Dual Designs, Singular Dispute: Engineering Firm Wins Fees for Abandoned Villa Plans

In a commercial dispute that underscores the binding nature of contracts and the value of expert testimony, the Al Ain Simple Commercial Court has ruled in favor of an engineering consultancy firm, ordering a property owner to pay for design services rendered for a villa project that was redesigned and later stalled. The case revolved around two separate agreements, significant changes of plans by the client, and the subsequent refusal to compensate the firm for work it had diligently completed on two separate occasions.

📋 The Genesis of the Project and the Initial Agreement

The story began in September 2021 when a property owner, aspiring to build a private villa, engaged the services of a reputable engineering consultancy. The parties entered into a formal agreement wherein the consultancy was tasked with a comprehensive set of services: creating the architectural designs, navigating the complex process of securing all necessary permits and licenses, and supervising the eventual construction. The fee for this comprehensive service was set at 2.5% of the total project value.

The consultancy promptly commenced its work. Its team of architects and engineers developed the designs, submitted the required documentation to the authorities, and successfully obtained the building permit. This marked the completion of the first major phase of their contractual obligations, entitling them to a fee of 1.5% of the project value, as stipulated in the agreement. The client had even secured a bank loan of AED 1,250,000 to finance the construction, and everything seemed on track for the project to break ground.

🔄 A Change of Heart and a Second Contract

However, the project came to an abrupt halt. The property owner decided not to proceed with the approved designs. Some time later, she decided to revive the project but with a completely different vision. This necessitated a fresh start, rendering the initial set of approved plans obsolete. To accommodate this new direction, the owner secured an increased loan from the bank, bringing the total financing to AED 1,750,000.

In March 2023, nearly a year and a half after the first agreement, the parties signed a new contract. This second agreement commissioned the consultancy to develop an entirely new set of architectural designs, once again handle the licensing procedures, and provide supervision. The fee structure was slightly different, set at 2% of the new project value. For a second time, the consultancy delivered on its promise. It completed the new designs, navigated the administrative hurdles, and successfully secured a new building permit. This fulfilled the first part of the second contract, entitling them to a fee of 1% of the project's value.

⚖️ The Legal Battle Begins

Despite the consultancy having fully performed the design and licensing phases under two separate contracts, the property owner failed to remit the outstanding payments. After repeated amicable attempts to recover the fees proved futile, the engineering firm was left with no option but to seek legal recourse. They filed a lawsuit demanding payment of AED 62,750 for their services, compensation of AED 10,000 for material and moral damages, and legal interest at a rate of 12%.

During the court proceedings, which were conducted remotely, the defendant failed to appear despite being duly notified. Recognizing the technical nature of the dispute, the supervising judge appointed an independent engineering expert to investigate the matter thoroughly. The expert was tasked with reviewing the contracts, assessing the work performed by the consultancy, and calculating the exact amount owed.

🔍 The Expert's Authoritative Findings

The expert's report became the cornerstone of the court's decision. After a meticulous review of all documents and evidence, the expert concluded:

• Two distinct and valid contracts were signed by the parties.

• The consultancy had fully executed its obligations under the design and licensing phases of both contracts.

• The total outstanding amount rightfully due to the consultancy for the completed work across both agreements was precisely AED 35,098.56.

🏛️ The Court's Final Verdict

The court placed significant weight on the expert's report, finding its conclusions to be logical, well-founded, and based on the evidence presented. The judge cited foundational principles of UAE law, including Articles 881 and 889 of the Civil Transactions Law, which affirm that an engineering firm is entitled to its fees once it completes the agreed-upon work. The court also invoked Article 125, which establishes that a contract is the law between the contracting parties.

Addressing the claim for damages, the court acknowledged that the client's failure to pay constituted a contractual breach that caused financial harm to the consultancy. The firm was deprived of the use of its earned funds, which justified compensation. However, the court deemed the requested amount excessive and rejected the claim for moral damages, reasoning that a corporate entity does not suffer moral harm in such commercial disputes.

Regarding the interest, the court recognized that the defendant's delay in paying a known, liquidated debt warranted delay interest as a form of compensation. It cited a Court of Cassation precedent establishing this principle but exercised its discretion to set a fair rate.

Based on this comprehensive analysis, the court issued its final judgment:

1. The property owner was ordered to pay the engineering consultancy the principal amount of AED 35,098.56.

2. The owner was also ordered to pay delay interest at a rate of 3% per annum from the date the lawsuit was filed until the date of full settlement, with the total interest not to exceed the principal amount.

3. The owner was further ordered to pay AED 3,000 as compensation for the damages incurred by the consultancy.

4. Finally, the owner was held responsible for a proportionate share of the court fees, the expert's fees, and was ordered to pay AED 300 towards the consultancy's attorney fees. All other claims were dismissed.