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Claim No: SCT 351/2023

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
BEFORE SCT JUDGE MAITHA ALSHEHHI

BETWEEN

MIRBAL

Claimant

and

MISUR

Defendant

JUDGMENT OF SCT JUDGE MAITHA ALSHEHHI

UPON the claim having been filed on 13 September 2023

AND UPON the Defendant’s defence filed on 27 October 2023

AND UPON a hearing having been listed before SCT Judge Maitha AlShehhi on 6 November 2023, with the Claimant’s representative and the Defendant’s representative in attendance (the “Hearing”)

AND UPON reviewing the documents and evidence filed and recorded on the Court file

IT IS HEREBY ORDERED THAT:

1. The Defendant shall pay the Claimant the outstanding rent in the amount of AED 47,069.86.

2. The Tenancy Contract be terminated and the Defendant shall immediately vacate the Unit.

3. The Claimant’s other claims shall be dismissed.

4. The Defendant shall pay the Claimant’s DIFC Courts’ filing fee in the amount of AED 2,353.49.

5. Each party shall bear its own costs.

Issued by:
Hayley Norton
SCT Judge and Assistant Registrar
Date of issue: 20 November 2023
At: 3pm

THE REASONS

Parties

1. The Claimant is Mirbal (the “Claimant”), the landlord of, DIFC, Dubai, United Arab Emirates (the “Unit”).

2. The Defendant is Misur (the “Defendant”), a company registered in the DIFC and tenant of the Unit.

The Claim

3. The Claimant is seeking cancellation of the tenancy contract dated 7 March 2023 (the “Tenancy Contract”) and eviction of the Defendant from the Unit before the expiration of the lease due to the Defendant’s recurring behaviour of not paying the rent on time.

4. The Claimant further seeks payment from the Defendant in the amount of AED 57,040.64 which comprises of the outstanding rent payment, interest on delayed payments and expenses incurred by the Claimant.

5. In accordance with the Tenancy Contract, the Defendant’s lease of the Unit was for the period of 7 March 2023 to 6 March 2024 in return for AED 179,313.75 payable to the Claimant in four cheques.

6. The Claimant submits that the Defendant ought to have made sure that rent payment was secured by cheque on 6 September 2023 as agreed in the Tenancy Contract and such delay is not acceptable especially since payment has not been made to date.

7. The Claimant submits that the reason for refusing to accept cash payment is because the Claimant’s bank raised KYC and compliance concerns with them about the whereabouts of the Defendant’s money and is strictly only accepting cheques that come from the Defendant (Misur) within the UAE.

8. The Claimant concedes that this is not the first time where they had to initiate legal proceedings against the Defendant to retrieve the rent payment and the same issues keep arising every quarter with regards to delayed payment and “cash” payment which is why they are seeking a court order to evict the Defendant from the Unit.

The Defence

9. The Defendant acknowledges that it has not made the payment on time, however, it has offered to pay by cash, but the Claimant refused.

10. In an email dated 18 September 2023, the Defendant states that it has tried to apply for a banker’s cheque but could not do so because it does not have an operative bank in the UAE and can only make the payment through its bank in Bahrain.

11. The Defendant maintains its position that rent would have been paid, although late, if the Claimant accepted cash payment.

12. Therefore, the Defendant rejects the Claimant’s claim in full and submits that the Tenancy Contract which is on a non-renewal basis would expire in any event in 4 months’ time (i.e March 2024) and sees no justification for eviction at this point.

Applicable law

13. This dispute is governed by the DIFC Leasing Law No.1 of 2020 (the “Leasing Law”) in conjunction with the Tenancy Contract.

14. Generally, leases may be terminated before the expiry of the term by written agreement of the parties, or without agreement of the parties in certain conditions. Leases may also be terminated by a Court order reflecting such termination.

Does non-payment of rent entail eviction from the Unit?

15. Clause 14 of the additional conditions of the Tenancy Contract clearly stipulates the method of payment “The payment will be done through Misur bank account only”.

16. Despite the above, the Defendant allegedly does not have an operating bank within the UAE while providing the Claimant with four post-dated cheques in respect of the Unit.

17. Clause 16 of the additional conditions of the Tenancy Contract reads as below:

“should any payment be returned from the bank for insufficient funds, then a penalty of AED 1,000 will be charged to the Tenant by the Landlord and alternative means of payment must be provided within seven days of the due date thereof”.

18. The Defendant contacted the Claimant by email on 18 September 2023 which is 12 days from the date of the cheque to offer cash payment and still has not paid the due rent.

19. Along with the Defendant’s failure to pay the rent on time (i.e 6 September 2023), the Defendant also failed to honour clauses 14 and 16 of the Tenancy Contract.

20. I find that the Defendant is in breach of the Tenancy Contract by failing to pay the rent on time using the method prescribed in addition to failing to provide an alternative payment within seven days. Therefore, the Defendant must pay a penalty of AED 1,000 in line with clause 16 of the Tenancy Contract.

21. It follows that the Defendant is liable to settle the outstanding rent payment in the amount of AED 47,069.86.

22. In addition to the rent payment, the Claimant is also requesting the Defendant to pay 12% interest on previous delayed payments in the amount of AED 1,882.79 as well as expenses incurred by the Claimant when filing previous DIFC Courts’ cases in the amount of AED 2,353.49 and time spent following up with the Defendant in the amount of AED 5,000.

23. With regards to the 12% interest, I do not see a reference to a charge of interest in the Tenancy Contract, as such, I see no legal basis for granting this and I shall dismiss this claim in the amount of AED 1,882.79.

24. As to the expenses incurred in filing previous DIFC Courts’ cases against the Defendant, I am of the view that the Claimant should only be awarded costs in relation to the present case and cannot seek to claim costs in relation to previous cases. Therefore, I shall dismiss this claim in the amount of AED 2,353.49.

25. Furthermore, the Claimant is seeking payment in the amount of AED 5,000 in respect of time spent following up with the Defendant to pay the rent. The Claimant failed to provide any proof to support this claim, as such, I find that this claim must be dismissed for lack of evidence.

26. Finally, the Claimant is seeking cancellation of the Tenancy Contract and eviction from the Unit. I shall arrive to my decision based on the Tenancy Contract and the Leasing Law.

27. Article 54(1)(a) of the Leasing Law states that a lease can be terminated by a court order if the tenant failed to pay rent on agreed payment date under the lease agreement and failed to remedy within the remedy period or within 30 days if there is no remedy period.

28. In the situation at hand, I find that the Defendant is in breach of Article 54(1) of the Leasing Law as well as the Tenancy Contract.

29. Given that the Defendant did not settle the rent on 6 September 2023 and did not provide alternative payment within 7 days nor paid within 30 days, I am of the view that the Tenancy Contract be terminated.

30. In accordance with the above, I find that the Defendant must vacate the Unit.

Findings

31. In light of the aforementioned, I find that the Defendant shall pay the Claimant the outstanding rent in the amount of AED 47,069.86.

32. The Tenancy Contract be terminated and the Defendant must vacate the Unit.

33. The Claimant’s other claims shall be dismissed.

34. The Claimant is also entitled to the Court fee paid for the filing of this Claim, and taking into consideration the Claimant’s failure to succeed on all its claims, I find it appropriate that the Defendant be ordered to pay the Court fee applicable to the judgment sum set out above, in the amount of AED 2,353.49.

35. Each party shall bear its own costs.