Damac Properties must pay Dh1.8m after failing to finish apartment

An Irish couple won Dh1.8 million in a recent Dubai court case that could set precedents for other property owners in the emirate.

Damac is putting the finishing touches on the interiors of the Park Towers apartments. The project was reportedly scheduled to be finished by 2008. Jeffrey E Biteng / The National
Powered by automated translation

An Irish couple has won a Dh1.8 million payout from Damac Properties after the developer failed to finish their apartment on time.

The Dubai International Financial Centre (DIFC) Courts have affirmed an earlier decision to issue the couple a refund in a ruling that could have implications for other property companies within the DIFC, the financial free zone where the courts have jurisdiction.

The financial crisis and the local property downturn combined to delay scores of projects in Dubai, leaving investors clamouring for refunds and other concessions that developers have often been reluctant to grant.

Kaashif Basit, a partner at the DIFC law firm KBH Kaanuun, said he already had clients in circumstances similar to those of Noel and Lorna Gaffney, the couple he represented in the claim against Damac.

"I very much hope that … Damac will now … sit down to reach an amicable settlement in the several other similar cases that we have in the pipeline," he said.

But while the ruling paved the way for claims by investors in the same project as the Gaffneys, Mr Basit stressed that its applicability to people outside the Park Towers development depended on the structure of their contracts. The Gaffneys had a sale and purchase agreement with a deadline for delivery and a break clause that stipulated a refund, he said.

"We are very pleased with this result," Mr Gaffney said. "All we wanted was the court to uphold our rights under the contract."

Damac is weighing whether to appeal the judgment, according to Jonathon Davidson of Davidson & Co in Dubai, which is representing the company. Damac would need clearance from DIFC Courts to do so.

The Gaffneys had already won a default judgment in the DIFC Courts in April, when Damac missed a deadline to respond to their claims. The court awarded the Gaffneys Dh1,781,009 (US$484,872), representing a refund of payments they made towards apartment 602 in Tower B of the development.

Damac's lawyers, however, tried to revive the case and present a defence. Damac argued that the Gaffneys had not followed proper court procedures in filing their claim and that the company had not been given adequate notice about the case. In the ruling last Tuesday, however, the DIFC Courts dismissed Damac's bid to have the earlier default judgment set aside.

"It is disappointing for our client that the application to have the default judgment set aside was unsuccessful," Mr Davidson said. "There is a process of appeal and our client is currently considering its options."

The Gaffneys bought their Park Towers apartment off-plan in 2004, according to their original claim. The project consists of two 49-storey cone-like glass buildings and is situated within the grounds of the DIFC, close to the financial district's central Gate Building.

The towers are structurally complete, and Damac is putting the finishing touches on the interiors and landscaping before the handover to buyers scheduled for later this year.

The Gaffneys' case in the DIFC Courts is just one of many pitting investors against developers, with property prices declining by as much as half in some parts of Dubai since the peak of the market in 2008.

Delays in construction and handover have been a focus in many of those cases. According to the Gaffneys' original complaint, the Park Towers apartment was first scheduled to be finished by early 2008 before being pushed back to the middle of 2009.