Property debtors get fresh chance

Awad Mustafa

• Last Updated: November 06. 2009 12:41AM UAE / November 5. 2009 8:41PM GMT

DUBAI // The hard walls of debtors’ prison are beginning to crack.

No longer will home buyers in Dubai who cancel postdated cheques because of a developer’s missed deadlines or broken promises automatically face jail.

Instead of being investigated by police or prosecuted, delinquent tenants and homeowners will be referred to a new judicial committee that will make a binding judgment on whether they should be held to payment. It will also deal with developers who run into financial difficulties and cannot pay their investors.

The move, decreed by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, follows growing concern that the criminal courts, and prisons, have become clogged up with bad-debt cases as a result of the global financial crisis.

Ahmed Ibrahim Saif, the chief justice of the Dubai Criminal Courts, said yesterday that the committee would look into any cheque cases related to property transactions. In each case, the committee will decide whether the action should be referred to the courts or dismissed. Its decisions will be final.

“This order is very fair and has come in good time for everyone,” Justice Saif said.

“In light of some projects stopping or slowing down, this committee will look into who deserves what in this case. It has come to ease the pressures that are placed on cheque issuers.”

Not only will police, prosecution and the courts be barred from pursuing new bounced-cheque cases relating to real estate without the committee’s approval, but all current cases will also be stopped and referred to the committee.

The panel will consider cases involving cheques issued by buyers to developers, as well as from tenants and beneficiaries of long-term rentals and purchased units to developers. It will have the power to cancel bounced cheques, and to instruct the issuer to present a new cheque at a date of his choosing.

The three-member committee will be chaired by an Appeal Court judge, sitting with a Court of First Instance judge and a representative of the Land Department.

“We are conducting a meeting this Sunday to choose the members of this committee and identify them, as well as reviewing the procedures,” Justice Saif said.

Bounced cheques are regarded legally as fraud, a criminal offence punishable by jail. But with more than a half-million cheques bounced between January and May of this year alone, the cases have been putting an increasing strain on the legal system.

In March, Lt Gen Dahi Khalfan Tamim, the chief of Dubai Police, called for bad debts to be treated as civil matters.

“As a police force, we have been involved in a matter that shouldn’t have been under our mandate,” he said.

The Minister of Justice, Dr Hadef al Daheri, last month said the laws and procedures relating to bad debts were under review.

Among the debtors who stand to benefit from Sheikh Mohammed’s decree is Peter Margetts, a property developer who was arrested in January and sentenced to 20 years in prison for bounced cheques.

Abdullah al Bannai of The Attorneys, which represents the 46-year-old Briton, said: “All his cases will be pulled out of the courts, prosecution and police.

“We are waiting to know the procedures of the committee and start registration.

“We also will take the cases ruled upon by the lower courts as they are not final rulings.”

In addition to the 13 counts for which he has already been jailed, Margetts, who was the chief executive of the developer Hampstead and Mayfair, faced a 33 further charges that could have added 118 years to his sentence.

The company is developing the Boutique Residence 1, 2 and 3 projects at Jumeirah Village on the outskirts of Dubai.




amustafa@thenational.ae