must reimburse the Claimant from the pre-paid amount. If the Claimant chooses to remain in the Premises until the completion of the tenancy period, no rent shall be reimbursed under this direction.

32. The Claimant’s Claim for the Hearn invoice will not be reimbursed due to the fact the Claimant had prior knowledge of the amount being above AED 1,000 and decided to go ahead with the repairs without prior consent from the Defendant and without giving the Defendant enough notice for him to consent on the amount.

33. The Claimant’s claim for the pest control invoice is also rejected because no invoice was provided by the Claimant. Additionally, reimbursement for the expert report invoice is rejected as the parties shall bear their own litigation and legal expenses.

34. The Claimant’s Claim for reimbursement of broker commissions, Dewa, DU, Empower, moving fees, and additional cleaning invoices are all rejected as these expenses would have been incurred regardless of the maintenance issues.

35. The Claimant’s Claim for reimbursement of his AED 6,000 security deposit is granted, although the Defendant shall have the opportunity to deduct valid expenses against the security deposit, as per the Tenancy Contract. The Defendant shall submit documented inspection of the Premises, a list of proposed deductions against the security deposit, and corresponding quotes for the needed repairs to the Small Claims Tribunal Registry by no later than 1 June 2017 for approval. Upon response from the SCT Registry, the Defendant shall have 15 days to transfer the remainder of the security deposit, if any, to the Claimant.