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Property buyers, developers filing 'test' cases to find 'right' ruling

The overall cost includes court fee of 7.5 per cent of the value of the case or a maximum of Dh30,000, per contract, which is to be paid before filing of the case. (REUTERS/GETTY)

By Parag Deulgaonkar

Developers and law firms in the UAE are filing “test” cases, hoping to get a favourable judgement in any one and set a precedent to win future cases, industry sources told Emirates 24|7.

“Legal firms, on behalf of investors or developers, file a number of “test” cases. A judgement in their favor helps them file similar cases against the other and the probability of winning is quite high,” the sources said.

“The law firms file a series of cases against one developer. The investor is asked only to pay Dh30,000, which is to be deposited with the court. Initially, the investors are not charged and once a favourable judgement is received, a barrage of cases are initiated against the developer,” they said.

Filing a formal case is an expensive and time-consuming proposition.

The overall cost includes a court fee that is 7.5 per cent of the value of the case or a maximum of Dh30,000, per contract, which is to be paid before filing of the case. Translation costs have to be added as every document submitted to the court has to be translated into Arabic and, finally, the attorney cost is required to be paid up front. In most cases, the minimum expense of litigating is Dh150,000.

However, a senior official of a private development company, on condition of anonymity, said real estate agents, due to the lack of business, were helping some law firms to get investors who would agree to file cases.

“We have noticed that some legal firms filed a number of cases against us… later we found out they had employed/appointed real estate agents who were sending investors to them. We believe there is a growing nexus between these people," the source said.

Earlier this month, Dubai-based Al Fajer Properties said it would take legal action against customers who have defaulted on payments as part of its move to claim the rightful dues from defaulters in its Jumeirah Business Centre towers at the Jumeirah Lakes Towers community.

The company claimed that in the ruling the judge had ordered a defaulting customer to pay 40 per cent of the contract price to it for defaulting on payments for their delivered properties in the JBC towers.