Claim No. SCT 222/2021
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
In the name of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Ruler of Dubai
IN THE SMALL CLAIMS TRIBUNAL OF DIFC COURTS
BEFORE H.E. JUSTICE MAHA AL MHEIRI
|Hearing :||6 September 2021|
|Judgment :||29 September 2021|
JUDGMENT OF H.E. JUSTICE MAHA AL MHEIRI
UPONthis Claim being filed on 27 July 2021
AND UPONthe Claimant filing an Amended Claim on 4 August 2021
AND UPONthe Defendant filing an Acknowledgment of Service intending to defend all of the Amended Claim dated 11 August 2021
AND UPONthe Defendant filing a counterclaim on 25 August 2021
AND UPONthe Defendant indicating its intention to contest jurisdiction of the DIFC Courts’ Small Claims Tribunal and defend all of the Amended Claim on 1 September 2021
AND UPONa Jurisdiction Hearing having been listed before H.E. Justice Maha Al Mheiri on 6 September 2021, with the Claimant and the Defendant’s representative attending
AND UPONreading the submissions and evidence filed and recorded on the Court file
IT IS HEREBY ORDERED THAT:
1. The Defendants’ application to contest jurisdiction is denied.
2. The DIFC Courts’ Small Claims Tribunal has jurisdiction to hear and determine the Claimant’s Claim.
3. The Defendant’s Counterclaim be transferred to the DIFC Court of First Instance in accordance with Rule 53.41 of the Rules of the DIFC Courts.
4. Each party shall bear their own costs.
Nassir Al Nasser
Date of issue: 29 September 2021
1. The Claimant is Lingham, an individual filing a claim regarding his employment at the Defendant company (the “Claimant”).
2. The Defendant is Lalima, a company registered in the DIFC, located at DIFC, Dubai, UAE (the “Defendant”).
Background and the Preceding History
3. The parties entered into an employment agreement on 1 May 2017, pursuant to which the Claimant was contracted as a Managing Director with an agreed monthly remuneration of AED 40,000 (the “Employment Contract”).
4. The Claimant submits that he was promoted verbally in 2019 to the role of Chief Executive Officer with a monthly salary of AED 75,000, as there is no amended employment contract to reflect this promotion.
5. The Defendant alleges that, in April 2021, it discovered that the Claimant had been transferring unauthorized payments in the amount of AED 75,000 per month as salary from the month of September 2019 until the Claimant’s termination, without the Defendant’s approval.
6. On 12 April 2021, the Defendant terminated the Claimant’s employment with immediate effect. The Claimant requested payment for his final settlement, but the Defendant refused payment stating that the Claimant had caused a lot of damage to the company as a result of the unauthorized transfers.
7. On 27 July 2021, the Claimant filed a claim in the DIFC Courts’ Small Claims Tribunal (the “SCT”), which the Claimant amended on 4 August 2021, claiming the amount of AED 500,000. The claimed sum comprises payment of salary for 12 days of April 2021, payment of a 3-month notice period, payment in lieu of accrued and untaken annual leave, and payment of his end of service gratuity, as well as the cancelation of his employment visa.
8. On 25 August 2021, the Defendant filed a Counterclaim seeking reimbursement of the amount of AED 3,845,000, which the Defendant alleges equates to the sums that the Claimant transferred to his account unlawfully without the Defendant’s approval.
9. On 1 September 2021, the Defendant responded to the amended Claim Form indicating its intention to contest the jurisdiction of the DIFC Courts Small Claims Tribunal. On 6 September 2021, I heard the parties’ arguments at the Jurisdiction Hearing.
The Jurisdiction Application
10. The Defendant argues that the Claimant has been unlawfully receiving the sum of AED 75,000 as monthly salary from September 2019 to March 2021, when, in fact, in accordance with Employment Contract, he should only have been receiving payment in the amount of AED 40,000. In addition, the Defendant argues that the Claimant was transferring bonuses to himself without the approval of the Defendant. As such, the Defendant filed a Counterclaim in the amount of AED 3,845,000 for the reimbursement of the unlawful transfers made by the Claimant.
11. The Defendant argues that the Claim and Counterclaim should be heard and determined together as they deal with the same issue, which is the employment of the Claimant and the monies that he unlawfully transferred to his account.
12. In reply the Claimant argues that, when filing the claim on 27 July 2021, he had originally claimed a significantly higher sum, however, he chose to reduce the claimed sum to ensure that it fell within the financial limitations of the SCT. The Claimant also adds that he is a litigant in person and, he fears that a claim that might proceed through the court system for up to a period of 9 months in the Court of First Instant (“CFI”) would significantly impact his life in a negative way.
13. The Claimant also argues that he is currently on the Defendant’s visa, with an expired Emirates ID card, and his family have no medical insurance, all of which is greatly impacting his quality of life.
14. The Claimant submits that the claim and counterclaim can be determined separately, with the claim being determined by the SCT and the Counterclaim by the CFI.
15. The total sum claimed by the Claimant as set out in the Amended Claim Form is AED 500,000, in addition to payment of the court fees.
16. This dispute is governed by DIFC Employment Law No. 2 of 2019 (the “DIFC Employment Law”) in conjunction with the relevant Employment Contract.
17. First and foremost, the decision to transfer an SCT case to the CFI pursuant to RDC 53.37 is ultimately a discretionary decision. RDC 53.37 states that “Where appropriate, the SCT Judge may order that the small claim be transferred to the Court of First Instance.” While the SCT Judge “may” transfer the case, he or she “shall” have regard to the listed factors included at 53.37(1) – (10) when determining whether a transfer should be ordered. These factors include:
(1) The financial value of the claim or of the subject of the claim;
(2) The nature of the dispute;
(3) The nature of the remedy sought;
(4) The likely complexity of the facts, law or evidence;
(5) The number of parties or likely parties;
(6) The value of any counterclaim or other additional claim and the complexity of any matters relating to it;
(7) The amount of oral evidence which may be required;
(8) The importance of the claim to persons who are not parties to the proceedings;
(9) The view expressed by the parties at the consultation; and
(10) The circumstances of the parties, including their financial means.
18. RDC 53.4, which states that “Reference in this Part to ‘claims’ shall include reference to counterclaims, save that, where a counterclaim would not otherwise be within the SCT’s jurisdiction, an SCT Judge may direct that the proceedings be transferred to the Court of First Instance.” However, this provision would require or mandate a transfer should the Counterclaims fall outside of the AED 500,000 threshold relevant to the SCT, the provision states that the SCT Judge “may” transfer the proceedings, not “shall” or “must”, and therefore this too is a discretionary provision.
19. Therefore, I must mention that while a decision to transfer a case from the SCT to the CFI, which is largely determined in the SCT Judge’s discretion in considering the listed factors, may be legally sound, it may still accomplish a miscarriage of justice. This is the assessment I must make today, taking into consideration the arguments of the parties.
20. I am convinced that transferring the Claimant’s employment Claim to the CFI unduly prejudices him such that it may be a miscarriage of justice. However, the Defendant argues that failure to transfer the case and failure to keep the Claim and Counterclaims together will unduly prejudice it by determining one aspect of the case and leaving the other aspect undetermined. Thus, I must balance the needs of both parties, “ensuring that the parties are on equal footing” to have adequate access to justice in their particular circumstances.
21. I will first address the prejudice that the parties could face if this claim were to be transferred to the CFI. I will then address whether the Claim and Counterclaims must remain connected, addressing issues of mandatory counterclaims, res judicata, and parallel proceedings. Finally, I will address the claimed prejudice that the parties may experience if the Claim and Counterclaim are kept together.
Prejudice to the Claimant
22. The Claimant specifically chose to file his Claim in the SCT for numerous reasons, specifically the costs and expedited procedures relevant in the SCT. Claimants should generally be able to choose their forums and such choices should be respected as much as possible.
23. In this case, it is clear that the Claimant’s Claim regarding his alleged outstanding employment entitlements is appropriate for the SCT. In fact, it is a type of case well within the scope of the SCT’s specific design. Transfer of this Claim to the CFI will cause significant delay to resolution of the Claimant’s Claim and will increase the costs to get a resolution by many times. For an individual seeking to obtain employment benefits in the range of AED 500,000, a full CFI claim does not make sense unless there are specific reasons why that claim cannot be heard in the CFI.
24. In this case, the entirety of the reason for the Claim being transferred seems to stem from the Counterclaim, not the Claimant’s SCT Claim. I make no statement or assessment as to the genuine nature of the Counterclaim or the Claimant’s Claim. However, I must note that allowing the Counterclaim to so delay and so amplify the costs for the Claimant is a miscarriage of justice if the Defendant can otherwise be allowed to pursue its Counterclaim without requiring the Claimant to bear this burden. This type of balancing is squarely within the Overriding Objectives of the DIFC Courts which must apply equally to both parties.
25. Furthermore, the Claimant’s Claim is not for a sum significant enough to justify the costs of a CFI case. In seeking to be proportionate to the “amount of money involved” in the Claimant’s Claim, the relative lack of “complexity of the issues” and the “financial position of each party”, it becomes obvious that forcing the Claimant to continue his simple Claim in the CFI is a miscarriage of justice. This transfer will not ensure that the Claimant’s Claim is “dealt with expeditiously and fairly” and I cannot see a commensurate gain on the side of the Defendant to justify this burden.
26. In addition, allowing the Claimant’s Claim to proceed at the speed available in the SCT will miscarriage any justice, as shown by my below discussion.
27. Thus, I find that the Claimant’s clear inability to pursue his Claim, which is of a small value, in the CFI is a miscarriage of justice especially as it has been mandated to him in circumstances where the interests of the Defendant could be addressed in other less extreme ways.
Connected Claims andRes Judicata
28. Contrary to the Defendant’s arguments, I find that the Counterclaim filed is not relevant nor is it connected to the facts and circumstances of the Claimant’s Claim. Therefore, it is appropriate to separate the Counterclaim from the SCT proceedings in order to allow both parties to fully pursue their claims without prejudice.
29. In addition, I will mention that the Defendant argues that it brought its Counterclaim in the SCT because the claims were connected enough that it was not legally possible to pursue the Counterclaim separately for fear of issues of parallel proceedings, and potentially conflicting outcomes.
30. I do not find this argument convincing. There may be potential for parallel proceedings and conflicting judgments. However, while there is potential for such mischief in this matter, it is clear that the SCT Judge would be aware of this potential and would address the issues accordingly.
31. The Defendant argued at the Hearing that the Counterclaim is connected to the Claimant’s Claim, per se, and linked as they are brought under the same Employment Contract. However, claims brought under the same contract are not necessarily connected. Furthermore, the speedy nature of the SCT proceedings would almost assuredly guarantee that parallel proceedings would not occur, and the CFI would inevitably be informed and aware of the prior SCT judgment before making its own decision, avoiding conflicting judgments. In the event that the SCT Judgment is appealed to the CFI, the relevant Judge would be able to handle the relative case management to ensure that these issues are avoided. Certainly, the issues of parallel proceedings and potential for conflicting judgments are far greater in circumstances where the two forums applicable are not connected in the way that the SCT and CFI are intrinsically linked.
32. Therefore, I do not find that the Claim and Counterclaim must be kept together
The Defendant’s Opportunity to Pursue Its Counterclaim
33. The Defendant has argued that it must be able to fully pursue its Counterclaim. Of this statement, I have no doubt or question. I treat the Counterclaim as a genuine claim which the Defendant has every right to bring and has the right to a fully opportunity to be heard.
34. My criticism of the Defendant’s argument comes in its assessment that it will be prejudiced if the Claim and Counterclaim are not kept together. I do not see how this argument can hold merit.
35. I have no doubt that the proper determination of the Counterclaim is of vital importance to the Defendant. However, I was not convinced at the Hearing that failure to keep the Claim and Counterclaim together, while also giving the Defendant the full opportunity to have its Counterclaim heard, would somehow prejudice the Defendant.
36. The Court finds that the Claimant has specifically chosen for the SCT to hear and determine this simple employment dispute. I find that this choice must be given significant weight and it is important that I balance this interest with any prejudice or harm that the Claimant may suffer if this Claim were to proceed in the CFI.
37. The Court also finds that the Parties are financially imbalanced and that if this claim were to be transferred to the CFI, there might be concerns that the Defendant would be better placed in terms of its resources compared to the Claimant, as the Claimant is, notably, a litigant in person and may not have access to the same legal resources as the Defendant
38. For my reasons set out above, I find that the Defendant is free to pursue the Counterclaim in the CFI if it wishes to proceed. The Defendant has not made any argument as to why the Claim and Counterclaim must be heard together, other than to state that they relate to the same Employment Contract. It is a realistic possibility that this argument would not override the Claimant’s important interest in having his claim heard in the forum of his choice, especially when balancing the difference in time and costs between the SCT and CFI proceedings.
39. Accordingly, based on the submissions and the arguments heard at the Jurisdiction Hearing, I find that Claimant’s claim clearly falls within the jurisdiction of the SCT, and the Defendant may seek to pursue its Counterclaim in the CFI.
40. For the above cited reasons, I find that the Defendant’s application to contest the jurisdiction DIFC Courts’ SCT, must be dismissed as the DIFC Courts SCT has jurisdiction over the Claimant’s Claim.
41. Each party shall bear their own costs as to the Application to contest jurisdiction.