Court rejects oil trader’s injunction against John’s Group

A court has rejected an application made by pardoned oil trader George Farrugia and his wife Catherine, requesting it to issue a warrant of prohibitory injunction against his brothers and their companies, on the grounds that the court felt that the injunction had only been sought as an “arm-twisting measure”.

Farrugia was the man at the centre of the 2013 oil procurement scandal in which he was investigated in connection with allegations of commissions paid by commodity trader Trafigura, for the supply of oil to Enemalta in 2004. He received a presidential pardon in return for information on kickbacks to Enemalta officials.

The application, filed by George Farrugia and his wife Catherine against John’s Garage Ltd, Powerplan Ltd and 14 others requested the court to prevent the defendants from selling or transferring a total of 16 properties in order to safeguard a claim for “considerable debts in their favour owed by companies owned by the defendants”. 

George Farrugia later ceded the requested warrants against all the defendants bar John’s Group Limited.

Despite George Farrugia’s “substantial payments”, he claimed that the companies had not filed their accounts and this precluded them from performing share transfers, to his detriment.

Aside from this, Farrugia claimed that since the claims were publicised in the media, he could not continue his business with foreign oil companies, who consistently refused to deal with him and he was suffering damages as a consequence. The complainants had told the court that there had been a confidential agreement between the parties which was not being honoured. They said that despite its confidential nature, details of the agreement “began springing up and spreading with the four winds”.

George Farrugia had told the court how he had received “several objects” as part of an agreement between the parties, however they subsequently demanded to be paid €30-€40,000 for these objects. He insisted that the defendants could freely take them back. He denied claims that that the VAT department was owed €100,000 in arrears for the period of time for which he was a director of the company.

Chris Farrugia, CEO of John’s Group Limited disputed George Farrugia’s claim that he had been given the shares for free, saying that the stock had been heavily undervalued and had been paid by set-off with a consignment of lubricating oil that they would receive from the plaintiffs. In addition, the plaintiffs had taken oil stocks and petrol station equipment from the defendant as payment for the amounts demanded by the plaintiffs.

On the issue of unpaid taxes, the CEO testified that John’s Group Limited had no outstanding balances with the VAT department or the Inland Revenue Department. He added that talks were underway with the VAT Commissioner with respect to the €100,000 assessment, as it was contended that the amount in question was not subject to VAT. He added that the only payment still outstanding was that owed by the plaintiffs in National Insurance payments, which they had undertaken to pay as part of an agreement between the parties. This payment had not taken place.

In her judgment, Ms Justice Jacqueline Padovani Grima noted that the application contained serious procedural errors. It did not contain the particulars of a physical person, as required by law and the damages suffered were specified in a separate note – again, not as demanded by the law. The judge further noted that the claims made by plaintiffs in the application were contradictory as it was simultaneously requesting the warrant be issued on a precautionary basis, to safeguard rights against a non-observance of confidentiality and requesting damages.

The court noted that the alleged losses were calculated on the basis of a report compiled by George Farrugia, who was pardoned for his involvement in the oil procurement scandal. The judge pointed out that he had only been granted a presidential pardon in exchange for his collaboration with police investigations.

The court was not convinced that the breach of rights allegedly suffered by the plaintiffs existed at first glance – prima facie. In addition, it quoted several previous judgments establishing the principle that the prohibitory injunction was an exceptional remedy of last resort, only to be used if the right to be protected would otherwise be irremediably damaged.

“The warrant of prohibitory injunction is not to be used as a weapon to twist the arm of the other party into compliance with its demands. If this were the case, the warrant would no longer remain a tool to protect a prima facie right, but a muzzle that prevents the defendants from the enjoyment of their rights.”

The court revoked its prior, temporary grant of the prohibitory injunction, holding that, although the plaintiffs had proved that they did indeed have a prima facie right, they had failed to prove that the prohibitory injunction was required to protect it.