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Claim No. CFI 056/2021

IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

TARIG MOHAMED ABDELSALAM ABDELRAHMAN

Claimant

and

EXPRESSO TELECOM GROUP LTD

Defendant

ORDER OF JUSTICE SIR JEREMY COOKE

UPON the Default Judgment being issued by H.E. Justice Maha Al Mheiri on 1 September 2021 in favour of the Claimant

AND UPON the Defendant filing Application No. CFI-056-2021/1 on 16 September 2021 to set aside the Default Judgement (the “Application”)

AND UPON reading the relevant material in the case file and hearing from counsel for the Parties at an oral hearing on 22 November 2021

AND UPON the Defendant accepting that the sum of USD 207,349 is due and owing to the Claimant in respect of his post-termination employment benefits

IT IS HEREBY ORDERED THAT:

1. The Defendant shall pay into court the sum of USD 207,349 by 29 November 2021.

2. Provided that the Defendant has carried out the step set out at paragraph 1 of this Order, the Default Judgment issued by H.E. Justice Maha Al Mheiri on 1st September 2021 shall be set aside in full.

3. The Claimant shall serve on the Defendant an amended claim form and full particulars of claim by 6 December 2021.

4. The time for filing the acknowledgment of service and/or defence thereafter shall be in accordance with the requirements set out in Part 11 and/or Part 16 RDC.

5. The Claimant shall pay the Defendants costs of the application in the sum of AED 50,000.00 by 6 December 2021.

Issued by:
Amna Al Owais
Chief Registrar
Date of issue: 5 December 2021
At: 3pm

SCHEDULE OF REASONS

Summary

1. The Defendant filed an application notice on the 16 September 2021 to set aside the Default Judgement issued by H.E. Justice Maha Al Mheiri on 1 September 2021 in favour of the Claimant.

2. The Default Judgement set aside application is granted.

3. Defendant has accepted that it is liable to the Claimant in respect of a salary and benefits in the sum of USD 207,349. After discussion with the Defendant's counsel, the Defendant agreed that that sum could be paid into court within seven days and that an order could be made on the basis of admissions that that sum was due. On that basis, the judgment is set aside.

Background

4. On 1 August 2019, the parties entered into an employment contract whereby the Claimant was engaged as managing director of the Defendant's subsidiary in Mauritania. Clause 2 of the employment contract set out a basic salary of USD 12,000 per month and various allowances of one kind or another, amounting to a not insignificant additional figure. The contract provided for termination on six months' notice or termination for cause, in accordance with the DIFC employment law, where the employee committed a fault resulting in substantial material loss to the company, with a proviso as set out in clause 12.1(c). It was specifically provided in clause 12.3 that on termination of employment the Defendant should pay all wages owing to the employee within seven days after the end of the pay period, and clause 12.4 provided for vacation pay and the like. I should say that the governing law of the contract was the law of the DIFC.

5. The Defendant's position is that the Claimant's employment was terminated because investigations by a parent company revealed financial irregularities and misappropriation of funds of approximately USD 1.5 million, at a time when the Claimant was the financial manager of the Defendant's subsidiary company. The investigations were such that the Claimant himself was involved and spoke to those investigating, as recorded in the findings of the committee. The committee produced a report on 24 March which the Claimant signed. The Claimant acknowledged that he delivered approximately USD 1.5 million in cash in 2015, or other years, after being asked to do so by the then, current chief executive officer.

6. The Claimant acknowledged that he had not signed delivery or receipt documents when withdrawing the cash or delivering the cash and had not obtained approvals from the officials in charge when doing so. That, it was accepted, was not in line with company procedures and the Claimant expressly acknowledged that there had been an administrative or procedural error, or mistake in that matter, due to the lack of obtaining the signature of those whose authorisation was required and by way of receipt. It is said that the Claimant is now subject to an ongoing criminal investigation in Sudan, where the subsidiary operated. The Claimant says that he has received no summons of any kind and is not aware of any such proceedings. Those are matters for the future and not for now, being in dispute between the parties.

Reasons

7. Judgment should then be set aside for more than one reason, but primarily because the Defendant has real prospects of defending the claim on the basis that the Claimant's employment was terminated for cause on account of admitted irregularities in accounting procedure for which he was responsible, which resulted in the sum of approximately USD 1.5 million being unaccounted for, apparently being received by the chief executive. The effect of the arguability and the real prospects of success of that defence is to negate large elements of the claim for USD 447,700. It was on 23 September 2021, some six months after the letter of termination, that the Defendant first accepted that the sum of USD 207,349 was due and owing. It is right to note that in the letter of termination of 25 March 2021, which expressly terminated the Claimant's employment for cause, effective immediately, the Defendant stated that:

"Within the next week a representative from the finance department will contact you to finalise the administrative and financial procedures."

8. There is no evidence of any such contact, and it is accepted that no payment was made of the sum which is now admitted to be due, and which could, in my view, have been calculated in that seven-day period and paid within it, in accordance with the provisions of the contract which required payment within seven days of termination. The letter of 23 September was sent some 22 days after a Default Judgment was entered for the larger sum, which is still claimed by the Claimant.

9. I have considered whether it would be open to me to set aside judgment only in respect of the part of the claim which is disputed, but to leave intact a judgment for the lesser sum of USD 207,349, which is the sum accepted to be due. But the way in which the parties have approached the matter allows me to make an order in the form that I now do. It is clear to me that the Defendants do have a realistic prospect of success in their claim that the Claimant's employment was terminated for cause and in showing that only the lesser sum, which is admitted, is due, for all the reasons which appear in the witness statements filed and the skeleton arguments served on behalf of the Defendant.

10. The Defendant advances other grounds why the whole of the Default Judgment should be set aside in any event, which is why the course that has been adopted makes sense. It is contended that the claim form was not properly served on the Defendant or, alternatively, that there is sufficient doubt about the validity of such service. That judgment should be set aside in its entirety, ex debito justitiae, or as a matter of the court's discretion, in accordance with the provisions of RDC 14.1, by reference to RDC articles 13.4 and 14.2(2).

11. What the documents and evidence show, once again, is that on 25 March 2021 the Defendant terminated the employment of the Claimant for cause in the manner I have already outlined. On 9 August 2021, the Claimant's lawyers emailed Mr Abdelmalik, a director of the Defendant in the DIFC, stating that they were acting for the Claimant in the abovementioned claim which was not defined but must, I assume for present purposes, be taken to refer to previous correspondence in which the claim for wages and other benefits was advanced.

The email sent by the Claimant's lawyers went on to say this in the second paragraph:

"Kindly confirm in writing that the preferred communication method for serving summons and further communication with the company (email or courier or other).” (sic)...

12. The response from Mr Abdelmalik on the same day was this:

"Thank you for your email. Please address all the related communications for the time being to the below email addresses."

And then two email addresses were given. Later that same day, the Claimant's lawyers sent a further email with attachments, including a claim form. In that email, the following appeared:

"Kindly be advised that the attached claim, CFI-056-2021, with its supporting documents, has been filed against Expresso Telecom Limited before DIFC Courts, Court of First Instance, on the 26th of May 2021. Following the written confirmation by your email dated 9 August 2021 regarding communication method, please consider this email with its attachments as summons served to Expresso Telecom Group Limited as Defendant. Subject to the DIFC Courts rules, you may file an acknowledgement of this summons within 14 days, and you must file and serve your defence within 14 days."

The claim and supporting documents were attached, including the claim form, employment contract, a financial claim and the termination letter. I should point out that in the email the name of the Defendant was wrongly spelt, with an additional "E" in the "Expresso", so that it read “Exepresso”. That defect also appeared in the claim form itself, which was extremely limited in the details of the claim provided. All that the claim form actually said by way of details under the heading "Particulars of Claim" was this:

"End of service gratuity, unpaid salaries, notice period, aggressive termination, annual leave - travelling tickets."

13. The amount claimed was USD 447,700. The Defendant was, at the time of the exchange of emails to which I have just referred, not represented by lawyers and on 26 August 2021 - that is within the 14 days allowed for Acknowledgement of Service - asked the DIFC Courts for an additional 14 days in order to obtain the services of a DIFC lawyer. The court informed the Defendant that it had either to file an application with the court for an extension of time or to seek the consent of the Claimant to such an extension. The court was informed that the Defendant was intending to file a defence and counterclaim.

14. On 29 August the Defendant asked the Claimant's lawyer for a 14-day extension of time, but on the following day the Claimant's lawyers refused such an extension and sought Judgment in Default of Acknowledgement of Service, which was granted by the court on 1 September 2021.

15. On 5 September 2021, that Default Judgment was sent by email to the Defendant and the Defendant then sought assistance from DIFC-registered lawyers, which resulted in the current application to set aside the judgment, which was made on 16 September 2021.

16. It is in those circumstances that the court must consider the terms of the rules and whether or not service was properly and validly made and whether the judgment therefore was regularly entered or not.

17. The question therefore arises as to whether the Defendant did expressly indicate that it would accept service of the claim form by electronic means in its email of 9 August 2021. I conclude that it did not unequivocally do so because it merely said:

"Please address all the related communications for the time being ..."

to the addresses in question. There was therefore no express consent to service of a claim form, although it is fair to point out that the plaintiff's lawyers' prior message referred to "serving summons". In circumstances where no lawyer had been instructed, the request to address "all related communications" to be Mr Abdelmalik’s email address, as given by the Defendant, could not reasonably, in my judgment, be understood to be a consent to service of proceedings by that method and there was no express consent to serving a summons via that method, let alone a claim form, if the difference was plain to anybody's mind at the time.

18. In the result, I take the view that the Claimant was bound to serve the proceedings in the conventional way by serving them on the registered office of the Defendant in the DIFC. In those circumstances, the judgment should be set aside ex debito justitiae.

19. If I was wrong in that conclusion, as a matter of discretion, it seems there is plainly enough doubt about the validity of service for the court, in its discretion, to set aside judgment in accordance with the principles set out in the decision in Grand Valley General Trading LLC v GGICO Sunteck Limited DIFC (CFI-044-2018) at paragraphs 25 to 28. The reason is that the court cannot be satisfied that the conditions required for entry of a Default Judgment as set out in RDC 13.46 have been fully met. In those circumstances, judgment would be set aside under RDC 14.2(2).

20. The Defendant further relies on the fact that its name was spelt wrongly at the time of the entry of the Default Judgment, both in the claim form and in the judgment itself. It submits therefore that the proceedings and the judgment did not validly implead the Defendant and the court should take a strict approach in determining whether the conditions for service have been met, since the effect would be to deprive a Defendant of the opportunity to deliver in the claim.

21. I need not decide that point, but if it had been the only point raised by the Defendant, I doubt whether it would carry any weight because amendment of what was either a typographical or spelling error would accord with general principles of justice, whether such amendment fell to be made before or after judgment.

22. The reality here is, however, that given the history, as I have recorded it, there is a measure of opportunism on the part of the Claimant in seeking Default Judgment in the circumstances set out when the Defendant had sought an extension of time and was unrepresented with a known defence to at least part of the claim. In those circumstances, it would be unjust to deprive the Defendant of the opportunity to run its defences in respect of that part.

23. It is extremely odd, to my mind, notwithstanding what is said on the Claimant's behalf, that there was no response to the letter of 23 September, where an admission was made as to the sum due. The reason given on his behalf was that he did not accept that was the only sum due, but the absence of response is odd, just as the failure on the part of the Defendant to pay the sum which is admitted being due is likewise unjustified.

24. The Defendant applied promptly to set aside the judgment once lawyers were instructed, following the service of the Default Judgment, and justice demands that the Defendant be given the opportunity to defend where there are disputed matters of the kind alleged. Given the fact that the setting aside of the judgment is made on the basis of admissions of a sum due and payment into court of that sum, the order therefore takes full account of the position between the parties as I have identified it.

25. On that basis, the whole of the judgment is to be set aside, provided that the payment into court is made within the seven-day period, which I have ordered.

26. There remains then I think the question of costs and I will listen to the parties' submissions on that subject. The only other element I suppose is this - and I would also invite submissions on it – is what directions should be made for the future progress of the claim. It appears to me that the Claimant will need to serve a proper Particular of Claim of the basis on which it alleges the additional sum is due and then there needs to be provision for service of a defence and the like.