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You are here: BAILII >> Databases >> The Dubai International Financial Centre >> Normand V Nathaniel [2024] DIFC SCT 125 (15 August 2024) URL: http://www.bailii.org/ae/cases/DIFC/2024/DSCT_1251.html |
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Normand V Nathaniel [2024] DIFC SCT 125
August 15, 2024 SCT - JUDGMENTS AND ORDERS
Claim No: SCT 125/2024
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
BETWEEN
NORMAND
Claimant
and
NATHANIEL
Defendant
Hearing : 5 August 2024 Judgment : 15 August 2024 JUDGMENT OF SCT JUDGE MAITHA ALSHEHHI
UPON the claim having been filed on 21 March 2024 (the “Claim”)
AND UPON the Defendant’s reply dated 7 June 2024
AND UPON a hearing having been listed before SCT Judge Maitha AlShehhi on 5 August 2024, with the Claimant’s representative and the Defendant’s representative in attendance (the “Hearing”)
AND UPON the Claimant’s and the Defendant’s further submissions dated 5 August 2024
AND UPON reviewing the documents and evidence filed and recorded on the Court file
IT IS HEREBY ORDERED THAT:
1. The Defendant shall pay the Claimant the amount ofAED 371,212.95.
2. The Defendant shall pay the Claimant the DIFC Courts’ filing fee int the amount ofAED 18,560.63.
Issued by:
Delvin Sumo
SCT Judge and Assistant Registrar
Date of issue: 15 August 2024
At: 12pmTHE REASONS
Parties
1. The Claimant Normand (the “Claimant”), a limited liability company registered in the UAE.
2. The Defendant is Nathaniel (the “Defendant”), an individual institution company registered in the UAE.
The Claim
3. The Claimant submits that the Defendant entered into a concession agreement dated 1 October 2015, signed on 30 June 2016, (the “Agreement”) with Niles, managed by Nat, which was operated for and on behalf of Naeem (“Naeem”)
4. At the time of signing the Agreement, Schedule 1 stated the management of Naeem to be under “Nat” and is the duly authorised agent to operate it. However, on 31 December 2020, the management agreement between them had been terminated and as a result, Nat does no longer managed Naeem.
5. In accordance with the terms of the Agreement, the Defendant was granted permission to access and use an area in the lobby of the hotel as an office providing travel and tourism services for the period from 1 July 2016 to 30 June 2017, in return for monthly payment of AED 17,160.
6. The Claimant contends that the Defendant occupied the premises while defaulting in payment for no legal justification. As per the statement of account provided by the management of Naeem, the total amount due is AED 369,892.95.
7. The Claimant asserts that as a real estate company, it is entitled to recover the outstanding dues directly from the Defendant because it owns Naeem and is its legal representative before judicial departments.
8. The Claimant submits that it obtained a preliminary judgment from a UAE Commercial First Instance Court to appoint an accounting expert to review the papers and verify the amount owed. The expert concluded that the Defendant owes the Claimant the amount of AED 371,212.95 (the “Judgment”).
9. The Claimant takes the view that the Judgment is only limited to the expert to prove the exact amount due, and that the DIFC Courts have jurisdiction over the Claim pursuant to Article 28 of the Agreement.
10. The Claimant contends that the Defendant did not enter into a settlement agreement with Naeem as that settlement was signed with a different branch of Nivas which is not owned by the Claimant. Consequently, it does not extend to the Claim at hand and the Defendant remains liable for payment in the amount of AED 371,212.95 as substantiated by the Judgment.
11. Further to Naeem ending the management agreement with Nat (“Nat”) in 2020, the Claimant (as the owner) sent a notice to the Defendant to demand for full payment of outstanding dues. Therefore, the Claimant argues that the settlement agreement referred to above could not have extended to the Claimant as it was entered into in 2022 (i.e. after Nat’s exit) and with a different company not owned by the Claimant.
12. The Claimant relies on the findings in the Judgment which stipulates that the Defendant acknowledged and admitted to Nat by way of email dated 29 March 2017 that it owes, among other things, Naeem the amount of AED 337,049.92. However, on 8 April 2018, the Claimant submits that the Defendant refused Nat’s offer as the manager of the two hotels to offset the payments on the basis that they are owned by different owners.
The Defence
13. The Defendant rejects the Claim in its entirety and submits that the Claimant does not have the legal capacity to file this Claim as it is not a party to the Agreement which was entered into with Naeem. Therefore, no contractual relationship exists and for that reason the Defendant is not entitled to pay anything to the Claimant.
14. The Defendant argues that the Claimant is a limited liability company which means that it has a separate legal personality and cannot proceed to file a claim on behalf of another party. The Defendant adds that it never communicated with the Claimant when it used to occupy the premises.
15. The Defendant disputes the Judgment and asserts that the expert did not get hold of all required documentation and the amount is not a correct representation, therefore the Court should not be bound by it. Additionally, the Defendant rejects the findings of the expert.
16. The Defendant explains that this is because the expert relied on email communications between the employees of the companies instead of relaying on proper accounting documents or books of traders. Also, the Defendant asserts that the expert failed to take into consideration that all hotels had the same bank account.
17. The Defendant further submits that it entered into a settlement agreement with Norwood (“Norwood”) dated 13 September 2022 for payment to be made in the amount of AED 125,000 in favour of the Defendant (“Settlement Agreement”). As a result, the Claimant is not entitled to recover or file anything further against the Defendant as all matters with Nat have been concluded by virtue of the Settlement Agreement which is read as follows:
“
Subject: Release of liabilities for concessionary agreement between both parties entered into effect on the 1st of January 2016 for the period from the 1st of July 2016 till the 30th of June 2017
Dear Nazeer,
Norwood and Nathaniel agree that further to recent discussions in person and via email from April 2022 till date, Norwood will pay Nathaniel a full and final amount of AED 125,000.00.
Nathaniel agrees that this payment constitutes full and final payment and Nathaniel shall forever release and discharge Norwood and its respective Affiliates from all liabilities, causes of action, proceedings, issues, claims, disputes and demands whatsoever, whether known or unknown, suspected or unsuspected, fixed or contingent, asserted or unasserted, arising or existing on or before the date of this letter.
Please acknowledge and sign a copy of this letter attached.
Regards,
Nigella
Cluster General Manager
Norwood”18. The Defendant noted that the expert did not make any finding in respect of the governing relationship between the Claimant and the Defendant, and for that reason it should have not concluded that any amount was owed to the Claimant.
19. Additionally, the Defendant asserts that Nat as manager of both Norwood and Naeem used to deposit all the amounts in the same bank account belonging to Norwood. Therefore, the Settlement Agreement applies to the Claimant as Naeem did not have a separate bank account.
Applicable Law
20. The dispute resolution clause is set out in Article 28.2 of the Agreement and is read below:
“28.2 The parties will attempt to negotiate in good faith a settlement of any claim or dispute between or among them arising out of in connection with this Agreement including any question regarding its existence, validity or termination (“Dispute”). If such a Dispute is not resolved by negotiation within thirty (30) days of receipt of one Party of a written request for negotiation from the other party, the Dispute shall be referred to, and finally resolved by, the DIFC Courts and the parties agree that the DIFC Courts shall have exclusive jurisdiction to hear any and all disputes, controversies or claims arising out of or in connection with this Agreement (including, without limitation, any question regarding its existence, validity or termination).”
21. RDC 53.2 requires that the SCT hear only cases that fall “within the jurisdiction of the DIFC Courts”. 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:
“(1) The Court of First Instance shall have exclusive jurisdiction to hear and determine:
(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 performed 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) The Court of First Instance may hear and determine any civil or commercial claims or actions where the parties agree in writing 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.”
22. For cases to be heard in the SCT, first, they must first fall within the DIFC Courts’ jurisdiction by engaging any of the jurisdictional gateways set out in the abovementioned Article.
23. Further to the above, the DIFC Courts have jurisdiction to hear and determine the Claim in accordance with Article 5(A)(1)(2) of the JAL on the basis that Article 28.2 of the Agreement is clear on the parties’ intention to resort to the DIFC Courts in case of any dispute and is the appropriate forum to hear the Claim.
Discussion
Is the Settlement Agreement applicable to the Claimant?
24. The Claimant submitted evidence in the form of a document from the Chief Executive Officer of Neveah dated 20 November 2023 (the “Letter”) which is read as below:
“Re: Neveah LLC (the “Neveah”) and Nathaniel
We refer to the above matter and by way of background confirm the following:
1) Neveah as owner of Norwood (formerly known as Norval) historically entered into a contract with Nathaniel on 1 January 2016 (the “Nathaniel Contract”)
2) As of 5 April 2022, there was outstanding liability owed by Neveah of AED 305,205.31 to Nathaniel in relation to the Nathaniel Contract.
3) Following a demand for payment through the Courts, Neveah and Nathaniel entered int settlement discussions and a settlement agreement was concluded on 13 September 2022 in an amount of AED 125,000 payable by Neveah to Nathaniel n full and final settlement of the outstanding liability under the Nathaniel Contract (the “Settlement”) (copy letter attached as Annex 1).
On behalf of Neveah, I hereby confirm that the Settlement pertains exclusively to the outstanding liability owed by Neveah (on behalf of the Norwood (formerly known as Norval) under the Nathaniel Contract and is not attributable to any liabilities owed to or by Nathaniel by any other company or entity or in relation to any other contractual arrangement.
Sincerely,
For an on behalf of Neveah”25. Further to the above, it is clear that the Settlement Agreement is entered into between the Defendant and Norwood which is owned by Neveah as confirmed in the Letter. Therefore, neither the Claimant nor its subsidiaries are relevant to this.
26. Also, the Settlement Agreement states that the Defendant shall release and discharge the Hotel and its affiliates from all liabilities and not the other way around. Therefore, I find that the Settlement Agreement does not extend to the Claimant and is unenforceable in this case.
Does the Claimant have the legal capacity to file the Claim and request for payment?
27. Given that the Claimant owns Naeem which entered into the Agreement with the Defendant and that it is authorised to represent it before all judicial departments, the Claimant takes the view that it has the legal capacity and right to file a claim on its behalf to retrieve outstanding sums owed.
28. The Defendant argues that this is not permissible and disputed this before the issuance of the Judgment and submits that the Claimant is not entitled to file any further claim against them by virtue of the Settlement Agreement which stipulates that all claims shall be forever discharged and released.
29. As discussed above, the Settlement Agreement specifies that the Defendant shall discharge Norwood from any liabilities, and not the other way around. Besides, I find that it does not apply to the Claimant as it is a separate entity.
30. The Judgment did not give its opinion on whether the Claimant is eligible to file this claim on behalf of Naeem, instead, it referred the matter to the Court for determination on the basis it is a legal principle.
31. Nonetheless, the Judgment states that the Defendant is obligated to pay the outstanding amount to the Claimant, and that the Settlement agreement is not applicable.
32. As mentioned previously, the Defendant acknowledged that it is liable to pay Naeem, but submits that the Settlement Agreement supersedes it and therefore no payment should be made.
33. Article 1.10 of the Agreement reads as follows:
“This Agreement is entered into by Manager for and on behalf of Owner, as Owner’s authorized agent. All obligations of Owner specified in this Agreement shall be solely those of the party identified in Part 1 of Schedule 1 as Owner shall not be obligations of Manager; all rights of Owner specified in this Agreement may be exercised by Owner or by Manager as its authorised agent, and Concessionaire shall recognize and abide by all such instructions of Manager; all directions, notices and communications given by Manager to Concessionaire shall be treated as given by Owner, and all notices and communications given by Concessionaire to Manager shall be treated as having been given to Owner. Wherever this Agreements calls for a consent or approval of Owner, such consent order approval may be given by Manager on Owner’s behalf and shall have the same effect as if given directly by Owner.”
34. Further to the above and given that Nat does not manage Naeem anymore and the Claimant does, I am of the view that the amount can be claimed by the Claimant as the owner of Naeem and authorised legal representative.
35. Given that I have already determined that the Settlement Agreement does not apply to the Claimant and due to the Defendant’s acknowledgment that the amount is due by way of email, I find that the Defendant is liable to pay the Claimant.
Findings
36. The Claim shall succeed, and the Defendant shall pay the Claimant the amount of AED 371,212.95.
37. As the Claimant have been successful in its claim, the Defendant is entitled to recover the Court filing fee. Therefore, I find that the Defendant shall pay the Claimant the DIFC Courts’ filing fee in the amount of AED 18,560.63.