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Agency uses wrong procedure to collect a refund

The First Hall of the Civil Court ruled that Article 466 of the Code of Organisation and Civil Procedure should not have been used for a government agency to collect a refund of money because of a breach of agreement.

malcolm_mifsud
Malcolm Mifsud
8 August 2014, 8:00am
This was decided on July 28, 2014 by Mr Justice Anthony Ellul in the names Il-Koordinatur Nazzjonali ta’ l-Agenzija Programmi ta’ l-Unjoni Ewropeja -v- Steven Attard.

Mr Attard filed an application that the official letter he was notified with on January 31, 2014 was null and that the procedure used by the agency in terms of Article 466 of the Code of Organisation and Civil Procedure was wrong.

The Agency replied by saying that the action they took did fall under article 466 since Mr Attard received European Union financial assistance through the Ministry of Education’s agency, the European Union Programmes Agency (EUPA). An agreement was signed between Europe Experience Malta and the agency under the Youth in Action Programme. The refund was claimed because Mr Attard failed to present a final report as the contract had laid down.

Mr Justice Ellul examined the judicial letter which was claiming a payment of €18,526.17 because Mr Attard failed to adhere to the agreement with the agency which was signed on March 6, 2008. The judicial letter mentioned that it was making reference to Article 466 and the head of EUPA signed an affidavit which was attached to the judicial letter.

Article 466 reads: (1) Where the head of a government department or the person vested with the legal representation of a body corporate established by law or with the legal representation of any company or other body which has been authorised by or under any law to collect any amounts due to a government department or to a body corporate established by law, desires to sue for the recovery of a debt due to a government department or to any administration thereof or to a body corporate established by law, for any services, supplies, penalties, rent, ground rent, other burdens on property, compensation for occupation and or for any licence or other fee or tax due, he may make a declaration on oath before the registrar, a judge or a magistrate wherein he is to state the nature of the debt and the name of the debtor .....”

The court held that the EUPA is established under Legal Notice 128 of 2007 and its aim is to take care of projects that take place in Malta which are financed by the European Union. One of these projects is Youth in Action Programme, where foreign youths are to visit Malta. The parties had signed an agreement on March 6, 2008. Mr Attard had received on June 1, 2008 circa €18,000 and was to receive a further €31,000.

The whole issue arose when Mr Attard failed to present a final report as stipulated in the contract. In an email sent on October 28, 2010 the Agency wrote: “…. Failure to fulfil your obligations under Article 1.5 – Submit the final Report and other documents and Article II – Termination of the Agreement, results in the total recovery of the advance payment for this project”. Clause II.11.14 of the agreement reads: “By way of exception, at the end of the notice referred to in paragraph 3, where the NA is terminating the agreement on the grounds that the beneficiary has failed to produce the final technical implementation report and financial statement within the deadline stipulated in Article 1.5, and the beneficiary has still not complied with this obligation within two months following the written reminder sent by the NA by registered letter with advice of delivery or equivalent, the NA shall not reimburse the expenditure incurred by the beneficiary up to the date on which the action ended and it shall recover any amount if its use is not substantiated by the technical implementation reports and financial statements approved by the NA”

In its judgment the court held that it did not agree with the Agency that this was a claim for a service rendered, but it is in fact a refund for a payment already made as a breach of the conditions of an agreement. Mr Justice Ellul commented that the Agency was giving a very wide interpretation of Article 466 where it may collect monies for services. The court held in its judgment that Article 466 does not apply to every single credit that the government may have. If this was the case, there would not have been the need for the legislator to list the instances that this procedure may be used. Therefore the term “to collect any amounts due” used in Article 466 is limited to those instances mentioned in the same Article.

"In its judgment the court held that it did not agree with the Agency that this was a claim for a service rendered"
The court then moved to uphold Mr Attard’s request that the judicial letter of 31 January 2014 is unfounded.

Dr Malcolm Mifsud

Partner 

Mifsud & Mifsud Advocates

malcolm_mifsud
Malcolm Mifsud is a partner at Mifsud & Associates.
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