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Golda LLC v Gilam [2016] DIFC SCT 127

Golda LLC v Gilam [2016] DIFC SCT 127

October 4, 2016

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Claim No: XXXX

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS 

In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai 

IN THE SMALL CLAIMS TRIBUNAL

BEFORE SCT JUDGE NATASHA BAKIRCI 

BETWEEN 

GOLDA LLC 

Claimant 

and 

GILAM

Defendant

Hearing: 28 September 2016

Judgment: 4 October 2016


JUDGMENT OF SCT JUDGE NATASHA BAKIRCI


 UPON hearing the Claimant’s representatives and the Defendant’s representative

AND UPON reading the submissions and evidence filed and recorded on the Court file

IT IS HEREBY ORDERED THAT:

1.The Claimant’s claim is dismissed for lack of jurisdiction;

2. Each party shall bear their own costs. 

THE REASONS

Parties

3. The Claimant is Golda LLC Real Estate Broker, a Dubai based real estate brokerage company (hereafter the “Claimant”).

4. The Defendant is Gilam, an individual owning property in Dubai (hereafter the “Defendant”).

Background and the Preceding History

5. The Claimant and Defendant entered into a “Contract Between Seller and Broker” as per a Dubai Land Department Form A on 17 May 2016 (hereafter “Form A”) as regards the sale of the Defendant’s villa (hereafter the “Property”). Form A lists “Commission Amount” as AED 39,600. Form A does not contain any provisions with regard to dispute resolution.

6. The Form A agreement was signed in relation to an Agreement of Sale (hereafter “AOS”) between the Defendant and a third party buyer (hereafter the “Buyer”), executed on 16 May 2016. The AOS does contain provisions related to the “Broker” as defined in the AOS as the Claimant but the Claimant is not a party to the AOS. The AOS was signed in connection with a “Property Sales Contract between Seller and Buyer,” Contract No. 15858/2016, as executed in a Dubai Land Department Form on 17 May 2016 to which the Claimant is also not a party.

7. The AOS states in Article 3.1 that “This Agreement shall be governed by and construed in accordance with the laws of the Dubai International Financial Centre, In the Emirate of Dubai UAE.” It further states in Article 3.2(i) that “Where the dispute relates to a claim for a sum within the limits specified by the DIFC Small Claims Tribunal from time to time, then the dispute shall be referred by either Party to the said Tribunal.”

8. Article 2.19 of the AOS provides that “If the Seller withdraws from the sale after the Broker receives the Buyers deposit . . . the Seller is liable for a penalty equivalent to the deposit amount . . . Twenty Percent (20%) to the Broker.” Article 2.21 of the AOS states that “Should . . . clause 2.19 . . . be enacted, both Buyer and Seller agree to the Broker releasing funds on their behalf. If either Party dispute the non-fulfillment of the agreement, both Parties are aware that a case will be lodged at the DIFC Courts against the defaulting party to recover any costs relating to this agreement, the Broker will act only as a witness in the DIFC Courts.”

9. The underlying AOS was allegedly terminated by the Defendant although the Defendant claims that he terminated the AOS as a result of misrepresentation by the Claimant.

10. On 11 August 2016, the Claimant filed a claim in the DIFC Courts Small Claims Tribunal (the “SCT”) for payment of the AED 39,600 commission plus additional costs from the Defendant. The Claimant claimed a total of USD $ 11,896.50 (equivalent to AED 43,719.64) against the Defendant.

11. The Defendant responded to the claim via email on 12 August 2016 seeking an extension of time to respond. In response, a Consultation was scheduled for 22 August 2016 with the Defendant given until the Consultation to provide further submissions. The Defendant did not provide any further submissions before the Consultation and the parties were unable to reach a settlement at the Consultation.

12. After the Consultation the Defendant sought permission to have a legal representative in the Hearing, and I granted such request on 4 September 2016.

13. The Defendant submitted a defence on 25 September 2016 in advance of the Hearing. The Claimant did not supplement their Claim Form in advance of the Hearing. On 28 September 2016 I heard the submissions of the Claimant’s representatives and the Defendant’s representative at a Hearing.

Particulars and Defence

14. In the Claim Form the Claimant argued that the Seller breached the AOS by failing to proceed with the sale. The Claimant contended that it did not receive payment as agreed in Form A and seeks to be paid the commission fee, as required from the Defendant. Furthermore, the Claimant claimed any additional costs for filing the claim.

15. After the Consultation, the Defendant provided a submission on 25 September 2016. In the defence, the Defendant primarily argued that he was under the impression that the sale relevant to the AOS was to be made via cash, not financing, as was indicated by the Claimant’s consultant via WhatsApp message. The Defendant argued that he signed the AOS and returned it quickly knowing that time was of the essence, but under the assumption that the sale would be in cash.

16. The Defendant argued that the AOS is invalid as is the corresponding “Dubai Land Department Contract” (presumably Form A, but it is not clear from the Defendant’s submission) due to this misrepresentation. The Defendant stated that he objected to the AOS on 19 May 2016, immediately upon realising the mistake as to cash versus financing. Thus, he argued, there was no breach of obligation on the Defendant’s part and instead, the Defendant was entitled to terminate the contract for false representation.

17. Furthermore, the Defendant argued that there is no jurisdiction for the Claimant to file this claim before the DIFC Courts as the Claimant and Defendant had not entered into any agreement that opts-in to the DIFC Courts’ jurisdiction. The Claimant is not a party to the AOS, which does contain a clause opting-in to the DIFC Courts’ jurisdiction. Provisions of the AOS make clear that the opt-in clause applies only to the Defendant and the Buyer, not the Claimant.

18. At the Hearing, the Claimant contended that they are making their claim under Form A but as Form A is directly applicable to the AOS, the contracts should be read in conjunction with each other. The Defendant reiterated the above mentioned arguments.

Finding

19. Having considered the written submissions and the arguments put forward at the Hearing, I find that this dispute does not fall within the jurisdiction of the DIFC Courts and the Small Claims Tribunal and therefore the Claimant’s claim must be dismissed for want of jurisdiction.

20. Rule 53.2 of the Rules of the DIFC Courts (“RDC”) requires that the SCT hear only cases that fall “within the jurisdiction of the DIFC Courts.”

21. 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, 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 performed within DIFC and is related to DIFC activities; . . .

(d) 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 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. Neither party is, or was, a DIFC registered and licensed entity.

23. There is no evidence that the relevant contract was “partly or wholly concluded, finalised or performed within DIFC or will be performed or is supposed to be performed within DIFC.” There is also no evidence that this case relates to “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.”

24. The parties have made no reference to a DIFC Law or Regulation granting jurisdiction over this dispute, nor do I consider any relevant to this dispute.

25. Finally, there is no indication that the parties have opted-in to the jurisdiction of the DIFC Courts, especially as the agreement between the parties is a form agreement issued by the Dubai Land Department.

26. The Claimant makes an argument that as the related AOS does have an opt-in clause, the Form A contract between the Claimant and Defendant should also be under DIFC Courts’ jurisdiction as an adjunct contract.

27. As per Article 5(A)(2) of the Judicial Authority Law, parties can opt-in to the jurisdiction of the DIFC Courts with a “specific, clear and express” provision. The AOS, as executed between the Defendant and the Buyer, is an agreement separate and distinct from the Form A agreement upon which the Claimant relies. While the AOS does contain provisions relevant to the Claimant, as the “Broker” referred to in the AOS, the opt-in clause in the AOS applies only to the relationship between the Defendant and the Buyer as parties to the agreement.

28. This is evidenced by the fact that Article 3.2 of the AOS relates to “dispute[s] arising between the Parties” rather than dispute relevant to the agreement. Article 3.2(a) goes on to state that a “dispute shall be referred by either Party.” Thus, Article 3.2 of the AOS is a “specific, clear and express” provision opting-in to the DIFC Courts’ jurisdiction as regards the Defendant and Buyer as parties to the agreement, not the Claimant. Furthermore, Article 2.21 contemplates that the “Parties are aware that a case will be lodged at the DIFC Courts . . . the Broker will act only as a witness in the DIFC Courts.” This implies that the Defendant, upon reviewing the AOS, would not have been aware that he had opted-in to the DIFC Courts’ jurisdiction as to his relationship with the Claimant but only as regards his relationship with the Buyer.

29. Thus, the Defendant never specifically agreed to opt-in to the DIFC Courts’ jurisdiction in so far as concerned the requirements of Form A, the contract between him and the Claimant. Any opt-in between these two parties must be “specific, clear and express” and reliance on the AOS, a contract to which the Claimant is not a party, does not meet this standard.

30. The Claimant’s argument is therefore not persuasive. The DIFC Courts do not have jurisdiction over the underlying dispute as it does not relate to the DIFC and the parties have not opted-in to the DIFC Courts’ jurisdiction.

31. For cases to be heard in the SCT they must come under DIFC Courts’ jurisdiction, as addressed above, and the case must also be appropriate for the SCT. As there is no DIFC Courts’ jurisdiction in the first place, there cannot be jurisdiction for the SCT to hear the dispute.

32. For the above cited reasons, I find that the Claimant’s claim should be dismissed for lack of DIFC Courts’ jurisdiction. I am not therefore in a position to consider the merits of this case.

33. Each party shall bear their own costs.

 

Issued by:

Natasha Bakirci

SCT Judge

Date of issue: 4 October 2016

At: 4pm

 

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