Real estate firm ordered to pay Dhs3.4 million in legal fees for disregarding contract terms

A real estate development company tended to disregard a legal consultancy contract it had concluded with a law firm specialising in legal advice, prompting the latter to resort to the courts to claim its contractual dues after the completion of the litigation phases in the dispute in which it was tasked with representing the company.

Dubai Civil Court ruled that the real estate development company pay Dhs3.412 in legal fees to the law firm plus legal interest of 5 per cent per annum from the date of the lawsuit until full payment, and obliging after a written contract and an explicit judicial acknowledgment of the right to the claimed amount were proved to exist.

The company was also obligated to pay the incurred charges, expenses and lawyer’s fees.

The dispute stemmed from a real estate development company’s contract with a law firm to represent it in a major property dispute against another company.

The claim involved sums exceeding Dhs62 million, a request to return post-dated cheques and nine bank guarantees and litigation in a counterclaim for hundreds of millions of dirhams.

Under an addendum to the fee agreement between the two parties, the scope of services was amended to encompass all stages of litigation, including appeals and cassation, while the agreed-upon fees were increased to Dhs4 million, payable in installments linked to the progress and outcome of the case.

The original lawsuit resulted in a ruling in favour of the real estate development company, where its opponent was obligated to pay approximately Dhs6.9 million and return cheques and bank guarantees. After the Court of Appeal upheld the ruling, the remaining payments of fees became due in accordance with the addendum to the contract.

Although it paid a portion of the fees at the beginning of the contract, the real estate development company refused to pay the remaining balance, prompting the law firm to resort to legal action.

During the proceedings, the director of the real estate development company acknowledged in a written response the law firm’s legal entitlement to the full agreed-upon fees but noted that the company was experiencing difficult financial circumstances and would make the payment later.

The court considered this acknowledgment as legally binding and irrevocable, reiterating that the written fee agreement was the basis for determining fees and that jurisdiction lay with the Court of First Instance whenever there was a written agreement between the lawyer and their client.

The court also noted that late payment interest would be due when the debt was of a known and established amount, which was the case in the present lawsuit.

Accordingly, the court ruled that the real estate development company must pay the full outstanding balance with legal interest from the date the lawsuit was filed until full payment.