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DIFC Court rules in favour of purchasers of apartments in delayed development

Rohan & Ors v Daman Real Estate Capital Partners 

In a judgment handed down in the Dubai International Financial Centre Court of First Instance on 4 August 2013, Deputy Chief Justice Sir Anthony Colman held that the purchasers of a number of residential appartments were entitled to the return of their deposits together with interest and further compensation.

Between December 2007 and April 2008 the Claimants entered into Sales and Purchase Agreements (‘SPAs’) with the Defendant for the purchase of 7 apartments in a development known as “The Buildings by Daman” within the DIFC. The Claimants had paid more than AED 8.5 million to the Defendant by way of deposits. The apartments were due to take 26 months to build and ought to have been completed and handed over to the Claimants by 31 July 2009. None of them were completed by then and the construction work was still far from complete by the time of the trial.

The Claimants had exercised their contractual right to terminate the SPAs and sought recovery of the monies paid to the Defendant together with consequential losses. The Defendant contended that the Claimants had not been entitled to terminate the SPAs as it was entitled to extend, and had effectively extended, the completion dates thereunder. The Defendant relied on the force majeure clause within the SPAs which, unusually, defined force majeure so as to include the Defendant’s contractor’s breach of contract or failure to perform. The Defendant relied on the extension of time determinations made by the engineer under the construction contract in attempting to establish force majeure.

Sir Anthony Colman held that the notices relied on by the Defendant were ineffective and that, even if the notices had been effective, the Defendant could not rely on the engineer’s determinations to establish what period of delay amounted to force majeure within the meaning of the SPAs.

Crispin Winser appeared for the successful Claimants, instructed by Kennedys Dubai LLP.

The Judgment is available here.

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