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Claim No: SCT 308/2024

IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

NADIA

Claimant/Applicant/Respondent

and

NABHAN

Defendant/Respondent/Applicant

ORDER WITH REASONS OF JUSTICE RENE LE MIERE

UPON the judgment of H.E. Justice Nassir Al Nasser (the “Judge”) dated 30 August 2024 (the “Judgment”)

AND UPON the Claimant’s Appeal Notice dated 13 September 2024 seeking permission to appeal the Judgment (the “Claimant’s PTA Application”)

AND UPON the Defendant’s Appeal Notice dated 16 September 2024 seeking permission to appeal the Judgment (the “Defendant’s PTA Application”)

AND UPON the Defendant’s Application Notice dated 16 October 2024 seeking relief from sanctions for failing to file its appeal within the prescribed time and requesting that its Appeal Notice be deemed filed in accordance with the Rules (the “Defendant’s relief from sanctions Application”)

AND UPON considering the documents and submissions filed by both parties and recorded on the case file

AND UPON hearing and considering the oral submissions of the Claimant and the Defendant’s representative made at a hearing held on 14 October 2024 (the “Application Hearing”)

IT IS HEREBY ORDERED THAT:

1. The Claimant’s PTA Application is granted

2. The Defendants relief from sanctions Application and PTA Application is granted

3. The costs of the Applications will be reserved pending the appeal.

Issued by:
Hayley Norton
SCT Judge and Assistant Registrar
Date of Issue: 24 October 2024
At: 8am

Summary

1. The Claimant, Ms. Nadia, is a Spanish citizen residing in Dubai.

2. The Defendant, Nabhan, is a company incorporated in the DIFC.

3. The Defendant employed Ms. Nadia as Managing Director from 1 December 2014 to 22 July 2024.

4. On 26 July 2024, the Claimant filed a claim with the DIFC Courts’ Small Claims Tribunal (the “SCT”), seeking payment of end of service entitlements amounting to AED 277,334.72.

5. On 30 August 2024, SCT Judge H.E. Justice Nassir Al Nasser issued a judgment in favour of the Claimant, ordering the Defendant to pay her a total of AED 217,522.54, plus fees of AED 4,350.45 (the “Judgment”).

6. On 13 September 2024, the Claimant filed an application for permission to appeal against the Judgment (“Claimant’s PTA Application”).

7. On 16 September 2024, the Defendant filed an application for permission to appeal against the Judgment, albeit out of time (“Defendant’s PTA Application”).

8. The appeals were heard on 14 October 2024.

9. On 16 October 2024, the Defendant filed an application seeking relief from sanctions for failing to file its appeal within the prescribed time and requested that its Appeal Notice be deemed filed in accordance with the Rules (“relief from sanctions application”).

10. For the reasons which follow:

Relief from sanctions and extension of time

11. The Judgment was issued on 30 August 2024. The Defendant had to file its permission to appeal (“PTA”) application by 4pm on 13 September 2024.

12. The Defendant filed its PTA Application, but not the filing fee, before 4pm on 13 September 2024, and hence its application was issued on the next business day, 16 September 2024.

13. Seeking an extension of time to file an appeal is considered an application for relief from sanctions because it excuses missing the original deadline.

14. Rule 4.49 of the Rules of the Dubai Financial Centre Courts 2014 (“RDC”) states that, in an application for relief from sanctions, the Court will consider the interests of justice; promptness of the application; intentionality of non-compliance; explanation for the failure; compliance with other rules and orders; responsibility for the failure; impact on the trial date; effect on each party; and the effect of granting relief.

15. The application was not prompt, being made over four weeks late.

16. There was no good explanation for the failure; the Defendant and its lawyers delayed filing the application until the last day and did not arrange timely payment.

17. The Defendant missed other deadlines, submitting Grounds of Appeal late and failing to serve responses on time.

18. The fact that the appeal was heard before the relief application is relevant. Courts prefer resolving matters on their merits, especially if the appeal has been argued. This aligns with Denton v White Ltd [2014] EWCA Civ 906, which emphasizes considering all circumstances.

19. The court will consider if the delay caused prejudice or disrupted litigation. If not, the court is more inclined to grant relief.

20. The Claimant argues the delay caused prejudice, but it did not affect her ability to present arguments at the PTA hearing.

21. The Defendant’s case has a real prospect of success, which would be lost without an extension of time.

22. Justice is served by granting relief from sanctions and extending the PTA filing deadline. The Defendant’s Appeal Notice will be deemed filed in accordance with the Rules.

Claimant’s case

23. The Claimant’s case before the SCT was in three parts, summarised as follows:

Total shortfall claim amount:

24. First, the Claimant says that her Pre-DEWS accumulated End of Service Gratuity from 1 December 2014 to 31 January correctly calculated is AED 419,360.23 but the Defendant paid to DEWS on 24 June 2022 only AED 248,045.03. The shortfall amount of the claim is AED 171.315.

25. The Claimant also claims the difference between the monthly payments to DEWS since September 2022 when she says the Defendant effectively reduced the monthly contribution. The shortfall amounts to AED 238,261.08.

26. Secondly, the Claimant says the Defendant wrongly withheld the 2023 CPI salary adjustment on her salary from 1 January 2024 to the end of her employment on 22 July 2024. The amount of this claim is AED 10,284,84.

27. AED 624,103.91 / (3 days a week x 52 weeks) = AED 4.000,67 per day + 2023 CPI 3.3% = AED 4.132,69 daily wage x 12 days holidays = AED 49,592.26. where AED 624,103.91 is her annual salary.

28. The Defendant has paid AED 20,803.46. The Claimant claims the shortfall of AED 28,788.80.

Defendant’s Case

29. The Defendant responded to each of the Claimant’s claims as follows.

30. The Claimant’s calculation of her entitlement is incorrect. Article 66(3) of the DIFC Employment Law states that the daily rate of an employee’s basic wage is calculated by dividing the annual basic wage by 365 days. Therefore, whether an employee works part-time or full-time is irrelevant, as the daily wage is based on calendar days, not working days.

31. The Claimant’s holiday pay claim is based on a miscalculation due to her part-time status. The Claimant calculated 12 working days as four calendar weeks, assuming a three-day workweek. However, the Defendant paid the Claimant for 12 working days based on her actual schedule. Therefore, no additional holiday pay is owed.

32. Paragraph 4.2 of the Contract states, “Each year, depending on the budget, CPI increase and performance of the Employee, there will be the possibility of a salary review.” There is no obligation to apply a CPI adjustment to the Claimant’s salary for 2024.

Judgment

CPI adjustment on salary

33. At [27]-[30] the Judge dealt with the Claimant’s 2023 CPI adjustment on salary from January to June 2024 claim as follows

End of Service Gratuity

34. After setting out Article 66 of the DIFC Employment Law at [32], at [33]-[40] the Judge dealt with the End of Service Gratuity claim as follows.

Accrued But Untaken Annual Leave

35. The Judge dealt with accrued but untaken annual leave at [39]-[42] as follows.

36. The Defendant adduced evidence that the Claimant must take her 12 days of accrued annual leave during garden leave. However, there is no evidence that the Claimant has taken the 12 days of leave, as no vacation notice was provided. The Defendant has agreed to pay for these days

37. The Claimant’s entitlement is to be calculated in accordance with Article 28(3) of the DIFC Employment Law, which states that compensation for unused vacation leave is based on the Employee’s Daily Wage at termination. The daily wage is calculated as follows:

38. The Claimant’s entitlement is calculated:

The PTA Applications

39. The Claimant seeks permission to appeal against the end of service gratuity finding. The Defendant seeks permission to appeal against the CPI salary adjustment and the end of service gratuity findings.

Claimant’s appeal

40. The Claimant seeks permission to appeal the End of Service Gratuity calculations (Judgment paragraphs 33-38) for the following reasons.

41. DEWS Payments: monthly payments up to August 2022 are undisputed. The discrepancies involve Pre-DEWS accumulated amounts, and DEWS payments from September 2022 onward, where the Defendant applied a new formula.

42. Gratuity Calculation: the Claimant argues for a gratuity of 30 days not 21 for the first five years, as per the Employment Contract.

43. Daily Wage Calculation: the Employment Contract states a 3-day work week. The daily wage for a part-time employee is calculated as 3/5 x 365 = 219 days.

44. With these adjustments, the total balance in favour of the Claimant is AED 269,917.14.

45. The Claimant provided the following calculations.

46. Both parties assert that the Judge erred in calculating the end of service gratuity. I set out below the Defendant’s argument that the Judge erred in calculating the end of service gratuity.

47. The arguments raised by the Claimant are complex. Complexity alone does not guarantee permission to appeal. The appellant must clearly articulate why the decision is perceived as wrong or unjust. The Claimant has done that. The issues raised by the Claimant are significant enough to warrant further examination. The Claimant’s arguments present an arguable point of law and fact that merits full consideration. I will therefore grant permission to appeal.

Defendant’s Appeal

CPI increase

48. The Defendant asserts the Judge erred in fact and law as follows.

49. In paragraph 28 of the Judgment, the Judge states that the CPI adjustment occurred on 24 July 2024 via email, confirming a 1.60% increase effective from 1 January 2024, with arrears to be paid soon. However, this is factually incorrect, as the Claimant did not receive any such email. The correspondence mentioned was sent to other employees, and since the Claimant’s employment had already ended at that time, she did not receive confirmation regarding her situation.

50. While confirmation of a CPI increase was sent to some employees, it was not sent to the Claimant. It is a legal error to apply one employee’s terms to another, as there is no requirement for uniformity in employment terms among all employees. This is confirmed by Article 104(1) of DIFC Law No. 6 of 2004. The letters sent to other employees contained specific details intended solely for those individuals. The terms should not be applied to the Claimant. Therefore, it is a legal error to extend these terms to her.

51. The Defendant’s grounds are arguable. The statement in [28] of the Judgment is ambiguous. It refers to “an email”. The Defendant submits the Judge erroneously found that the email was sent to the Claimant. The Claimant says the meaning of the Judge’s statement is that the Defendant sent the email to current employees. When a statement of fact is ambiguous, the court assesses both the language used and the factual context simultaneously. The court analyses how the language interacts with the factual background to determine the most reasonable interpretation.

52. The appellate court will only overturn a finding of fact if it is satisfied it is plainly wrong. However, on a PTA application it is sufficient for the Court to find that the appeal would have a real prospect of success or there is some other compelling reason why the appeal should be heard. I consider the ground of appeal has a real prospect of success. Furthermore, I will give permission to appeal on the ground relating to the end of service gratuity payment and as the CPI increase is a factor in calculating the end of service gratuity payment, that is an additional reason for giving permission to appeal on the ground that the findings in relation to the CPI increase are wrong.

End of service gratuity calculation

53. The Defendant asserts the Judge made an error of law in calculating the Claimant’s end of service gratuity entitlement because the Judge wrongly applied the CPI increase to the Claimant.

54. The Defendant asserts the Judge further erred in law in calculating end of service gratuity entitlement as follows.

55. In paragraph 33 of the Judgment, the Judge incorrectly references the Claimant’s salary at termination on 22 July 2024 for the EOSG calculation. The correct reference salary should be the amount from the lump sum payment made into DEWS on 26 June 2022, which the Claimant confirmed.

56. According to Article 66(6) of the DIFC Employment Law, an employer can transfer the Gratuity Transfer Amount to a Qualifying Scheme with the employee’s prior written consent. This transfer relieves the employer from any obligation to:

57. Since the Defendant has already made a lump sum payment into the DEWS Scheme with the Claimant’s signed consent, they are not obligated to make any further payments to her. In respect of the calculation of such EOSG entitlement.

58. The Defendant set out the correct EOSG calculation as follows:

59. Like the arguments raised by the Claimant, the arguments raised by the Defendant are complex. The Defendant has articulated why it says the decision is wrong. The issues raised by the Defendant, like those raised by the Claimant, are significant enough to warrant further examination. The Defendant’s arguments present an arguable point of law and fact that merits full consideration. I will therefore grant permission to appeal.

Costs

60. The costs of the PTA applications will be reserved pending the appeal.