Claim No: CFI 013/2011
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai
IN THE COURT OF FIRST INSTANCE
BEFORE JUSTICE ROGER GILES
CAPITAL INVESTMENT INTERNATIONAL (CII-UAE) LTD
Hearing: 21 May 2014 and 23 June 2014
Counsel: Bushra Ahmed instructed and assisted by Shiraz Sethi (Stephenson Harwood Middle East LLP) for the Claimant
Samir Kanaan assisted by Firas Adi (Kanaan Advocates & Legal Consultants) for the Defendant
Judgment: 30 June 2014
JUDGMENT OF JUSTICE ROGER GILES
Summary of Judgment
|The Claimant was an employee of the Defendant and was dismissed without notice. Her claim and the defendant’s counterclaim both succeeded in part and failed in part at trial. Permission to appeal was refused by the Chief Justice. This was a reconsideration of the applications pursuant to RDC 44.15, including consideration of a last-minute application by the Claimant for leave to add an additional ground of appeal.
It was held that neither the Claimant nor the Defendant had made out a case warranting the grant of leave to appeal and ordered that the Claimant’s application to amend the grounds of appeal be dismissed and that each of the applications for permission to appeal be dismissed.
This summary is not part of the Judgment and should not be cited as such.
1. The Claimant was employed as CEO of the Defendant under a contract dated 1 September 2009 (“the employment contract“). On 18 May 2011 she was dismissed without notice. In the ensuing proceedings her claim and the Defendant’s counterclaim were both upheld in part and rejected in part. Both parties applied for permission to appeal. The Chief Justice refused permission to appeal on the papers, without giving reasons other than the appeals did not have real prospects of success.
2. This is a reconsideration of the applications pursuant to RDC 44.15, including consideration of a last-minute application by the Claimant for leave to add an additional ground of appeal. For simplicity, I continue to refer to the parties as Claimant and Defendant.
3. The learned trial judge, H.E. Justice Ali Al Madhani, held that the dismissal was authorised by the terms of the employment contract entitling the Defendant to dismiss the Claimant without notice if the Claimant did not achieve a target (Clause 3.2) or if she consistently underperformed the objectives in a business plan (Clause 16.1.7); and that it was also justified as a reasonable reaction to discovering that she was concurrently employed by another company, Four Winds, with which she had caused the Defendant to contract. The trial judge held that the Claimant was entitled to unpaid salary to the date of the dismissal (AED 356,693) and to payment in lieu of untaken annual leave (AED 227,450). She was not entitled to payment of salary or for annual leave for the contractual notice period of six months (claimed at AED 825,000 and AED 442,268 respectively), to insurance reimbursements (claimed at AED 136,717) or to a sum for air fare (claimed at AED 2,500); see later as to a statutory gratuity payment. On the counterclaim the trial judge upheld a claim to an amount of travel expenses not recoverable from Four Winds (AED 624,468), but rejected a claim to recover the salary paid for the 17 months of the Claimant’s employment (claimed at AED 2,342,812).
4. One of the Claimant’s grounds of appeal was abandoned in the course of the hearing, and no more need be said of it. Her remaining original grounds of appeal challenged the upholding of the validity of the dismissal and the counterclaim for the amount of the travel expenses. Leave was sought to add grounds of appeal concerning the claim to a gratuity payment upon dismissal (claimed at AED 121,486).
5. The Defendant’s grounds of appeal challenged that the Claimant was entitled to the unpaid salary and annual leave payment, first in reliance on provisions of the Employment Law 2005 and the employment contract, and secondly in reliance on breaches by the Claimant of her obligations as an employee. They also challenged the rejection of the claim to recover the 17 months’ salary.
Validity of dismissal
6. The grounds of appeal largely arose from the trial judge’s references to satisfaction of a test of honest belief on reasonable grounds in the Claimant’s failure in performance.
7. The cases to which the trial judge referred in connection with a test of honest belief on reasonable grounds in the Claimant’s failure in performance were in the context of a statutory unfair dismissal scheme, not applicable in the UAE. With respect, they and satisfaction of the test were not in point. But it does not follow that leave to appeal should be granted.
8. An appeal lies against orders, and leave to appeal should not be granted if the trial judge’s reasons sustain the result notwithstanding that in some respects they may be open to question. The Defendant was entitled to dismiss the Claimant without notice pursuant to Clause 16.1.7 of the employment contract, which it did, and for the original grounds of appeal it is sufficient to focus on that basis for the dismissal. Application of the test was an unnecessary gloss on the finding that the Claimant had consistently underperformed the objectives in a business plan. That finding sustains the result.
9. The Claimant was incorrect in submitting that a different additional test of reasonableness was required by Article 59A of the Employment Law Amendment Law, DIFC Law No.3 of 2012, which was not in force at the time, or by Article 60 (4) of the Employment Law 2005, which was concerned only with termination for misbehaviour. Unless the factual finding underpinning dismissal pursuant to Clause 16.1.7 is impugned, the dismissal was valid.
10. Perhaps going beyond the grounds of appeal, the Claimant wished to argue that there was no business plan from which objectives could be ascertained, and that for that reason or otherwise Clause 16.1.7 had not been enlivened. The trial judge’s reasons were brief, but I have examined the business plan and do not think that there are real prospects of success in overturning his conclusions that it established objectives (sometimes called targets) and that over the period of employment until dismissal they were not achieved; that is consistent underperformance. The Claimant also wished to argue that the Defendant had not followed a fair procedure, such as by warning her of poor performance and giving her an opportunity to respond. The bases for the argument came from the statutory unfair dismissal regime, which as I have said did not apply, and I do not think it has real prospects of success.
11. The Claimant further wished to argue that the trial judge wrongly held that there had been compliance with a provision of the Employment Law 2005 (Article 58, incorrectly identified as Article 60) requiring a written statement of reasons for an employee’s dismissal. I doubt that the trial judge so held, but in any event the Claimant did not say that non-compliance with Article 58 vitiated the dismissal; rather, it was said that failure to give the written statement gave rise to an inference that the “real reason” for the dismissal was not as conveyed at the time. I do not think that this offers any prospect of impugning the exercise of the contractual entitlement.
12. In my opinion, the Claimant has not shown real prospects of success in overturning the ultimate conclusion of a valid dismissal without notice.
The counterclaim for the amount of travel expenses
13. Under the contract with Four Winds the Defendant was entitled to recover travel expenses from it provided they were “first approved” by Four Winds. Four Winds refused to pay the travel expenses on the ground that there had not been prior approval. The trial judge held that the Claimant’s failure to have her travel expenses approved “must be regarded as a breach of the duty that she owed to the Defendant” and that she “must be held responsible for the Defendant’s losses incurred as a result of her negligence”.
14. The Claimant wished to argue that the trial judge failed to take into account a post-dismissal letter in which the CEO of Four Winds said that she was “fully aware of all of Aida’s travels”. This was not evidence of prior approval (and it may be noted that the same CEO signed the letter refusing to make payment).
15. The Claimant further wished to argue, as orally explained although not apparent from the written submissions, that the pleading of the counterclaim required a finding of dishonesty, and that a finding of negligence was insufficient and was outside the pleaded case. The pleading of the defence and counterclaim was quite confused, but included breach of an express term of the employment contract to use best endeavours to promote and protect the interests of the Defendant and failure to exercise reasonable skill, care and diligence: the latter apparently as breach of fiduciary duty, which can include a duty to exercise reasonable care, skill and diligence (The Law of Obligations 2005, Article 159 and Schedule 3(5)). The scattering of references to other breaches of fiduciary duty and to breaches of trust notwithstanding, I do not think it reasonably arguable that breach of duty in failing to obtain the necessary prior approval was not in issue; and it was found, albeit with a perhaps unnecessary tag of negligence. The trial judge did not, as was suggested by the Claimant, uphold an unpleaded cause of action in negligence, and I do not think there are real prospects of success on these arguments.
Unpaid salary and annual leave payment — Employment Law 2005 and employment contract
16. Clause 16 of the employment contract provided that a dismissal without notice should be “without any payment by way of compensation, damages or otherwise”. The trial judge held that this did not preclude payment of salary or other sums to which the Claimant had an accrued entitlement (and also a statutory entitlement, see Articles 15 and 16 of the Employment Law 2005). The Defendant wished to argue that this was incorrect. In my view, the trial judge was clearly correct.
17. Article 17 of the Employment Law 2005 provided that an employer should not deduct from an employee’s wages unless the employee had previously agreed in writing to the deduction. Clause 24 of the employment contract recorded the Claimant’s consent to deduction from her salary or other sums owed to her of any sums owing to the Defendant. The Defendant wished to argue that this provided a defence to the claim to accrued salary and annual leave payment. In his orders the trial judge set off the amount found due to the Claimant against the amount found due to the Defendant, with a balance of AED 40,324 in favour of the Defendant. This gave effect to the deduction, and the Defendant is not entitled to anything more.
18. The Defendant also wished to argue that these provisions of the Employment Law 2005 and the employment contract of themselves entitled it to recover the 17 months’ salary. It is not clear that this was put to the trial judge. This is not reasonably arguable and has no prospects of success.
Unpaid salary and annual leave payments — breaches of duty, and recovery of the 17 months’ salary
19. The trial judge reasoned, in essence, that any damages for breach of duty recoverable by the Defendant were not related to the amount of the 17 months’ salary; and that, when the Claimant “has worked for the Defendant and has undertaken many responsibilities that entitle her for remuneration for her services”, the breaches of duty did not negate her entitlement to salary and annual leave. Specifically in relation to the final months to which the unpaid salary related, he said that the Defendant “did not argue or prove that the Claimant did not work or was absent from work during the said period”.
20. The Defendant wished to argue that the Claimant was not entitled to the unpaid salary or to an annual leave payment, and that it was entitled to recover the 17 months’ salary, because (in my summary of lengthy and sometimes passionate submissions) the Claimant took up employment with the Defendant and purported to carry out her duties at all times falsely, for no purpose other than to advantage herself at the expense of the Defendant. As the intended argument went, this fundamental flouting of the employment relationship (which was cast unquestionably at the level of deliberate deceit and dishonesty) freed the Defendant from any obligation to pay the Claimant and entitled it to recover what it had paid.
21. Such a case had to be clearly pleaded and particularised. It was not pleaded at all as a defence. In the counterclaim the allegation was that the Defendant could recover the salary “paid to the Claimant to perform the duties assigned to her under the Employment contract which she abused to serve her own personal gains”, which fell far short of the case outlined before me. I do not think that there is a reasonable prospect that the Court of Appeal would give leave to maintain on appeal the case outlined before me. Without commenting on the merits of that case, I do not think that there are real prospects of success on appeal.
Amendment to add a ground of appeal
22. The application to amend was made at the conclusion of the reconsideration hearing. Directions were given leading to a further oral hearing.
23. The Claimant had claimed a gratuity payment pursuant to the Employment Law 2005. She wished to argue that the trial judge had failed to make a finding as to whether she was or was not entitled to it, and that she was entitled to it because “she had been terminated for breach of contract not for misbehaviour”.
24. This is incorrect in both respects. Referring to Article 62(4) of the Employment Law Amendment Law No 3 of 2012, the trial judge held that the right to the gratuity was lost because the Claimant’s employment was terminated for cause: that is, her concurrent employment by and dealings with Four Winds. Article 62(4) was not in force at the time, and the correct provision was Article 60(4) of the Employment Law 2005 speaking of termination for misbehaviour but materially to the same effect as Article 62(4). Repeating that an appeal lies against orders, the error does not affect the correctness of the result. There is no substance in the argument.
25. The Claimant also wished to argue that because the trial judge referred to Article 62(4) he applied the wrong test for reasonableness of the dismissal, in the context of entitlement to a gratuity payment, and that the dismissal for misbehaviour was not objectively reasonable (see Article 60(4), “where a reasonable employer would have terminated the employee”). The trial judge held that dismissal was “a reasonable reaction”, a brief but sufficient finding and one which I do not think could be gainsaid on the facts. It satisfied Article 60(4).
26. I do not think the additional grounds of appeal offer reasonable prospects of success. Leave to amend should be refused.
27. In my opinion, neither the Claimant nor the Defendant has made out a case warranting the grant of leave to appeal. I order —
Date of Issue: 30 June 2014
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