Termination of Contract with a Real Estate Developer and Refund of AED 1,016,250 with Compensation of AED 300,000: Dubai Court Ruling
We all witness global changes occurring in the real estate market, and the United Arab Emirates (UAE) is known as one of the fastest-growing countries in construction and real estate. Dubai, being one of the seven emirates at the forefront of this sector’s development, has recently faced certain challenges, including delays by some developers in completing their projects. This has raised concerns among buyers, leading them to seek legal protection to terminate contracts, seek compensation for delays, and request refunds of the amounts paid in advance.
Al Safar & Partners Law Firm always strives to protect the rights of its clients. Through its unique legal expertise, the firm aims to achieve successful outcomes for its clients. In this brief, we will highlight the efforts and remarkable results achieved for our client (the plaintiff – M.W.S) in this particular case.
Background of the Legal Dispute:
The plaintiff (our client- M.W.S) purchased a hotel unit from the defendant, with an area of 106 square meters, along with one parking space, as per Clause 3 of the sales agreement. The total price agreed upon was AED 1,200,000 (One Million and Two Hundred Thousand Dirhams), of which AED 1,016,250 (One Million, Sixteen Thousand, Two Hundred and Fifty Dirhams) was paid. The expected completion date was set for the second quarter of 2018, and the sales agreement was registered with the Dubai Land Department.
However, the seller (the defendant – A.Z) breached their obligations under the sales agreements and refused to complete and deliver the units on the agreed-upon date, without any legal justification. Additionally, the seller failed to provide any notice indicating a delay in project completion, disregarded the buyer’s (our client – M.W.S) demands to comply with the agreed terms, and canceled certain services included in the sale, such as concierge services, high-speed internet, television connectivity, weekly cleaning, and laundry services, which significantly reduced the value of the sold unit. Moreover, the interior construction quality was poor, with evident leaks and structural cracks that differed greatly from the images presented in the brochure, which are still available on the seller’s website. These issues prompted (our client – M.W.S) to seek legal representation to uphold their rights and claim their entitled compensation from the seller.
Court Judgment of First Instance:
During the initial session, the court appointed a committee of experts specializing in hotel apartment litigation, and the head of the expert affairs committee received the court’s decision, as documented in its statement. Pursuant to the court’s ruling, the expert committee initiated its tasks and submitted a report on its findings during the subsequent session.
The court has deduced from the presented facts in the lawsuit, relying on its circumstances and details, subject to adaptation to the contract and the application of the law by the Court of Cassation (Court of Cassation’s ruling). It is established that the buyer (our client – M.W.S), when requesting termination, must prove the seller’s fault in failing to fulfill his obligation. The court’s task is to extract evidence or denial of contractual error from both parties to the contract, based on what it perceives from the contract’s circumstances and details. The assessment of justifications for terminating binding contracts for both parties is an objective matter determined by the court, supported by solid evidence. According to the Civil Transactions Law, it is required to implement the contract according to its provisions and in a manner consistent with good faith. The contractual obligation is not limited to what is stated in the contract but also includes all its implications according to the law, custom, and the nature of the transaction, resulting in the implementation of the obligations established by the contract in accordance with the nature of the transaction and the requirements of its implementation in good faith. This is what the court deduces from its authority to collect and understand the reality of the case, and it has a solid basis in the documents. It is also established that the court has complete authority in collecting and understanding the reality of the case, examining the evidence, and submitting documents.
The court also bases its opinion on the decree authorizing establishments and classifying hotel establishments in the Emirate of Dubai, as well as the Civil Transactions Law.
The sale and purchase agreement regarding the hotel unit is terminated, and the defendant (the seller – A.Z) is obligated to pay the plaintiff an amount of AED 1,016,250 (one million, sixteen thousand, two hundred and fifty dirhams) plus interest at a rate of 5% from the date of the claim until full payment. The defendant is also obliged to pay the plaintiff (our client – M.W.S) an amount of AED 106,451 (one hundred and six thousand, four hundred and fifty-one dirhams) as compensation, along with fees and expenses.
We believe that this judgment demonstrates the transparency and integrity of the UAE judiciary, as it imposes the original amount and compensation on the seller, in addition to interest from the date of the claim, indicating that damages have been incurred by the plaintiff (our client- M.W.S) as a result of the breach of the agreements between the parties. This judgment also reflects Al Safar & Partners’ efficiency and legal expertise in assisting the affected parties and restoring their rights, in line with our mission.
For further assistance please contact Al Safar & Partners on +971.4.4221944 email email@example.com – www.alsafarpartners.com