What were the specific factual circumstances and the amount at stake in the dispute between Liberty and Lance Real Estate Broker?
The dispute arose from a failed residential property transaction in the DIFC. The Claimant, Liberty, sought the return of a deposit paid toward the purchase of a unit from a group of seven siblings (the Sellers), represented by the First Defendant, Lance Real Estate Broker. The transaction was governed by a "Second Agreement" signed on 27 February 2020, following an initial agreement in January. As the completion date approached, the global onset of the Covid-19 pandemic and subsequent UAE travel restrictions prevented the Sellers' representative from traveling to the UAE to finalize the transfer.
The core of the dispute involved the developer’s requirement for in-person attendance to obtain a No Objection Certificate (NOC), a prerequisite for the transfer that could not be bypassed via remote services. When the transfer could not be completed on the scheduled date, the Claimant sought to terminate the agreement and recover her funds.
The Claimant paid to the Sellers a deposit in the amount of AED 142,000 by way of a cheque, which is held by the First Defendant.
The total sum claimed by the Claimant as set out in the Claim Form is AED 142,000 in addition to Court fees.
For further context on the procedural history of this matter, see Liberty v Lance Real Estate Broker [2020] DIFC SCT 128 — Covid-19 frustration and deposit restitution (18 June 2020).
Which judge presided over the SCT hearing for Liberty v Lance Real Estate Broker and when was the judgment issued?
The matter was heard before SCT Judge Maha Al Mehairi. Following a failed consultation before SCT Judge Nassir Al Nasser on 10 May 2020, the case proceeded to a hearing before Judge Al Mehairi on 19 May 2020. The final judgment was formally issued on 18 June 2020.
What were the respective legal positions of Liberty and the Defendants regarding the termination of the Second Agreement?
The Claimant argued that she remained ready, willing, and able to perform her contractual obligations. She contended that the failure to complete the sale was entirely due to the Sellers' inability to fulfill their side of the bargain, specifically their failure to attend the developer’s office to secure the necessary NOC. Consequently, she issued a notice of termination on 26 March 2020, citing the Sellers' non-performance.
The First Defendant, acting for the Sellers, resisted the claim for the return of the deposit. They argued that the transaction had been impacted by "third-party delays" and invoked provisions within the Second Agreement that allowed for a 45-day postponement of the completion date. They maintained that the travel restrictions were an external force majeure event that did not automatically entitle the buyer to terminate the contract and demand a refund.
What was the precise doctrinal question the Court had to answer regarding the Second Agreement?
The Court was tasked with determining whether the Claimant’s notice of termination constituted a valid rescission based on the Sellers' non-performance, or if the contract remained in force due to the postponement clauses. Specifically, the Court had to decide if the inability of the Sellers to travel to the UAE due to government-imposed Covid-19 restrictions excused their failure to perform, or if that failure entitled the Claimant to treat the agreement as terminated and recover her deposit under the principles of contract law.
How did Judge Maha Al Mehairi apply the doctrine of non-performance to the facts of the case?
Judge Al Mehairi analyzed the timeline of the transaction against the backdrop of the UAE’s travel restrictions. The Court found that the Claimant had fulfilled her obligations, whereas the Sellers were unable to complete the essential steps for the transfer. The judge rejected the notion that the Claimant was "withdrawing" from the contract; rather, the judge held that the contract had effectively collapsed due to the Sellers' inability to perform their obligations.
Due to the Sellers’ non-performance of the Second Agreement on the date of transfer, and the travel restrictions imposed by the UAE Government at that time, on 26 March 2020, the Claimant issued a notice of termination of the Second Agreement and asked for the return of the cheque for the deposit amount of AED142,000 held by the First Defendant.
The Court emphasized that the Claimant’s readiness to proceed was documented, while the Sellers' representative was incapacitated by the pandemic.
On 19 March 2020, the Claimant was able and willing to continue with the sales process, but the travel ban was issued.
Which specific provisions of the DIFC Contract Law No. 6 of 2004 were applied in this dispute?
The Court relied upon the DIFC Contract Law No. 6 of 2004, specifically Articles 86, 88, and 90. These provisions govern the performance of obligations and the consequences of non-performance. By applying these articles, the Court determined that the Sellers’ failure to secure the NOC—a prerequisite for the transfer—constituted a failure to perform their contractual duties, thereby justifying the Claimant's termination of the agreement.
How did the Court characterize the Sellers' failure to perform in light of the Covid-19 travel restrictions?
The Court distinguished between a voluntary withdrawal by a buyer and a termination necessitated by the other party's inability to perform. The judge noted that the First Defendant’s reliance on "third-party delays" to trigger a 45-day extension was insufficient to override the fundamental failure of the Sellers to meet the requirements for the property transfer. The Court held that the contract was "broken" due to the Sellers' non-performance, rather than being a case of the buyer simply changing her mind.
I am of the view that the Claimant is not withdrawing from the Second Agreement, but that the Second Agreement is broken due to non-performance.
What was the final disposition and the specific monetary relief ordered by the SCT?
The Court allowed the claim in its entirety. The First Defendant was ordered to return the full deposit amount to the Claimant. Additionally, the Court ordered the Defendants to cover the costs of the litigation, specifically the Court fees incurred by the Claimant.
As such for the above cited reasons, I find that the Claimant is entitled to the refund of the deposit in the amount of AED 142,000 that was paid to the First Defendant.
The Defendants shall pay the Claimant the Court fee in the sum of USD 1,933.29.
What are the wider implications of this ruling for real estate practitioners in the DIFC?
This case serves as a critical precedent for how the DIFC Courts handle contractual frustration and non-performance during the Covid-19 pandemic. It clarifies that when a party is prevented from performing a fundamental contractual obligation—such as attending a developer’s office for an NOC—due to government-mandated travel restrictions, the counterparty is not necessarily bound by postponement clauses. Practitioners must now anticipate that "non-performance" arguments will be viewed through the lens of objective impossibility rather than mere inconvenience, and that deposits are likely to be returned if the underlying transaction cannot proceed through no fault of the buyer.
Where can I read the full judgment in Liberty v Lance Real Estate Broker [2020] DIFC SCT 128?
The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/small-claims-tribunal/Liberty-V-1-Lance-Real-Estate-Broker-2-Lucian-3-Lilyana-4-Lucille-5-Lucca-6-Lacey-7-Lexi-8-Lawsan-2020-DIFC-SCT-128
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external case law cited in the judgment. |
Legislation referenced:
- DIFC Contract Law No. 6 of 2004, Articles 86, 88, and 90.