This judgment addresses the enforceability of service invoices in the face of a defendant’s claim that a professional engagement had been unilaterally terminated, clarifying the evidentiary threshold required to prove the cessation of a contractual relationship.
What was the specific monetary value and nature of the dispute between Lendro and Mr. Lutis?
The dispute centered on a claim for unpaid legal fees arising from an engagement agreement dated 9 February 2015. The Claimant, Lendro, sought recovery of fees for services rendered between September 2019 and February 2020, which the Defendant, Mr. Lutis, refused to pay on the basis that he had terminated the professional relationship.
On 10 May 2020, the Claimant filed a claim with the SCT claiming payment of the outstanding invoices in the amount of AED 33,075.56 (the “Invoices”), in addition to a late payment penalty fee on the outstanding Invoices, as per the terms of the Agreement, and the recovery of the Court fees associated with filing the Claim.
The total amount at stake included the principal debt of AED 33,075.56, plus late payment penalties and court fees. This matter is a continuation of the broader contractual disputes often seen in the Small Claims Tribunal, similar to the issues explored in Lendro v Mr. Lutis [2020] DIFC SCT 166 — Contractual termination following Covid-19 travel restrictions (23 July 2020).
Which judge presided over the SCT hearing in Lendro v Mr. Lutis?
The matter was heard before SCT Judge Maha Al Mehairi. The proceedings involved multiple hearings, including a consultation before SCT Judge Delvin Sumo on 18 May 2020, followed by hearings on 8 June 2020 and 16 June 2020, culminating in the final judgment issued on 23 July 2020.
What were the primary legal arguments advanced by Lendro and Mr. Lutis regarding the alleged termination of services?
The Claimant argued that the services provided during the six-month period were performed at the express request of the Defendant, supported by records of ongoing communication via WhatsApp and telephone. They contended that the Defendant never contested the monthly invoices sent during this period and, in fact, acknowledged his obligation to pay.
The Claimant argues that they have represented the Defendant in several matters, and that the outstanding amount sum of AED 33,075.56 refers to the services performed during the period of September 2019 to February 2020.
Conversely, the Defendant argued that he had effectively terminated the agreement on 1 September 2019 via email. He maintained that any subsequent communication with the Claimant was limited to seeking updates on matters for which he had already settled payment, rather than authorizing new work.
In response to the Claim, the Defendant submits that, on 1 September 2019, he sent an email to the Claimant requesting that they stop acting on his behalf until further notice.
What was the core legal question the court had to resolve regarding the validity of the termination?
The Court was tasked with determining whether the Defendant’s email of 1 September 2019 constituted a valid and effective termination of the engagement agreement, or whether the subsequent conduct of the parties—specifically the Defendant’s continued requests for assistance and failure to formally revoke the Power of Attorney—precluded him from asserting that the contract had ended. The issue was whether the Defendant’s actions created an estoppel or an implied continuation of the contract despite his purported termination.
How did Judge Maha Al Mehairi apply the doctrine of conduct-based contractual obligations to the facts of this case?
Judge Al Mehairi evaluated the evidence of the parties' interactions, noting that the Defendant’s own admissions and the lack of formal revocation of the Power of Attorney undermined his defense. The judge found that the Defendant’s conduct was inconsistent with his claim of termination.
I am not satisfied that the Defendant ended the Claimant’s services on 1 September 2019, as he suggests, and I find that the Claimant continued to provide its services to the Defendant until February 2020.
The judge further highlighted that the Defendant had explicitly acknowledged the debt in correspondence dated 19 January 2020, where he admitted awareness of the invoices and cited a delay in receiving funds from the Court as the reason for non-payment, rather than a dispute over the validity of the services.
Which specific DIFC laws and contractual provisions were applied to determine the liability of Mr. Lutis?
The dispute was governed by the DIFC Contract Law. The Court relied heavily on Clause 14 of the Engagement Agreement, which established the exclusive jurisdiction of the DIFC Courts and stipulated that the agreement was governed by DIFC law. Furthermore, the Court applied the contractual terms regarding late payment penalties to calculate the additional sums owed by the Defendant.
In relation to remedy (c), the Court is satisfied that the Agreement contains a clause for imposing a ‘Late Payment Penalty’, which I set out below:
“i.
How did the Court interpret the evidence of the Defendant’s acknowledgment of debt?
The Court utilized the Defendant’s email of 19 January 2020 as a critical piece of evidence to refute his claim that the services were unauthorized. By acknowledging the invoices and providing a reason for the delay in payment, the Defendant effectively waived his right to claim that the services were performed without his consent.
In the Defendant’s email of 19 January 2020, he confirmed that he was aware of the Invoices and asserts that he was just waiting to receive his money from the Court in order to process payment.
What was the final disposition and the specific relief granted to Lendro?
The Court ruled in favor of the Claimant, finding that the Defendant was liable for the full amount of the outstanding invoices, the late payment fees, and the costs of the proceedings.
The Defendant shall pay the Claimant the sum of AED 33,075.56 in relation to unpaid invoices.
The final order required the Defendant to pay AED 33,075.56 for the invoices, AED 2,315.29 for late payment fees, and AED 1,653.76 for court fees, totaling AED 37,044.61.
What are the wider implications for practitioners regarding the termination of service agreements in the DIFC?
This case serves as a reminder that a unilateral email claiming termination is insufficient if the parties' subsequent conduct suggests a continued professional relationship. Practitioners must advise clients that if they wish to terminate an agreement, they must ensure that all formal instruments, such as a Power of Attorney, are explicitly revoked and that they cease all conduct that could be interpreted as requesting or accepting further services. Failure to do so will likely result in the Court finding that the contract remained in force, rendering the client liable for all subsequent fees.
Where can I read the full judgment in Lezly Bank (Pjsc) v Lazaro [2019] DIFC SCT 483?
The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/small-claims-tribunal/lezly-bank-pjsc-v-lazaro-2019-difc-sct-483 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/small-claims-tribunal/DIFC_SCT-483-2019_20200723.txt.
Legislation referenced:
- DIFC Contract Law
- Rules of the DIFC Courts (RDC)