Limitless has been ordered to pay back more than Dh11 million to a Saudi property developer in a case that could have far-reaching implications for thousands of other investors seeking refunds.
Judges Sir Anthony Evans and Sir David Steel ruled in favour of Said Ali Alangari, the founder of Al Gihaz Holdings, a Saudi Arabian developer worth hundreds of millions of dollars, in a high profile case at the Dubai World Tribunal this week.
In a judgement dated on Monday, the judges ordered Limitless to pay back Dh11,074,930 that Mr Alangari paid in February 2008 in connection with two plots at its Downtown Jebel Ali scheme in Dubai because no official documents had been signed.
Lawyers say that the judgement could have implications for the thousands of investors who put down deposits on Dubai property schemes and are still left waiting to get their money back.
Limitless argued that the money was paid as a 10 per cent deposit on the plots under a sales-and-purchase agreement and could not be returned.
However, Mr Alangari's lawyers argued that no official sales-and-purchase agreement had been signed and, therefore, the sale had not been completed - even though Mr Alangari took steps to sell the plots on to another investor.
"The initial transaction was concluded without any reference, express or implied, to the sales-and-purchase agreement terms, sufficient to incorporate them in … the basic contract," the judges said.
"As such absent, express or implied provision that it might be retained as a deposit, it must in our judgement be repaid."
The news follows two similar cases in which investors were awarded refunds because the court ruled that their deposits were refundable.
Although in the UAE legal precedents are not binding on courts, lawyers say that the three cases have implications for developers across the UAE holding onto money paid down as deposits on property schemes hit by the global financial crisis - especially if no paperwork was signed at the time the deal was struck.
"This was a significant decision, particularly for developers and individual investors who have not been refunded deposits subsequent to the economic downturn," said Joe Durkin, a partner at Davidson & Co,the law firm representing Mr Alangari.
"The tribunal's judgement follows a decision in the recent World Island case that payment can only be retained by a master developer or seller of property if there is an express provision to that effect.
"It is likely that there remain hundreds if not thousands of investors who are in a similar position, who may have potential cases for refunds whether it's before the Dubai courts or in arbitration," Mr Durkin said.
Limitless declined to comment when contacted yesterday.