This Small Claims Tribunal judgment clarifies the strict liability of a rental agreement signatory for damages and charges incurred by third-party drivers, reinforcing the principle of privity of contract in DIFC car rental disputes.
What was the specific nature of the financial dispute between Naila and Nakir regarding the rental vehicle?
The dispute arose from a car rental agreement where the Claimant, Naila, sought recovery for unpaid rental extensions, vehicle damage, and traffic-related penalties. The Claimant alleged that the Defendant, Nakir, remained liable for all costs associated with the vehicle, which had been in the possession of a third party, Mr. Naqsh, during the rental period. The total amount in controversy reached AED 12,004.25, covering windshield repairs, Salik toll fees, extended rental days, and various traffic fines.
On 4 July 2024, the Claimant filed a claim in the DIFC Courts’ Small Claims Tribunal (the “SCT”) for the unpaid rent and damages in the amount of AED 12,004.25.
The core of the disagreement centered on whether the Defendant could shift the financial burden to the third-party user. While the Claimant maintained that the contractual terms bound the signatory exclusively, the Defendant argued that his role was limited to the initial three-day rental and that he should not be held responsible for the subsequent actions or damages caused by his friend.
Which judge presided over the SCT proceedings in Naila v Nakir [2024] DIFC SCT 269?
The matter was heard and determined by H.E. Justice Maha Al Mheiri. Following an initial consultation before SCT Judge Maitha AlShehhi on 31 July 2024, which failed to produce a settlement, the case was referred to Justice Al Mheiri for a formal hearing on 15 August 2024. The final judgment was issued on 12 September 2024.
What were the primary legal arguments advanced by the parties regarding the liability of the signatory?
The Claimant argued that the Rental Agreement constituted a binding contract between the Lessor and the Lessee (the signatory), explicitly prohibiting the assignment or transfer of obligations. The Claimant relied on the express terms of the agreement, which stipulated that the person signing the document—the Defendant—was responsible for all charges, including those incurred during the extended period and any damages sustained while the vehicle was in use.
Conversely, the Defendant contended that he had only intended to rent the vehicle for a three-day period for his friend, Mr. Naqsh. He argued that any additional rent, damages, or fines should be pursued directly against Mr. Naqsh. Furthermore, the Defendant claimed he did not approve any additional charges and cited a language barrier, asserting that he was not the driver of the vehicle at the time the liabilities were incurred.
What was the central jurisdictional and doctrinal question the SCT had to resolve?
The Court had to determine whether the signatory of a standard-form rental agreement could escape liability for damages and extended rental fees by delegating the vehicle's use to a third party. The doctrinal issue involved the interpretation of privity of contract and the enforceability of "Lessor-Lessee" clauses against a signatory who claims to have acted merely as an intermediary for a third party. Additionally, the Court had to confirm its own jurisdiction, which was challenged implicitly by the Defendant's attempt to distance himself from the contractual obligations.
How did Justice Maha Al Mheiri apply the principles of contract law to the Defendant’s liability?
Justice Al Mheiri’s reasoning focused on the express terms of the Rental Agreement. The Court found that the Defendant, by signing the agreement, had accepted the role of "Lessee" and was therefore bound by the terms governing the vehicle's use, regardless of who was physically operating the car. The judge emphasized that the contract explicitly stated that the signatory could not assign or transfer their obligations to others.
In light of the aforementioned, I find that the Defendant shall pay the Claimant the amount of AED 12,004.25.
The Court rejected the Defendant's argument regarding his lack of English proficiency and his claim that the vehicle was rented for a third party. By signing the agreement, the Defendant assumed full responsibility for the vehicle's condition and any costs incurred during the rental period. The Court noted that the Claimant had provided sufficient evidence of the damages and outstanding fees, which the Defendant failed to refute through any contractual basis.
Which specific provisions of the Rental Agreement were critical to the Court’s decision?
The Court relied heavily on the definitions and obligations set out in the Rental Agreement. Clause 1 established that the agreement was between the Lessor and the Lessee, and that the signatory (the "Lessee") could not assign or transfer their obligations. Clause 11.7 was particularly significant, as it mandated that the "Lessee shall be obligated to pay any fines, penalties, court costs or other expenses imposed on Lessor by law arising from the use of the vehicle during the rental period." Furthermore, Clause 11.9 explicitly held the Lessee responsible for all Salik fees and traffic fines incurred during the execution of the agreement.
How did the Court address the Defendant’s reliance on the third-party involvement of Mr. Naqsh?
The Court treated the Defendant’s attempt to shift liability to Mr. Naqsh as legally irrelevant to the contractual relationship between the Claimant and the Defendant. The Court noted that while Mr. Naqsh had attempted to extend the rental via the "Nasmi App," the contract remained between the Claimant and the Defendant. The Court’s reasoning effectively disregarded the third party's actions as a defense, emphasizing that the Defendant remained the primary obligor under the signed agreement.
On 12 May 2024, Mr. Naqsh informed the Claimant that he wanted to extend for one more day, he paid through Nasmi App and sent the screenshot of the transfer to the Claimant.
The Court’s focus remained strictly on the contractual privity established at the time of signing, reinforcing that the Lessor is not required to look beyond the signatory to recover costs, even if the signatory claims they were not the driver.
What was the final disposition and the specific monetary relief ordered by the SCT?
The Court found in favor of the Claimant, Naila, and ordered the Defendant, Nakir, to pay the full amount claimed. The disposition included the principal debt and the reimbursement of court filing fees.
The Defendant shall pay the Claimant’s DIFC Courts’ filing fee in the amount of AED 600.61.
The total award of AED 12,004.25 was calculated based on the evidence provided by the Claimant, including repair costs for the windshield, Salik fees, extended rental days, and traffic fines. The Defendant was ordered to settle these amounts in full.
What are the wider implications of this ruling for car rental companies and their customers in the DIFC?
This case serves as a clear warning to individuals who sign rental agreements on behalf of third parties: the signatory remains the sole party liable for all contractual breaches, regardless of who actually drives the vehicle. For rental companies, the ruling validates the use of robust "no-assignment" clauses and confirms that the DIFC Small Claims Tribunal will uphold the plain language of such agreements. Future litigants must anticipate that the Court will prioritize the written contract over oral assertions regarding third-party usage or claims of language barriers.
Where can I read the full judgment in Naila v Nakir [2024] DIFC SCT 269?
The full judgment can be accessed via the DIFC Courts website at: https://www.difccourts.ae/rules-decisions/judgments-orders/small-claims-tribunal/naila-v-nakir-2024-difc-ct-269. The text is also available via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/small-claims-tribunal/DIFC_SCT-269-2024_20240912.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external precedents cited in the judgment. |
Legislation referenced:
- DIFC Courts Law (General jurisdiction)
- Rental Agreement Terms and Conditions (Clauses 1, 2, 5, 11.7, 11.8, 11.9, 20)