Thursday, July 8, 2010

Judge's Verdict: Landlords & Tenants

This article was written by Curtis partner James Harbridge of the firm’s Muscat office. It originally appeared in the Muscat Daily and is republished here with permission.

Landlord/ tenant disputes are sometimes quite prevalent. Furthermore, on some occasions, the outcome at court may differ from what one would have expected.

The facts that led to Supreme Court case 273/06 were as follows:

A property owner rented out a property to the tenant, who planned to use the premises as an educational establishment. However, when the tenant stopped paying the rent, the owner of the building filed a case in the Primary Court. The tenant was ordered to pay RO12,000 in accrued rentals to the owner. This sounds fairly routine, but in fact it was a judgment that surprised the tenant, for reasons explained below.

The tenant, meanwhile, filed an appeal to the Appeal Court, stating that the two parties had never actually signed a lease. He also relied on the resultant fact that there was no tenancy agreement registered with the relevant municipality. Accordingly, the tenant reasoned, the Court should disregard the case as it is a statutory requirement in Oman that a building lease must be registered.

However, the Appeal Court ruled against the tenant, and upheld the RO12,000 judgement in favour of the landlord.

In consequence, the tenant appealed to the Supreme Court. He relied upon four lines of appeal:

  1. The Primary and Appeal Courts in Muscat should have declined to hear the dispute as the property in question was not in Muscat;
  2. The lease contract had never been signed;
  3. He had never derived a benefit from the lease, as he had never obtained the necessary licence from the Ministry of Education; and
  4. He had made some payments by cheque and therefore the claimed amount was wrong.
On November 8, 2006, the Supreme Court gave its ruling. They adjudged that the lower courts in Muscat had been right to hear the dispute, as although the building was outside Muscat, the two parties had met and negotiated the lease in Muscat. Moreover, it was held that a dispute regarding an unregistered lease could be heard, as, in the particular circumstances of this case, the tenant had admitted there was a lease contract in place. Indeed, it seems that the fact that the tenant stated he had made some rental payments by cheque was evidence in itself from the tenant that a landlord-tenant relationship existed and that the monthly amounts paid were connected to the lease arrangements.

The judges, moreover, sated that it was not the fault of the landlord that the tenant failed to obtain the necessary licence from the Ministry of Education. Finally, the Supreme Court state that it could only hear legal arguments, and not factual disputes, meaning that the fourth ground of appeal lacked credibility.

In this way, the Supreme Court upheld the lower courts' judgements that the tenant must pay RO12,000 to the landlord.

The lack of signature on the contract was deemed not to be a problem, as the parties had formed the contract by a combination of writing it and then acting in accordance with what it stated.