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Claim No. TCD 003/2022

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

THE TECHNOLOGY AND CONSTRUCTION DIVISION

BETWEEN

RAFID GOURMET INVESTMENT IN COMMERCIAL ENTERPRISES & MANAGEMENT LLC

Claimant/Defendant to Counterclaim

and

DIF INTERIOR DECORATION CO. LLC

Defendant/Claimant to Counterclaim

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JUDGMENT OF JUSTICE MICHAEL BLACK

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UPON hearing the counsel for the Claimant and counsel for the Defendant at a hearing held before me

AND UPON reviewing the Parties’ filings in this case

IT IS HEREBY ORDERED THAT:

1. The Claimant’s claim succeeds and the Claimant is entitled to damages in the sum of AED 612,246.

2. The Defendant’s counterclaim is dismissed.

3. The Parties shall serve submissions on interest and costs within 14 days of being notified of this judgment.

Issued by:
Hayley Norton
Assistant Registrar
Date of Issue: 16 August 2023
At: 9am

SCHEDULE OF REASONS

The Parties

1. Rafid Gourmet Investment in Commercial Enterprises & Management LLC (“Rafid”) operates a café and an award-winning modern Greek restaurant under the brand name of “OPSO” at Fashion Avenue, Dubai Mall. The restaurant is reached through the café and overlooks the Dubai Fountain and Burj Khalifa.

2. Due to the impact of COVID footfall in the Dubai Mall fell off dramatically, however it began to recover in the summer of 2020 and Rafid thought it would be a good time to refurbish the OPSO Café. The works were to be overseen by Rafid’s Director of Operations, Mark Taquet. Mr Taquet has extensive experience in the hospitality industry but no experience in the construction industry.

3. In August 2020 Mr Taquet approached DIF Interior Decoration Co LLC (“DIF”), a well-regarded fit-out contractor founded and run by architect, Sherif Mohamed Salah El Fadaly. There were discussions involving Mr Fadaly, Esam Baccush and Bai Akmad of DIF and later the owner of Rafid, Faisal Al Mandil.

The Contract

4. In December 2020 Rafid and DIF agreed that DIF would produce drawings for the proposed works for the sum AED 10,500 and these were accompanied by a quotation and draft Bill of Quantities (“BOQ”).

5. There were further discussions leading to some revisions to the proposed works.

6. On 21 April 2021, DIF issued invoice RG-1311 to Rafid, for payment of the “Advance Payment” in the amount of AED 178,500 plus VAT.

7. DIF produced a further quotation dated 24 April 2021 in the sum of AED 850,000 plus VAT.

8. The terms of payment were as follows:

9. The quotation was accompanied by a BOQ which contained further terms:

10. Rafid paid the Advance Payment Invoice on 28 April 2021 and Mr Taquet countersigned the quotation and applied the company stamp.

11. It is common ground between the parties that:

Hoardings

12. The works included two different sets of hoardings: the external hoardings facing on to the Mall and the internal hoardings that screened the works off from customers of the restaurant passing though the café area.

13. The external hoardings had to be undertaken by Emaar’s approved contractors in accordance with their specifications. The approved contractor was Shadi Makdasi Decor Cont. LLC ("Makdasi"). Both the external and internal hoardings were apparently included in DIF’s scope of works. There are two sets of items in the quotation in relation to hoardings in the scope of works but unhelpfully they are in identical terms and so it is impossible to discern which is external and which is internal – one set (with Printed Graphics and including removal) is priced at AED 15,820 and the other at AED 11,450.

14. In the event and for reasons that are not wholly apparent, Rafid paid Makdasi direct against a quotation dated 20 May 2021 for AED 11,345 ex VAT. The quotation is not sufficiently detailed to enable me to compare it with DIF’s prices but given the similarity to the lower of the two I assume it related to that work and so AED 11,450 must be omitted from DIF’s workscope.

15. In the event the work was not carried out in May 2021 due to suspension of the project.

Suspension of the works

16. It was necessary to suspend the works because the Landlord (Emaar) did not grant permission to commence the works until (on or about) 24 October 2021 when permission was granted to commence the works on 1 November 2021. Mr Fadaly had already informed Mr Taquet by email dated 18 October 2021 that DIF would not be in a position to commence work on 1 November 2021 due to other work commitments and he requested a commencement date of 17 November 2021. Notwithstanding, according to Mr Fadaly, Mr Yukesh or Yogesh (DIF’s Project Manager) agreed a timeline with Mr Taquet.

17. This may be a reference to DIF’s programme dated 19 October 2021. The programme showed:

18. It also appears that Mr Yukesh and another Project Manager, Mr Mohamed, left DIF around this time as mentioned in an email from Mr Taquet dated 20 October 2021 recording what was agreed a meeting on 19 October 2021. In that email he stated:

“I also requested that we are send the finalized timeframe schedule we agreed work would start on the 1st of November 2021 with a hand over date 31st December 2021 this was supposed to be sent this morning as it is also vital so the correct documents can be resubmitted, and works can start asap.”

It therefore appears that his recollection in his witness statement that the agreed completion date was 30 December 2021 is incorrect and that Mr Fadaly is correct in his recollection that after discussions with Mr Al Mandil 31 December was agreed to be the handover date. Mr Fadaly accepted in cross-examination that it was not desirable for customers to be walking through building works on New Year’s Eve. It is likely that Mr Taquet emphasized that DIF had to have completed the works, not only so as not to inconvenience the restaurant customers attending on New Year’s Eve, but also to enable the café to open for this important trading period at the Dubai Mall.

19. On 26 October 2021 Mr Taquet wrote to Mr Baccush. In his email he referred to the now superseded dates in the quotation and requested “the reworked cash flow document against the set progress stages and dates to be completed as per the renewed work plan sent that should hand the site over on the 30th of December 2021. The cashflow document should clearly mention the proposed date of each additional payment against the percentage of work that must be completed per each future payment.”

20. Mr Baccush replied on 27 October 2021 and specifically in relation to the second progress payment:

“Second payment: 20% Progress payment against site work progress 31st of May (no work has been completed) - We both have agreed that the works are on hold due to Emaar related issues , we are now ready to mobilise based on approvals being ready which as you seen Edgar has asked to resubmit, we have sent the form 3 for you to fill and then we will submit to Emaar. We have to receive - Anticipated date is 10th November 2021 - at 30% completion of works at site, factory and value of furniture.” [original emphasis]

21. Mr Taquet replied the same day, “Please check this each stage you have mentioned 30% completion I need this confirmed correctly as per the milestones set for completion of work”. In his oral evidence Mr Fadaly said that they connected payments into dates, they agreed 30% achievement as the target date. In his written evidence he said that he understood that Rafid wanted to adhere to the original payment terms. The original payment terms made no reference to “completion of works at … factory and value of furniture” but referred to “site progress”.

Commencement of the Works

22. Mr Fadaly went on to say that “on 30 October Emaar has issued permission to erect the hoarding, our team has coordinated with the appointed mall contractor Makdasi, and we deployed our manpower to start the site works. Since 30th October, our team have been working at continually to achieve the target of 10th November”.

23. Rafid disputes that DIF deployed its manpower to start the site works on 30 October 2021. At 3:35 AM 31 October 2021 Mr Taquet wrote to Mr Baccush (copied to Mr Fadaly) in the following terms:

24. Mr Fadaly rejected these criticisms in his oral evidence but I found that to be unrealistic given that far from rejecting them, that day Mr Baccuch directed his project team (copied to both Mr Taquet and Mr Fadaly) to address the issues and avoid or minimise any future issues on the site.

25. On 10 November 2021 at a meeting and by email Mr Taquet complained to DIF that the facade work, demolition work, MEP works and removal of the glass window were behind schedule. The shelving wall units and built-in furniture had not yet been completed. The flooring waterproofing of the water feature area and screeding plus surface preparation had not been completed. The partition walls were due to start from the morning of the 11th but he doubted this could happen as debris had not been cleared from the site.

26. On 11 November 2021 Dilip Menon, DIF’s Senior Project Manager, responded with minutes of the meeting. It was noted that there had been damage to a marble counter and to tiles in the restaurant area. Rafid’s branding was being revised and DIF was to continue in all areas where branding had no direct impact. He suggested that Mr Taquet wait until the following week for a factory visit and that an updated work plan would be provided before close of business.

27. On 14 November 2021 Mr Taquet told DIF to proceed with works in the corridor and stated that he was awaiting the redone work plan and confirmation on the site visit for the carpentry. On 17 November 2021 he again pressed for the new work plan and confirmation of the site visit. He expressed concern that he was unable to monitor progress without a work plan, very little work appeared to have been done and he questioned whether DIF would be able to finish on time.

28. On 18 November 2021 Mr Menon replied:

Cessation of Works On Site

29. Notwithstanding the promises in relation to screeding, tiling, ceiling painting, glazing and cabinetry it is common ground that from 17 November 2021 DIF did not carry out any further works on site.

30. Mr Fadaly admits that the site progress was not impressive (his words) but due to the fact that majority of the works was off site but he seeks to explain the “unimpressive” site progress in two ways:

31. As to the first point, in his email of 18 November 2021 Mr Menon did ask whether drawings had been reviewed for the custom joinery and whether there was any update on the new branding to allow the provision of light points at the pillar cladding in eth shopfront area. He also suggested meeting to approve certain samples. On 24 November 2021 DIF submitted a quotation for varied work. Mr Taquet responded requesting a meeting and copies of the detailed design drawings as many of the things said to be variations were covered in the original scope.

32. On 28 November 2021 Mr Taquet visited the factory of AMG Technical Services LLC (“AMG”) who were joinery suppliers. He said it was obvious to him that hardly anything had been done. There were two steel frames and some wood on the floor. He spoke to the factory owner who said he was awaiting payment from DIF.

33. Mr Menon emailed Mr Taquet that day. In it he outlined what he said needed to be concluded:

34. The next day Mr Taquet emailed Mr Menon. He says that he was now very concerned that the project would not be complete on time. In his email he said:

35. Mr Malek Khateib of AMG gave evidence before me. I did not find his evidence of any assistance as it lacked detail as to the date and amount of work done. He did however confirm that AMG’s contract was with DIF but DIF refused to pay outstanding payments on the grounds that DIF had not been paid by Rafid.

36. As to the second point, according to the 19 October 2021 programme the following were to have been completed by 28 November 2021:

The Claim for the First Progress Payment

37. Mr Fadaly says that by 30 November 2021 the situation was that DIF was on site with minimal open scope as the following items were not yet confirmed or under redesign:

DIF was waiting for lighting fixtures to be procured and to pay the shop front sub-contractor.

38. It seems to be common ground that the items set out paragraph ‎36 above had not been completed.

39. On 30 November 2021 DIF submitted its Invoice No.63 in the sum of AED 178,500 in respect of the first progress payment. DIF said it had completed 54% of the works, calculated as follows:

40. Mr Fadaly was vague in his oral evidence as to how these percentages had been calculated. He suggested that they were assessed internally at DIF. I asked whether there were site diaries that might show progress. He admitted that there were site diaries but he was unable to explain why they had not been relied upon or produced.

41. The same day Mr Menon wrote to Mr Mr Taquet summarising the position:

Rafid Disputes the Progress Achieved

42. Mr Fadaly says that the lack of the design and construction processes from Rafid’s representative was creating frustration and heating up the relationship and that confirmation was finally received on 5 December 2021.

43. Mr Taquet wrote on 7 December 2021 asking that DIF do not deviate from the terms of the contract and stating that that payments will be released based on the milestones reached for completion of work as per the design not based on the raw materials purchased.

44. In his written evidence Mr Fadaly states that DIF received an email dated 8 December 2021 from Mr Al Mandil requesting again the workflow schedule and the new handover date and stating that he had agreed now to pay the outstanding payment to DIF. I have searched the documentary record in vain to find this email (and indeed others referred to by Mr Fadaly and his legal representatives). It is completely unacceptable for parties or their lawyers to refer to potentially important documents without producing them and proving their contents. The Court has no way of knowing if hearsay statements of the contents of such documents are accurate or being misrepresented.

45. In the instant case the suggestion that Mr Mandil gave an unconditional undertaking to make an immediate payment of the progress payment is inconsistent with the documents that are before me. On 9 December 2021 Mr Menon wrote to Mr Taquet enclosing timeline for he works and stating that “Above all it is imperative that the payment is now released at the earliest for these timeline to be achieved.” The email was copied to Mr Mandil and if he had given an unconditional agreement to pay the progress payment on the previous day it is surprising that reference was not be made to it.

46. Mr Taquet’s response of 11 December 2021 is also inconsistent with such an agreement. He was critical of the timeline produced and said it did not align with the payment terms. He requested a meeting to include Mr Al Mandil the following day. The meeting took place at OPSO at 2PM on 12 December 2021 and Mr Taquet recorded what was agreed in an email that day:

47. I therefore reject Mr Fadaly’s claim (not pleaded in the Defence and Counterclaim but repeated in written submissions) that Rafid agreed to pay the outstanding progress payment on 8 December 2021.

Reprogramming the Works

48. On 13 December 2021 DIF produced a revised programme. The document is telling and the following observations of Mr Taquet’s upon it in his witness statement were unchallenged:

49. The programme appears to be inconsistent with the progress payment having been due on 30 November 2021 or an agreement to make the payment on 8 December 2021.

Ms Abbas

50. On 15 December 2021 Mr Taquet introduced Ms Natasha Abbas of North 51 Consulting (“N51”) as Project Manager on behalf of Rafid.

51. Ms Abbas is a highly-qualified, experienced and independent construction professional. She considered her function to get the project moving rather than assess the commercial claim. She is to be regarded as a witness of fact albeit that her understanding of the facts is informed by her expertise. I place considerable reliance on her evidence.

52.On or shortly after 15 December, Ms Abbas rang DIF and spoke to Mr Fadaly and Mr Baccush. They told her that they were waiting on the release of a further payment before they would resume the works as DIF had spent the whole of the advance payment on the procurement of the furniture and joinery. She arranged a “Kick Off Meeting” for 20 December 2021.

53. The minutes of the meeting recorded 8 actions:

54. In addition, it was agreed that Ms Abbas would carry out an assessment of the progress of the works.

55. On 27 December 2021 Ms Abbas wrote Mr Baccush in the following terms:

56. On 28 December 2021 she wrote to DIF:

57. The same day, DIF delivered a number of boxes to the site containing many of the artifacts listed in Part L of the BOQ and Mr Taquet attended the factory where DIF was procuring the joinery. He found and reported to Ms Abbas that the works had not progressed since his last inspection on 28 November 2021. None of the joinery was complete or ready for installation. The partially constructed items were stored outside and had been damaged.

58. The meeting scheduled of 28 December 2021 did not take place because Ms Abbas had been in contact with someone suffering from COVID but the following day she tested negative.

59. On 29 December 2021 Ms Abbas carried out an assessment of the works. The purpose of the assessment was to determine that state of completion of the works as at 30 November 2021. DIF was invited to attend but did not do so.

Ms Abbas’s Assessment of Progress

60. Ms Abbas has set out her observations in her witness statement as follows:

61. In preparing her witness statement Ms Abbas discovered her error in thinking that DIF’s claim for Artwork was AED 78,525 instead of AED 11,316. This had the effect of bringing the percentage completion as asserted by DIF in her estimation down to 46%. Ms Abbas states that had she found that the progress of the works was equal to or greater than 30% she would have advised Rafid the pay Invoice No.63 but after due allowance for the defective demolition works she assessed that there they were no more than 2% complete. Even if she had ignored the defective demolition works, allowed all of the hoarding costs and did not correct her error in the value of the artwork her assessment would still have been 16% completion.

62. Ms Abbas accepts that in a fit out contract progress can be credited for procurement of goods as long as they meet the requirements of the contract, they have all appropriate certifications and it is established that they are held specifically for the contract. In the present case DIF claimed for all the furniture but it had not been delivered to site nor approved. In fact DIF had only paid 50% of the cost of the furniture and failed to order 15 lounge chairs.

Breakdown in Relations

63. On 29 December 2021 Ms Abbas sent her comments to DIF. There was a meeting at some point. I am not sure when it took place. Ms Abbas described it in her oral evidence as involving “finger pointing“ and “blaming” and as “a slanging match”. DIF was unwilling to finish the works and Rafid was unwilling to pay in advance.

64. On 30 December 2021 Ms Abbas agreed with Mr Al Mandil and Mr Taquet that Rafid would re-tender the Project, and if DIF had not resumed the works, and a suitable replacement was ready and able to carry out the Project, they would terminate the agreement as the delay was causing too much damage and there was no sign of the issue being resolved, with ongoing rent being paid by Rafid, and no revenue generation.

65. On 3 January 2022 Ms Abbas sent a “Non-Conformance Observation Report (NCR)” to DIF. It contained the following observations:

66. On the same day she sent an “Early Warning Notice” based on the following:

67. Ms Abbas says that DIF took no action to resolve the issues. On 12 January 2022 she carried out a detailed inspection of the furniture being held at the supplier, Interior 360. This furniture had been claimed as completed in its entirety (except for one item) in the 30 November 2021 invoice with a value of AED 209,952.50. It was during this inspection that Ms Abbas discovered that 15 chairs had not been ordered with a combined value of AED 58,425. Thus the value of the loose furniture was overstated by some 25%, nor had it been paid for in full and so it was not appropriated to the contract.

68. On 17 January 2022 Ms Abbas carried out a detailed inspection of the artwork. She determined that many items had not been delivered and other were damaged or defective. This reduced her estimate of the value of artwork supplied to AED 5,640.

69. On 21 January 2022 Ms Abbas asked Mr Fadaly to hand over the loose furniture. Ms Abbas’s colleague Mini Raju sent a reminder. Instead of responding to the request, Mr Fadaly introduced Mr Sagaya (whose full name is Sagaya Raja Kuttappan) who he said would be the one to take all the formalities and the point of contact from DIF.

Mr Sagaya

70. It is necessary at this point to consider Mr Sagaya’s role in these proceedings. Mr Sagaya appears from his witness statement to have been employed as a Claims Consultant by DIF to recover the amount of the interim payment. His evidence is largely inadmissible as it purports to be a legal opinion on DIF’s entitlement to the first progress payment.

71. I am somewhat mystified by what he thought was his function. He says that “I have not scrutinized the Defendant’s progress payment as it is not part of our service. However, I have generally evaluated the Progress Details to analyze whether Defendant has the right to request the progress payment as which is the main cause of the issue between the Claimant and Defendant.” This seems to me to be an internally inconsistent statement. Whatever it was intended to mean Mr Sagaya seems to have considered it to be his task to assess the value of the works both on and offsite. This amounts to unauthorised expert evidence as, unlike Ms Abbas, he was not involved in the actual administration of the works and therefore cannot give first hand evidence of fact. In fact no reliance can be placed on his assessment even if one were to overlook the absence of permission to call expert evidence as he is clearly not independent since he seems to have acted as an unlicensed legal advisor. He prepared DIF’s counterclaim which comprises not just the unpaid progress certificate but also claims for extended preliminaries and head office overheads and claims for loss of profits that may, most charitably, be described as ambitious.

72. Having said all that he did play some minor role in the factual chronology.

73. Ms Abbas repeated the request to hand over the loose furniture to Mr Sagaya on 25 January 2022 stating that without the necessary documents the furniture would be rejected. Mr Sagaya replied on 26 January 2022 that he had informed the DIF team to get the requested documents from the supplier. Ms Abbas wrote to Mr Fadaly on 27 January 2022 noting that there had been no confirmations nor any information about the furniture since 28 December 2021 which had caused delay and compromised Rafid in its commitment to EMAAR Malls LLC.

74. It was Mr Sagaya who replied the next day that:

“However, we are communicating with the supplier to obtain the fire rating certificate and other confirmation on commercial grade. Though we have already paid 50% to the supplier, we are finding difficult to get such information from them. However, we continue follow up with them and provide the documents ASA received from them.”

Termination 

75. On the same day (28 January 2022) Ms Abbas wrote to put on record that the TV screens installed in the corridor were not the ones specified in contract and that given the lack of requested information and delays to date incurred on the project, Rafid was serving Notice of Termination.

76. Mr Sagaya states:

“On 28 January 2022, the Claimants’ Representative has issued the Notice of Termination of the Contract. I have found that the termination is not valid under the Contract and Law. Moreover, as the root cause of the situation was due to non-payment, I have advised Defendant to reply to it as an Invalid Termination stating the intention to give mutual consent for the termination and claim cost incurred due to wrongful termination. Thus, I have provided draft reply to Defendant, which was sent to Claimant’s Representative.”

His draft foreshadowed the counterclaim. This clearly demonstrates the inadmissibility of his evidence.

77. DIF vacated the site on 7 February 2022.

Post-Termination

78. The works were re-tendered and let to Blue Camel Design LLC (“BCD”) for AED 994,390 who commenced work as soon as DIF had removed its tools and equipment.

79. On 18 February 2022 Mr Taquet attended the premises of Interior 360, he noted that the wood stain colour used on the tables was incorrect, and a number of the tabletops were chipped. Arrangements were made with Interior 360 for the furniture to be used by BCD.

80. Mr Taquet says that they then discovered that that DIF had only paid 50% of the sum due to Interior 360 for that furniture. I am not sure that is correct – on 28 January Mr Sagaya had told Ms Abbas that only 50% had been paid. I do not consider that anything turns on the point.

81. Rafid agreed to pay Interior 360 a total of AED 91,198.88 to secure the release of the furniture as follows:

82. BCD rectified defects caused by DIF, including the foul smell caused by the water back flow following their demolition of the water feature, completing the works in 45 days and the OPSO Café reopened on 23 March 2022.

The Claim

83. The Amended Particulars of Claim is not a very illuminating document. While it pleaded the facts in detail the relief sought was for the Court to declare that the contract was terminated with effect from 28 January 2022. So much is common ground. It also claimed damages “because of the Defendant’s breach of contract” but did not identify the terms of the contract said to be breached or what is said to have constituted the breach or how the loss and damage claimed were caused thereby.

84. The Reply to the Defence spent unnecessary time criticising the pleading of the Defence while doing little to repair the defects in the Amended Particulars of Claim.

85. A proper exposition of the case appears in the Claimant’s Skeleton Argument. It is the Claimant’s case that it was not liable to pay the first progress payment because DIF had failed to achieve 30% completion. DIF was not entitled to stop works and abandon the site. Its actions amounted to a fundamental non-performance of its obligations under the Contract under Articles 77 and 86(2) of DIFC Law No. 6 of 2004 (“Contract Law”) and Rafid (not DIF as mistakenly stated at paragraph 13.2 of the Skeleton Argument) was therefore entitled to terminate the Contract pursuant to Article 86(1) and to claim full compensation for the harm sustained by DIF’s non-performance under Articles 109 and 110 of the Contract Law.

86. Rafid argues that the words “site work progress” in the payment provisions should be given their literal meaning and confined to the progress of the works actually executed on the site. In my judgment this is too narrow an interpretation, I consider that it may also include works or materials not yet brought to site if those works or materials are appropriated to the contract and property in them has passed to employer. I am reinforced in this view as matter of general interpretation by evidence of Ms Abbas who was willing to give credit for off site works on proof that they were held specifically for the contract. I am reinforced in this view in particular because it appears to have been the shared intention of the parties. Mr Fadaly certainly held that view and in his email of 29 November 2021 Mr Taquet spoke of “the 30% of works expected to date on and off site”.

87. The point is ultimately of academic interest only as I am satisfied on the evidence that neither the works on site alone, nor taken in combination with the off site works, came close to satisfying the criterion of 30% completion necessary to trigger the first progress payment. In reaching this conclusion I have regard to Mr Taquet’s evidence as a record of the state of the works. I do not consider his estimate of the percentage of completion as reliable as he is not a construction professional. I do not accept Mr Fadaly’s assessment of the percentage of completion as he was not the person who prepared Invoice No.63 or the supporting documents. No evidence was adduced from that person and it was not disclosed how the percentage of completion was determined. It was however clear that there were serious over-estimates in the Invoice. I have found Mr Sagaya’s evidence as to the percentage completion inadmissible. It follows that the best evidence I have is that of Ms Abbas.

88. DIF criticises her evidence in the following respects:

89. On the basis of these criticisms (which are demonstrably unfounded) DIF submits that Ms Abbas’s evidence unrealistic, without conviction and should be “squashed and struck off completely”. I have no hesitation in rejecting DIF’s submissions and accepting the evidence of Ms Abbas in its entirety without qualification. In my judgment it is beyond argument that she did a proper professional job in assessing the state of the completion of the works as at 29 December 2021 subject to the minor corrections she readily accepted in her witness statement.

90. I therefore find as a fact that as at 30 November 2021 DIF had not completed 30% of the works whether on site or off site and so was not entitled to the payment claimed in Invoice No.63. The undisputed evidence is that after 17 November 2021 DIF ceased any meaningful works and did not resume execution of the contract before termination on 28 January 2022. While DIFC law permits a party to suspend performance when the other party is in default (see Articles 79(1) and 80(4) of the Contract Law) since Rafid was not obliged to pay Invoice No.63 DIF had no right to suspend performance. Indeed DIF had already ceased performance before Invoice No.63 was even issued.

91. The Claimant refers me to Article 86 of the Contract Law:

92. Article 77 of the Contract Law defines non-performance as “failure by a party to perform any one or more of its obligations under the contract, including defective performance or late performance”.

93. I am satisfied on the evidence that DIF was guilty of fundamental non-performance of the contract from 17 November 2021 in that DIF’s cessation of work was intentional, substantially deprived Rafid of what it was entitled to expect under the contract and gave Rafid reason to believe that it could not rely on DIF’s future performance – Mr Taquet said in his oral evidence that by January 2022 “all confidence had gone”. DIF’s work on any view was late and, at least so far as the damage to the drainage was concerned, defective.

94. The Claimant therefore succeeds on the claim.

The Counterclaim

95. DIF’s counterclaim is based on breach of the obligation in the contract to make timely payment as set out at paragraph ‎9(a) above on the basis that Rafid failed to pay Invoice No.63 when it fell due.

96. As I have held that the conditions for payment of Invoice No.63 were never satisfied and consequently Rafid never came under an obligation to pay the same, the counterclaim must fail.

Damages

97. During the course of argument I raised the issue of liquidated damages in the light of the provision of the contract:

“In case there is delayed in the performance of works, we shall be liable for paying an amount of AED 5,000 late payment fee per each day of delay from the date of handover (15th of July 2021).”

98. The parties did not purse the issue and consequently it is unnecessary to consider the matter further.

99. The Claimant relies on Articles 109 and 110 of the Contract Law:

100. The Claimant claims damages under 4 heads:

101. The first head is calculated as follows:

102. I do not consider that the VAT inclusive figures should be used to calculate this head of claim as Rafid will already have set off what it has paid by way of input tax against its output tax payments, accordingly the appropriate figure will be AED 460,373.

103. I can deal with the other heads of claim more compendiously. The Claimant’s submissions show that the claim for loss of profits is calculated by deducting rent, salaries and other costs from projected revenue. However DIF did not challenge the figures either in cross-examining Mr Taquet or in submissions. Notwithstanding, there is no evidence to support the projected revenue between 31 December 2021 and 22 March 2022, Mr Taquet only produced figures for 23 to 28 March 2022 (inclusive) without estimating the lost revenue.

104. Mr Taquet does not produce any evidence of the rent payable in respect of the café during the delay period.

105. He does produce some evidence of staff costs. I would have expected evidence of wage slips in respect of each employee during the relevant period to have been produced, but in the absence of any challenge I will accept the Claimant’s claim in the sum of AED 151,873.

Conclusion

106. The Claimant’s claim succeeds and the Claimant is entitled to damages in the sum of AED 612,246.

107. The Defendant’s counterclaim is dismissed.

108. The parties are directed serve submissions on interest and costs within 14 days of being notified of this judgment.