Disgruntled investors who lost £50 million when a planned homes development in the United Arab Emirates failed have won a landmark court case for compensation.
Developer Khoie Properties took the money as deposits on homes that were to be built as The La Hoya Bay Residences in Ras-al-Khaimah between 2006 and 2008.
Around 700 investors staked the cash for the 1,000 homes planned for the resort.
None were built although the developer, Frank Khoie, bought one plot of land for the resort but handed over a £9 million cheque that bounced as payment for two further plots in 2009.
In the UAE, passing a dud cheque is a criminal offence. Khoie was subsequently jailed for a year for writing the cheque.
Landmark case
The development has never started. Khoie claimed the government refused to connect the land to an electricity supply, so he could not begin construction.
The case has passed through three courts and Khoie has lost each hearing.
Now, a class action by 35 investors has won an execution claim that means they can catalogue Khoie’s assets and sell them to meet their claim of £1.5 million compensation plus costs.
The legal firm leading the challenge, Judicare, claim this is the first case property investors seeking compensation for lost deposits have won in the UAE and that a precedent has been set for future claims.
“This is great news for property investors,” said chief executive Neil Heaney. “The court has clearly told developers in the UAE that if they have failed to build property for which they have collected a deposit that they must reimburse the cash.
Cancelled projects
“The decision is a huge boost for investors wondering what they need to do to try and secure the return of their money.”
Heaney alleges Khoie has done everything he can to delay the legal action and his claim that he could not build because of the electricity supply issue was found not to be true by the courts.
Lawyers for the investors in the case are now tracking Khoie’s assets and have threatened to take further legal action if the company is not worth enough to repay the deposits and costs.
The UAE government estimates around 220 property development projects were cancelled during the credit crisis, leading to a massive fall in prices which the country is only just recovering from.
Many of the developers fled the country and left investors millions of pounds out of pocket.
I was an unfortunate buyer of the Khoie project at RAK. But I have been trying to get some information about anything I could or can do. Did all the investors get their money back or at least some