Niki v Nolan [2024] DIFC SCT 497 (16 April 2024)

Claim No. SCT 497/2023

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

In the name of His Highness Sheikh Mohammed Bin Rashid Al Maktoum,
Ruler of Dubai

IN THE SMALL CLAIMS TRIBUNAL OF DIFC COURTS
BEFORE H.E. JUSTICE MAHA ALMHEIRI

BETWEEN

NIKI

Claimant

and

NOLAN

Defendant

Hearing :	19 March 2024
Judgment :	16 April 2024

JUDGMENT OF H.E. JUSTICE MAHA ALMHEIRI

UPON this Claim being filed on 15 December 2023

AND UPON a hearing having been listed before H.E Justice Maha Al Mheiri on 19 March 2024, with the Claimant’s and the Defendant’s representative in attendance.

AND UPON reading the submissions and evidence filed and recorded on the Court file

IT IS HEREBY ORDERED THAT:

1. The Claimant’s Claim shall be dismissed.

2. Each party shall bear their own costs.

Issued by:
Hayley Norton
Assistant Registrar
Date of Issue: 16 April 2024
At: 12pm

THE REASONS

The Parties

1. The Claimant is Niki (the “Claimant”), a consultancy service company located in Dubai.

2. The Defendant is Nolan (the “Defendant”), a technology company located in Abu Dhabi.

Background and the Preceding History

3. On 28 June 2021, the Parties signed a contract for the Claimant to provide human resource services to the Defendant via the Claimant’s consultant (the “Consultancy Agreement”). The Consultancy Agreement sets out the scope of the services which were to be carried out.

4. As the Defendant was a startup company and required different positions to be filled, the Claimant was instructed by the Defendant to conduct a search on various positions for the company. In consideration of the services provided, the Claimant was to be paid a fee of AED 74,000 per calendar month, pursuant to the Consultancy Agreement.

5. On 1 May 2021, the Claimant positioned one of their consultants, Nancy (the “Consultant”), to be located at the Defendant’s company to help with the placement of different positions. The Consultant began providing services to the Defendant under the Agreement on behalf of the Claimant. The Claimant facilitated the placement of more than 30 positions to the Defendant’s company.

6. The Claimant was assisting the Defendant in finding candidates to fill the position of Chief People Officer. The relationship between the parties continued until the September 2021, where the Claimant received a call from the Consultant serving her resignation to work with the Defendant as Chief People Officer.

7. The Claimant’s claim pertains to an unpaid invoice for the placement of the Consultant in the position of Chief People Officer. Previous invoices between the parties had been settled; this claim pertains specifically to the sum for the placement of the Consultant, a sum of AED 176,223.60, which is based on the Consultant’s salary when she used to work with the Claimant.

8. On 15 December 2023, the Claimant filed a claim against the Defendant in the DIFC Courts’ Small Claims Tribunal (the “SCT”) claiming the following:

(a) AED 176,223.60 payment for the placement of the Consultant in the position of Chief People Officer;

(b) Pre-judgment interest from 28 September 2023 inclusive to the date of judgment (pursuant to Article 118(2) of the DIFC Contract Law and at the average bank short-term lending rate to prime borrowers prevailing for the currency of payment at the place of payment);

(d) Interest on the judgment sum pursuant to PD 4 of 2017 at the rate of 9% per annum until the date of payment;

(e) All court fees; and

(f) Any other recoverable costs and expenses.

9. On 22 December 2023, the Defendant filed an Acknowledgment of Service intending to defend all of the claim.

10. The parties met for a Consultation with SCT Judge Delvin on 14 February 2024 but were unable to reach a settlement. In line with the rules and procedures of the SCT, this matter was referred to me for determination, pursuant to a Hearing held on 19 March 2024.

The Claim

11. The Claimant submits that pursuant to the Consultancy Agreement, the Claimant arranged for the placement of the Consultant in the position of ‘Chief People Officer’ with the Defendant from 2 September 2021. Thereafter, under and in accordance with the Consultancy Agreement, the Claimant argues that it periodically invoiced the Defendant in respect of the Consultant placement, however the Defendant failed to pay the sum invoiced.

12. On 13 September 2023, the Claimant sent an invoice to the Defendant in respect of the cumulative sum owing to the Claimant in respect of the placement of the Consultant in the total amount of AED 176,223.60, to be paid within 14 days.

13. The Claimant also argues that the Defendant has additionally breached its obligations to the Claimant under the Consultancy Agreement by directly employing the Consultant in the same position that she was performing as a consultant, contrary to the express terms of Clause 8 of the Consultancy Agreement, which provides in terms as follows:

“8. EXCLUSIVITY

8.1 The Client irrevocably agrees and guarantees that it shall not circumvent, avoid, bypass, or obviate the Company by accepting terms directly with the Company’s Consultant.

8.2 For a period of 1 (one) year immediately following the Termination Date, the Client agrees, either for themselves or for any other Person to not solicit the Company’s Consultant.”

14. The Claimant is aware that the Consultant was engaged by the Defendant on a salary superior to the remuneration she was receiving under her Employment Contract with the Claimant. The Claimant is entitled in the circumstances to claim damages referable to the Consultant’s new salary, however for the purposes of this Claim, the Claimant is calculating its claim to the known monthly salary that she used to receive when she was working as a consultant with the Claimant.

15. In the circumstances, the Claimant has suffered loss calculated on the Consultant’s salary when she worked with the Claimant in the amount of AED 176,223.60 and claims the said amounts as damages for breach of the Consultancy Agreement as against the Defendant.

The Defence

16. The Defendant argues that the Consultant’s employment contract is not valid due to the fact that it is not signed by the Claimant, nor has it been attested by the Ministry of Labour. The Consultant terminated her relationship with the Claimant, by notice on 16 September 2021 as a result of her never receiving a signed and attested employment contract or work visa from the Claimant.

17. The Defendant denies that the Claimant arranged, pursuant to the Consultancy Agreement, for the placement of the Consultant in the position of ‘Chief People Officer’ from 2 September 2021. The Consultant was at the time an employee of the Claimant providing the services under the Agreement. As set out above, the Defendant paid all sums due under the Consultancy Agreement up to and including 31 October 2021 and it is denied that the Defendant has breached any term of the Consultancy Agreement.

18. The Defendant argues that the Consultant was introduced by the Claimant to the Defendant in respect of a permanent engagement with the Defendant and it is denied that the Defendant provided instructions to the Claimant to source the Consultant, in the position of Chief People Officer.

19. In addition, no such acknowledgement has been made by the Defendant, nor any promise to pay the amount of AED173,226.60. No invoice was received from the Claimant between 1 May 2021 and 23 September 2023 in respect of a placement of the Consultant. Notably, the Defendant submits that between May 2021 to November 2022, the Claimant placed additional employees to the Defendant under the Agreement terms and the Defendant has paid all fees.

20. From 1 November 2021, the Consultant and the Claimant were in frequent communication regarding the placement of candidates with the Defendant and no mention of the claimed fees were ever mentioned to the Defendant or the Consultant until September 2023 when the Claimant presented the invoice.

Discussion

21. The dispute is governed by DIFC contract law and the relevant case law and principles concerning a breach of contract as stipulated under Clause 21 in the Consultancy Agreement:

“21. GOVERNING LAW AND JURISDICTION

21.1 This Agreement and any non-contractual obligations arising out of or in connection with it are governed by, and shall be construed in accordance with, the laws of the Dubai International Financial Centre (DIFC). Any dispute arising out of, or in connection with, this Agreement, including any question regarding its interpretation, scope, existence, validity or termination, shall be referred to the exclusive jurisdiction of the DIFC courts.”

22. In this judgement I will only discuss the Consultancy Agreement signed between the Claimant and the Defendant, and the effect of Clause 8 to the outcome of the claim.

23. The Consultant’s Employment Contract does not affect the circumstances leading to her filing her resignation with the Claimant. Even if the Employment Contract was not signed or registered, the fact that she worked with the Claimant and was introduced to work with the Defendant as one of the Claimant’s employees is not disputed by both parties, as such all the clauses in her Employment Contract are valid.

24. The Claimant argues that the Consultant was introduced to the Defendant as a placement for the position of Chief People Officer and accordingly a placement fee was generated. After examination of the submissions and the court file, the process of placing a candidate before the Defendant has many steps being introduction, vetting stage, then approval of the candidates, interviews then final selection all of which the Claimant failed to provide any evidence to support this argument. The Court agrees with the Defendant that the Consultant was not introduced as a placement and was working with the Defendant to place different positions in the Defendant’s company, as such the Claimant’s Claim for placement is dismissed.

25. The Claimant also argued that the Defendant solicited the Consultant to work with them as an employee, nothing before the Court was presented to support that argument. According to the Claimant’s submissions, it is submitted that it received a call from the Consultant to inform of her resignation and that she will be working with the Defendant. The Claimant continued working with the Defendant and the Consultant even after she was an employee of the Defendant.

26. After examination of Clause 8, specifically 8.2, I find that the Defendant had an obligation to refuse to employ the Consultant, as agreed in the Consultancy Agreement signed by the Defendant.

“8. EXCLUSIVITY

8.1 The Client irrevocably agrees and guarantees that it shall not circumvent, avoid, bypass, or obviate the Company by accepting terms directly with the Company’s Consultant.

8.2 For a period of 1 (one) year immediately following the Termination Date, the Client agrees, either for themselves or for any other Person to not solicit the Company’s Consultant.”

27. The Claimant seeks payment from the Defendant of an unquantified amount as compensation for the damages that had fallen upon their company as a result of the Defendant’s actions.

28. The circumstances that have fallen upon the Claimant do not meet the burden that the Claimant has suffered undue damage at the hands of the Defendant.

29. It is clear that the Consultant was employed by the Claimant, who provided her services to the Defendant, until she resigned and commenced working for the Defendant. As the Claimant had not placed her in the employment of the Defendant, but was employing her itself, it was not entitled to fees calculated under the Permanent Placement Agreement.

30. However, by employing the Consultant, the Defendant has breached Clause 8.1 of the Consultancy Agreement, and the Claimant is entitled to damages for breach. As the Defendant has received the benefit of the employment of the Consultant by reason of its breach, an appropriate measure of the damage suffered by the Claimant is the fee to which it would have been entitled if the Defendant had requested the Claimant to place the Consultant as a permanent employee of the Defendant, under the Permanent Placement Agreement, instead of breaching the Consultancy Agreement.

31. Due to the fact that the Claimant waited for almost 2 years to raise any invoice, and benefited from the ongoing relationship between them to place additional placements, does bring this claim within the doctrines of waiver and estoppel.

32. The Claimant was aware that if it made the claim, the Defendant would cease doing business with it. It therefore refrained from making any claim until all pending matters were settled, thereby impliedly representing that no claim would be made. That representation continued in effect for the period of almost two years before the claim was brought. During those 2 years the Defendant relied upon the implied representation by continuing to do business with the Claimant, from which the Claimant derived revenue and presumably profits.

33. In these circumstances I am of the view that the Claimant has either waived its right to bring the claim, or is estopped from doing so, under English law. The Claimant failed to provide any evidence to demonstrate that the placement of the Consultant was sent or communicated to the Defendant before 13 September 2023 and continued to work with the Defendant before that. This action is warranting a form of estoppel, that party is said to be estopped from making certain related arguments or claiming certain related rights.

34. I do not find it appropriate to order any damages to be paid to the Claimant as it is my view that the Claimant failed to provide evidence to demonstrate the damages that it has been subjected to by the Defendant.

35. For the above cited reasons, I find that the Claimant’s claim must be dismissed.

36. Each party shall bear their own costs.

The Dubai International Financial Centre

Niki v Nolan [2023] DIFC SCT 497

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You are here: BAILII >> Databases >> The Dubai International Financial Centre >> Niki v Nolan [2024] DIFC SCT 497 (16 April 2024) URL: http://www.bailii.org/ae/cases/DIFC/2024/DSCT_497.html Cite as: [2024] DIFC SCT 497