Summary of the Decision
On 15 July 2020, the Supreme Court of the Maldives upheld the judgment of the High Court in an appeal filed by Guleyfa Mohamed (the landlord) against Adam Haleem (the tenant).1 The matter before the Supreme Court originated from a residential tenancy dispute involving non-payment of rent by Adam Haleem, and losses caused to Guleyfa Mohamed as a result of the tenant’s failure to properly handover the property to her.
- Adam Haleem entered into a residential tenancy agreement with Guleyfa Mohamed for the lease of the 5th floor apartment of Ma. Kuredhivarugeaage (‘the rented property). Adam Haleem, however, failed to pay rent in accordance with the agreement and was consequently notified to vacate the property. Guleyfa Mohamed, alleging non-performance, sued Adam Haleem in the Civil Court2 for unpaid rent and compensatory damages. In the trial proceedings, she argued that Adam Haleem failed to return the key to the property after he vacated the property in late September 2011 and so that she was entitled to rent until the key is returned to her. Further, she claimed for unpaid rent of July, August and September 2011, and petitioned the Court to determine any damage to the apartment during Adam Haleem’s occupation of the property and recover any monies owed for repairs to the property.
- The Civil Court held in favour of Guleyfa Mohamed and awarded her the unpaid rent due for July, August and September 2011. The Court’s Valuation Committee, following an assessment of the damage to the property, determined that Guleyfa Mohamed was entitled to MVR 34,652 for repairs to the property. The Court, however, did not award Guleyfa Mohamed rent for the period following September 2011. The Court opined that, though the key had not been returned to Guleyfa Mohamed, there was no legal restriction barring her from entering the property and as such, the Court cannot award any amount for the period after September 2011.
- On appeal to the High Court3, Guleyfa Mohamed contended that the Civil Court erred in its decision arguing that she was unable to make use of the rented property for the period following September 2011 until she gained entry to the property after breaking the lock. Guleyfa Mohamed further noted that she did not break the lock and enter the apartment to put the apartment to use as she believed it would make it difficult for the Court’s Valuation Committee to determine damages done to the apartment by Adam Haleem. The High Court, in upholding the decision of the Civil Court, opined that Clause 5 of the contract permitted Guleyfa Mohamed to utilise the security deposit for any repairs to the property and as such, she was not under any legal restriction to enter and make use of the property.
- In the case before the Supreme Court, Guleyfa Mohamed argued that even though it was established in the lower courts that Adam Haleem had not returned the key to the property after he vacated the property in late September 2011, the Court had erred in not awarding her the unpaid rent for the period after Adam Haleem had vacated the property. Guleyfa Ahmed further argued that she was entitled to unpaid rent for the period 1 October 2011 to 15 October 2012 – the date that the Civil Court’s Valuation Committee entered the property after destroying the lock to the property.
- The Supreme Court, citing Section 24 of the Law of Contract (Law Number 4/91), observed that a party would not be entitled to recover losses incurred by them arising from a failure to take reasonable precautions. The apex court then examined the question of whether Guleyfa Mohamed took reasonable precautions to mitigate her loss. The apex court went on to lay down two considerations to take into account when deciding whether the claimant in a case has taken reasonable precautions to mitigate losses suffered, i.e. whether it was reasonably possible for the claimant to reduce losses suffered and whether the claimant acted reasonably.
- The apex court observed that compensatory damages sought by Guleyfa Mohamed were with respect to the period 1 October 2011 to 15 October 2012. The apex court also observed that the Civil Court’s Valuation Committee obtained Guleyfa Mohamed’s permission to enter the property after destroying the lock. The Court opined that Guleyfa Mohamed was aware that the property was unoccupied, and under her control during the period 1 October 2011 to 15 October 2012, and could have replaced the lock and leased the property to mitigate losses incurred during that period.
- The apex court also observed that the courts do not only rely on the valuation carried out by the Valuation Committee of the Court for the determination of damages arising from breach of contract. The Court opined that it is the responsibility of the contracting party seeking damages to provide a reasonable determination of the value of such damages, and other reliable evidence can be submitted to the Court to prove such damages. The Court determined that Guleyfa Mohamed did not act in the manner that a reasonable person in her circumstances would – as a person derives income from the lease of property, she did not attempt to enter and assess possible damages to the property for an extended period of time. Hence, the Court determined that Guleyfa Mohamed did not take reasonable precautions to mitigate her losses, even though she had the opportunity to do so.
The Supreme Court agreed with the High Court’s decision to uphold the Civil Court’s Judgment and found no reason to amend the High Court’s decision.References