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Claim No. SCT 060/2022

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 TRIBUNAL OF DIFC COURTS
BEFORE SCT JUDGE DELVIN SUMO

BETWEEN

LARGO

Claimant

and

LAWAHIZ

Defendant

JUDGMENT OF SCT JUDGE DELVIN SUMO

UPON the Claim Form being filed on 15 February 2022

AND UPON a Consultation being held on 28 February 2022 before SCT Judge Maitha AlShehhi with the Claimant and the Defendant’s representative in attendance

AND UPON the parties failing to reach a settlement at the Consultation

AND UPON a Hearing having been listed before SCT Judge Delvin Sumo on 18 March 2022 with the Claimant and the Defendant’s representative in attendance

AND UPON considering all documents submitted on the Court file

IT IS HEREBY ORDERED THAT:

1. The Claim is dismissed.

2. Each party shall bear its own costs.

Issued by:
Hayley Norton
SCT Judge
Date of issue: 24 March 2022
At: 2pm

THE REASONS

The Parties

1. The Claimant is Largo, an individual living in Abu Dhabi, UAE (the “Claimant”).

2. The Defendant is Lawahiz, a company registered in Dubai, UAE (the “Defendant”).

Background and the Preceding History

3. On 27 December 2021, the parties entered into a written membership agreement (the “Agreement”) whereby the Claimant became a VIP member of the Defendant and was provided use of the Defendant’s boats.

4. On 15 February 2022, the Claimant filed a Claim with the DIFC Courts’ Small Claims Tribunal (the “SCT”) seeking payment of sums allegedly owed to the Claimant by the Defendant for an alleged breach of the Agreement in the sum AED 44,000, which consists of the following:

5. On 21 February 2022, the Defendant filed an Acknowledgment of Service setting out its intention to defend all of the Claim.

6. The matter was called for a Consultation before SCT Judge Maitha AlShehhi on 28 February 2022. Although both of the parties were in attendance, they failed to reach a settlement.

7. In accordance with the rules and the procedures of the SCT, the matter was referred to me for determination, pursuant to a hearing held on 18 February 2022 (the “Hearing”). After considering all documents and evidence submitted on the Court file, I give my judgment below.

The Facts

8. As per the terms of the Agreement, the Claimant was required to pay a monthly commitment to the Defendant the sum of AED 2,000 as a membership fee, in the total sum of 24,000 (the “Fees”).

9. The Parties agreed to the following payment plan as set out within the Agreement (the “Payment Plan”) by way of postdated cheques (the “Cheques”):

10. In addition to the Fees, the Claimant provided the Defendant with a cheque to be held as a security deposit (the “Security Deposit Cheque”) in the sum of AED 10,000. Clause 4.6 of the Agreement states the following in this regard:

“A sum of AED 10,000 shall be paid as a security deposit to the Club which will be encashed by the Club prior to the start of the membership. The same shall be used as a remedy for failure by you to comply with your obligations under this Agreement. Any remaining balance will be paid to you at the end of your membership agreement”.

11. Clause 10.8 deals specifically with instances of damage caused to the boat and states the following:

“You will be solely responsible for the costs of repairing as a result of damages that has been caused to the Boat intentionally or poor judgement and as a result of which Insurance cannot be claimed. In the event of an accident due to unforeseen situation where the cost of repairing any accidental damage does not exceed AED 15,000 such cost should be paid by the member concerned. If the cost of repairing the damage exceeds AED 15,000, you will be responsible for paying AED 15,000 towards the insurance excess in case the insurance has agreed to honour the claim based on the situation therein, however if for any reason insurance rejects the claim then you will be liable for the full amount of damage, any third-party property and any consequential liability arising due to the incident. Failure to pay will lead to suspension as per clause 8.1.1 and 4.6 can be applied and the club has all rights to file a legal suit for recovery of the amount due to the club”.

The Claim

12. The Claimant alleges that the Defendant has failed to adhere to the terms of the Agreement, which, the Claimant submits constitutes a breach of the Agreement.

13. The Claimant submits that the Defendant was not permitted to cash the Security Deposit Cheque under the terms of the Agreement and claims the refund of the amount of AED 10,000. The Claimant claims that he is therefore entitled to claim the termination of the Agreement and the refund of the Fees in the sum of AED 24,000.

14. The Claimant also claims that he is entitled to compensation in the sum of AED 10,000 based upon the civil transaction law. Within his written submissions, the Claimant refers to various articles of the law, however, he fails to specify the legislation to which he is referring.

The Defence

15. The Defendant alleges that the Claimant had use of a boat on 28 January 2022 (the “Claimant’s Boat”), and while parking the Claimant’s Boat, the Claimant lost control, hit, and damaged (the “Accident”) another boat (the “Damaged Boat”). The Defendant alleges to have repaired the Damaged Boat, however, pursuant to clause 10.8 as stated in paragraph 11 of this Judgment, the Defendant claims that the Claimant is responsible for the costs related to the repair of the Damaged Boat in the sum of AED 12,500 (the “Costs”).

16. The Claimant refers to clause 10.9 of the Agreement which reads as follows:

“The repair costs of the Boat’s quotation will be full and final and cannot be challenged, we have the right to obtain quote from Lufar. suppliers. Failure to settle payment will lead to clause 8.1.1 and clause 4.6”.

17. The Defendant alleges that it had made several attempts to contact the Claimant in order to settle the Costs, however, the Claimant refused the make any such payment. Therefore, the Defendant claims that it was entitled to cash the Security Deposit Cheque as stated in clauses 4.6 and 10.8, and use the amount for the Costs. The Defendant claims that, initially, it was a special gesture towards the Claimant to not cash the Security Deposit Cheque, however, pursuant to clause 4.6 of the Agreement, the Defendant is entitled to cash the Security Deposit Cheque at the time the Claimant became a member of the Defendant.

18. In reply, the Claimant contends that he is not responsible for the Costs, and claims that, under the terms of the Agreement, he can only be held responsible for damages caused to the Claimant’s Boat. The Claimant further submits that only the Abu Dhabi Coastal Guard Station is responsible for dealing with matters concerning the determination of the damages caused to the boats. The Claimant alleges that the Defendant failed to inform the relevant authorities.

19. With regards to the termination of the Agreement, the Defendant claims that the termination may be initiated after completion of 6 months, in addition to 1 month notice. Hence, the last day of the Contract would be 31 July 2022. The Defendant refers to clause 8.6 of the Agreement which states the following:

“You may terminate this Agreement by giving us one months’ notice in writing; however, no such notice can be served in the first six months of the term. If you cancel your membership part-way through the membership year we will refund the membership fee you have paid for the remainder of the year on a pro-rata basis and return any post-dated cheques that relate to the period after the expiry of your notice”.

20. The Defendant further claims the sum of AED 2,500 as the remaining amount for the Costs and the sum of 25,000 for liquidated damages for the inconvenience caused to the business as the Damaged Boat could not be used due to the damages and the Defendant not paying the Costs (the “Counterclaim”).

Discussion

Jurisdiction

21. The jurisdiction of the DIFC Courts is determined by Article 5(A) of the Judicial Authority Law, Dubai Law No. 12 of 2004, as amended (the “JAL”), which provides a number of limited gateways through which the DIFC Courts may exercise jurisdiction over a claim, which are, as relevant:

22. Pursuant to the JAL, the DIFC Courts can exercise its jurisdiction over a matter that is unrelated to the DIFC, where the parties have agreed in writing that any dispute arising between them would be referred to the DIFC Courts for adjudication. Such a provision would allow the parties to ‘opt-in’ to the DIFC Courts’ jurisdiction, provided that it clearly demonstrates the parties’ intention to do so.

23. It must be noted that by virtue of an opt-in clause found at clause 15 of the Agreement, I am of the view that the parties have opted into the DIFC Courts’ jurisdiction to hear and determine this matter. The relevant opt-in clause states as follows:

24. As the claim value is less than AED 500,000, this claim is properly before the SCT, pursuant to Rule 53.2 of the Rules of the DIFC Courts.

Findings

25. In essence, the disagreement between the parties pertains to whether the Defendant was entitled to cash the Security Deposit Cheque for the Costs.

26. In my view, the Agreement between parties is clear as to when the Security Deposit may be cashed. Clause 4.6 of the Agreement clearly states that the Defendant shall cash the Security Deposit Cheque prior to the start of the Contract. However, the following question that arises is whether the Defendant was entitled to use the amount of the Security Deposit Cheque towards Costs.

27. To answer that question, I would need to establish first whether the Accident falls within the remit of the Contract. As mentioned earlier, clause 10.8 deals specifically with instances of damage to the boats and states that ‘you will be solely responsible for the costs of repairing as a result of damages that has been caused to the Boat intentionally or poor judgement and as a result of which Insurance cannot be claimed’.

28. Furthermore, clause 10 under Schedule 2 - Rule and Regulation of the Agreement states:

“You must return our Boats to us in the condition that they were in at the start of your trip. lf you fail to do so, you will be responsible for any additional cleaning and maintenance costs incurred to return the Boat to its original condition. Boats should be returned to the same berth it departed at”.

29. In my view, and considering clauses 10.8 and 10 under schedule 2, the Agreement appears to relate only to boats which are used by the Claimant. The Agreement does not include any provisions in the event damages are caused to other boats. Therefore, I find that the Accident does not fall within the remit of the Agreement and the Defendant was not entitled to use the amount of the Security Deposit Cheque.

30. Having said that, the Security Deposit Cheque shall be held by the Defendant as a security deposit pursuant to clause 4.6 of the Agreement and shall be paid to the Claimant at the end of the Contract. Therefore, I dismiss the Claimant’s claim in the sum of AED 10,000 being the amount of the Security Deposit Cheque.

31. I will now turn to the Claimant’s claim with regards to the termination of the Agreement and the return of the Cheques with the total sum of AED 24,000. The Defendant has rightfully submitted that, pursuant to clause 8.6, the Agreement may be terminated after completion of 6 months, in addition to 1 month notice. I am satisfied that the Claimant has agreed to the terms of the Agreement, and he has failed to provide any further proof or evidence demonstrating that this clause should not be upheld.

32. In light of the aforementioned, I dismiss the Claimant’s claim for termination of the Agreement and the return of the Cheques in the sum of AED 24,000. Nevertheless, the Claimant is at liberty to terminate the Agreement after the completion of 6 months, in accordance with clause 8.6 of the Agreement.

33. The Claimant’s claim for compensation in the sum of AED 10,000 is not substantiated, and the Claimant has failed to provide any further proof or evidence to support the concerned claim. Therefore, I find that this claim shall be dismissed.

34. Furthermore, I note that the Defendant has not formally filed its Counterclaim, which would allow the Claimant to respond. Therefore, I find that there is no Counterclaim to be considered.

Conclusion

35. The Claim is dismissed.

36. Each party shall bear its own costs.