Response to the Appeal about the recovery of the amount under the contract and the penalty

 

To the Judicial Board of Appeal for Civil Cases in Almaty

Almaty, 050000 Kazybek Bi street, 66.

0201@sud.kz

from the Defendant: M.B.G. LLP

BEAN.....

Almaty, 194 B.. street, 10th floor, office 1009

+7 705 .

Representative by proxy:

Law and Law Law Firm  

BIN 201240021767

79 Abylai Khan Ave., office 304, Almaty

info@zakonpravo.kz / www.zakonpravo.kz

+7 708 578 5758; +7 727 971 78 58.

 

Feedback

on the appeal of the plaintiff of OTR G. LLP against the decision of the Almaty City Court of April 26, 2024 on the recovery of the amount under the contract and the penalty

 

On 04/26/2024, the Specialized Interdistrict Economic Court of Almaty issued a decision in civil case No. 7527-24-00-2/848 on the claim of OTR G. LLP (hereinafter referred to as the Plaintiff) against M.B.G. LLP (hereinafter referred to as the Defendant) (signed by Judge Aketaeva D.A. on 05/03/2024) to recover from the Defendant in favor of the Plaintiff the amount of in the amount of 5,750,000 (five million seven hundred and fifty thousand) tenge and recovery from the Defendant in favor of the Plaintiff a legal penalty in the amount of 2,043,514.55 (two million forty-three eight thousand five hundred and fourteen) tenge (fifty-five) tiyn.

The decision of the Specialized Interdistrict Economic Court of Almaty in the civil case No. 7527-24-00-2/848 denied the claim of the limited Liability Company "OTR G.".

Subsequently, disagreeing with the court's decision, the plaintiff filed an appeal. The plaintiff motivates his complaint with unfounded arguments that have been comprehensively investigated in the framework of the civil case, namely that:

· The court incorrectly determined and clarified the range of circumstances relevant to the case, in accordance with paragraph p1) paragraph 1 of art.427 of the CPC RK.  Did not give a proper assessment of the evidence available in the case, in accordance with paragraph 1 of Article 16 of the Code;

· The court violated and incorrectly applied the norms of substantive and procedural law, in accordance with paragraph p1) paragraph 1 of art.427 of the CPC RK.  He did not maintain objectivity and impartiality, did not create the necessary conditions for the realization of the rights of the parties to a full and objective investigation of the circumstances of the case, in accordance with the provisions of art.15 of the CPC RK.;

 

And asks the judicial board to reverse the decision of the Specialized Interdistrict Economic Court of Almaty in full, to make a new decision on the satisfaction of the claims of OTR G. LLP in full.

 

 

Dear Board of Appeal, we believe that the Plaintiff's arguments are inconsistent, contradictory, and mutually exclusive.

In the framework of the considered civil case No. 7527-24-00-2/848 on the claim of the Limited Liability Partnership OTR G. LLP (hereinafter referred to as the Plaintiff) against M.B.G. LLP (hereinafter referred to as the Defendant) for the recovery of the amount under the contract.  

Where the plaintiff demanded:

1.                  To collect from "M.B.G." LLP in favor of "OTR G." LLP the amount under the Agreement in the amount of 5,750,000 tenge.

2.                  To collect from "M.B.G." LLP in favor of "OTR G." LLP a legal penalty in the amount of 2,043,514.55 tenge.

3.                  To collect from "M.B.G." LLP in favor of "OTR G." LLP the costs of paying for the services of a representative in the amount of 500,000 tenge.

4.                  To collect from "M.B.G." LLP in favor of "OTR G." LLP the costs of paying the state fee in the amount of 233,805.43 tenge.

 

Thus, the parties signed an Agreement for the development of the website and mobile application No. 588 dated May 24, 2021 (hereinafter referred to as the Agreement)

On 08/19/2022, an Additional Agreement was concluded to Contract No. 588 dated 05/24/2021 (hereinafter referred to as the Agreement), which complies with the terms of Articles 151, 152, 378 of the Civil Code of the Republic of Kazakhstan, which stipulates that the Agreement recognizes the agreement of two or more persons on the establishment, modification or termination of civil rights and obligations, which in this civil case is not disputed by the parties.

According to the terms of the concluded Agreement, clause 1.1 "The Customer assigns, the Contractor undertakes the development of the website and mobile application in accordance with the terms of reference (Appendix No. 1 to this Agreement), which is an integral part of this Agreement."

In accordance with clause 2.1. of the Agreement, "The cost of work under this Agreement is: 5,750,000 (five million seven hundred and fifty thousand) tenge."

In accordance with clauses 2.2-2.7 of the Agreement, "The down payment is 30% of the total cost of work under this agreement: 1,800,000 tenge. It is paid by the Customer within 3 banking days from the date of signing the Contract.

The second installment is 40% of the total cost of work under this agreement: 2,225,000 (two million two hundred and twenty-five thousand) tenge. It is submitted by the Customer within 3 banking days from the date of signing the interim act confirming the approval of the design.

The third installment is 30% of the total cost of work under this agreement: 1,725,000 tenge. It is submitted by the Customer upon completion of the work and the signing of the acceptance certificate of the work performed by the parties. "

According to clause 1 of the Agreement, the amendments to clause 2.4 of the Agreement were demolished and set out in the following wording:

"2.4.1. The third installment is 15% of the total cost of works under this agreement 862,500 (eight hundred sixty two thousand five hundred) tenge.

2.4.2. The fourth installment is 15% of the total cost of works under this agreement 862,500 (eight hundred sixty two thousand five hundred) tenge. "

According to clause 2 of the Agreement, amendments were made to clause 2.7 of the Agreement and set out in the following wording:

"2.7.1. The third installment is paid by the Customer, within 3 banking days from the date of signing the interim act confirming the approval of work on the second stage.

2.7.2. The fourth installment is paid by the Customer upon completion of the work and the signing of the acceptance certificate of the work performed by the parties, including the mobile application. "

The plaintiff made payments in the following order:

1. On 05/25/2021, according to payment order No. 805, an amount of 1,800,000 tenge was transferred to the Defendant's current account.

2. On 08/23/2021, according to payment order No. 885, an amount of 2,225,000 tenge was transferred to the Defendant's current account.

3. On 09/20/2022, according to payment order No. 885, an amount of 862,500 tenge was transferred to the Defendant's current account.

4. On 22.12.2022, according to payment order No. 1722, an amount of 862,500 tenge was transferred to the Defendant's current account.

 

In accordance with clause 3.1 of the Agreement, "The Contractor undertakes to deliver the finished website and mobile application to the Customer within 120 (one hundred and twenty) business days from the moment the Customer approves the design of all pages of the mobile application and provides data for enabling online payment, and the Customer accepts them and pays."

In accordance with clause 2.6. of the Agreement, "The second installment must be paid by the Customer within 3 banking days from the date of signing the interim act confirming the approval of the design."

The interim acceptance certificate for the design of all pages of the site dated 08/13/2021 was signed by the parties, and the second part of the payment, according to payment order No. 885 dated 08/23/2021, was paid by the Plaintiff.

Accordingly, starting from 08/13/2021, the date of delivery of the completed work after 120 (one hundred and twenty) business days, the website and mobile application should have been developed and delivered to the Customer by 02/15/2022, the Plaintiff's representative claims.

We do not agree with the Plaintiff's arguments, whereas according to clause 3.1 of the Agreement, "The Contractor undertakes to deliver the finished website and mobile application to the customer within 120 working days from the moment the Customer approves the design of all pages of the mobile application and provides data for enabling online payment, and the customer accepts them and pays."

However, the Plaintiff provided the online payment connection data on August 28, 2023, as evidenced by the correspondence of the Megarent & A-Lux group created in Whatsapp, where the Plaintiff informs the defendant "Good afternoon, I am currently negotiating with the bank about acquiring, when they approve I will send the API description, you will need to connect to the website and application"

 

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The origin of the screenshot is a mobile phone, which, if necessary, we can provide to the court for review.

 

Thus, the Plaintiff's arguments that the deadline for the delivery of the website and mobile application is 663 calendar days have no legal justification.

In accordance with Articles 68, 72 of the CPC of the Republic of Kazakhstan, each party must prove the circumstances to which it refers as the grounds for its claims and objections, each evidence is subject to assessment taking into account relevance, admissibility, reliability.

According to Appendix No. 1 dated 05/24/2021 to the Contract for the development of the website and mobile application No. 588, the development of the website and mobile application consists of the following list of works:

1) Development, coordination and approval of the website and mobile application structure (hereinafter referred to as the "MP");

2) Development, coordination and approval of the layout of the main page of the website and the MP;

3) Development, coordination and approval of layouts of internal pages of the website and MP;

4)    Layout of the main page and internal pages of the website and MP;

5) Programming:

- peer-to-peer layouts of site pages and MP

- enabling Push notifications;

6) Development of a Website and MP Management System (CMS);

7) Content content of the website and MP (according to clause 3.8. of the Agreement);

8) Website and MP testing;

9) Publishing a mobile application in the App Store and Google Play and uploading the site to hosting;

10) Enabling online payment (Visa, Mastercard);

11) Delivery-acceptance of works.

According to clause 3.8. of the Agreement, "The Contractor undertakes to perform work on the content content of the website and mobile application. The amount of information entered should not exceed 30 (thirty) pages (1800 characters per page without spaces). The additional amount of content is calculated separately."

According to the terms of the concluded Agreement, on 12/21/2022, the Defendant fully handed over the Completed Works Act No. 1137, the developed website and mobile application to the Plaintiff, who in turn accepted the work and signed and sealed the ATS.

The Act of completed works No. 1137 dated 12/21/2022 was signed by the parties and subsequently not disputed, and also in this civil case is not questioned.

In addition, the Plaintiff makes Claims for the fulfillment of the terms of reference specified in Appendix No. 1 dated May 24, 2022, namely:

1) items 1-6 are fulfilled, with a claim to quality and timing;

- According to the terms above, we have provided exhaustive refuting arguments.

– As part of the warranty service for the site and mobile quality service for the wound site, no complaints were received from the Plaintiff and there were no complaints from the Megarent & A-Lux WhatsApp Group. The only complaint from the Plaintiff was a pre-trial claim from the Plaintiff's representative.  

2) paragraph 7 - the content was provided only by the party

The plaintiff;

- Because the Plaintiff did not provide the content to the Defendant at all.

3) point 8 - testing of the website and MP was carried out repeatedly,

constantly identifying technical problems and site layout errors, which caused new problems to appear.;

- We consider these arguments to be groundless, since there were no global problems, if there were problems, the Plaintiff would not accept the defendant's work under the act, in addition, there was a warranty service for the site.

4) Item 10 - at the Defendant's insistence, the payment system was activated

the PayTech system, which soon stopped working, which the Defendant did not notify in any way, further, as part of the Guarantee, Internet acquiring from Bank CenterCredit JSC had to be connected, which was not done.

- Pay tech is a third-party organization, the defendant is not responsible for the operation of third-party programs.  The plaintiff asked for advice on who our other clients work with, and we advised Pay Tech.   The contract stipulates that One payment system is connected, either pay tech or the Credit Center. The plaintiff chose Pay tech and the contract was concluded on 12/14/2023, and immediately after the Defendant installed the website and the application, more than a year passed after installation, we believe the Plaintiff for personal gain erased Pay tech or deleted it unnecessarily.

         

The plaintiff also demands to recover from M.B.G. LLP in favor of OTR GROUP LLP a legal penalty in the amount of 2,043,514.55 tenge.

Whereas, according to Article 298 of the Civil Procedure Code of the Republic of Kazakhstan, a penalty is levied for non-fulfillment or improper fulfillment of an obligation if there are conditions for holding the debtor accountable for violating the obligation.

In accordance with this article, we consider that the Plaintiff has not provided relevant evidence of a violation of the terms of the contract by the Defendant. Thus, the amount of the penalty according to art. 296 The amount of the penalty is determined in a fixed amount of money or as a percentage of the amount of the unfulfilled or improperly fulfilled obligation is not justified.

Article 297 also stipulates that if the penalty to be paid (fine, fine) is excessively large in comparison with the creditor's losses, the court, at the request of the debtor, has the right to reduce the penalty (fine, fine), taking into account the degree of fulfillment of the obligation by the debtor and the interests of the debtor and the creditor that deserve attention.

         

In accordance with Article 6.7 of the Agreement, the Warranty period for the website under the Agreement is 6 (six) months from the date of signing the act of completed works, that is, until June 2023. During the warranty period, the Defendant undertakes to eliminate all identified deficiencies in the Services independently at his own expense.

          As part of the website's Warranty Service, the Defendant fulfilled his obligations under the Contract and all the plaintiff's wishes were corrected.

          However, to date, the Plaintiff claims that they have new problems on the site that need to be fixed.

I would like to draw the court's attention to the fact that the Website consists of complex codes that constantly require updating and maintenance by specialists who, with each update of the contributing software, need to be edited and updated.

The plaintiff's actions violate Articles 4 and 5 of the CPC RK Tasks and Principles of civil proceedings. Violation of the principles of civil proceedings, depending on its nature and materiality, entails the cancellation of judicial acts.

 

The plaintiff in the complaint indicates that during the preparation and further participation in the process, the Plaintiff incurred expenses for the representative's services in the amount of 500,000 (five hundred thousand) tenge, which is confirmed by the Service Agreement No. TK11-08/2023 dated 12/07/2023, payment order No. 3500 dated 12/11/2023 and power of attorney.

Accordingly, he requests the court to recover from "M.B.G." LLP in favor of "OTR G." LLP the costs of paying for the services of a representative in the amount of 500,000 tenge.

They do not agree with the claims of the Plaintiff's representative to recover the costs of paying for the representative's services in the amount of 500,000 tenge, since In accordance with Article 113 of the CPC of the Republic of Kazakhstan, it is stipulated at the request of the party in whose favor the Decision was made, the court awards, on the other hand, the costs incurred to pay for the assistance of a representative (several representatives) who participated in the process and is not in an employment relationship with this party, in the amount of the expenses actually incurred by the party (payment orders, fiscal receipt). For property claims, the total amount of these expenses should not exceed ten percent of the satisfied portion of the claim. According to non-property requirements, the amount of expenses is collected within reasonable limits, but should not exceed three hundred monthly calculation indices.

Article 6. The Civil Code of the Republic of Kazakhstan "Interpretation of the norms of civil legislation" stipulates: The norms of civil legislation must be interpreted in accordance with the literal meaning of their verbal expression.

During the study of the Service Agreement No. TK11-08/2023 dated 12/07/2023, payment order No. 3500 dated 12/11/2023 and the power of attorney, we found that the specified agreement was concluded with Koval and Partners Law Firm LLP, where the head is Ya.K.D., however, the head of Ya.K.D., in court proceedings She did not participate in the processes. The power of attorney to represent the Plaintiff's interests was issued by M. A., K. A. on the basis of which he signed the Claim through the judicial office.

However, the representative of the Plaintiff M.A., K.A., did not provide the court with what relation he has to Koval and Partners Law Company LLP or the company to him, for example (Employment order at the time of filing the claim) Since the Order of a legal entity is not a strict accounting, we believe it is necessary to request an extract from the pension fund on the accrual of pension accruals to the employee of M.A., K.A. Law Company LLP.

Accordingly, we consider that the representative by proxy of M.A., K. A. cannot claim compensation for his services since, according to art. 113 of the CPC RK, the Plaintiff actually did not bear the expenses of the representative of M.A., K.A.

Thus, Dear Court, the Plaintiff's arguments that the terms of the Contract are not being fulfilled are not valid and are not justified on the basis of the above arguments.

According to Articles 67, paragraphs 1, Article 68 of the CPC RK, evidence is considered reliable if, as a result of verification, it turns out that it corresponds to reality. Each evidence is also subject to assessment taking into account its relevance, admissibility, reliability, and all the evidence collected together is sufficient to resolve a civil case.

Article 72 of the CPC RK. The "Duty of Proof" provides for Each

the party must prove the circumstances to which it refers as the basis of its claims, which is not observed in the statement of claim.

Being a decent and responsible person, the Defendant has never refused to fulfill his Contractual obligations to the Plaintiff. However, the Plaintiff himself did not undertake any constructive dialogue to resolve the current situation. To date, the Defendant has fulfilled all the clauses of the contract, however, the Plaintiff himself has been abusing the clauses of the contract and the norms of legislation for his own unscrupulous selfish purposes.

For review by the court, we provide correspondence via the Whatsapp messenger, where the Plaintiff says that the company is being sold and asks if we can provide technical support to the new owners.

We believe that if the Plaintiff requests technical support for the application for the new owners of her company, we can conclude that everything is working and suits them at the time of completion of warranty service.

We consider the Plaintiff's arguments to be unsubstantiated and unjustified from the point of view of relevance and admissibility as evidence in accordance with art. 68 of the CPC RK, each evidence is subject to assessment taking into account relevance, admissibility, reliability, and all the evidence collected together sufficiency to resolve a civil case – in this civil case, we observe the groundlessness of Claims and Defamation in relation to The defendant.

392 of the Civil Code of the Republic of Kazakhstan, when interpreting the terms of a contract, the court takes into account the literal meaning of the words and expressions contained therein. The literal meaning of a contract clause, in case of ambiguity, is established by comparing it with other terms and the meaning of the contract as a whole.

Also, the selfish thoughts of the Plaintiff will not find their embodiment, since according to Article 147 of the Civil Code of the Republic of Kazakhstan, Transactions are recognized as actions of citizens and legal entities aimed at establishing, changing or terminating civil rights and obligations.

The plaintiff in this civil case does not dispute in his claims the Contract for the development of the website and mobile application No. 588 dated May 24, 2021 and the Additional Agreement to the Contract No. 588 dated 08/19/2022.

 In addition, the signed Act of Completed Works No. 1137 dated 12/21/2022 confirms the proper performance of contractual obligations in accordance with the norms of Articles 271, 272 of the Civil Code of the Republic of Kazakhstan. Obligations arise from the contract and the Obligation must be performed properly in accordance with the terms of the obligation and the requirements of the law, and in the absence of such conditions and requirements - in accordance with business practices or other commonly imposed requirements.

Thus, we consider that the Plaintiff, without recognizing the above-mentioned documents as invalid or without terminating them in court, has no right to demand the recovery of the amount under the contract, since the Contract and the Act of Work performed comply with the requirements of the legislation and have legal force for the parties.

By virtue of art. 219 part 2 of the CPC, the Court does not have the right to change the subject or the basis of the claim on its own initiative and is obliged to resolve the case within the limits of the claims stated by the plaintiff.

In accordance with Article 8 of the Civil Code of the Republic of Kazakhstan, the exercise of civil rights should not violate the rights and legally protected interests of other subjects of law.

         Citizens and legal entities must act in good faith, reasonably and fairly in exercising their rights, observing the requirements contained in the legislation, the moral principles of society, and entrepreneurs, as well as the rules of business ethics.

     This obligation cannot be excluded or limited by the contract. Good faith, reasonableness and fairness of the actions of participants in civil law relations are assumed.

     Actions of citizens and legal entities aimed at harming another person, abuse of the right in other forms, as well as the exercise of the right in contradiction with its purpose are not allowed.  

 

          As part of the consideration of this civil case, the court ordered a judicial examination of computer technology tools and issued a corresponding Ruling on February 14, 2024, where the following questions were posed to the expert:

1. Does the website and mobile application comply with the terms of reference according to Appendix No. 1?

- As a result of a comparative study, the Expert concluded that the Defendant's obligations were not fully fulfilled in accordance with the Terms of Reference in PDF format on 36 pages. Whereas the Court asked the Expert whether the website and mobile application comply with the terms of reference according to Appendix No. 1 and not the Terms of Reference in PDF format on 36 pages. Thus, the expert went beyond the questions raised.

 

2. Does the website and mobile application comply with the terms of reference as of the date of filing the claim?

3. Were any changes made to the website and mobile application during the period from 08.01.2024 to 15.02.2024, if so, under which account and what changes and additions were made?

4. What was the content of the website at the time of filing the claim?

5. When were the last changes made during the period preceding the filing of the claim?

6. Has the defendant performed all the work under the contract?

 

In addition, the Technical Specification was provided to the expert in PDF format on 36 pages and on the basis of which the Expert's conclusions were drawn, with which we, the Defendant's side, were not familiar and have no idea about the current technical specification since the Defendant did not draw up and did not sign the Technical Specification on 36 sheets.

Dear court, the act was signed in 2022. And the expert has been making an assessment on file changes since January 08, 2024. Which is fundamentally incorrect, since during this period any changes on the website and in the mobile application could have been made by the customer himself in 2 years.

We believe that the expert should have checked the file changes from the date of signing the certificates of completed works, and not from January 8, 2024. And where did this date come from? Why January 8th? Strange.

 

The defendant has a Mobile download application published in the Google Play application on December 15, 2022.  Google Play is a serious organization that would never accept and add a NON-working application to its market without verification.

 

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It can also be noted that in addition to changing the files on the server, there is also the admin panel of the site, where you can also easily delete all the content, which the customer did. At the time of delivery, everything was working as expected.  And there is a clause in the contract, if the customer himself makes changes to the code, the contractor is no longer responsible for the correct operation of the site.

Regarding the content of the website, clause 3.6. of the Agreement clearly stipulates: "The materials necessary to fill out and design the website and mobile application are provided by the customer. The period for the provision of services is extended accordingly to the time of delay – thus, we believe that the Plaintiff himself did not provide the specified materials to the Defendant.

Therefore, we consider the examination of file changes from January 8, 2024 to be generally incorrect.  It is necessary to carry out from 2022 from December from the moment of the signed ATS.

And we emphasize once again that Appendix No. 1 is a technical specification signed by the parties and not their TOR, which is not signed by either party.

According to Article 5 of the Law of the Republic of Kazakhstan "On Forensic expert activity", an expert performing his expert activity is obliged to adhere to the principles of comprehensiveness, completeness, objectivity and scientific validity of forensic expert research.

Article 92 of the CPC stipulates that an expert's opinion is not binding on the court when adopting a judicial act.

In connection with the above, we believe that in this case there is a low-quality and biased examination. The main principles of independent experts are objectivity and reliability, which is not respected when making an opinion. These violations affect the interests of the defendant.

Dear Board of Appeal of the Almaty City Court, we believe that the Plaintiff's arguments in the Appeal are not objectively supported by anything, nor are they substantiated and sound.

According to subparagraph 1) of paragraphs 3 of Article 77 of the Constitution of the Republic of Kazakhstan, when applying the law, a judge must be guided by the following principles:: 1) a person is considered innocent of committing a crime until his guilt is recognized by a court verdict that has entered into legal force.;

In accordance with paragraph 1 of the Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan, "on the application in judicial practice of legislation on the protection of honor, dignity and business reputation of individuals and legal entities," the dissemination of information discrediting the honor and dignity of a citizen or organization means publishing them in the press, radio, television, using other mass media. information, presentation in official party and other characteristics, public speeches, statements addressed to various organizations, officials, or a message in another form, including verbally to several persons or at least one person.

Paragraph 13 of the Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan dated December 18, 1992 No. 6 "on the application in judicial practice of legislation on the protection of honor, dignity and business reputation of individuals" stipulates that, along with a claim for the protection of honor and dignity, the court has the right to consider the claim of a citizen or a legal entity for compensation for moral damage, as a result of dissemination by the defendant of information that does not correspond to reality, discredits his honor and dignity, or causes other non-property damage.

According to Part 1 of Article 72 of the CPC, each party must prove the circumstances to which it refers as the grounds for its claims and objections, use remedies, assert, challenge facts, provide evidence and objections to evidence within the time limits set by the judge, which correspond to the fair conduct of the process and are aimed at facilitating the proceedings.

On the basis of Part 1 of Article 68 of the CPC, each evidence is subject to assessment, taking into account its relevance, admissibility, reliability, and all the evidence collected together is sufficient to resolve a civil case.

By virtue of Article 13 of the Constitution of the Republic of Kazakhstan, everyone has the right to defend their violated or disputed rights, freedoms or legally protected interests.

In accordance with art. 408 of the CPC RK, the person participating in the case sends a response to the appeal, the prosecutor's petition to the court of appeal, to other persons participating in the case, accompanied by documents confirming objections to the appeal, the prosecutor's petition.

Based on the above and guided by the requirements of art. 408 of the CPC of the Republic of Kazakhstan,

 

I ask the Court:

 

o To dismiss the Plaintiff's appeal against the decision of the Council of Economic and Social Council of Almaty dated April 26, 2024 in civil case No. 7527-24-00-2/848.

o Decision of the Council of Economic and Social Councils of Almaty dated April 26, 2024 in civil case No. 7527-24-00-2/848 - to leave unchanged;

 

With respect,

Proxy Representative Lawyer:

 

___________/Sarzhanov G.T.

 

"___" __________ 2024 G.

 

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