Judgment Display

In the name of God, the Most Gracious, the Most Merciful

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

Court of Cassation

In the public session held on 08-07-2025 at the seat of the Court of Cassation in Dubai

In Cassation No. 695 of 2025 Commercial

The appealed judgment was issued in Appeal No. 378/2025 Commercial Appeal, dated 07-05-2025.

The following judgment was issued:

After reviewing the documents and hearing the summary report prepared and recited in the session by the appointed judge, Dr. Saif Al-Haddad Al-Hazmi, and after deliberation.

Whereas the cassation has fulfilled its formal requirements.

Whereas the facts—as apparent from the appealed judgment and all other case documents—are that the respondents filed lawsuit No. 1694 of 2023 Commercial before the Dubai Court of First Instance against the appellant, seeking a judgment for his removal from the management of Fire Defense for Security and Safety Systems company, holding him accountable for all his administrative and financial violations, compelling him to return all funds and material assets he seized from the company, and ordering him to pay them an amount of AED 100,000 as compensation for the material and moral damages they suffered due to his financial and administrative violations and actions that harmed the company, and, alternatively, appointing an expert to examine the lawsuit.

They stated in support of their claim that they and the appellant are partners in Fire Defense for Security and Safety Systems company with varying shares, and the appellant was appointed as the company's manager. The latter conducted transactions for the benefit of other companies by obtaining work permits for individuals belonging to other companies and then canceling them. This resulted in the Ministry of Human Resources and Emiratisation auditing the company's transactions, revealing that a number of transactions were submitted in violation of the terms and conditions, leading to administrative fines totaling AED 12,000,000. The appellant breached his obligations in managing the company and committed numerous transgressions that caused serious violations against the company. They contacted him to hold a general assembly meeting to discuss the shortcomings in the company's management and reach a solution to save the company from collapse, and to protect the workers' rights as they were filing labor complaints due to his contacting them, taking their cars, and asking them not to come to the company. This prompted them to file those complaints. He was obstinate and did not attend the general assembly meeting; instead, he closed the company's premises, did not renew the lease, and vacated the premises. Therefore, the partners were forced to hold the general assembly meeting in a public place near the company's headquarters. The agenda included discussing all the violations committed by the company's manager, which caused the company to incur numerous fines and financial penalties...

demanding he return all amounts unlawfully seized from the company, instructing him not to deal in the company's name as a manager with any party or sign any agreement related to the company's business from the date of his removal, and a new manager was appointed. As the appellant manager refused to attend the general assembly meeting and committed numerous transgressions that severely harmed the company, the lawsuit was filed.

The court appointed an expert. After the expert submitted his reports, the court ruled on 09-01-2025 to remove the appellant from the management of Fire Defense for Security and Safety Systems, ordering him to pay the company AED 350,000 and AED 120,000, and to pay the respondents AED 15,000 as compensation, to be distributed equally among them, and rejected the remainder of the claims.

The appellant challenged this judgment in Appeal No. 378 of 2025 Commercial, and on 07-05-2025, the court upheld the appealed judgment.

The appellant challenged this judgment by the present cassation, based on a statement of grounds containing three reasons for appeal, requesting the cassation of the appealed judgment and referral.

The respondents' lawyer submitted a memorandum in reply.

The cassation was presented to this court in chambers, and a session was set for its resolution.

Whereas the cassation is based on three reasons by which the appellant criticizes the appealed judgment for error in applying the law, deficiency in reasoning, corruption in inference, violation of the right of defense, and contradicting the record. In his statement, he argues that the respondents claimed he committed violations that cost the company AED 1,200,000, which is contrary to the truth as they did not provide any evidence for their claim. He submitted evidence to the appointed expert in the case proving the payment of these fines or fees through other companies, but the expert ignored what he submitted and did not mention it in his report. He also submitted accounting reports to the respondents showing the company's financial position. The transaction for the AED 350,000 in question dates back to September 2019, and no objection was raised. This amount was withdrawn from the first respondent's account, with his knowledge as a partner in the company and his brother. Subsequent transactions from the same account occurred for two years with the knowledge and consent of the first respondent. The respondents' statements are mere unsubstantiated allegations without any supporting evidence. He requested the trial court to refer the case for investigation to prove his defense, but the court did not grant his request. He also contended that the incident has a different aspect from what the respondents claimed regarding his committing many transgressions resulting in serious violations against the company, such as many workers filing labor complaints against it. This is contrary to the reality of the case, as the respondents incited the workers in the company to file complaints to prove their claim of him harming the company and causing it to incur financial expenses. He appeared before the court and submitted official permits and employment contracts issued in the names of all the workers who filed the labor complaints against the company. These permits bear the name of a company belonging to the second and third respondents, proving they transferred the workers' sponsorship to their private companies, which indicates their intention to cause harm. Furthermore, he stated before the trial court that regarding the amount of AED 3,500,000, a receipt was issued confirming his receipt of that amount, but he was a victim of a theft of the amount and the receipt, and a police report was filed to that effect. However, the judgment ignored the foregoing and based its decision on the report of the appointed expert despite its flaws and deficiencies, without examining his objections and defense, which renders it defective and warrants its cassation.

Whereas this plea is unfounded. It is established in the jurisprudence of the Court of Cassation that the provisions of Articles 113 and 117 of the Civil Transactions Law and Article 1 of the Law of Evidence stipulate that the burden of proof alternates between the parties in a lawsuit according to their respective claims. Whoever claims a right against another must provide proof of their claim, contrary to the original state of non-liability, as its existence is contingent. If they prove their right, the defendant must provide evidence of the extinguishment of the debt and its cause. It is also established that one who claims discharge of an obligation must prove it. A denier is not exempt from providing proof unless their denial is absolute and does not respond to the claim with anything other than denial. However, if they admit one of the alleged elements of the claim and assert something contrary to the apparent facts, they bear the burden of proof.

its daily operations in general, and that it derives its authority and powers from the company's articles of association or the contract under which it is appointed to represent and manage it as the case may be, by which the partners delegate and grant it the authority to act independently in all matters covered by that delegation and its necessary accessories. However, its actions are restricted by the provisions of the contract and by custom. Article 22 of the Commercial Companies Law, in the chapter on general provisions for companies, states that the person authorized to manage the company must protect its rights and exercise the care of a prudent person, and must carry out all actions consistent with the company's purpose and the powers granted to him by virtue of an authorization issued by the company for this purpose. This is because the company, according to Article 23 of the same law, is bound by any act or transaction issued by the person authorized to manage the company during the course of their usual management activities. The company is also bound by any transaction conducted by one of its employees or agents when they have the authority to act on its behalf, and the other party relied on this in their dealings with the company. Article 24 of the same law invalidates any provision in the company's contract or articles of association that allows it or any of its subsidiary companies to approve the exemption of any person from any personal liability they bear as a current or former official in the company. Regarding the management of a limited liability company, Article 83 of the same law states that '1- The management of a limited liability company shall be undertaken by one or more managers as decided by the partners in the articles of association. These managers are chosen from among the partners or from others. If the managers are not appointed in the articles of association or in a separate contract, the general assembly of the partners shall appoint them. If there are multiple managers, the partners may appoint a board of directors, and the board shall be vested with the powers and functions specified in the articles of association. 2- Unless the manager's appointment contract, the articles of association, or its internal regulations restrict the powers granted to the manager, he shall be authorized to exercise full powers in managing the company, and his actions shall be binding on it, provided they are accompanied by a statement of the capacity in which he is acting.' Article 84 of the same law also stipulates that '1- Every manager in a limited liability company shall be liable to the company, the partners, and third parties for any fraudulent acts he commits, and shall be obliged to compensate the company for any losses or expenses incurred due to the misuse of authority or violation of the provisions of any applicable law, the company's articles of association, his appointment contract, or a gross error on the part of the manager. Any provision in the articles of association or in the manager's appointment contract that contradicts the provisions of this clause shall be void. 2- Subject to the provisions for a limited liability company under this decree-law, the provisions concerning the members of the board of directors in public joint-stock companies as stated in this decree-law shall apply to the managers of limited liability companies.' Thus, the principle is that all actions and deeds carried out by the manager within the limits of his authority are attributable to the company, and he is not held personally liable unless what he did involves fraud, abuse of power, violation of the law or the company's articles of association, or gross negligence in performance, such as managing a competing company or one with similar purposes, or conducting for his own account or for the account of others deals in a trade that competes with or is similar to the company's trade without the approval of the company's general assembly. In these cases, the principle of limited liability to the company is not recognized; rather, liability extends to its manager, both before the company, the partners, and third parties. Therefore, the manager of a limited liability company is responsible to the company, the partners, and third parties for compensating for damages resulting from his mistake and negligence in management and for all acts of fraud and abuse of power and for every violation of the law or the company's regulations. It is established that, according to Article 109 of the Law of Evidence in Civil and Commercial Transactions, the court may, when necessary, appoint one or more experts to seek their opinion on matters requiring resolution in the case, such as technical points that are not within its knowledge and material facts that are difficult for it to ascertain, without addressing legal issues for which the court alone has the authority to decide. The trial court only resorts to experts to facilitate the expert's task through research and study based on his capabilities and technical competence to reveal the truth in technical matters and material facts that are obscure to it, as the court has full authority in assessing the work of experts, considering it an element of evidence in the lawsuit and in adopting it.

after refuting with specific reasons the objections raised by the parties against the expert's report, because adopting it, based on its reasons, implies that it did not find in the opponent's defense anything that undermines the validity of the conclusion reached by the expert, which does not require a response beyond what the report contains, as long as it has clarified the reality it was convinced of and provided its evidence. The court is not obliged to return the mission to the expert to accommodate one of the parties as long as it finds in the completed report enough to form its conviction, and as long as the appointed expert has adhered to the limits of the mission entrusted to him in the appointment judgment. Furthermore, the expert is not obliged to perform his work in a specific manner as long as what he does achieves the purpose of his appointment and without being bound by what the parties deem appropriate, as long as his work is ultimately subject to the court's assessment, which may adopt it if it is satisfied with it or reject it if it has doubts.

And that the text of Article 236 of the Commercial Companies Law states that 'If a company manager is appointed in its articles of association without a specific term, he shall remain a manager for the duration of the company's existence unless the articles of association provide for his dismissal. The dismissal of the manager in this case shall be by the majority required to amend the company's contract unless the contract stipulates another majority. If the company's contract does not provide for the dismissal of the manager, he may be dismissed by the consensus of the partners or by a judicial ruling when there are serious reasons justifying it.' This means that if the manager of a limited liability company is appointed in the company's articles of association for a specific period, he remains in his position as manager until the end of that period. However, if he is appointed in the company's articles of association without specifying the duration of his tenure as a manager, he is not removable by the other partners because the agreement to appoint him as a manager in the articles of association is considered part of the company's contract, which has binding force. If the articles of association provide for the dismissal of the manager, his dismissal is carried out by the majority required to amend the company's contract, unless the articles of association stipulate another majority. If the articles of association do not provide for the dismissal of the manager, he may be dismissed by the consensus of the partners. In all cases, any partner, regardless of the size of their shares in the company's capital, may resort to the judiciary to request the dismissal of the company's manager if there are serious reasons justifying it, such as his mismanagement of the company, his illness and inability to work, or his commission of acts of dishonesty against the company and its partners, regardless of whether the manager is appointed in the company's articles of association for a specific or indefinite term.

And that if the manager of a limited liability company breaches one of the duties of management or violates the law or the provisions of the company's contract and its articles of association, he is responsible for his personal mistakes or any actions involving fraud, deceit, or gross negligence. The determination of the manager's liability in this case is a matter of fact that the trial court independently assesses, provided it bases its judgment on valid reasons derived from a fixed source in the documents. And that the determination of the fault giving rise to liability—whether contractual or tortious—the resulting damage, and the causal link between them, and the negation thereof, are matters that the trial court independently assesses based on its authority to understand the reality of the case, assess the evidence and documents, and adopt what it is satisfied with and discard the rest. Compensation is not awarded unless these three elements are present. The trial court has full authority to understand the reality of the case, examine and assess the evidence and documents submitted, weigh them against each other, adopt what it is satisfied with and discard the rest, and interpret contracts, declarations, and all other documents in a way it deems most consistent with the intention of their makers or the parties involved. The appointed expert in the case derives his authority from the judgment appointing him and within the limits of the mission assigned to him. He is not obliged to perform his mission in a specific way; it is sufficient that he performs what he was appointed to do in a manner that achieves the objective intended by the court in his appointment, and that he gathers his information from any documents presented to him by the parties, considering that his work is ultimately subject to the assessment of the trial court, which is not subsequently obliged to track the parties in all aspects of their statements and arguments and respond independently to each one, as long as the reality it was convinced of and whose evidence it cited provides an implicit rebuttal to the parties' statements and arguments. As long as its judgment is based on valid reasons sufficient to support it and justify the conclusion it reached.

Since that is the case, and it is clear from the documents that the respondents filed their lawsuit seeking a judgment to dismiss the appellant from the management...

and for the moral damages they suffered due to his financial and administrative violations and actions that harmed the company. The first instance judgment, upheld by the appealed judgment, based its decision on its satisfaction with the case documents, its records, and the report of the appointed expert, which it adopted based on its reasoning after confronting the parties' objections. It concluded that the nature of the relationship between the litigants is that they are partners in Fire Defense for Security and Safety Systems company, and it was agreed that the appellant would be the manager of the company according to the powers and obligations stated in the company's articles of association dated 23-06-2013. The appellant breached his obligations by failing to appoint an external auditor and prepare balance sheets for the company showing its financial position at the end of each year so that an accounting could be conducted between the partners regarding the results of its operations. Regarding the claim to compel the appellant to return AED 350,000 to the company, he did not provide any documents showing how the first respondent obtained that amount from the company, whether in cash or by checks, and only provided a photocopy of a payment voucher which the latter challenged, in addition to a certificate of loss after more than three years had passed. He did not provide any documents proving the first respondent's receipt of that amount, so the appellant is obliged to pay it to the said company. Regarding the claim to compel the appellant to return AED 120,000 to the company for breaching his obligations as the company's manager regarding violations by the Ministry of Human Resources, it was clear from reviewing the violation notice issued by the Ministry of Human Resources and Emiratisation that it was specifically addressed to the company, and the appellant did not provide any documents proving that this violation was specific to other companies of the company's sponsor as he claims, nor did he provide any documents proving the absence of any violations against the company for the benefit of the Ministry of Human Resources and Emiratisation, so he is obliged to return it. Regarding the respondents' claim to compel the appellant to compensate for the material and moral damages resulting from his actions that harmed them and the company, according to what was stated in the expert's report in the case as previously mentioned, the appellant's breach of his obligations as the company's manager was established, and the fault was verified on his part, and this fault resulted in damages that befell them, for which they deserve compensation. The judgment concluded with the dismissal of the appellant from the management of the company as a result of the violations he committed—as this was done by the majority required to amend the company's contract, they being the owners of 75% of the company's shares, which is the same majority required to dismiss the manager as the articles of association did not stipulate another majority for that—and ordering him to pay the adjudicated amounts. The conclusion reached by the judgment is sound, has its basis in the documents, is sufficient to support its decision, and leads to the result it reached, with an implicit rebuttal of any contrary argument. Therefore, there is no blame on it if it did not grant the appellant's request to refer the case for investigation when the case documents were sufficient to form the court's conviction. Consequently, the challenge based on the reasons for the appeal is nothing more than a debate over the trial court's authority in understanding the reality of the case, assessing the evidence presented, evaluating the expert's work, and determining the elements of liability for compensation, which is not permissible to raise before the Court of Cassation. Since the foregoing is established, the appeal must be rejected.

For these reasons

The court has ruled to reject the appeal and to order the appellant to pay the costs and a sum of one thousand dirhams for attorney's fees, and to confiscate the security deposit.