Nalani v (1) Nikholai (2) Niles [2024] DIFC SCT 122 (26 June 2024)

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Nalani v (1) Nikholai (2) Niles [2024] DIFC SCT 122

June 26, 2024 SCT - JUDGMENTS AND ORDERS

Claim No: SCT 122/2024

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
BEFORE SCT JUDGE MAITHA ALSHEHHI

BETWEEN

NALANI

Claimant

and

(1) NIKHOLAI
(2) NILES

Defendants

Hearing :10 June 2024
Further submissions :11 June 2024
Judgment :26 June 2024

JUDGMENT OF SCT JUDGE MAITHA ALSHEHHI

UPON the claim having been filed on 20 March 2024 and amended on 24 April 2024 (the “Claim”)

AND UPON the Defendant’s defence dated 28 March 2024 and 8 May 2024

AND UPON the Claimant’s and the Defendant’s further submissions dated 11 June 2024

AND UPON a hearing having been listed before SCT Judge Maitha AlShehhi on 10 June 2024 with the Claimant’s representative and the Defendants’ representative in attendance (the “Hearing”)

AND UPON reviewing the documents and evidence filed and recorded on the Court file

IT IS HEREBY ORDERED THAT:

1. The Lease Agreement shall be terminated.

2. The Defendants shall vacate the premises within 14 days of the date of this Judgment.

3. The Defendants shall ensure that all utility bills are paid and provide the Claimant with a clearance letter.

4. The Defendants shall pay the Claimant the amount ofAED 76,797.12which represents the rent due for May 2024.

5. The Defendants shall pay the Claimant the DIFC Courts’ filing fee in the amount ofAED 3,839.85.

Issued by:
Hayley Norton
SCT Judge and Assistant Registrar
Date of issue: 26 June 2024
At: 12pm

THE REASONS

Parties

1. The Claimant is Nalani (the “Claimant”), a company registered in the DIFC, Dubai, the UAE.

2. The First Defendant is Nikolai (the “First Defendant”), a company registered in the DIFC, Dubai, the UAE.

3. The Second Defendant is Niles (the “Second Defendant”), the co-founder of the First Defendant.

4. The Defendants will collectively be referred to as the “Defendants”, except where separation is necessary.

The Claim

5. The Claimant and the First Defendant entered into a renewed lease agreement on 31 March 2023 for the purpose of operating a restaurant from 1 February 2023 to 31 January 2026 (3 years), for an annual rent of AED 292,560.10 (the “Lease Agreement”).

6. The Claimant asserts that the Defendants breached the terms of the Lease Agreement and are still in breach for failure to make the rental payments within 30 days from the due date in accordance with Article 30, which reads as follows;

“The Landlord may terminate this Lease by giving seven (7) days written notice to the Tenant if:

(a) Any sum due under this Lease remains unpaid for thirty (30) calendar days after becoming due for payment (whether or not formally demanded);

…………

(e) Subject to Section 30, if the Tenant fails to comply with any of the terms and conditions of this Lease and fails to cure such failure within 14 calendar days from the date of receipt of a written notice of default by the Landlord”.

7. The Claimant submits that it is a standard behaviour of the Defendants to delay payment, and further submits that it has the right to request the Defendants to vacate the premises following termination as per Article 31 of the Lease Agreement which reads;

“The Landlord (or its authorized agent) shall have the lawful right and entitlement to; (i) encash any cheques belonging to such period; (ii) repossess the Premises and take possession of all property therein and to let the Premises to others and dispose of such of the property found on the Premises in such manner and at such price as the Landlord deems fit.”

8. The Claimant relies on Schedule 1 of the Lease Agreement, shown below, in respect of the payment terms and states that the Defendants were late for more than 30 days in paying the February, March and April rent. Therefore, the Defendants have been in breach from February 2024 and are still in breach for failure to settle the May rent till date.

Sr. No.Lease YearTermsAmount (AED)VAT 5% (AED)Total (AED)
0DepositSecurity Deposit on the date of signing the agreement29,256.01***29,256.01
11st1stPayment on the date of signing the agreement73,140.033,657.0076,797.03
21st2stPayment dated (01-05-2023)73,140.033,657.0076,797.03
31st3stPayment dated (01-08-2023)73,140.033,657.0076,797.03
41st4stPayment dated (01-11-2023)73,140.033,657.0076,797.03
52nd5thPayment dated (01-02-2024)73,140.033,657.0076,797.03
62nd6thPayment dated (01-05-2024)73,140.033,657.0076,797.03
72nd7thPayment dated (01-08-2024)73,140.033,657.0076,797.03
82nd8thPayment dated (01-11-2024)73,140.033,657.0076,797.03
93rd9thPayment dated (01-02-2025)73,140.033,657.0076,797.03
103rd10thPayment dated (01-05-2025)73,140.033,657.0076,797.03
113rd11thPayment dated (01-08-2025)73,140.033,657.0076,797.03
123rd12thPayment dated (01-11-2025)73,140.033,657.0076,797.03

9. The Claimant is seeking the following remedies against the Defendants:

(a) Termination of the Lease Agreement due to the Defendants’ breach and eviction with immediate effect in accordance with Articles 30 and 31;

(b) Payment of the outstanding rental due in the amount of AED 61,797;

(c) Penalty for late payment;

(d) Payment of the rent due from 1 May 2024 until date of full eviction;

(e) Payment of utilities with a clearance letter; and

(f) Reimbursement of the Court filing fee and associated costs.

10. In the Claimant’s submission dated 11 June 2024, the Claimant confirmed that it received the amount of AED 76,707.03 by way of random instalments from the Defendants after initiating the Claim with the DIFC Courts. However, they are still waiting on the rental payment for May, which has been pending for over a month to the amount of AED 76,707.03. Therefore, the Defendants are in breach of the contractual obligation to pay within 30 days and the Claimant has the right to terminate the Lease Agreement pursuant to Article 30.

The Defence

11. The Defendants are of the opinion that they did not breach the terms of the Lease Agreement and therefore should not be asked to vacate the premises.

12. The Defendants assert that they reached a mutual agreement with the Claimant’s representative after concluding the Lease Agreement that payment will be done monthly as opposed to quarterly payments.

13. The Defendants rely on the Claimant’s representative email dated 28 April 2023 which reads as below:

“Dear Madam Noreen

Good Day to you,,

Further to your email, kindly note that in order to hold the cheque each Quarter, we should receive the cash monthly deposit amount before the cheque date.

Please make sure to deposit the amount before end of this month and send us deposit slip. “

14. The Defendants do not deny that the rental amounts were due, however, they requested the Claimant’s cooperation in providing more time to settle the outstanding amount due to the financial hardships they were facing with the previous management of the restaurant.

15. The Defendants submit that they settled the rental amount due from February 2024 to April 2024 by way of cheque, after the Claim had been lodged to the amount of AED 76,707.03.

16. Consequently, they assert that they are not liable to pay anything further in respect of the Claim at hand as the total amount of AED 112,588.06 was paid prior to the Hearing. They further submit that it is the Claimant’s true intention to evict them so they could rent the premises with a higher price.

17. The Defendants’ representative submitted at the Hearing that the Claimant cannot request them to pay the rent for May as it was not included in the Claim and stated that the Claimant should file a fresh claim instead to recover this amount.

Applicable Law

18. The jurisdiction of the DIFC Courts is determined by Article 5(A) of the Judicial Authority Law Dubai Law No. 12 of 2004, as amended (the “JAL”), which provides a number of limited gateways through which the DIFC Courts have jurisdiction over a claim, which are, as relevant: …

“(a) Civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party;

(b) Civil or commercial claims and actions arising out of or relating to a contract or promised contract, whether partly or wholly concluded, finalised or performed within DIFC or will be performed or is supposed to be performed within DIFC pursuant to express or implied terms stipulated in the contract;

(c) Civil or commercial claims and actions arising out of or relating to any incident or transaction which has been wholly or partly perform within DIFC and is related to DIFC activities;

(e) Any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations.

(2) … civil or commercial claims or actions where the parties agree inwriting to file such claim or action with [the DIFC Courts] whether before or after the dispute arises, provided that such agreement is made pursuant to specific, clear and express provisions.”

19. Article 42 of the Lease Agreement reads as follows:

“The Courts of the Dubai International Financial Centre shall have the jurisdiction in the settlement of any dispute between the two parties to this Agreement.”

20. Given that the parties have agreed in writing to elect the DIFC Courts jurisdiction and on the basis that the Claimant and the First Defendant are DIFC establishments, I find that the DIFC Courts have jurisdiction to hear and determine this Claim in accordance with Article 5A(a) and 5A(2) of the JAL.

Discussion

21. It has been established above that the Defendants paid the rental dues from February 2024 to April 2024, although late. The issue remains whether the Defendants are also required to settle the rental due for May 2024.

22. The Defendants’ core contention is that the Claimant is not entitled to claim this amount in this case as the claim did not include it as a remedy in the Claim and that they have already paid the sums owed.

23. However, the Claimant’s stance is that the request for payment for the May rent was already included in the remedies sought section and it has the right to ask for it as it fell due for more than 30 days. As such, the Defendant is in breach of the Lease Agreement.

24. At the Hearing, the Defendants’ representative requested for additional time to settle the pending rent which was not approved by the Claimant due to the continuously late payments.

25. The original claim form dated 20 March 2024 mentions the claim amount to be AED 112,588 while the amended claim form dated 24 April 2024 mentions the claim amount to be AED 61,797. Having reviewed them both, it is evident that the Claimant included the request for payment of the May rent under remedies sought section, as per the below:

“……4) order the defendant to pay the upcoming rent from 1st of May 2024 until the full eviction.”

26. Although the Claimant did not mention the amount associated with the May rent in the remedies sought section, I am of the view that the Claimant is eligible to claim it as it remains outstanding till date, and in accordance with the Lease Agreement, payment ought to have been made on 1 May 2024 or 1 June 2024 at the latest.

27. In the Defendants’ submission dated 11 June 2024, they accepted to pay the rent as per the terms of the Lease Agreement. Nevertheless, they are already in breach as the rent was supposed to be paid on 1 May 2024 and no payment has been made.

28. Accordingly, I hereby order that the Lease Agreement be terminated pursuant to Article 30.

29. It follows that the Defendants must vacate the premises within 14 days of the date of this Judgment.

30. The Defendants must also ensure payment for all utility bills and to provide the Claimant with a clearance letter in accordance with Article 6 of the Lease Agreement which reads as follows:

“The Tenant shall pay all charges in respect of consumption costs of electricity, AC and water and sewerage consumed at the Premises and all charges in respect of any telephone, facsimile or other communication service costs and all charges imposed directly by any utility or authority for the supply of any other services to the Premises.”

31. Given that the Claimant has requested within its Claim for May’s rent until date of eviction which remains outstanding till date, I find that the Defendants must pay the Claimant the amount of AED 76,797.12.

Findings

32. The Lease Agreement be terminated, and the Defendants shall vacate the premises within 14 days of the date of this Judgment.

33. The Defendants shall ensure that all utility bills are paid and provide the Claimant with a clearance letter.

34. The Defendants shall pay the Claimant the amount of AED 76,797.12.

35. The Defendants shall pay the Claimant the DIFC Courts’ filing fee proportionate to the judgment sum in the amount of AED 3,839.85.

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URL: http://www.bailii.org/ae/cases/DIFC/2024/DSCT_1226.html