Court sticks to tenant’s and landlord’s initial intentions

Mr Justice Lawrence Mintoff in the First Hall of the Civil Courts, decided on 12 January, 2015, in Giljan Agius v Mark Micallef, that once the parties agreed on the lease agreement that the tenant had to pay for the first year’s rent, this was binding on both of them.

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Malcolm Mifsud
23 January 2015, 8:00am
In his application, Giljan Agius explained that Mr Micallef owed him Lm15,000 in terms of a lease agreement of 25 January, 2002. Mr Micallef disagreed with this, since it was subject to a clause that said that this sum was not due “should the business prove unfruitful in the first twelve months from the opening date”. He also stated that the restaurant was not licensed and therefore, other conditions of the lease agreement were not adhered to.

The court analysed the evidence given, in that Mr Agius contested the fact that the restaurant was not licensed by the Malta Tourism Authority (MTA). He explained further that since the restaurant was not used he had asked the MTA to suspend the licence in order not to incur these expenses. When the defendant took over the restaurant, arrangements were being made for the licence to be transferred to Mr Micallef’s name. There was no problem with this. 

"There were a few things not in place, such as fire precaution equipment, but these were considered as minor and the licence would have been issued"
With regard to the debt of Lm15,000, the court examined the lease agreement, which stipulated that the lease period was for five years from 15 April, 2002 and the lessee had an option to extend for a further five years. However, the lessee could be released from his obligations for the “other years should the business prove unfruitful in the first 12 months from the opening day”. Therefore, the defendant could be released only after the first 12 months.

Dr Anna Mallia, who drafted the lease agreement, told the court under oath, that Mr Micallef had to spend one year in the premises and in that year he had to decide whether or not to continue. There was also a note which stated that Dr Mallia had explained the clauses of the agreement to the parties. Therefore, the defendant was bound to pay the Lm15,000. 

Mr Micallef told the court that he had returned the keys because the premises was not covered by a MTA licence. But this was not the reason given when he returned the keys. He had explained that he was not doing well. It was only during the case that he raised this argument. Mr Justice Mintoff quoted from the MTA representative who testified that were the payment to be sent the licence would be issued.

The court observed that the defendant had in fact opened the premises for business and the MTA had inspected the place. There were a few things not in place, such as fire precaution equipment and emergency alarm system, however, these were considered as minor and the licence would have been issued. 

Mr Justice Mintoff commented that after Mr Micallef returned the keys, he had rented and opened another restaurant in a different place. 

The Court held that the parties are bound by the agreement they themselves signed and therefore ordered Mr Micallef to pay Mr Agius €34,941 equivalent to Lm15,000.

Malcolm Mifsud, Partner, Mifsud & Mifsud Advocates

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Malcolm Mifsud is a partner at Mifsud & Associates.