Judgment For Our Favor
Judgment For Our Favor

News, & Updates,

Judgment For Our Favor: Real Estate (Partial + Appeal)

Dubai Court of First Instance Ruling: Contract Termination with Real Estate Developer and Recovery of AED 1,711,104 with Compensation of AED 500,000.

The United Arab Emirates is one of the fastest-growing countries in the construction and real estate sector, and Dubai is one of the seven Emirates that have experienced significant development in this field. However, considering recent developments in the real estate market, many buyers in Dubai may face various obstacles, including delays by some developers in completing their projects. This has raised concerns among some buyers and prompted them to seek legal protection to terminate the contract, seek compensation for the delays, and recover pre-paid amounts.

Al-Safar & Partners always puts the best interests of their clients at the forefront, striving to uphold their rights by providing them with their unique legal expertise to achieve successful outcomes.

In this brief, we will illustrate the effort exerted and the remarkable results achieved by the lawyers and the team at Al-Safar & Partners in favor of our client through the lawsuit we will discuss.

Legal Background of the Conflict:

The plaintiff entered into a purchase agreement with the defendants for the acquisition of a real estate unit, specifically a hotel apartment, for a price of AED 3,687,648. The plaintiff paid a sum of AED 1,711,104. However, the defendants failed to fulfill their obligations by changing the description of the unit to residential instead of hotel, and also by not completing the unit within the agreed-upon deadline.

Our lawsuit includes the following claims:

  1. Invalidating the termination procedures carried out by the Land and Property Department.
  2. Termination of the purchase agreement due to the developer’s change of the unit’s usage from hotel to residential.
  3. Compelling the defendants to jointly and severally pay the plaintiff an amount of AED 1,711,104, along with legal interest at a rate of 12% from the date of the judicial claim until full payment is made.
  4. Compelling the defendants to jointly and severally pay the plaintiff AED 500,000 as compensation for the material and moral damages suffered as a result of the defendants’ breach of their contractual obligations.
  5. Compelling the defendants to bear the legal expenses and attorney fees.

The case has been discussed in sessions as detailed in the session transcripts. The first defendant has submitted a memorandum opposing the lawsuit and has presented documents, including a copy of the unit’s title deed issued by the Department of Land and Property in Dubai a certificate of initial contract registration with the Department of Land and Property in Dubai in the plaintiff’s name, a notice of completion and possession of the unit, a notice of payment delay from the first defendant to the plaintiff, and a notice from the Land and Property Department to the plaintiff demanding payment of the outstanding amount. The plaintiff has also provided documents from the Land and Property Department confirming the validity of the procedures, a certificate of cancellation of the unit’s registration under the plaintiff’s name, and the agreement’s assignment document bearing the plaintiff’s name. The plaintiff has submitted a memorandum in which they have outlined their requests.

Court’s Opinion: 

The court ruled and before deciding on the matter, it appointed an architectural engineering expert from the court’s list of experts to perform the specified mission mentioned in the ruling. The court’s procedure was to prevent repetition.

The appointed expert carried out the assigned mission and submitted a report in which they reached a conclusion. The second defendant did not appear before the expert and did not provide any documents despite her announcement via email. The expert prepared their report based on the documents provided to them and is still of the opinion stated in their initial report, which concluded that both parties presented evidence of their relationship, a sales and purchase agreement for the units subject to the lawsuit between the plaintiff buyer and the first defendant. The expert could not establish a connection between the second defendant and the project. The expert confirmed that the claimant paid AED 1,711,104, which is equivalent to 44.63% of the total unit price, and did not pay 59.38% of the total unit price, leaving a remaining balance of AED 2,124,050. Therefore, the claimant failed to fulfill their contractual obligations by not paying the fifth installment. The first defendant failed to fulfill their contractual obligations as the contract allowed for the use of the property for hotel apartments, but they did not obtain a license from the Department of Tourism and Commercial Marketing in Dubai for the hotel activity of the building.

The expert believes that the required notification and grace period procedures have been fulfilled. Since the lawsuit was discussed in sessions after the expert submitted their report, the plaintiff submitted a memorandum in which they requested specific demands, and the first defendant submitted a memorandum in which they requested the dismissal of the lawsuit. The court decided to reserve the lawsuit for judgment in another session.

Therefore, the court ruled to terminate the contract subject to the lawsuit, ordering the first defendant to refund the plaintiff AED 1,711,104 and an interest of 5% from the date of the claim until full payment. The court also awarded AED 250,000 as compensation to the plaintiff and obligated the first defendant to bear the expenses and attorney fees.

Court of Appeals Opinion:

The Court decided to reserve the appeal for today’s session, considering that the formal requirements of the appeal have been fulfilled. Regarding the subject of the appeal, within its scope and in accordance with its transferable effect, and based on the appellant’s objection to the invalidated judgment, it is stipulated that as per Decree No. (17) of 2013 concerning the licensing and classification of hotel establishments in the Emirate of Dubai, it is required that a hotel facility be licensed and classified by the Department of Tourism and Commerce Marketing. No hotel facility may be constructed or any existing building converted into a hotel facility without obtaining prior written approval from the Department, fulfilling the prescribed conditions, obtaining the preliminary approval for the establishment of the hotel facility does not exempt from obtaining the license and classification from the Department, fulfilling the remaining operational requirements, and obtaining a certificate of no objection to receive guests.

Furthermore, according to the Court of Cassation, the contract is governed by the law of the contracting parties, and if the contract is valid and free from defects of consent, both parties are obligated to fulfill the obligations stipulated in the contract. According to the Civil Transactions Law, both parties are obliged to fulfill the obligations stipulated in the contract, and they must execute the contract in accordance with its provisions and in a manner consistent with good faith. The execution of the contract is not limited to the obligations stated in it, but also includes all its necessary implications according to the law, custom, nature of the transaction. It is also stipulated that the seller is obliged to deliver the sold property in the condition and specifications agreed upon.

Moreover, the determination of the sufficiency of reasons for terminating or rescinding the binding contract for both parties and identifying the defaulting party in fulfilling their obligations or denying any negligence on their part is a matter within the purview of the court, as it has the authority to understand the facts in the case and evaluate the evidence and documents presented to it, giving weight to what is deemed reliable and excluding what is not. The court has absolute authority to assess the work of experts as elements of proof in the case, taking into consideration what satisfies it and aligns with the established facts in the case when it bases its judgment on valid reasons derived from the documents. The court is not obligated to respond to specific objections raised by the opposing party against the expert’s report, as it relies on the report based on its own valid reasons. The court also has the full authority to understand the facts in the case, evaluate the evidence and documents presented to it, and give weight to what is deemed reliable and exclude what is not, and it has the absolute authority to assess the work of experts as elements of proof in the case.

Furthermore, it is established that the contractor’s performance of its contractual obligations, breach of performance, or unjustifiable delay constitutes a fault that entails liability for compensating the resulting damages. Extracting the fault that gives rise to liability, determining the damages, evaluating the compensation, and considering the relevant circumstances in determining the amount of just compensation are matters of fact that fall within the jurisdiction of the court, as long as the law does not require the adoption of specific criteria for evaluation or supervision by the Court of Cassation, as long as the elements of damage and the legitimacy of the claimant’s entitlement are evident from what is presented in the documents.

Based on the above, the court ruled, in a hearing, to accept the appeal formally. In the subject matter, the appeal was rejected, the appealed judgment was affirmed, and the appellant (defendant) was ordered to bear the expenses and lists there of.

It is evident that this judgment confirms the transparency and integrity of the UAE judiciary, as the first-instance judgment ordered the seller or defendant to pay the original amount and compensation, in addition to interest since the filing of the claim, indicating that damages have been suffered by the plaintiff as a result of the breach of the agreements concluded between the parties. The Court of Appeals’ judgment supported the first-instance judgment, and these judgments also demonstrate our competence 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 reception@alsafarpartners.com  –     www.alsafarpartners.com

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