When contractual obligations are outlined clearly in writing, obligations must be honoured

The Court ruled that when contractual obligations are outlined clearly in writing, such contractual obligations must be honoured and other interpretations should not be taken into account

By Dr Charlene Gauci

The Court ruled that when contractual obligations are outlined clearly in writing, such contractual obligations must be honoured and other interpretations should not be taken into account. This was held in Philippe Guillaut vs HOSI Malta Limited decided by the Civil Court First Hall, presided by Honourable Judge Christian Falzon Scerri on the 16th January 2023.

Philippe Guillaut filed a court application wherein he made a claim for the payment of €26,227.87 representing wages which were due to him but which were not paid to him by the employer. The applicant who was employed with HOSI Malta Limited was seconded to another company operating in Morocco, named Heliconia Holding Morocco.

An additional contract was contracted between the applicant and the Moroccan company. The second contract specified that the applicant was to receive an additional remuneration of 21,000 dirham, equivalent to €1,900. The payment was to be made in dirham since this was the currency used in Morocco. However, the applicant claimed that as soon as he started his secondment with the Moroccan company, the amount of €1,900 was deducted from the wages due to him by HOSI Malta Limited instead of being awarded to him in addition to the said wages.   

The defendant company argued that the remuneration outlined in the secondment agreement was not to be awarded in addition to the wages given by HOSI Malta Limited. Instead the defendant company argued that the remuneration indicated in the contract between the applicant and the Moroccan company reflected the portion of the wages paid by HOSI Malta Limited, which were to be paid in dirham instead of in euro. Therefore, instead of receiving an additional remuneration by the Moroccan company as specified in the employment contracts, the applicant ended up receiving the exact same amount as before, which amount was now split in two different currencies.

The court explained that the applicant honoured the principle that whoever alleges must prove. It held that in case of doubt and in the absence of a receipt, the court must make the presumption that the credit due was not paid. However, the court also explained that proof of payment is not only made in virtue of a receipt but it may also be made in virtue of other evidence, including documents, witnesses, confessions of the creditor and indirect evidence such as presumptions and circumstantial evidence which may convince the adjudicator that the payment was actually made.   

Therefore, the court took into account the testimonies of witnesses brought forward by the defendant company who explained that the applicant was receiving a portion of his wages in dirham due to his secondment in Morocco.

However, the court also took into account the written employment contract, concluded by the applicant with HOSI Malta Limited which stated that: “This remuneration, additional to the remuneration he shall receive directly from Heliconia Holding Morocco, shall enable the Employee to meet the expenses and obligations related to this expatriation”. Furthermore, the contract of employment concluded with Heliconia Holding Morocco specified that the plaintiff was to receive the sum of 21,000 dirham per month, that is a sum equivalent to €1,900. However, this additional contract does not mention that this sum is to be deducted from any other wages which the plaintiff was already receiving.

The Court explained that the juridical relationship between the parties was created in virtue of the initial employment contract and therefore, any disputes must be resolved according to what has been agreed between them in the same contract. When honouring juridical obligations emanating from a written contract, the following rules should apply:

When an agreement is made in writing, one must take into consideration that whatever the parties wanted to agree about was in actual fact written down in that agreement;

That verbal evidence is only admissible in order for any dubious points about the agreement to be clarified;

That verbal evidence can be brought forward in order to better explain the will of the parties vis a vis the agreement, especially if what is written down in the agreement is ambiguous. Otherwise such verbal evidence may be used to prove an incidental fact or accessory compatible with the same agreement;

This rule remains in force unless the court is convinced that there is a mistake in the agreement or contract or that a specific pact has been left out for a particular reason.

The Court also explained that whenever a juridical obligation emanating from an agreement is created in virtue of a written agreement, any contrary evidence is to be based on the same written contract, and the court should not refer to evidence extraneous to the agreement from which the juridical obligation emanates. It is a fundamental rule that contracts are concluded in good faith and one must appreciate that a written agreement not only creates an obligation but also the consequences which are attached to such obligations. The parties need to ensure that the contract is executed in harmony with what was reasonably the scope behind the conclusion of such an economic operation between them.

When the interpretation of the contract is clear and the facts which would have led to that agreement do not allow for any doubt in what the will of the parties was, then the adjudicator is restricted from giving an interpretation different from what the parties have actually outlined in writing.

In this case, the written contract was very clear in its wording, in that the payment from the company Heliconia Holding Morocco was to be given to the plaintiff in addition to the payment due to him from HOSI Malta Limited. Therefore, the Court ordered the defendant company to pay the sum of €26,227.87 to the plaintiff, representing the wage and other benefits which were due to him in terms of his contract of employment.