An employee contributes 60 thousand dirhams to a company.. and receives 15 million by a final judgment

The Dubai Court of Cassation has settled a legal dispute, with a reference ruling, and upheld the ruling of the first instance and appeal courts regarding the entitlement of an employee to 50% of the shares of a pharmaceutical company, and ruled in his favor for an amount of 15 million and 462 thousand dirhams from the total profits of the company and the institutions that branched out from it, after proving his contribution of 50% of the founding amount, amounting to 60 thousand dirhams, without including his name in contracts or official papers, as he was a government employee at the time.

The Dubai Courts approved the rule of de facto partnership between the employee and his partner who disavowed him and transferred the company to his wife’s name, in order to deprive him of his rights. The court confirmed that the main condition for the establishment of the company is that the partners have the intention to participate, and that each of them contributes to its capital and shares in the profit and loss, noting that the failure to prove the partnership in a written contract and its failure to be published does not prevent proving its existence by other means of proof, and this is what the court of subject matter relied on, and was supported by the Courts of Appeal and Cassation.

The legal advisor representing the plaintiff, Mohamed Naguib, said that the plaintiff in this case proved that he transferred the amount to the defendant when the company was established in 2009, and the latter continued to send reports on profits and expenses periodically, until he decided to remove him from the partnership, after the company grew and its business flourished.

According to the evidence from the case papers and the expert report that the court was satisfied with, the plaintiff, the defendant and a third partner (who joined the case as an intervening party) agreed among themselves in 2009 to establish a pharmaceutical consulting company, to be registered as a sole proprietorship owned by the defendant, given that the other two partners work as employees of another entity and cannot register their names in the contract. They agreed that the company’s capital would be AED 130,000. The plaintiff paid AED 60,000 from his personal account to the company’s account, then paid AED 30,000 in cash, with his share being 50% of the partnership. The other two partners paid AED 20,000 each equally, with each partner’s share being 25%.

In 2010, they agreed to add a new activity to the company and change its name. The defendant provided the plaintiff with all the information about the company, including contracts and other matters, via email. They remained committed until 2020. They also agreed to appoint the plaintiff’s wife in the company with a salary of 50,000 dirhams, but in reality she was not working, but rather receiving her husband’s profits.

The lawsuit papers stated that the plaintiff left his job and decided to officially join the partnership. He sat down with his two partners to draft a new contract proving his 50% partnership, but the defendant turned against his two partners and seized the company’s assets for himself.

The plaintiff filed a lawsuit, especially after he discovered that his partner had registered the company from the beginning in the name of the defendant’s wife, who had taken secret measures to divorce his two partners, so he signed a partnership contract with his wife without their knowledge, and the company continued to grow and flourish, and its activities expanded, and branched out into other companies. In the meantime, the defendant transferred the company completely into his name, believing that he had thus completely divorced his two partners, because on paper they had contributed to a company owned by his wife, and in light of the transfer of its ownership, they no longer had any rights.

The legal advisor representing the plaintiff, Mohammed Najib, said that the defendant took the initiative to transfer all the company’s funds and profits, which exceeded 30 million dirhams, to his wife’s account, in a new attempt to embezzle his partners’ shares in the profits, which represents a type of fraud, collusion and unjustified seizure of others’ money, placing them under psychological and material pressures and family burdens.

He added that his client requested proof of the de facto partnership between him, the defendant and the third partner in the company from the date of its establishment, and obligating the company, the defendant and his wife to pay his profits due from the date of the company’s establishment. The third partner also submitted a memorandum in which he requested proof of his partnership, as he is an intervening party in the lawsuit.

Najeeb pointed out that the plaintiff based his lawsuit on the bank transfer of the establishment amount of 60 thousand dirhams, in addition to the correspondence that had been taking place between them on a regular basis since its establishment and over the years.

After examining the case, the Court of First Instance ruled that the defendant and the company must pay 15 million and 462 thousand dirhams and legal interest at a rate of 5% from the due date to the plaintiff. It also ruled that they must also pay the third partner (the offensive intervening opponent) the amount of seven million and 731 thousand dirhams.

In addition, the defendant was not satisfied with the ruling, and appealed before the Court of Appeal, which rejected the appeals submitted and upheld the appealed ruling. He continued the appeal before the final judicial level, the Court of Cassation, which settled the dispute with a reference ruling, which is proving the partnership in reality, and upholding the first-degree and appeal rulings.

• The plaintiff’s partner denied him when he demanded his share and excluded him after the business flourished.