October 05, 2022 SCT - Judgments and Orders
Claim No. SCT 291/2022
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 MAHA AL MHEIRI
BETWEEN
LOFT
Claimant
and
LICKI
Defendant
| Hearing : | 26 September 2022 |
|---|---|
| Judgment : | 5 October 2022 |
JUDGMENT OF H.E. JUSTICE MAHA AL MHEIRI
UPON the Claim Form being filed on 28 July 2022
AND UPON a Second Hearing having been held before H.E Justice Maha Al Mheiri on 26 September 2022, with the Claimant’s representative in attendance and the First Defendant failing to appear although served notice of the Claim
AND UPON considering all documents and evidence submitted on the Court file
IT IS HEREBY ORDERED THAT:
1. The Defendant shall pay the Claimant the amount of AED 23,072.45 in accordance with the below:
(a) The amount of AED 17,888.71 in respect of the unpaid rent from 12 May 2022 until 19 October 2022;
(b) The amount of 1,788.87 as 10 % legal interest;
(c) The amount of AED 500 as penalty payment for the bounced cheques; and
(d) The amount of AED 2,894.87 for DEWA and District Cooling and any other service charges that shall accrue until the date of evacuation.
2. The Defendant shall vacate the unit by no later than 19 October 2022 and return the Unit to the Claimant in good condition.
3. The Defendant’s security deposit in the amount of AED 4,000 shall be forfeited in favour of the Claimant.
4. The Defendant shall be liable for the costs of the maintenance and damages of the Premises.
5. The Defendant shall pay the Claimant the DIFC Courts’ filing fee in the sum of AED 1,328.18.
6. The Claimant shall serve this Order upon the Defendant.
Issued by:
Hayley Norton
SCT Judge
Date of issue: 5 October 2022
At: 4pm
THE REASONS
The Parties
1. The Claimant is Loft (the “Claimant”), the landlord of unit 001 (the “Premises”).
2. The Defendant is Licki, a tenant in the Claimant’s Premises (the “Defendant”).
Background and the Preceding History
3. On 11 August 2021, the Claimant and the Defendant entered into an agreement to lease the Premises for one year (the “Lease Agreement”), starting from 12 August 2021 to 11 August 2022, for the annual rent amount of AED 40,000 to be paid by 4 instalments.
4. The Defendant failed to pay the fourth instalment by way of cheque payment in the amount of AED 10,000 due to the Defendant’s insufficient funds.
5. The Claimant served several reminders and notices to the Defendant to settle the outstanding amount towards the rent payment and the imposed penalties of the returned cheque but the Defendant failed to respond.
6. On 28 July 2022, the Claimant filed a claim in the DIFC Courts’ Small Claims Tribunal (the “SCT”), seeking an order against the Defendant to pay the total amount of AED 26,545.87, in addition to 10 % legal Interest from its due date until full payment of the amount as per clause (12) of the Lease Agreement. The claims are set out as follows:
(a) the amount of AED 13,288 in respect of the overstay rent amount from 12 May 2022 until 10 August 2022, plus any further rent until the date of the evacuation;
(b) the amount of AED 500 towards the penalty for the bounced cheque dated 12 May 2022, as per clause 22 of Lease Agreement;
(c) the amount of AED 9,863 as liquidated damages as per Clause 11 of the Lease Agreement; and
(d) an order that the Defendant clears the amount of AED 2,894.87 for outstanding charges towards DEWA, District Cooling and any other service charges until the date of the evacuation.
7. The Claimant also sought an order for the following terms:
(a) an order that the Defendant pay all the costs for the maintenance of the Premises and rectify any damages upon handover of the Premises;
(b) an order that the Security Deposit of AED 4,000 be forfeited by the Defendant in favour of the Claimant as liquidated damages as per clause 11 of the Lease Agreement;
(c) an order that the Defendant vacate the Premises immediately and hand it over in good condition to the Claimant, and the Claimant gain access to the Premises; and
(d) an order that the Defendant pay all legal costs associated with filing this claim.
8. The matter was called for a Consultation before SCT Judge Hayley Norton on 29 August 2022. Although the Claimant’s representative and the Defendant were in attendance, they failed to reach a settlement.
9. In line with the rules and procedures of the SCT, this matter was referred to me for determination, pursuant to a Second Hearing held on 26 September 2022, with the Claimant in attendance and the Defendant absent although served with notice of the listing date.
10. Rule 53.61 of the Rules of the DIFC Courts (“RDC”) stipulates that “if a defendant does not attend the hearing and the claimant does attend the hearing, the SCT may decide the claim on basis of the evidence of the Claimant only”.
The Claim
11. The Claimant’s case is that it entered into the Lease Agreement with the Defendant for a period of one year, from 12 August 2021 to 11 August 2022.
12. The Claimant submits that the Lease Agreement was due to expire on 11 August 2022. The Claimant sent several notices to the Defendant, requesting that it pay all of the outstanding rent. However, no payment was received, therefore, the Claimant proceeded to terminate the Lease Agreement on 13 July 2022 by notice and file its Claim with the SCT. I shall elaborate on each of the Claimant’s claims in the discussion below.
13. The Claimant now seeks an order against Defendant for the remedies as set out in paragraph 6 and 7 of this Judgment.
Discussion
14. As the Defendant failed to appear at the Hearing, I note that RDC 53.61 stipulates that “if a defendant does not attend the hearing and the claimant does attend the hearing, the SCT may decide the claim on basis of the evidence of the Claimant only”.
15. First and foremost, the relevant Lease Agreement is in relation to a unit in the DIFC, therefore by default, any 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 Lease Agreements, 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 SCT.
16. The Court will first review the calculation of the outstanding rent, and then discuss whether any penalties shall apply, and lastly determine the Defendant’s financial obligation (if any) towards the Claimant.
Unpaid Rent
17. The Claimant submits that the Defendant has outstanding payments to be made against the Lease Agreement and has confirmed that the Defendant is still occupying the Premises. The Court shall grant the Defendant two weeks from the date of this Judgment to vacate the Premises and pay all outstanding rent to the Claimant. As such, I find that the Defendant is liable to pay the amount of AED 17,888.71, as calculated until the 19 October 2022.
18. The agreed rent from 12 August 2021 to 11 August 2022 is AED 40,000, and the Court shall grant the Defendant two weeks to vacate the Premises, with the vacation date being no later than 19 October 2022. As such, the rent shall be calculated from 12 May 2022 (being the date of the fourth instalment bounced cheque) to 19 October 2022.
12 May 2022 to 19 October 2022 is equal to 161 days.
AED 40,000 rent per year/12 months = AED 3,333.33 per month
3,333.33/30 = 111.11 rent per day x 161 days = AED 17,888.71
19. In accordance with the terms of the Lease Agreement, the Defendant is also liable to pay the amount of AED 500 as a result of the returned cheque that was provided by the Defendant as stated below:
“22. In the event any cheque is bounced by the bank for any reason whatsoever, the tenant shall be bound to pay AED 500 (five hundred dirhams as mutual agreed fixed compensation.”
Penalties
10% Legal Interest
20. The Claimant drew the Courts’ attention to a number of clauses within the Lease Agreement, each of which are set out below:
21. Clause 12 reads as follows:
“12. without prejudice to the rights and remedies of the Landlord under this Tenancy Contract or under applicable law if the Tenant fails to make any payments to the landlord of the rent or any sums whatsoever due to the Landlord under this Tenancy at the time or times or within the periods specified in this tenancy contract, the Landlord may charge the Tenant a penalty thereon in addition to the owed amount calculated at a rate of ten percent (10%) per annuum on which the payment is due in accordance with this tenancy contract until the date of full payment as mutual agreed compensation.”
22. In review of Clause 12, the Court finds that the Clause is ambiguous as to the application of the 10% penalty. The Court is of view that such a penalty shall apply on the outstanding rent that falls due under the Lease Agreement, as such 10% of AED 17,888.71 is AED 1,788.87.
23. Clause 11 of the Lease Agreement reads as follows:
“11. Consequent to the termination of this Tenancy Contract based on the above-mentioned clause, the Tenant’s right to use the premises for the rest of the Tenancy Period shall be ceased and terminated, and the remainder of the Rent Amount or an amount equal to (Three) 3 months’ rent , whichever is more, shall be paid to Landlord in addition, the security Deposit as mentioned in clause (G) of above mentioned particular shall be forfeited in favor of the Landlord as liquidated damages.”
24. Upon reviewing Clause 11, I find that there are two parts. The first deals with the penalty in the form of rent, and the second deals with the security deposit.
25. I note that the Claimant is given two options as penalty and they cannot be used at the same time, hence the word (or) that is used in the clause, set out below:
“and the remainder of the Rent Amount or an amount equal to (Three) 3 months’ rent whichever is more, shall be paid to Landlord”
26. Since the Court has granted the Claimant the remainder of the rent as mentioned above, AED 17,888.71, an amount which is greater than 3 months of rent, the Court is satisfied that the penalty under Clause 11 has been met. Accordingly, I dismiss the Claimant’s claim for the amount of AED 9,863 equal to 3 months of rent as liquidated damage penalties under Clause 11.
Security Deposit
27. Clause 11 of the First Lease Agreement reads as follows:
“Consequent to the termination of this Tenancy Contract based on the above-mentioned clause, the Tenant’s right to use the premises for the rest of the Tenancy Period shall be ceased and terminated, and the remainder of the Rent Amount or an amount equal to (Three) 3 months’ rent , whichever is more, shall be paid to Landlord in addition, the security Deposit as mentioned in clause (G) of above mentioned particular shall be forfeited in favor of the Landlord as liquidated damages.”
28. Accordingly, I find that the Security Deposit of AED 4,000 shall be forfeited by the First Defendant in favour of the Claimant as liquidated damages pursuant to Clause 11 of the Lease Agreement.
Dewa and District Cooling bills
29. Clause 24 and 25 of the Lease Agreement reads as follows:
“24. All fixed and consumption charges for Water, Electricity, Telephone, Internet, Air Conditioning and District Cooling (Capacity Consumption) charges and all other utilities’ bills and the related third-party billing fees are on the account of the Tenant.”
“25. The Tenant shall pay the District Cooling Bills on time without any delay. The tenant acknowledges and agrees that the district cooling bills will be prepared and collected by a Third-Party Company, and in that regard the tenant undertakes to settle in full charges and fees related to…”
30. Pursuant to the above, I find that the Defendant shall pay any outstanding amounts for the DEWA and District Cooling bills. The Defendant has not submitted any proof or payment demonstrating that the outstanding amount exceed the amount as mentioned above. Therefore, the Defendant shall pay the Claimant the amount of 2,894.87 for DEWA and District Cooling and any other service charges until the date of evacuation.
31. The Claimant also seeks to recover the fee that was paid to the Court for the filing of this Claim. I am of the view that, although the Claimant has been unsuccessful on some of its claims, the Court granted it an amount greater than what it claimed. As such, the Claimant can only recover the fee that it paid in respect of filing the Claim.
Conclusion
32. In light of the aforementioned, I find that the Defendant shall pay the Claimant the amount of AED 23,072.45 in accordance with the below:
(a) The amount of AED 17,888.71 in respect of the unpaid rent from 12 May 2022 until 19 October 2022;
(b) The amount of 1,788.87 as 10 % legal Interest;
(c) The amount of AED 500 as penalty payment for the bounced cheques; and
(d) The amount of AED 2,894.87 for DEWA and District Cooling and any other service charges that shall accrue until the date of evacuation.
33. The Defendant shall vacate the unit by no later than 19 October 2022 and return the Unit to the Claimant in good condition.
34. The Defendant’s security deposit in the amount of AED 4,000 shall be forfeited in favour of the Claimant.
35. The Defendant shall be liable for the costs of the maintenance and damages of the Premises.
36. The Defendant shall pay the Claimant the DIFC Courts’ filing fee in the sum of AED 1,328.18.
37. The Claimant shall serve this Order upon the Defendant.
