Claim No: CFI 029/2018
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
THE INDUSTRIAL GROUP LTD
Claimant/Counterclaim Defendant
and
ABDELAZIM EL SHIKH EL FADIL HAMID
Defendant/Counterclaim Claimant
JUDGMENT OF JUSTICE SIR RICHARD FIELD
Introduction
1. This a claim brought by way of counterclaim by the Defendant (“Mr Hamid”) for compensation following the summary termination of his contract of employment with the Claimant (“TIG”). The compensatory sums he seeks to be awarded fall into two distinct categories. In the first category he is claiming: notice pay; end of service gratuity; accrued vacation; and a statutory penalty under Article 18 of the 2005 DIFC Employment Law. The claims for notice pay and end of service gratuity depend on whether Mr Hamid’s contract of employment was lawfully terminated. In the second category he is claiming damages for the tort of abuse of process in respect of the two sets of proceedings brought against him by TIG and malicious prosecution in respect of a criminal complaint made by TIG to the Dubai police that he had embezzled AED 2.7 million, the investigation into which lasted from 13 May 2018 to 26 May 2019 when the Public Prosecutor dismissed the complaint.
The factual background established from those parts of the witnesses’ evidence accepted by the Court, the documents relating to Mr Hamid’s contract of employment and the other disclosed documents put before the Court
2. TIG was incorporated in the DIFC in 2012. It controls a group of companies that carry on business in Dubai, KSA and elsewhere in the Middle East providing specialty chemicals, packaging products, and food flavours.
3. This group of companies was formerly owned and controlled by a company incorporated in KSA called Al Banawi Industrial Group (“BIG”). In 2012 it was decided that TIG should replace BIG as the head of the group and this was achieved by the shareholders of BIG exchanging their shares for new shares in TIG.
4. Mr Hamid is a Sudanese National. He became an employee of BIG on 1 November 1999 when he accepted the position of General Accountant at one of BIG’s affiliated companies in KSA1pursuant to a term of his employment contract giving BIG the right to assign him to work for any of its affiliates. Following promotion to the position of Finance Manager, in June 2001 Mr Hamid was transferred to an Egyptian affiliate, Henkel Technologies and in July 2006 he was transferred back to KSA and promoted to Division Finance Controller, in which capacity he controlled a number of affiliates including the first two for which he had worked.
5. In 2007, Mr Hamid was promoted to the position of Financial Controller at BIG where later he became Corporate Treasurer and after that, Director of Finance and Planning. On 27 March 2013, he signed a new employment contract with TIG under which he was to work in TIG’s Head Office in Dubai as Director of Finance and Planning managing the same subordinates as in KSA and reporting direct to the Chairman of TIG. In March 2015 Mr Hamid’s family joined him in Dubai from Egypt and from that date he held the position of VP Finance and Planning for TIG and was based in the DIFC.
6. In addition to his employment contract dated 27 March 2013, Mr Hamid signed respectively on 8 June 2013, 9 November 2014 and 29 August 2017 the following documents: a Code of Ethics; a Policy on Authorisation Limits and an Undertaking.
7. The Code of Ethics emphasises the importance of such topics as impartiality, confidentiality, insider trading, the protection of and improper use of company assets and in Clause 8 avoiding conflicts of interests. The latter topic features significantly in TIG’s case against Mr Hamid. In relevant part Clause 8 states:
“Avoiding conflicts of interest is one of the fundamental principles of ethical behaviour. Confidence in the Group can exist only if Directors and Employees are known to be acting in the best interests of the Group, rather than pursuing their own interests or the interests of third parties. Directors and Employees should avoid any conflict of interest between themselves and the Group.
A conflict-of-interest arises when a person’s private interest interferes in any way, or even appears to interfere, with the interest of the Group. A conflict can arise when a Director or Employee takes actions or has interests that make it difficult to perform his or her duties objectively and effectively for the Group. Conflicts of interest also arise when a Director, an Employee or a family member receives improper personal benefits as a result of engagement or employment with the Group or has a financial interest in any organisation doing business with the group… Any situation that involves or appears to involve, a conflict-of-interest has been properly disclosed to the Chairman and Chief Executive Officer.”
8. The Policy on Authorisation Limits sets out the requirements for the authorisation of a large range of different purchase orders and requirements for payments depending, inter alia, on the value of the orders or payments and whether they have been budgeted for.
9. The Undertaking sets out a hierarchical order for the making of 8 different types of payment. The payments at the top of the list are those that have been specifically approved by the Chairman. Fourth down are payments to foreign suppliers and at the bottom are payments to local suppliers. I am satisfied that this document was introduced to give priority to payments made on behalf of the Chairman of TIG, in preference to payments to be made for the benefit of TIG and that its implementation significantly increased financial pressure on TIG because there was not always enough cash available to meet the expenses of TIG which Mr Hamid found personally distressing.
10. At all material times the Chairman of BIG and TIG was Mr Hussein Al Banawi (the“Chairman”) who dominated the management of BIG and TIG to the point that in large measure his word was law within the Group. Over time, Mr Hamid formed a very close relationship with the Chairman based on a high degree of mutual trust and confidence. In consequence of and in the course of this close relationship, an agreed arrangement evolved whereby Mr Hamid had standing authority to pay, using his personal bank account, expenses relating to the expenses of the Chairman’s company in Switzerland, Rotana Swiss AG, the rent for the Chairman’s villa in Dubai, the rent and maintenance of his villa in Germany, the telephone bills incurred by members of the Chairman’s family and occasionally the salary of individuals who worked for the Chairman at his foreign residences, when such expenses needed to be paid whether by pre-payment or otherwise when there were insufficient funds available in TIG’s accounts to pay for them without leaving TIG short of the necessary money to pay other pressing debts or there was insufficient time to organise the necessary funds for expenses that were required to be paid on the nail. For his part, the Chairman would reimburse Mr Hamid for certain of these payments and in respect of others, when TIG’s bank accounts contained sufficient funds, Mr Hamid, with the Chairman’s full knowledge and consent, would organise reimbursing payments out of TIG’s funds. Between December 2012 and February 2018, the total amount reimbursed from the Chairman’s bank account to Mr Hamid’s account was AED 3,891,424.
11. Also, and again with the Chairman’s knowledge and consent, Mr Hamid would occasionally make payments from his personal account into TIG’s bank account so that debts owed in respect of the aircraft used by the Chairman or owed to suppliers to the Group could be paid when there were insufficient funds in TIG’s bank accounts for this to happen. Later, as and when TIG’s funds permitted, Mr Hamid would arrange for reimbursing payments from selected TIG accounts to be paid into his personal account.
12. In order to have sufficient funds readily available to make the payments referred to in the above two paragraphs, Mr Hamid kept a float of around AED 1 million in his bank account. For the reimbursement of such payments made out of his personal account, Mr Hamid would send the documents proving the payment to the Accounts Department where a member of the staff would verify that reimbursement was due. Payment of the reimbursement would then be authorised in accordance with the authorisation procedure that involved four authorisation levels and those authorising would check the documents held in the Finance Department showing the payment from Mr Hamid’s personal account and other supporting documentation.
13. The introduction of the Undertaking the principal purpose of which was to ensure that the expenses of the Chairman were paid before other sums due by TIG to third parties put particular pressure on Mr Hamid because the achievement of this purpose depended on him finding the cash to make this happen and the required cash for him to be reimbursed by TIG was only rarely available. In Mr Hamid’s view the Authorisation Policy did apply to the reimbursement of funds paid out on behalf of the Chairman by employees like himself.
14. In September 2017, Mr Hamid was assigned to manage solely the strategic direction of TIG and the personal affairs of the Chairman upon his daily finance tasks being assigned to a newly appointed Director of Finance and Reporting, Mr Mubarak Taj (“Mr Taj”). However, in December 2017, Mr Taj gave up this appointment and became Director of Internal Audit because he was unable to bear the responsibility and pressure of having to defer payments to suppliers whilst at the same time meeting the Chairman’s demands for payments to be made for his personal benefit.
15. In January 2018, therefore, Mr Hamid found himself having to take over Mr Taj’s former role as well as managing the strategic direction of TIG and the personal affairs of the Chairman and he told the Chairman that he wanted to resign. What lay behind this was Mr Hamid’s deep dissatisfaction with how TIG’s business was being run with the Chairman putting his own lavish lifestyle ahead of the interests of the company, a situation that was putting Mr Hamid under very considerable stress. Predictably, the Chairman did not take Mr Hamid’s indication that he wished to resign at all well.
16. Following his discussion with the Chairman about resigning, on 22 January 2018, Mr Hamid submitted to the Chairman for his approval a list of forecast priority payments prepared by the finance team under his supervision and endorsed by Mr Taj to whom Mr Hamid sent the list by email dated 21 January. Under the heading “Administrative Expenses” there was a sub-heading “Reimbursements to Abdulazim” that related to “various payments for Villa Rotanna, Swiss & Villa rent Dubai” totalling AED 610,000. As the Chairman must have well understood at the time, the AED 610,000 was due to be paid to Mr Hamid who had paid for these expenses out of his own bank account at a time when TIG had insufficient funds to defray these expenses as those arose. Mr Hamid had paid the AED 610,000 in July 2017 and had not earlier sought to be reimbursed because TIG did not have sufficient funds to make urgent payments to suppliers whilst at the same time reimbursing him.
17. Later on 22 January 2018, Mr Hamid was called to attend a meeting with the Chairman by video conference. The Chairman said that he was not aware that Mr Hamid was owed such a large sum and enquired how the amounts Mr Hamid had paid on TIG’s behalf had reached such a level. He also raised detailed questions about the payments although he knew perfectly well to what they related. In the course of the meeting Mr Hamid confirmed that he had received similar reimbursing payments to those he was now claiming in the past in respect of payments he had made to cover expenses incurred by the Chairman and other payments he had made on behalf of the company. At the end of the meeting the Chairman asked Mr Hamid to hand over to him when he made the visit to Jeddah that was imminent, the bank security device that Mr Hamid used to make payments on TIG’s behalf. However, when Mr Hamid attempted to hand over the device, the Chairman insisted he keep it for the time being and Mr Hamid ended up handing over the device to Mr Khalid Jaberah (“Mr Jaberah”), TIG’s Country Vice President for Saudi Arabia.
18. On 24 January 2018, just prior to a meeting with the Chairman to discuss the reimbursement of the sums due him, Mr Jaberah told Mr Hamid that the Chairman would do whatever he could not to pay the sums due to Mr Hamid and that the Chairman had asked him to suggest at the meeting that there should be an internal audit and then to assure Mr Hamid that this would not affect his integrity and reputation in any way. The Chairman knew that if he raised the question of an internal audit Mr Hamid would be hostile to the idea because the Chairman had requested that the payments be made and was aware of each payment. At the meeting Mr Jaberah duly suggested that there be an internal audit to which Mr Hamid replied that he would co-operate with this process and would suspend his duties until the audit had been completed. The Chairman then refused Mr Hamid’s offer to suspend his duties saying that any such decision should be made by himself. At the end of the meeting the Chairman commended Mr Hamid for his achievements and the high level of his performance throughout his long period of employment. Following the meeting, Mr Hamid asked one of the accountants, Mr Jitesh Raghuvanshi (“Mr Raghuvanshi”), to provide him with copies of the documents that would be relevant to the internal audit. As noted below, these documents were kept in lever arch files which contained TIG’s general ledger and payment files. Sometime later, Mr Hamid saw that Mr Taj who worked on the internal audit had been provided with the same documents and that this was so confirmed to him later by Mr Raghuvanshi.
19. On 3 February 2018, Mr Hamid had another discussion with the Chairman about the arrangements for his resignation. The Chairman wanted Mr Hamid to delay his departure for a year. Mr Hamid rejected this idea and said that he would submit his resignation by May 2018 and could handle a few matters for the Chairman on a consultancy basis. During this meeting, the Chairman promised to reimburse Mr Hamid the AED 610,000.
20. On 4 February 2018, at the instigation of the Chairman, Mr Hamid relinquished his position of VP Finance and Planning and was appointed Senior Advisor to the Chairman. Mr Hamid was also informed he would work on some particular financial matters and the external audit for 2017 and would carry out a hand over to the newly appointed Financial Controller, Mr El Setohi.
21. On 2 April 2018, TIG engaged its external auditors, Ernst & Young (“EY”) to carry out a review to identify any transactions where the controls may not have operated appropriately in the course of which investigation EY would consider payments made in 2016 and 2017 and the related TIG bank statements in respect of a number of listed TIG employees including Mr Hamid. EY were given strict instructions not to contact Mr Hamid in the course of their investigation. It is plain that this engagement was prompted by the internal audit that had been underway since 24 January 2018 that was focused on transactions in which payments had been made from TIG bank accounts to Mr Hamid.
22. At the request of the Chairman made in March 2018, Mr Hamid was in KSA for the first week of April 2018 to finalise the handover to Mr El Setohi and away on two weeks’ leave from 8 to 22 April 2018. On return to his office in Dubai on 22 April 2018, he attended a meeting with the Chairman together with Mr William Beckley, TIG’s General Counsel, Mr Jaberah, Mr Osama Hamdan, TIG’s newly appointed CFO, and Mr Ali Al Hashmi of TIG’s lawyers, Global Advocates2. At the start of the meeting the Chairman said that they wished Mr Hamid all the best in his future endeavours. There was a need for transparency in the disclosure of information to safeguard the Group’s interests. The transfer of funds to Mr Hamid was weighing heavily. An audit was being performed to be fair to Mr Hamid and the Group. The desire was to make sure there was enough time to do an orderly handover to Mr El Setohi. Everyone must work with the Chairman and make sure the transition was done in a smooth manner. Mr Hamid said that he would do the transition again in an orderly manner and would be forthcoming.
23. The following day (23 April 2018), Mr Hamid was shocked to receive a notice from the DIFC Courts’ Registry of anex parteapplication to be made the next day by TIG against himself in proceedings entitled CFI-024-2018. He asked Mr Jaberah what was going on who replied that he knew nothing of any such application. He then asked the same question of Mr Beckley who told him that it was only a procedural step to ensure that Mr Hamid completed the handover before he left TIG. Mr Hamid then left the office taking with him his laptop computer as was perfectly normal. The next day, Mr Hamid tried to attend the hearing of TIG’s application but was not allowed into the Court.
24. In fact, theex parteapplication was for an order forbidding Mr Hamid from leaving the UAE and compelling him to deliver up his passport to the Court within 24 hours. It was Mr Beckley who had instructed the application to be made on behalf of TIG. It appears that the application had been filed with the Court on 18 April 2018, four days before the meeting held on 22 April 2018.
25. The skeleton argument filed by TIG’s counsel, Sharon Lakhan, in support of the application asserted that Mr Hamid had approved a transfer from the bank account of the Group of which TIG was a member to Mr Hamid’s personal bank account of AED 610,000 without the necessary authorisation and this had led to an internal audit that revealed that payments totalling around AED 1.3 million had been made to Mr Hamid’s personal bank account without proper authorisation andit appeared that Mr Hamid had actively sought to conceal these transactions from the Group.
26. The application was also supported by an affidavit sworn by Mr Jaberah, who deposed, inter alia, that at a meeting held on 22 January 2018, Mr Hamid had put forward a list of pending payment requests which included under the heading “Administrative Services” the figure of AED 610,000 due to be paid to himself. When Mr Hamid was asked about this AED 610,000, he had said he had made a number of payments on behalf of the Group from his personal account and because Mr Hamid had not sought prior approval from the Chairman of the Group,“it was clear that he [Mr Hamid] was trying to make these without the Chairman’s knowledge and intending that the transactions not be disclosed.”Mr Jaberah also deposed that unknown to Mr Hamid, an internal audit team had discovered “unusual’ transactions consisting of payments made from two of TIG’s bank accounts to Mr Hamid’s personal bank account totalling AED 1.3 million and that EY had been appointed to investigate the “unauthorised” payments without Mr Hamid knowing about this investigation. In paragraph 24 of this affidavit, Mr Jaberah stated:“It does appear there has been some dishonesty on [Mr Hamid’s] part in relation to these transactions, although the extent of that dishonesty and the harm caused to TIG remains unclear. Given that there has been some dishonesty in his dealings I believe that there is a risk that if [Mr Hamid] learns that we have discovered these other transactions, which he has kept hidden from TIG, and that we are conducting a thorough investigation, that there is a strong possibility that he will leave the country to avoid the consequences of his actions.”
27. Unsurprisingly, TIG’s application was refused by H.E Justice Shamlan Al Sawalehi.
28. On 25 April 2018, Mr Taj issued his Internal Audit Report in which it was stated that during the internal audit he had come across suspicious transactions whereby money totalling AED 1.3 million had been transferred from various of TIG’s bank accounts to Mr Hamid, these payments having been authorised by Mr Hamid himself. None of the outgoing or incoming payments had been authorised or approved by the Chairman and there was no documentation to justify or support any of these transfers or payments. The transactions were only evidenced by bank transfer instructions downloaded from the bank portal which did not provide any explanation or reasons for the transfers. There was no documentation to justify or support any of the transfers and payments which suggested that there had been serious misconduct on the part of Mr Hamid.
29. Also on 25 April 2018, Mr Hamid’s entry pass for the office and his laptop were both disabled and he hurriedly instructed a lawyer who sent a letter to TIG seeking information about theex parteapplication heard the day before and enquiring about Mr Hamid’s employment status. This letter never received a reply and on 29 April 2018 Mr Hamid went to the office to submit a letter of resignation with effect from that date. When he arrived at the office, however, he found that his access key had been disabled and when he tried to ring the bell, no one answered. The resignation letter was therefore sent to TIG by email by Mr Hamid’s lawyer. In this letter, Mr Hamid gave 90 days’ notice effective from 29 April 2018.
30. On Sunday, 29 April, 2018, Mr Beckley received an email from Sharon Lakhan, a lawyer with Global Advocates instructed by TIG stating, inter alia:
“Dear William,
As discussed with Ali last week, we suggest trying to file a civil claim for a travel ban against Mr El Fadil simultaneously with the application for a travel ban against him through a criminal complaint. This is to maximise our chances in case the criminal travel ban application is rejected. The idea is that if we are able to obtain a civil travel ban on the evidence currently available, this will prevent Mr EL Fadil travelling for the moment and might give us sufficient time to have the E & Y interim report completed and submitted to the police for the criminal complaint to be finalised. Of course we are likely to face a similar issue with the civil court judge as we have faced with the police because we do not have the external auditors report yet. It is therefore not certain that an application for a civil travel ban would be successful.”
31. On 8 May 2018, Mr Beckley on behalf of TIG issued a long letter to Mr Hamid terminating his employment with immediate effect. The letter began by recounting what had happened at the meeting on 22 January 2018 and alleged that the inclusion of the request for payment of AED 610,000 in the list Mr Hamid had presented at the meeting was a “flagrant breach” of the Group’s internal policies. It alleged that Mr Hamid had failed to comply with the company’s request that he provide receipts for the payments he said he had made for the Group.
32. The letter then went on to state that EY’s interim preliminary report highlighted Mr Hamid’s “egregious conduct” and “fundamental failings” to perform his role and confirmed that he had made several transfers without the knowledge of the Group between the Group’s bank accounts and his own personal bank accounts in the amount of approximately AED 1.4 million. EY had reported that they could not find any documents authorising these transactions and were not able to reconcile the payments made due to the way in which they have been recorded in the Group’s financials. This strongly implied that Mr Hamid had breached his fiduciary obligations to the Group and that he may have benefited personally from those transactions. In making these transactions he had breached the Groups internal policies, his contract of employment and the duties he owed under the law.
33. EY’s interim report had also noted that there were numerous purchase orders Mr Hamid had issued without invoice documents in the SAP system thereby making it impossible to create a link between the payments made against his purchase orders. A significant number were posted manually in the SAP system without any link to vendors. There were also significant payments made by Mr Hamid to “unrecognised” vendors which he had created within the system. This strongly implied that he had been responsible for the SAP system being intentionally configured to bypass the Group’s procurement process at his discretion and for his benefit. It appeared that Mr Hamid had deliberately put in place a system without adequate processes, procedures and mechanisms properly to govern the Finance function and to have exposed the Group to a serious risk of fraud, loss and harm. It appeared that Mr Hamid had sought to benefit personally from the lack of proper processes which the Group considered to be a fundamental breach of trust
34. Next the letter alleged that the handover list he had prepared to give to the new CFO was inadequate and he had failed to ensure that proper systems of internal governance and record keeping were maintained or that transaction processes were in place to support the continuity of the business. He had also failed to put in place a proper procedure for managing accrued annual leave resulting in employees including himself claiming hundreds of days of untaken leave which cannot be reconciled because no proper records are maintained. This strongly implied that it was intentionally done by him for his benefit. Mr Hamid had also consistently frustrated the Group and its external auditors and had failed to attend for work on 24–26 and 29 April 2018 with no explanation for his absence until his resignation letter.
35. In paragraph 16, the letter stated that in light of the initial findings contained in EY’s interim report TIG had no option but to terminate his employment for cause pursuant to article 59A of the DIFC Employment Law (2005) for the reasons enumerated in the earlier paragraphs, including breaches of his obligations under his contract of employment, the DIFC employment law, his fiduciary duties and the Group’s internal policies.
36. On 10 May 2018, EY issued its findings on completion of its investigation. These included the following. “During our sample verification, we noted several payments were made from the company’s bank account as well as cash payments to an employee, [Mr Hamid] … who is the Vice President, Finance and Planning. These amounts were totalling up to approximately ARD 1.376M in multiple payments during the years 2016 and 2017. We were not provided with any written approval for these transactions.We enquired with the account department on these payments and they informed us that Mr[ Hamid] instructed them to make these payments because Mr Abdulazeem had earlier deposited funds from his personal account to TIG’s account.The control weaknesses identified in this report could result in fraudulent transactions and a more detailed study focused around this subject is required to provide more details. [Emphasis supplied].
37. On 13 May 2018, TIG filed a criminal complaint against Mr Hamid with the Dubai police and also issued a new claim (CFI-029-2018) in this Court replacing the earlier claim (CFI-024-2018) on which it had founded its unsuccessful ex parte application.
38. On 23 May 2018, Mr Hamid filed his own claim against TIG (CFI-034-2018) claiming that his dismissal was unlawful and seeking payment of, inter alia, US$ 1,123,411 and sums in respect of his “labor rights” including a gratuity, annual leave and a penalty.
39. On 27 May 2018, Mr Hamid filed an Acknowledgment of Service which had CFI-024-2018 on it rather than CFI-029-2018.
40. On 21 June 2018, Mr Hamid filed a Defence in CFI-024-2018.
41. On 24 June 2018, TIG filed its Particulars of Claim in its new claim (CFI-029-2018). The following aspects of this pleading are to be noted. (1) In respect of Mr Hamid’s request for payment of the AED 610,000, TIG pleaded that at the meeting on 22 January 2018 it discovered that Mr Hamid “had soughtdishonestlyto transfer an amount of AED 610,000 from TIG‘s account to Mr Hamid’s personal bank account” [emphasis supplied].(2) It alleged that between 2013 and 2015 and during 2016 and 2917 Mr Hamid procured payments from TIG‘s bank accounts to his own personal account respectively totalling AED 1,443, 817.62 and AED 1,344,277,17 and that investigations into these payments were continuing. (3) Pursuant to article 160 of the DIFC Law of Obligations, Mr Hamid was liable to pay damages to the claimant in respect of any loss suffered by TIG and was liable to account to TIG for any benefit he had acquired in consequence of a breach of his duty. (4) The relief sought in the Prayer was for various declarations and interim orders, an order that Mr Hamid repay to TIG the full amount of any sums found to have been improperly transferred from TIG‘s account and (unspecified) damages under Articles 8 and 9 of the DIFC Law of Damages for losses sustained by TIG as a result of Mr Hamid’s breaches of his employment contract. No claim for AED 1,344,277.17 was made in the Prayer. Instead, the claim for this sum was wrapped up in the claim for an order that Mr Hamid repay TIG the full amount of any sumsfound to have been improperly transferredfrom TIG’s account to Mr Hamid.
42. On 9 July 2018, a report by Mr Walid HPA Shmasa Al Ameri Auditing (“theHPA Report”) commissioned by TIG was handed to the Dubai police. It was stated in this document that TIG had informed HPA that it had detected that Mr Hamid had abused the powers conferred on him and had manipulated TIG’s accounts and misappropriated money from TIG and HPA had been assigned to provide a consultant accounting report to conclude that Mr Hamid had committed irregularities and breaches against TIG and to report on the sums Mr Hamid had misappropriated.
43. Amongst the conclusions reached in the HPA report were the following:
(1) Mr Hamid had manipulated TIG’s accounts and unrightfully had appropriated amounts of money belonging to the company for himself whilst knowing that he had fraudulently appropriated these amounts.
(2) Such documents as there were showing payments by and to Mr Hamid did not provide any explanation or causes for the transfers which proved that Mr Hamid was acting in bad faith towards TIG.
(3) It was established that AED 2,724,369.29 was payable by Mr Hamid to TIG because he had unrightfully appropriated this amount and having deliberately intended to cause TIG to sustain harm in losses.
44. In the week prior to 15 July 2018, at a meeting with the Dubai Prosecutor attended, inter alios, by Dr Ahmad Bin Hezeem on behalf of TIG, the prosecutor stated that since the same subject matter was currently being dealt with by the DIFC Courts, the prosecution should halt the criminal proceedings until the DIFC Court has adjudged on the DIFC case DIFC-029-2018. This was reported to Mr Beckley by a member of TIG’s lawyers by email dated 15 July 2018, who had advised that the DIFC case be continued to acquire a judgment and submit it to the Prosecutor to resume the criminal proceedings.
45. On 15 July 2018, Mr Hamid attended at the Police Station and his passport was confiscated and his visa revoked. Thereafter he was interrogated by the police over many days.
46. On 16 July 2018, Mr Robert Mitchley, a lawyer employed by BSA Ahmed Bin Hezeem & Associates, advised Mr Beckley that since Mr Hamid had not filed a Defence in DIFC-029-2018, there was an opportunity to file a request for a Default Judgment, which if successful would bring the matter to an end as required by the Dubai Public Prosecutor.
47. On 22 July 2018, TIG filed an application for a default judgment against Mr Hamid on the ground that he had neither served an Acknowledgement of Service nor a Defence in DIFC-029-2018. The application stated in terms that “[t]he Claimant requests for judgment to be entered against the Defendantfor an amount to be decided by the Court…” The application was supported by a witness statement signed by Mr Jaberah in which he stated, “I confirm that the Defendant has not settled the amounts claimed and has not complied with any of the remedies sought by the Claimant,” and thereafter he stated:
“In terms of the Particulars of Claim the Claimant is seeking judgment for:
A. Declarations ….
B. The Defendant to repay to the Claimant, as determined by the Court:
i) The sum of AED 1,344, 277.17.”
48. As recorded in paragraph 40 above, the relief claimed in the Prayer of the Particulars of Claim did not include a claim for AED 1,344,277.17.
49. On 30 July 2018, Judicial Officer Nassir Al Nasser (as he then was), granted the application for judgment in default on the basis that the claim was “for a specified sum of money and the request specifies the date by which the whole of the judgment debt is to be paid …” and ordered Mr Hamid to pay TIG AED 1,376,000 within fourteen days.
50. On 9 August 2018, Mr Hamid filed an application to set aside the default judgment. The application set out in an unorthodox fashion what in substance was Mr Hamid’s defence. It was signed by Mr Hamid’s lawyer but not by Mr Hamid and no witness statement from Mr Hamid was filed in support of the application. On the same date, an expert accountant’s report prepared by a Mr Syed of EMA Saxena Auditors (the “EMA Saxena Report”) was served in support of the application. This report consisted of a review of transactions and supporting documents for payments made to Mr Hamid on behalf of TIG or the Chairman, funds transferred by TIG to Mr Hamid and sums payable to Mr Hamid by TIG at the end of his employment. As related above, copies of these documents had been made by Mr Hamid from the originals provided by the Finance Department. These documents were kept in lever-arch files that were referred to at the trial as “Box File No. 24” which contained TIG’s general ledger and payment files, each entry for each year being numbered chronologically with the prefix 24. Unfortunately, the copies of the supporting documents that were annexed to the report were not served as they should have been.
51. In early August 2018, Mr Hamid was recalled to the Police Station to speak to the Public Prosecutor and it was at this point that he first learned of the HPA Report.
52. The application to set aside the default judgment was heard by myself on 15 October 2018. The documents referred to in and intended to be attached to the SMA Saxena Report were not before the Court. I dismissed the application, whilst at the same time ordering that there be a stay of execution on the judgment pending trial of Mr Hamid’s cross claims in CFI-034-2018. Mr Hamid’s counsel did not take the point that no claim for AED 1,376,000 was made in the Prayer or pleaded elsewhere in the Particulars of Claim.
53. The documents forming a crucial part of the EMA Saxena Report were served on TIG’s lawyers on 25 October 2018 and around this time the full EMA Saxena Report, attachments and all, was provided to the Dubai police.
54. Table A of EMA Saxena Report consists of a list of recipients for whom amounts were transferred by Mr Hamid on behalf of the Company or its Chairman. The recipients named were – the Chairman, the Chairman’s Villa Rotana in Germany (paid to a staff member; the custodian; VR Bank); a housemaid at the Chairman’s home in Switzerland via Rotana Capital AG; a consultant with Rotana Capital AG; the Chairman’s daughter; other members of his family; the Construction Consultant constructing the Chairman’s villa in Jeddah; and TIG’s account.
55. In Section 1 of the EMA Saxena Report there was analysis of the sums making up the AED 753,395 due to Mr Hamid to reimburse him for payments he had made on behalf of TIG or the Chairman. Table B (1) consisted of seven vertical columns headed, from left to right, as follows: Details of payment made …; Date of payment; CUR (currency); Amount [FC]; Amount [AED]; Details of supporting document verified; Supporting document Ref#. Included in Table B (1) were the payments totalling AED 610,000 for which Mr Hamid had sought the Chairman’s approval at the meeting on 22 January 2018.
56. Copies of all the supporting documents that were verified by EMA Saxena in the course of compiling the report were included within Annexures numbered 1 to 12. In the great majority of cases, the supporting documents including journal entries, but excluding several of Mr Hamid’s bank statements, were in the possession of TIG in the Box 24 Files or spread over other files held by the finance department.
57. Table B (2) of the report set out the sums due to Mr Hamid by way of salary and end of service benefits.
58. In Section 2, the report analysed the details of payments made by Mr Hamid on behalf of TIG or the Chairman and related reimbursement funds transferred to Mr Hamid by TIG in the period 2013 to 2017. Table D set out the details of the payments made by Mr Hamid and the payments received by him totalling AED 1,344,277. This table had 12 vertical columns, the first 7 of which from left to right had the same headings as in Table B (1) and related to the payments made by Mr Hamid, whilst the remaining columns pertained to the related payments received by Mr Hamid and bore the headings: Date of payment by Company to Mr Hamid; CUR; Amount transferred by Company [FC]; Amount transferred by Company [AED]; Beneficiary’s bank ref.
59. In Section 3, the Report analysed funds transferred by Mr Hamid to TIG during 2017 and for which of those transfers Mr Hamid received a reimbursement payment made by TIG. The two payments made by Mr Hamid for which he had not received a reciprocal payment totalled AED 300,000. These payments are included in Table B. The nature of the supporting documents verified for each payment was noted in the appropriate column and cross-referenced to the Annexures in question.
60. Copies of the supporting documents verified were appended in Annexures numbered 1 through 12.
61. In Section 4 the Report analysed reimbursements made to Mr Hamid by the Chairman for payments incurred by Mr Hamid on behalf of TIG or the Chairman. Forty-five examples of reimbursements made by the Chairman to Mr Hamid during the years 2015 – 2018 totalling AED 1,774,366.89 are set out in Table F which shows the date, the amount, which of Mr Hamid’s bank accounts received the payment and verification from the bank statements for the payment, copies of which were contained in the files kept in the Finance Department.
62. On 16 November 2018, I dismissed Mr Hamid’s application for permission to appeal the dismissal of his application to have the default judgment set aside.
63. After having analysed the HPA Report, Mr Hamid told the Public Prosecutor that the report did not support the allegations of bad faith and embezzlement made therein and the Prosecutor requested the Ruler’s Court to appoint an expert to consider the HPA and the EMA Saxena Reports. The expert chosen, Mr Abdelazim Al Disawi (the“court expert”) took up his appointment on 21 November 2018. Mr Hamid paid AED 20,000 towards his costs, as did TIG.
64. By its Reply and Defence to Counterclaim dated 22 November 2018, TIG admitted that TIG owed him AED 610,000 and that the sum of AED 1,344,277 had been properly repaid to Mr Hamid.3
65. On 12 December 2018, TIG maintained and repeated before the court expert the criminal complaint that AED 2,734,369 had been embezzled on the ground that Mr Hamid had not obtained the approval of the Chairman for the transfers to himself.
66. On 12 February 2019, TIG amended its Particulars of Claim by: (A) excising the allegations that Mr Hamid had deliberately: (i) put in place a system without adequate processes and procedures; and (ii) failed to ensure proper systems of internal governance and record keeping were established and maintained; and (B) alleging that Mr Hamid was responsible for the extension of credit to Merab Establishment (“Merab”) in respect of the supply to that company of goods priced at SAR 1,718,750 when Merab was already indebted to the Group in the sum of SAR 7,756,396.54, with the result that the SAR 1,718,750 was never paid (the“Merab Claim”).
67. On 5 March 2019, HPA served a supplementary report on the court expert in which it repeated the allegation of embezzlement on the ground that the payments were not pre-authorised by the Chairman but reduced the amount involved to AED 1.7 million.
68. On 8 April 2019, HPA served on the court expert a number of submissions that included the contention that the expert had to be attentive to what Mr Hamid was trying to do, namely, to mislead the expert and delude him into believing that Mr Hamid transferred amounts from his own account to pay amounts due from the company and then transferred the same back to his account, which scenario (if true) would be a well-plotted and thought-out plan to conceal Mr Hamid’s crimes and legalise his embezzlements and the amounts that entered his account.
69. The court expert issued his report on 24 April 2019 in which he set out, inter alia, in tabular form, the details of: (a) the 27 transactions totalling the AED 2,724,363.29 alleged to have been embezzled by Mr Hamid; (b) the documents and explanations for each transaction provided by Mr Hamid; and (c) his (the expert’s) conclusion in each case that Mr Hamid had been entitled to receive the amounts in question.
70. The expert noted that: (i) TIG had admitted in the DIFC Court proceedings that Mr Hamid was entitled to receive the amounts numbered 14 – 16 appearing in the table; (ii) it had been demonstrated that Mr Hamid had transferred and deposited amounts from his personal account to TIG’s account and that of the Chairman for a long period so that the officers of TIG were aware of such transfers and deposits; TIG was aware that the amounts transferred by Mr Hamid from his personal account to TIG were in accordance with the Undertaking dated 29 August 2017.
71. TIG refused to accept the court’s expert’s report and in a submission dated 7 May 2019 made on its behalf to the Public Prosecutor it accused the court expert of having been grossly prejudiced in favour of Mr Hamid and of having disregarded the documents in a way that did not achieve justice between the parties. The court expert should have upheld the criminal complaint on the ground that Mr Hamid had not obtained the approval of the Chairman for the payments made to himself.
72. On 20 May 2019, the court expert issued a report replying to TIG’s submission dated 7 May 2019 in which it was stated, inter alia, that: (i) TIG’s case that Mr Hamid was indebted in respect of the payments received by Mr Hamid because there was no prior written approval by the Chairman, despite the fact it was admitted that Mr Hamid was entitled to these amounts, should be rejected; (ii) it was proved that Mr Hamid was entitled to the sums received; the Chairman and TIG’s officials knew Mr Hamid transferred and deposited amounts from and into his personal account; Mr Hamid followed the procedures set out in the Undertaking.
73. On 26 May 2019, the Public Prosecutor roundly rejected TIG’s complaint stating, inter alia: (i) the accountant who prepared the HPA Report admitted that the report was based on documents from TIG yet Mr Hamid had never been given an opportunity to present his defence, whilst at the same time, there was no decisive evidence that proved the complaint so that“consequently, the allegations of [TIG] are unfounded and crumbling and were not supported by any conclusive evidence or clue and the same was not sufficient to refer the penal case to the Court of law.”[Emphasis supplied]
74. Finally, on 10 July 2019, Mr Hamid’s passport was returned to him.
75. On 19 November 2019, Mr Hamid applied for a series of orders seeking, inter alia, the striking out of various of TIG’s claims and permission to plead claims for abuse of process and malicious prosecution. This application was heard on 17 February 2019. TIG opposed most of the application relying on a skeleton argument and witness statements from Messrs Beckley and Jaberah. Mr Hamid supported his application by serving two witness statements made by himself. For reasons handed down on 3 March 2020: (i) the default judgment was set aside and indemnity costs were awarded against TIG; (ii) TIG’s claim for AED 1,443,817.62 was struck out on terms that TIG had liberty to rely on the procedural failings pleaded in respect of this claim as part of its case that Mr Hamid had been lawfully dismissed with cause; (iii) the claim for AED 490,000 was struck out by consent; (iv) the Merab claim was struck out with liberty to plead a new cause of action claiming that Mr Hamid had breached a contractual duty in granting credit in the sum of SAR 1,718,150 to a customer thereby causing loss to TIG equivalent to the credit granted; (v) in respect of three sums claimed by Mr Hamid, unless TIG paid those sums into court within a stipulated time, Mr Hamid was to have judgment for the same; (vi) the application for a penalty under Article 18 of the DIFC Employment Law was adjourned to the trial; (vii) Mr Hamid was given permission to plead a claim for damages for the alleged torts of abuse of process and malicious prosecution; and (viii) save in respect of (i) above, the costs of Mr Hamid’s application were to be in the Counterclaim.
76. The three sums for which judgment was to be entered unless they were paid into court were: (i) AED 820,585 in respect of outstanding business expenses claimed in paragraph 13 of the Amended Counterclaim (“TAC”); (ii) AED 84,833 claimed as outstanding salary in paragraph 20 of TAC; and (iii) AED 104,876.71 being part of the AED 910,345 claimed in paragraph 13 in respect of accrued annual leave. All of these sums were paid into Court and later AED 49,000 was paid directly to Mr Hamid. The reason for the order that the sums be paid into court if not made the subject of a judgment was that TIG had been given leave to replead its Merab claim which if successful and for a sum that exceeded the money in court could be set off against Mr Hamid’s claims for these sums. However, having had three unsuccessful attempts to do so, by an order of the Court dated 2 November 2020, TIG was eventually barred from repleading the Merab claim and TIG was ordered to pay the money in court to Mr Hamid within 7 days. This payment was made on 9 November 2020.
77. During the period Mr Hamid was facing the CFI-029-2018 proceedings and the complaint made to the Dubai Police he was separated from his family who had to return to Sudan. He was without an income and in constant fear that the default judgment would prove the criminal complaint and he would be imprisoned. He felt ashamed by the loss of his reputation. Most of his family and friends disowned him. His health deteriorated, he lost his house and was unable to get a job. He had previously lived with his family in a villa in Mirdif, Dubai. For a period after his dismissal, he lived in a one-bedroom apartment in Sharjah but after almost a year he could no longer afford the rent and had to live in a shared room with two other people in Ajman.
The witnesses for the Defendant/Counterclaimant
Mr Hamid
78. I found Mr Hamid to be an honest and reliable witness in respect of all those matters he personally witnessed by sight and/or by sound and I accept this direct evidence without reservation. There were parts of his testimony when he gave his opinion on such things as the motive of individuals, such as his view that TIG habitually lied its way out of trouble and his claim that he knew that Global Advocates had advised TIG not to dismiss him summarily for cause. As to matters of this sort, it is only where I find that they are convincingly supported by other reliable direct or circumstantial evidence that I accept them.
79. Where there are differences between Mr Hamid’s direct evidence and the evidence of Mr Jaberah and Mr Beckley, I prefer and accept the evidence of Mr Hamid. As I find below, there were parts of the evidence given by Mr Jaberah and Mr Beckley that I have concluded were unreliable and inaccurate. I accordingly accept Mr Hamid’s evidence as to what Mr Jaberah said to him before the meeting on 24 January 2018 and his denial that he was ever invited by anyone, including the Chairman, to produce documents, including receipts and his bank statements, to support his insistence that the payments received by him were reimbursement payments in respect of sums he paid from his own bank accounts to discharge expenses incurred by the Chairman and/or TIG. If TIG really did press Mr Hamid to produce the aforesaid documents, one would have expected to see written requests urging Mr Hamid to bring forth exculpatory documents but no such requests were sent. On the contrary, at the Chairman’s urging, Mr Hamid was away in KSA for the first week of April 2018 to finalise the handover to Mr El Setohi and away on two weeks’ leave from 8 to 22 April 2018 and then locked permanently out of the office from 24/25 April 2018, as I find on the evidence.
80. I also accept Mr Hamid’s evidence that: (i) at the meeting on 22 January 2018 in answer to the Chairman’s questions as to what the AED 610,000 expenses related he answered all the Chairman’s questions and clarified everything; (ii) the Chairman knew exactly what the payments had been made for and had full knowledge of the circumstances of those payments; (iii) he made payments out of his own money to cover (a) the expenses of the Chairman and the Chairman’s family and (b) debts due by TIG where TIG did not have the financial resources to pay expenses of the first sort and those of the second sort but it was essential that some debts of the second sort be paid in the interests of TIG; (iv) at all times Mr Hamid had the “approval” of the Chairman to pay his (the Chairman’s) personal expenses either out of his personal account or TIG’s account if sufficient funds were available whenever such payment became due, these payments being always approved by the Chairman as repeated payments where the expenses had to be paid on a regular basis; (v) individuals within the Finance Department, including in particular Mr Raghuvanshi, knew of and kept records of these payments made on behalf of the Chairman; (vi) although he was upset that on 24 January 2018 the Chairman ordered that there be an internal audit following on from Mr Hamid having told the Chairman on 22 January 2018 that he had received reimbursing payments for payments he had made from his personal account to cover the expenses of the Chairman and occasionally sums due by TIG to third parties, Mr Hamid said that he would cooperate with the internal audit but he was never once asked to provide information or documents including receipts.
81. I find that Mr Hamid answered the questions put to him in cross-examination honestly and fairly and nothing emerged that gave me any reason for doubting any part of Mr Hamid’s direct testimony.
Mr Raghuvanshi
82. The evidence given by Mr Raghuvanshi was carefully delivered and reliable. His evidence in chief was that he was employed by TIG as an Accountant in the corporate office in the DIFC, Dubai from December 2014 to 21 April 2018. The payments made by Mr Hamid for which he was recompensed by payments from TIG amounting to AED 1,344,277.16 were made when there were insufficient funds in TIG’s bank account to pay critical payments such as payroll and rent for the villa of the Chairman in Dubai. These payments were made either where there were contracts previously approved or were for repeated expenses or where some form of an approval had been received from the Chairman.
83. Within a few months of leaving TIG on 21 April 2018, he went to TIG’s office at the request of Mr Beckley and was told that TIG were reviewing the transfers made to Mr Hamid. Mr Raghuvanshi explained that the payments were reimbursements to Mr Hamid in respect of payments made from his personal bank account on behalf of TIG.
84. Part of Mr Raghuvanshi’s job was to verify these payments and initiate the reimbursement to Mr Hamid which involved him ensuring that the amounts were credited to the company’s bank account or transfers were executed to meet the expenses. He maintained records for these transactions and provided reports on the amount settled and outstanding to Mr Hamid. He handed over a summary and supporting documents for the payments to the director of internal audit, Mr Taj, before Mr Hamid departed from the company. Mr Raghuvanshi was a key person in processing the payments to Mr Hamid but the company did not make any investigation of him on his role in approving the payments.
85. In cross-examination, Mr Raghuvanshi said that in general once payment vouchers were posted on an ERP system called SAP it would generate a system voucher to which would be attached the supporting documents. To identify the records for the payments totalling 1.3 million would require having to look in a number of different files. In the case of Mr Hamid, the accountants used to maintain a separate excel sheet which gave the date payment was made from his account and the date when the company reimbursed him. Based on the latter date he would go into the system and extract the document number and then go into the hardcopy file and physically pull out the document.
86. Some of the sums reimbursed to Mr Hamid in respect of expenses that the Chairman would incur were properly chargeable to the company and some were not. Generally telephone bills of the Chairman’s children would not be within the scope of the expenses that the company should be responsible for and there could be a few possibilities when these children’s telephone bills were charged to the company but afterwards they would have been taken to the Chairman’s current account.
87. Mr Raghuvanshi was not the person who used to approve the payments. He was used as a bookkeeper so when he was posting a transaction on the system this had to be based on the supporting documents and only then could there be reimbursement. Most of the payments would be raised from the bank to the beneficiaries and to reimburse Mr Hamid. In respect of an overall payment of AED 170,000, before that would be reimbursed to Mr Hamid the staff in the finance department would see where all these expenses have been paid. The AED 170,000 could be across four or five different types of expenses and the supporting documents had to be obtained and verified after which it would be repaid to Mr Hamid.
88. If Mr Hamid paid for a salary he would transfer that to the company’s account and the company would then release the salary to the employee so that there was a temporary loan made by Mr Hamid to the company which once there was sufficient cash flow would be reimbursed to him by the accounts department. So, all the entries that were reimbursed to him would have the supporting documents showing him transferring it to the company bank account or transferring it to the direct beneficiaries. It was from that record that there would be reimbursement.
89. Mr Raghuvanshi did not see the making of pre-payments for expenses as posing a problem. Payments could be made on a monthly basis for the Villa to cover expenses in Switzerland and Germany. These were being paid from the company and he and the staff were aware of the nature of the expenses or the nature of the transaction that was taking place. Mr Raghuvanshi was the initiator in the process leading to a payment being made by the company’s bank. The initiator was the one who initiated the payment on the portal and then there were authorisers who had to check that the sum was due and in respect of what transaction. Most of the payments would have been booked onto the ERP system either by Mr Raghuvanshi or one of his colleagues. The final approval for the listed payments, except for four of them, was by Mr Hamid. If there was no level three authoriser available, the ultimate approver was Mr Hamid. The Chairman did not have access to release the payments on the online portal. He would have given the authority to the third approvers to release the payments. If at the time when the expense took place the company bank accounts did not have the funds or there was a delay in receiving funding, Mr Hamid would pay the expense from his own funds. There were times when finance managers in associated group companies would refuse to release funds to Dubai because they were needed by the affiliated company. Mr Raghuvanshi agreed with Mr Taj’s conclusion that none of the incoming or out-going fund transfers to and from Mr Hamid‘s personal accounts had been authorised or approved by the Chairman at least in most cases. For most of the time, there were no written approvals from the Chairman for most of the expenses that were being covered out of Mr Hamid’s personal account. When it came to the payments from the company back to Mr Hamid, if they were particular expenses of the Chairman there would be no approval from the Chairman but if they were for salaries there was proof from the bank documents that the funds were transferred by Mr Hamid to fund the salary payments to the employees and when Mr Hamid was reimbursed when the company had the funds to do so.
Mr Abuelgasim Osman Ahmed Ali
90. Mr Ahmed’s evidence in chief can be summarised as follows.
91. Mr Ahmed has been a close friend of Mr Hamid since 1983. In June 2018, he received a call from Mr Hamid who told him he had been summoned to the Bur Dubai police station the next day. Mr Hamid was very stressed; his hands were shaking. Mr Ahmed accompanied him to the police station the following day and waited outside for him. Mr Hamid was released after a couple of hours having been told that he could be called back any time.
92. In the middle of July 2018 Mr Ahmed was sitting with Mr Hamid when the latter received another call from the Dubai police asking him to come to the police station with his passport. Mr Osman accompanied Mr Hamid to the police station where his passport was confiscated. When Mr Hamid left the police station he looked pale and shaken. He was terrified and kept saying that he might lose everything and go to jail if TIG succeeded in establishing the complaint they had made against him.
93. Mr Hamid was devastated that his family and friends were now aware of the criminal complaint against him and many people started to question his integrity. After Mr Hamid’s dismissal from TIG, his family had to move back to Sudan and later to Egypt. As Mr Hamid could not obtain a salary certificate he could not renew his family’s visa. He was very concerned about the poor economic conditions in Sudan and was in fear for his family’s safety. He moved to a one-bedroom apartment in Sharja but after almost a year he could not afford the rent and had to move to a shared room in Ajman. This affected Mr Hamid greatly. He was emotionally distressed and suffered from anxiety all the time. Most of his family and friends had stopped contacting him and would not return his calls. He had no support during what he described as the worst period of his life. The move to Sudan had a very bad impact on his children. His daughter’s fiancée broke off the engagement and his children had to leave the very good schools they had been attending in Dubai. He was not able to find a job because of the status of the criminal proceeding and the fact that a good reputation and integrity are essential for any job.
94. In cross-examination, Mr Ahmed confirmed that he himself had not spread around information concerning the police investigation of a complaint that Mr Hamid was guilty of embezzlement. He was very surprised how there was a case against Mr Hamid given his work for the company. Mr Hamid told him the allegations that he faced but Mr Ahmed did not ask him whether the allegations were true or not.
95. I found Mr Ahmed to be a truthful and reliable witness and I accept his evidence without reservation.
Mr Hatem Zaghoul
96. At the time of the trial Mr Zaghoul was Regional Vice President at what he called the Industrial Group. After he was sworn and confirmed the truth of his witness statement he was not asked any questions on behalf of Mr Hamid. His evidence was that he had originally been employed by the Group’s Saudi entity in 1991 and had left that employment in about 2008 before re-joining the Group in 2014. He left the Group again in March 2017 returning for a third time on an informal basis on 1 February 2018.
97. In his statement he says he was present for the telephone meeting on 22 January 2018 and recalled very clearly that the Chairman was very surprised and shocked by the presence of the AED 610,000 payment to Mr Hamid in the payment pre-authorisation list about which the Chairman had no knowledge of what the payment was for. When Mr Hamid was asked to explain the payments he wasn’t able to do so.
98. Mr Zaghoul also stated that each time he left the Group he experienced no vindictiveness for having done so. At an exhibition held between 29 and 31 October 2019 he met Mr Hamid by coincidence and had a conversation with him. Mr Hamid appeared to be in good health and good spirits. He asked Mr Hamid why he was not taking the opportunity to resolve matters with the Group to which Mr Hamid replied that he had nothing to lose and that the “counter was counting on the penalty”. Mr Zaghoul now believes that Mr Hamid was saying that he was happy for the dispute to continue because it meant that any penalty would continue to grow.
99. He recalled that Mr Hamid explained that he was now working in a senior position for the Campbell Group which he believed was a group of eight companies based in North America and the Middle East. Mr Hamid in this role wanted to buy adhesives from the Group’s subsidiary in Egypt and explained that he was negotiating with the Mr Bassem Al Hannaway who was currently a Sales Manager with the Group’s Egyptian subsidiary.
Mr William Beckley
100. At all material times, Mr Beckley was employed by TIG with the title “General Counsel”. He is a lawyer qualified to practise in Ontario, Canada. He retired from his position with TIG in November 2020. At the time he gave evidence he was living in London, Ontario. Mr Beckley was the author of three witness statements, his second, third and fourth, that stood as his evidence in chief.
The second statement
101. Mr Beckley testified in his second statement that contrary to Mr Hamid’s evidence, annual leave accrued by employees of TIG was not rolled over into the next year.
102. He also gave hearsay evidence based on what he had been told by the Chairman and Mr Jaberah of what occurred on 22 January 2018 when the Chairman raised questions about the approval sought by Mr Hamid for payments to himself totalling AED 610,000. According to this version of events, although Mr Hamid was asked by the Chairman for more details of this transfer, including proof of the payments he said he had made,“[Mr Hamid] failed to engage or provide any receipts or other proof of the AED 610,000 that he said he had spent. Due to [Mr Hamid’s] failure to provide any proof that he was entitled to this sum, his authority as a bank signatory and his authority to approve purchase orders for the Group was revoked.”
103. In paragraph 18 of his second witness statement, Mr Beckley says that in Mr Taj’s internal audit report, Mr Taj stated that Mr Hamid had failed to provide sufficient documentary proof to support his claim that the payments made under the unauthorised transactions had been made on behalf of the Group.
104. In paragraph 21, Mr Beckley says that it appeared to him that the decision to commission the EY report was justified because not only had the Group’s initial concerns been confirmed by EY, but 16 unapproved payments made outside the Authorisation Policy dating back to 2016 had been discovered.
105. When dealing with the decision to terminate Mr Hamid’s employment for cause, Mr Beckley stated in paragraph 26 that it was because Mr Hamid had utterly failed to comply with the Group’s Authorisation Policy that the Group considered that Mr Hamid’s actions were sufficiently serious to warrant termination for cause, the decision to do so being reached following discussions between Mr Jaberah, the Chairman and TIG’s external advisers at the time and subsequently approved by the Chairman.
106. Responding to Mr Hamid’s claim for damages for abuse of process, Mr Beckley states in paragraph 34 that it was the Group’s (and his) genuine belief at the time that Mr Hamid was not entitled to the substantial sums that had been discovered to have been transferred without authorisation from the Group’s bank accounts to his accounts. Mr Hamid was refusing to cooperate with the Group’s enquiries about the transfer of the sums and there was a real and genuine concern that he would flee the country, making recovery of those sums extremely challenging, if not impossible.
107. Mr Beckley also states in paragraph 40 that it is entirely denied that the Group knew that the amount sought in the application for the default judgment was not owing either when the default judgment was applied for or when the judgment was handed down. Mr Beckley also stated that it is absolutely not true that the Group made any claims whether in CFI-029–2018 (or otherwise) knowing that the amounts were not owing. He said that much of this process continued in the manner it did because Mr Hamid refused to engage with the group when the concerns first came to light. Mr Beckley remained unclear why Mr Hamid chose to take this approach, particularly as it had subsequently become clear that he was entitled to the sums in question. He could only assume that Mr Hamid was aware that, despite being owed the sums claimed, he knew that he was not following the correct internal processes and was likely to be criticised as a result.
108. Mr Beckley also stated that although he had no involvement in the criminal proceedings against Mr Hamid, he was aware that Mr Hamid failed to return his work computer to the group when requested and he believed that that, coupled with the substantial unauthorised payments that were outstanding, led to the Group bringing criminal proceedings and he considered this an entirely reasonable course of action in the circumstances.
The third statement
109. In this statement made in response to witness statements signed by Mr Hamid and Mr Raghuvanshi, Mr Beckley accepts that on 23 April 2018 he told Mr Hamid that the application to the Court was only a procedural step to ensure completion of the expected handover. He also accepted that in proceedings against Global Advocates, who had acted for TIG in making the application, he described the application as “ill considered”.
110. In paragraph 20, Mr Beckley said that since the criminal proceedings were in Arabic, the Group placed almost total reliance on the Group’s new legal advisers, BSA Ahmed Bin Hezeem & Associates LLP (“BSA”). Referring to the application for a default judgment, Mr Beckley said that he did not know that the amount of AED 1.3 million was not owing at the time because the Group’s investigations were ongoing and the application was made on the advice of BSA.
111. In paragraphs 46 – 48 Mr Beckley confirmed that he spoke to Mr Raghuvanshi in around June or July 2018 who informed him that he believed that the payments totalling AED 1,344,277.16 were for reimbursements in respect of payments Mr Hamid had made on behalf of the Group. However, Mr Raghuvanshi did not provide any details of what the reimbursements were for or whether they had been legitimately made by Mr Hamid.
The fourth statement
112. This statement was made in response to Mr Hamid’s 8th witness statement. In it, Mr Beckley denies Mr Hamid’s allegation that it was him (Mr Beckley) who had written the Internal Audit Report, not Mr Taj, and that he had threatened Mr Taj that he would face the same allegations that Mr Hamid had faced if he did not sign the report that Mr Beckley had written. Mr Beckley said had made some linguistic changes to Mr Taj’s wording to ensure that it was written in “proper” English.
113. Mr Beckley also testified that as General Counsel he was very aware of the HR policies and procedures, including those concerned with accrued untaken leave, and it was not the Group’s policy to roll-over an employee’s vacation from their employment in Saudi Arabia to the DIFC. To do so would be unwieldy and impractical because the jurisdictions have different employment laws. Mr Hamid had been responsible for accounting for employees’ accrued vacation until he ceased to be Vice President of Finance and if any employees had their vacation rolled over whilst Mr Hamid held that position, this would have been done with Mr Hamid’s approval acting on his own.
Cross-examination
114. In reference to the statement in the Dismissal Letter signed by Mr Beckley that Mr Hamid had been asked to provide receipts for the payments for which the AED 610,000 was in recompense, Mr Beckley said that he was informed by Mr Jaberah and the Chairman that they had asked Mr Hamid for these receipts. Mr Beckley believed that Mr Hamid was consistently requested to provide documents supporting his claim that the sums totalling AED 1.3 million he had received were in repayment for sums he had paid for the Chairman and TIG. When asked if there were any documents evidencing this request, Mr Beckley accept that he was not aware of any.
115. Mr Beckley testified that: (i) it was Mr Jaberah who ordered the cancellation of Mr Hamid’s entry pass to the office; (ii) he understood that the cancellation of the pass was only intended to ensure that Mr Hamid was accompanied by a TIG official if he came to the office; (iii) he did not know who had authorised or given the instruction to EY not to talk to Mr Hamid in the course of their investigation (the“EY instruction”); (iii) he understood that the EY instruction was given to EY to ensure that EY, who had had dealings with Mr Hamid in their role as TIG’s external auditors, would produce an “objective” report.
Assessment of the witness
116. I find that, with certain exceptions mentioned below, Mr Beckley gave a reliable account of his involvement in the dismissal for cause of Mr Hamid and the related court proceedings. He was at pains to stress that he acted on the advice of TIG’s lawyers in authorising the unsuccessfulex parteapplication for a passport order, signing the Dismissal Letter and signing the Particulars of Claim on the basis of which the application for judgment in default was made. That said: (1) I give no weight to his evidence that the disabling of Mr Hamid’s pass was not intended to keep Mr Hamid out of the office but only to ensure that he was accompanied when he visited4or to the assertion that Mr Hamid was consistently requested to provide documents to support his justification for receiving the payments totalling AED 1,344,817.62; (2) there is no sound foundation for Mr Beckley’s evidence in re-examination that he believed that EY was instructed not to talk to Mr Hamid to ensure that they produced an objective report5.
117. I say this because there is no mention of allegations (1) or (2) in Mr Beckley’s evidence in chief and in paragraph 8 of TIG’s Defence to Counterclaim dated 22 November it is admitted that Mr Hamid “was denied access” to the office premises on 29 April 2018. Further, for certain Mr Hamid was never told that he could come to the office but would be accompanied during his visit if he came. And as I go on to state when reviewing his evidence, I reject Mr Jaberah’s testimony that he and the Chairman requested Mr Hamid to produce receipts. Indeed, in my judgment, the senior management of TIG, particularly the Chairman and Mr Jaberah, egged on by TIG’s lawyers, adopted a course of action decided on shortly before 18 April 2018 which was designed to ensure that Mr Hamid was not involved in the steps they had determined to take to assemble as formidable and one-sided a case as could be put together in order to have Mr Hamid charged with and convicted of embezzlement and his passport confiscated. Hence: (1) the insistence that Mr Hamid take two weeks’ holiday from 8 – 22 April 2018; (2) theex parteapplication for a passport order relying on the evidence of Mr Jaberah that included allegations of dishonesty on the part of Mr Hamid;6(3) the disablement of Mr Hamid’s laptop and entry pass on 25 April 2018; (4) the EY instruction; (5) the failure to instruct anyone in the Finance Department, including Mr Raghuvanshi who worked for TIG from December 2014 to 21 April 2018 and had a spreadsheet covering the transactions at the heart of TIG’s claims against Mr Hamid, to search for and produce not only authorisations for payments made and received by Mr Hamid but also for all available documents relating to the AED 610,000 and the AED 1,344,817.62 that were supportive of Mr Hamid’s claims that payment of the former was due as reimbursement for sums paid to cover the Chairman’s expenses and receipt of the latter was justified as repayment of loans made to TIG. If such an instruction had been given, I am confident that virtually all of the documents annexed to the Saxena EMA report and a number of different documents annexed to the HPA Report would have been produced with the consequence that TIG would have been bound to accept within about two weeks that it had to pay Mr Hamid the AED 610,000 and to drop the claim for AED 1,344,817.62, as it finally did on 22 November 2019.
118. I turn to Mr Hamid’s allegation that the Internal Audit Report dated 25 April 2018 was written by Mr Beckley who pressured Mr Taj into signing it in the face of Mr Taj’s rejection of what was said in the majority of the report. In support of this allegation Mr Hamid relied on a telephone conversation with Mr Taj on 23 June 2021 that he summarised in an email to his Counsel, Mr Bowden, dated 24 June 2021. In this email it is recorded, inter alia, that Mr Taj said he would be willing to cooperate and provide a witness statement which contains the whole truth. On 27 June 2021, Mr Taj sent an email to Mr Bowden, copied to Mr Hamid, in which he stated that the Internal Audit revealed that Mr Hamid had reimbursed himself for an amount of SAR 1.4 million and the only documents available in the files that related to this reimbursement were payment instructions to banks. To the extent that there were no written approvals/authorisations from the Chairman, the Internal Audit Report commented that these transactions were unauthorised transactions. There was no mention of legitimacy of the transactions in the report. For reasons unknown, Legal Counsel of TIG reworded Mr Taj’s internal audit report which he was then asked to sign. This was the report that Mr Bowden had shared with him. Mr Taj was of the view that Mr Hamid should have taken written approvals before injecting his own funds in the company bank account and before withdrawing such funds into his personal account.
119. In the event, neither side called Mr Taj as a witness although it was not suggested that Mr Taj was unavailable or otherwise unable to give evidence. It was clear on the evidence that if Mr Taj had sent his report to Mr Beckley in response to a request that he do so as Mr Beckley testified, the report would have been in Word, yet no trace of such a document was found on Mr Beckley’s computer or on Mr Taj’s computer when a search was conducted by Mr Mohammed Javed Anjum who signed TIG’s Document Production Statement. I regard this as a very worrying state of affairs but in the absence of direct sworn evidence from Mr Taj in support of Mr Hamid’s allegation I find that Mr Hamid’s allegation has not been proved.
Mr Jaberah
120. Mr Jaberah had a close involvement in many of the main events relevant to these proceedings. When the story began with the meeting on 22 January 2018, he was Company Secretary to TIG’s Board of Directors and Country Vice President for Saudi Arabia. Later, he was appointed Special Adviser to the Chairman.
121. In his evidence in chief, Mr Jaberah gives his version of the main events that occurred in the period 22 January 2018 to 3 March 2020 including: the meetings on 22 and 24 January 2018; the instruction on 2 April 2018 of EY to review the P2P process in order to review the governance around the payment process with the objective of identifying any transactions whereby the controls may not have operated appropriately; the unsuccessfulex parteapplication for a passport order on 24 April 2018; the disablement of Mr Hamid’s computer and entry pass on 25 April 2018; the Internal Audit Report of the same date; the termination of Mr Hamid’s contract of employment for cause on 8 May 2018; the EY Report on 10 May 2018; the filing of the criminal complaint with the Dubai police and the issuance of TIG’s claim in CFI-029-2018 on 13 May 2018; the issuance of Mr Hamid’s claim against TIG in CFI-034-2018 on 23 May 2018; service on the Dubai Public Prosecutor of the HPA Report on 9 July 2018; the confiscation by the police of Mr Hamid’s passport on 15 July 2018; the judgment in default of a defence issued on 30 July 2018; the filing of the EMA Saxena Report minus the copies of the supporting documents on 9 August 2018, followed by the service of the missing documents on 25 October 2018; the admission in TIG’s Reply and Defence to Counterclaim dated 22 November 2018 that Mr Hamid was entitled to be recompensed in the sum of AED 610,000 and entitled to receive the AED 1,344,277 previously alleged to have been unlawfully and dishonestly received; the court expert’s report dated 24 April 2019 finding that on the basis of the documents exhibited to the EMA Saxena Report, including the documents annexed thereto, Mr Hamid was due to be paid AED 610,000 and entitled to receive the AED 1,344,277 followed by the court expert’s dismissal of TIG’s appeal against his earlier finding on 20 May 2019; the Dubai Public Prosecutor’s dismissal of TIG’s criminal complaint against Mr Hamid on 26 May 2019; and the orders made in favour of Mr Hamid by this Court on 3 March 2020 and 2 November 2020.
122. What I am concerned to do here is to comment on those parts of Mr Jaberah’s evidence that are contradicted by the evidence of Mr Hamid, particularly Mr Jaberah’s testimony that: (i) due to the failure of Mr Hamid to engage properly with any of the internal processes and investigations, the Group had only been able to reach the conclusion that Mr Hamid was entitled to be reimbursed for expenditure he incurred on behalf of the Group after a lengthy litigation process; (ii) on the face of it, the size and vague description of the requested payment included in the list of payments for approval appeared suspicious; (iii) shortly after Mr Hamid’s authority as a bank signatory was cancelled, Mr Jaberah met Mr Hamid and explained that it was in Mr Hamid’s interest that an internal audit take place to clarify the position and Mr Hamid responded saying that he should not be investigated and refused to be part of any audit into his actions (or words to that effect); (iv) the internal audit was begun despite Mr Hamid’s refusal to engage with it; (v) Mr Hamid was requested to provide receipts but failed to do so; (vi) if Mr Hamid had provided receipts and an explanation for the unauthorised transfers when requested in January 2018, this entire process could have been avoided; (vii) it was particularly true that an employer faced with such an overwhelming amount of evidence would have dismissed the employee for cause when noting the independent external report from EY and Mr Hamid’s ongoing refusal to engage with the process and provide information or evidence that would have supported his position; (viii) “I clearly remember that at the end of the meeting [on 22 January 2018] [Mr Hamid] did confirm that he would provide a file of documents supporting his request to be reimbursed AED 610,000.”
123. I do not accept Mr Jaberah’s evidence identified in (i) - (viii). Instead, I prefer and accept the evidence of Mr Hamid to the contrary. In my judgment there are sound reasons for concluding that these parts of Mr Jaberah’s evidence are unreliable. Thus, in paragraphs 12 and 13 of his first witness statement served in support of theex parteapplication for a passport order and dated 19 April 2018 -- about three months after the meeting held on 22 January 2018 -- Mr Jaberah refers to this meeting and states that the Chairman said that the requested payment of AED 610,000 would be held pendinga formal internal auditof the extent of the unauthorised payments that Mr Hamid had said he had made from and received into his personal account. However, it is abundantly clear that the idea an internal audit was not proposed at this meeting but at the meeting on 24 January 2018 which is not referred to all by Mr Jaberah in this statement. Further, in this first statement, Mr Jaberah says nothing about Mr Hamid having been asked to produce receipts; or that Mr Hamid confirmed that he would provide a file of documents supporting his request to be reimbursed AED 610,000; or that shortly after Mr Hamid’s authority as a bank signatory was cancelled, Mr Jaberah met Mr Hamid and explained that it was in Mr Hamid’s interest that an internal audit take place to clarify the position and Mr Hamid responded saying that he should not be investigated and refused to be part of any audit into his actions (or words to that effect). In my view, these omissions and inaccuracies in Mr Jaberah’s first witness statement are significant because this statement was extremely hostile to Mr Hamid showing an intention to include as many matters as possible that pointed to Mr Hamid having been dishonest and thereby liable to flee from the UAE. In this regard I have in mind paragraphs 11, 21 and 24.
124. In paragraph 11, Mr Jaberah states that because Mr Hamid had not even sought verbal approvals for the sums he had paid outit was clear that Mr Hamid had been trying to make the transfers totalling AED 610,000 without the Chairman’s knowledge and intending that the transactions not be disclosed, when any reasonable person giving a fair account of the 22 April 2018 meeting would not have made this allegation given that: (a) under the heading “Administrative Expenses” in the payment list appeared the sub-heading “Reimbursements to Abdulalazim” and the words “Various payments for Villa Rotanna, Swiss & Villa rent Dubai”, about which the Chairman was bound to have been familiar; and (b) the day before the meeting, Mr Hamid had sent the payment list quite openly to the internal auditor, Mr Taj.
125. In paragraph 21, Mr Jaberah states without any proper justification that he did not understand why Mr Hamid had not reported the problem caused by the lack of any way to substantiate the accruals in respect of employees claiming over 200 days leave owing to themand there was a strong suspicion that he had done this firstly in order to harm the Group and secondly to establish a precedent that would benefit him when he leaves his employment.
126. In paragraph 24, Mr Jaberah states “It does appear that there has been some dishonestly on [Mr Hamid’s] part in relation to these transactions, although the extent of that dishonesty and the harm caused to TIG remains unclear.”
127. There are also serious questions concerning Mr Jaberah’s evidence concerning the disablement of Mr Hamid’s laptop and access card and the EY instruction.
128. In paragraph 30 of Mr Jaberah’s fourth statement he says:
“I am aware of a letter from Muburak Taj, Director of Internal Audits, to the Chairman dated 25 April 2018 setting out the findings of the internal audit which identified that there had been“serious misconduct on the part of [Mr Hamid], particularly given his senior position”and recommending that further investigations be undertaken to establish the extent of the issue. On the same day, and as a result of both the internal audit’s findings and Mr Hamid’s decision to leave the office with the company laptop and not return, the decision was made to prevent Mr Hamid from accessing the Group’s online system from his laptop, to block his access to his work email account, and to re-set his door access card, preventing him from entering the building.”
129. In my judgment, this language is consistent only with an intention on the part of TIG to keep Mr Hamid out of the office premises which is to be contrasted with Mr Beckley’s evidence that there was no such intention, the intention being that Mr Hamid should simply be accompanied on any visit he chose to make to the office. The language is also at variance with what Mr Jaberah said in cross-examination when he was asked whether, although Mr Hamid‘s card access had been cancelled, he was nevertheless welcome to come to the office, the answer being: “If he would have come to the office we would know that and we would allow him to get in.”7In my judgment, this reply was an opportunistic attempt to fortify TIG’s case that Mr Hamid’s failure to produce documents or an exculpatory explanation for the payments he had received gave rise to justifiable suspicion that Mr Hamid had embezzled the payments. It is also to be noted that this answer is in accordance with the position taken by Mr Beckley in cross-examination before this evidence came from Mr Jaberah when he (Mr Beckley) said that the disabling of Mr Hamid’s pass was not intended to keep Mr Hamid out of the office but only to ensure that he was accompanied when he visited the office.
130. Turning to Mr Jaberah’s evidence on the EY Instruction, in paragraph 33 of his fourth witness statement he says:
“Having appointed an experienced auditing firm to conduct the report it was not for us to dictate who they should or should not speak to, however by the time EY went to speak to Mr (Hamid) he had left the Group with company property and had not returned. Due to the ongoing police proceedings, and given his failure to engage with any of the processes to date, we told EY that they should proceed with the preparation of the report without Mr Hamid’s input.”
131. In cross-examination Mr Jaberah insisted that it was not he who had instructed EY to have no contact with Mr Hamid; he was not consulted on whether the instruction should be given and he only became aware of the instruction at the last stage when EY wanted to express their conclusions and mentioned they had not spoken to Mr Hamid and Mr Hamid was not even in reach; starting from 24 – 25 February8he left the office and was not in reach9.
132. The inconsistencies in the evidence given by Mr Jaberah as to the exclusion of Mr Hamid from the office and on the EY instruction reinforce the conclusion I have already expressed in paragraph 117 above that the senior management of TIG, particularly the Chairman and Mr Jaberah, egged on by TIG’s lawyers, adopted a course of action decided on shortly before 18 April 2018 which was designed to ensure that Mr Hamid was not involved in the steps they had determined to take to assemble as formidable and as one-sided a case as could be put together in order to have Mr Hamid charged with and convicted of embezzlement and his passport confiscated. It follows that in my judgment the references in the evidence of Mr Jaberah and Mr Beckley to the failure of Mr Hamid to produce documents and engage with the internal audit is wholly disingenuous. Mr Hamid accepts that on 24 January 2018, at which stage he envisioned remaining in TIG’s employment until June 2018, he said he would cooperate with the audit by which he plainly meant that he would respond to requests for information and documents from Mr Taj who was to be in charge of the process. Instead, no such requests were made of him and he found himself on the end of an ex parte application to the court, kept away and then excluded from the office, a defendant to a criminal complaint alleging the embezzlement of AED 2.7 AED and the theft of a laptop and the defendant to an extremely hostile claim that: (a) he had dishonestly sought to transfer AED 610,000 from TIG’s bank account to his personal bank account with the intention that the transaction not be disclosed to the Chairman; (b) he had deliberately put in place a system without adequate processes and mechanisms to properly govern the finance function thereby exposing the TIG and the Group to a serious risk of fraud, misconduct, loss and harm; and (c) in breach of his contractual obligations, his fiduciary duties, his duty of care and the Chairman’s policies and procedures had dishonestly used TIG’s funds. Small wonder that Mr Hamid concentrated on mounting his defence with the eventual assistance of the EMA Saxenda Report.
Was Mr Hamid lawfully dismissed for cause?
133. The test for termination of a contract of employment for cause is set out in Article 59A of the Employment Law 2005 (the“2005 Law”):
“An employer or an employee may terminate an employee’s employment for cause in circumstances where the conduct of one party warrants termination and where a reasonable employer or employee would have terminated the employment.”
134. InElseco v Lys [2016] DIFC CA 011 (5 July 2017) at 24, the Court of Appeal said:
“The authorities regard this Article as giving rise to a two-stage test. The first stage is a characterisation of the conduct as that which “warrants termination”. The second stage is to determine whether “a reasonable employer would have terminated the employment on that ground”. There was no dispute that, for the latter purpose, all the surrounding circumstances could be taken into account.[19]”
135. The Court of Appeal then went on to cite with approval the following passages in the judgment of Justice Roger Giles inChristopher James McDuff v KBH Kaanuun Ltd [CA-003-2014] dealing with the construction of the predecessor to Article 59A, Article 60 (4), both articles being in relevant part in identical terms.
“Article 60(4) expresses the cumulative requirements first, that the employee’s conduct warrants termination and secondly, that a reasonable employer would have terminated the employee. The second is in strong terms, that a reasonable employer would have terminated the employee, and it is not enough that a reasonable employer could have terminated the employee. Ordinarily, if an employee’s conduct warrants termination it would be reasonable for the employer to terminate the employee. Something more must be involved in deciding whether a reasonable employer would have terminated the employee.[22]
The construct of “a reasonable employer” must be given content. It is not a hypothetical employer remote from the particular circumstances and armed only with knowledge of the conduct warranting termination. It is an employer in the circumstances of the actual employer, and the question is whether that hypothetical employer would, as a positive conclusion, have terminated the employee. Thus, for example, if the actual employer has known of the relevant conduct for some time and has done nothing, it should be asked whether a reasonable employer who had known of the relevant conduct for some time and had done nothing would have terminated the employee.[23]
This does not mean, as was submitted by Mr McDuff, an importation of the test for unfair dismissal under the law of England and Wales, by which it is asked whether the employer had a genuine belief on reasonable grounds after reasonable investigation that the employee had misconducted himself and whether termination was within the range of reasonable responses … That test stems from legislation in quite different terms, applying the concept of fairness fleshed out by whether the employer acted reasonably or unreasonably in treating the reason for dismissal as a sufficient reason. For Article 60(4), whether a reasonable employer would have terminated the employee does not call for an investigation of the employer’s beliefs and how they were arrived at. The conduct warranting termination is a given, and the knowledge of it must be attributed to a reasonable employer in the circumstances of the actual employer. The hypothetical employer is not allowed a range of reasonable responses; it must be found that it would have terminated the employee.”[24]
136. The Court of Appeal also cited with approval this passage concerning Article 59A from the first instance judgment of Justice Roger Giles inAsif Hakim Adil v Frontline Development Partners Ltd [CFI-051-2014]
“The concept of conduct warranting termination in the Article appeals to a standard other than breach of contract or of fiduciary duty, one which may possibly be wider than either but in any event can involve different investigation. Further, the Article adds the integer that a reasonable employer would have terminated the employment, as construed, meaning a reasonable employer in the circumstances of Frontline.”
137. In paragraph 24, the Court of Appeal concluded:
“24. What emerges from these decisions and is clear enough from the terms of Article 59A itself, is that, although the Article does not proceed on the basis of contractual classification, the first stage of the test is akin to that which is applied at common law for summary dismissal, and does involve some conduct which was fundamentally inconsistent with the employment relationship, seriously incompatible with it or repudiatory of it. The conduct in question had to be sufficiently serious to warrant summary dismissal, and likewise here has to be sufficiently serious to warrant termination for cause. As indicated by Justice Roger Giles in McDuff, the common law concept is not an inappropriate way of giving meaning to the first stage of the test. As is also clear from the terms of Article 59A and the authorities, the second stage of the test involves a positive finding as to what a reasonable employer would do, and is in that respect distinct from the unfair dismissal cases in the UK where the question is whether a reasonable employer could have acted in the way that the employer did in dismissing the employee, even though other reasonable employers might have done something different.”
138. It is submitted on behalf of TIG that its dismissal of Mr Hamid was justified by:
(1) Mr Hamid’s failure to obtain written consent before approving payments to himself totalling AED 1,343,277, this being a breach of clause 1.2 of the Authorisation Policy and clause 8 of the Code of Ethics requiring the avoidance of conflicts of interest.
(2) Mr Hamid’s breaches of the Undertaking in presenting his claim for AED 610,000.
(3) D’s retention of the laptop.
139. As to (1), failure to obtain written consent, it is made clear in TIG’s closing submissions that the complaints that TIG makes are predicated on its acceptance that Mr Hamid had an entitlement to reimbursement for the sums he received. TIG submits that written approval was essential for record keeping. Without a written record, the cost and difficulty of determining whether a payment is genuinely due is inevitably increased. Further, the policies relating to conflicts of interest are plainly an important safeguard to any payment system. These were all the more important where the person seeking approval was the head of Finance. In any event, clause 1.2 of the Authorisation Policy applies in respect of “Any…requests for payment regardless of value…” There is nothing in the Undertaking that supports Mr Hamid’s view given in evidence that there was an unwritten exception to Clause 5 of the Undertaking in respect of reimbursements in cash.
140. As to (2), the claim for AED 610,000, TIG submits that Mr Hamid failed to comply with the Undertaking in the following ways:
(i) Mr Hamid failed to comply with the obligation to include all debts in the preauthorisation schedule each week. The Undertaking was introduced in August 2017. The sums comprising the AED 610,000 were incurred between 6 February 2017 and 28 November 2017. Preauthorisation schedules from August 2017 should have included these sums in accordance with clause 6 of the Undertaking which provides: “The preauthorization payment schedule … should be done and presented weekly and not daily…”
(ii) The information provided was incorrect. It stated that the sums were due immediately they were incurred and were overdue by between 30 and 90 days, further complicating the search for substantiation;
(iii) The information provided was inadequate. It was impossible to locate the payments which were said to comprise the sum. No explanation was given.
141. As to (3), the laptop, TIG submits: that
(i) Mr Hamid admits that on leaving, he took with him a laptop belonging to TIG that he held onto because TIG was withholding a post-dated cheque which he was entitled to have handed over to him;
(ii) the laptop contained valuable information about TIG’s company finances and its removal further complicated the search for evidence and gave the strong impression that Mr Hamid was seeking to cover his tracks.
142. TIG relies on the fact that Mr Hamid was a senior financial officer, held a position of trust and was capable of influencing the culture in the Finance team: employees in that department looked up to him for leadership. In consequence of how he made payments on behalf of the Chairman and received reimbursing payments without having obtained written approval, the external auditors were unaware of what was happening. TIG also contends that Mr Hamid knew of and was upset by the fact there was an investigation going on into payments made out from and received into his personal account and yet he failed to have supporting documents collated or to present relevant information to the investigation himself.
143. TIG further argues that the receipt of cash by way of reimbursement for payments to cover the expenses of the Chairman and/or TIG alone justifies Mr Hamid’s dismissal.
144. Responding to TIG’s case that Mr Hamid’s contract of employment was terminated for cause, Mr Hamid advanced the following contentions in his Submission on Employment Issues:
(1) The entirety of the AED 610,000 claimed was found to have been legitimately owed to Mr Hamid and was paid to him following the order of 3 March 2020.
(2) The Chairman had full knowledge of the expenses amounting to AED 610,000 and was told what the expenses were paid for at the meeting on 22 January 2018 when the Chairman asked to what the expenses related.
(3) Mr Hamid was never approached by TIG for documentary evidence after the Chairman instructed there be an internal audit report. There is no evidence to support the consistently made allegation that Mr Hamid was asked to provide supporting documents and failed to do so.
(4) TIG had all the necessary receipts and documentary evidence to support the reimbursement request for AED 610,000 within its finance/accounting department. This is proven by the production of the journal entries in addition to the documents attached to the EMA Saxena report.
(5) The entirety of TIG’s investigational search for incriminating conduct was kept from Mr Hamid and until he discovered the ex parte application on 23 April 2018. The day before (22 April 2018), TIG held a meeting at which Mr Hamid was praised for his long and successful career and told that his oral resignation plans to leave the group had been accepted.
(6) The transfers between TIG’s bank account and Mr Hamid’s personal bank account represent the reality of the monetary arrangement which had been adopted for years between the Chairman and Mr Hamid for benefit of the Chairman.
(7) TIG did not instruct EY to conduct a verification of payments and transactions for which there was no apparent approval.
(8) TIG had all the documentary evidence that proved Mr Hamid’s entitlement to the reimbursements totalling AED 1.3 million. This is proved by the fact that these documents were in fact attached to the HPA report which was commissioned by TIG.
(9) The evidence establishes that Mr Hamid had an answer for any question TIG might have had at the time of the investigation. He was ready willing and able to cooperate if asked.
145. In his reply submissions on the employment submissions, Mr Hamid contends as follows:
“The first limb of the Elsco v Lys test.
(1) It was not put to Mr Raghuvanshi that Mr Hamid improperly influenced the culture of the finance department.
(2) TIG‘s case that Mr Hamid should have obtained written approval from the Chairman for each request for reimbursement ignores the evidence that shows the arrangement set up by the Chairman to have Mr Hamid pay expenses on his behalf. That evidence shows that the total amounts of reimbursements directly transferred from the Chairman‘s bank account to Mr Hamid’s bank account is AED 3.8 million. This arrangement was not made for the benefit of Mr Hamid. The way in which the Chairman’ s expenses were dealt with internally in the finance department through the four levels of approval was explained by Mr Raghuvanshi.
(3) There is no evidence to suggest that any employee of TIG who approved at any of the four approval levels for the operation of the bank portal was subject to investigation or given a warning or dismissed for alleged breach of the approval process.
(4) Neither Mr Jaberah nor Mr Beckley produced any substantiation in the course of their evidence to contradict the evidence of Mr Raghuvanshi.
(5) TIG‘s case on the lack of written authorisation for the payments is contradicted by the admission made by TIG that the reimbursements totalling AED 1.4 million were made with the approval of TIG and recorded within the accounts as such.
(6) The reimbursement process was managed and approved by several officers/employees of TIG and there was no evidence to suggest that Mr Hamid simply approved his reimbursements and paid himself without authority to do so or without obtaining the necessary approvals within the finance department.
(7) The allegation of breach of the Undertaking is not supported by any evidence advanced by TIG. Mr Hamid explained how the format of the undertaking was based on the Chairman’s discretion.
(8) The supporting documents for Mr Hamid’s claim to be reimbursed AED 610,000 were in TIG‘s possession. Mr Raghuvanshi testified that he or any other accountant in the finance department would have been able to verify the AED 610,000 and locate supporting documents.
(9) The alleged breach founded on a failure to obtain the Chairman’s written consent could not have justified Mr Hamid’s dismissal almost 3 months after the presentation of the payment list. The findings of the EY Report did not justify termination and neither did the Internal Audit Report.
(10) The conduct by which Mr Hamid submitted his claim to the Chairman for reimbursement of AED 610,000 was in accordance with the adopted policies and procedures of TIG and, most importantly, as directed by the Chairman himself. This cannot constitute conduct that is sufficiently serious to warrant dismissal without cause under the first limb.
(11) As to Mr Hamid’s retention of the company laptop, it was routine for employees to take their work laptops home and this is what Mr Hamid did on 23 April 2018, his last day at the office. In the period between this date and the date of the Termination Letter (8 May 2018) TIG never asked Mr Hamid to return the work laptop, which in any event was disabled by TIG on 25 April 2018.
(12) There is nothing to suggest that Mr Hamid stole the company’s property or had any malicious intention by taking his work laptop home. The suggestion that the absence of the laptop further complicated the search for evidence and gave the impression that Mr Hamid was seeking to cover his tracks is not supported by any evidence.
The Second limb
(13) Investigation into the circumstances of the termination, and the information and substantiation thereof which TIG had at the time of the termination is such that it is obvious that a reasonable employer in the same circumstances would not have dismissed Mr Hamid summarily. “
146. I turn to consider the reasons advanced by TIG in support of its contention that Mr Hamid’s conduct in failing to obtain written consent before himself approving the payments totalling AED 1,343,277.16 justified his summary dismissal.
147. Clause 1.2 of the Authorisation Policy reads:
“Any purchase orders or requests for payment regardless of value which belong to the approver personally should not be approved by him without the prior written approval of his superior. “
148. Clause 8 of the Code of Ethics is summarised in detail in paragraph 7 above.
149. By Clause 5 of the Undertaking, Mr Hamid undertook:
“Not to approve any payment unless it is already approved by the Chairman through a payment pre-authorisation schedule (as per template) and to match exactly and specifically the Chairman’s approved pre-authorisation schedule.”
150. The transactions involved in the reimbursement payments totalling AED 1,343,277.16 are listed 1 – 17 in table D of the EMA Saxena Report reproduced with each payment numbered in the Aide Memoire dated 29 August 2021 provided to the Court by Mr Hamid’s counsel, Mr Bowden. Referring to the Aide Memoire, transactions 1,2,4,10,12,14,15,16 and 17, totalling AED 337,382, are reimbursements for payments made by Mr Hamid to cover the expenses of the Chairman and members of his family. The reimbursements were received by Mr Hamid in accordance with the understanding he shared with the Chairman that where there was insufficient money in TIG’s bank accounts to pay such expenses when they were due, having regard to other pressing demands on the company’s funds, Mr Hamid would cover the expenses out his own money and reimburse himself when there was sufficient money for this to be done. Mr Hamid was therefore entitled to proceed on the basis that he had the necessary authority to pay the expenses when they arose for payment and to make matching reimbursement payments without seeking the written authority of the Chairman to do so each time the occasion arose for the latter payments to be made. It follows, in my judgment, that the making of the reimbursement payments covered in transactions 1,2,4,10,12,14,15,16 and 17 was not conduct that justified the termination of Mr Hamid’s employment contract.
151. As to the other 8 transactions totalling AED 1,005,895, it was Mr Hamid’s evidence that he did not view them as falling within Clause 8 of the Code of Ethics or Clause 5 of the Undertaking once the latter had become operative because the payments he received were repayments of a loan he had advanced to TIG. It was only where he was claiming payment where his interest was directly involved, for example claiming travel and hotel expenses, that he needed to obtain the Chairman’s approval. Mr Hamid also expressed the view in evidence that receipts in cash rather than by bank transfer were not covered by the Undertaking so that the AED 95,000 cash reimbursement he received after the introduction of the Undertaking was not in breach of Clause 5 thereof. I found Mr Hamid’s explanation for receiving the reimbursements made in cash totalling AED 95,000, rather than by bank transfer, straightforward and convincing.
152. In my judgment, albeit that I find that Mr Hamid’s above-mentioned views were genuinely held, Mr Hamid technically acted in breach of Clause 1.2 of the Authorization Policy and Clause 8 of the Code of Ethics in failing to obtain the consent of the Chairman for the all the reimbursement payments totalling AED 1,005,895 and he was also in breach of Clause 5 of the Undertaking in respect of those payments he received after 29 August 2017.
153. I have found it difficult to reach a decision whether Mr Hamid’s aforesaid breaches of the Authorization Policy, the Code of Ethics and the Undertaking warranted summary termination of his contract of employment. The relevant provisions in these policy documents are designed to achieve important standards of corporate management but it does not follow, in my opinion, that any breach or series of breaches of these provisions is self-evidently conduct justifying summary dismissal of the employee in question, even where the employee occupies the senior position of Vice President of Finance and Planning.
154. In my judgment, at the first stage of the test propounded in Elsco v Lys, consideration must be given to the immediate context of the conduct alleged to warrant summary termination. After careful consideration of the evidence and the parties’ submissions I find that Mr Hamid’s breaches of Clause 1.2 of the Authorization Policy, Clause 8 of the Code of Ethics and the Undertaking, fall short of amounting to conduct justifying his summary dismissal. TIG knew from 22 January 2018 that Mr Hamid justified the payments he had received on the ground that they reimbursed him for prior payments he had made from his personal account in the interest of the Chairman and/or the Group. In addition, TIG had in its possession documents and other accounting records that attested to the payments made out of Mr Hamid’s personal account and the matching payments into that account, as was known by employees within the Finance Department who had created these records under the supervision of Mr Hamid, including Mr Raghuvanshi and the employees who approved the reimbursements in accordance with the authorisation code. In the light of these circumstances, I find Mr Hamid’s conduct in breaching the aforesaid provisions did not warrant his dismissal.
155. In case my conclusions applying stage 1 of the Elsco v Lys test in respect both of the transactions entered into within the understanding of Mr Hamid and the Chairman relating to the expenses of the Chairman and members of his family and the other 8 transactions, are wrong, I propose to go on to consider whether a reasonable employer in the position of TIG would, in all the circumstances of the case, have dismissed Mr Hamid for the breaches relied on TIG.
156. In my judgment, a reasonable employer in the position of TIG in all the circumstances, including the many years during which Mr Hamid had worked for the company enjoying a very high level of trust and respect, would not have dismissed Mr Hamid. Instead, the reasonable employer would have carried out a balanced, fair and open-minded investigation into the transactions, at the end of which it would have been established that Mr Hamid was entitled to have received the reimbursement payments leading to the conclusion that he should not be dismissed. Such an investigation would have included inviting Mr Hamid to attend non-hostile meetings to explain the transactions by reference to the relevant documents held within the Finance Department and would have included interviews with staff members within that department, including Mr Raghuvanshi who was involved in making accounting entries in respect of many of the transactions and had maintained an excel record thereof. What a reasonable employer in the position of TIG would NOT have done would be to proceed as TIG did, namely, unfairly to develop a hostile and unbalanced case against Mr Hamid deliberately excluding him from the process with the objective not only of dismissing him summarily but also obtaining the confiscation of his passport by pursuing a criminal complaint that Mr Hamid was guilty of embezzlement ending with his conviction of that crime.
157. I now deal with TIG’s case in respect of the claim for payment of the AED 610,000. In my judgment the matters advanced by TIG in respect of this subject are not sufficiently serious to warrant termination for the purposes of level one in accordance with the approach approved inElseco v Lys. I say this for the following reasons.(1) the Chairman (and therefore TIG) was well aware prior to and/or at the latest at the meeting on 22 January that Mr Hamid had personally paid to cover the expenses for which he (Mr Hamid) was seeking reimbursement in accordance with the understanding the Chairman shared with Mr Hamid that where there was insufficient money in TIG’s bank accounts or the Chairman’s account to pay the expenses when they had to be paid, having regard to other pressing demands on the company’s funds, Mr Hamid would cover the expenses out his own money and obtain reimbursement therefor when there was sufficient money for this to be done. Mr Hamid, therefore had the Chairman’s authority to cover the expenses from his own account and was entitled to be reimbursed for this expenditure rendering it unnecessary to include these expenses in weekly preauthorisation schedules. (2) If, contrary to (1), Mr Hamid was in breach of the Undertaking as claimed, the breach was not akin to a repudiatory breach of Mr Hamid’s employment contract given that the failure to comply with the requirement to include the claim in weekly pre-authorisation schedules began in August 2017 and endured only for 5 ½ months down to 22 January 2018 and did not cause TIG any significant damage or inconvenience. (3) As to the contention that the information provided in the payment list was incorrect because it stated that the sums were due immediately they were incurred and were overdue between 30 and 90 days, it is strongly arguable that in fact the sums had been due immediately because the expense had been incurred or there was an obligation to make prepayments of future expenses and there is no sufficient basis for the assertion that the statement in the payment list further complicated the search for substantiation.
158. Further and in the alternative, if it be the case that, contrary to my findings in paragraph 154 above, the matters relied on by TIG under this part of its claim were sufficiently serious to warrant termination of Mr Hamid’s contract of employment, I am of the clear opinion that a reasonable employer in the position of TIG would not have terminated Mr Hamid’s employment on that ground. My reasons for this finding are: (i) a reasonable employer in the position of TIG and therefore aware as the Chairman was as to what these sums related would not have concluded that the inclusion of the claim for AED 610,000 in the payment list was suspicious; (ii) a reasonable employer in the position of TIG would have known, as the Chairman knew, that the payments for which reimbursement was being sought were made to cover the expenses of the Chairman and his family on the basis of an understanding between the Chairman and Mr Hamid that Mr Hamid was authorised to make such payments when they fell due from his own account at a time when there was insufficient money in the Chairman’s bank account or TIG’s bank accounts to pay for the expenses having regard to TIG’s need to pay other pressing debts owed by TIG to third parties; (iii) TIG was in possession of documents that demonstrated that Mr Hamid’s entitlement to reimbursement for the expenses he had paid for the benefit of the Chairman and the Chairman’s family; (iv) rather than dismissing Mr Hamid summarily, a reasonable employer would have carried out a balanced, fair and open-minded investigation into the transactions allowing Mr Hamid to make representations to justify his claim to be entitled to be reimbursed, at the end of which investigation it would have been established that Mr Hamid was entitled to have received the reimbursement payments and he should not dismissed; (v) in addition to the foregoing matters, a reasonable employer would conclude that Mr Hamid ought not to be dismissed given that the resulting damage to TIG was not particularly serious.
159. Finally, I consider TIG’s case that it was entitled to dismiss Mr Hamid for having retained possession of the company laptop after the return of all company property was demanded in paragraph 20 of the Dismissal Letter. I accept Mr Hamid’s evidence that: (a) after the laptop he had taken home on 23 April 2018 had been disabled it was of no use; (b) he was entitled to have returned to him certain post-dated cheques that he had submitted in his name for payment of the rent payable by the Chairman’s daughter; (c) he asked TIG to hand over these cheques, at which time he would hand back the laptop but his request was refused; (c) eventually he handed over the laptop on 9 October 2018 when at the same time the post-dated cheques were returned.
160. TIG contends in its closing submissions that the laptop contained valuable information about TIG’s finances and its removal further complicated the search for evidence and gave the strong impression that Mr Hamid was seeking to cover his tracks. However, there was no evidence before the court about what information the laptop retained after its disablement or as to how its absence complicated TIG’s search for evidence. Moreover, the laptop was not wrongfully removed. Mr Hamid was fully entitled to take the laptop home with him on 23 April 2018 and, because his letter of resignation gave 90 days’ notice, to retain it until receipt of the Dismissal Letter. I therefore find the suggestion that the laptop’s removal gave the strong impression that Mr Hamid was intending to cover his tracks and that this represented a damaging consequence of its retention by Mr Hamid after 8 May 2018 as verging on the absurd.
161. In my judgment, TIG’s case that the retention of the laptop constituted conduct warranting the summary dismissal of Mr Hamid is irredeemably weak and if this be wrong, I find that a reasonable employer in the place of TIG would not have summarily dismissed Mr Hamid by reason of Mr Hamid’s conduct concerning the laptop relied on by TIG.
162. In conclusion, I dismiss TIG’s contention that TIG dismissed Mr Hamid for cause, whether the three grounds relied on by TIG are taken singly or in any combination.
Mr Hamid’s claim for compensation in lieu of the remuneration that would have been received during the notice period.
163. Article 59 (2) of the DIFC Employment Law provides:
“(2) Subject to Article 59 (4) and (5), the notice required to be given by an employer or employee to terminate a person’s employment, where the person has been continuously employed for one (1) month or more, shall not be less than:
…
(c) (90) days if the period of continuous employment is five (5) years or more.”
164. Article 59 (2) is subject to Article 59 (3):
“This Article shall not prevent an employer and employee from agreeing to a longer or shorter period of notice nor shall it prevent either party from waiving notice or from accepting a payment in lieu of notice.”
165. In relevant part, Clause 8 of Mr Hamid’s contract of employment provides:
“8.1 The Company may terminate your employment at any time without cause by giving you a written notice of termination thirty (30) days prior to the effective date of termination.…
8.3 You may terminate your employment at any time by submitting your signed resignation in writing to the Company and in such case you will only be entitled to termination benefits as may be required by applicable laws and regulations. Your resignation must be submitted thirty (30) days prior to the effective date of resignation or you will lose any termination benefits for which you may be eligible … However, notwithstanding the foregoing, the company shall have the right to extend the effective termination date of your employment by up to ninety (90) days to enable the Company to locate and hire a suitable replacement.”
166. On the basis that he was not dismissed for cause, Mr Hamid contends that the applicable period of notice is 90 days, this being the notice he gave in his resignation letter consistently with Article 59 (2) (c) of the Employment Law. In Mr Hamid’s submission, the option afforded to the employer in the last sentence of Clause 8.3 of the contract (“the proviso”) should be read as being equally available to the employee. In the alternative, as I understand the submission made in paragraph 35 of Mr Hamid’s Employment Submissions dated 23 September 2021, Mr Hamid argues that since clause 8 as a whole contains inconsistent provisions where it reverts to the default position of 90 days’ notice in the proviso, the inclusion of the proviso renders Clause 8.1 invalid so that the period of 90 days stipulated in Article 59 (2)(c) prevails.
167. I am unable to accept these submissions. There is nothing in the Employment Law that provides that if one side of the contract has an option that is potentially to its benefit, the other side must have a matching option that is potentially to its benefit. The issue is therefore the construction of Clause 8 of the contract. In my opinion, the meaning of the clause is plain. The notice period is 30 days unless varied by agreement of the parties (which it was not in this case) and TIG as the employer alone has the option of extending the period to 90 days where the employee gives notice of termination of the contract.
168. It follows that the period of notice in this case is 30 days and Mr Hamid is entitled to AED 110,000 under this head of claim.
Mr Hamid’s claim for End of Service Gratuity
169. When Mr Hamid issued his claim in CFI-034-2018 the applicable DIFC Employment Law was Law No. 4 of 2005, Article 62 of which provides in relevant part:
(1) Subject to Article 62(5), and (6), an employee who completes continuous employment of one (1) year or more is entitled to a gratuity payment at the termination of the employee’s employment.
(2) The gratuity payment shall be calculated as follows:
(a) twenty one (21) days’ basic wage for each year of the first five (5) years of service.
(b) thirty (30) days’ basic wage for each additional year of service, provided that the total of the gratuity shall not exceed the wages of two (2) years of service. The daily rate for the employee’s basic wage shall be calculated based on the number of days in the year. The employer may deduct from the gratuity any amounts owed to the employer by the employee.
(3) Where the termination occurs prior to the end of any full year of employment, the gratuity payment shall be calculated on a proportionate basis.
170. By virtue of Article 1 (2) and (3) of The Employment Law No. of 2019 (the“2019 Law”) that repealed and replaced Employment Law No. 4 of 2005 (the“2005 Law”), Mr Hamid’s claim under this head continues to be governed by Article 62 of the 2005 Law.
171. Mr Hamid claims that for the purposes of Article 62 (1) he was continuously employed from 1 November 1999 for close on 19 years from the date of the employment contract under which he began employment with BIG until he was dismissed on 23 April 2018, or 24 April 2008 or 25 April 2008 (when he gave notice of his resignation) or on 8 May 2018 (the date of the Dismissal Letter). On this basis he claims AED 1,452,490 under this head of claim.
172. Relying on a written notice signed by Mr Hamid requesting BIG’s HR Director to accept his resignation from his position in the Jeddah Corporate office effective from 31 March 2013 (“the Resignation Notice”), TIG submits that the relevant period of continuous employment began with Mr Hamid’s employment on 27 March 2013 with TIG, that company not having existed until sometime in 2012. TIG also relies on a statement headedBanawi Industrial Group, End of Service Award(the“ESA”) that refers to Mr Hamid and states that his end of service award is SAR 426,400. The document shows that it bears the signature of an official approving the statement and the date thereof and other very hard to decipher signatures. Mr Hamid admitted that he received AED 426,400 by way of an end of service gratuity upon moving to Dubai. However, he denied signing the document, maintaining that he had never seen it until these proceedings were under way.
173. Mr Hamid testified that the Resignation Notice did not have the effect of ending his employment; it was just the start of a process by which he was moving from the Group’s Jeddah office to the Dubai office with no change to his responsibilities. He also said that: (a) the ESA was wrongly calculated because it was founded on his base salary when under KSA law it should have been based on the total of his monthly entitlements; (b) he treated the sum paid as the end of service award as only a part payment.
174. As TIG observed in its Closing Submissions, no case is advanced that any liability of BIG would be transferred to TIG and nor is there a principle of DIFC law to the effect that prior service with a related entity counts towards the calculation of the end of service gratuity. One is left therefore simply to give effect to Article 61 and in my judgment it is plain that it contemplates continuous employment between the postulated employee and the postulated employer. It follows that no intervening contracts made with a different employer can count in arriving at the length of continuous employment. Here the claim is made against TIG and it is the continuous employment by TIG of Mr Hamid that fixes the entitlement to and quantum of Mr Hamid’s end of service gratuity due from TIG.
175. Whichever of the dates Mr Hamid says was the date of his dismissal, he had by then completed five years’ service and is entitled to 21 days x 5 = 105 days of basic wage. Mr Hamid’s payment package included allowances of AED 13, 200 and it was his case that TIG treated his overall monthly salary as including the allowances and should be treated as his base salary for the purpose of calculating his gratuity. In support of this submission, he testified that he received a letter on 17 March 2013 that was countersigned by the Chairman confirming that his basic salary at the time (AED 66,000) was “all inclusive and does not separate any allowances whatsoever from your total compensation package. All the other conditions of your employment remain unchanged.” This letter makes no reference to Mr Hamid’s entitlement to an end of service gratuity and it preceded the contract of employment with TIG dated 27 March 2013, clause 4.1 of which provides in its last sentence: “Your end-of-service gratuity will be calculated on your base salary only, not including your allowances”. I therefore find that Mr Hamid’s gratuity is to be calculated using his base salary consistently with Article 62 (2) and paragraph 3 of Schedule 1 to the 2005 Law, under which “basic law” excludes allowances. It follows that under this head of claim, Mr Hamid is entitled to 105 x (AED 96,800/30) = AED 338,800.
The claim for vacation pay
176. In relevant part Articles 27 and 28 of the 2005 Law provide:
“27 (1) Subject to Article 30, an employer shall give an employee a minimum paid vacation leave of twenty (20) working days per annum to be accrued pro rata for employees who have been employed for at least ninety (90) days.
(2) An employee is entitled to carry forward his accrued but untaken vacation leave up to a maximum of twenty (20) working days into the next calendar year for a maximum period of twelve (12) months after which the unused leave shall expire.
(3) …
(4) …
(5) An employee is not entitled to a payment in lieu of vacation leave earned except where: (a) the employee's employment is terminated; or (b) the employer agrees otherwise.
28 (1) Where an employee's employment is terminated, the employer shall pay the employee an amount in lieu of vacation leave accrued but not taken. In the event that the employee has taken more vacation leave than has accrued at the termination date, the employee shall repay the employer the corresponding sum.
(2) Compensation in lieu of vacation leave shall be calculated using the employee's daily wage applicable on the employee's last day of employment.“
177. In the proceedings leading up to the 3 March 2019 order, Mr Hamid was claiming an entitlement to 146 days of untaken leave made up of: 96 days due from his employment by BIG in KSA transferred to his employment by TIG in Dubai; 20 days of accrued vacation leave; and 30 days of vacation leave.
178. Pursuant to the 3 March 2020 order and the 2 November 2020 order TIG paid Mr Hamid the sum of AED 104,876.71 and on 10 May 2021 paid Mr Hamid an additional amount of AED 49,000 on terms that if the Court concludes that no additional holiday pay is owing to Mr Hamid, TIG reserves the right to recover the sum as an overpayment, paid to him on terms that if the Court concludes that no additional holiday pay is owing to Mr Hamid, TIG reserves the right to recover the sum as an overpayment.
179. In his First Skeleton for Trial dated 24 August 2021, Mr Hamid contended that he was entitled to AED 617, 003.29 under this head of claim calculated as follows: AED 5,280 x 146 days = AED 770,880 less AED 104,876.71, less AED 49,000.
180. In his post-trial Employment Submissions, Mr Hamid restated the figure sought under this head of claim as AED 470,747.29 for the following periods of days:
(1) 96 days due and transferred from employment in KSA pursuant to a policy of TIG testified to by Mr Hamid and supported by: (a) a status change form for Mr Mahboob Pasha showing a vacation balance as at 30/11/12 being transferred; (b) a signed vacation leave form provided by HR in January 2014 certifying that Mr Hamid had a vacation balance of 96 days transferred from KSA to Dubai; and (c) a spreadsheet attached to an email dated 6 March 2018 from HR to Mr Hamid showing that Mr Hamid had a balance of vacation leave of 164 days up to December 2017.
(2) 20 days accepted by TIG.
(3) 2.3 days accepted by TIG.
181. TIG denies that Mr Hamid was entitled to accrued holiday leave of 96 days that was carried over when he took up employment with TIG on 27 March 2013. This denial is supported by the evidence of Mr Beckley and the fact that the ESA states that Mr Hamid’s accrued leave is zero.
182. I am satisfied on the evidence that TIG did agree that Mr Hamid should be entitled to have the benefit of 96 vacation days that had accrued whilst he was employed by BIG notwithstanding that the ESA states that Mr Hamid’s accrued leave is zero. Mr Beckley was not part of the HR set up. He is unlikely to have known of instances where what he thought was a policy against the transfer of accrued leave was departed from by TIG. That there were departures is evidenced by the status change form for Mr Mahboob Pasha showing that his previous vacation balance as at 30/11/12 was being transferred. No form like that dealing with Mr Mahboob Pasha was provided to Mr Hamid but I find that the vacation leave form stating that Mr Hamid had a vacation balance of 96 days transferred from KSA to Dubai and the spread sheet that was sent with the email dated 6 March 2018 showing that Mr Hamid had a balance up to December 2017 of 164 days’ vacation from 1 November 1999 to be strong support for Mr Hamid’s evidence that this had been agreed by TIG. As I have already said, I found Mr Hamid to be an honest and reliable witness when not expressing opinions or speculating and I accept his evidence that TIG agreed that 96 days of leave that had accrued before moving to Dubai should be transferred over to his account whilst working for TIG in Dubai.
183. Mr Hamid’s daily rate for the purposes of calculating his holiday pay entitlement is AED 5,280. He is therefore entitled under this head to AED470,747.29calculated as follows:
AED 5,280 x 118.3 days = AED 624,624
AED 624,624 – (AED 104,876.71 + AED 49,000) = AED 470,747.29
Mr Hamid's penalty claim
184. It is common ground that Mr Hamid first claimed for a statutory penalty payment before the 2019 Law was enacted on 30 May 2019 and came into force on 28 August 2019.
185. Article 18 of the 2005 Law provides:
“18. Payment where the employment is terminated
(1) An employer shall pay all wages and any other amount owing to an employee within fourteen (14) days after the employer or employee terminates the employment.
(2) If an employer fails to pay wages or any other amount owing to an employee in accordance with Article 18(1), the employer shall pay employee a penalty equivalent to the last daily wage for each day the employer is in arrears.“
186. The 2019 contains a differently worded penalty provision:
“19. Payments following termination
(1) An Employer shall pay to an Employee, within fourteen (14) days after the Termination Date:
(a) all Remuneration, excluding, where applicable, any Additional Payments deferred in accordance with Article 18 (2);
(b) where applicable, any Gratuity Payment that accrued prior to the Qualifying Scheme Commencement Date under Article 66 (1) not transferred to a Qualifying Scheme under Article 66 (6);
(c) a Daily Wage for each day of accrued Vacation Leave not taken; and
(d) all outstanding amounts due in respect of the Employee under Article 66 (7) not yet paid to a Qualifying Scheme.
(2) Subject to the provisions of Article 19 (3) and 19 (4), an Employee shall be entitled to and the Employer shall pay a penalty equal to an Employee’s Daily Wage for each day the Employer is in arrears of its payment obligations under Article 19 (1).
(3) A penalty pursuant to Article 19 (2) may only be awarded to an Employee if the amount due and not paid to the Employee in accordance with Article 19(1) is held by a Court to be in excess of the Employee's Weekly Wage.
(4) A penalty pursuant to Article 19(2) will be waived by a Court in respect of any period during which: (a) a dispute is pending in the Court regarding any amount due to the Employee under Article 19(1); or (b) the Employee's unreasonable conduct is the material cause of the Employee failing to receive the amount due from the Employer.”
187. Article 1 of the 2019 Law provides:
“1. Title and repeal
(1) This Employment Law 2019, repeals and replaces the Employment Law 2005 (DIFC Law No. 4 of 2005), as it was in force immediately prior to the commencement of this Law (the “Previous Law”), and may be cited as the “Employment Law 2019” or “this Law”.
(2) Except where otherwise provided in this Law, anything done or omitted to be done pursuant to or for the purposes of the Previous Law is deemed to be done or omitted to be done pursuant to or for the purposes of this Law.
(3) Without limiting the generality of Article 1(2), and subject only to Articles 1(4), 10 and 61(2), the repeal and replacement under Article 1(1) shall not affect:
(a) any right, remedy, debt or obligation accrued to or incurred by any person; or
(b) any legal proceeding commenced, or to be commenced, in respect of any such right, remedy, debt or obligation, under the Previous Law, and any such legal proceeding must be instituted, continued or enforced, including any penalty, fine or forfeiture, under this Law without prejudice to any right, remedy, debt or obligation which has accrued or incurred prior to the commencement of this Law.
(4) Where there is no equivalent provision in this Law to a provision in the Previous Law, the relevant provision in the Previous Law is deemed to survive the repeal and replacement under Article 1(1), until such time as necessary for the purposes of any legal proceeding specified in Article 1(3)(b). The fact that a provision in this Law reduces or extinguishes rights in the Previous Law does not prevent it from being an equivalent provision.”
188. TIG argues that Mr Hamid’s penalty claim can only be determined under the 2005 Law to the extent that TIG had remained in breach of Article 18 with the amount of the penalty due accumulating daily down to 28 August 2019 when the 2019 Law came into effect. This is so, submits TIG, because the right to be paid a penalty measured by the number of days the employer is in default of Article 18 of the 2005 Law accrues each day that the employer is in breach since the sum due is different each day that passes. CitingWest v Gwynne [1911] 2 Ch 1, TIG contends that this construction of the word “accrued” in Article 1 (3) of the 2019 Law does not give the 2019 Law retroactive effect. Instead, rights accrued down to the time when the 2019 Law came into effect are actionable under the 2005 Law and thereafter different rights arise under the new legislation. TIG argues that its construction of the meaning of “accrued” in Article 1 (3) gives effect to the Legislative intention to stop penalties accruing while a dispute is proceeding through the Courts. In addition, TIG suggests that any payment in respect of a penalty would be a windfall to Mr Hamid and unattractively refers to Mr Zaghoul’s evidence that Mr Hamid said to him in late October 2019 that “the counter was counting on the penalty”, as if that could have anything to do with the question of construction that is in issue here.
189. It was submitted on behalf of Mr Hamid that whilst it is accepted that the right to a penalty claim does not accrue on a single date, the “trigger event” for such a claim is a single event that occurs once the employer has failed to pay what is due within 14 days of the termination of the employment. With respect to Mr Hamid’s counsel, I would reformulate this submission along these lines: the right to a penalty under the 2005 Law accrues as soon as the employer has failed within 14 days following the termination of the employment to pay all wages and any other amount owing to the employee, regardless of the fact that the quantum of the sum recoverable will accumulate until payment.
190. Construing Article 18 of the 2005 Act, Article 19 of the 2019 Law and Article 1 (3)(c) of the 2019 Law without reference to Mr Hamid counting on the penalty, I am persuaded that the right to a penalty under the 2005 Law accrues as soon as the employer has failed within 14 days following the termination of the employment to pay all wages and any other amount owing to the employee, regardless of the fact that the quantum of the sum recoverable will accumulate until payment. If this interpretation were not correct, I think there would be difficult questions as to whether a fresh claim would have to be added by way of amendment to the original claim each day that passes and when a claim for a penalty brought under the 2005 Act becomes statute barred. Does time begin to run from the expiration of the 14-day period or from the day that determines the quantum of the recovery? In my judgment, time runs from the expiration of the 14 day period, this being when the right to a penalty accrued.
191. In my judgment, Mr Hamid’s employment terminated when he was dismissed on 8 May 2018, the date of the Dismissal Letter. His employment did not terminate when he gave notice of 90 days in his resignation letter (the actual permissible notice period was 30 days) since under either notice period his employment was still subsisting when he was dismissed on 8 May 2018. It follows that under this head of claim, Mr Hamid is entitled to recover AED 5,280 x the number of days from 22 May 2018 until payment. My provisional calculation is that at 6 April 2022, the number of days will be 1,430 giving a total sum of AED 7,550,400.00. This is a very large sum but TIG knew that they could be liable to a penalty that increased on a daily basis if it did not pay all sums due to Mr Hamid within 14 days of 8 May 2018 and it decided to run the risk of a penalty liability by not paying these sums in a timely fashion. TIG must now face the consequences of this calculated decision.
Mr Hamid’s tort claims for abuse of process and malicious prosecution
192. Mr Hamid claims that by lodging and pursuing its criminal complaint in the way that it did with the Dubai police TIG is liable in damages in a tort equivalent to the English tort of malicious prosecution. This English tort is committed where there is a malicious preferring of an unreasonable and improbable criminal charge where the prosecution is determined in the claimant’s favour. Malice in this context exists where the predominant purpose of the accuser is something other than the vindication of the law.
193. Mr Hamid also claims that in bringing and pursuing its claims in CFI-024-2018 and CFI-029-2018, TIG is liable in damages in tort equivalent to the tort known in English law as abuse of process. This tort requires the use of the process for an improper, collateral purpose.
194. It was held by the Privy Council inCrawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd [2013] UKPC 17 that in the law of the Cayman Islands the tort of malicious prosecution extended to claims brought in civil proceedings. InWillers v Joyce [2016] UKSC 43, the UK Supreme Court adopted the Privy Council’s reasoning in CrawfordAdjustersand confirmed that as a matter of English law, the tort of malicious prosecution extends to civil proceedings.
195. It is clear from paragraph 102 of Mr Hamid’s First Skeleton Argument for trial that Mr Hamid’s abuse of process of claim is founded on the law as stated inCrawford AdjustersandWillers.
196. In order to determine the law governing these tortious claims one must resort to Article 8 (2) of the Law on the Application of Civil and Commercial Laws (“the Waterfall Provision”), paragraph (c). It is plain that DIFC law applies to the abuse of process claim since the proceedings were all conducted in the DIFC Courts. What about the malicious prosecution claim? In its Closing Submission, TIG observes that the criminal complaint engaged the criminal processes in Dubai so that complaints about TIG’s conduct in that process are governed by UAE law as the law that has the closest connection to the facts of and the persons concerned in that matter. UAE law includes an offence of knowingly making false statements to the police but there is no civil cause of action equivalent to the English tort of malicious prosecution and none is alleged.
197. In my judgment, however, it is reasonably arguable that DIFC law is the law most closely connected with the facts and persons that feature in the malicious prosecution claim given that TIG is a company incorporated in the DIFC and the criminal complaint was closely connected to a contract of employment governed by DIFC law. I therefore propose to assume that the law applicable to TIG’s tortious claims for both Malicious Prosecution and Abuse of Process is DIFC law.
198. I pressed Mr Bowden, counsel for Mr Hamid, to tell me what his case was for contending that the torts relied were part of DIFC law. He responded:
“The simple answer to that is that this is a common law court, there are common law causes of action and the DIFC law, and particularly the laws of Obligation, do not exclude the other torts, so that they are inclusive.”
199. When it came to closing submissions, it was common ground that the torts sued on had to be provided for in the Law of Obligations in order to be sued on in this case. TIG contends that the Law of Obligations is a complete Code for DIFC torts. The remedies available in the event of such liability are set out in the Law of Damages and Remedies. These remedies expressly require some breach of DIFC legislation. Thus Article 23 of the Law of Damages and Remedies creates the right to damages in the event of a breach of an obligation under the Law of Obligations, Articles 24 and 25 limit compensation to losses caused by breaches of the Law of Obligations and Article 35 provides a general right to remedies “where a person commits a breach of any requirement, duty or obligation which is imposed under any DIFC Law …”.
200. TIG submits that the torts sued on are not provided for in the Law of Obligations and accordingly Mr Hamid’s claim based on the malicious prosecution and abuse of process torts must fail.
201. Relying on Article 8 of the Law of Obligations, it is submitted on behalf of Mr Hamid that the Law of Obligations does contemplate actionable causes of action that are not provided for in that Law. Article 8 provides:
“8. Rights cumulative
(1) The existence of a right of action under this Law is without prejudice to any other right of action under this Law or any other law. [Emphasis supplied]
(2) A claimant may sue a defendant in respect of any right of action under this Law”
202. In Mr Bowden’s submission, the torts relied on are “any other law” and are therefore part of DIFC Law.
203. TIG contends that Article 8 (1) is merely permissive, ensuring that the rights, obligations and liabilities created by the Law of Obligations are cumulative with any other rights, obligations and liabilities which exist. The words “any other law” do not mean all torts recognised in the many different legal systems of the world for else by reason of these words there would be imported a mass of conflicting mutually inconsistent principles, some of which are expressly excluded by Federal law. Further, Mr Hamid’s construction would require the tort to arise both under the Law of Obligations (Article 8 (2)) and not under the Law of Obligations (article 8 (1)). DIFC law provides for many situations in which parallel rights arise. For example, the rights, obligations and liabilities provided for under the DIFC Contract Law, the DIFC Employment Law and the DIFC Regulatory Law can exist in parallel, in appropriate factual circumstances. Article 8 (1) merely provides that they are cumulative, not mutually exclusive. Hence the heading “Rights Cumulative”. The fact that the Law of Obligations does not, by creating rights, extinguish any other rights says nothing about the content of those other rights, or even whether they exist.
204. I agree with and accept TIG’s submissions. If the Law of Obligations contained general provisions such as Articles 282, 283 and 28410in the UAE Civil Code, it would be open to the Court to find that the matters complained of regarding the manner in which the civil and criminal proceedings were conducted were actionable wrongs but there are no such general provisions in the Law of Obligations. It follows in my judgment that Mr Hamid has failed to establish that he has a cause of action under DIFC law for either the malicious prosecution claim or the abuse of process claim and accordingly both of these claims are dismissed.
Conclusionary remarks.
(1) Mr Hamid is entitled to judgment for the sums identified in paragraphs 168, 175, 183 and 191 above.
(2) Within 8 days from the formal issuance of the final judgment herein, Mr Hamid should file concise written submissions setting out his case on costs and any claim for interest on the sums awarded and on any costs that he might be awarded.
(3) TIG’s submissions on costs and interest should be filed within 8 days following the filing of Mr Hamid’s submissions.
(4) Mr Hamid must file any submissions in reply within the following 7 days.
In the meantime, the parties will be informed whether there will be a hearing to determine the issues of costs and interest, and if so when, or whether the court will make its determination on the written submissions only.
Issued by:
Nour Hineidi
Registrar
Date of Issue: 6 April 2022
At: 10am