June 14, 2022 court of first instance - Judgments
Claim No: CFI 028/2022
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
(a limited liability company)
JUDGMENT OF H.E JUSTICE ALI AL MADHANI
|Hearing :||12 May 2022|
|Counsel :||Maleik for the Appellant
Mallor on behalf of the Respondent
|Judgment :||14 June 2022|
UPON hearing from Appellant and Respondent in person.
AND UPON considering the Appellant’s appeal against the judgment of SCT Judge Delvin Sumo dated 24th March 2022.
IT IS HEREBY ORDERED THAT:
1. The Appellant’s appeal be dismissed.
2. There be no order as to costs.
Ayesha Bin Kalban
Date of Issue:14 June 2022
SCHEDULE OF REASONS
1. On 15 February 2022, the Appellant issued a claim for repayment of monies paid to the Respondent based on a membership contract with the Respondent dated 27 December 2021 (the “Contract”). The terms of the Contract entitled the Appellant to use the Respondent’s fleet of pleasure boats. The Respondent is a private boating company offering memberships to consumers for the use of their boats, including other ancillary services. In consideration for this access to the Respondent’s boats, the Appellant was required to pay a monthly membership fee of AED 2,000 per month. In payment of the membership fee, the Appellant issued the Respondent a post-dated cheque (the “Cheque”).
2. Clause 4.6 of the Contract asserts that the Cheque would be encashed prior to the parties entering into the Contract and the encashed sum would be held as security in the event of any failure by the Appellant fulfilling their obligations under the Contract. Any balance would then be repaid to the Appellant at the end of his membership. The Contract was for an initial term of a year, which may be terminated by either party after six months from the date of the Contract by giving the other party one month’s written notice, as stipulated under clause 8.6 of the Contract.
3. On 28 January 2022, shortly after commencing membership with the Respondent, the Appellant was involved in an incident with two boats owned by the Appellant in which a collision occurred (the “Incident”). The Appellant accepted that he was driving one of the boats. As a result of the Incident, the Respondent undertook an investigation, and a report was issued thereafter confirming that (i) the Appellant lost control of the boat he was driving causing collision into the other boat (ii) and damages were suffered due to the collision. The cost of repairing the damaged boat was AED 12,500. The Appellant’s small boat driving licence had only been issued on 17 January 2022, 11 days prior to the Incident.
4. The Appellant’s initial claim was filed before the Small Claims Tribunal (the “SCT”) seeking to (i) terminate the Contract (ii) a repayment for his membership fees, (iii) AED 10,000 in relation to the Cheque; and (iv) AED 10,000 for additional compensation, therefore a total of AED 44,000. The parties entered into a mediation with the assistance of the Court, however a settlement could not be reached. The matter then came before SCT Judge Delvin Sumo for trial, which was heard on 18 March 2022.
5. On 24 March 2022, after hearing from both parties, SCT Judge Delvin Sumo handed down a judgment dismissing the Appellant’s claim (the “Judgment”). On 6 April 2022, the Appellant issued an appeal which was put forward before me for determination at an oral hearing scheduled on 12 May 2022. The initial basis of the Appellant’s appeal was on the grounds that the Respondent had breached the Contract in encashing the Cheque and as such he was entitled to terminate the Contract.
6. As noted in the Judgment, the Appellant was seeking to rely on the UAE Transaction Law in support of his argument entitling him to terminate the Contract due to the Respondent’s encashment of the Cheque. The Appellant was not able to identify which law he intended to rely on in support of his argument. Nonetheless, as set out in the Contract, this dispute is governed by DIFC Law and UAE Transaction Law is not applicable.
7. I do not accept that the Respondent was ineligible to encash the Cheque. The Contract clearly sets out that the Cheque shall be encashed by the Respondent prior to the date of the Contract and the sum would be held as security, which shall be used as compensation in case of a breach by the Appellant, as stipulated under clause 4.6. This appears to me to be a reasonable term as the Contract provides membership of the Respondent’s activities on a monthly basis. The membership under the Contract was for a duration of 12 months which could roll-on on a monthly basis, and the parties could terminate the same after the first six months.
8. From the Respondent’s perspective, the commitment to their memberships with any client may carry on for months or years, accordingly any issued cheque at the start of a membership may have already expired, therefore nullifying the purpose of the cheque as security for the respective contract. Nonetheless, as a courtesy to the Appellant, the Respondent confirmed they would not encash the cheque prior to the Contract. The encashment of the cheque would only be triggered if the Appellant breaches his obligations under the Contract, causing a damage to one of the Respondent’s boats.
9. Under the terms of the contract, the purpose of the Cheque is to behave as a deposit. I find that, in these circumstances, the Respondent was entitled to encash it and did so in accordance with the terms of the Contract.
10. During the hearing, the Appellant sought to rely on a new ground of appeal which was not contained in his notice. The Appellant claims that under the terms of the Contract his liability is only limited to the boat he was driving and does not extend to the second boat which was damaged, therefore barring the Respondent from encashing the Cheque.
11. I do not accept this submission. Under clause 10.14 of the Contract, the Appellant is liable for any loss or damage to the “boat”, including any loss or damage to any persons or third-party property. The definition of the “boat” under the Contract included all boats within the Respondent’s fleet in both Dubai and Abu Dhabi. These were set out under Schedule 1 of the Contract. Schedule 1 further states “We may from time to time replace the above fleet in any locations.”
12. Further, clauses 10.14.2 and 10.14.3 also provide for the Appellant’s liability under clause 10.14 where loss occurs arising from the Appellant’s acts or omissions or his use of the Respondent’s boats in a reckless or negligent manner.
13. Furthermore, clause 10.1.3 states that the Appellant is also liable for any tortious act arising under or in connection with the Contract. This provision would also encompass the Appellant’s tortious liability under the DIFC Law of Obligations No. 5 of 2005 (“Law of Obligations”). Clause 9.1.3 states that the use of the Respondent’s boats must be within the Appellant’s ability. Further still, clause 10.8 states:
“You will be solely responsible for the costs of repairing as a result of damages that has been caused to the Boat intentionally or poor judgement and as a result of which insurance cannot be claimed. ln the event of an accident due to an [sic] unforeseen situation where the cost of repairing any accidental damage does not exceed AED 15,000 such cost should be paid by the member concerned.”
14. In my view, the Contract clearly sets out that the Appellant would be liable for damages caused when using the Respondent’s boats. I, therefore, do not accept, as a matter of law that the Appellant’s liability was confined to the boat he was driving. Within the support of many provisions under the Contract confirming the Appellant’s liability extends to any incident which may occur arising from a negligent conduct. The Law of Obligations imposes a statutory duty on the Appellant to act within reasonable care and skill when it is reasonably foreseeable that his acts or omissions would cause any party loss. Equally to driving on a road, driving a boat and losing control causing a crash is an act of negligence. As such, I find that the Appellant was liable for the damage caused to the boat involved in the Incident under the terms of the Contract.
15. During the appeal hearing, the Appellant stated that his liability arising from the Incident had not been proved, albeit the Appellant failed to deny his liability. Further, the Appellant did not put forward an alternative version of events of the Incident negating his liability. There is no evidence to suggest that the Appellant disputed liability or contested the findings of the Respondent’s report both at the time it was made or during the trial of this matter. I raised with the Appellant that the time to contest liability for the Incident had been and gone, particularly where the Respondent had already completed its investigation. The Respondent’s report and investigation into the Incident appears to be reasoned and based on factual evidence available at the time. In these circumstances and without even any alternative version of events raised by the Appellant, this ground of appeal must also fail. The Respondent has proved on the balance of probabilities that the Appellant was at fault for the Incident and as a result they were entitled to use the monies from the Cheque to pay for damages from the breach of the Contract.
16. Part of the Appellant’s original claim was to terminate the Contract, however, as I have already explained above, the only way the Appellant can do this is to serve one month’s written notice in accordance with clause 8.6 which states:
“You may terminate this Agreement by giving us one months' notice in writing; however, no such notice can be served in the first six months of the term. lf you cancel your membership part-way through the membership year we will refund the membership fee you have paid for the remainder of the year on a pro-rata basis and return any post-dated cheques that relate to the period after the expiry of your notice.”
17. Such a notice must be served in accordance with the clause 13 of the Contract which requires written notices in English, signed and sent within the requirements specified. At the time of the appeal hearing, the first six months of the Contract had not yet lapsed and the Appellant was not entitled to terminate the Contract under any circumstances. Despite that, based on the information and evidence before me, no such notice has been attempted to be served (by either party). The Appellant had the freedom to serve such a notice allowing him to terminate the Contract six months after commencement of the Contract.
18. For all the reasons set out above I, therefore, dismiss the Appellant’s appeal and the Judgment dated 24 March 2022 will be upheld.
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