Hints of acceptance of debt, sufficient to interrupt prescription

The Court of Appeal has held that an email message saying that the debtor will process a payment is sufficient to interrupt prescription

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Malcolm Mifsud
31 March 2017, 11:00am
The Court pointed out that the Department did not produce evidence that it followed standard government procedures and the company did not receive documents called LPO’s from the Department
The Court pointed out that the Department did not produce evidence that it followed standard government procedures and the company did not receive documents called LPO’s from the Department
The Court of Appeal on 21 March 2017 held that an email message saying that the debtor will process a payment is sufficient to interrupt prescription. This was held in a judgment in MM Workshop Ltd v Civil Protection Department delivered by Mr. Justice Anthony Ellul.

The appellant company, MM Workshop Ltd, had filed an action before the Small Claims Tribunal for payment of €2938.34 from the Civil Protection Department for works carried out on its vehicle.

The defendant, the Civil Protection Department, defended the action by saying it is time-barred in terms of Article 2148(a) of the Civil Code and that the Department was not the correct defendant.

The Tribunal in its judgement of 3 February 2015 agreed with the Department that the action was time-barred, although it was the correct defendant.

The plaintiff company, filed an appeal, because the action was not time-barred and it disagreed that the Department did not agreed to pay.

The Department also filed an appeal because it was not the owner of the vehicles which the company works on, irrespective of the fact that the vehicles had its signage. The works were not ordered by the Department’s personnel and the Department did not have any commercial relationship with MM Workshop Ltd.

Mr Justice Ellul listed the relevant evidence produced including that the appellant company carried out mechanic services on the vehicles used by the Department. An invoice was sent after the work was carried out and a statement was sent monthly. The unpaid invoices concern works carried out in 2008.

The Court of Appeal dealt with the Department’s appeal and referred to a previous judgement Pauline Mac Donald v Medistar Healthcare Services Ltd decided 28 September 2016 that for there to be a judicial relationship if there is a contract between the two, the creation of a right derived from law.

The appellant company filed the action against the Department, because the Department allegedly made orders to the company from which invoices were issued. The Director of the Department who gave evidence was appointed in 2010 and the Court commented that it would have been better if the previous Director had testified, since he was involved. In fact, the Director testified that he was not aware of all the facts but confirmed that the vehicles were not owned by the Department. On the other hand, a representative of the appellant company that the vehicles had Civil Protection stickers and produced photos of these cars. 

The Court pointed out that the Department did not produce evidence that it followed standard government procedures and the company did not receive documents called LPO’s from the Department. The Director of the Civil Protection testified that at times verbal authorisations are given, but the previous Director could have given more details.

The Court held that it was evident that the vehicles on which the company worked in 2008 and therefore there was a judicial relationship.

With regard to the issue on prescription the Court pointed out that Article 2148 (a) of the Civil Code gives 18 months for actions against persons “exercising any trade or mechanical art, for the price of their work or labour or the materials supplied by them”.

This case concerns three invoices dated 24 April, 28 May and 25 June 2008 and a judicial letter was sent on 1 September 2010. The Court did not agree with the appellant company that since it had done work continuously for the Department there is no prescription, because an invoice was issue for every job once finished. The Court had to see if the Department accepted the debt.

The Court of Appeal held that for there to be an interruption of the prescription there may the debtor may recognise that there is a debt. Mr Justice Ellul held the acceptance of the debt is a renunciation to claiming that the debt is time-barred. 

The Tribunal in its judgment, which was appealed, held that the invoices were separate invoices and not a statement of account. The Tribunal pointed out that the Department had paid several invoices but not these, since the Department wanted to carry out its verifications. The previous Director of the Department had written: “Thanks, will review and inform you in due course” or “in process”.

The Court of Appeal had a different interpretation to the correspondence between the two. The appellant company wrote to the Department on March 2010:

“….I have been sending monthly statements of accounts and discussing these vehicles since 2008 with Mr Peter Cordina who never at any time denied that the vehicles do not belong to the Civil Protection Department”. The Court pointed out that in fact at the time there was no contestation. The Court saw other correspondence between the two, where the company on 4 December 2009, the company wrote: “I have been trying to contact you through out the whole week but unfortunately with no luck. We are still awaiting our payments of last year’s invoices. Your early settlement of the said invoices would be appreciated”. The reply was “in process” The Court of Appeal held that this last message indicates that the Department had accepted to pay the amount due. Therefore, the 18 months did not lapse from this message to when the case was instituted. 

The Court then moved to uphold the company’s appeal and declare that the action was not time-barred and referred the case back to the Small Claims Tribunal.

Dr Malcolm Mifsud is partner Mifsud & Mifsud Advocates

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Malcolm Mifsud is a partner at Mifsud & Associates.