SALEM DWELA v DAMAC PARK TOWERS COMPANY [2018] DIFC CFI 083 — Misrepresentation and specific performance in real estate (16 December 2021)

What was the specific nature of the dispute between Salem Dwela and Damac Park Towers regarding the 2010 Sale and Purchase Agreement?

The dispute centered on a Sale and Purchase Agreement (SPA) executed on 18 May 2010 for a residential unit in the Park Towers development within the DIFC. The Claimant, Salem Dwela, sought to rescind the contract and recover the full purchase price, which he had paid in full by July 2011, alleging that he had been induced to enter the agreement based on false representations regarding the development's status and the unit's specifications. Specifically, Mr. Dwela contended that the developer had misled him regarding the completion timeline, the square footage of the unit, and the existence of a "pool view."

The Claimant’s factual basis for the claim was articulated as follows:

Accordingly, the Claimant was informed that Park Towers, DIFC was near completion with only some ‘snagging works’ remaining and the completion was expected within three months. The specific unit offered was to be 2402.53 square feet, on the 7th Floor of the building, with a full pool view and two parking bays.” Mr. Dwela says that based on those representations he entered into the SPA on 18 May 2010. 5.

The Defendant, Damac Park Towers Company, denied these allegations, maintaining that the contract was valid and binding. The developer counterclaimed for specific performance, seeking to compel Mr. Dwela to complete the handover of the unit and pay outstanding service charges, which had accrued over the years of the dispute.

Which judge presided over the trial of Salem Dwela v Damac Park Towers Company Limited in the DIFC Court of First Instance?

The trial was presided over by Justice Lord Angus Glennie in the DIFC Court of First Instance. The hearing took place on 5 December 2021, with the final judgment delivered on 16 December 2021.

What were the primary legal arguments advanced by Salem Dwela and Damac Park Towers Company Limited during the trial?

Mr. Dwela, represented by Mr. Michael Wheater, argued that the misrepresentations made by the developer were fundamental to his decision to enter the SPA. He contended that the failure of the unit to meet the promised specifications—specifically the lack of a pool view and the discrepancy in size—entitled him to rescind the contract under the DIFC Law of Obligations. Having abandoned his earlier claim for breach of contract and declining to pursue a claim for fraudulent misrepresentation, his case rested entirely on the assertion that he was induced by incorrect statements of fact.

Conversely, the Defendant, represented by Mr. Waleed Dwela (appearing as a McKenzie Friend), argued that no such representations were made. They emphasized that the SPA contained clear clauses allowing for design modifications and that the Claimant had failed to provide evidence of any "categoric assurance" regarding the unit's features. The Defendant maintained that the Claimant was bound by the terms of the signed SPA and that the developer was entitled to specific performance, including the recovery of service charges and associated interest, as the Claimant had failed to take possession of the unit despite having paid the purchase price.

What was the precise doctrinal issue the Court had to resolve regarding the alleged misrepresentations?

The Court was tasked with determining whether the statements allegedly made by the developer prior to the signing of the SPA constituted actionable misrepresentation under Articles 29 and 30 of the DIFC Law of Obligations. The doctrinal challenge lay in distinguishing between mere sales puffery or non-binding expectations and a "statement of fact" that induced the Claimant to enter the contract. Furthermore, the Court had to address whether the contractual terms within the SPA, specifically those granting the developer the right to modify unit designs, precluded the Claimant from relying on pre-contractual descriptions of the unit's features.

How did Justice Lord Angus Glennie apply the test for misrepresentation to the facts of the case?

Justice Glennie evaluated the evidence to determine if the developer had made an incorrect statement of fact that actually induced the Claimant to enter into the SPA. The Judge found the Claimant's evidence regarding the alleged "pool view" and the specific completion timeline to be unsubstantiated. He noted that in complex real estate transactions, it is highly improbable that a developer would provide absolute, binding assurances that contradict the written terms of the SPA.

Regarding the alleged assurances, the Court observed:

But I consider it inherently unlikely that Mr. Dwela would have been given a categoric assurance to this effect.

The Court further reasoned that even if such statements had been made, the SPA itself contained clauses that explicitly permitted the developer to modify the unit's design and layout. The Judge held that it was legally difficult to imply a representation that would effectively override the express terms of the contract:

However, there is in my view very great difficulty in implying any such representation in circumstances where the SPA itself in clause 12 specifically allows Damac to make variations to the plans and in particular (clause 12.2) “to change, vary or modify the design, layout or location of the Unit” (emphasis added).

Which DIFC statutes and specific sections were central to the Court’s determination of the claim and counterclaim?

The Court relied on several key pieces of DIFC legislation to adjudicate the matter. The claim for misrepresentation was analyzed under the DIFC Law of Obligations (DIFC Law No. 5 of 2005), specifically Articles 29 and 30. The Court also referenced the DIFC Law of Damages and Remedies (DIFC Law No. 7 of 2005) regarding the assessment of damages and the availability of specific performance.

Regarding the recovery of damages, the Court noted:

The recovery of damages for misrepresentation is governed by Part 3 of the DIFC Law of Damages and Remedies (DIFC Law No. 7 of 2005).

Furthermore, the Court cited the following provisions concerning remedies:

The right to damages can either be exclusive or in conjunction with other remedies. Article 24 provides that the injured party is entitled to full compensation for loss sustained as a result of the breach of the relevant obligation.

Additionally, the Court noted the scope of its remedial powers under the Law of Damages and Remedies:

Part 4 sets out other remedies. Amongst “Other Orders” listed in Article 35(1), the court may make an order for restitution or for specific performance and/or “(g) any other order that the Court thinks fit”.

How did the Court utilize English and DIFC precedents in its analysis of the misrepresentation claim?

The Court referenced Brown v Raphael [1958] Ch 636 and Spice Girls Ltd v Aprilia World Service BV [2002] EWCA (Civ) 15 to contextualize the principles of misrepresentation. These authorities were used to examine the threshold for what constitutes a statement of fact capable of inducing a contract. The Court also acknowledged the procedural history of the case, specifically the Court of Appeal’s decision in CA-009-2020, which had previously reversed a strike-out order by H.E. Justice Omar Al Muhairi.

The Court noted the procedural context:

Justice Omar Al Muhairi (the “Judge”) on 1 July 2020 on the ground that it was statute-barred under Article 123 of the DIFC Contract Law (DIFC Law No.6 of 2004).

While the Court of Appeal had previously held that Mr. Dwela had pleaded an "arguable case" of misrepresentation, Justice Glennie’s role at trial was to determine whether that case held up under the weight of evidence, ultimately concluding that the Claimant failed to meet the burden of proof required to establish that the alleged misrepresentations occurred.

What was the final disposition of the case, and what specific monetary relief was ordered?

The Court dismissed the Claimant’s claim for misrepresentation in its entirety. Regarding the Defendant’s counterclaim, the Court accepted the claims for service charges and interest, while dismissing the second ground of the counterclaim. The Court ordered the Claimant to pay a total of AED 370,000.00, which included the outstanding service charges and simple interest.

The order for payment was specified as follows:

I shall make an order for payment of AED 370,000.00, comprising the sum of damages set out at (a) above and simple interest as set out at (c) above. 32.

The Court also ordered that costs be awarded in favor of the Defendant, to be assessed by the Registrar on a standard basis if not agreed upon by the parties.

What are the wider implications of this judgment for practitioners handling real estate disputes in the DIFC?

This judgment serves as a reminder of the high evidentiary threshold required to prove pre-contractual misrepresentation in the face of a signed SPA containing comprehensive variation clauses. Practitioners should note that the DIFC Courts are generally reluctant to allow oral representations to override the express terms of a written contract, particularly where the contract explicitly grants the developer the right to modify unit specifications. The case reinforces the principle that parties are bound by the written terms of their agreements and that specific performance remains a robust remedy for developers in the DIFC when purchasers attempt to rescind contracts based on unproven allegations of misrepresentation.

Where can I read the full judgment in Salem Dwela v Damac Park Towers Company Limited [2018] DIFC CFI 083?

The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/salem-dwela-v-damac-park-towers-company-limited-2018-difc-cfi-083

Cases referred to in this judgment

Legislation referenced

• DIFC Contract Law (DIFC Law No. 6 of 2004), Article 123
• DIFC Law of Obligations (DIFC Law No. 5 of 2005), Articles 9(2), 29, 30
• DIFC Law of Damages and Remedies (DIFC Law No. 7 of 2005), Part 3, Part 4, Articles 24, 35(1)