February 04, 2022 SCT - JUDGMENTS AND ORDERS
Claim No: SCT 001/2022
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
In the name of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Ruler of Dubai
IN THE SMALL CLAIMS TRIBUNAL OF DIFC COURTS
BEFORE H.E. JUSTICE NASSIR AL NASSER
BETWEEN
MARCOS
Claimant
and
MILLER
Defendant
| Hearing : | 27 January 2022 |
|---|---|
| Judgment : | 4 February 2022 |
JUDGMENT OF H.E. JUSTICE NASSIR AL NASSER
UPON a Hearing having been listed before H.E Justice Nassir Al Nasser on 27 January 2022, with the Claimant’s and the Defendant’s representatives in attendance
AND UPON reading the submissions and evidence filed and recorded on the Court file
IT IS HEREBY ORDERED THAT:
1. The Defendant shall pay the Claimant the sum of AED 178,406.20.
2. The Defendant shall pay the Claimant the Court fee in the sum of AED 8,920.31.
3. The Defendant’s counterclaim shall be dismissed.
4. Each party shall bear its own costs in relation to the Counterclaim.
Issued by:
Nassir Al Nasser
SCT Registrar
Date of Issue: 4 February 2022
At: 11am
THE REASONS
Parties
1. The Claimant is Marcos(the “Claimant”), a company registered in the DIFC, located in Suite 111, Dubai International Financial Centre, Dubai, UAE.
2. The Defendant is Miller (the “Defendant”), a Public Listed Company registered and located in Dubai, UAE.
Background and Procedural History
3. The underlying dispute arises over a recruitment agreement (the “Agreement”) signed by the Claimant and the Defendant on 18 October 2020.
4. On 3 January 2022, the Claimant filed a claim with the DIFC Courts’ Small Claims Tribunal seeking payment in the sum of AED 178,406.20 from the Defendant, being the balance of the unpaid invoices arising out of the Agreement.
5. On 10 January 2022, the Defendants filed an Acknowledgment of Service with the intention to defend the whole claim.
6. The parties met for a Consultation with SCT Judge Hayley Norton on 12 January 2022 but were unable to reach a settlement.
7. In line with the rules and procedures of the SCT, this matter was referred to me for determination, pursuant to a Hearing held on 27 January 2022, at which the Claimant’s and the Defendant’s representatives were in attendance.
Claim
8. The Claimant submits that pursuant to the Agreement, it was agreed that the Claimant would provide specific services to the Defendant regarding the recruitment of the group chief marketing officer in the UAE, and the Defendant would pay for such services in accordance with the Agreement.
9. The Claimant submits that the Defendant failed to pay the total sum of AED 160,570.20 for invoices 1094 and 1210 (the “Invoices”), plus the sum of AED 17,836 as contractual interest on the aforesaid amount at the rate of 1% per month from the date of the invoices until the date of payment.
Defence
10. The Defendant, in response, submitted that the Agreement between the parties is a one-sided Agreement, the terms of which require the Defendant to pay professional fees to the Claimant regardless of the services performed and the results achieved by the Claimant.
11. The Defendant submits that the Claimant shortlisted candidates and made its recommendation. However, the candidate that was selected for the position was not in fact suitable for the role and did not satisfy the profile that the Defendant was seeking. Nevertheless, due to the urgency of filling the position and relying on the recommendation of the Claimant and its skills, the Defendant appointed the candidate, however, the Defendant submits that it was obvious from the beginning that the candidate was not suitable. The candidate failed to complete the probation period and was requested to leave his job with the Defendant due to his underperformance.
12. Notwithstanding the provision in appendix C of the terms and conditions of the Agreement, and specifically the clause entitled “performance guarantee”, the Claimant was supposed to re-launch the search for a new candidate under the original role specification for no additional professional fee. However, the Defendant alleges that the Claimant disregarded its obligations to do so.
13. The Defendant alleges that, based on the poor service of the Claimant, and the breach of the Claimant’s commitment, the Claimant should not be entitled for the payment of the Invoices. Notably, Invoice No. 1094 for an amount of AED 156,056.25 and Invoice No. 1210 for an amount of AED 4,513.91, and the interest accumulated thereon for an amount of AED 17,836.
Defendant’s counterclaim
14. The Defendant filed a counterclaim alleging that the Claimant failed to perform its obligation under the Agreement and therefore, breached the Agreement (the “Counterclaim”).
15. The Defendant adds that it had to identify alternative candidates, evaluate the best-qualified candidates and conduct hiring negotiations (the “Services”). As a result, the Defendant alleges that it had suffered damages by performing the above tasks.
16. Therefore, the Defendant alleges that the Claimant should pay the Defendant the amount of AED 144,506.25, as this is the sum subsequently incurred by the Defendant in arranging for the performance of the Services instead of the Claimant.
Discussion
17. As per the Agreement, the parties agreed upon the following commitments:
“Professional Fees
Our professional fees are fixed in advance for a given assignment and reflect the complexity of that assignment and the scope of our search efforts, not the compensation level of the position to be filled. Our fees have no commission or contingent element and, therefore, we have no vested economic interest in the compensation package you negotiate with the final candidate. Our sole goal is a successful search and a satisfied client.
Our fixed professional fee for this assignment would be AED 550,500. We will invoice in four equal monthly instalments:
• the First invoice will be issued right after signing this letter of proposal and upon talking the briefing for the search, submitting our search strategy and a tentative timeline for the project.
• The Second invoice will be issued 45 days from the first invoice or upon acceptance of the shortlisted candidates whichever comes earlier.
• The third invoice will be issued 30 days from the second invoice or upon presentation whichever comes earlier.
• The fourth and final invoice will be issued 30 days from the third invoice or upon closing whichever comes earlier.
Should you employ one of our candidates prior to the end of the billing period, then the remaining unpaid balance of our total fixed professional fee is accelerated and becomes due. Taxes as applied by the government would be payable on the professional fees.
If for any reason this assignment is cancelled before the completion of the billing period, our fees will be adjusted in accordance with the time and expenses incurred up to that point. If the assignment has not been solved after the 4-month period, the total fee having been paid, we will continue with our engagement, charging only expenses on a monthly basis.”
18. I am satisfied that the parties have agreed the dates of the Invoices as per the agreement above. Therefore, I find that the Defendant clearly had an obligation to pay the Claimant in relation to the invoices that it received.
19. In addition, the Defendant in its submissions confirmed that the Claimant provided the candidates and that it had chosen a candidate, albeit that candidate was then asked to leave due to non-performance. However, this does not exempt the Defendant from paying the Invoices.
20. Therefore, in light of the above, I find that the Claimant is entitled to the sums due in relation to the Invoices, in the sum of AED 160,570.20.
21. In relation to the sum of AED 17,836, as per the Agreement, the parties agreed that “we invoice our professional fees and expenses on a monthly basis. Invoices are due and payable upon receipt. The amount on the invoices is the net amount to be deposited into bank account after tax and other levies. Invoices paid after 45 days of receipt may be subject to interest at 1% a month at our discretion. For this assignment, invoices will be directed to you unless you advise us otherwise.”
22. Therefore, I find that the Claimant is entitled to interest in the sum of AED 17,836.
The Counterclaim
23. The Defendant filed its Counterclaim arguing that the Claimant failed to perform its obligation under the Agreement and therefore, breached the Agreement.
24. The Defendant adds that it had to identify alternative candidates, evaluate the best-qualified candidates and conduct hiring negotiations (the “Services”). As a result, the Defendant argues that it had suffered damages by performing the above tasks.
25. Therefore, the Defendant claims that the Claimant should pay the Defendant the amount of AED 144,506.25 as this is the sum subsequently incurred by the Defendant in arranging for the performance of the Services instead of the Claimant.
26. The Claimant in response argues that the Defendant should have informed the Claimant that the candidate was asked to leave due to non-performance so that the Claimant could have relaunched a search for a new candidate without additional professional fees pursuant to Appendix C: Terms and Conditions, which states as follows:
“Performance Guarantee
If in the first 12 months of employment, hired candidate is asked to leave for reasons of under-performance, provided that there has not been a material charge in the nature or location of the position, we will re-launch a search for a new candidate, under the original role specifications. In such case, we will do so for no additional professional fee, though charging expenses as provided for in the original search. If the nature, location or reporting structure has changed materially since we closed on the original hire, we will mutually agree on a revised Role Specification and a new fee structure. The professional fee and expenses related to the specific assignment as mentioned in this letter of proposal are not transferable to any other assignment. Please not that our performance guarantee does not apply in the even a candidate resigns of find him/herself compelled to leave his position because of an event of force majeure (e.g. war, civil disturbances, regional hostilities, etc)”.
27. The Defendant failed to provide any evidence to demonstrate that it had communicated with the Claimant in order for the Claimant to arrange for a relaunch of the search pursuant to the performance guarantee.
28. The Defendant failed to provide any evidence of the damages suffered as a result of arranging the Services.
29. Therefore, I find that the Counterclaim has no supporting evidence and must be dismissed.
Conclusion
30. In light of the aforementioned, the Defendant shall pay the Claimant the sum of AED 178,406.20.
31. The Defendant shall pay the Claimant the Court fee in the sum of AED 8,920.31.
32. The Defendant’s counterclaim shall be dismissed.
33. Each party shall bear its own costs in relation to the Counterclaim.
