Claim No. SCT 265/2022
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 LEASING TRIBUNAL OF DIFC COURTS
BEFORE H.E. JUSTICE NASSIR AL NASSER
BETWEEN
LIHANT
Claimant
and
LIQT
Defendant
| Hearing : | 14 December 2022 |
|---|---|
| Judgment : | 23 December 2022 |
JUDGMENT OF H.E. JUSTICE NASSIR AL NASSER
UPON a hearing before H.E. Justice Nassir Al Nasser on 14 December 2022, with the Claimant’s representative and the Defendant appearing in person at the hearing
AND UPON reading the submissions and evidence filed and recorded on the Court file
IT IS HEREBY ORDERED THAT:
1. The Defendant shall pay the Claimant the sum of AED 318,783.32 plus interest at the rate of 9% per annum from the date of this judgment until the date of full payment.
2. The security deposit in the sum of AED 10,000 shall be forfeited in favour of the Claimant.
3. The Defendant shall pay the chilled water charges from 30 June 2018 to 20 September 2020, and pay any outstanding amounts towards DEWA, District Cooling and any other service charges.
4. The Claimant’s remaining claims shall be dismissed.
5. The Defendant shall pay the Claimant the Court fee in the sum of AED 15,939.16
Issued by:
Delvin Sumo
SCT Judge
Date of issue: 23 December 2022
At: 9:30am
THE REASONS
The Parties
1. The Claimant is Lihant (the “Claimant”), the owner of the, DIFC, Dubai, UAE (the “Apartment”).
2. The Defendant is Liqt (the “Defendant”), an individual who signed and entered into a tenancy contract (the “Contract”) with the Claimant for the Apartment.
Background and the Preceding History
3. The underlying dispute arises out of the Contract dated 18 July 2018. As per the Contract, the period of tenancy is for one year from 21 July 2018 to 20 July 2019. The Contract provided that the rent due for the Apartment for 1 year was AED 170,000 per year and was to be paid by way of four cheques.
4. On 1 July 2022, the Claimant filed a claim in the DIFC Courts’ Small Claims Tribunal (the “SCT”) seeking payment of AED 561,729.98, which consists of the following:
a. Rental arrears in the sum of AED 456,450 in addition to rent arrears from 21 July 2021 until the date of actual eviction;
b. Late renewal fees in the sum of AED 70,400 plus AED 100 for each day from 21 July 2021 till the date of actual eviction;
c. AED 4,000 in fines for 4 bounced cheques;
d. Chilled water charges in the sum of AED 20,879.98 for the period from 30 June 2018 to 18 May 2021 and payment of any outstanding amounts towards DEWA, District Cooling and any other service charges until the date of actual eviction;
e. A security deposit in the sum of AED 10,000 to be forfeited as compensation for non-payment of rent;
f. Interest;
g. An order to vacate the premises and hand it over to the Claimant in good condition;
h. Such relief that the court considers appropriate; and
i. All legal costs associated with filing this claim to be paid by the Defendant to the Claimant.
5. A consultation was held before SCT Judge Hayley Norton on 19 September 2022, 26 September 2022, and 5 October 2022. The Claimant’s representative attended the consultation, but the Defendant was absent.
6. On 6 October 2022, SCT Judge Hayley Norton issued a Default Order.
7. On 19 October 2022, the Defendant filed an application to set aside the Default Order. On 2 November 2022, the Default Order was set aside.
8. On 14 November 2022, 18 November 2022 and 29 November 2022, a consultation was held before SCT Judge Hayley Norton, in which the parties failed to reach an amicable solution.
9. In line with the processes and procedures of the Small Claims Tribunal (the “SCT”) this matter was referred to me for determination. The parties appeared before me at a Hearing on 14 December 2022.
The Claim
10. The Claimant submits that the period of tenancy was for one year from 21 July 2018 to 20 July 2019.The Defendant provided four cheques by way of payment for rent. The cheques bounced back yet the Defendant continued to live in the Apartment without making proper payment of rent. The Claimant submits that the actual handover of the apartment took place on 25 October 2022. Therefore, the Claimant filed a claim seeking a total sum of AED 561,729.98.
11. The Defendant submits that he was in financial distress during Covid-19, having lost his job and his business becoming bankrupt. The Defendant further submits that he was unable to pay his DEWA bills and had informed the landlord of his financial situation and requested to move out by way of an email dated 20 September 2020. The Defendant left the apartment during September 2020. At the time, there was no electricity in the Apartment as a result of non-payment of the electricity bills. The Defendant was refused the opportunity to move his belongings and handover the Apartment unless he settled all his outstanding bills.
12. On 23 May 2021, by way of email, the Defendant further requested to handover the Apartment to the Claimant, but he was again unable to do so because of the Claimant’s refusal as a result of the unpaid bills which had accumulated.
Findings
13. The relationship between the parties is governed by the Contract, the DIFC Leasing Law No. 1 of 2020 (“DIFC Leasing Law”) and the Contract Law No. 6 of 2004 as amended (“DIFC Contract Law”).
14. Clause 16 of the Addendum to the Contract provides “this Contract validity is for one year and will be renewable on a yearly basis.”
15. Clause 15 of the Addendum to the Contract provides “the validity of the tenancy contract is subject to the clearance of the cheques.”
16. As per the Contract, the period of tenancy was for one year from 21 July 2018 to 20 July 2019. The Defendant’s four cheques bounced back from the beginning of the Tenancy Period, and the Claimant failed to take any steps in relation to the Defendant’s breach of the Contract. In addition, the Defendant informed the Claimant of his position and requested to move out in September 2020. However, the Claimant refused to grant him the approval to move out of the Apartment. The Claimant also failed to initiate legal action against the Defendant until 1 July 2022, after two years of non-payment and a request not to renew the tenancy.
17. The Claimant confirmed that from the start date of the Contract and after four cheques bounced back, the Defendant only made partial payment of AED 53,550 towards his tenancy.
18. Pursuant to the Contract, the Claimant had the right to terminate the Contract with immediate effect as the Defendant’s cheques were not cleared pursuant to Clause 15 of the Addendum. However, the Claimant took 3 years from the date of the first cheque bouncing up until 1 July 2022, to file a claim against the Defendant in relation to the tenancy.
19. I find that the Defendant communicated with the Claimant on several occasions to enable him to handover the Apartment, but the Claimant refused and failed to initiate legal proceedings during that period.
20. Pursuant to Clause 16 of the Addendum to the Contract, the validity of the Contract is for one year and will be renewed on yearly basis. There is no evidence of any renewal filed by the parties.
21. Article 54 of the DIFC Leasing Law provides for termination by Court order:
“(1) The Lessor’s implied power under Article 55(4) of the Real Property Law shall not apply in the event of any one or more of the following events occurring under or in respect of a Residential Lease, and in such events a Lessor shall require an order of the Court to give effect to a termination of the Lease:
(a) the Lessee having failed to pay Rent on an agreed payment date and:
1. where the Residential Lease provides for a remedy period, such remedy period having expired; or
2. where the Residential Lease does not provide for a remedy period, a period of thirty (30) days having expired, without the Lessee having remedied such failure.
a. the Lessee having failed to comply with any other material obligations under the Residential Lease, and also having failed to remedy such failure within thirty (30) days of written notice from the Lessor of such failure;
b. the Lessee having abandoned the Residential Premises for a period exceeding three (3) months;”
c. the Lessee using the residential premises for an illegal purpose; or
d. if the Lessee having declared insolvent.”
22. I find that the DIFC Leasing Law provided the Claimant with remedies to terminate the Contract, however, the Claimant failed to apply for such remedies until July 2022. In addition, the Defendant informed the Claimant of his circumstances, as a result of which the least it could have done was to file a claim against the Defendant rather than leaving the Apartment as it was and seeking remedies after 2 to 3 years.
23. I find that in accordance with the terms of the Contract, the Contract ended on 20 July 2019. In absence of renewal between the parties and due to the breach made by the Defendant, I find that the Defendant is liable for the contract period and overstayed in the Apartment until 20 September 2020. This was the date he communicated with the Claimant and requested to handover the apartment and the period during which the Apartment was uninhabitable due to non-payment of the utility bills.
24. The Claimant filed a claim seeking payment of the sum of AED 561,729.98 which consists of the following:
j. Rental arrears in the sum of AED 456,450 in addition to rent arrears from 21 July 2021 until the date of actual eviction;
k. Late renewal fees in the sum of AED 70,400 plus AED 100 for each day from 21 July 2021 until the date of actual eviction;
l. AED 4,000 in fines for 4 bounced cheques;
m. Chilled water charges in the sum of AED 20,879.98 for the period from 30 June 2018 to 18 May 2021 and payment of any outstanding amounts towards DEWA, District Cooling and any other service charges until the date of actual eviction;
n. A security deposit in the sum of AED 10,000 to be forfeited as compensation for non-payment of rent;
o. Interest
p. An order to vacate the premises and hand it over to the Claimant in good condition;
q. Such relief that the Court considers appropriate; and
r. All legal costs associated with filing this claim to be paid by the Defendant to the Claimant.
25. The Claimant confirmed that the Defendant had made a partial payment towards the Contract in the sum of AED 53,550. Therefore, the remaining balance is the sum of AED 116,450. I take into consideration the fact that the Defendant did not communicate his intention to handover the apartment until 20 September 2020. Accordingly, I find that the Defendant overstayed in the apartment from 21 July 2019 to 20 September 2020 which is 1 year and 2 months.
26. I shall calculate the overstay pursuant to the previous rental sum of AED 170,000 for the period from 21 July 2019 to 20 July 2020. For the two extra months it shall be calculated pursuant to the following: AED 170,000/ 12 months = AED 14,166.66 per month x 2 months= AED 28,333.32.
27. Pursuant to the additional terms of the Contract it states that “any return cheque a fine of AED 1000 per one time will be paid by the tenant, third time plus the paid fine landlord has the right to vacate him within one month.”
28. The Claimant claims AED 4,000 in fines for four bounced cheques, which I find the Claimant is entitled to.
29. I find that the Defendant is also liable to pay the chilled water charges for the period from 30 June 2018 to 20 September 2020, and to pay any outstanding amounts towards DEWA, District Cooling and any other service charges.
30. The security deposit in the sum of AED 10,000 is to be forfeited as compensation for non-payment of rent.
31. The Claimant also claims post judgment interest. Pursuant to Practice Direction no 1 of 2017.
32. In the light of the aforementioned paragraphs, I find that the Defendant shall pay the Claimant the sum of AED 318,783.32 plus interest at the rate of 9% per annum from the date of this judgment until the date of full payment.
33. The security deposit in the sum of AED 10,000 shall be forfeited in favour of the Claimant.
34. The Defendant shall also pay the chilled water charges for the period from 30 June 2018 to 20 September 2020, and to pay any outstanding amounts towards DEWA, District Cooling and any other service charges.
35. The Claimant’s remaining claims shall be dismissed.
36. The Defendant shall pay the Claimant the Court fee in the sum of AED 15,939.16.