A woman has been ordered to pay AED1.46 million, plus 5% legal interest from the date of the claim, after guaranteeing her partner’s debt in a real estate investment project.
The Dubai Court of Appeal ruled that the woman must pay the amount to a man after she signed a notarised debt acknowledgment pledging to repay the money he had provided to finance her partner’s share in a villa investment project. The project involved buying a villa, reselling it and sharing the profits. The court held that her signature on the acknowledgment amounted to acceptance of responsibility for the partner’s debt and an obligation to settle it.
Court documents stated that the woman and another person had entered into a memorandum of understanding for an investment project involving the joint purchase of a villa. The agreement provided that the property would be resold and the profits divided equally, with each party receiving 50%.
According to the ruling, the agreement stipulated that the partner would contribute 40% of the villa’s value, amounting to AED1.46 million, while the woman would finance the remaining 60% through a mortgage loan.
The court said another man paid the partner’s share, which represented the down payment, through a manager’s cheque issued to the villa owner. As a result, the amount became a debt owed by the partner to the man who financed his share of the real estate project.
The case file included a notarised acknowledgment of debt in which the woman stated that she owed the man AED1.46 million and undertook to repay it by February 2, 2026. The document also gave the man the right to take legal action in the event of non-payment.
After the repayment date passed, the man applied for a payment order compelling the woman to pay the amount, along with 5% legal interest, fees, expenses and legal costs. He relied on the notarised acknowledgment and stated that she had failed to pay despite being formally notified.
The competent judge refused to issue a payment order. The man then appealed, arguing that the debt was established by a notarised declaration, that the amount was specified and due, and that the legal requirements for issuing a payment order had been met.
In response, the woman asked the court to reject the appeal and uphold the decision. The court subsequently appointed an expert to examine the documents and the nature of the financial relationship between the parties.
The expert concluded that the woman had acknowledged, through a documented instrument, a debt of AED1.46 million owed to the man, payable on February 2, 2026. However, the expert was unable to determine whether the acknowledgment represented a genuine debt owed by her because there were no documents explaining the reason for the indebtedness.
After reviewing the case file, expert report and supporting documents, the Court of Appeal found that the amount represented the partner’s share in financing the villa purchase project. It also found that the man had paid that share directly to the property owner, creating a debt owed to him by the partner.
The court held that the woman’s signature on the notarised declaration, which specified the debt amount and repayment date, demonstrated her acceptance of responsibility for guaranteeing the partner’s debt and her commitment to repaying it.
The court explained that a guarantee adds the guarantor’s liability to that of the debtor in fulfilling an obligation. A creditor may therefore pursue the debt from the debtor, the guarantor, or both. It noted that a guarantee is not affected by the form in which the original obligation was created.
The court held that the notarised acknowledgment obligated the woman to pay the amount because she had accepted responsibility for guaranteeing her partner’s debt. It added that once the repayment date had passed, the creditor was entitled to claim the amount from her.
The Court of Appeal overturned the lower court’s decision and ruled that the woman must pay AED1.46 million, plus 5% legal interest from the date of the claim. It also ordered her to pay court expenses and AED1,000 in legal fees, in addition to the refund of the security deposit.