Claim No: SCT 221/2023
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 OF DIFC COURTS
BEFORE H.E. JUSTICE NASSIR AL NASSER
BETWEEN
MIKLAY
Claimant
and
MIDHAL
Defendant
| Hearing : | 24 July 2023 |
|---|---|
| Judgment : | 16 August 2023 |
JUDGMENT OF H.E. JUSTICE NASSIR AL NASSER
UPON the Claimant filing the Claim Form dated 12 June 2023
AND UPON a Hearing having been held before H.E. Justice Nassir Al Nasser on 24 July 2023, with the Claimant’s and the Defendants’ representatives in attendance
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 42,296.27.
2. Description automatically generatedThe Defendant shall pay the Claimant the Court fee in the sum of AED 2,067.18.
Issued by:
Hayley Norton
Assistant Registrar
Date of Issue: 16 August 2023
At: 10am
THE REASONS
Parties
1. The Claimant is Miklay (the “Claimant”), a company registered and located in Fujairah, UAE.
2. The Defendant is Midhal (the “Defendant”), a company registered and located in Dubai, UAE.
Background and Procedural History
3. The underlying dispute arises in relation to unpaid invoices in accordance with the Consultancy Service Agreement dated 23 July 2022 (the “Agreement”) in the sum of AED 41,343.75.
4. On 23 June 2023, the Defendant filed its Acknowledgment of Service with an intention to defend all of the claim.
5. The parties met for a Consultation on 6 July 2023 but were unable to reach a settlement.
6. In line with the rules and procedures of the SCT, this matter was referred to me for determination, pursuant to a Hearing held on 24 July 2023, at which the Claimant’s and the Defendants’ representatives were in attendance.
The Claim
7. The Claimant filed a claim claiming unsettled invoices in accordance with the Agreement for services carried out from 1 February 2023 to 7 April 2023.
8. The Claimant submits that the Defendant terminated the Agreement on untrue grounds and has not served notice of termination in accordance with the Agreement.
9. The Claimant submits that the Defendant claims in its email dated 6 April 2023 that the Claimant has delayed the project, however, the Claimant submits that the delay is due to the Defendant’s request for brand change and extension of sheesha area which was rejected by the Landlord Mekht. The Claimant adds it is the Defendant’s responsibility to obtain the Landlord’s NOC pursuant to clause 3.3 of the Agreement which provides the following:
“unless the parties agree otherwise, the Client or Client’s appointed contractor shall as soon as practicable lodge and obtain all approvals, landlord’s NOC, authorities, licenses and permits which are required from governmental, municipal or other responsible authorities of the lawful implementation and completion of the project. The obtaining of such approval, NOC’s, authorities, licenses, and permits shall be a condition precedent to performance by the fit-out contractor of any activities requiring such approvals. The consultant will manage the landlord submissions and dissemination of information to the wider project delivery team.”
10. The Claimant adds that the Defendant is refusing to take accountability of constant design changes resulting in multiple rejection by Mekht.
11. The Claimant submits that its scope of work does not include undertaking interior design/kitchen design/mechanical and MEP design which are direct appointments by the Defendant. The Claimant’s scope of work is defined in the Agreement.
12. Therefore, the Claimant seeks the total sum of AED 41,343.75 including delayed payment interest in accordance with clause 4.6 of the Agreement and the reimbursement of the Court fees.
Defence
13. The Defendant submits that the Claimant bears the responsibility of the delay as the Project Manager of the Project.
14. The Defendant submits that during the course of the Agreement, the Defendant paid all the sums due. The Defendant submits that the total sum of AED 210,000 was the design phase (which required the Landlord’s approval) and the construction phase.
15. The Defendant submits that clause 1.2 of the Agreement in annexure A, the design phase, was supposed to have been carried out from 4 July 2022 to 24 August 2022, and the works on site were supposed to have commenced on 25 August 2022 and be completed by 21 December 2022.
16. The Defendant submits that the project was delayed from July 2022 to March 2023 due to Emaar not granting the required approvals. The Defendant submits that over the course of the project the Claimant always provided positive feedback and gave the Defendant an impression that there was nothing they could do to speed up the approvals.
17. The Defendant adds that on 7 December 2022 the Claimant advised the Defendant that the “MEP proposal for Sheesha [is] approved in principal”. However, the Defendant asserts that he discovered from Mekht that the sheesha expansion was the issue holding up the entire project. The Defendant adds that Mekht informed him that the project would not be approved with this sheesha expansion in the design.
18. The Defendant adds that after an investigation, he became aware that the information given to him by Mekht had been relayed to the Claimant previously, but the Claimant never passed it to the Defendant or the wider project team.
19. The Defendant adds that he wanted the sheesha expansion, however, once he was aware of the information, he was able to arrange for the design to be amended.
20. The Defendant submits that he had paid the Claimant the fee as per the Agreement. however, the Defendant submits that the Claimant mismanaged the project in order to bill the Defendant on a monthly rate in accordance with clause 4 of Annexure B of the Agreement which provides that if the project or fit-out work is delayed or extended after 21 December 2022 due to circumstances out of the project manager consultant’s control, the Project manager consultant reserve the right to charge at a pro-rata rate on monthly basis. Therefore, the Defendant terminated the Agreement immediately.
21. The Defendant in conclusion submits that such delay was within the control of the Claimant, therefore, the Claimant is not entitled to claim a monthly rate from 23 February 2023 to 7 April 2023.
Discussion
22. The main issue is whether the delay was caused by the Claimant or not and whether the Claimant is entitled to the claimed amount.
23. Clause 3.3 of the Agreement provides the following:
“unless the parties agree otherwise, the Client or Client’s appointed contractor shall as soon as practicable lodge and obtain all approvals, landlord’s NOC, authorities, licenses and permits which are required from governmental, municipal or other responsible authorities of the lawful implementation and completion of the project. The obtaining of such approval, NOC’s, authorities, licenses, and permits shall be a condition precedent to performance by the fit-out contractor of any activities requiring such approvals. The consultant will manage the landlord submissions and dissemination of information to the wider project delivery team.”
24. The Claimant asserts that Mekht were not giving the Defendant approval on MEP submission due to the increased sheesha area which the Defendant was seeking. Mekhtonly formally confirmed this on 16 March 2023 by way of an email to the Defendant. The Claimant adds that prior to 16 March 2023, Emaar did not formally reject the extension of the sheesha area nor inform the Claimant or the Defendant.
25. The Claimant asserts that the project timeline has extended not just because of the sheesha approval but due to 12 design revisions initiated by the Defendant.
26. The Claimant’s scope of work as per the Agreement is to manage the design approval process between the client, interior designer, landlord/FM Management team, fit-out contractor, and kitchen supplier.
27. The Defendant assert that it was the Claimant’s responsibility to obtain approval from Mekht in relation to the sheesha expansion, however, pursuant to clause 3.3 of the Agreement, it is the Defendant who should obtain the approvals and not the Claimant. The Claimant’s responsibility was to manage the landlord submissions and dissemination of information to the wider project team.
28. There is no evidence before the Courts that the parties agreed that the Claimant should obtain the approvals.
29. Upon reviewing the evidence provided, besides the design changes, the delay was from the Landlord by not informing the Defendant and its project manager that the request of the sheesha expansion is rejected. The rejection was formally sent during mid-March 2023, after which time, I find the Claimant and Defendant to have been in communication until 31 March 2023 on matters related to the Project without mention to the Claimant of the reason for the delay. In addition, it is the Defendant’s responsibility pursuant to clause 3.3 of the Agreement to obtain the approvals.
30. There is no evidence before the Courts which stipulates that the Claimant was the reason of the delay nor that the Claimant did not perform its obligations as per the Agreement.
31. Therefore, I find the Claimant is entitled to payment of the invoices in accordance with clause 4 of Annexure B of the Agreement which provides the following: “if the project or fit-out work is delayed or extended after 21 December 2022 due to circumstances out of the project management consultant’s control, the project management consultant reserves the right to charge at a pro-rata rate/calendar month of the fee proposal in Annex B. This will be communicated to the client in advance to seek client’s approval in advance. Final account settlement is factored in from 21 December 2022 – 30 December 2022.”
32. The Claimant issued two invoices to the Defendant dated 22 March 2023 and 17 April 2023 in the total sum of 41,343.75. I find the Defendant is liable to pay for the work performed by the Claimant during the period from 23 February 2023 to 7 April 2023.
33. The Claimant claims interest pursuant to clause 4.6 of the Agreement which provides that the “the Client agrees that in addition to all other rights and remedies of the consultant if the client fails to pay all monies/invoices as and when due, the consultant shall be entitled to payment of interest on overdue accounts. Invoices are raised in advance of the calendar month and any uncleared invoices past the 14 calendar day due date will attract an interest of 4% plus interbank rate chargeable du to delayed payment. The interest shall be calculated on daily balances at the current UAE interbank rate plus 2% per annum on all monies, which are not paid on the due date.”
34. The interbank rate which has been adopted from the UAE Central Bank site as on 10 August 2023 is 5.45%.
35. The Claimant calculated the interest rate as per the below:
| Date of Invoice | Due date of Payment | 14 calendar days from the due date | Amount of Invoice | 1st leg of Interest (4% plus interbank rate) | 2nd leg of Interest (2% per annum) | Total Interest |
|---|---|---|---|---|---|---|
| 22/03/2023 | 04/04/2023 | 18/04/2023 | 33,075.00 | 935.41 | 231.98 | 1,167.38 |
| 17/04/2023 | 26/04/2023 | 10/05/2023 | 8,268.75 | 188.72 | 48.03 | 236.75 |
| Total Interest | 1,404.13 | |||||
36. The Claimant claims interest on two invoices from the due date until 10 August 2023. However, I shall only award interest from the due date to the date of filing the claim on 12 June 2023. As such the calculation shall be as follows:
(a) For the 1st leg Invoice dated 22 March 2023 in the sum of AED 33,075 x 9.45% per annum = AED 3,125.58/12 month = AED 260.46/30 days = AED 8.68 per day x 54 days = AED 468.72
(b) For the 2nd leg invoice dated 22 March 2023 in the sum of AED 33,075 x 7.45% per annum = AED 2,397.93/12 month = AED 199.82/30 days = AED 6.66 per day x 54 days = AED 359.64.
(c) For the 1st leg Invoice dated 17 April 2023 in the sum of AED 8,268.75 x 9.45% per annum = AED 781.39/12 month = AED 65.11/30 days = AED 2.17 per day x 32 days = AED 69.44
(d) For the 2nd leg Invoice dated 17 April 2023 in the sum of AED 8,268.75 x 7.45% per annum = AED 616.02 /12 month = AED 51.33/30 days = AED 1.71 per day x 32 days = AED 54.72
| Date of Invoice | Due date of Payment | 14 calendar days from the due date | Amount of Invoice | 1st leg of Interest (4% plus interbank rate) | 2nd leg of Interest (2% per annum) | Total Interest |
|---|---|---|---|---|---|---|
| 22/03/2023 | 04/04/2023 | 18/04/2023 | 33,075.00 | 468.72 | 359.64 | 828.36 |
| 17/04/2023 | 26/04/2023 | 10/05/2023 | 8,268.75 | 69.44 | 54.72 | 124.16 |
| Total Interest | 952.52 | |||||
37. In light of the aforementioned, the Defendant shall pay the Claimant the sum of AED 42,296.27 (including the interest calculated above).
38. The Defendant shall pay the Claimant the Court fee in the sum of AED 2,067.18.