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Claim No: SCT 135/2022

IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

LUHART

Claimant/ Respondent

and

LIFAN

Defendant/ Appellant

ORDER WITH REAONS OF H.E DEPUTY CHIEF JUSTICE ALI AL MADHANI

UPON the Judgment of H.E Justice Maha Al Mheiri dated 10 August 2022 (the “Judgment”)

AND UPON reviewing the Order with Reasons of H.E Justice Ali Al Madhani dated 23 September 2022 dismissing the Defendant’s application seeking to appeal the Judgment (the “Order”)

AND UPON reviewing the Defendant’s renewed Application Notice SCT-135-2022/2 seeking permission to appeal the Judgment dated 18 October 2022

AND UPON reviewing the Claimant’s submissions filed in opposition of the renewed Application Notice dated 2 November 2022

AND UPON reviewing the written submissions filed by the Claimant and the Defendant dated 8 November 2022

AND UPON considering the Rules of the DIFC Courts (the “RDC”)

IT IS HEREBY ORDERED THAT:

1. The Application is dismissed in its entirety.

2. The Appellant shall pay the Claimant’s costs for defending this application on a standard basis, or assessed by the Registrar, if not agreed.

Issued by:
Delvin Sumo
Assistant Registrar
Date of issue: 12 December 2022
At: 3pm

SCHEDULE OF REASONS

1. This is a renewed application for permission to appeal the judgment (the “Judgment”) issued by H.E Justice Maha Al Mheiri on 10 August 2022 (the “Renewed Application for PTA”). The Judgment was granted in favour of the Claimant awarding them an amount of AED 114,698.56 together with the Claimant’s Court fees.

2. On the 11 August 2022, the Defendant applied for permission to appeal the Judgment (the “First Permission to Appeal”) and it was dismissed due to the Defendant’s inability in discharging its burden of proof under RDC 53.91. On 4 October 2022, the Defendant applied for a Renewed Application for PTA based on two grounds pertaining to the reasons mentioned under paragraph 8 and paragraph 11 of the First Permission to Appeal Order. Both grounds of appeal relate to quantum.

3. On 7 November 2022, a hearing was scheduled for the Renewed Application for PTA (the “Hearing”).

4. My reasons for dismissing the Renewed Application for PTA are two-fold: the Defendant has failed to discharge its burden of proof under RDC 53.91, and the application notice failed to identify and set out a clear basis upon which the Renewed Application for PTA should be granted.

5. I will not repeat the facts and the background of the case as it has been dealt with in the Judgment. In this short schedule of reasons, I do not propose to refer to each point made by the parties. The fact that I may omit some arguments does not mean that I have overlooked them.

6. I will now turn to the first ground of appeal which is in connection with a variation order ref: Lird 001 to the original agreement. The Claimant and Defendant entered into an agreement on 30 May 2021 (the “Agreement”). The Claimant was originally engaged to provide the Defendant with fabrication and supply powered coated aluminium mesh doors to the Spanish Pavilion (the “Project”) by virtue of the agreed terms and conditions set out in the Agreement. Under clause 1 of the Agreement, the parties agreed that any changes related to the supply of the product, specification, size or quantity, would be subject to cost implication.

7. Following the signing of the Agreement, it became apparent to the Claimant that the aluminium mesh doors were not available in the UAE market, therefore rather than frustrating the Agreement due to this unforeseeable event, the Claimant wrote to the Defendant on 27 July 2021 (the “Variation Letter”) notifying them of the non-availability of the aluminium mesh doors and recommending GI mesh doors, as an alternative replacement. As part of the Variation Letter, the Claimant listed all additional works that ought to be carried out as a result of the proposed variation which included “(a) additional heavy-duty roller required for new gate due to heavy weight, (b) removing and changing existing tracks (c) additional GI panels; and (d) additional resources and equipment for site fabrication and assembling” (the “Proposed Works”).

8. Consequently, the proposed variation increased the original agreed price by an additional AED 19,506.90 inclusive of VAT. The Claimant notified the Defendant of this increase in their letter dated 23 August 2021, requesting the Defendant’s “earliest [...] approval to proceed accordingly”. The Claimant clarified that the additional sum of AED 19,506.90 had not been included in their Variation Letter primarily because it had taken significant time to calculate all charges associated with the supply of the GI mesh doors including the Proposed Works which would have been carried out on the Project.

9. The Defendant rejects this variation order in its entirety on account of three factors: (a) the Defendant alleges that they did not consent to the variation order proposed by the Claimant; (b) notice may have been provided by the Claimant however it was not sufficient notice prior to the scheduled opening of the Spanish Pavilion; and finally (c) no evidence of any request for the variation order made by the Defendant. Based on the above, the Defendant considers that they should not be liable in paying the additional amount of AED 19,506.90.

10. The Defendant relies on the absence of written evidence approving the proposed variation, alleging that the Claimant in fact proceeded to supply the alternative GI mesh doors, unilaterally, without obtaining any prior approval from the Defendant. As part of the Claimant’s oral submissions, they refuted those allegations, contending that a verbal approval to proceed with the supply of GI mesh doors was obtained in meetings with the Defendant’s team. The Claimant further clarified that obtaining verbal approvals from the Defendant had been a customary practice due to the parties ongoing relationship and their involvement on other projects.

11. The Claimant declined the notion that they had proceeded with the supply of GI mesh doors without obtaining prior approval from the Defendant, particularly given the impact this variation would have had on the “existing fabricated curved gate works” including the additional charges associated the Proposed Works. To dispose of the Renewed Application for PTA fairly, during the Hearing, I sought proof from the Defendant demonstrating their rejection to the Variation Letter. The Defendant was unable to provide the Court with any written evidence or witness statement substantiating its rejection of the supply of the GI mesh doors or the Proposed Works that had been carried out on the Project.

12. The first ground of the Renewed Application for PTA must fail based on the lack of any evidence supporting the Defendant’s rejection to the Claimant’s proposed variation. On 27 July 2021, the Defendant had been prompted to the supply issue of the aluminium mesh doors in the Claimant’s Variation Letter and on 23 August 2021, the Claimant provided the associated charges to such variation including the Proposed Works that ought to be carried out on the Project.

13. Further, the lack of any objection to the Variation Letter and the subsequent letters that followed thereafter could be construed as “acceptance by way of conduct”, I will explain this in further detail. The Variation Letter amounted to a counteroffer proposed by the Claimant which only arose when it became apparent that the Claimant was unable to supply the Defendant with the requested doors due to unavailability in the market. Once the Defendant had been in receipt of the Variation Letter, there was an “implied obligation to speak,” meaning it was incumbent on the Defendant to either (a) accept the Variation Letter, (b) reject it or (c) negotiate the terms of the Variation Letter. Based on inactivity from the Defendant, it was inferred that the supply of the GI mesh doors, albeit expensive, had been accepted by the Defendant by way of conduct, when it accepted delivery of the GI mesh doors and allowed the Proposed Works to proceed on the Project without any interference.

14. The Defendant argued that the timing of the Variation Letter had placed them in an unfavourable position, as they had been unable to reject the terms of such letter and had no other alternative other than to proceed with the Claimant’s proposed variation. However, the Defendant had been alerted as early as 27 July 2021 to the supply issues surrounding the aluminium mesh doors in the UAE market. The Defendant had the opportunity to consider alternative options, including but not limited to (i) contacting an alternative supplier in the market to ascertain whether the aluminium mesh doors could be supplied; (ii) negotiating the price of the GI mesh doors with the Claimant once the Defendant was aware of the additional charges that would be involved including the Proposed Works; and (iii) engaging another supplier(s) that could carry out the remaining works on the Project at a better value than the price ultimately quoted by the Claimant on 23 August 2021. Despite all available options to the Defendant, no practical steps were considered to mitigate the Defendant’s “unfavourable” position. It is on this basis that I consider that this is a weak argument and must fail.

15. The second ground of appeal is based on the final amount claimed by the Claimant, the Defendant argues that the Claimant has purportedly overvalued their claim by failing to account for two separate payments related to purchase order 0818.

16. As part of the Renewed Application for PTA, the Defendant provided bank transfers demonstrating that:

17. I am satisfied that those payments had been paid to the Claimant. However, the Claimant clarified that it does not dispute that the Defendant made those two separate payments, because they had been accounted in their final calculations and had not been overlooked when calculating the amount owed by the Defendant.

18. Therefore, upon further review of the statement of accounts prepared by the Claimant and the Defendant, the second ground of this Appeal must fail as I am satisfied that there are no miscalculations by the Claimant and the payments of AED 4,674.60 and AED 4,207.14 have been accounted for by the Claimant.

CONCLUSION

19. Based on the above, the Defendant shall pay the costs of the Claimant in defending this Renewed Application for PTA.