What happens to your belongings when they are sitting inside a property you were negotiating to buy, the negotiation collapses, and the owner refuses to let you take them back?
The following case study, drawn from a matter concluded by MIO & Partners before the Dubai Courts, explains how such a situation could develop and how it was resolved.
Background
Our client was negotiating the acquisition of a residential property in Dubai for a price in the region of AED 84 million. Terms were discussed and a verbal understanding was reached between the parties. No sale and purchase agreement was executed.
During the negotiation period, the seller offered to allow the client to move his personal property into the residence in advance of completion. The client accepted and did so, placing jewellery, bespoke furniture and artwork with a value exceeding AED 18 million into a property he neither owned nor leased.
The client subsequently formed the view that the price under discussion materially exceeded the property’s value, and raised the point with the seller. The seller’s position changed at that stage. He asserted that:
- Rent of approximately AED 7.3 million was payable for the three-month period during which the goods had been in the property;
- Compensation of approximately AED 1.8 million was payable for the client’s withdrawal from the purchase; and
- The goods would not be released until those sums were paid.
The client therefore faced demands exceeding AED 9 million in a transaction where neither a sale agreement nor a tenancy contract had been signed, while his own property remained inside the residence.
The Difficulty We Faced
The obstacle in a matter of this kind is that the facts our client needed to establish were the same facts the seller wished to rely upon.
To recover the goods, we had to establish that they were inside the property. Pleaded without care, that fact would have supported the two propositions on which the seller’s demands depended, namely that our client had occupied the premises and that rent had therefore accrued, and that the parties’ dealings had produced a binding agreement to purchase which our client had then breached.
The case was accordingly conducted on a narrow basis: our client’s title to his goods and his entitlement to their return, without concession that a tenancy had been created or that a concluded sale existed. Every filing, across both sets of proceeding, had to remain consistent with that position.
The Evidence Relied Upon by the Seller
The seller advanced two categories of evidence.
The first was electronic correspondence, principally WhatsApp exchanges, said to demonstrate that a binding agreement had been concluded. Electronic communications are routinely relied upon in property and commercial disputes before the UAE courts, and their significance depends on what they in fact establish. We addressed them on that basis, distinguishing messages recording price discussions and negotiating positions from evidence of a concluded agreement on defined terms.
The second was a tenancy contract produced to establish a rental relationship. We disputed the document as forged and required production of the original for examination. Where the authenticity of a document is challenged, the challenge must be raised clearly and the original called for, and a party relying on a document it does not produce in original form faces obvious difficulty in asking the court to act upon it.
Parallel Proceedings and Early Setbacks
The matter proceeded on two tracks, before the Rental Dispute Centre and before the civil courts. Parallel proceedings require positions in each forum to remain strictly consistent, since anything advanced in one becomes available to the opposing party in the other.
The early outcomes were unfavourable. The claim failed at first instance. It failed again on appeal. An expert report obtained in the proceedings did not support our client’s case.
At that stage the commercial instinct is to settle. Our assessment was that our client’s entitlement to his own property remained sound and that the documentary case underpinning the rental demand would not withstand examination. On that basis we advised continuing, and the matter proceeded to cassation.
Outcome
The Court of Cassation determined the matter in our client’s favour. He recovered his belongings in full. No rent was paid and no compensation was paid. The proceedings ran for approximately three years from filing to final judgment.
The matter formed part of the work recognised in the firm’s ranking by The Legal 500 as a leading law firm in the UAE.
Conclusion
What began as a courtesy during a property negotiation became a three-year dispute over belongings worth AED 18 million. The matter was resolved not by any single decisive argument, but by maintaining one consistent position across two forums and three levels of court, and by declining to concede a tenancy that had never been agreed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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