Privacy Settings

Case No SCT 089/2023

IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

MURKAN

Claimant/Respondent

and

MISHTI

Defendant/Appellant

---

Defendant/Appellant

---

UPON the Defendant’s Appeal Notice dated 17 May 2023 seeking permission to appeal (“the Permission Application”) against the judgment of H.E. Justice Maha Al Mheiri dated 3 May 2023 (“the Judgment”)

AND UPON the hearing held before me on 14 June 2023 with the Claimant and the Defendant in attendance (the “Hearing”)

AND UPON reviewing the relevant documents on the Court file

IT IS HEREBY ORDERED THAT:

1. The Permission Application is allowed on the ground that the Small Claims Tribunal’s calculation of the Respondent’s entitlement to accrued annual leave and holiday pay included a figure for a monthly bonus of AED 500.

2. The Permission Application is otherwise refused.

3. The appeal is allowed to the extent that the Judgment of the Small Claims Tribunal requiring the Defendant to pay the Claimant the sum of AED 1,984.54 is substituted by an order that the Defendant pay the Claimant the sum of AED 1,587.79.

4. The above Order will come into effect fourteen (14) days after the date of issue of the Order unless the Claimant lodges a written submission within that time against the appeal being allowed in relation to the amount of the monetary award.

5. In the event that the Claimant files a written submission pursuant to the preceding Order, the Defendant will be at liberty to file a responding submission within seven (7) days thereafter.

6. Unless the parties otherwise contend, the appeal in that event will be disposed of on the papers.

Issued by:
Delvin Sumo
Assistant Registrar
Date of Issue: 3 July 2023
At: 3pm

SCHEDULE OF REASONS

Introduction

1. This is an application for permission to appeal against a decision of H.E. Justice Maha Al Mheiri, delivered in the Small Claims Tribunal (the “SCT”) on 3 May 2023. The dispute arises out of an employment contract between the Claimant and the Defendant and the termination of that contractual relationship.

2. By his claim in the SCT, the Claimant alleged that he had commenced employment with the Defendant on 7 March 2022. He claimed that as the work environment was unpleasant and he was under significant stress at work he tendered his resignation on 9 December 2022 but continued to work for one month following that which he said was his notice period under the contract. He claimed that his last date of employment was 9 January 2023. He claimed that despite his requests, the Defendant had failed to take a number of steps:

3. The remedies sought were:

4. The total amount of the claim was AED 2,723.094.

5. The Defendant filed a defence on 8 March 2023 in which it alleged that the Claimant:

6. The Defendant said:

7. The Defendant made a counterclaim in the following amounts:

8. The total amount of the counterclaim was AED 17,500.

9. A number of documents and witness statements were before the Judge.

The Judge’s decision

10. The Judge set out the background and history of the dispute between the Claimant and the Defendant. A number of findings of fact emerged from that background and they are summarised as follows:

11. The Judge then referred to the defence and counterclaim, which has already been mentioned. A mediation consultation took place before SCT Judge Delvin Sumo, on 6 March 2023 but the parties were unable to reach a settlement.

12. The Judge stated that the dispute was governed by the Employment Law Amendment Law DIFC Law No 4 of 2021 (the “Employment Law”) read with the Employment Contract. She then set out each of the Claimant’s claims, the Defendant’s defence and counterclaim and the Court’s reasoning and findings. Her reasoning and conclusions may briefly be summarised as follows.

Accrued but untaken annual leave

13. The Judge found that the Claimant was entitled to 21 days of annual leave per annum according to the Employment Contract, an entitlement which he could access once he completed one year of employment. The Defendant submitted that the Claimant had worked until 7 January 2023 and submitted the Biometric Login for him. The Claimant’s last working day was therefore 7 January 2023, which meant that he had accumulated, on a pro rata basis, 13.21 days of annual leave. On that basis the Judge found that he must be paid in lieu of those leave days the amount of AED 1,523.02. This was calculated by reference to the Claimant’s monthly salary of AED 2,500 x 12/260 days x 13.2 = 1,532.02. The figure of 260 days appears to be the total number of days in the year, 365 less 105 weekend days.

Public Holiday Day

14. The Claimant had submitted that he was entitled to the sum of AED 461.52 for four public holidays during which he worked at the Defendant’s. The Defendant had rejected that claim on the basis that the Claimant was not entitled to those days because the holidays aligned with the Government sector. The Judge referred to Article 32(2) of the Employment Law, which provides:

“An Employer shall pay an Employee their Daily Wage for each Public Holiday.”

15. She also referred to Article 16(1)(f) of the Employment Law which imposes an obligation on an employer to maintain a record of such days and states as follows:

16. The Judge found that the Defendant had failed to provide records of the public holidays that the business was closed. Because of the lack of evidence submitted by the Defendant, the Judge relied upon the Claimant’s submissions about the number of days that he had worked. She calculated an amount of AED 461.52, calculated according to the Employment Law as AED 2,500 x 12/260 x 4 = 461.52.

Reimbursement of Unpaid Sick Pay

17. The Claimant’s submission that he was entitled to be paid a day of sick leave failed for want of any evidence.

Counterclaim

18. The Judge then turned to the counterclaim and dealt first with the counterclaim for payment in lieu of the notice period. She referred to the Claimant’s Employment Contract which provided:

“Termination
By the Employee
You may terminate the contract by giving the company 3 (three) months in advance written notice.”

19. The Judge referred to the Defendant’s argument that the Claimant had withdrawn his resignation one week after giving it. She referred to screenshots from WhatsApp conversations between them which showed that although the Claimant did communicate that 8 January was his last day, he questioned how many more days he would have to serve notice before the Defendant would cancel his visa. The Claimant also said in the hearing before the Judge that he was willing to go back to work to serve the remainder of the notice period which the Defendant denied, submitting that he might damage the goods received by the Defendant’s clients and that the Defendant could not trust the Claimant any more. The Judge found that the Claimant’s last working day was 7 January 2023 and that he was willing to serve the other two months, but that the Defendant refused his offer. The Defendant’s claim for the amount of AED 7,500 in compensation for the notice period was denied.

Breach of Non-compete Clause

20. The Judge referred to the Defendant’s contention that the Claimant had breached his Employment Contract by sharing the Defendant’s HR Department number with the HR Department of Mirt Laundry and Dry-Cleaning. The Judge found that on 6 January 2023, the Claimant had confessed that he had been contacted by previous employees to join Mirt Laundry and Dry-Cleaning. The Defendant argued that the Claimant was going there during his days off to share the Defendant’s internal information. The Defendant requested that the Claimant sign a written statement confirming that he shared information with the competitor. It further submitted that the Employment Contract stated that he was not permitted to work for any competitor within Dubai, Abu Dhabi and RAK for a period of one year after leaving the Defendant.

21. The Judge said she had observed the Claimant’s spoken English at the hearing and she was convinced his command of the English language was limited to the extent that he required a translator to explain his case. The Claimant was still under the Defendant’s visa and not working for any competitor. The Defendant failed to provide any evidence to demonstrate any breach in the non-compete clause other than the statement which it had prepared and which had been signed by the Claimant. The burden of proof was not met by the Defendant. Accordingly she dismissed its claim for breach of contract.

Failure to return company’s belongings

22. The Judge found, in effect, that the Claimant had only received one shirt from the Defendant, not the three alleged by the Defendant. She ordered the Claimant to return all the company’s belongings that were within his possession, namely one shirt, safety shoes, two aprons and a pair of trousers.

Compensation for economic losses

23. This concerned the Defendant’s claim that the Claimant had forced it to suffer an economic loss from around AED 500 to AED 1,000 daily. It sought payment from him in the amount of AED 10,000. The Judge found that the Defendant did not discharge the burden of proof necessary to demonstrate that it had suffered damage at the hands of the Claimant.

24. The Judge made the following orders:

25. Although not recorded in the Formal Order on the front sheet of the Tribunal’s Judgment, the Tribunal also ordered:

“4. The Defendant’s counterclaim shall be dismissed.”

26. All of these contentions went to questions of fact upon which no appeal is available.

The Small Claims Tribunal and the Appellate Jurisdiction of the Court of First Instance

27. The SCT was established in 2007 by Order of the Chief Justice made pursuant to Article 14(3) of the DIFC Court Law No 10 of 2004, which provides:

“(3) The Chief Justice may, where he considers it appropriate, set up and administer Tribunals of the DIFC Court and authorise rules for their administration, which shall be set out in the Rules of Court.”

28. Under Article 14(1)(d), the Chief Justice may “appoint judicial officers as members of Tribunals of the DIFC Court.”

29. Article 28 of the DIFC Court Law deals with appeals from DIFC Tribunals and Article 28(1) provides that:

30. The powers of the Court of First Instance (the “CFI”) are set out in Article 28(2), which include affirming, reversing or varying the decision appealed.

31. The term “DIFC Law” is defined in Article 2 of the Schedule to the DIFC Court Law as:

“law made by the Ruler (including, by way of example, the Law), as applicable in the DIFC.”

32. The term “the Law” refers to “the DIFC Court Law, DIFC Law No 10 of 2004 made by the Ruler.” The Rules of Court are made by the President on the recommendation of the Chief Justice.

33. Article 31 provides for the Rules of Court and states in Article 31(1):

“The Chief Justice shall recommend for enactment by the President rules of procedure to be known as the Rules of Court in relation to any proceedings before the DIFC Court or a tribunal of the DIFC Court.”

34. There is a distinction to be drawn between the jurisdiction of the DIFC Court defined in the DIFC Court Law and the Judicial Authority Law on the one hand, and rules of procedure which determine how jurisdiction is to be exercised. Rules of Court are a species of delegated legislation.

35. In Order No 2 of 2007, the then Chief Justice, Sir Anthony Evans, made orders which included the following:

“(1) That the DIFC Courts Small Claims Tribunal is hereby set up as a Tribunal of the DFC Courts with power to hear and determine claims within the jurisdiction of the DIFC Courts (as it may be defined from time to time) where the amount of the claim or the subject-matter of the claim is less than AED 100,000 (one hundred thousand UAE Dirhams) or such other amount as may be ordered or directed by the Chief Justice from time to time.”

36. The Order provided that the tribunal was to be known as the DIFC Courts Small Claims Tribunal and its members as SCT Judges when acting in that capacity.

37. In Article (5) of the Order, the Chief Justice said:

“(5) I authorise such Rules for the administration of the SCT as shall be enacted and published as part of the RDC pursuant to Article 31 of the DIFC Courts Law. Such Rules shall also regulate the conduct of proceedings in the SCT and the enforcement of rulings and judgments of SCT Judges.”

38. It may be noted that the authorisation to make rules for the administration of the SCT contemplated that those Rules would be made pursuant to Article 31 of the DIFC Court Law — that is to say, they would be “rules of procedure”. The Chief Justice also said in Article (6) of the Order:

“(6) I note that pursuant to Article 28 of the DIFC Courts Law a limited right of appeal will lie from the decisions of SCT Judges as therein set out.”

39. Under the former RDC 44.118, the grounds of appeal to the CFI from a decision of a tribunal were that the decision was:

40. That provision was held to exclude appeals on questions of fact.

41. RDC 44, in its application to tribunal appeals has now been substituted by Part 53 of the RDC. Part 53.1 provides:

42. RDC 53.2 sets out the jurisdiction of the SCT. Appeals are dealt with in RDC 53.84 to 53.86. It is convenient to set out the relevant parts of those Rules.

43. RDC 53.89 to 53.93 deal with permission to appeal. An application for permission to appeal must be made to the CFI.

44. Under RDC 53.91:

45. There are provisions for consideration of permission without a hearing — see RDC 53.94 to 53.100. There is provision for a permission hearing — RDC 53.101 to 53.103. There are provisions for appellant’s notices in RDC 53.104 to 53.106 and their filing and service in RDC 53.107 to 53.111. There is provision for a separate hearing after permission to appeal is given — RDC 53.116 to 53.117.

46. As appears from the above, the jurisdiction of the CFI in relation to appeals from DIFC tribunals is defined and limited by Article 28 of the DIFC Court Law. The jurisdiction does not extend to a case where the appeal simply relates to a question of fact. RDC 53.87(1) — requiring an appeal to be allowed where the decision was “wrong”, cannot be read as including a simple question of factual error as that would expand the jurisdiction of the CFI beyond that contemplated in Article 28. The previous Rule, RDC 44.118, was interpreted in Capital Resources Limited v Ali Jam [2018] DIFC CFI 041 (25 July 2018) as excluding from the appellate jurisdiction complaints about findings of fact unless they flowed from some procedural unfairness or miscarriage of justice. The Court said “[a]ll questions of fact are entirely for the Tribunal to determine.”¹ The Court went on:

“The second point that needs to be made in relation to any appeal is that it is limited by virtue of Rule 44.136 to a review of the decision of the lower court. It is not a rehearing. It follows that the Appellant must identify matters within the Judgment, which justly or arguably justify a complaint that the judge was wrong in law or was conducting proceedings in a manner which gave rise to unfairness or a potential miscarriage of justice.”²

47. The Judge in that case cited RDC 44.143 which had the same text as the predecessor to Part 53 in RDC 44.118.

48. Consistently with the above provisions, and in particular having regard to Article 28 of the DIFC Court Law, in my opinion no appeal lies from the SCT on a question of fact. The word “wrong” which appears in the current Rule — if it were to encompass questions of fact — would mean that the appeal to the CFI would open up for review all or any of the SCT Judge’s findings of fact said to affect the outcome. Of course, errors of fact which flow from some procedural unfairness or miscarriage of justice do fall within the appellate jurisdiction.

49. The above approach is consistent with the nature of the proceedings in the SCT set out in the Rules, namely that:

50. It is plain to see why, having regard to the character of proceedings before the SCT which are intended to serve the objectives of expedition, economy and finality, an application for permission to appeal because of errors of fact, is not available.

DIFC Employment Law

51. Some of the contentions advanced by the Defendant must be understood by reference to the Employment Law. The DIFC Employment Law, DIFC Law No 2 of 2019, sets out, among other things, to provide minimum employment standards for employees.³

52. It sets out the requirements of employment contracts which must include the employee’s Wage,⁴ the entitlement to vacation leave,⁵ and the termination notice that each of the employer and employee is obliged to give.⁶

53. Under Article 15, an employee is entitled to receive, as soon as reasonably practicable, a written itemised pay statement in respect of each pay period, that includes the amount of the remuneration payable and the amount of any deduction from that amount and the purpose for which it is made.⁷

54. Article 19 sets out payments following termination, which include the following:

55. Article 62 provides minimum notice periods for termination of employment, albeit the parties may agree to longer notice periods in an employment contract.

56. Schedule 1 to the Employment Law sets out various definitions of terms used in the Law. They include the following:

Contentions and Conclusions on the Application for Permission to Appeal

57. The Defendant’s Application for Permission to Appeal involved the following contentions, set out in a covering page of its written submissions. This Court’s conclusions are set out in italics against each contention.

58. The Defendant offered additional specific contentions in relation to the Judge’s decision. The Judge had held:

“The underlying dispute arises from the employment of the Claimant by the Defendant pursuant to an Employment Contract dated 22 May 2022 (the Employment Contract). The Claimant was employed in the position of Sales Associate on a monthly salary of AED 2,500.”

59. The salary payable to the Claimant was said by the Defendant to in fact have been AED 2,000 monthly as evidenced by a document which was before the Judge setting out the remuneration he was being offered. That document disclosed a “gross salary” of AED 2,000 broken down into a package of:

60. There appeared an additional statement in the remuneration offer that:

61. The other document relied upon by the Defendant was a document entitled ‘Receipt of December Salary’. That document and the remuneration statement referred to above are set out below.

62. What was asserted here was an error on the part of the Judge in counting the AED 500 monthly bonus as part of the monthly salary. Interestingly, the term ‘Salary’ is not a defined term under the Employment Law. Relevant terms are ‘Wage’, ‘Basic Wage’. ‘Annual Wage’, and ‘Daily Wage’. The term ‘Wage’ includes allowances but excludes additional payments, i.e. bonuses. The term ‘Annual Wage’ is calculated by reference to the Wage, a calculation which must necessarily exclude Additional Payments. It follows that the Daily Wage also excludes Additional Payments. On that basis ‘Vacation Leave’ should not include ‘Additional Payments’ — that is to say, should not include Bonus Payments.

63. It appears, therefore, that the Judge may be said to have made an error of law when calculating the Claimant’s entitlement to annual leave on the basis of an AED 2,500 monthly salary. There was nothing in the judgment to disclose the reasoning upon which that figure of AED 2,500 was used for the monthly salary.

64. The difference in the amount of accrued annual leave applying a monthly salary of AED 2,000 would have been AED 304.46. The difference in the public holiday calculation would have been AED 92.29. Both were very small amounts.

65. That miscalculation arguably reflected an error of law. The grant of permission to appeal is discretionary notwithstanding that an error of law is involved. It would arguably be open to this Court in the exercise of its discretion to refuse to grant permission to appeal on the basis that the amount in issue is so small. Upon reflection, in my opinion, the appropriate course is to grant permission to appeal on that aspect of the decision and endeavour to dispose of the appeal on the spot.

66. The Defendant referred to the Judge’s finding that it had failed to provide records of public holidays that the business was closed, which would have assisted the Court to understand the days that the Claimant was not working. The Defendant contended that they had submitted a Biometric as the Judge demanded and that it clearly showed that the Claimant wasn’t working for four days during bank holidays in December. The submissions included a copy of what was said to be a biometric of attendance clearly showing that the Claimant was paid during the relevant period. Again, this is a claim that the Judge erred in fact in her finding. If there were an error, it is not error for which permission to appeal can be granted.

67. The Defendant then contended that the Claimant had breached his contract because he didn’t serve his notice period and because he shared confidential information about the company and planned to work for the competition. This was said to disentitle the Claimant to any payment. It was said that the Claimant had breached the contract by failing to comply with the specified notice period, even after withdrawing his resignation and by his going to a direct competitor, contrary to the no-compete clause. He had also shared company information.

68. The Judge, however, made findings of fact adverse to the Defendant in this regard, which made its contentions unsustainable. These were the findings on the counterclaim. As to the breach of the non-compete clause, the Judge found that the Defendant had failed to provide evidence to demonstrate any breach apart from the statements which it had prepared and had been signed by the Claimant and which the Judge did not accept. These are all questions of fact which are fatal to the Defendant’s complaints about the Judge’s findings in relation to the Claimant’s claims. They are also fatal to the Defendant’s complaints about the Judge’s findings on the counterclaim. As to the counterclaim it may be added that there appeared to be no evidence on the record which would have supported the economic losses claimed by the Defendant.

Conclusion on Permission Application

69. For the above reasons, in my opinion, permission to appeal must be refused on all grounds save for the erroneous inclusion of the bonus in the SCT’s calculation of the entitlement to accrued annual leave and holiday pay.

The Appeal

70. In the course of the Parties’ submissions I may have conveyed the erroneous impression that if permission to appeal were granted, the matter would have to go to the Court of Appeal. That of course is incorrect. The appellate jurisdiction is exercised by this Court.

71. It is desirable that this appeal be disposed of quickly as there is only a very small amount of money involved. The Appeal Notice was filed on 17 May 2023. I propose to make an order which would dispose of the appeal on the limited ground upon which permission to appeal is granted. That is limited to the SCT’s error in using AED 2,500 as the monthly salary, wrongly including the bonus figure in its calculation.

72. In order to avoid any unfairness to the Claimant, I will allow him fourteen (14) days to file any written argument he may have against that order. If he does so I will hear from him and from the Defendant, preferably by way of written submission. If not the Order allowing the appeal on this very limited basis will stand.