Court orders couple to pay contractor reduced fee for finishes

IVN Holdings Limited sued the Camilleris for €94,702.36 for non-payment for work it had done on a Siggiewi property. IVN then reduced the claim to €69,357.17. The defendants pleaded that the agreement was to pay a deposit of 10%, then pay the balance when the works were concluded. They claimed that the company had not concluded and, therefore, payment was not due. They also claimed that the bills were inflated, as, for example, they were meant to pay for items including VAT, and the company charged them further VAT. They also claimed that the works were not done according to acceptable standards. They held that only €21,467 was due.

The court appointed a technical expert to examine the invoices and the works. The expert pointed out that the parties had entered into an agreement that the Camilleris would pay Lm5,500 per apartment for finishes and installation of services. Four other agreements were signed between the parties. On 6 March 2008 a bill was presented stating that the works were completed.

The couple's architect, Tancred Mifsud, presented in court a list of problems (or snag list) of reparatory works. It seems from this list that no reparatory works were required with regard to gypsum on the walls and ceiling.

Keith Attard Portughes testified regarding how Mr Camilleri had approached him to perform the works in a block of apartments. The agreement was for 40% settlement in cash and 60% barter. The company's foreman testified and admitted that there were some works that had to be done, but described also the differences that took place between his employer and the property owner. The court also quoted Mr Camilleri's testimony, wherein he described how he had visited the site a number of times and found "Arabs" working there. Camilleri would point out that the works were not being done correctly, and since there were around seven Arab workers, he was afraid and left.

The court expert on site found a number of shortcomings and listed them for the court to consider. The expert concluded that the agreement mentioned only lump sums for every apartment and not itemised units. The agreement intended that the property be completely finished, however, this was not carried out professionally and in fact the costs for repair amounted to €5,130. Furthermore, there should be a further reduction of €1,400 on the bathrooms. The total bill was €119,779.02. The defendants paid €50,421.85, leaving a balance of €69,357.17 - however, the court expert calculated that the Camilleris should pay a lesser amount, €46,533.

The court pointed out that although legally it is not bound by the court expert's conclusions, it cannot dismiss them lightly and must do so only on very serious grounds. Furthermore, the court noted that none of the parties contested the conclusions of the court expert in any manner.

The court then analysed the agreements the parties had signed and held that they were an expression of their intentions, and if they were legally binding, then they could be revoked or changed only by another agreement. In fact Article 993 of the Civil Code states that contracts must be executed in good faith.

The agreement mentioned only the desired end and not the unit price. If it were the unit price, then the contractor would have a right to be paid for the work carried out. If the price were fixed on the end product, then the contractor would be paid at the end when all the works were carried out. In this particular case, there was a disagreement when the works were being carried out and, therefore, the contractor did not manage to finish. As described by the court expert, the works carried out did not reach professional standards.

The court noted on the other hand that the defendants had effected payments during the court case and did not file a counter-claim for damages. Furthermore, the company had accepted to carry out the pending snag list, as long as it was paid, but the Camilleris had refused. On this ground the company was correct to file the action when it had.

The court then considered the issue of interest and stated that although in essence this was a commercial agreement, the action was with regard to a debt which was not certain from the very start and required the appointment of a technical expert. Therefore, the court adopted the principle in liquidandis non fit mora and, therefore, interest should start from the date of the judgment.

The court ordered the defendants to pay €46,553, which was divided into €18,621 in cash payment and €27,932 in the form of barter.

Malcolm Mifsud is a partner at Mifsud & Mifsud Advocates