The real estate sector in the United Arab Emirates, particularly in Dubai, is constantly evolving, attracting numerous investors. However, some buyers in Dubai may encounter obstacles that raise concerns and compel them to seek legal recourse to terminate contracts, claim compensation, and retrieve the amounts paid.
Al Safar & Partners Law Firm, renowned for its extensive and profound expertise in this sector, based on that, the client reached out to us to assist him in reclaiming his rights. The detailed Judgment below outlines the outcome.
Legal Background of the Dispute:
Pursuant to a sales and purchase agreement, our client – B.F (the plaintiff) entered into a contract with the defendant (the opposing party) to purchase the subject property unit for a price of AED 1,350,000 (One Million Three Hundred Fifty Thousand United Arab Emirates Dirhams). The agreement included the agreed-upon completion and delivery date of the sold unit, as well as other details outlined in the sales agreement. Our client – B.F (the plaintiff) fulfilled their contractual obligations by making timely payments of the installments as scheduled. Subsequently, an amendment was made to the purchase agreement, modifying the completion date. However, the defendant (the opposing party) failed to fulfill the revised project completion date and deliver the property unit to our client – B.F (the plaintiff) at the agreed-upon time, causing damage to our client's rights.
Furthermore, the seller (the opposing party) has breached their obligations as stated in the purchase agreements. They have failed to provide any notice indicating their intention to delay the project and have disregarded and refused to complete and deliver the units within the agreed-upon timeframe, without any legal justification or reason.
Consequently, our client sought legal representation from our firm to protect their rights and pursue the remedies they are entitled to against the seller (the opposing party).
Our Demands:
To annul the sales and purchase agreement and the subsequent amendment and compel the defendant (the opposing party) to pay our client – B.F (the plaintiff) the sum of AED 1,227,020 (One Million Two Hundred Twenty-Seven Thousand and Twenty United Arab Emirates Dirhams) and an additional amount of AED 200,000 (Two Hundred Thousand United Arab Emirates Dirhams) as compensatory damages for the material and moral harm suffered by our client – B.F (the plaintiff) due to the defendant's (the opposing party's) breach of contractual obligations and legal interest on the full amount claimed at a rate of 9% from the date of filing the legal claim until full payment.
First Instance Court Judgment:
The Court, in its presence, first ruled to annul the sales and purchase agreement, and its subsequent amendment concluded between the parties to the dispute regarding the subject property. Secondly, the defendant was ordered to pay the plaintiffs – B.F (our client) a sum of AED 1,027,000 (one million and twenty-seven thousand dirhams), along with legal interest at a rate of 5% on the amount awarded from the date of filing the legal claim until full payment is made. The defendant was also obligated to pay the plaintiffs (our client) AED 100,000 as compensation for the damages incurred by them, along with interest at a rate of 5% on the amount awarded from the date of the final Judgment's execution until full payment is made. The defendant was further ordered to bear the expenses of the lawsuit, including the attorney fees.
Appeal Judgment:
The defendant (appellant) filed an Appeal against this Judgment, requesting its annulment through a memorandum that concluded by seeking the Appellate Court's decision to accept the Appeal both in form and substance. The appellant requested the cancellation of the Appealed Judgment and a fresh ruling rejecting the lawsuit on the grounds that it was filed prematurely, according to the contract agreement, invoking the doctrine of supervening impossibility of performance as stipulated in Clause 12 of the agreement and Ministerial Resolution No. (5) of 2021 regarding the financial crisis. The appellant also sought the application of Article 249 of the Civil Transactions Law concerning the discharge of an overly burdensome obligation to the extent borne by the debtor. Additionally, the appellant requested an extension of at least two years to deliver the subject property of the dispute. The appellant further requested the dismissal of the counterclaim against them (our client), the reimbursement of expenses, and attorney fees for both levels of litigation.
The appellant, through her attorney, submitted a memorandum stating that the Appealed Judgment erred in invalidating the contractual agreement despite the premature filing of the lawsuit, which sought an extension of the delivery period according to the contract addendum. The appellant argued that the prevailing circumstances of the COVID-19 pandemic, along with its impact on the construction sector, constituted supervening impossibility and force majeure, without causing any damage to the appellant's counterparty (our client) that would warrant the awarded compensation.
Therefore, our client (the counter-appellants) submitted a memorandum requesting a subsidiary Appeal to annul the Appealed Judgment insofar as it compelled the counter-appellant (our client) to pay a subsidiary amount of AED 100,000 as compensation for the damages incurred, along with a 5% legal interest on the amount awarded from the date of the final Judgment's execution until full payment is made. Additionally, our client requested the Court to issue a fresh ruling obligating the counter-appellant (the appellant) to pay our client a subsidiary amount of AED 200,000 as compensatory damages for the material and moral harm suffered as a result of the appellant's breach of contractual obligations. Our client also sought to hold the counter-appellant (the appellant) liable for the legal interest on the entire claimed amount at a rate of 9% from the date of filing the legal claim until full payment is made. Furthermore, our client requested the counter-appellant to bear the judicial expenses of all levels of litigation, arguing that the Appealed Judgment did not fully grant their compensation request despite the material and moral damages suffered and the financial expenses incurred.
Appeal Court Opinion:
The Court ruled to appoint an Expert to carry out the task specified in the Judgment. After the Expert commenced the assigned mission and submitted his report, it concluded that the counter-appellant – B.F (our client) had fulfilled their contractual obligations and made all required payments according to the contract and within the specified deadlines, without any delays. On the other hand, it found that the appellant (the counter-party) had failed to fulfill its contractual responsibilities, specifically in completing the hotel unit subject to the lawsuit within the designated date as per the contract. The delay in completion persisted until the date of writing this report. Consequently, the counter-appellant – B.F (our client) had the right to terminate the sales and purchase agreement and the amendment agreement, and to claim a full refund of the amounts they had paid, totaling AED 1,027,000, upon the contract's cancellation. The Court would determine the compensation amount.
Therefore, the Court ruled to accept both the original and subsidiary Appeals in form, and in substance, rejected them, affirming the Appealed Judgment. Each appellant was ordered to bear the costs of their respective Appeals, and the Court ordered a set-off of attorney fees. Additionally, it ordered the seizure of the security deposit in both Appeals.
This Appeal Court Judgment highlights the commitment of the UAE Judiciary to uphold contractual obligations and protect the rights of buyers in the real estate sector. It also emphasizes the importance of seeking legal assistance from experienced law firms such as Al Safar & Partners to navigate complex legal disputes and reclaim rightful compensation.
For further assistance please contact Al Safar & Partners on +971.4.4221944 email reception@alsafarpartners.com - www.alsafarpartners.com