Claim No. CFI 020/2017
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 H.E. JUSTICE SHAMLAN AL SAWALEHI
MOHD AMMAR AL HASSAN
Hearing: 8 May 2018
Counsel: Mohammed Ahmad (Baitulhikma Law Firm) for the Claimant
Maria Rubert as Lead Counsel and Amanda Lewis assisting (United Advocates) for the Defendant
Judgment: 29 May 2018
JUDGMENT OF H.E JUSTICE SHAMLAN AL SAWALEHI
UPON hearing Counsel for the Claimant and Counsel for the Defendant at a Hearing on 8 May 2018
AND UPON reading the submissions and evidence filed and recorded on the Court file
IT IS HEREBY ORDERED THAT:
1.The Claimant’s Claim is dismissed.
2. The Defendant’s Counterclaim is dismissed.
3. The Claimant shall pay the Defendant’s costs of the Claim, to be assessed by the Registrar if not agreed.
4. The Defendant shall pay the Claimant’s costs of the Counterclaim, to be assessed by the Registrar if not agreed.
Ayesha Bin Kalban
Date of Issue: 30 May 2018
Summary of Judgment
The Claimant is an offshore company established in the Jebel Ali Freezone and the Defendant is a Syrian national residing in Dubai. The Defendant purchased a Unit in the DIFC from Damac Park Towers Company Limited. The current dispute arises out of a Memorandum of Understanding allegedly entered into between the parties in 2012 (the “MOU”) by which the Defendant intended to sell the Unit to the Claimant according to a payment schedule. The Claimant argued that it had entered the MOU with the Defendant, but that even if that MOU is not legally binding, there was a meeting of the minds and clear intention that the Defendant would sell the Unit to the Claimant. The Claimant alleges it made numerous payments via a real estate agent to Damac, on the Defendant’s behalf but on the basis that they would ultimately amount to the purchase price of the Unit and result in a transfer of title from the Defendant to the Claimant. In light of the Defendant’s failure to transfer title, the Claimant seeks for specific performance to be ordered or alternatively, that the payments are refunded.
The Defendant alleged that the Claimant had only proven that their agent (rather than itself) had been making payments to Damac and the Defendant argues that these payments were, in fact, made by the agent on the Defendant’s behalf. Damac issued the receipts for each payment it received from the agent, which were in the name the Defendant as the payer. The Defendant denied that it entered the MOU and submitted that the document had been forged, forwarding a second document (“MOU 2”) as the true agreement entered into between the parties and alleging that the Claimant’s failure to act upon MOU 2 entitled the Defendant to a penalty payment which it Counterclaimed for.
The Court was not satisfied that the Claimant had proven it was responsible for the payments made to Damac as there was no supporting evidence and it was determined that some of the Claimant’s own conduct, such as making payments which were not in line with those set out in the MOU (upon which it relied) did not support its submission that the MOU is legally binding and acted upon. The validity of both MOU’s was called into question and the Court was not convinced that either was valid and binding as there was lack of persuasive evidence. Accordingly, the Court could not order specific performance or reimbursement of the sums allegedly paid by the Claimant and the Claim was dismissed. The Counterclaim was also dismissed for the same reasons. The Claimant was ordered to pay the Defendant’s costs of the Claim and the Defendant ordered to pay the Claimant’s costs of the Counterclaim.
This summary is not part of the Judgment and should not be cited as such
1.VTJ Limited is an offshore company established pursuant to the regulations of the Jebel Ali Freezone (the “Claimant”).
2. The Defendant is Mohd Ammar Al Hassan (the “Defendant”), a Syrian national residing in Dubai.
Background and Procedural History
3. The Defendant purchased Unit DFR/P4/30 in the Parks Tower development in the DIFC (the “Unit”) from Damac Park Towers Company Limited (“Damac”) by way of an Agreement to Sell dated 29 March 2012. The current dispute arises out of a Memorandum of Understanding allegedly entered into between the parties on 19 April 2012 (the “MOU”) by which the Defendant intended to sell the Unit to the Claimant for a total of AED 1,867,750 (the “Purchase Price”), made up of the following payments:
(i) AED 373,500: deposit payable by the Claimant to the Defendant upon execution of the MOU;
(ii) AED 186,750: second instalment of 10% to be paid by 30 May 2012;
(iii) AED 373,500: third instalment of 20% to be paid by 15 July 2012;
(iv) AED 467,000: fourth instalment of 25% to be paid by 30 August 2012; and
(iv) AED 467,000: fifth instalment of 25% to be paid by 30 October 2012.
4. The terms of the MOU provided that the Defendant would transfer title of the Unit upon full payment of the Purchase Price being made and prohibited the Defendant from making any increases in the Purchase Price of the Unit and from selling the Unit to any third party following payment of the deposit being made.
5. It is alleged by the Claimant that the parties verbally agreed for the Claimant to assume payments of the Unit on behalf of the Defendant to the Developer and for the transfer of title to occur once all relevant instalments have been made.
6. The Claimant alleges that the following payments were made by the Claimant to Damac, on behalf of the Defendant:
(i) AED 272,000 by cheque 000006 on 20 May 2012;
(ii) AED 2,000 by cash deposit on 26 July 2012;
(iii) AED 141,000 by cash deposit on 26 July 2012;
(iv) AED 282,000 by cash deposit on 2 October 2012;
(v) AED 300,000 by cash deposit on 21 November 2012;
(vi) AED 52,500 by cash deposit on 3 February 2013;
(vii) AED 337,500 by cash deposit on 2 February 2013.
7. Upon completion of the above payments, the Claimant alleges it paid a further “community fee” on behalf of the Defendant in the sum of AED 36,142 to Luxury Management LLC on 25 March 2012, via a cheque drawn on “Taylor Wessing (Middle East) LLP (Dubai Br) Client Account” (“Taylor Wessing”, the Claimant’s former Counsel).
8. The Claimant alleges it made an additional payment on 4 April 2013, on behalf of the Defendant, in respect of district cooling connection fees, in the amount of AED 18,065.51; and a further payment of AED 48,265.50 on 7 April 2013, in respect of all outstanding penalties on the Unit on behalf of the Defendant.
9. Following these payments, the Claimant obtained a valuation report for the Unit which was required to procure the no objection certificates from Damac. It is alleged that there was a meeting between the parties and Damac, in which the no objection certificate (“NoC”) was signed by the Defendant authorising the transfer of the Unit to the Claimant.
10. The Claimant submits that there were unforeseeable delays which ultimately ended with the parties being informed that the DIFC Registrar of Properties did not have any documents relating to the transfer of the Unit and that this ought to be provided by Damac as the developer. Damac responded that it no longer had documents relating to the sale and purchase of the Unit and these were in fact with the Defendant. The Claimant concluded that the documents were lost, and the parties agreed to reproduce all documents necessary to obtain a new NoC from Damac; the new NoC was subsequently issued by Damac and executed by the Defendant before being submitted to the DIFC Registrar of Properties.
11. Following a second valuation of the Unit, the Claimant instructed Taylor Wessing to deposit the 5% transfer fee with the DIFC Registrar of Properties, before attempting to transfer title of the Unit. The DIFC Registrar of Properties rejected the Claimant’s request and sought additional evidence that the purchase price had been paid in full.
12. The Claimant instructed the Defendant to appear before the DIFC Registrar of Properties to execute the final transfer documents, however, the Defendant allegedly refused unless he received an additional payment of AED 400,000, failing which he would sell the Unit to another buyer.
13. The Claimant alleges that the parties met between May and June 2016, and the Defendant reiterated his demand for an additional payment and requested a further payment of AED 200,000 and a waiver of further legal action by the Claimant, before the Unit would be transferred.
14. The Claimant filed a Part 7 Claim with the DIFC Courts’ Court of First Instance on 5 April 2017, seeking a declaration that it had complied with all its obligations under the MOU and that the Defendant’s failure to transfer the Unit is a breach of contract. As a remedy, the Claimant seeks specific performance from the Defendant, to transfer the Unit. In the alternative, the Claimant seeks that all payments made by it to Damac be reimbursed by the Defendant. The Claimant has also requested its costs.
15. The Claimant served the Claim on the Defendant and the Defendant filed an Acknowledgment of Service on 14 August 2017, indicating his intention to defend the Claim and forward a Counterclaim, which was subsequently filed on 8 October 2017.
16. The parties provided submissions in support of their arguments and appeared for a Hearing before me on 8 May 2018, following which, Judgment was reserved.
The Parties’ Arguments
17. In the Particulars of Claim, the Claimant contends that the Defendant’s actions constitute clear breaches of the MOU, as follows:
(i) Clause 2: that the parties would cooperate with each other for the successful completion of the transfer of the Unit;
(ii) Clause 5(a)(ii): that in consideration for payment of the deposit, the Defendant would not market the Unit or the Claimant’s interest in the Unit to a third party;
(iii) Clause 5(a)(iii): that in consideration for payment of the deposit, the Defendant would not increase the Purchase Price of the Unit; and
(iv) Clause 8: that upon payment of the Purchase Price, the Defendant would transfer title of the Unit to the Claimant.
18. The Claimant submits that the Claim hinges on matters of fact rather than law, as its main contention is that the MOU was binding, and it had complied with all traditions and obligations accordingly. Alternatively, the Claimant argues that there was an agreement by conduct and the payments being sought are with the third party Alyans Real Estate (which no longer exists) and value should be given to Mr Ciro Arianna’s (“Mr Ciro”) witness evidence as he was the agent overseeing the transaction. The Claimant produces the Damac Know Your Customer Form dated March 2012 which names Mr Ciro as the agent.
The Defendant’s Defence and Counterclaim
19. The Defendant denies entering the MOU and rejects its contents, stating that it is invalid, and the signature of the Claimant only reflects the name of the company, without any details of the authorised representative. The Defendant suggests that his signature on the MOU was forged and he filed a criminal complaint in this regard against the Claimant on 18 September 2017. However, it is submitted that the complaint was rejected by the Dubai Police because there was no original version of MOU 2 produced, as the Defendant was only in possession of a copy. The Defendant highlights that the MOU relied upon in the Claimant’s claim does not bear any company stamp of the Claimant, nor does it have the initials of the purported parties on each page or reference to the legal representative. The Defendant submits that the MOU is entirely fabricated, and the aforementioned points bring its authenticity into question in any event. It is also denied that the Defendant received any monies from the Claimant or made any oral agreement pertaining to the payment of instalments as alleged. All payments due to Damac were made by the Defendant, as reflected in the receipts which show direct cash deposits to Damac along with a cheque payment to the DIFC Registrar of Real Estate.
20. With respect to the cheque for AED 272,000 dated 20 May 2012, this is submitted to be undertaken via Alyans Real Estate which assisted the Defendant at the time of the purchase of the Unit. The Defendant submits that the Claimant has failed to demonstrate that it is the issuer of this cheque and if it was issued by a third party, the Defendant was unaware of this.
21. The Defendant denies that it approached the DIFC Registrar of Real Estate with the Claimant as the Claimant suggests and submits that it is untrue that Damac lost all original documents. It is also argued that the transfer process is very straightforward if done in adherence to the law, therefore, had the MOU been duly entered, there should not have been any difficulties.
22. It is submitted by the Defendant, that the parties and Alyans Real Estate actually entered into a different Memorandum of Understanding dated 9 September 2014 (“MOU 2”). The Defendant denies receiving any payment from the Claimant whatsoever and submits that pursuant to Clause 2 of MOU 2, the Claimant agreed to pay the booking deposit of AED 180,000 which would be held by Alyans Real Estate until the date of transfer and final payment.
23. The Counterclaim is made pursuant to Clause 9 of MOU 2, which provides that in the event that the Claimant fails to proceed with the purchase of the Unit and defaults on the payment, the Defendant would be entitled to 75% of the holding deposit (held by Alyans Real Estate) as a penalty. It is submitted that the Claimant failed to proceed with the necessary transaction, thus, causing loss to the Defendant.
24. The Defendant also seeks for costs to be paid by the Claimant, which include but are not limited to the Claim value of USD 36,784 and legal costs of USD 63,760.21. Furthermore, the Defendant requests an undertaking from the Claimant that their Claim is unwarranted and there will be no further disrepute caused to the Defendant and/or any other relief that the Court deems fit.
25. The Claimant argues that it had entered the MOU with the Defendant, but that even if that MOU is not legally binding, there was a meeting of the minds and clear intention that the Defendant would sell the Unit to the Claimant upon payment of the Purchase Price. Pursuant to this understanding, the Claimant had made numerous payments to the developer, Damac, on the Defendant’s behalf but on the basis that they would ultimately amount to the Purchase Price of the Unit and result in a transfer of title of the Unit from the Defendant to the Claimant. It now submits that the Defendant’s failure to acknowledge the payments it has made and his refusal to transfer title have resulted in the Defendant being unjustly enriched as he has essentially obtained the Unit for free, requesting an amount in excess of what was agreed before any transfer would be completed. The Claimant has attempted to forward an explanation as to where the funds for the payments it made came from and its witness Mr Ciro spoke of having withdrawn the amounts from various bank accounts overseas in order to make the payments to Damac for the Claimant.
26. However, the Defendant alleges that the Claimant has only proven that Alyans Real Estate (rather than itself) had been making payments to Damac and the Defendant argues that these payments were, in fact, made on the Defendant’s behalf as its agent. Although the Claimant submits that Mr Ciro’s evidence, as the agent, is impartial and should be given more weight than that of the Defendant’s (which it suggests is obviously biased), the Claimant has failed to provide documentary evidence supporting Mr Ciro’s contention that payments made by Alyans Real Estate to Damac originated from the Claimant.
27. During the Hearing, I questioned the Claimant as to whether it ever received confirmation from the Defendant following each payment it allegedly made to Damac on the Defendant’s behalf, but the Claimant confirmed it had not. On the contrary, it was Damac that issued the receipts for each payment it received from Alyans Real Estate and all of these receipts name the Defendant as the payer.
28. The Claimant is clear in its assertion that all transactions made by Alyans Real Estate to Damac originated from its various bank accounts overseas, before being withdrawn by Mr Ciro for Alyans Real Estate (as the agent) and being transferred to Damac in the Defendant’s name; pursuant to the MOU and in the understanding that title of the Unit would ultimately be transferred to the Claimant as a result. However, I am not satisfied that the Claimant has proven that it is responsible for these payments, and it is for the Claimant to prove the Claim that it brings.
29. The Claimant seeks specific performance from the Defendant pursuant to the terms of the MOU, however, the Defendant denies that it entered the MOU and submits that the document has been forged. The Defendant points to the payments that the Claimant itself alleges that it paid to Damac on the Defendant’s behalf and highlights that the dates and amounts do not correspond with the schedule of payments set out on the MOU itself. It does seem surprising that the payments would not be made in line with the MOU that the Claimant itself relies upon in its Claim, but the Claimant attempts to explain this discrepancy by alleging that the payments were made pursuant to verbal agreements, rather than written. Suffice to say, there is no supporting evidence in this regard either.
30. The Claimant forwards an alternative argument that if the MOU is not found to be legally binding then it should be found that there was an understanding, or meeting of the minds and this can be found in the parties’ alleged conduct. Namely, the Claimant’s payment of the Defendant’s instalments to Damac. However, I am of the view that the Claimant has not proven this aspect of the Claim and, in fact, some of its own conduct, such as making payments which are not in line with those set out in the MOU (upon which it relies) do not support its submission that the MOU is legally binding and acted upon.
31. The Claimant suggests that irrespective of the MOU, there was a clear intention to contract and transfer title of the Unit to the Defendant. However, the Defendant relies on MOU 2 and submits that the actual agreement was for the Claimant to pay the purchase price of AED 1,800,000 via Bankers Draft or Managers Cheque at the time of the transfer and not before. Accordingly, the Defendant denies that any payments have already been made by the Claimant and that title of the Unit should be transferred or refunds of any amounts should be made.
32. In summary, the validity of both MOUs is called into question, as each party relies on a different version in explaining the parties’ relationship. I am not convinced by either the Claimant’s or Defendant’s arguments that either of the MOUs is valid and binding. Although there appears to have been some understanding that the Claimant would buy the Unit from the Defendant and Alyans Real Estate would act as the agent in this transaction, I have not been persuaded by Mr Ciro’s evidence over and above that of the Defendant, particularly as there is no evidence to support the assertion that numerous payments have already made by Alyans Real Estate to Damac, on behalf of the Claimant, rather than the Defendant. Accordingly, the Court cannot order specific performance or reimbursement of these alleged payments and the Claim must be dismissed.
33. In his Counterclaim, the Defendant relies on Clause 9 of MOU 2, which states:
“in the event the SECOND PARTY withdraws from the purchase or defaults on any of the terms and conditions after signing this Agreement, the First Party has the right to keep 75% of the holding deposit and 25% should be handed over to the agency from the initial AED 180 000 as penalty.”
34. The Defendant alleges that the deposit cheque which was left with Alyans Real Estate and has not yet been encashed, ought to be forfeited to the Defendant and Alyans Real Estate in line with Clause 9 of MOU 2, as it is the Claimant and not the Defendant who has withdrawn from the transaction for sale of the Unit.
35. The Claimant accepts that the deposit cheque was left with Alyans Real Estate but submits that MOU 2 was an unexecuted agreement and there was no meeting of the minds, whether by agreement or conduct.
36. Just as there is doubt surrounding the validity of both MOUs in my analysis of the Claim above, I am not convinced by either party’s arguments in this regard and am not satisfied that Clause 9 of MOU 2 should be applied in the circumstances. The Defendant has failed to prove all aspects of the Counterclaim and it is hereby dismissed.
37. The Claimant shall pay the Defendant’s costs of the Claim, to be assessed by the Registrar if not agreed.
38. The Defendant shall pay the Claimant’s costs of the Counterclaim, to be assessed by the Registrar if not agreed.
Ayesha Bin Kalban
Date of Issue: 30 May 2018
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