No: CFI 070/2024

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

SIRAJ POWER MACHINERY AND EQUIPMENT LEASING LLC

Claimant

and

(1) AL TAJIR GLASS INDUSTRIES LLC
(2) TRANSNATIONAL PALLET INDUSTRIES

Defendants

---

---

JUDGMENT OF H.E. JUSTICE THOMAS BATHURST

---

UPON the Part 7 Claim Form dated 4 October 2024 (the “Claim”)

AND UPON the Defendants’ Acknowledgements of Service dated 18 October 2024 intending to defend all of the Claim

AND UPON the Defendants’ Defence dated 15 November 2024

AND UPON the Claimant’s Reply to Defence dated 20 December 2024

AND UPON the Pre-Trial Review held on 24 September 2025 before H.E. Justice Thomas Bathurst, with counsel for the Claimant in attendance, and at which the Defendants failed to appear (the “PTR”)

AND UPON the Trial held on 20 October 2025 before H.E. Justice Thomas Bathurst, with counsel for the Claimant in attendance, and at which the Defendants failed to appear (the “Trial”)

AND UPON review of the submissions on the Court file, including the Case Bundle prepared for the Trial dated 15 October 2025 (the “Case Bundle”)

IT IS HEREBY ORDERED THAT:

1. Judgment is entered for the Claimant against the First Defendant in the amount of AED 9,826,528.83.

2. Judgment is entered for the Claimant against the Second Defendant in the amount of AED 7,792,942.32 (together the “Judgment Sums”).

3. The Claimant is entitled to interest on the amounts referred to in paragraphs (1) and (2) at the rate of 6% per annum calculated in the manner set out in the Claimant’s calculations which appear at pp. 644-648 of the Case Bundle.

4. The Claimant is to provide a schedule of the amount of interest payable on the amounts referred to in paragraphs (1) and (2) which will be added to the Judgment Sums set out in those paragraphs.

5. The Defendants shall pay the Claimant’s costs of the proceedings assessed in the amount of AED 348,210.

Issued by:
Hayley Norton
Assistant Registrar
Date of issue: 18 November 2025
At: 12pm

SCHEDULE OF REASONS

1. In these proceedings the Claimant, Siraj Power Machinery & Equipment Leasing LLC (the “Claimant”) seeks to recover from the First Defendant, Al Tajir Glass Industries LLC (the “First Defendant”) certain sums said to be due to it under an agreement dated 27 June 2021 described as the Solar Photo Voltaic System Leasing & Operation Agreement (the “Lease Agreement”) and an agreement dated 15 June 2022 (the “Amendment Agreement”). The Claimant claims the same amount from the Second Defendant, Transnational Pallet Industries (the “Second Defendant”), pursuant to a guarantee dated 30 June 2021 whereby the Second Defendant guaranteed the obligations of the First Defendant under the Lease Agreement.

2. Although each of the Defendants filed Defences to the claim, they filed no evidence and did not participate at the hearing. However, as the Claimant properly accepted, it is necessary for me to be satisfied that the evidence tendered by it established its claim taking into account the matters raised by the Defendants in their respective Defences.

The Claimant’s Claim

3. The Claimant claimed an amount of AED 985,874.22 in respect of rent due but unpaid under the Lease Agreement in respect of outstanding invoices for rent covering the period from 10 May 2023 to 30 June 2024. It also claims interest on that amount at the contractual rate of 6% per annum provided for in the Lease Agreement. The amount, as at the date of hearing 20 October 2025, was the sum of AED 104,047.69.

4. The Claimant also claims an amount of AED 6,482,922 as the amount payable on termination of the Agreement, in the event of a Lessee Default event pursuant to clause 13(b)(ii) of the specific terms and conditions contained in Exhibit 8 of the Lease Agreement together with the sum of AED 324,146.10 being 5% VAT on that amount making a total of AED 6,807,068.10. It also claims interest on that amount at the contractual rate of 6% totalling AED 520,321.10 as at 20 October 2025.

5. The Claimant also claims an amount of AED 707,217.70 in respect of outstanding instalments under the Amendment Agreement together with interest at the rate of 6% totalling as at 20 October 2025 an amount of AED 74,437.05. The Claimant also claims what is described as the Default Value in the Amendment Agreement in amount of AED 1,269,875.06 together with 5% VAT of AED 63,493.75. It also claims interest on this amount at the rate of 6% which as at 20 October 2025 totalled AED 101,920.52.

6. The Claimant’s calculation of these amounts is set out at pp. 644-648 of the Case Bundle. I have checked these calculations and they are mathematically correct.

The Agreements

A. The Lease Agreement

7. By Provision 2 of the General Conditions of the Lease Agreement (the “General Conditions”) the Claimant agreed to lease to the First Defendant the system described in Exhibit 2 of the Lease Agreement. It is unnecessary to set out the details of the system but it may generally be described as an electricity generation system. The term of the lease was a period of 20 years.

8. Provision 4(a) of the General Conditions provides for the payment of rent as follows:-

It should be noted that Provision 12 of the Lease Agreement as amended by Exhibit 8 (the “Specific Conditions”) provides that the Claimant should insert one or more meters as it deems appropriate immediately before the Delivery Point to capture the output of the System. It provides that only the Claimant’s meters should be referred to for that purpose.

9. Provision 4(b) as amended by the Specific Conditions provides that on each first day of the month the Claimant shall issue an invoice stating the rent due for the prior month any additional charges incurred by the “lessee” (sic) and the total amount due by the First Defendant.

10. Provision 4(c) as amended by the Specific Conditions provides that if an invoice is not paid within 30 days of its due date it should incur interest at the rate of 6% per annum.

11. Because there is an issue concerning the liability of the First Defendant to reimburse the Claimant for VAT incurred or to be incurred in respect of the amount claimed, it is necessary to set out the clause which imposes liability for Taxes. The first paragraph of Provision 4(d) provides as follows:

12. It is also necessary because of the manner in which the amount claimed is calculated to have regard to Provision 8(g) as amended by the Specific Conditions. It is in the following terms:-

13. Provision 13(a) as amended by the Specific Conditions deals with default. So far as relevant, it is in the following terms:-

14. Provision 13(b)(ii) as amended by the Specific Conditions imposes an obligation on the First Defendant if it defaults in its obligations under the Lease Agreement to purchase the System if required to do so by the Claimant. It is in the following terms:-

15. The table referred to provides for varying amounts of purchase price depending on the year the default occurs. Thus, if the default occurs in Year 1, the purchase price is AED 6,772,775 and in Year 2, AED 6,482,922. Thereafter, it reduces from year to year to an amount of AED 519,177 in Year 20. The Claimant alleges that as it terminated the Lease Agreement for default in Year 2, the amount of AED 6,482,922 is payable under that provision.

The Tripartite Agreement

16. By an agreement dated 20 May 2022 between the First Defendant, the Claimant and a company Matrix Bldg. Waterproofing Fixing LLC (“Matrix”), Matrix agreed to install a Roof Cooling System at the First Defendant’s premises. The Claimant agreed to pay the contract price totalling AED 1,500,000 on behalf of the First Defendant. Of relevance is the warranty period of 15 years with an extension period of 5 years. It should be noted that the Tripartite Agreement recited that waterproofing is required on the warehouse rooftop surface before installation of the solar photovoltaic system.

The Amendment Agreement

17. As I indicated the Amendment Agreement was entered into on 15 June 2022. It recites that the parties thereto (the Claimant and the First Defendant) have agreed to amend the Lease Agreement in order to refer to the Claimant’s agreement to financing the waterproofing works under the Tripartite Agreement.

18. Clause 1 of the Amendment Agreement is in the following terms:

19. The Amendment Agreement provides in Clause 2 that it amends the Lease Agreement and must be read together with the Lease Agreement and constitute a single contract. It provides in Clause 3 that all other obligations, terms and conditions contained in the Lease Agreement continue in full force and effect until the termination of the Lease Agreement.

The Guarantee

20. As I indicated the Second Defendant guaranteed the obligations of the First Defendant under the Lease Agreement. The recitals to the Guarantee referred to the entry into the Lease Agreement dated 27 June 2021 by which the First Defendant agreed to lease the system (the solar photovoltaic system) from the Claimant and recited the Lessee agreed to procure the delivery of the Guarantee to the Claimant guaranteeing the obligations of the First Defendant under the Lease on the terms and conditions set out in the Guarantee.

21. Clause (a) of the guarantee is in the following terms:

22. Clause (c) deals with the preservation of rights and reinstatement. It provides as follows:

CONSIDERATION

23. Counsel for the Claimant in his Skeleton Argument set out what he described as the nine issues in the proceedings arising from the claim and the defences filed by each Defendant. I am satisfied that these issues encompass all the matters in dispute between the parties. I will deal with them in the order to which they were addressed by counsel in his Skeleton Argument and in his address to the Court.

Issue 1 – Whether the Amendment Agreement constituted an amendment to the Lease or an independent agreement

24. The Second Defendant in its Defence (paragraph 37) pleaded that the Amendment Agreement was not an amendment to the Lease Agreement but a new contract under which the First Defendant assumed wholly new obligations which were not contemplated by the Second Defendant and the Claimant at the time of entering into the Guarantee. It pleaded any obligations the First Defendant may have under the Amendment Agreement were beyond the purview of the obligations the Second Defendant agreed to assume under the Guarantee. Alternatively, it pleaded (paragraph 38) that because the Amendment Agreement was a new contract, the Second Defendant’s obligations do not extend to any obligations of the First Defendant under it.

The Submissions

25. In its Skeleton Argument, counsel for the Claimant submitted that the Amendment Agreement constituted an amendment to and contractual variation of the Lease Agreement, not an independent contract. It submitted that was apparent from its express terms, structure, legal effect and commercial context.

26. In the Skeleton Argument he pointed first to the express provisions of the Amendment Agreement to which I have referred at [18] above. He referred to clause 1 which expressly states the parties had agreed to amend the Lease Agreement by the incorporation of s 13(a)(ix) into Exhibit 8 to the Lease Agreement, thus including default under the Tripartite Agreement. He also referred to the fact that clause 2 of the Amendment Agreement provides that it needs to be read with the Lease Agreement and constitutes a single contract. He also referred to the fact that clause 5 of the Amendment Agreement expressly incorporated the Governing Law Provisions and the Dispute Resolution Provisions of the Lease Agreement.

27. He also submitted that the Amendment Agreement demonstrated its character as a variation by modifying specific commercial terms within the original framework including by introducing payment obligations in consideration of the Claimant financing the Contract Works and by integrating additional events of default and revised default values into the existing termination regime. He also submitted the commercial context supported this construction submitting the Amendment Agreement was to address a development that was ancillary to and in furtherance of the original transaction.

28. At the hearing counsel for the Claimant referred to the guarantee and in particular the words in (a), “In consideration of the company entering into the lease, the guarantor as primary obligor, … guarantees to the company that if the lessee, … fails to make due and punctual payment of any of the balance of any and every sum which the lessee is liable to pay the company under the lease”. He submitted the reference to “every sum” does not mean the parties intended the guarantee only extending to rent payment but to extend to any other sum that may become due under the lease and the amounts due under the Amendment Agreement because it was incorporated into the Lease Agreement becomes an amount due under the Lease.

29. Although counsel for the Claimant accepted there may be cases where an incorporation of an additional obligation under the Lease was so remote from what was originally contemplated as not to be covered by the Guarantee, he submitted that was not the present case submitting the waterproofing was an essential component of the Lease Agreement as without the waterproofing there would be no lease. In that context it should be noted the Lease Agreement was dated 27 June 2021 and the Tripartite Agreement was entered into some 11 months later on 20 May 2022. However, the particulars of claim state that the system commenced commercial operation in April 2023 after the work the subject of the Tripartite Agreement was completed.

30. Counsel for the Claimant accepted that it was necessary for me to be satisfied objectively that the Guarantor would have intended the Guarantee to extend to an agreement of the nature of the Tripartite Agreement.

Discussion

31. The First Defendant does not deny that, as a matter of construction, the Amendment Agreement imposes liability on it in respect of the Consideration Invoices. However, it denies liability to pay what is described as the Default Value. It seeks to put the Claimant to strict proof that it in fact made the payments under the Tripartite Agreement and asserted, in any event, that the amount claimed for the Default Value was manifestly disproportionate to the loss envisaged as capable of resulting from the breach and thus unenforceable. It also alleges it is not liable for VAT in any event. I deal with these matters in considering issues 3, 4 and 6 below.

32. The critical question is whether the obligations under the Guarantee extend to the payments made under the Amendment Agreement. In dealing with the question it is necessary to have regard to the provisions of the DIFC Contract Law 2004 and, in particular, Article 49(2) which provides a contract shall be interpreted according to the meaning that reasonable persons of the same kind as the parties would give it in the same circumstances.

33. The Claimant’s case is essentially simple. It states that the Guarantee extends to variations of the Lease Agreement and the Amendment Agreement by its terms and, in its effect, constitutes such a variation.

34. There can be no doubt, in my opinion, that the Amendment Agreement at least as between the parties thereto varied the Lease Agreement. It was not intended to replace the Lease Agreement but rather to vary it by adding additional rights, obligations and liabilities.

35. The proposition that the Guarantee extends to monies due under the Amendment Agreement finds some support in the definition of Guaranteed Obligations in clause (a) of the Guarantee. However, the question remains whether the words “any and every sum which the Lessee is liable to pay the Company under the Lease” could extend to what is in effect a separate liability merely by virtue of the fact the Claimant and the First Defendant agreed to treat the liability under the Amendment Agreement as a liability under the Lease Agreement and thus as a guaranteed obligation although the obligation was divorced from the original obligations which were guaranteed by the Second Defendant.

36. Counsel for the Claimant submitted that the waterproofing was an essential component to the Lease Agreement as without the waterproofing there would be no lease. However, to the extent that the Lease Agreement deals with the issue matters such as roof repairs are treated as a pre-condition of the obligation on the Claimant to install the System as distinct from a liability of the First Defendant to carry out such work. Thus, Provision 6 of Exhibit 4 to the Lease Agreement provides that the Claimant’s obligation to install the System was subject to a number of conditions including completion by the First Defendant of “any renovations, improvements or changes reasonably required at the Premises (e.g. removal of a tree or roof repairs necessary to enable the Lessor to safely install the System)”. The obligation guaranteed by the Second Defendant under the Guarantee to pay the rent only commenced on the Commercial Operation Date (COD) namely the date the Claimant gave the First Defendant written notice the System was technically complete and capable of providing electrical energy to the Delivery Point (see Provisions 3 and 4 of Exhibit 4 to the Lease Agreement).

37. Thus, the Guaranteed Obligations only extended to payments due after the System was installed. Although roof repairs were contemplated, there was no suggestion it was within the contemplation of the parties at the time of the Lease Agreement or at the time of the Guarantee that the works would be funded by the Claimant, the First Defendant’s liability to repay the financing costs would become a liability under the Lease Agreement and thus become a guaranteed obligation. Rather, Provision 6(b) of condition 4 provided that if the conditions for instalment were not fulfilled, the Claimant could terminate the Lease Agreement without incurring any liability to the First Defendant.

38. In these circumstances, I do not think that the payments due under the Amendment Agreement fell within the definition of Guaranteed Obligations under clause (a) of the Guarantee. Rather, as stated in the recital to the Guarantee, Guaranteed Obligations were the obligations under the Lease Agreement which at that time of the Guarantee did not extend to separate obligations subsequently incurred under the Amendment Agreement. That position, in my opinion, cannot be altered by the creditor and the principal debtor simply agreeing that the liability would be a liability under the Lease Agreement.

39. It is true that clause (c) of the Guarantee provides that the liability of the guarantor shall not be affected by any variation in the terms of the Lease. However, that does not impose liability for any variation rather, it excludes the principle that the liability of a guarantor is discharged by a variation to the relationship between the creditor and the principal debtor which varies the surety’s liability. However, it is a proviso to the operation of that principle that the variation attracts liability under the Guarantee. In my opinion, the variation made by the Amendment Agreement does not attract such liability.

40. In these circumstances, the Second Defendant is not liable for the amounts claimed under the Amendment Agreement although it remains liable for the amounts otherwise claimed by the Claimant.

Issue 2 – Whether pursuant to the Lease Agreement the First Defendant is liable to the Claimant for the rental invoices

41. There is no substantial defence to this claim except for the fact that the First Defendant alleges that INV700 and INV780 cover the same billing period.

The Submissions

42. In his Skeleton Argument, counsel for the Claimant referred to Provisions 4(a) and 12 of the Lease Agreement to which I have referred at [8] above. He submitted the effect was that the energy measurement was to be based on the Claimant’s energy meter, the Power Measuring Unit (PMU). Counsel for the Claimant submitted that the PMU at all times functioned accurately. At the hearing he referred to the evidence of Mr Laurent Longuet, the Chief Executive Officer of the Claimant, that on COD the Claimant recorded the initial PMU reading. Mr Longuet stated that simultaneously the Dubai Electricity and Work Authority (DEWA) recorded the reading from its own sealed and configured meter using the same photographic method. Mr Longuet stated that the dual recording process is standard practice under the Shams Dubai Regulatory Framework which governs the connection of solar energy systems to the grid in Dubai.

43. Mr Longuet stated that ten months later each of the PMU and the DEWA meter were checked. He stated the variants between the two meters was approximately 0.5% which was well within the acceptable accuracy range. Mr Longuet provided photographic evidence of the meter readings which confirmed the variance.

44. Counsel for the Claimant submitted that this evidence confirmed that the System generated the power claimed.

45. In relation to the issue of double counting, counsel for the Claimant submitted in his Skeleton Argument that INV775 was one of a number of invoices (INV482, INV483, INV595 and INV775) related to a portion of the outage period which exceeded the permitted twenty-four (24) Daylight Hours. At the hearing he referred to a series of emails between the parties covering the period between 21 March 2024 and 6 July 2024 which he correctly submitted confirmed the excess outage period

46. In his Skeleton Argument, counsel for the Claimant accepted that INV780 was a duplicate to INV775 generated in error during the same billing cycle and should be disregarded. It should be noted that notwithstanding INV780 is included in the schedule of outstanding invoices said to make up the amount claimed. However, it makes no difference as INV775, which is an identical amount to INV780, was not claimed

Discussion

47. The rent payable by the First Defendant under the Lease Agreement was the amount of electricity generated multiplied by the defined tariff. Having regard to the evidence I have referred to above, I am satisfied that the invoices accurately calculated the amount due from time to time. I am also satisfied that the rent payable in respect of the outage periods was properly claimed in accordance with Provision 8(g) of the Lease Agreement (see [12] above). In these circumstances, the First Defendant is liable for the rent claimed.

Issue 3 – Whether pursuant to the Lease Agreement and the Amendment Agreement, the First Defendant is liable to the Claimant for the Consideration Invoices.

48. The Consideration Invoices are the invoices in respect of the periodic payments referred to in clause 1(a) of the Amendment Agreement.

49. In its Defence, the First Defendant seeks to put the Claimant to strict proof that the amounts payable to Matrix under the Tripartite Agreement were in fact paid. It also contends it is not liable to pay VAT in respect of the amounts claimed in the invoices.

The Submissions

50. In his Skeleton Argument, counsel for the Claimant contended that the invoices were issued strictly in accordance with the Contractual Payments Schedule and represents sums properly due under the Amendment Agreement.

51. So far as VAT is concerned, he submitted that whilst Provision 4(d) (Taxes) of Exhibit 4 limits VAT liability to “the lease of the System, the delivery or consumption of electric energy produced by the System or the interconnection of the System to the Utility’s electric distribution system” that only governs the operational phase of the Lease Agreement and did not operate to exclude VAT on other taxable supplies. He submitted the Claimant’s liability for VAT is to be found in Article 2A of the Federal Decree Law No. (8) of 2017 on VAT (the “VAT Law”).

52. He also submitted that the First Defendant’s contentions that the aggregate amount of the consideration VAT and Default Value constitutes a windfall is unfounded. He submitted the Consideration Invoices represented payments of amounts actually paid to Matrix, the VAT is a statutory levy imposed under UAE Law and the Default Value is a separate contractual entitlement triggered by the First Defendant’s default in repayment of the Consideration Invoices.

Discussion

53. The evidence of Mr Longuet was that Matrix was paid the full contract price due to it under the Tripartite Agreement. He produced a statement from Matrix dated 13 December 2024 which confirmed this fact. He also produced monthly invoices for the amount claimed from the First Defendant covering the period 30 June 2023 to 30 July 2024. There is no suggestion these amounts were paid.

54. So far as VAT is concerned, I agree with the submission of counsel for the Claimant, Provision 4(d) (Taxes) of Exhibit 4 to the Lease Agreement does not operate to exclude liability for VAT in respect of a matter which was in effect a separate transaction. As counsel pointed out, Article 2 of the VAT Law imposes VAT on taxable supply made by a Taxable Person. As counsel also pointed out, VAT was charged by Matrix on the supply of services pursuant to the Tripartite Agreement. It seems to me the liability of the First Defendant extends in these circumstances to reimbursing the Claimant for that VAT liability.

55. In these circumstances, the Claimant is entitled to the amount claimed in respect of the Consideration Invoices including VAT.

Issue 4 – Whether pursuant to the Lease Agreement and the Amendment Agreement, the First Defendant is liable to the Claimant for the Interest Invoices.

Discussion

56. This matter can be dealt with shortly. As counsel for the Claimant pointed out, Provision 4(c) of Exhibit 8 to the Lease Agreement provides that any invoices not paid within 30 days of the due date attracts contractual interest at the rate of 6%. The provision clearly applies to the outstanding invoices for rental payable under the Lease Agreement.

57. So far as the Consideration Invoices are concerned, as clause 2 of the Amendment Agreement provides that the Amendment Agreement is to be read with the Lease Agreement to constitute a single contract, the provisions in clause 4(c) of Exhibit 8 would apply to those invoices. The Claimant is entitled to interest at the contractual rate on the amount outstanding under these invoices.

Issue 5 – Whether pursuant to the Lease Agreement and the Amendment Agreement, the First Defendant is liable for the Termination Invoice together with 6% contractual interest.

58. What is described as the Termination Invoice incorporates first the claim in respect of the First Defendant’s obligation on default to purchase the System at the price set out in Provision 13(b)(ii) of the Amended Specific Conditions (see [13]-[15] above). It also includes a claim for the Default Value under the Amendment Agreement together with a claim for VAT and interest on those amounts. It is convenient to deal with these matters separately.

59. In its defence, the First Defendant asserts that the amount claimed in respect of the purchase price is manifestly disproportionate to the loss envisaged and thus irrecoverable pursuant to Article 21(2) of the Law of Damages and Remedies. It points to the fact first that the amount claimed was AED 1,178,713 greater than the amount which would be payable to the Claimant had the First Defendant exercised its option to purchase the System on the Claimant’s default. It also pointed out that the amounts payable for the System pursuant to an option granted to the First Defendant to purchase the system in years 6 to 20 are more than the amounts of the purchase price if termination followed a default by the Claimant but less than the amount if terminated following a default by the First Defendant. It alleged that in these circumstances the Lease purports to penalise the First Defendant for any default.

The Submissions

60. In his Skeleton Argument, counsel for the Claimant pointed out following the purchase the Claimant essentially forgoes all future rent for the remainder of the term. He also pointed out that the purchase price was negotiated and agreed between sophisticated commercial parties as a genuine pre-estimate of the Claimant’s loss. He asserted it was calculated by the net present value of forgone revenue, the significant capital expenditure invested in the System and the operating costs incurred up to termination. He stated it reflected an express allocation of commercial risk.

61. Counsel for the Claimant also pointed to the fact that Article 21(1) of the Law of Damages and Remedies provides that where a contract stipulated a specific sum to be paid for non-performance, the agreed party is entitled to payment of it irrespective of its loss. He noted that the Court’s power under Article 21(2) to reduce such sum arises only if it is manifestly disproportionate to the loss that could result from non-performance. He pointed out the First Defendant has provided no evidence to show that the payment was manifestly disproportionate.

62. In relation to the comparison of the amounts payable under the default provision with the amount payable on the lessor’s default, he submitted the law did not require the amounts to be symmetrical and a question remained whether the amount payable bears a reasonable resemblance to the anticipated loss.

Discussion

63. Irrespective of whether any assistance can be derived from the common law doctrine of penalties ultimately the question is whether the amount claimed is manifestly disproportionate to the anticipated loss.

64. Mr Longuet in his evidence (paragraph 34) explained that the purchase price was calculated in the manner submitted by counsel for the Claimant in his Skeleton Argument (see [60] above). In the face of this unchallenged evidence and in the absence of any evidence or submission to the contrary, it could not be said that the amount was manifestly disproportionate to the anticipated loss even allowing for the difference in the purchase price compared to that payable on default by the lessor. It follows that the First Defendant is liable to pay the purchase price.

The Default Value

65. In its Defence, the First Defendant contended that it is not liable for the Default Value. It contended that the Claimant has not alleged any of the three default events set out in paragraph 1(b) of the Amendment Agreement has occurred.

66. Alternatively, it contended the amount claimed was manifestly disproportionate to the loss suffered, pointing out that the Claimant has claimed a total of AED 2,087,449.41 being the sum of the Consideration Invoices, the Default Value and VAT. He submitted that was manifestly disproportionate to the amount payable by the First Defendant under the Amendment Agreement which totalled AED 1,667,000.

The Submissions

67. In his Skeleton Argument, counsel for the Claimant submitted that the failure to settle the Consideration Invoices within 30 days constituted an issue arising during the 15 year warranty period as defined in clause 10 of the Tripartite Agreement and thus the Claimant was entitled to the Default Value.

Discussion

68. The circumstances in which the Default Value is payable are obscure. This is primarily due to the fact that the parties attempted to import the separate transaction, the subject of the Amendment Agreement into the Lease Agreement.

69. If the amended provisions sought to be inserted into the Lease Agreement are viewed in isolation and in the context of the Amendment Agreement considered as a whole, it seems to me clear that the purpose of the Amendment Agreement was to provide a mechanism for the repayment of the amount paid to Matrix for the Roof Cooling System with a default amount payable on termination for breach of that agreement by the First Defendant. Considered in that context it seems to me that the insertion of subclause (ix) into Provision 13(a) of the Exhibit 8 and the additional subclause in Provision 13(b)(ii) was to apply the default provisions in the Lease Agreement to default under the Amendment Agreement the principal difference being the default value set out in the Amendment Agreement will be payable on a contravention of Provision 13(a)(ix) rather than the purchase price set out in the table to Provision 3(b)(ii) (see [15] above).

70. The question remains whether one of the events of default referred to in Provision 13(a)(ix) has occurred. As I indicated, counsel for the Claimant contended that the failure to pay the Consideration Invoices was an issue which occurred during the warranty period and remained outstanding for more than 30 days. The failure to pay the Consideration Invoices did arise during the warranty period. Whilst on its face it may seem a somewhat strained construction to describe the failure to pay as an issue which arose in the warranty period, it seems to me that in the context of this agreement the failure to pay can be considered such an issue. It would seem to me contrary to the parties’ intention to exclude the event of default most likely to occur namely a failure to pay one or more of the instalments required under the Amendment Agreement.

71. There remains the question of whether the amount payable is manifestly disproportionate to the loss suffered by the Claimant. The First Defendant relies on the comparison between the sum of AED 2,087,449.41 sought by the Claimant compared to the amount payable under the Amendment Agreement of AED 1,667,000. To the extent such a comparison is relevant, it should exclude VAT which is a statutory liability. However, the mere fact that the difference arises in respect of this particular default does not mean, in my view, that the default value is manifestly disproportionate to the loss envisaged as capable of resulting from the non-performance and to the other circumstances within the meaning of Article 21(2) of the Law of Damages and Remedies.

72. In these circumstances, the Claimant is entitled to the default value claimed in the Termination Invoice.

Entitlement to VAT

73. The First Defendant in its Defence first contended it was not liable to pay VAT on the purchase price for the same reasons as those which I rejected in dealing with issue 3. It also contended if that the purchase price is payable then it is deemed to be inclusive of VAT in accordance with Article 27 of the VAT Implementing Regulations.

74. Counsel for the Claimant pointed out correctly, in my opinion, that Article 27 of the Regulations related to advertised prices rather than prices laid down in a bespoke contract. He also pointed out, in any event, a taxable person may declare prices to be exclusive of tax where the recipient of the goods or services, a “registrant” is a taxable person. He pointed out that the First Defendant was a taxable person.

75. In those circumstances, it seems to me that the First Defendant is liable to VAT on the purchase price.

Interest

76. Provision 4(b)(iii) of the Lease Agreement as amended by the Specific Terms and Conditions provides that on the first day of each month following COD the Claimant shall issue to the First Defendant an invoice stating the total amount due from the First Defendant. Clause 4(c) provides for interest to be payable at the rate of 6%.

77. As I already indicated these provisions extend to monies due under the Amendment Agreement as incorporated into the Lease Agreement (see [56]-[57] above). As the amounts, the subject of the Termination Invoice, are monies due under those provisions, the Claimant is entitled to the interest it seeks.

Issue 6 – Whether the obligations under the Guarantee extend to the First Defendant’s obligations under the Amendment Agreement. If so, whether the Guarantee imposes primary obligations on the Second Defendant, thereby entitling the Claimant to enforce the Guarantee directly against the Second Defendant without pursuing the First Defendant.

78. I have already indicated that, in my opinion, the Second Defendant’s liability under the Guarantee does not extend to amounts due under the Amendment Agreement. So far as liability under the Lease Agreement is concerned, clauses 1(a) and 1(b) of the Guarantee make it clear that the liability of the Second Defendant is as a primary debtor. It follows that in respect of the amounts for which the Second Defendant is liable it is not necessary to proceed against the First Defendant before seeking to enforce the Guarantee.

CONCLUSION

79. In the result, the First Defendant is liable to the Claimant in the amount of AED 985,874.22 in respect of the Rent Invoices and an amount of AED 700,217.70 in respect of the Consideration Invoices. It is also entitled to the amount claimed in the Termination Invoice namely, AED 8,140,436.91 (inclusive of VAT).

80. The Second Defendant is liable to the Claimant in the amount of AED 985,874.22 in respect of the Rent Invoices and in the amount of AED 6,807,068.10 (inclusive of VAT) in respect of that part of the Termination Invoice which relates to the Purchase Price.

81. The Claimant is entitled to the above amounts calculated in the manner set out in the Claimant’s calculations which appear at pp. 644-648 of the Case Bundle. The Claimant should provide a schedule setting out the total amount of interest to be added to the judgment sum.

COSTS

82. The Claimant has filed a Statement of Costs claiming an amount of AED 348,210 including AED 300 for disbursements. The Statement of Costs sets out in summary form the work done, the time spent and the rates charged by the Claimant’s legal representatives. The costs incurred seem to me to be reasonable and proportionate having regard to the amount claimed and the issues involved. I would order the Defendants pay the Claimant’s costs in the amounts claimed.

ORDERS

83. I would make the following orders: