November 01, 2022 SCT - JUDGMENTS AND ORDERS
Claim No. SCT 293/2022
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 H.E. JUSTICE NASSIR AL NASSER
BETWEEN
LICFT
Claimant
and
LASUT
Defendant
| Hearing : | 9 September 2022 |
|---|---|
| Further Submission : | 24 October 2022 |
| Judgment : | 1 November 2022 |
JUDGMENT OF H.E. JUSTICE NASSIR AL NASSER
UPON this Claim being filed on 29 July 2022
AND UPON a hearing having been listed before H.E. Justice Nassir Al Nasser on 9 September 2022 at which the Claimant’s and Defendant’s representatives were in attendance
AND UPON reading the submissions and evidence filed and recorded on the Court file
IT IS HEREBY ORDERED THAT:
1. The Defendant shall pay the Claimant the total sum of AED 114,698.56.
2. The Defendant shall pay the Claimant the Court fee in the sum of AED 5,738.84.
Issued by:
Delvin Sumo
Assistant Registrar
Date of issue: 1 November 2022
At: 3pm
THE REASONS
The Parties
1. The Claimant is Licft (hereafter “the Claimant”), a construction equipment rental company registered in Ras Al Khaimah, UAE.
2. The Defendant is Lasut (hereafter “the Defendant”), a construction company located in Abu Dhabi, UAE.
Background and the Preceding History
3. The underlying dispute arises over alleged unpaid invoices pursuant to a purchase order signed by the Claimant and the Defendant (the “Agreement”), following which the Defendant failed to pay the Claimant the sums due under the Agreement.
4. On 29 July 2022, the Claimant filed a claim with the DIFC Courts’ Small Claims Tribunal (the “SCT”) seeking payment of the amount of AED 147,903.
5. On 4 August 2022, the Defendant filed its defence to the claim.
6. On 16 August 2022, a consultation was listed before SCT Judge Ayman Mahmoud Saey, at which the parties failed to reach an agreement.
7. On 9 September 2022, a hearing was listed before me, at which the Claimant’s and Defendant’s representatives were in attendance (the “Hearing”).
The Claim
8. The Claimant submits that it was appointed by the Defendant to supply and apply corten steel imitation paint finish on fabricated metal works for an Expo 2020 project in accordance with purchase order (PO-0094) dated 4 May 2021 for a total amount of AED 147,000 (including VAT) (the “Purchase Order”).
9. The Claimant carried out the works in accordance with the Purchase Order and it is now seeking payment of the outstanding amount of AED 147,903 (including VAT) and variation work.
10. A breakdown of the Claimant’s calculation of AED 147,903 is set out below:
(a) Contract Value of AED 140,000;
(b) Cost of variation work in the amount of AED 28,860;
(c) (a) and (b) equals to be the sum of AED 168,860) plus VAT in the sum of AED 8,443, provides the total amount of AED 177,303.
11. The Defendant has already paid the sum of AED 29,400, therefore, the remining claimed sum by the Claimant falls to be in the amount of AED 147,903.
12. The Defendant claims that the works carried out by the Claimant are defective and it has suffered to rectify the problems and therefore the Claimant is only entitled to payment in the amount of AED 17,422.45 (excluding VAT).
13. The Defendant’s calculation was based on the following:
(a) Contract value of AED 140,000;
(b) The cost of rectifying the painting works in the sum of AED 81,669.55; and
(c) An amount of AED 12,908 to be omitted from the Claimant’s scope of work.
14. The sum of AED 28,000 (excluding VAT) has already been paid by the Defendant
15. Therefore, the total outstanding sum that the Defendant deems to be owed to the Claimant is the amount of AED 17,422.45 + 5% VAT.
Discussion
16. First and foremost, I find that the relevant Agreement falls under the DIFC Courts’ jurisdiction as the Agreement states at Article 14 of the Agreement:
“14. JURISDICTION AND DISPUTE RESOLUTION: This Purchase Order shall be subject to the laws of Dubai and the United Arab Emirates in the event of any dispute, the Parties will in first instance attempt to resolve the dispute through bona fide negotiations Falling resolution through bona fide negotiations within 10 working days, such dispute, including any question regarding the Purchase Order’s existence, validity or termination, shall be subject to exclusive jurisdiction of the Courts of the Dubai International Financial Centre.”
17. At the Hearing, I informed the parties that the determination of this claim would require the provision of a report to be produced by an independent expert.
18. I ordered that the report must address the following issues:
(a) Whether the works under the Purchase Order have been completed;
(b) Whether the defects and poor quality of the works were caused by the Claimant; and
(c) Whether the Claimant rectified the defects and poor quality.
19. The expert report was submitted to the Court on 20 October 2022 (the “Report”). I have made the following observations from the Report: and set out the following observations:
(a) The Claimant carried out the work entrusted to it in accordance with the Purchase Order.
(b) The Claimant submitted to the Defendant a claim in regards to an alleged variation order for an amount of AED 28,860 excluding VAT. The expert was unable to consider this issue due to a lack of supporting documents, such as the approval or instruction from the Defendant for the additional variation works to be carried out.
(c) The Defendant alleges that on assessment of a final account some items have been omitted from the Claimant’s scope of work equaling to the value of AED 12,908 (excluding VAT). The expert was unable to consider this issue due to a lack of supporting documents such as instructions to cancel some work approved by both parties.
(d) The Report confirms that the Claimant completed 100% of the work and the value of the completed work is in the amount of AED 140,000 (excluding VAT).
20. The expert made the following findings within the Report:
(a) The material used (Corten Finish) was selected by the Defendant, and the Claimant has no responsibility regarding the specification or the type of material requested.
(b) The protection of the work/paint is the Defendant’s responsibility.
(c) The non-uniform surface visibility/rust finish was due to the specification of used materials not at the fault of the Claimant.
(d) The scope of work of the new contractor appointed by the Defendant was to touch up the rustic iron/Corten, and the responsibility does not fall upon the Claimant, nor may the Claimant be liable for the damages caused by others.
(e) The purchase order of the new contractor did not indicate any other rectification works completed by the Claimant apart from the touch up of rust.
(f) Therefore, the Claimant has no responsibility for the defects and, accordingly, will not consider any deduction from his payment.
21. The Expert Report provides that the due outstanding amount owed to the Claimant including VAT is AED 117,600.
22. The calculation reached by the expert is as follows:
Value of the performed work is AED 140,000 (minus AED 29,400 (inc. VAT) =
AED 110,600 + 5% VAT= AED 116,130.
Conclusion
23. In light of the aforementioned, I find that the Defendant is liable to pay the Claimant the total sum of AED 116,130 (inclusive of VAT) being the payments owed.
24. The Defendant shall pay the Claimant the Court fee in the sum of AED 5,806.50.
