Under the terms of the ruling, the property developer, Frank Khoie – an Iranian national trading under the name of Khoie Properties – must repay the investors who brought the case, provide compensation and cover their legal fees.
The dispute is over a development first marketed to investors between 2006 and 2008 in the Ras-al-Khaimah emirate, part of the United Arab Emirates. The La Hoya Bay Residences was marketed as a 1000-plus unit resort and more than 700 investors bought in, investing around £50m (AED300m, $80m).
Bounced cheque
Investors believed Kohie was planning to purchase three plots of land from the Ras-al-Khaimah Government. One plot was successfully purchased, but when a $15m cheque he gave the government to purchase the two further plots of land in 2009 bounced, Kohie was sent to jail.
After serving one year, Kohie was released and was faced with, understandably, some very vexed investors. However, still having not begun building work on the one plot of land he did own, Kohie claimed he was being prevented from moving forward by the Government which he said refused to supply the development with electricity. During the litigation, Kohie claimed this as a so-called “force majeure” defence.
After further frustration, some of the investors finally lost patience and contacted Judicare which, having had initial discussions with around 150 investors, assisted 35 investors as they fought for compensation in the local Arbitration Courts of Ras-al-Khaimah, led by lead counsel Ashraf El Motei.
Despite this recent ruling, and having lost at each stage of the process, Kohie has so far refused to pay anything bank to the investors and, in the words of Judicare chief executive Neil Heaney as done all he can to “frustrate the legal process”.
The latest ruling is more accurately described as the third in a series of rulings. The last – a so-called “execution claim” – means Judicare is permitted, with the support of the courts, to gather information on Kohie Properties’ assets and can sell them to meet the repayment requirements for the 35 investors it represents, amounting to around £1.5m.
“Clearly this is good news for our clients and is a warning to developers in the UAE who attempt to frustrate purchasers seeking reimbursement of invested monies for non-delivery of property, especially if they rely on an inaccurate force majeure argument,” said Heaney.
“It is a hugely positive sign for any and all investors who find themselves caught in this particular situation and who may be contemplating a challenge for legal redress and the return of their invested funds.”
Judicare said it is now seeking to trace all assets attached to the Kohie business in order to repay the investors. If these assets do not amount to the £1.5m required, Judicare said it will consider taking criminal action against the company and Frank Kohie which will allow it to pursue worldwide assets.
