Claim No: CFI 084/2021
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
ORDER WITH REASONS OF JUSTICE LORD ANGUS GLENNIE
|Hearing :||28 October 2021|
|Counsel :||Luz, the Appellant, as a litigant in person; and|
Lobo, Managing Partner, for the Respondent
|Judgment :||1 November 2021|
UPONthe Judgment of H.E. Justice Maha Al Mheiri dated 20 September 2021 (the“Judgment”)
AND UPONreviewing the Claimant/Appellant’s application for permission to appeal dated 30 September 2021
AND UPONreviewing the Defendant/Respondent’s skeleton argument
AND UPONthe Order of H.E Justice Nassir Al Nasser dated 11 October 2021 granting permission to appeal against the Judgment
AND UPONhearing the Claimant/Appellant and the Defendant/Respondent at the hearing on 28 October 2021
IT IS HEREBY ORDERED THAT:
1. The Appeal succeeds in part.
2. The Defendant/ Respondent shall pay to the Claimant/ Appellant the sum of AED 52,900 in respect of his monthly expenses claim under the First Agreement, the Independent Contractor Agreement.
3. The Claimant/ Appellant’s claim under the Second Agreement, the Employment Contract, fails.
4. The Defendant/Respondent shall pay the Claimant/Appellant the Tribunal and Court fees paid or payable by him in relation to his bringing his claim in the Small Claims Tribunal and on appeal to this Court.
5. Save as set out above, no order as to costs.
Amna Al Owais
Date of issue: 2 November 2021
1. In this Judgment the Claimant/Appellant is referred to as the Claimant; and the Defendant/Respondent is referred to as the Defendant.
2. This is an appeal by the Claimant to the Court of First Instance from the Order of H.E. Justice Maha Al Mheiri dated 20 September 2021, sitting in the Small Claims Tribunal, dismissing the Claimant’s claim against the Defendant. The appeal is brought with permission granted on 11 October 2021 by H.E. Justice Nassir Al Nasser.
3. RDC r.44.118 applies to this appeal. The Court will allow the appeal only when the decision of the Small Claims Tribunal: is wrong in law; was arrived at unjustly because of some procedural or other unfairness; or is wrong in relation to other matters provided for in or under Dubai International Financial Centre law. There is no right of appeal against findings of fact made by the Small Claims Tribunal unless, of course, such findings derived from an error of law or some procedural unfairness.
4. The Claimant claims under two separate agreements. The First Agreement is the Independent Contractor Agreement signed on and effective from 8 March 2021. The Second Agreement is an Employment Contract signed on and effective from 1 April 2021.
The First Agreement - the Independent Contractor Agreement
5. Despite arguments from the Defendant that it was not signed by the relevant persons, H.E Justice Maha Al Mheiri accepted that the First Agreement was properly signed and was valid and binding on the parties. That decision turned on findings of fact from which there is no appeal.
6. But H.E Justice Maha Al Mheiri found against the Claimant on the construction (i.e. proper interpretation) of the First Agreement and held that no payment was due to him under that Agreement, so that his claim for payment thereunder failed. That decision involves the proper construction of the provisions of the First Agreement, which is characterised as a point of law.
7. The First Agreement is headed “Independent Contractor Agreement” and there is no doubt that that is what it is. That is spelled out in Clause 3. It is not an Employment Contract. Any doubt about that is removed by the express terms of Clause 18(a) and (b), which make it clear that the Agreement does not constitute a contract of employment and further that the Claimant (the Manager) provides services to the Company solely under that Agreement acting as an Independent Contractor, not as an employee.
8. The “Background” recited in the First Agreement is that the Defendant company is a financial services, wealth and investment management firm; and that the Defendant company wants the Claimant (the“Manager”) to join and work for the company in order to implement financial services, investment funds, wealth and investment. It appeared to be a matter of agreement at the hearing before me that the Claimant approached the Defendant company rather than the other way around, but nothing turns on this.
9. Clause 1 of the First Agreement listed the various services to be provided by the Claimant. They included such things as providing wealth and investment management and advisory services, buying and selling financial products and managing investment accounts and funds. Clause 4 (“Personal Expenses”) provided as follows:
“4 Personal Expenses
The parties mutually agreed that the Manager’s monthly personal expenses is twelve thousand five hundred UAE Dirhams (AED 12,500).
Clauses 6, 7 and 8 are also relevant:
“6 Liust Terminal Cost
The parties mutually agreed that the monthly cost of Liust terminal shall not be deducted from the monthly gross generated money if the managing partners and shareholders could not bring new clients to the Company every month.
7 The Monthly Net Generated Money
The parties mutually agreed that the monthly net generated money is equal to the monthly gross generated money minus the Manager’s monthly personal expenses and minus the monthly Liust terminal cost subject to clause 6.
8 Compensations and Reimbursement
The parties mutually agreed that the Manager shall be compensated and reimbursed as follows:
(a) The Company shall pay to the Manager fifty percent (50%) of the monthly net generated money within maximum thirty (30) calendar days of the money generation date.
(b) The Company shall pay every month twelve thousand five hundred UAE Dirhams (12,500 AED) to the Manager in order to reimburse him for his monthly personal expenses.
Assuming the following:
(a) The monthly gross generate money – AED 100,000
(b) The Manager’s monthly personal expenses – AED 12,500
(c) The monthly Liust terminal cost – AED 7,500 (subject to clause 6)
The compensation and remuneration shall be paid as the following:
(1) The first payment to the manager – AED 12,500 (reimbursement)
(2) The second payment to the Manager – AED 40,000 (compensation) as per the following calculation
AED100,000 – AED12,500 – AED7,500 = AED80,000 *50% = AED40,000”
10. The company generated no income during the relevant period (i.e. a period of four and a quarter months from 8 March 2021 until the First Agreement came to an end on 15 July 2021). The Claimant says that nonetheless he is entitled to be reimbursed his expenses at the rate of AED 12,500 per month. He calculates the amount due to him for this period as AED 52,900. The Defendant company, on the other hand, says that in terms of the First Agreement the Claimant is only entitled to be paid if the company has generated some income – the “reimbursement” of his monthly personal expenses is agreed to be taken from income (“Gross Generate Money”) – if there is no generated money, there is nothing from which to reimburse the expenses. In the Small Claims Tribunal, the Judge agreed with the Defendant on this point and rejected the claim under the First Agreement.
11. I have come to a different view. It seems to me that on a plain reading of the First Agreement the sum of AED 12,500 is paid monthly regardless of whether or not the company generates any income. The terms of Clause 4 are unqualified. The Manager’s monthly personal expenses is AED 12,500. There appears to be no dispute about the nature of such expenses – the Claimant had moved to Dubai and was inevitably incurring living and travelling expenses. Such expenses would be incurred whether or not the company was generating any income. It was not suggested that his expenses required to be vouched in any way – Clause 4 laid down a simple provision for the payment of AED 12,500 per month by way of personal expenses. It would have been easy to make payment of the commission conditional upon the generation of some income by the Company – Clause 6 provides an example of this in relation to the Bloomberg terminal cost.
12. In addition to his monthly expenses of AED 12,500, the Claimant was also entitled to 50% of net generated money (net income). The manner of calculating this is set out in Clause 8. From any gross income there is deducted, first, the Claimant’s personal expenses for that month and, second, the monthly Liust terminal cost. That gives a figure for net generated money, or net income. The Claimant is entitled to 50% of that figure.
13. The Defendant argued and the Small Claims Tribunal Judge agreed with this argument that that calculation showed that the Claimant’s personal expenses were to be deducted by him from the gross revenue achieved for the month in question, and if there was no revenue for any particular month then there was nothing to deduct those expenses from. In other words, if there was no revenue in any month, no expenses were payable to the Claimant. The same argument was advanced by reference to an email sent before the Agreement was concluded, which talked about the expenses being deducted from revenue.
14. I cannot agree with that argument. The determinative provision providing for payment of the Claimant’s expenses is Clause 4. The obligation in Clause 4 is to pay expenses in the amount of AED 12,500 per month. It is not expressed to be conditional upon the generation of revenue or profit. It appears to recognise that the Claimant will be incurring expenses and should be paid accordingly. Clause 8 does not change this. The calculations set out in Clause 8 are designed to explain how the Claimant’s entitlement to 50% of net income is to be calculated. That involves explaining that the various expenses (i.e. the Claimant’s expenses and the Liust terminal cost) fall to be deducted from the Gross Generated Money so as to arrive at a figure for net generate money of which the Claimant is entitled to 50%). But they do not alter the absolute nature of the Claimant’s entitlement to monthly expenses of AED 12,500 and in some way convert it into an entitlement to recover expenses only if the Company generates income during the relevant month.
15. The Defendant relied on the term “reimburse” and “reimbursement” used in Clause 8 in connection with the payment of the Manager’s monthly expenses. It was suggested that this showed that the Claimant had no automatic right to be paid his expenses regardless of income being generated. I do not accept this argument. The expression “reimburse” is appropriate to an agreement whereby the Claimant is reimbursed his expenses. It differs, as the Defendant says, from a salary or some other sort of payment or reward for services rendered. I agree that the term “reimburse” has this meaning, but that would only be relevant here if there was a dispute about whether the Claimant had actually incurred the expenses claimed by him. But that is not the argument here. The term “reimburse” throws no light on the question of whether the entitlement to be reimbursed expenses monthly in the amount of AED 12,500 is contingent upon the generation of revenue. Indeed, if anything it focusses attention on the reimbursement of expenses rather than any revenue-based pre-condition to reimbursement.
16. For these reasons, I consider that the Claimant is entitled to be paid his expenses in the sum of AED 12,500 per month for the period of four and a quarter month from 8 March 2021. There was no dispute about the calculation. I shall award the Claimant the sum of AED 52,900.
The Second Agreement – the Employment Contract
17. The Employment Contract was entered into on 1 April 2021 and was stated to take effect from that date. The reason for entering into that Employment Contract was explained in clause 18(c) of the First Agreement, the Independent Contractor Agreement. This states as follows:
“18(c) The parties acknowledge and agree that they must enter into an employment agreement solely for the purpose of satisfying and fulfilling the requirements of the work permit, employment and immigration laws and regulations of the United Arab Emirates, the Emirate of Dubai and the Dubai International Financial Centre.”
18. The Small Claims Tribunal Judge found that that Employment Contract was a sham. She was right to come to that conclusion. Clause 18 of the Independent Contractor Agreement goes on in paragraphs (d) and (e) as follows:
“(d) The Parties acknowledge and agree that any employment agreement signed by both parties after the Effective Date shall not replace or terminate this Independent Contractor Agreement and shall not deem this Independent Contractor Agreement invalid or unenforceable, in whole or in part.
(e) The Parties acknowledge and agree that any employment agreement signed by both parties after the Effective Date shall not be legal and binding between the Parties.”
19. The parties have clearly agreed in these provisions that the Employment Contract which they would sign would not be a legally binding agreement. That is conclusive on this point.
20. I agree entirely with the Small Claims Tribunal Judge that the Second Agreement, the Employment Contract, is of no legal effect and accordingly that the claim under this contract fails.
21. I should add that in the course of the hearing before me, the Claimant himself very fairly accepted that he could not expect to be paid under both the First and the Second Agreement. He accepted that if he was to succeed under the First Agreement, as I have found that he has, then he would have no claim under the Second Agreement.
22. The Claimant also advanced a claim for aggravated damages relating to the conduct of the Defendant Company in relation to his engagement with them.
23. The Small Claims Tribunal Judge rejected this claim on the ground:
(a) that the circumstances which had fallen upon the Claimant, while unfortunate, did not meet the burden that the Claimant would have to prove to demonstrate that he had suffered damage at the hands of the Defendant Company; and
(b) that in any event the Claimant had failed to provide evidence to demonstrate such damages.
I agree with that conclusion, but in any event, these are findings of fact with which this Court cannot interfere. The appeal on this point fails.
24. The Claimant asks for his costs of bringing this claim. He relies on Clause 15 of the First Agreement, which provides that in the event of a dispute resulting in legal action, the company shall pay the legal fees to the Manager including, but not limited to, attorney fees.
25. The general rule about costs in the Small Claims Tribunal is that the Tribunal may not order a party to pay a sum to another party in respect of the other party’s costs, fees and expenses, including those relating to an appeal, except (1) such part of any Court or Tribunal fees paid by the other party as is considered appropriate or (2) such further costs as the Small Claims Tribunal assesses by the summary procedure and orders to be paid by a party who has behaved unreasonably pursuant to RDC r.53.70.
26. In light of the terms of clause 15 of the First Agreement, I consider that it is appropriate for me to order the Defendant to pay to the Claimant his Court and Tribunal fees both before the Small Claims Tribunal and before this Court on this appeal.
27. However, I cannot make any further order as to costs in favour of the Claimant. Any further costs order must be assessed by the summary procedure, and that requires the Claimant to have lodged an account of his expenses with the Court prior to the hearing. That has not been done. I do not, however, consider that my refusal to order payment of any further costs will result in any injustice to the Claimant, since he was unrepresented at both hearings and therefore the likely cost burden that he will incur will simply be the Court and Tribunal fees referred to above.