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CFI 023/2017 Meloud Benfetta vs Damac Park Towers Company Limited

CFI 023/2017 Meloud Benfetta vs Damac Park Towers Company Limited

August 7, 2018

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Claim No. CFI-023-2017

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BEFORE H.E. JUSTICE SHAMLAN AL SAWALEHI

BETWEEN

 MELOUD BENFETTA

Claimant/Respondent

and

 

DAMAC PARK TOWERS COMPANY LIMITED

Defendant/Applicant


ORDER WITH REASONS OF H.E. JUSTICE SHAMLAN AL SAWALEHI


UPON the Defendant’s/Applicant’s (the “Defendant”) Application dated 11 April 2018 (the “Application”), seeking to Strike Out the Particulars of Claim pursuant to Rule 4.16 of the Rules of the DIFC Courts (the “RDC”) and seeking Immediate Judgment pursuant to RDC 24.1(a)

AND UPON the Defendant’s time for filing its Defence having been stayed until the outcome of this Application, pursuant to the Order of H.E. Justice Omar Al Muhairi dated 29 April 2018

AND UPON reading the documents submitted in the Court file and hearing the Applicant’s and Claimant’s/Respondent’s (the “Claimant”) arguments at the Hearing on 11 June 2018

IT IS HEREBY ORDERED THAT:

1. The Defendant’s Application to Strike Out the Particulars of Claim and for Immediate Judgment is granted. The Claim is dismissed.

2. The Claimant shall be responsible for the Defendant’s costs of the Application and costs of the case to be assessed by the Registrar if not agreed between the parties within 30 days of this Order.

Issued by:

Ayesha Bin Kalban

Assistant Registrar

Date of issue: 7 August 2018

Time: 11am

 

SCHEDULE OF REASONS

Introduction

1. The Applicant, as Defendant in the proceedings, has requested that the Particulars of Claim be struck out pursuant to RDC 4.16 and has applied for an Order of Immediate Judgment against the Respondent/Claimant pursuant to RDC 24.1. The Defendant has also sought to stay the requirement for it to serve its Defence until this Application has been determined by the Court. In seeking the Application, the Defendant states that:

a. the Particulars of Claim are wholly defective and cannot stand;

b. the Particulars of Claim fail to provide any facts or details of a cause of action against the Defendant; and

c. the Claimant has no real prospect of succeeding on the claim.

2. The Claimant is an individual who previously bought property from the Defendant. The Claimant did not file a response to the Application or a Skeleton Argument in advance of the 11 June 2018 Hearing. At the Hearing, the Claimant’s counsel made representations on behalf of the Claimant.

Procedural Background

3. The Claimant filed its Claim on 1 May 2017 requesting that the Court cancel the Sale and Purchase Agreement (the “SPA”) entered into between the parties and award the Claimant USD 600,178 from the Defendant with 12% interest. The Claimant alleged that the Defendant sold him a Unit in Park Tower, a high-rise tower located within the DIFC, as per an SPA dated 24 November 2009 (the “Unit”). The Claimant states that the Unit he received was not as initially advertised to him, with the size of the Unit being smaller than expected. Due to this discrepancy, the Claimant alleges that the property is no longer suitable to him and thus, the SPA should be cancelled via Court Order, with the requirement that the Defendant pay the Claimant the sale sum, legal interest of 12% and any fees, expenses and attorneys’ fees.

4. After the Defendant filed an Acknowledgment of Service on 16 May 2017, the Claimant filed his Particulars of Claim on 18 June 2017, which largely reiterated the brief statements made in the initial Claim Form. The Claimant served his Particulars of Claim via email, as reflected in the Certificate of Service filed on 19 June 2017.

5. On 20 September 2017 the Claimant filed an Application for Default Judgment seeing as the Defendant had not filed a Defence or any documentation since its Acknowledgment of Service. Such request was granted via the Default Judgment Made by Judicial Officer Nassir Al Nasser dated 25 September 2017 (the “Default Judgment”).

6. On 16 January 2018 the Defendant filed an Application seeking to set aside the Default Judgment, alleging that the Claimant did not properly serve his Particulars of Claim on the Defendant, in violation of RDC 13.5.

7. The Default Judgment was then set aside pursuant to the Order of H.E. Justice Omar Al Muhairi dated 18 March 2018. In this Order, the Claimant was directed to file and serve his Statement of Case and Particulars of Claims within 14 days, with the Defendant to file its Defence within 28 days thereafter.

8. The Claimant served his Particulars of Claim on 3 April 2018. The Defendant filed this Application to Strike Out the Particulars of Claim and for Immediate Judgment on 11 April 2018.

9. Via the Order of H.E. Justice Omar Al Muhairi dated 29 April 2018, it was determined that the Defendant’s responsibility to file its Defence was stayed until final determination of this Application.

10. After submissions from the parties, a Hearing on the Application was held on 11 June 2018. At the Hearing, I reserved the Application for decision.

The Parties’ Arguments

11. In seeking to Strike Out the Particulars of Claim and for an Order for Immediate Judgment, the Defendant argues that (i) the Particulars of Claim are wholly defective and cannot stand; (ii) the Particulars of Claim fail to provide any details or cause of action against the Defendant and are wholly obscure; and (iii) the Claimant has no real prospect of succeeding on the Claim.

12. The Defendant argues that the Claimant has failed to plead any facts or elements relevant to the cause of action, in violation of RDC 17.17 and RDC 17.43. The Defendant states that the Particulars of Claim are so wholly deficient that the Defendant cannot respond adequately in a Defence. While the Particulars of Claim state that the Claimant discovered that the size of the relevant Unit had been changed without his knowledge, and that the Unit was no longer suitable for the purpose purchased, the Claimant makes no allegations against the Defendant. It is required that the Claimant plead his case with precision and the Claimant’s failure to do so result in his Particulars of Claim being wholly defective.

13. The Defendant also argues that the Claimant has no real prospect of succeeding on the claim, even if more evidence or legal clarity were provided in the future. The Defendant denies that the size of the Unit was reduced from the agreed upon area and furthermore points out that the Claimant has provided no evidence that such a reduction occurred as alleged. In fact, the SPA at Clause 12 includes provisions outlining that variations to the Unit may result and there are specific provisions for price adjustments in case of variations. Based on Clause 12 of the SPA, the Defendant has a contractual right to vary the size of the Unit, with no price adjustment necessary should the Unit be smaller by less than 5%. Based on Clause 12 of the SPA, there is no contractual right to terminate or cancel the SPA based on a Unit size variation. Furthermore, the provisions of the SPA have been completed and thus the agreement cannot be cancelled. In sum, the Claimant has no real prospect of succeeding on the claim and there is no compelling reason why this case should be disposed of at a trial.

14. The Defendant reiterated its arguments at the Hearing on 11 June 2018 and provided some further explanation, noting that the Particulars of Claim are effectively a one-page document without pleadings of facts or pleadings of the legal basis for the case. Furthermore, the relief sought is not available under the SPA and no other legal basis for it being sought has been provided. The basic requirements for pleadings have not been met in this case and therefore, this is a quintessential case for Striking Out and granting Immediate Judgment.

15. The Defendant also provided some additional details on the facts relevant to the case. The Defendant pointed out that the Unit in question is an office unit and is subject to Clause 10.10 of the SPA, which provides that the “total area” will include the “net floor area” of the Unit plus the “common office area” as defined in the SPA. The listed size of the Unit at 89.09 square meters includes the “net floor area” of the Unit and the “common office area”, as per the SPA’s details. The Defendant also reiterated that Clause 12.1 of the SPA allows for some variation in size of the Unit without a right to cancel the agreement.

16. The Defendant also noted that the Claimant took possession of the Unit, as per a signed “Letter of Discharge” entered into the Court file after the Hearing, in 2014. As far as the Defendant understands, the Claimant alleges that the Unit is smaller than agreed. Even if this is proven (which it has not been), the relief that is provided for under the SPA is for adjustment in purchase price, not cancellation and refund. Furthermore, the Defendant contends that there is no change in the Unit size but rather the Claimant has confused “net floor area” versus “total area”, defined terms that are clearly spelled out in the SPA.

There was no change in the area as originally agreed between the parties. Therefore, this is a case where Strike Out and Immediate Judgment are wholly appropriate to save costs and resources in coming to the same result later on at trial.

17. Having failed to respond to the Application or file a Skeleton Argument, the Claimant’s first representations as to this Application were presented at the Hearing on 11 June 2018. The Claimant alleges that there is a 30% difference in the size of the Unit, with the size decreased from 89.09 square meters as agreed to 68.48 square meters as delivered. The Claimant alleged that the inclusion of the “common office area” was not adequately clear from the SPA terms. The actual size of the Unit is appropriate for an expert to determine for trial.

18. When asked why the Claimant was seeking cancellation of the SPA in full, the Claimant’s Representative stated that the adjusted price for the alleged smaller size would be acceptable rather than a cancellation. However, the Claimant had not, at the time of the Hearing, formally applied to amend the Particulars of Claim to reflect this adjustment in argument and relief.

19. When asked why this Claim was filed in 2017, when the Claimant received possession of the Unit in 2014, the Claimant’s Representatives stated that there was a delay in noticing the actual area of the Unit until the receipt of documents related to maintenance fees. The Unit was not occupied, and the actual size was discovered when a potential new buyer took measurements in the Unit to reveal the size. While the Claimant did not object to the size of the Unit upon receipt in 2014, he claims he did send a notice of complaint to the Defendant after discovering the size later on. However, this notice was not found in the submissions.

Discussion

20. It is imperative to keep in mind the standard of review required in assessing an Application for Immediate Judgment pursuant to Part 24 of the RDC. RDC 24.1 clearly states that:

“The Court may give immediate judgment against a claimant or defendant on the whole of a claim, part of a claim or on a particular issue if:

(1) it considers that:

a. that claimant has no real prospect of succeeding on the claim or issue; or

b. that defendant has no real prospect of successfully defending the claim or issue; and

(2) there is no other compelling reason why the case or issue should be disposed of at trial. “

21. The Defendant also applies under RDC 4.16, which provides that the Court may Strike Out a statement of case “if it appears to the Court: (1) that the statement of case discloses no reasonable grounds for bringing or defending the claim.” As stated by Justice Roger Giles in (1) Nest Investment Holding Lebanon S.A.L. and others v (1) Deloitte & Touche (M.E.) & (2) Joseph El Fadl, [2016] DIFC CFI 027, RDC 4.16 and RDC 24.1 include some overlap where RDC 4.16 requires that even if the grounds as pleaded are accepted, the claim must still fail. RDC 24.1 applications may include evidence showing that the claim must fail, or the absence of evidence to support the claim. These types of applications will require a common approach.

22. As Justice Giles rightfully stated in the Nest case, the Claimant will be required to “have a realistic, as distinct from a fanciful, prospect of success,” meaning a “case which is better than merely arguable and carries some degree of conviction.” See [2016] DIFC CFI 027, citing Swain v Hillman [2001] 2 All ER 91, and ED & F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472.

23. In this case, the Claimant has provided quite limited details in the Particulars of Claim, such that the Particulars disclose no reasonable grounds for bringing the claim as presented. The Claimant has not detailed the legal basis for bringing the claim or for seeking the desired relief, nor do the Particulars include factual pleadings that would allow the Court to grant the requested relief, if proven. Instead, the Claimant seeks cancellation of a contract without reference to the legal reason why such cancellation is appropriate. The Defendant is correct in its argument that it cannot adequately defend against the Particulars as they are presented. The inadequacy of the Particulars of Claim makes it appropriate to grant the Defendant’s Application to Strike Out the Particulars of Claim pursuant to RDC 4.16 as the statement as written discloses no reasonable grounds for bringing the claim.

24. It is possible in some cases to Strike Out the Particulars of Claim and allow the Claimant the opportunity to amend them. However, given the limited arguments provided in the initial Particulars of Claim and the complete change required to adjust the case towards a claim for price reduction, I do not find it just to allow the Claimant to make these amendments to the Particulars. This would result in prejudice to the Defendant, who has had to respond to this Claim as presented. Past cases where the Judge has allowed the Particulars to be amended, such as Hafeez v Damac Park Towers Company Limited [2014] DIFC CFI 002, have included far more robust initial Particulars of Claim requiring far less significant amendments in order to pass the Strike Out test. This case is therefore not appropriate for allowing such amendments.

25. Given the case as it stands, it is clear that that the Claimant has no real prospect of succeeding on the claim, and therefore the case meets the standard required to grant Immediate Judgment pursuant to RDC 24.1. The Defendant has shown that the SPA includes clear provisions detailing the “common office area” to be included in the “total area” of the Unit in question, pursuant to Clause 10.10. Therefore, the size of the Unit has not changed by 30% as claimed by the Claimant. If there is any change in the area of the Unit from what was agreed, it has not been shown by the Claimant and furthermore, even if it were to be shown, the Claimant has sought inappropriate relief in asking for cancellation of the SPA. Should there be a real reduction in the size of the Unit, the Defendant has shown that pursuant to Clause 12.1 of the SPA, the appropriate relief would be a reduction in price if the size reduction is greater than 5%. I have seen nothing to suggest that there has been any reduction in size of the Unit, especially after viewing the floor plan in conjunction with Clause 10.10 of the SPA.

26. The case as presented by the Claimant does not have a realistic prospect of success. Rather, the case as presented in the Particulars of Claim is fanciful and therefore, it is appropriate to grant Immediate Judgment in favour of the Defendant at this time. I dismiss the Claimant’s Claims in full.

Costs

27. As regards this Application, I find it appropriate to apply the default rules as to costs, pursuant to RDC 38.7. Thus, as the Defendant’s Application has been granted in full, the Claimant shall be responsible for the Defendant’s costs as to this Application and as to the case. The parties are free to agree on the costs within 30 days of the issuance of this Order and should the parties fail to agree, such costs may be assessed by the Court.

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