Session of 3 December 2008
Civil Cassation Appeal by Cassation No. 90/ 2008
 (2, 1) Judgment “its reasoning” – the Court of First Instance “its power to deduce the determination of liability and relief thereof” – liability “contractual liability: its determination and relief thereof”.
(1) Contractual liability – it may be agreed on the determination or relief of such liability – Section 170(2) of the Civil Law No 22 of 2004.
(2) Deducing the intention of the contracting parties in the liability determination or relief report – within the powers of the Court of First Instance subject to what it deems best serving the intention of the contracting party – (an example for a reasonable deduction relating to agreement on the determination of liability upon rescinding a contract before the expiry of its term).
(3) Cassation “reasons of appeal by way of cassation: legal reasons involving facts – new reasons”.
A legal reason involving a fact not previously presented before the First Instance Court – a new reason – may not be raised afresh before the Cassation Court.
1- The meaning of the provisions of Section 170(2) of the Civil Law No. 22 of 2004 is that an agreement may be reached on the determination or relief of contractual liability.
2- The deduction of the intention of the two parties in the determination and relief of liability report is a matter within the powers of the First Instance Court to interpret the texts of contracts and other documents in a way that best serves the intentions of the parties. The judgment appealed against by cassation has concluded the provisions of Section 2(4) of the agreement concluded between the Appellant and the Respondent on (…) was intended to determine the liabilities of each party upon rescinding the contract before the expiry of its term, because of potential damages including the cost of preparing the site and the provision of necessary infra structure. The Section also provided that the value of such costs should be equally distributed among them. It follows that the judgment ordered the Respondent to pay one half of the value of such costs. This is what the Appellant had pleaded in its final memorandum presented before the First Instance Court. The judgment has reached the aforesaid conclusion, which did not differ from the documentary evidence, accompanied with reasonable grounds, sufficient to support such judgment, and includes such response as would refute all pleadings, defences, statements and argumentation raised by the Appellant.
3- It is established jurisprudence of this Court that no pleading before the Cassation Court with a factual reason, or a legal reason involving a fact, not previously presented before the Court of First Instance, is allowed to be raised for the first time before such Court. The defence pleaded by the Appellant, as included in the reason for the contention, that the refusal by the Respondent to implement the contract involved deception and gross fault. This is the defence that has not been previously raised before the First Instance Court, albeit involving a fact not previously presented before such Court. Therefore, this is considered as a new reason which may not be pleaded before the Cassation Court.

Having reviewed the documents, heard the report read out by the Presiding Judge and heard the pleadings, and after due deliberation on the appeal by cassation which satisfied its formal requirements;

The facts, as revealed in the judgment appealed by cassation and other documents, may be summarised as follows.Whereas the Appellant Company brought the claim No (…) civil – general – applying for a judgment ordering the Respondent Company – as included in its final pleadings before the  Instance Court – tobind to pay to it, first, the amount of 5,157,000 Riyals, being the value ofloss it incurred, secondly, the amount of 34,380,000 Riyals being the value of lost profits, thirdly, the amount of 5,000,000 Riyals in moral compensation, fourthly, the amount of 33,400 Riyals as provided in the expert’s report, and fifthly, the amount of 6,874,000 Riyals being the value of cabins and equipment owned by it, which were deteriorated by the Respondent. The Appellant stated that by virtue of the contract dated 14.3.2005, agreed with the Respondent to establish a workers’ residential project at the (…) city, on two land plots owned by the Respondent, provided that it undertakes the procurement and installation of the cabins. I actually commenced implementation by procuring several cabins and heavy excavation equipment and preparing the site by providing water and building materials. On 3.7.2005, the Respondent informed the Appellant of their withdrawal from the project and termination of the Contract due to delay in obtaining the necessary licences. This withdrawal from the implementation of the contract by the Respondent caused material and moral damages to the Appellant, prompting it to bring the claim. The court appointed an expert who presented his report, issued a judgment ordering the Respondent to pay to the Appellant the amount of 2,066,800 Riyals, and rejected other applications. The Appellant filed an Appeal bearing No. 758/2007 against the judgment and the Respondent likewise filed an Appeal bearing No. 760/2007.  Subsequently, the Court combined the two appeals and issued a judgment on 30.4.2008 amending the judgment appealed against by ordering the Respondent to pay to the appellant the amount of 88,400 Riyals. The Appellant lodged against the said judgment an appeal by cassation, which was presented before this Court, at the deliberation chamber, where it fixed a session for its consideration.

Whereas this appeal by cassation is based on four reasons. In the first three reasons the Appellant contend against such judgment that it violated the law, erred in its application, and deviated from documentary evidence. The essence of its statement is that the said judgment disregarded its application for compensation of lost earning and ordered half of what it had spent in preparing the site and transporting some equipment and elementary materials, on the basis that the provisions of Article 2 of the contract dated 14.3.2005 represent a limitation of liability and a ceiling for compensation in the case of termination of the contract before the expiry of it’s the term of five-years. This was so despite that the intention of the parties in the said provisions was not to limit liability or define a ceiling for compensation upon premature termination of the contract. Rather, it was a retrievalof the expenditure regarding the preparation of the site and the procurement of the infrastructure, by dividing such expenditure between the two contracting parties in the case of termination of the contract. This renders the said judgment defective and necessitates its cassation.

Whereas this contention is inappropriate, as the Article 170(2) of the Civil Law No 22 of 2004 provides that it is allowed to agree on the limitation or relief from contractual liability. The deduction of the intention of the contracting parties concerning such limitation of relief is a matter subject to the powers of the First Instance Court to interpret the texts of contracts and other documents in the manner most serving the intentions of the parties. The judgment appealed against by cassation concluded that the provisions of Article 2(4) of the contract between the Appellant and the Respondent on 14.3.2005 was intended to limit the liabilities of each contracting party upon the termination of the contract before the expiry of its term, in anticipation of potential damages specified as the expenses of preparing the site and the provision of necessary infrastructure, which were provided to be equally divided among them. The judgment based its jurisprudence on the aforesaid, ordering the Respondent to pay one half of such expenses, which was also what the Appellant had applied for in its final memorandum presented before the First Instance Court. The said conclusion by the court did not deviate from documentary evidence. It further stated reasonable grounds, sufficient to support such judgment and including such response as would refute all the defences, statements and arguments pleaded by the Appellant, thereby rendering the contention inappropriate.

Whereas in the fourth reason of the appeal the Appellant contends against the judgment appealed against by cassation that it violated the law by disregarding the position of the Respondent, assuming that there was an agreement limiting liability and a ceiling for compensation, which involved mala fides and deception, by unilaterally refusing to resume the implementation of the contract based on the failure to obtain the licences although the latter falls within the obligations of the Respondent which it should have implemented. The said judgment disregarded the impact of deception ad gross fault, which results in allowing judgment of  compensation in excess of what the contracting parties have agreed upon, which renders such judgment defective and necessitates its cassation.

Whereas this contention is inadmissible. It is established jurisprudence of this Court that a point of fact, or a point of law involving facts, which not previously pleaded before the First Instance Court, should not be raised afresh before the Cassation Court. The Appellant’s defence included in this contention’s reason, that the withdrawal by the Respondent from the implementation of the contract involved deception and gross fault, being a defence not previously presented before the First Instance Court, is a new reason which may not be pleaded before the Cassation Court.

According to the aforesaid, this appeal should be dismissed.