The three parties involved in a Dubai lawsuit over an equity acquisition in Sky Gardens traded blows in court yesterday.
Lawyers representing the education provider Taaleem, National Bonds Corporation and Deyaar Development delivered opening statements in the DIFC Courts, on the first day of the trial in Taaleem’s case against the other two firms.
The dispute centres on Deyaar’s alleged agreement in 2008 to acquire from Taaleem a 33 per cent share in the luxury residential complex in the DIFC.
The alleged deal coincided with the collapse of property prices in Dubai, and Deyaar has been denying that a binding agreement was signed.
Vernon Flynn QC, the attorney for Taaleem, claimed that an agreement had been struck between Taaleem and Deyaar in late 2008, noting that a sale purchase agreement between both parties had been signed by senior Deyaar executives, and sent to its lawyers.
Mr Flynn also noted that Deyaar had given Taaleem two cheques totalling Dh72.1 million in December 2008, which represented the agreed premium for which Deyaar would buy Taaleem’s share in the property.
He said Taaleem made subsequent payments to NBC, which financed its earlier acquisition of the Sky Gardens stake.
Robin Knowles QC, Deyaar’s attorney, countered that although both parties worked towards a special purchase agreement, that did not constitute a binding agreement.
Mr Knowles argued that Deyaar’s payment of Dh72.1m did not constitute an agreement; it was instead a deposit paid to Taaleem during negotiations, which would be refundable if both sides decided against proceeding with the transaction.
The terms of the contract were set out in a binding memorandum of understanding (MoU) – that set the terms for negotiations between both parties – signed by the two sides in mid-May of 2009, backdated to December 9, 2008.
The MoU would automatically terminate on June 9, 2009 if no agreement was reached, although this was subsequently extended to September 9 that year.
Mr Flynn said the MoU appeared several months after an agreement was reached on the acquisition, and was Deyaar’s attempt “to re-write history”.
Deyaar’s additional payments to NBC were made during ongoing negotiations with Taaleem, said Mr Knowles, as the firm had concerns that Taaleem was unable to make the payments itself, which would jeopardise the deal under negotiation.
The legal dispute stems from the Dh1.64 billion acquisition of Sky Gardens in mid-2008 by a special purpose vehicle of Amlak, the Islamic home finance firm, from First Dubai Real Estate, the complex’s developer.
A tripartite deal between Taaleem, NBC and Amlak (which both hold shares in Taaleem) resulted in Taaleem acquiring a 33 per cent stake in the building, for subsequent sale to realise a profit – a common practise known as “flipping”.
NBC provided the financing.
Following Deyaar’s decision to walk away from the deal, Taaleem claims that NBC demanded payment of Dh237m in April 2010, as part of an agreement Taaleem allegedly signed in July 2008. Taaleem denies it did so.
Taaleem is seeking the court’s assurance that it is not liable for the Dh237m payment.
The trial is scheduled to last until November 7, with a verdict likely to be handed down before the end of the year.