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Lawyers representing an investor in a Damac Properties commercial project said their client has won the first of what may be many compensation claims against the company.
A claimant that had bought seven units in the mixed use Executive Bay project in Business Bay has won money from the Dubai developer, according to law firm The Legal Group.
The case is currently in the 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 was deemed to be behind the scheduled April 2012 completion date.
Normally, claims against developers occur at the time of handover, Fareya Azfar - a partner at The Legal Group told CW, adding that the date for completion needed third-party verification.
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“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 is an office and commercial tower project in Business Bay launched in April 2007 to meet the expected demand for facilities to suit high-achieving individuals who flocked to Dubai as the economy quickly developed over the last decade.
The claimant, still unnamed, 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 took the unit with the lowest value to the Court of Appeal, according to Azfar, where they were victorious in proving their right to their investment.
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 and is there for all to see.
Tower A is up to level 15, with columns and core walls complete, according to the company. Tower B is currently at level 14, with blockwork up to level 10 in progress and plaster work up to level 9.
“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 on Thursday. He acknowledged that there was a single unit case against Damac, but that the case was in the first of many stages in the Court of Appeal.
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