Claim No: SCT 198/2023
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
MISHTUN
Claimant
and
MAWUL
Defendant
| Hearing : | 27 July 2023 |
|---|---|
| Judgment : | 10 August 2023 |
AMENDED JUDGMENT OF H.E. JUSTICE NASSIR AL NASSER
UPON the Claimant filing the Claim Form dated 29 May 2023
AND UPON a Consultation being listed before SCT Judge Hayley Norton on 11 July 2023, with the parties failing to reach a settlement at the Consultation
AND UPON a Hearing having been held before H.E. Justice Nassir Al Nasser on 27 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 174,686.93 plus interest at the rate of 9% per annum from the date of this Judgment until the date of full payment.
2. The Defendant shall pay the Claimant the Court fee in the sum of AED 8,734.34.
Issued by:
Hayley Norton
SCT Judge and Assistant Registrar
Date of Issue: 10 August 2023
Date of Reissue: 15 August 2023
At: 8 am
THE REASONS
Parties
1. The Claimant is Mishtun (the “Claimant”), a company registered in Dubai and located in , Dubai, UAE.
2. The Defendant is Mawul (the “Defendant”), a company registered in the DIFC and located in 0, DIFC, Dubai, UAE.
Background and Procedural History
3. The underlying dispute arises in relation to unpaid invoices in accordance with the Master Services Agreement in the sum of AED 174,686.93.
4. On 5 June 2023, the Defendant filed its Acknowledgment of Service contesting the jurisdiction of the DIFC Courts.
5. On 19 June 2023, a Jurisdiction hearing was listed before me. On 20 June 2023, I have issued an Order rejecting the Defendant’s Jurisdiction Application.
6. The parties met for a Consultation on 11 July 2023 but were unable to reach a settlement.
7. In line with the rules and procedures of the SCT, this matter was referred to me for determination, pursuant to a Hearing held on 27 July 2023, at which the Claimant’s and the Defendants’ representatives were in attendance.
The Claim
8. The Claimant submits that during or around mid-2021, the Claimant (as Lessee) entered into a Tenancy Contract with Muhar (as Lessor) in respect of the commercial premises situated at Mihar t Dubai, UAE (the “Premises”).
9. The Claimant submits that the Defendant wished to make use of the premises, which was then under the control of the Claimant. In addition, the Defendant required certain telephone services to be provided to its employees during the term of the Agreement.
10. Accordingly, the Claimant submits that on or about 1 May 2021, the parties entered into a Master Service Agreement (the “Agreement”). In accordance with the Agreement:
(a) The Claimant agreed to allow the Defendant to make use of the Premises and in consideration would charge the Defendant a total monthly fee of AED 19,957 for the offices 001, 002 and 003;
(b) The monthly rental charges in respect of office 001, which is relevant for purposes of this claim was AED 5,986.67;
(c) The Claimant would allow the Defendant and/or its employees to make use of the Claimant’s Du telephone account; and
(d) The Claimant would invoice the Defendant as per actuals and on average of AED 5,000 per month in respect of the Defendant’s usage of the Du telephone account.
11. On 31 May 2022, the Claimant raised an invoice to the Defendant for an amount of AED 77,826.71, this amount compromised the total rental due to the Claimant under the Agreement in respect of Office 001, from May 2021 to May 2022 in the sum.
12. Throughout the term of the Agreement, the Claimant had also raised a number of invoices to the Defendant in relation to the Du telephone usage in the sum of AED 15,980.85 calculated as following:
(a) February 2022 in the sum of AED 1,000 (the Defendant paid the sum of AED 2,781.11 for February 2022;
(b) March 2022 in the sum of AED 4,862.81;
(c) April 2022 in the sum of AED 4,322.31; and
(d) May 2022 in the sum of AED 5,795.73.
13. The Claimant submits that the Defendant is in breach of the Agreement pursuant to clause 2.2 of the Agreement which provides the following: “release the payment on or before 10 of every month to the [Claimant]”. The Claimant submits that the Defendant has failed to comply with its obligation and is therefore in breach of the Agreement.
14. Accordingly, as a result of the Defendant’s breach, the Claimant seeks an order from the SCT that the Defendant be ordered to make payment to the Claimant in the amount of:
(a) AED 77,826.71 in respect of unpaid rental invoices; and
(b) AED 15,980.85 in respect of unpaid Du telephone usage.
15. In addition, the Claimant submits that on 25 June 2021, the Claimant procured Mastin Group Policy (the “Policy”). The Policy covered a number of Mawul group staff for, among other things, medical care, maternity, critical illness, life, body repatriation and personal accident.
16. The Claimant submits that the parties agreed that the Defendant would make payment to the Claimant towards the policy premium. As such, the Claimant issued two invoices to the Defendant in relation to the policy:
(a) On 31 July 2021, the Claimant raised invoice 1111 to the Defendant for an amount of AED 78,472.80. The Defendant made payment of AED 78,268.39 towards the invoice; accordingly, the sum of AED 204.41 remains outstanding;
(b) On 17 January 2022, the Claimant raised invoice 1111 to the Defendant for an amount of AED 83,674.96. The Defendant made payment of AED 3,000 towards the invoice; accordingly, the sum of AED 80,674.96 remains outstanding.
17. As a result of the Defendant’s failure to make payment of the policy invoices, the Claimant seeks the payment of AED 80,879.37 being the aggregate of the two invoices.
18. Therefore, the Claimant seeks the total sum of AED 183,421.27 which includes the Court fees plus interest at the rate of 9% per annum from the date of the Judgment until the date of full payment.
Defence
19. The Defendant submits that the parties were both controlled and managed (including finances and banking of both parties) by the same individuals (Mr Murkh , Mr Mistal and Mr Mort (former management)).
20. The Defendant adds that the former management were fiduciaries of the Defendant, pursuant to Article 158 of the Law of Obligations DIFC Law No. 5 of 2005 as amended. In consequence, the former management owed an obligation of loyalty to the Defendant and a duty to act in good faith in the interest of the Defendant without regard to their own interest.
21. The Defendant submits that the Agreement and the policy arise from the activities of the former management, where the former management made gains as shareholders of the Claimant, by effecting transfer of sums from the Defendant to the Claimant while in control of both parties.
22. The former management resigned on 31 May 2022. In early 2023, the Defendant made a complaint to the Dubai Police, concerning the loss of approximately AED 11.8 million during the period in which the former management were in control of the Defendant and its finances.
23. In relation to the Agreement, the Defendant submits that it did not benefit from the Agreement and the Defendant did not use the premises nor have employees working at the premises.
24. The Defendant submits that the former management were not lawfully authorised to bind the Defendant to the Agreement with the Claimant. Further, the Claimant through former management as its agent, failed to act in good faith within the meaning of Article 20(3) of the companies Law (DIFC Law No. 5 of 2018) as amended.
25. The Defendant, in the alternative, submits that to the extent the Defendant entered into the Agreement, such agreement was produced under duress by the Claimant through misrepresentation, the exertion of undue influence over the Defendant, and otherwise amounted to an unconscionable dealing.
26. The Defendant denies the invoices and submits that if any liabilities were lawfully owed by the Defendant these were met by way of payments made by Former Management from the Defendant to the Claimant while the Defendant was under the control of the former management.
27. In relation to the policy, the Defendant denies the policy.
28. The Defendant submits that the Claimant failed to identify any basis upon which the Defendant has any relationship with the policy. The Defendant submits that:
(a) No written agreement has been referred to;
(b) No date, time or place upon which an alleged oral agreement has been made between the parties;
(c) The policy referred to is in the same name of the Claimant; and
(d) None of the beneficiaries of the policy are the employees or agents of the Defendant.
29. The Defendant in the alternative submits that to the extent the Defendant agreed to make payment into the policy premium or withholds any liability towards the policy, such agreement was produced under duress by the Claimant through misrepresentation, the exertion of undue influence over the Defendant, and otherwise amounted to an unconscionable dealing.
30. The Defendant denies the invoices and submits that if any liabilities were lawfully owed by the Defendant these were met by way of payments made by Former Management from the Defendant to the Claimant while the Defendant was under the control of the former management.
31. The Defendant adds that the Board of Directors was not properly made aware of, nor did it approve or agree to the Agreement and/or policy, nor sanction the transfer of the sum allegedly owed to the Claimant.
32. The Defendant adds that the Board of Directors became aware of the matter in October 2021 when the Board inquired about the reason for transferring the material sums to the Claimant.
33. The Defendant submits that former management were at all times acting in clear breach of Article 8 of the Shareholder Agreement which provides the following:
“8.1 No conflict: Neither of any party nor any directors appointed by any party shall engage in any activity that creates an actual or perceived conflict of interest with company, regardless of whether such activity is prohibited by company’s conflict of interest guidelines or the Agreement, MOA and/or AOA, and either party and directors agree to notify the other parties before engaging in any activity that could reasonably be assumed to create a potential conflict of interest with Company.
8.2 No Competition: Notwithstanding this Article, either party or Directors shall not engage in any activity that is in direct competition with the Company or serve in any capacity (including, but not limited to, as an employee, consultant, advisor or director) in any company or entity that competes directly or indirectly with the Company in the UAE without prior consent in writing of the other parties”.
34. The Defendant submits that the Shareholders Agreement and the Defendant’s Article of Association state that no agreement or contract can be entered into if it involves a conflict of interest, without obtaining written approval from the Board of Directors. This requirement was not followed when signing the Agreement or allegedly entering into the policy. The Agreement was signed by the owners of the Claimant, acting as directors of the Defendant, contrary to what is stipulated in the shareholder’s Agreement and the Defendant’s Article of Association, as it relates to conflict of interest.
35. The Defendant adds when the Claimant delivered this Agreement to the Defendant, it did not attach the commercial license issued for the Claimant company or its founding contract, thus concealing from the Defendant, the true owners of the Claimant, and the conflict of interest.
Finding
36. The Claim before the SCT is in relation to unpaid invoices in accordance with the Agreement and the Policy premium.
37. The Defendant provided that it has raised a complaint in Dubai Police and the Public Prosecution against the Former Management concerning the loss of approximately AED 11.8 million. However, the Public Prosecution found that the Former management did not commit any criminal act and the claim was dismissed.
38. The Defendant failed to provide any evidence of conflict of interest or how the Former Management who are the shareholders of the Claimant acted unlawfully, the submissions provided were not supported by evidence.
39. The Defendant as well failed to provide evidence that the Defendant did not benefit from the Agreement or the Policy.
40. The Claimant filed its claim supported by evidence, the burden then falls on the Defendant to prove the allegations made by providing evidence to support its allegations. The Defendant failed to submit supported evidence. Therefore, I shall decide the below.
41. The evidence before the Courts is the Agreement signed between the Claimant and the Defendant. As per the Agreement, the Defendant to pay the Claimant for the rent of 001-003 in the sum of AED 19,957 per month.
42. The Claimant submitted unpaid invoices of non-payment of the monthly rental of Unit 602 from May 2021 to May 2022 in the sum of AED 77,826.71.
43. Clause 2.2 of the Agreement provides that “Mawul shall submit a detailed original invoice on 5 of every month to Mawul for the above. On the basis of that “Mawul” should release the payment on or before 10 of every month to Mawul”.
44. The Defendant failed to provide evidence that such amount claimed pursuant to the Agreement was paid. Therefore, I find that the Defendant shall pay the Claimant the sums owed in accordance with the Agreement and in the sum of AED 77,826.71.
45. The Claimant also claimed unpaid invoices to the Defendant in relation to the Du telephone usage in the sum of AED 15,980.85 in accordance with the Agreement. Similar to the above, the Defendant failed to provide evidence of payments made towards Du telephone usage.
46. Therefore, I find that the Defendant shall pay the Claimant the sum of AED 15,980.85 in relation to the Du telephone usage.
47. In relation to the Policy premium, the Claimant provided two invoices which are the following:
(a) On 31 July 2021, the Claimant raised invoice 111 to the Defendant for an amount of AED 78,472.80. The Defendant made payment of AED 78,268.39 towards the invoice; accordingly, the sum of AED 204.41 remains outstanding;
(b) On 17 January 2022, the Claimant raised invoice 111 to the Defendant for an amount of AED 83,674.96. The Defendant made payment of AED 3,000 towards the invoice; accordingly, the sum of AED 80,674.96 remains outstanding.
48. The Defendant has made payments toward the first invoice and the remaining balance in the sum of AED 204.41. The Defendant also made a minimum payment towards the second invoice and the remaining balance is AED 80,674.96.
49. Although the parties have not agreed in writing in relation to the policy, however, I find that the Defendant has agreed to the Policy by making a partial payment. Therefore, the Defendant by virtue of its performance, has agreed to the Policy premium and the remaining balance shall be paid to the Claimant.
Conclusion
50. In light of the aforementioned, the Defendant shall pay the Claimant the sum of AED 174,686.93 plus interest at the rate of 9% per annum from the date of this Judgment until the date of full payment.
51. The Defendant shall pay the Claimant the Court fee in the sum of AED 8,734.34.