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Mon 27 Jun 2011 08:25 AM

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Court upholds AED1.7m refund in Damac real estate row

Dubai developer must refund Irish couple for apartment delayed for more than three years

Court upholds AED1.7m refund in Damac real estate row
Damac may appeal the verdict, the companys legal representative said

A Dubai court has upheld a decision awarding an Irish couple
an AED1.7m ($463,000) refund from developer Damac Properties on an apartment
delayed for more than three years, the claimants’ lawyer said on Sunday.

DIFC Court dismissed an appeal by Damac Park Properties, a
unit of the Dubai developer, to overturn an April 14 judgement in favour of
Noel and Lorna Gaffney.

The developer was also ordered to pay the Gaffney’s legal
costs of AED200,000 within 14 days of the judgment.

The ruling may spur a rash of similar legal cases against
the developer, the claimants’ lawyer Kaashif Basit said.

"I am absolutely delighted for the Gaffneys with this
result. I very much hope that for a change Damac will now be sensible and sit
down to reach an amicable settlement in the several other similar cases that we
have in the pipeline,” Basit, a partner at law firm KBH Kannuun, said in a
statement.

The couple has sought a refund on an apartment purchased in
Park Towers, located in the Dubai International Financial Centre (DIFC) free
zone.

The DIFC is governed by a different set of regulations to
the rest of the emirate.

The Gaffney’s purchased their apartment in December 2004 on
the understanding the unit would be delivered in early 2008, Basit said.

The claimants paid around 90 percent of the AED1.9m purchase
price, but delivery of the unit was delayed and the tower is only now nearing
completion.

The pair notified Damac Park Towers they were terminating
the contract in October 2010, citing breach of contract.

The decision offered hope to real estate investors in
similar situations, said Basit, but he warned court rulings depended strongly
on the contract in place.

“Each case depends on the contract and the Gaffneys had a
particular contract and terms that allowed them the recourse that they sought,”
he said.

“It allowed them to terminate when the developer had not
performed its obligations, there will be other contracts where that is not the
case. But the major implication is that if you have the merits on your contract
then there is recourse available.”

Damac’s legal representative said the firm was
considering whether to appeal the ruling.

Arabian Business: why we're going behind a paywall

SAM 9 years ago

I can not understand on what basis is DAMAC defending its position?

investor1 9 years ago

What if there is no contract. My developer never gave me a contract and took the payment. My developer cashed 18% of the cheques I gave before I stopped payment.

Red Snappa 9 years ago

Thus if you have a decent contract in the first place, presumably they used a lawyer unlike the the majority who just hurled themselves into the purchase process, then the floodgates of compensation for late and non-existent properties will open.

However, the building in question did have the advantage of residing under Dubai International Financial Centre law, perhaps the ordinary Dubai courts would come to a different conclusion. However, the legal precedent has been set which hopefully will help at least some of the many hundreds who have written in to these comment sections complaining of parting with a lot of money with absolutelt no end in site as far as their property goes.

It is about time the law came down on the side of the individual property buyer, twice in fact in this case!

Telcoguy 9 years ago

@RS, yes this is positive, and not only for home buyers, but for anyone concerned about doing business with any UAE-based entity. Again your point about DIFC is quite valid. And so are your remarks about the use of a lawyer when preparing a contract.
@investor1, see RS comment about "the majority who just hurled themselves into the purchase process". Money should never change hands without a legally enforceable contract. I got tired of saying it in 2005/6. It is essentially too late for you now, i know it is not a helpful answer.
@SAM on the grounds that nobody wants to give away money. It is very simple, I would do the same, not only for this specific contract, but because of the precedent.

But this one of the best news for Dubai in the long term at least. Lets wait for the full details.

Serge 9 years ago

Red Snappa is right. It is necessary that the realisation of the need for equal and fair contracts for all parties, by the government is absolutely imperative. Hiding behind the small print is not going to serve the UAE well in both the short term and the long term.
The only way to do it is to impose terms of conduct that apply to all, which send out a strong and positive message to the market.
Going back to the courts all the time will only irritate the market to the point that it will continue bleeding.
I think that by now any rational politician would have realised that there is nowhere to hide any more.

Alastair 9 years ago

They defend their position on the premise that they have financial muscle to do so. Most people will give up, lose their jobs and have to leave the Emirates and have little ability financially, to purse their case.

Ken 9 years ago

Telco guy, Do you know anything about the project Babel A & B by Dubai Properties at Culture Village. Did they ever refund the customers as it appears the project is on hold?

MK 9 years ago

They are extremely smart, if I look at my contract (Lotus Tower by Damac) it says project will be completed within 40 months from the date the plot is handed over by the Master Developer. Now this was back in 2007 and the understanding given was that in 2011 the project would be ready for delivery.
It's already been 48 months and there is no site of the tower, even the foundation has not been laid.
Everytime I chase Damac and ask for a deadline or refund for property the same story "it's just starting" is given. I don't understand why a project like this is not being cancelled by the Land Department.

SAM 9 years ago

It seems that this is how business is done over here and it is highly unlikely that it will change in the near future. Something that potential expat investors should take notice of.

PParker 9 years ago

This is great news for property owners where the developers have breached the contract.. Purchased 2004 and handover 2011 - Taken more than 6 years to build. I believe thats longer than constructing Burj Khalifa....

This is what truth - justice is all about win case where a party has breached the contract.. I congratulate the Irish couple and the law firm.. DIFC are setting a good example of justice