Claim No. CFI 034/2012
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
In the name of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Ruler of Dubai
IN THE COURT OF FIRST INSTANCE
BEFORE JUSTICE TAN SRI SITI NORMA YAAKOB
(1) MR AMIT DATTANI
(2) MR NITIN JOBANPUTRA
(3) MR MASOOD UR RAHMAN
(4) MR SHEMHON IFTAKHAR
DAMAC PARK TOWERS COMPANY LIMITED
(Previously trading as DAMAC REAL ESTATE ASSET MANAGEMENT COMPANY LIMITED)
Hearing: 10 April 2013
Counsel: Mr Kaashif Basit (KBH Kaanuun) for the Claimants
Mr Drew Baiter (Damac Properties Co LLC) for the Defendant
Judgment: 20 October 2013
JUDGMENT OF JUSTICE TAN SRI SITI NORMA YAAKOB
1. Proceedings in two separate claims namely CFI 034/2012 (the first claim) and CFI 046/2012 (the second claim) have been consolidated by an order of court issued on 6 January 2013. Although the joint Claimants in both claims are not the same, their causes of action are and likewise the Defendant in both claims is the same. For ease of reference I shall refer to the joint Claimants in the first claim as the First and Second Claimants and the joint Claimants in the second claim as the Third and Fourth Claimants.
2. Under an agreement dated 1 November 2004 (the apartment agreement), the First and Second Claimants agreed to purchase a residential apartment No. B-1406 in Park Towers Dubai International Financial Centre Dubai (the apartment) from the Defendant, a real estate developer at the agreed price of AED 1,996,000.
3. Likewise the Third and Fourth Claimants also executed a similar agreement with the Defendant dated 16 January 2006 (the retail unit agreement) wherein the Third and Fourth Claimants agreed to purchase a retail unit, P4-6 (the retail unit) at the same location as the apartment, for a consideration of AED 2,103,000.
4. The terms of both agreements are almost identical and all four Claimants had to settle the purchase price of the properties by a deposit and eight instalments. It is not disputed that all four Claimants paid their respective instalments amounting to 90% of the purchase price under both agreements but not the eight instalment being the final 10% of the purchase price that became due and payable only upon completion of the apartment and retail unit. All the four Claimants maintain that the apartment and retail unit were never completed within the dates due for completion.
5. For that reason the First and Second Claimants maintain that they had validly terminated the apartment agreement on 5 October 2011 as the Defendant had breached its obligation to deliver the apartment on the completed date. The Defendant denies there has been such a breach and in turn maintains that it was the First and Second Claimants’ breaches in failing to keep up with the final instalment payment that forced the Defendant to validly terminate the apartment agreement six months later on 16 April 2012 after the First and Second Claimants’ termination.
6. It is also the Third and Fourth Claimants’ case that they had validly terminated the retail unit agreement on 6 October 2011 whilst the Defendant maintained that it had also taken the same action to validly terminate the retail unit agreement on 15 April 2012 on the same grounds as that maintained by both the First and Second Claimants and the Defendant when they respectively took similar actions to terminate the apartment agreement.
7. The First and Second Claimants issued the first claim on 19 September 2012 setting out the following damages against the Defendant for breaching the apartment agreement:
(i) Return of all sums paid by them under the apartment agreement together with a penalty interest of AED 184,064 amounting to AED 1,990,464, under clause 13.1 of the agreement.
(ii) Interest for 60 days under Article 17 (2) of the DIFC Law No. 7 of 2005, Law of Damages and Remedies to run from the notice of termination.
(iii) An uplift of actual damages under Article 40 (2) of the DIFC Law No. 7 of 2005, resulting from the Defendant’s offensive conduct.
8. Likewise the Third and Fourth Claimants issued the second claim against the Defendant on 27 December 2012 for similar remedies for breach of the retail unit agreement. However the amounts claimed under the different heads of claim differ from that claimed by the First and Second Claimants in the apartment agreement.
9. Before me, all four Claimants in their consolidated application, CFI 034/2012/04 dated 21 March 2013 apply for immediate judgment against the Defendant under RDC 24
10. The first issue raised before me is whether the Defendant had failed to deliver vacant possession of the apartment to the First and Second Claimants by the anticipated completion date under clause 13.1 of the apartment.
11. The relevant parts of clause 13.1 are worded as follows:
“If the Purchaser has fulfilled all his obligations in terms of this Agreement and the Seller is unable to give possession and occupation of the Unit by the Anticipated Completion Date, without prejudice to the provisions of Clause 14, the Seller shall pay a penalty at the Penalty Rate to the Purchaser on all the payments made by the Purchaser towards the Purchase Price for the period from the Anticipated Completion Date until the date when possession and occupation is offered to the Purchaser.”
12. To take advantage of clause 13.1, the First and Second Claimants must first show that they had made prompt payments of all seven instalments of the purchase price on the respective due dates as specified in Schedule 1 of the apartment agreement.
13. However there is evidence from the First Witness Statement of Cherise Pereira dated 30 December 2012, that the First and Second Claimants were less than prompt in meeting their obligation to pay. As a result the Defendant issued them with two notices of default dated 9 April 2009 and 17 September 2009 for failure to comply with the payment schedule.
14. The next issue raised is when was the apartment completed, Again from the First Witness Statement of Cherise Pereira it was completed on 28 June 2011, when the Defendant received the Certificate of Completion for Park Towers.
15. The fact of completion was made known to the First Claimant (who was also claiming for the Second Claimant, his uncle) by the Defendant’s letter dated 4 August 2011. However at that point in time, the First and Second Claimants had yet to make the eighth instalment payment, this being the final 10% of the purchase price of the apartment. But the First Claimant refused to make the final settlement as he claimed that the apartment was not completed.
16. What followed next were attempts to settle between the parties with the First and Second Claimants offering a Part 32 offer. But nothing resulted from this offer.
17. Likewise there is evidence to show that the Third and Fourth Claimants had also defaulted in meeting the instalment payments of the retail unit on the due dates in accordance with Schedule 1. Two notices of default dated 22 April 2009 and 1 April 2012 were issued against the Third and Fourth Claimants but they failed to remedy the breach.
18. Like the First and Second Claimants, the Third and Fourth Claimants also failed to pay the final 10% of the purchase price when they were informed by the Defendant’s letter dated 21 August 2011 that the retail unit was completed for delivery and occupation.
19. As the Defendant had also issued two notices dated 16 April 2012 and 15 April 2012 to terminate both agreements under clause 13.3, the validity of those two notices also became an issue.
20. Under clause 13.3, the Defendant is entitled to terminate the agreements following the Claimants’ breaches and to retain 40% of the 90% purchase price paid by the Claimants as pre-estimated liquidated damages.
21. As the Claimants question the validity of the Defendant’s notices of termination and the Defendant raises issue on the validity of the Claimants’ notices of termination, only oral evidence can determine which of the notices of termination issued by the parties can be sustained in law.
22. Under those circumstances and in the light of the unsatisfactory evidence that the Claimants had failed to fulfill their obligations under the two agreements, I consider that this is not a proper case for which RDC 24
is applicable and on that ground, the joint application, CFI 034/2012/04 is dismissed with costs to be assessed at the trial and to be paid by the Claimants to the Defendant.
Maha Al Mehairi
Date of issue: 20 October 2013