The Small Claims Tribunal (SCT) clarifies the recovery of costs for variation works and extended site presence in a construction contract, emphasizing the necessity of expert evidence in quantifying quantum meruit claims.
What was the specific monetary claim brought by Murkan against Muhy regarding the private villa project in Dubai?
The dispute arose from a construction agreement dated 2 January 2023, under which the Claimant, Murkan, was engaged to perform partial construction works on a private villa project in Dubai. The Claimant alleged that it performed significant works beyond the initial scope, including tower crane installation and various concrete works, which necessitated additional payments. The Claimant sought a total of AED 475,838.80, comprising outstanding payments for the original scope of work, approved variation works, and costs associated with an extended duration on site.
The Defendant, Muhy, contested these claims, arguing that the alleged variations were unauthorized attempts by the Claimant to influence the tendering process for the broader construction contract. The core of the dispute centered on the valuation of these works and the legitimacy of the delay costs. As noted in the record:
On 7 April 2023, the Claimant submitted an invoice of the works completed in the amount of AED 127,506.25 plus VAT which was due to be paid on 21 April 2023.
Which judge presided over the SCT proceedings in Murkan v Muhy and when was the final judgment issued?
The matter was heard before H.E. Justice Nassir Al Nasser in the Small Claims Tribunal of the DIFC Courts. Following a hearing held on 15 June 2023 and the subsequent submission of an independent expert report, Justice Al Nasser delivered the final judgment on 8 September 2023.
What were the primary legal arguments advanced by Murkan and Muhy regarding the scope of work and variation claims?
The Claimant argued that it was entitled to recover costs for additional works that were identified to the Defendant and performed on site. Murkan contended that these variations were essential to the project's progression and that the Defendant had effectively accepted the benefit of these works. Furthermore, the Claimant asserted that it was entitled to delay costs due to an extended stay on site beyond the anticipated completion date, specifically citing the period during which the tower crane remained on site.
Conversely, the Defendant argued that the Claimant was merely one of several contractors in a tendering process and that the alleged variations were performed unilaterally without proper approval. Muhy maintained that the works were either within the original scope or were performed at the Claimant’s own risk to secure future contracts. The Defendant eventually conceded that 80% of the original scope of work had been completed, which narrowed the scope of the Court's inquiry.
What was the jurisdictional and doctrinal issue the Court had to resolve regarding the governing law of the contract?
The Court was required to determine the governing law of the contract in the absence of an express choice-of-law clause within the Agreement. This necessitated an interpretation of the DIFC’s statutory framework to establish the legal basis for the construction contract's enforcement. The Court had to decide whether the DIFC law applied to the dispute, thereby granting the SCT the authority to adjudicate the claims for breach of contract and unpaid variation works.
How did Justice Nassir Al Nasser apply the expert report to determine the final quantum of the award?
Justice Al Nasser relied heavily on the independent Expert Report submitted on 20 July 2023 to reconcile the conflicting accounts of the work performed and the associated costs. The Court utilized the expert's findings to verify the completion percentage and the validity of the variation claims. Regarding the original contract, the Court applied a percentage-based assessment based on the Defendant's admissions:
Based on the admission made by the Defendant, it is my opinion that the Claimant should be awarded 80% of its claimed costs under the existing contract being AED 86,096.
The Court further scrutinized the delay costs, specifically evaluating the period the Claimant remained on site after the tower crane was dismantled. By cross-referencing the expert's assessment with the parties' correspondence, the Court determined the specific duration of the delay and the corresponding financial entitlement. As stated in the judgment:
Based on my reading of the evidence and the findings of the Expert Report, I conclude that the Claimant shall be entitled to its claimed costs from the Defendant in the amount of AED 420,242 (excluding VAT).
Which DIFC statutes and specific sections were cited by the Court to establish its authority and the governing law?
The Court relied upon Article 6 of Dubai Law No. 12 of 2004, which establishes the jurisdiction of the DIFC Courts. Regarding the governing law, the Court cited Article 10 of DIFC Law No. 10 of 2005, which provides that in the absence of a specified governing law, the contract shall be governed by the law of the DIFC. This statutory foundation was critical in validating the Claimant's right to seek relief through the SCT.
How did the Court address the Claimant's request for time delay costs in relation to the tower crane and site presence?
The Court examined the timeline of the project, specifically the period between 15 March 2023 and 10 May 2023. The Claimant argued that the extended duration was a direct result of the project's requirements and the Defendant's instructions. The Court noted:
However, the Claimant was on site until 10 May 2023 following the tower crane being dismantled, thereby an extended period of 56 days, 15 March until 10 May 2023 (the “time delay costs”).
The Court verified these costs by reviewing the Claimant’s earlier communications with the Defendant, specifically a letter dated 15 March 2023 and an email dated 3 March 2023, which served as evidence that the parties had discussed these potential additional costs.
What was the final disposition and the specific monetary relief awarded to the Claimant?
The Court allowed the claim in part. The Defendant was ordered to pay the Claimant a total sum of AED 420,242. This amount was broken down into three components: AED 239,096 for the existing agreement, AED 145,325 for variation works, and AED 35,821 for time delay costs. Additionally, the Court ordered the Defendant to pay AED 25,593.75 in costs, representing the Claimant’s contribution toward the appointment of the independent expert.
What are the wider implications of this ruling for construction contractors operating within the DIFC?
This case reinforces the critical importance of maintaining clear, written records for variation works and extensions of time. Practitioners must note that while the SCT may rely on expert reports to quantify claims, the burden remains on the claimant to demonstrate that variations were clearly identified and communicated to the counterparty. The reliance on Article 10 of DIFC Law No. 10 of 2005 serves as a reminder that the absence of a governing law clause will default to DIFC law, which provides a robust framework for contract enforcement but requires strict adherence to evidentiary standards.
Where can I read the full judgment in Murkan v Muhy [2023] DIFC SCT 172?
The full judgment is available on the official DIFC Courts website at: https://www.difccourts.ae/rules-decisions/judgments-orders/small-claims-tribunal/murkan-v-muhy-2023-difc-sct-172. The text can also be accessed via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/small-claims-tribunal/DIFC_SCT-172-2023_20230908.txt
Legislation referenced:
- Dubai Law No. 12 of 2004, Article 6
- DIFC Law No. 10 of 2005, Article 10