DIFC fit-out dispute: defects remain and the contractor wants payment

If your fit-out contractor demands final payment while defects remain, answer the account item by item and identify the unfinished or defective work behind each proposed deduction. Saying that the project was late or badly managed does not show how much should be deducted. In a DIFC fit-out defects payment dispute, check the contract's payment and notice provisions before withholding the whole balance or appointing a replacement contractor.

Prepare a single response schedule with these columns: account item, contractor's amount, your proposed amount, reason for the difference and supporting document. Keep separate sections for incomplete work, defective work, variations, retention and delay. This guide concerns a restaurant or office fit-out dispute pursued in the DIFC Courts. It does not assume DIFC substantive law governs every Dubai project.

Issue	Evidence needed first	Common confusion to avoid
Incomplete work	Agreed scope and completion record	Work removed from scope is not necessarily incomplete work
Defective work	Required standard, observed defect and notice	A complaint is not a valuation of the remedy
Replacement cost	Repair scope, access history and paid invoice	An invoice may include upgrades or unrelated work
Variations	Instruction, approval and valuation	Approval of a design is not necessarily agreement on every price
Retention	Contractual release trigger and account treatment	Do not count retained money twice
Delay loss	Programme, causes and actual loss records	Revenue is not automatically profit or recoverable loss

How should I answer a DIFC fit-out defects payment demand?

Answer the account item by item, while preserving any contractual notice or response deadline. A short statement that the entire project is defective leaves the contractor's actual figures unanswered. Ask for the final account in a format that can be reconciled and identify the contract version it uses.

Begin with matters that can be agreed: original price, payments already made and undisputed changes. Then isolate the differences. This prevents a missing credit or duplicate invoice from becoming entangled with a difficult technical dispute. Beside the disputed subtotal, show each reason and the evidence still needed to support it.

The supporting case, Bond Interior Design v Tr88house [2023] DIFC TCD 001, involved mechanical, plumbing and fit-out contracts. Its reasons criticised general factual evidence and unsupported account components. The contracts chose Dubai and applicable UAE law. The case is useful for evidence and account preparation, not as a universal DIFC defects code.

Do not use the original monetary award without its later history. The amended appellate costs judgment in Tr88house v Bond [2024] DIFC CA 006, paragraphs 1-6, records a consent correction for double-counted retention. The operative award was reduced to AED 1,665,386.89. That arithmetic correction did not amount to a general appellate endorsement of every possible defects argument.

What does the contract say the contractor had to complete?

Identify the obligation before describing its breach. The signed agreement may incorporate drawings, specifications, manuals, bills of quantities and correspondence. Obtain those incorporated documents and their revisions. A one-page signature sheet rarely tells the whole technical story.

For each disputed location, name the component and the required work. For example, distinguish installing a fitting, connecting it, testing it and obtaining a specified approval. If different contractors were responsible for those tasks, record the boundary. A photograph of a non-working fitting does not establish which contractual obligation failed.

Check the design history. An item omitted from a later approved drawing may have been removed, overlooked or left for another contractor. Those possibilities require evidence. Find the instruction explaining the revision, the resulting price treatment and any later instruction restoring the work. Do not claim a full omission credit if the same work was later reinstated and performed.

A schedule entry should let the reviewer find the drawing without another search. For example, a complaint about a fitting can identify the room, component and drawing revision together. Where the parties disagree on which drawing governed, show both versions and the instruction said to select one. Repeating that the work was not according to plan leaves that question unanswered.

Organise the first review around three questions.

Is a snagging list enough to support deductions?

A snagging list is a starting point, not a complete explanation of liability and cost. Add the contractual requirement, notification date, contractor's response, current status and remedy proposed. A hundred items marked outstanding may include duplicate complaints, completed repairs or matters outside the contractor's scope.

Give each item a stable identifier and do not renumber it whenever the list changes. Attach dated photographs showing the location and detail. If the defect is intermittent, keep a log of the conditions in which it appears and any test performed. Describe observations accurately without guessing the engineering cause.

Track the contractor's replies. One item may be admitted, another disputed and a third awaiting access. Record completed work as completed, while preserving any complaint that the attempted repair failed. A living schedule is more credible and useful than a static list that keeps every allegation even after the underlying condition has changed.

Where a health or safety issue requires immediate action, prioritise safety and document what made delay inappropriate. Keep the pre-repair condition and removed material where safe and sensible. Do not preserve a dangerous condition merely to improve evidence. Equally, do not turn a routine aesthetic disagreement into an asserted emergency without support.

A technical reviewer should be able to inspect a selected item and trace it back to the agreed requirement. If the list says only poor workmanship, ask for the observable problem: uneven joint, failed test, wrong dimension or missing component. Precision reduces the need for repetitive correspondence.

Must I let the original contractor return to repair?

Examine the contract's remedy and access provisions before refusing all further attendance. The effect of refusing access depends on the rights and facts, but the decision can materially affect a later claim for replacement costs. A business operating at the site needs workable access arrangements, not an unexplained blanket refusal.

In Bond, paragraphs 66 and 130-131, the Court addressed denied access and unproved back-charges. It did not accept that invoices alone established recoverable completion costs. That is a concrete warning about the record a business owner should create before using someone else to perform the work.

Propose practical access conditions where appropriate: named personnel, agreed work area, operating hours, protective measures and a defined repair scope. Record the contractor's response. If a proposed visit is refused because the method is unsafe or incompatible with operations, explain the specific reason and any alternative offered.

Distinguish inspection from permission to carry out remedial work. Allowing someone to inspect does not necessarily agree their proposed repair. Conversely, a refusal of one inconvenient appointment is not the same factual position as refusing every opportunity to return. The chronology should record the visit offered, the response and any alternative appointment.

Before appointing a replacement, have the notice, opportunity to cure and urgency assessed under the actual contract and governing law. This article supplies no universal number of days. The notice periods in a reported project's bespoke contract must not be copied into yours as statutory rules.

Can I charge the contractor for another company's repairs?

Prepare proof of what the replacement company did, why it was necessary and how it relates to the original obligation. The legal entitlement to recover the cost needs separate review. Payment of an invoice shows expenditure, not automatically that the original contractor must reimburse it.

Ask for a scope that distinguishes fault correction from improvement. If a replacement contractor upgrades the system while repairing it, identify the extra work and price separately. Obtain photographs or test records before removal, the repair method and the completion record. Avoid an invoice stating only site works when the dispute concerns several different alleged defects.

Match every claimed back-charge to the defect identifier. Record the original contractor's response and access opportunity alongside it. Where work was shared with other trades, identify the allocation. A repair package covering three contractors' work needs a reasoned division rather than the entire amount being placed against the most available defendant.

Use a hypothetical arithmetic check. Suppose a replacement invoice is AED 24,000, of which AED 5,000 is an agreed upgrade and AED 3,000 concerns another contractor's scope. The remaining AED 16,000 is the amount to investigate for this claim, not a finding that it is recoverable. Causation, reasonableness, contractual entitlement and evidence still require assessment.

Common mistake. Handing the expert a stack of repair invoices and expecting the expert to prove who caused the problem. Supply the scope, contemporaneous condition and factual witness evidence as well.

What if the contractor calls defective work a variation?

Determine whether the work corrects the original obligation or changes it. Start with the baseline scope and the instruction said to create the variation. A label on a quotation does not settle that question, just as the owner's refusal to sign does not explain the underlying scope.

Build a variation register showing instruction, description, approval status, price, programme effect and payment. Mark clearly where price was agreed but timing was not, or where the parties agreed that work should proceed while valuation remained open. Preserve the actual wording rather than forcing every item into approved or rejected.

Record who had authority to approve changes. Site staff may communicate design information without authority to approve every commercial consequence. The contract, delegations and subsequent conduct need review. Do not assume that the procurement team's silence has the same effect as an express approval or that it is always legally irrelevant.

Compare the variation list with the final account. Check that a variation is not included both in a revised contract sum and again as a separate addition. Where work was omitted and later restored, show both movements. The aim is an account that can be followed without knowing the project's informal shorthand.

For a live project, agree a disciplined process for new changes while the older dispute is reviewed. Keep instructions, valuation and time consequences together. Continuing to issue informal changes while asserting that all disputed delay belongs to the contractor can make the final evidence harder to analyse.

How do I check retention without double counting it?

Trace retention through the account from the agreed contract price to payments and the release trigger. Retention is not necessarily an additional price item. Its treatment depends on how the account has been built, so reconcile it before adding a retention balance to any subtotal.

A simple hypothetical illustrates the arithmetic. If an agreed price is AED 1,000,000 and payments total AED 900,000, the remaining AED 100,000 is already inside the price-minus-payments balance. Adding another AED 100,000 merely because that sum is called retention would count it twice. Whether the remaining sum is presently payable is a separate contractual question.

Now check the actual release conditions: taking over, expiry of a defects period, certification, completion of specified remedies or another agreed event. Record what happened and what is disputed. Do not assume occupancy alone satisfies every condition or that an unresolved minor item automatically prevents all release.

The amended appellate record in Tr88house matters precisely because a substantial arithmetic error survived the first decision. Read the corrected operative order rather than copying the earlier total from a case summary. In your own file, have someone who did not prepare the account recalculate it from the underlying figures. Ask them to check signs, repeated credits and whether retention has already been included.

Can I recover lost business income because opening was delayed?

That requires more than comparing the planned opening date with the actual opening date. Identify the relevant contractual remedy, the cause of the delay and the loss attributed to it. Separate agreed delay damages from a claim for lost profit and have their interaction assessed.

Build a dated programme record showing design decisions, site access, variations, approvals, contractor progress and other impediments. If the business could not open because an independent permit or another trade was incomplete, that fact needs to be included. Omitting it does not make the contractor's delay easier to prove.

For the loss calculation, preserve reliable accounts and assumptions. Revenue, gross margin and net profit are different figures. Identify expenses avoided during the closed period and costs incurred specifically because of the delay. If the business was new, record the basis for forecasts and the uncertainty instead of presenting a forecast as established trading history.

Bond's delay discussion at paragraphs 81-97 arose from its particular clauses and evidence, including difficulty establishing exclusive contractor responsibility. Do not convert it into a universal rule governing every concurrent-delay dispute. Its practical lesson here is narrower: the expert needs the actual programme facts and a supported financial calculation.

Keep the period of claimed loss aligned with the alleged cause. Do not use one total covering months with different impediments and assume a court will divide it for you. A period-by-period explanation may reveal that a smaller, well-supported claim is materially different from the original global accusation.

What should an independent expert be asked to do?

Give the expert a defined technical or valuation question and the material needed to answer it. The role is not to repeat your instructions as findings. RDC 31.3-31.9 requires assistance to the Court, independence, attention to material adverse facts and disclosure of limits.

Separate fields of expertise. A defects survey, a delay analysis and a quantum assessment may need different skills. Ask the proposed expert what falls within their competence and whether the available information supports a final opinion. A confident report outside its author's expertise is not strengthened by its length.

Provide both parties' relevant records, not only your selected evidence. Identify disputed factual assumptions explicitly. For example, the expert may calculate a repair cost on the assumption that a particular scope was required, while the court must still decide whether that assumption is correct. The report should not hide that dependency.

RDC 31.12-31.18 restricts expert evidence to what is reasonably required and requires permission to use it in proceedings. Discuss the proposed scope before commissioning a costly litigation report. The Court may also limit recoverable expert fees. A private diagnostic inspection and expert evidence intended for court are related but not identical tasks.

Factual witnesses still matter. The person who issued a drawing, denied access or approved a variation should explain what they actually did where needed. The expert cannot reconstruct missing personal knowledge merely by being handed a spreadsheet and asked to endorse it.

What should my first organised response contain?

Send a version-controlled account response with enough detail for the contractor to answer each point, while following contractual notice requirements. Keep the original received account unchanged and put your proposed adjustments in a separate marked version.

1. Confirm the contract, incorporated documents, governing law and dispute clause.
2. Reconcile the original price, approved changes and all payments.
3. List each disputed account item with your figure and supporting reason.
4. Connect defects and incomplete work to scope, notices and inspection records.
5. Record access offered, repair proposals and any replacement work.
6. Separate delay, loss and retention questions from basic arithmetic.
7. Identify the remedy sought and obtain advice before withholding, termination or settlement wording is sent.

Use a change log when the contractor responds. If an item is conceded or corrected, show the revised position and date. Do not circulate multiple spreadsheets with different totals and the same filename. A simple version number, author and source list can prevent disputes over which account was actually under discussion.

The practical test is whether a reviewer unfamiliar with the project can trace one deduction from allegation to document to calculation. Choose the largest disputed item and try that exercise. If it cannot be done, more general criticism of project management will not repair the gap. Obtain the missing record or identify the uncertainty expressly.

The final review file should distinguish these three outputs.

Should I ignore an offer while arranging a management meeting?

No. Have the offer's legal effect and relevant dates reviewed even if a commercial meeting is planned. Informal discussions do not themselves answer the requirements of a formal offer or stop its consequences.

In Tr88house, the appellate costs judgment at paragraphs 29-32 addressed an offer that would have achieved the eventual monetary result. Attempts to negotiate did not prevent the costs consequences applied there. The parties' costs positions changed across the relevant period despite the correction of the judgment amount.

RDC 32.2-32.8 distinguishes a compliant Part 32 offer from other settlement proposals. Do not assume an email suggesting a meeting is acceptance. Ask whether the offer is complete, what it covers, how acceptance must occur and whether it addresses the counterclaim, interest and costs.

Compare the offer against a current range of outcomes and future expense, not merely the original inflated demand. Separate the amount you believe legally due from what it may cost to prove the remaining differences. If clarification is needed, obtain it through the appropriate procedure without assuming the operative timetable pauses.

Deadline warning. A proposed meeting is not a substitute for responding to a formal settlement offer or complying with a court direction. Review the actual document and its dates promptly.

Does a fit-out case automatically belong in the DIFC specialist division?

First establish DIFC jurisdiction. Then consider whether the technically complex dispute is suitable for the Technology and Construction Division. RDC 56.2-56.4 identifies that specialist category and includes building, engineering and related technical disputes. The division is not a separate jurisdictional gateway for all Dubai projects.

The pleadings and case-management directions should identify the actual issues requiring decision. A broad defects label may conceal a largely arithmetic account dispute. Conversely, a modest-looking deduction may require specialist testing. Explain the real complexity and remedy sought so that the proposed procedure and evidence are proportionate.

Budget in stages for contract review, factual reconstruction, technical inspection, valuation and contested proceedings. Under RDC 38.6-38.10, costs are discretionary, with success, conduct and other circumstances relevant. A favourable adjustment does not guarantee recovery of every legal or expert bill.

Sources were checked on 29 September 2026. This is a case-based preparation guide, not a statement that the historical contracts or statutory regime in Bond govern a new project. The operative substantive law, current amendments, particular notice requirements and later case history require final review before publication or use in a live matter.

Frequently Asked Questions

Can I withhold the whole final bill because some defects remain? Do not assume so. Review the payment terms and identify the supported adjustment for each disputed issue.

Is the snagging list enough? Add the contractual requirement, condition, notice, response, access history and supported remedy. A list alone does not value the deduction.

Can I refuse the contractor access because the business is open? Examine the contract and propose workable conditions where appropriate. Refusing repair access can affect a later back-charge claim.

Does paying a replacement contractor prove my loss? It proves expenditure but not every element of recoverability. Connect the work and amount to the original contractor's responsibility.

What changed on appeal in Tr88house? The amended appellate record corrected double-counted retention by consent, reducing the operative monetary award to AED 1,665,386.89.

Can my expert establish all the factual history? No. The expert needs reliable underlying facts and must identify assumptions and limits. Relevant factual witnesses remain important.

Can I ignore a Part 32 offer while discussing settlement? No. Have its terms and consequences reviewed promptly. A planned discussion does not itself satisfy its requirements.

Did Bond apply DIFC substantive contract law? Its contracts selected Dubai and applicable UAE law. This article does not treat the DIFC forum as changing that governing-law choice.

This article is for general informational purposes only and does not constitute legal advice. Consult a qualified advocate for advice on your specific situation.

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