November 08, 2024 SCT - JUDGMENTS AND ORDERS
Claim No: SCT 239/2024
IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE SMALL CLAIMS TRIBUNAL
BETWEEN
NOUR
Claimant
and
NAOYUKI
Defendant
ORDER WITH REASONS OF H.E. DEPUTY CHIEF JUSTICE ALI AL MADHANI
UPON this Claim being filed on 14 June 2024 (the “Claim”)
AND UPON a hearing held before H.E. Justice Nassir Al Nasser on 19 August 2024, with the Claimant and the Defendant’s representative in attendance (the “First Hearing”)
AND UPON the judgment of H.E. Justice Nassir Al Nasser issued 6 September 2024, dismissing the Claim (the “Judgment”)
AND UPON the Claimant’s Appeal Notice filed 18 September 2024, seeking permission to appeal the Judgment (the “Application”)
AND UPON considering the documents and submissions filed by both parties and recorded on the case file
AND UPON the hearing held before H.E. Deputy Chief Justice Ali Al Madhani on 29 October 2024, with the Claimant and the Defendant’s representative in attendance as litigants in person (the “Hearing”)
IT IS HEREBY ORDERED THAT:
1. The Application is dismissed.
2. The Judgment dated 19 August 2024 is to be upheld.
3. Costs shall be paid on the standard basis, to be determined by the Registry if not agreed by the parties.
Issued by:
Delvin Sumo
SCT Judge and Assistant Registrar
Date of Issue: 8 November 2024
At: 8am
SCHEDULE OF REASONS
1. This Application is brought by the Claimant to seek permission to appeal the Judgment dated 6 September 2024, which dismissed the Claimant’s Claim in its entirety.
2. As decided at the Hearing, permission and appeal was dealt with simultaneously.
Background and Procedural History
3. This Claim is brought in the matter of an alleged breach of an Offer Letter dated 10 May 2024; the Claimant sought compensation for moral and financial damages in the sum of AED 267,885.
4. The Claimant was interviewed for the position of Director of Finance Accounting and Reporting with the Defendant on 5 January 2024, which was followed by an unconditional Offer Letter on 7 March 2024.
5. The Offer Letter was signed by the Claimant on 11 March 2024. Consequently, the Claimant resigned from her position with her previous employer and served her 60 days’ notice period, ending on 9 May 2024. During her 60 days’ notice, the Claimant received documents from the Defendant regarding her on-boarding.
6. On 9 May 2024, the Claimant was informed by the Defendant that her offer had been withdrawn.
7. On 14 June 2024, the Claimant filed the Claim.
8. On 21 June 2024, the Defendant acknowledged service of the claim form and filed its defence.
9. By 5 August 2024, the case was fully pleaded.
10. On 6 September 2024, the Judgment was passed dismissing the Claim.
11. On 18 September 2024, the Claimant filed the Appeal Notice.
12. On 26 September 2024, the Defendant filed its defence without counterclaim.
13. On 29 October 2024, the matter was heard in a Hearing before H.E. Deputy Chief Justice Ali Al Madhani with both of the parties present.
Permission to Appeal
14. As decided in the Hearing, I will take the burden of both permission and determination of the appeal if permission is granted. Pursuant to the Rules of the DIFC Courts (RDC) 44.19, permission may be granted if there is a real prospect of success, or if there is another compelling reason to do so. This rule will govern my discussion and resolve.
Grounds of Appeal
15. The Claimant submits the following grounds of appeal for the court’s consideration; the Judge in the lower court erred by not addressing the existence of damages and the right to compensation, he erred in failing to address the Defendant’s admission of wrongful termination, he erred in recognising that the claim was registered under civil law, and he erred in classifying the dispute under DIFC Law No. 4 of 2021 without stating the legal reasoning for this.
16. The Defendant rejects these grounds on the basis that they are entitled to withdraw the offer without notice and without damages under Article 62 of the DIFC Employment Law, and that the Claimant failed to provide sufficient evidence that the wrong law was applied. Further, as the Claimant dismissed the alternative offer of employment, the Claimant should bear the consequences of unemployment and is not entitled to damages.
17. Both parties plea that the other should cover the costs of the Application in the event of success.
18. It would normally be against procedure to permit the classification submission to be discussed at appellate level, as this is a new submission not put before the lower Court. However, as the Claimant explained in the Hearing, I accept that there was an assumption on her part that the lower Court would consider the format of the case file (being under Civil Law) as an intention to classify the contract under Contract Law. Therefore, on this occasion, I will accept the submission.
19. In my view, the only determining factor of these grounds is wrongful classification. If there is a real prospect of success on this ground, then the outcome will be affected, and permission would be granted for all grounds.
Discussion
20. There are a number of legal principles occupied here, but the primary determination is dependent on whether the commencement date affects the classification of the Offer Letter as being under Employment Law or Contract Law. However, it must first be established that the Offer Letter is a valid and binding contract.
21. In my view, on these facts the Offer Letter is akin to an employment contract, and therefore Employment Law applies. To reach this determination, several conditions must be satisfied.
22. First, the Offer Letter must be a valid and enforceable contract. Article 14 of the DIFC Employment Law does not reference or obligate that an employment contract take any particular form or title. At Article 14(2) there is a list of 14 terms that “shall” be included; this, again, does not obligate a format on the normal reading of “shall”. Instead, as per Article 3(a), this list fostered a minimum standard for the benefit of employees, and so if a contract fails to contain the terms set out in 14(2), the employee may still benefit from those terms as implied terms to the employment contract.
23. Second, the Offer Letter must exist as a complete contract not subject to change. I accept the Claimant’s submission that the Offer Letter is unconditional; this is supported by three particular phrases:
“[W]e are please to invite you to join”
“[P]lease sign the copy of this letter and return it to us as soon as possible”
“[W]e look forward to having you”
There is no reference to the offer being subject to additional terms, conditions or obligations to be carried out by the Claimant; it is clear on reading the offer letter that the Defendants had the full intention that the Claimant will join the Defendant on the agreed terms without further amendment. The Offer Letter therefore exists as a complete contract, which includes the implied terms set out in Article 14(2) of the Employment Law.
24. Third, the Offer Letter must contain the key elements of an enforceable contract. This is where the relevant cross over between Contract Law and Employment Law applies. As the DIFC Employment Law is silent on what constitutes the formation of an enforceable contract, and Article 3 of the DIFC Contract Law 2004 states that the statute applies to the “DIFC” as a whole with no restriction or condition as to the type of contract, Articles 14 and 15 of the Contract Law apply to the formation of an employment contract.
25. Article 14 states:
“A contract is concluded by the acceptance of an offer.”
26. Article 15 states
“A proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance.”
27. Therefore, formation follows the following format: offer, acceptance, intention to create legal relations, and certainty. In my judgment, the Offer Letter satisfies these conditions for the following reasons:
(1) Offer: it is clear an offer exists from the Defendant to the Claimant for the purpose of employment.
(2) Acceptance: this is evidenced by the Claimant signing the letter on 11 March 2024, and sending it to the relevant third party – Mr Neal . The Defendant does not object that the Claimant validly accepted the offer, nor do they dispute that they received the signed copy of the Offer Letter.
(3) Intention: intention to create legal relations with a binding and enforceable contract is presumed to exist in commercial contexts. As the intention was to create an employment relationship, the Offer Letter becomes and employment contract by virtue of the nature of the relationship between the parties.
(4) Certainty: it is accepted that “certainty” means not lacking some essential term; what is certain therefore depends on the context of the contract. For employment, the essential express terms to be established are the employee’s permission, the start date, the contract term and the salary – all of these terms are in the Offer Letter. All other terms under Article 14(2) of the DIFC Employment Law are included as implied terms.
Hence, I concede that a valid, binding and enforceable employment contract exists between the parties.
28. Next, the date on which the Offer Letter becomes binding must be established in order to determine the obligations, rights and remedies owed to the parties. Employment contracts are unique as it is standard for there to be an agreement to delay performance until the commencement date. The contract of employment, and employment under it, are two separate things; the contract can exist before performance, and so the Claimant does not need to undertake actual performance to be an employee of the Defendant nor benefit from the entitlement of an employee under DIFC Employment Law.
29. This principle is supported by DIFC Employment Law. in the statute, an employer is defined as an “establishment or entity” in the DIFC, and an employee is an “individual employed by way of an employment contract”; there is no obligation that performance had to have started before this relationship exists.
30. To summarise the above; the Offer Letter satisfies the conditions to create a valid and enforceable employment contract. The relationship between the parties is that of an employer/employee, as actual performance was agreed to be delayed. Therefore, the Offer Letter, and by virtue the relationship of the parties, is governed by the DIFC Employment Law. The Judge in the lower court did not err in applying Employment Law, and the commencement date does not affect the classification of the contract.
31. As an employee/employer relationship existed, and as there is no provision in the DIFC Employment Law as to the rules concerning withdrawal of an offer, the Judge in the lower court was correct to apply the probation period provisions available.
32. Furthermore, the Claimant fails to provide any authority to show that the Offer Letter is inherently governed by Contract Law in the run up to the commencement date. As I am not assisted with this, I can only consider that the Employment Law is relevant to the Offer Letter.
33. This outcome has a knock-on effect on the remainder of the Claimant’s grounds of appeal. As the Judge in the lower court was correct in his application of Employment Law and it was determined that the Defendant was not in breach of his obligations under that law, there was no need for him to address the Claimant’s right to damages and/or compensation or the context of the timing of the offer in relation to the Defendant’s financial position nor the Defendant’s responsibilities. Further, as termination during the probation period is not subject to cause pursuant to Article 62(6) of the DIFC Employment Law, any “admission” as to wrongful termination is not relevant. The Claimant’s grounds of appeal therefore do not have a real prospect of success, and so permission to appeal is dismissed.
Conclusion
34. All grounds of appeal are rejected; permission to appeal is dismissed.
35. The Judgment is upheld.
36. No further appeal applications may be made.
37. Costs shall be paid on the standard basis, to be determined by the Registry if the parties do not agree.
