Contracts Of Work And The Burden Of Proof

Introduction

In the case Aretrop Limited (C49725) (the "Claimant Company") vs Foundation for Tomorrow's Schools (the "Foundation") & the Hon. Dr. Justyne Caruana in her capacity as Education Minister (the "Hon. Minister"), the Hon. Madame Justice Audrey Demicoli delved into and examined various contracts entered into between the parties for works carried out by the Claimant Company, including the delivery of specialised furniture in various schools around Malta and Gozo. This case was decided by the First Hall Civil Court (the "FHCC") on the 6 June 2024.

The claimant company requested the FHCC (i) to determine whether the defendants or any of them were debtors of the Claimant Company for works carried out by the Claimant Company on the instructions of the defendants (ii) to liquidate the amount owed to the Claimant Company and (iii) order the defendants to pay the amount as liquidated.

Relevant Facts of the Case

The parties entered into six contracts between June 2019 and September 2020 for (i) the supply of furniture which the Claimant Company provided in various schools around Malta and Gozo; (ii) finishing and coating works at Valletta Primary School and (iii) the construction of a new substation in Birgu. These contracts, according to the Claimant Company, amounted to €159,857.89.

The relevant contracts were the following:

Contract A: Furniture for the Principal's Office at St. Thomas More College, St. Lucija Secondary School

Contract B: Furniture for Sannat Primary School, Gozo

Contract C: Plastering and painting at Valletta Primary School

Contract D: Furniture for VET labs for various State Secondary Schools

Contract E: Furniture for VET Labs Gozo & Dingli Secondary Schools

Contract F: Construction of a sub-station using Environmentally Friendly Products at Birgu Fortini School (Malta)

During the course of the proceedings, 3 schedules of deposits were filed in Court in the amount of €34,697.77, thereby reducing the amount allegedly owed to the Claimant Company to €125,224.52.

Defendants' pleas

The Foundation, in its Sworn Reply, held that:

1. First and foremost, the relevant entity is the Foundation for Tomorrow's Schools (LPF354) and not as erroneously indicated in the Claimant Company's' sworn application as "Fondazzjoni Ghall-Iskejjel Ta' Ghada";
2. The untimeliness of the de minimis action in relation to a part of the price due, particularly with reference to the amount being claimed for works in October 2021, when this case was initiated in August 2021;
3. Part of the amount due is time-barred in terms of Article 2148(a)¹ or Article 2148(b) of the Civil Code;
4. The facts as mentioned in Paragraphs 1 and 2 of the Sworn Application are not being contested;
5. While the facts with regard to works carried out at Valletta Primary School are not being contested, the works carried out at the Birgu Fortini Substation were not done to the level of satisfaction of the Foundation;
6. That while amounts have indeed been paid up by the Foundation, the amount of €159,857.89 being claimed by the claimant company is being contested.

The Hon. Minister, in her sworn reply held that:

1. She is not the proper defendant in these proceedings and should be therefore, declared non-suited to answer to the claims of the Claimant Company;
2. She cannot be cited in a judgment in a matter that affects the Ministry in accordance with Article 17 of Chapter 595 of the Laws of Malta
3. The amount being claimed is not backed by sufficient evidence;
4. It is possible that part of the amount due is time-barred in terms of Article 2148(a) or 2148(b) of the Civil Code;
5. This case is unfounded both in fact and in law and as will be proven throughout the course of these proceedings, the Hon. Minister is not a debtor of the Claimant Company.

Courts Considerations

The FHCC first went on to examine the defendants' preliminary pleas:

1. With regards to the Hon. Minister declaring that she is not the proper defendant, the FHCC held that it transpired that the contracts forming the basis of the case, were contracts entered into between the Claimant Company and the Foundation. The only time the Minister appeared was for and on behalf of the Foundation and never in her own name. In view of this, it was evident that the Hon. Minister was not the proper defendant to be called into these proceedings as the juridical relationship that existed was between the Claimant Company and the Foundation. The court thereby upheld the Hon. Ministers' plea.
2. With regards to the claim being time-barred in terms of Article 2148 (a) or (b), the Foundation held that the works carried out at the sub-station were not of the required quality. However, given that the Foundation never brought forward any evidence to show that money was not due, (while also making various payments throughout the proceedings), the court rejected the plea of prescription.
3. The court also examined the Foundations plea on the untimeliness of the de minimis action in relation to a payment for works due in October 2021 (when the case was opened in August 2021). The FHCC thus rejected the Foundations plea given that the Foundation continued to make payments throughout the course of the proceedings.

The FHCC then went into the merits and examined each contract in detail:

Contract A: The amount relative to this contract was that of €3,720.46. However, given that a Schedule of Deposit was filed in court in this exact amount, the court held that this amount was no longer due.

Contract B: The amount relative to this contract was €1,079.38. However, the Foundation claimed that the amount due was €950. Given that no proof was brought by neither the Claimant Company nor the Foundation as to which of the two amounts was owed, the court considered that the amount was no longer due.

Contract C: The amount relative to this contract was €7,532.46. A Schedule of Deposit was filed in court in the amount of €7,418.05, and therefore there was a discrepancy of €114.41. Given that evidence to account for the difference in amounts was not provide by the Foundation, the court declared that this amount was still due.

Contract D: The amount relative to this contract was €76,188.32. The global amount for furniture delivered by the Claimant Company was €265,932.59. However, the Foundation claims that the global amount is €219,009.55. The FHCC had to first determine which of the two amounts was correct. Under this contract, the Foundation claimed that a number of defects were present in the furniture delivered, and that the furniture was not of the agreed quality. The Claimant Company thus held that the Foundation cannot expect to not pay for goods which were already delivered and made use of. In view of this, it certainly could not be held that the defect was not visible or that the Foundation could claim, 2 years after delivery, that the tables delivered were in fact defected. The FHCC thus declared that the amount due under this contract was €36,830.

Contract E: The amount relative to this contract was €9,842.69. Given that the Foundation had made 3 payments totalling to €46,230.57, which amount included the €5,766.99 filed by means of a Schedule of Deposit, the FHCC declared that the amount due under this contract was in the amount of €4,598.24.

Contract F: The amount relative to this contract was €61,494.38. Although the Foundation, did not bring any evidence to show that the amounts were not due, it did hold that part of the payment could not be made given that the necessary approvals were still pending. The FHCC held that it was for the Foundation to request such authorisation and that the Claimant Company should not have to suffer for a failure on the part of the Foundation. The FHCC thus declared that the amount due under this contract was €54,649.24.

Decision

In conclusion and for the above-mentioned reasons, the FHCC declared that the Foundation was in fact a debtor of the Claimant Company in the amount of €96,191.89 in representation of various work carried out by the Claimant Company on the instructions of the Foundation, including the sale and delivery of specialised furniture in various schools across Malta and Gozo.

Footnote

1. 2148. The following actions are barred by the lapse of eighteen months:

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