Damac buyer wins payout in court drama

Monday, 29 August 2011 7:49 AM

Lawyers representing an investor in a Damac Properties commercial project said their client has won the first of what is hoped to be many successful compensation claims against the company in a landmark case in property litigation.

The Dubai developer in July returned money plus costs to an investor that had bought seven units in the mixed use Executive Bay project in Business Bay, according to law firm The Legal Group, which secured the payout in Dubai’s Court of Appeal.

The ruling broke the mould in property cases as a breach of an obligation due to failed delivery was ruled to have occurred ten months before the scheduled handover.

The planned 19-storey Executive Bay tower is behind its scheduled April 2012 completion date.

Normally, claims against developers occur at the time of handover, said Fareya Azfar - a partner at the Legal group.

“We brought in an expert from the land department in the courtroom, who said that the completion date was April 2012,” Azfar said. “We argued that part of the obligation for the developer was to oversee the construction of the project. We therefore argued that there is an anticipated breach of contract, and that if investors are not going to get their unit in April, they should be able to get their money now.”

Executive Bay was a planned office and commercial tower in Business Bay launched in April 2007. The unnamed claimant had put down a deposit on the seven units on 26 March 2008, paying a total of AED 26.653m, according to statistics from The Legal Group.

The person filed a case in the property division in the Court of First Instance on 7 September 2009, where the Land Department expert confirmed the date of completion.

But the case was thrown out. The investor then took the unit with the lowest value to the Court of Appeal, according to Azfar, where the court found in their favour.

The law firm argued on three fronts. “A breach of an obligation can occur even though the final date of its performance has still not expired,” said Azfar. “Also, the developer has a continued obligation to properly construct the project and not to delay it.

“As the developer failed to provide any valid reasons or reasonable causes of delay in construction, the judge reversed the decision of the first court and held that the developer is in breach of its obligation to construct in a timely manner.”

Downtown Dubai-based TLG has approximately seven claimants who have purchased 59 units between them in various Damac Properties projects, investing around AED 132.98m. Damac Properties, which has a real estate portfolio spanning from Dubai to Lebanon, has eight projects in Business Bay.

Azfar added that the firm has been working with the claimants since early 2010. The case had taken a long time to reach the court partly due to the time needed to secure a testimony from a member of the Land Department.

But Damac Properties has since countered that the building progress on the tower is on schedule.

“We are on schedule for a timely delivery as per the development programme,” Niall McLoughlin, senior vice president of corporate communications for the company, wrote in an emailed statement, adding that the case was in the first of many stages in the court of appeal.

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Posted by: Lakeside Investors Wednesday, 8 February 2012 3:43 PM[UAE] - Pakistan

Dear Lakeside Investors,

I have initiated the discussion officially with Damac Management Team - i can't disclose the name on this platform, however its one of the Highest Office Personnel.

We are 30+ Investors from Damac and our demand was as follow. keeping in view that Damac Delay in Construction Milestone has caused the 40% loss to investors.

1. 40% Discount on Original Price
2. Revision of Contract as per the current Market Value
3. Transfer of Amount to Ready Project

Above all options has been discussed but NONE of them are acceptable to Damac Management.

Infact they have used the word that "you can walk away!" which means that we have lost our money!!! This was very blunt and open statement that i have ever heard in my life from Developers like Damac.

However, we are left with option to go the court and seek legal action against Damac - kindly advise if any of Lakeside Investor has WON case against Damac.

Thanks...

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Posted by: decieved investor by Damac Wednesday, 8 February 2012 8:42 AM[UAE] - uk

Lakeside project is another delayed one and Damac has breached all angels of the law.

Damac must take this into consideration and re-fund inverstors 40% of the price of the untis to save itself a hefty court fines.

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Posted by: Red Snappa Sunday, 4 September 2011 8:52 PM[UAE] - Ireland

Dear Fareya Azfar,

I thank you for a breath of fresh air in terms of legal clarity and transparency, the Dubai property market needs people like you. May the case be with you!

The only way to bring people who are buying-to-live back in any numbers, as in it's their whole life the money they part with, the roof over their children's heads etc, is for developers across the board to who have failed to deliver, to be legally bound over to refund undoubtedly materially breached buyers.

Your client is a UAE national and he is not going to take his money abroad, but there again he may be unwilling to invest in his own domestic market again, until justice is seen to be done.

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Posted by: Bernard M.A. Doff Wednesday, 31 August 2011 1:41 PM[UAE] - USA

Interesting that it is DAMAC once again that is in the news. Is this the only developer where cases are being won?

An interesting point is that the claimant has seven properties in the same development and he has to bring a separate court case for each one. It must cost an absolute fortune.

Posted by: Al Thursday, 1 September 2011 9:34 AM[UAE] - Algeria

@Berny, no DAMAC is not the only bad developer but it seems the only one that can be mentioned. Everytime I mentionned another name of the big 3, it got censured. Damac is not the worst by far. JBR, Executive towers, Palm Jumeirah are facing different issues due contract breaches with other developers.

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Posted by: Fed up investor Tuesday, 30 August 2011 10:04 AM[UAE] - Dubai

"A breach of an obligation can occur even though the final date of its performance has still not expired,?.....I can not believe you have to go to court to prove this fact. If you have a contract with a specified completion date and that completion date has passed without delivery then off course there is a breach of obligation and breach of contract, what is the point of a contract if you have to prove breach of obligation otherwise, no wonder the rest of us with delayed properties will struggle to go to court for properties which are years delayed. I for one am sick and tired of this farce with properties 2 years behind their completion date, RERA need to sort this out and stop letting developers breach contracts. It is about time RERA started enforcing penalties on developers for breach of contract and late delivery otherwise contracts are not worth the paper they are written on, there is no trust.

Posted by: Bernard M.A. Doff Wednesday, 31 August 2011 1:42 PM[UAE] - UAE

Amazing how people are unable to read and comprehend a short article. April 2012 is the contracted delivery date. You may notice that it is a future date.

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