Engineering Firm Recovers Design Fees and Delay Damages Following Client Repudiation of Consultancy Agreement

Engineering Firm Recovers Design Fees and Delay Damages Following Client Repudiation of Consultancy Agreement

In a commercial dispute arising out of residential construction consultancy services, a specialized engineering firm initiated legal proceedings seeking the recovery of unpaid professional fees and compensation for breach of contract. The plaintiff, a limited liability consultancy practice, asserted that it had been duly engaged by a private property owner to prepare comprehensive architectural designs, secure mandatory governmental building permits, and oversee the execution of a private residential villa. Despite delivering the contractual design work and obtaining official statutory approvals, the firm was replaced without commercial justification or settlement of its earned remuneration.

Parties and Procedural Initiation

The action commenced before the Minor Commercial Circuit through an originating statement of claim filed by the engineering firm against the property owner. The dispute centered on contractual non-performance and the unilateral termination of professional services following significant project modifications and increased project financing.

Represented by its authorized legal counsel, the engineering firm formally petitioned the court to issue a binding decree directing the client to fulfill her monetary commitments, satisfy accrued contractual obligations, and pay legal interest alongside substantial compensatory damages for financial distress and procedural delays caused by the prolonged dispute.

Factual Background and Contractual Matrix

The genesis of the contractual relationship dates back to an initial engineering consultancy agreement entered into between the consultancy firm and the villa owner. The scope of engagement encompassed producing architectural, civil, and electro-mechanical drawings, processing permits through municipal authorities, and supervising the construction of a private residence. The consulting firm successfully executed the design stage and procured the construction permit, giving rise to an entitlement to remuneration.

However, the project underwent revisions when the property owner secured a substantial increase in mortgage financing from her lending institution, raising the total facility. Rather than proceeding under the initial scope, the client executed a revised agreement calling for redesigned layout plans and fresh municipal authorizations. Although the firm diligently completed these new structural revisions and secured the revised building permit, the client halted implementation, disengaged the consultant, and transferred the project to an alternative engineering office while refusing to honor outstanding invoices.

Evidentiary Review and Judicial Reference to Expert Analysis

In support of its claim, the engineering firm produced concrete documentary evidence, including the two successive consultancy agreements, official appointment confirmations, stamped design drawings, project quotation schedules, and the formal referral certification from the commercial conciliation centre.

During remote preparatory proceedings, the property owner failed to enter an appearance despite being legally notified. In view of the technical nature of construction auditing, the supervising judge appointed an independent civil engineering expert to verify whether the contractual phases had been performed, establish the percentage of completion, and quantify the actual debt owed to the plaintiff under governing industry standards and statutory principles.

The Expert Report and Assessment of Contractual Performance

The appointed court expert filed a detailed technical report addressing the financial and engineering aspects of the dispute. The expert findings established the following essential facts:

1. The property owner initially obtained a residential construction loan from a major commercial bank in the sum of AED 1,250,000 for building a residential villa on her designated land parcel.

2. Under the primary consultancy contract, the total agreed professional fee was set at 2.5% of the total project value, with the preliminary design phase and permit issuance component accounting for 1.5% of the contract value.

3. The consulting firm fully accomplished the first contractual phase, finalising technical drawings and obtaining the statutory building permit.

4. Subsequently, the client obtained an enhanced bank loan facility increasing total financing to AED 1,750,000, and engaged the firm under a secondary contract reflecting modified architectural parameters at an agreed fee of 2% of the project value.

5. The firm completed the new designs and successfully procured the amended building permit, thereby completing the design component representing 1% under the revised contract.

6. Following a strict audit of the payments and earned percentages across both scopes of work, the expert concluded that the net unpaid remuneration due to the engineering firm amounted to AED 35,098.56.

Legal Evaluation and Contractual Entitlement

Evaluating the expert findings, the court affirmed its discretion in weighing evidentiary materials. Under the statutory provisions governing architectural and civil engineering contracts in the UAE Civil Transactions Law, consultancy contracts are binding consensual agreements. When an engineer delivers agreed designs and obtains official approvals, the client remains legally bound to pay the contractually stipulated consideration or fair market compensation. Having verified the non-payment and finding the expert conclusions solid and impartial, the court adopted the assessed sum of AED 35,098.56, while dismissing unsubstantiated claims for higher unverified balances.

Assessment of Delay Interest and Monetary Compensation

Addressing the firm's demand for commercial interest, the court recalled the established precedent of the Abu Dhabi Court of Cassation. Where an obligation concerns an ascertained sum of money withheld by a debtor, the creditor is entitled to statutory interest as direct compensation for deprivation of capital from the date of judicial claim until full settlement. The court accordingly fixed delay compensation at the rate of 3% annually.

Regarding the claim for general damages, the court confirmed that contractual liability requires establishing breach, actual harm, and causation. The client's wrongful default caused measurable economic harm to the engineering firm by locking up its operational liquidity. Taking into account these factors, the court assessed equitable compensation at AED 3,000 to redress the material injury. However, it formally rejected the demand for moral damages, observing that corporate entities and commercial companies do not suffer emotional or moral injury in their business dealings.

Final Ruling

The court rendered its enforceable judgment concluding the litigation:

• Ordering the defendant property owner to pay the plaintiff engineering firm the principal sum of AED 35,098.56, together with delay interest at the rate of 3% per annum running from the date of filing until satisfaction, not to exceed the awarded principal.

• Ordering the defendant to pay the plaintiff compensatory damages of AED 3,000 for the material harm sustained.

• Directing the defendant to bear proportionate court fees, a proportional share of the expert expenses, and AED 300 towards legal costs, while dismissing all other claims.