September 07, 2023 TECHNOLOGY AND CONSTRUCTION DIVISION - ORDERS
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
and
DIF INTERIOR DECORATION CO. LLC
Defendant
ORDER OF JUSTICE MICHAEL BLACK
UPON the Judgment of Justice Michael Black dated 16 August 2023 ordering the parties to file cost submissions within 14 days (the “Judgment”)
AND UPON the Claimant’s cost submissions dated 30 August 2023
AND UPON the Defendant’s email correspondence to the Registry dated 31 August 2023 confirming that they will not file cost submissions
IT IS HEREBY ORDERED THAT:
1. The Defendant shall pay to the Claimant interest on the Judgment Sum of AED 612,246, in the amount of AED 60,209.
2. The Defendant shall pay 80% of the Claimant’s costs of the proceedings to be assessed by the Registrar in default of agreement.
3. The Judgment shall carry simple interest at the rate of 9% per annum from 16 August 2023 until payment in accordance with Practice Direction No 4 of 2017 – Interest on Judgments.
Issued by:
Delvin Sumo
Assistant Registrar
Date of Issue: 7 September 2023
At: 12pm
SCHEDULE OF REASONS
1. On 16 August 2023, I gave judgment in favour of the Claimant (“Claimant” or “Rafid”) in the sum of AED 612,246 and dismissed the Defendant’s Counterclaim. I directed the parties to serve submissions on interest and costs within 14 days of being notified of the Judgment. The Defendant declined to do so, but the Claimant served submissions on 30 August 2023.
2. Not only did the Claimant make submissions on interest and costs but requested that I reconsider the determined entitlement in favour of Rafid, by adding the sum of AED 222,362 on account of the rent paid by Rafid, during the delay period.
3. By its Amended Particulars of Claim, the Claimant claimed the sum of AED 1,031,728 by way of damages for breach by the Defendant of a café fit-out contract under the following heads:
1. AED 483,620, being the difference between the Contract Amount, and the actual cost to procure the Works;
2. AED 208,635, being the rent payable for the Site for the period starting on 31 December 2021 until 22 March 2022 (i.e., the date the Project was supposed to have been completed, and the date the Project was ultimately completed (“Delay Period”));
3. AED 187,600, being for loss of profits for the Delay Period; and
4. AED 151,873, being salaries paid by the Claimant to its staff during the Delay Period.
4. I awarded the Claimant AED 460,373 under the first head after deduction of the VAT claimed. I dismissed the claim for loss of profits on the basis that there was no evidence to support the projected revenue between 31 December 2021 and 22 March 2022 and the claim for rent on the basis that the Claimant did not produce any evidence of the rent payable in respect of the café during the Delay Period. I allowed the claim for the staff costs during the Delay Period.
5. The Claimant submits that I was wrong to hold that “Mr Taquet (the Claimant’s witness) does not produce any evidence of the rent payable in respect of the café during the delay period”. The Claimant now submits:
1. At Paragraph 5 of the witness statement of Mark Taquet, Mr Taquet:
(a) states that 2,000 sq. ft of the leased area is dedicated to the OPSO Café; and
(b) refers to Exhibit ‘MGT-1’, which he describes as containing “a copy of the financial terms of the lease of the Premises”;
2. Contained in MGT-1 (pages 115-118) is ‘Schedule 1’ of the lease of the premises. This document sets out:
(a) that the premises was leased by Rafid from Emaar Malls PJSC (“Emaar”) for a term of 3 years;
(b) that the term of the lease:
(i) commenced on 15 December 2021 (being a date that is before the commencement of the Delay Period); and
(ii) will end on 14 December 2024;
(c) that the internal area of the entire premises was 8,794 feet;
(d) that the rent in the first year (being the relevant rent payable during the delay period) was calculated on the following rates:
(i) Base Rent of AED 391 per square foot;
(ii) Service Charge of AED 85 per square foot; and
(iii) Chiller Charge of AED 25 per square foot;
(e) that an annual marketing fee of 2.5% of the rent (AED 90,260 for the first year) was payable;
(f) that an Ejari fee of AED 220 was payable; and
(g) that the Rent (which excludes the annual marketing fee) for the first year was payable in 4 equal instalments of AED 1,101,449, plus VAT.
3. Within MGT-1 (page 119) is a Notice to Pay dated 26 October 2021, issued by Emaar to Rafid. This document provides details of the cheques required to be 5 of 7 provided by Rafid, to Emaar for the whole of the term of the lease. The sums noted therein are inclusive of VAT and the first payment due on 15 December 2021 also included the annual marketing fee.
4. Within MGT-1 (pages 120-122) are copies of the cheques Rafid issued to Emaar for the relevant period, dated:
(a) 15 December 2021 for AED 831,187 and 16 January 2021 for AED 415,593, which totals AED 1,246,780, being the exact amount requested by Emaar for ‘Post Dated Cheque #1’ in the Notice to Pay at page 119 of the Bundle; and
(b) 5 March 2022 for AED 578,261 and 15 April 2022 for AED 578,260, which totals AED 1,156,521, again being the exact amount requested by Emaar for ‘Post Dated Cheque #2, in the Notice to Pay at page 119 of the Bundle.
5. Noting the above, Mr Taquet did provide evidence that Rafid paid rent over the entire Delay Period.
6. Due to the delay to the Works, the Rent (so far as it related to the 2,000 square foot area dedicated to the café) was an entirely sunk cost due to the fact that this part of the premises was hoarded up and was not able to generate any revenue.
7. The sum referred to at paragraph 54 of Rafid’s Skeleton Arguments erred by referring to the Delay Period as 1 January 2022 to 15 March 2022.
8. The Claimant has produced an updated calculation, based on the Delay Period being the period from 31 December 2021 to 22 March 2022 (81 days) with the rates (per square foot) as noted above:
| Description | Area (Sq Ft) | Rate (AED) Per/SqFt | Total/Year (AED) | Per Day Rent | No .of Days | Amount (AED) |
|---|---|---|---|---|---|---|
| Base Rent | 2000 | 391 | 782,000.00 | 2,142.47 | 81 | 173,540.07 |
| Service Charge | 2000 | 85 | 170,000.00 | 465.75 | 81 | 37,725.75 |
| Chiller Charges | 2000 | 25 | 50,000.00 | 136.99 | 81 | 11,096.19 |
| Total cafe rent | 1,002,000.00 | 222,362.01 | ||||
6. None of the above was explained in evidence or by way of submission.
7. I have no hesitation in rejecting the Claimant’s request that I reconsider the determined entitlement in favour of Rafid by adding the sum of AED 222,362 on account of the 6 of 7 rent paid by Rafid during the Delay Period, as being misconceived for the following reasons:
1. The Claimant does not suggest the legal basis on which I would have jurisdiction to revise my Judgment. The Claimant uses the phrase “before final orders are made in this proceeding”. This may be (although it is not clear) an invocation of the well-known principle that a judge is entitled to reverse their decision at any time before their order is drawn up and perfected. That principle cannot apply in the present case as the order has been drawn up, perfected and published on the Court’s website;
2. In any event, a party cannot simply produce documents said to support a sum claimed without explanation in evidence or by way of submissions and expect the Court unaided to understand its case. Mr Taquet’s witness statement gives no indication of how the documents annexed to the witness statement support the claim for rent payable during the Delay Period. In fact, his witness statement does not refer to that claim at all;
3. Perhaps even more important is that the opposing party is provided with notice of the case it is to meet. Failure to do so is a violation of natural justice. A party must be notified of the case it is to meet and have the opportunity to oppose that case both by way of evidence and submission;
4. The situation is only exacerbated where a party seeks to amend its case without notice; and
5. It is now too late to try to explain that which could and should have been explained during the trial and on which the Defendant ought to have had the opportunity to address the Court.
8. I now turn now to interest and costs.
9. As to interest, I agree with the Claimant that it is entitled to interest under Article 18 of the Law of Damages and Remedies (DIFC Law No.7 of 2005) which provides that “interest on damages for non-performance of obligations accrues as from the time of non-performance”. I accept the Claimant’s submission that the period when interest on the sum awarded should apply is from 28 January 2022 (being the date that the Contract was terminated), up to the date of the Judgement, being 16 August 2023, namely 565 days. I note the Claimant’s refences to Article 17(2) of the Law of Damages 7 of 7 and Remedies and GFH Capital Ltd v Haigh [2014] DIFC CFI 020 (4 July 2018) in support of its submission that 3-month EIBOR (as exhibited to its submissions) plus 1% would be an appropriate rate. I agree with that submission and so the appropriate rate will be 6.353% p.a. applicable to the 565-day period.
10. The Judgment Sum is AED 612,246; the interest will therefore be AED 60,209.
11. As to costs, the Claimant points to RDC 38.7(1) which provides that “the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party”. The Claimant also refers to RDC 38.8 which obliges the Court when making an order about costs to have regard to the conduct of all the parties and whether a party has succeeded on part of their case if they have not been wholly successful.
12. In the present case the Claimant has been wholly successful on the issue of liability and in resisting the counterclaim. While the Claimant has only recovered 57% of its claim, I do not consider that that percentage is a true measure of the Claimant's success which in my view is more accurately represented by an award of 80% of the Claimant’s costs.
13. Clause 3 of Practice Direction No 4 of 2017 – Interest on Judgments provides that any judgment of the DIFC Courts issued after the date of this Practice Direction shall carry simple interest, from the date the judgment is entered, at the rate of 9% or such other rate as the judge may prescribe
14. I therefore order that:
1. The Defendant is liable to pay interest on the Judgment Sum of AED 612,246, in the amount of AED 60,209;
2. The Defendant is liable to pay 80% of the Claimant’s costs of the proceedings to be assessed by the Registrar in default of agreement.
3. The judgment shall carry simple interest at the rate of 9% per annum from 16 August 2023 until payment in accordance with Practice Direction No 4 of 2017 – Interest on Judgments.
