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Court adjusts equity compensation

The Court of Appeal changed the compensation for a faulty water heater in order to satisfy the concept of equity that was applied in the Consumer Tribunal.

malcolm_mifsud
Malcolm Mifsud
18 April 2014, 11:39am
This was decided by Mr Justice Gino Camilleri who presided over the Court of Appeal on 8 April 2014 in the action Rosario Bonnici –v- Cutajar Limited.

Mr Bonnici had filed a complaint against Cutajar Limited wherein he asked for a refund of €550, which was the price of a solar water heater he had purchased, but developed defects on the outside of the tank. 

The solar water heater was heating regularly, but due to a number of dents on the exterior, Mr Bonnici was worried that the solar water heater was developing permanent damage. Cutajar Limited explained that there was nothing to worry about since it was covered by a seven-year guarantee. However, the guarantee did not cover the aesthetic conditions of the tank. The dents must have been caused by some other cause, not attributable to the company. 

"For equity to be applied, there has to be a legal basis, however it is also accepted that moral damages be permitted"
The Consumer’s Tribunal held in its decision that these dents were more than visible and considerable. The Tribunal ordered the company to refund Mr Bonnici the sum of €400.

The Company filed an appeal stating that the case was decided over two years after it was presented and that the decision was based on a hypothetical situation and not on facts. There was no evidence that the solar water heater was faulty. On the contrary the evidence showed that the water heater was working fine and the dents did not affect how it functioned. 

The Company claimed that it was to pay only real damages and not damages that may occur in the future. As a follow-up to this, the damages sustained were certainly not €400 when the price was €550.

Mr Bonnici submitted in his reply to the appeal that the Court of Appeal is not competent to decide on the merits of the case, as these were one of the grounds of appeal listed in Article 22(2) and (3) of the Consumers Affairs Act (Chapter 378) , which are:

(a) on any matter relating to the jurisdiction of the Tribunal; or

(b) on any question of prescription; or

(c) where the tribunal has acted contrary to the rules of natural justice and such action has prejudiced the rights of the appellant.

Mr Justice Camilleri examined the grounds of appeal and that the Tribunal’s decision was made over two years after the action was instituted. The Court held that the law does not mention that the decision has to be delivered by the Tribunal on the same day it was heard, but that it should be delivered on the same day if it is reasonably possible.

Although the Court held that this decision should be delivered as quickly as possible, on the other hand the law does not impose upon the Tribunal that it should decide the case on the same day.

With regards to whether the damages awarded were in fact real damages, the fact was that the water heater was working irrespective, despite having dents. The Court took into consideration that the Tribunal awarded damages in light of the fact that the solar water heater was meant to be placed outdoors and exposed to the elements and therefore, it would have been reasonable to expect that there would be no dents to begin with. 

"The Company claimed that it was to pay only real damages and not damages that may occur in the future"
The Tribunal was correct to conclude that the solar water heater was not built to sufficiently withstand the outside elements. The Tribunal used the principle of equity as allowed in the Consumers Affairs Act. For equity to be applied, there has to be a legal basis, however it is also accepted that moral damages be permitted. Tribunal was correct to make use of this principle and ordered a payment of €400 and not the full price of €550. 

The Court of Appeal held in the circumstances the €400 was excessive. The tank still functions and therefore the Court held that €180 was more appropriate. Therefore, the Court ordered that the Company pay Mr Bonnici €180.

Dr Malcolm Mifsud

Partner

Mifsud & Mifsud Advocates

malcolm_mifsud
Malcolm Mifsud is a partner at Mifsud & Associates.
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