Claim No. SCT 085/2021
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
LAVANGI
Claimant
and
LINEESH
Defendant
| Hearing : | 18 April 2021 |
|---|---|
| Judgment : | 28 April 2021 |
JUDGMENT OF H.E. JUSTICE NASSIR AL NASSER
UPONthis claim having been called for a hearing, the Claimant’s representative and the Defendant attended the hearing;
AND UPONreading 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 35,576.65.
2. The Defendant shall pay the Claimant the court fees in the sum of AED 1,778.83.
Issued by:
Nassir Al Nasser
SCT Judge
Date of issue: 28 April 2021
At: 12pm
THE REASONS
The Parties
1. The Claimant is Lavangi ( the “Claimant”), the Landlord of Unit 00, 2, DIFC, Dubai, UAE (the “Unit”).
2. The Defendant is Lineesh (the “Defendant”), the tenant of the Unit.
Background and the Preceding History
3. The underlying dispute arises over a tenancy contract entered into between the parties dated 1 January 2020 for a tenancy period extending to 31 December 2020 (the “Contract”). The Contract provided that the Claimant would rent the Unit for 1 year in return for AED 111,000 per year, to be paid over 12 instalments.
4. On 24 March 2021, the Claimant filed a claim in the DIFC Courts’ Small Claims Tribunal (the “SCT”) seeking payment in the sum of AED 44,826.65 plus 10% legal interest from the date payment was owed until the date of payment in full.
5. On 1 April 2021, the Defendant filed an acknowledgment of service setting out its intention to defend all of the claim.
6. The parties met for a Consultation with SCT Judge Hayley Norton on 7 April 2021 but were unable to reach a settlement.
7. In line with the processes and procedures of the Small Claims Tribunal (the “SCT”) this matter was referred to me for determination pursuant to a Hearing was scheduled before me on 18 April 2021. The Claimant’s representative and the Defendant attended the Hearing.
The Claim
8. The Claimant’s case is that the Defendant’s payment for the month of July 2020 as the cheque was returned to the Claimant by the bank.
9. On 19 August 2020, the Defendant approached the Claimant and requested that the Contract be terminated, and that the Defendant be permitted to vacate the Unit by 31 August 2020.
10. The Claimant submits that, upon the Defendant’s request, it was agreed that the security deposit of AED 15,000 will be adjusted against the outstanding amounts owed by the Defendant, and the balance amounts will be cleared before the Defendant’s agreed ‘move-out’ date.
11. In addition, the Claimant seeks compensation in the form of a penalty equal to 4 months’ rent (2 months in lieu of not giving prior notice within due date as per contract (clause 25.b) plus 2 months as compensation as per the Contract (clause 25.e, in the amount of AED 37,000.
12. In summary, the Claimant claims the sum of AED 44,826.65 (less the amount of AED 15,000 applicable to the security deposit), which consists of the following:
a. Rent outstanding for the period between 1 July 2020 to 6 September 2020 in the sum of AED 20,324.65.
b. Penalty fees in the sum of AED 500 in relation to
c. ‘DIFC cancellation fee’ in the sum of AED 402
d. Unit maintenance/painting charges in the sum of AED 1,600
e. Compensation for early termination equal to 4 months rent in the sum of AED 37,000
13. The Claimant confirms that the Defendant vacated the Unit on 6 September 2020 but failed to clear the outstanding amounts allegedly owed to it, despite several communication and follow ups
The Defence
14. The Defendant submits that he was a tenant of the Claimant as of 2018 and submits that upon the renewal of the tenancy relationship, the Defendant was terminated from his employment. The Defendant continues that he was unable to find alternative employment and therefore departed from the UAE in order to avoid violation of residency laws applied in the UAE. not secure a job and had to leave the country not to violate the residency rules.
15. The Defendant submits that the Claimant was informed the Claimant of the situation, but submits that the the Claimant, in response, sought to seek further payment from the Defendant in the form of an early termination penalty in addition to a notice period penalty.
16. The Defendant then submits that he requested that the Claimant utilise the security deposit in the sum of AED 15,000 against any pending rental payments and agreed to pay the Claimant the sum of AED 6,002, but refused to pay the early termination penalty.
17. The Defendant also submits that he received an official cancellation letter from the Claimant addressed to the DIFC stating that the Defendant moved out successfully after clearing all his dues.
Discussion
18. The relationship between the parties is governed by the Contract along with the DIFC Leasing Law No. 1 of 2020 (“DIFC Leasing Law”).
19. Clause 25 of the Contract states the following:
“The tenant may request early termination of this tenancy contract subject to and conditional to the realization of all of the following conditions:
a. The tenant must obtain the landlord’s prior written consent and explicit approval on the early termination. The said approval is up to the landlord’s discretion;
b. The tenant must give the landlord a written notice 3 months prior to the desired early termination date;
c. The tenant should settle all amounts due to the landlord;
d. The tenant should not be in breach of any terms and conditions of this tenancy contract;
e. The tenant must pay to the landlord a compensation equivalent to three (3) months of the annual rent amount.”
20. The Defendant submits that, on 6 September 2020, the Claimant sent the Defendant an email stating the following:
“please find attached the DIFC Cancellation request, you are requested to sign both the attached forms as per your signature in the emirates ID.”
21. The Defendant provided a copy of the DIFC cancellation request which was only signed by the Defendant. The request reads:
“we the landlord here by inform DIFC that the tenant of (Mr. Lineesh) had applied for Early Termination and moved out officially on 6 September 2020 from the mentioned unit by clearing all his dues.”
The Claimant therefore submits that as it was not a signatory to the letter, this letter should not apply.
22. The Claimant submits that the penalty fee for early termination can only be waived under the sole discretion of the Claimant. It refers to Clause 25.a of the Contract, which sets out that tenant (Claimant) must obtain the landlord’s prior written consent and explicit approval on the early termination. The Claimant agreed on an early termination but submit that it did not agree to waive the early termination penalty.
23. I am also of the view that the Defendant also failed to provide the Claimant with an early termination notice 3 months prior to the date of the early termination, in breach of Clause 25.b of the Contract. The Defendant also failed to settle the outstanding rent until 6 September 2020. However, the parties agreed that such amount will be offset from the security deposit.
24. Clause 25.d of the Contract stated that the tenant should not be in breach of any terms and conditions of this tenancy contract. Clause 25.e of the Contract states that the tenant must pay to the landlord a compensation equivalent to three (3) months of the annual rent amount.
25. In light of the above, I find that the Defendant is in breach of the Contract and therefore is obliged to pay the Claimant the remaining sums in relation to rent and compensation equivalent to three months of the annual rent amount.
26. I agree with the amounts claimed by the Claimant, however in review of the Contract, I find that the Claimant shall only be entitled to 3 months’ worth of compensation only with regards to early termination. I make this finding in accordance with Clause 25.e of the Contract.
27. Therefore, after deducting the security deposit and adjusting the compensation amount claimed should be as follows:
a. The sum of AED 7,826.65 for the remaining rent, penalty with regards to the returned cheque, DIFC cancellation fee and unit maintenance.
b. The sum of AED 27,750 in relation to 3 months early termination compensation.
28. The Claimant also claimed legal interest at the rate of 10% per annum as per clause 11 of the Contract which states that:
“without prejudice to the rights and remedies of the landlord under this tenancy contract or under applicable law if the tenant fails to make any payments to the landlord of the rent or any sum whatsoever due to the landlord under this tenancy at the time or times or within the periods specified in this tenancy contract, the landlord may charge the tenant a penalty thereon in addition to the owed amount calculated at the rate of ten percent (10%) per annum on which the payment is due in accordance with this tenancy contract until the date of full payment, as mutual agreed compensation”.
29. The C Claimant failed to include the claim in the claim form.
30. Therefore, I dismiss the claimant’s claim for legal interest from the due date until the date of full payment.
Conclusion
31. In conclusion, I find that the Defendant shall pay the Claimant the sum of AED 35,576.65 in relation to the rent amount and the 3 months’ early termination compensation.
32. The Defendant shall pay the Claimant the court fees in the sum of AED 1,778.83.
Issued by:
Nassir Al Nasser
SCT Judge
Date of issue: 28 April 2021
At: 12pm