No need for a director to represent a company

In a judgement delivered by Magistrate Dr Gabriella Vella on the 18 November 2013, in Carmel Spiteri vs. Geomike Ltd and John Cauchi, held that a person who is neither a shareholder nor a director may still represent a company and sign contracts on its behalf.

Carmel Spiteri instituted a court action against Geomike Ltd and John Cauchi personally, since he claimed that they owed him €6,212.44 for design services to a restaurant in Marsascala. 

John Cauchi held in his statement of defence that the restaurant is owned by Geomike Ltd and therefore does not owe anything. Geomike Ltd pleaded that it had no judicial relationship with Spiteri and if negotiations were held with John Cauchi - who is neither a shareholder nor an officer of the company - then he should pay himself. 

The court analysed the plaintiff's affidavit, who stated that he was first contacted by John Cauchi to do the interior design of this restaurant. In the meeting John Cauchi's brother, Gino was also present. Since Gino Cauchi was not frequently present, arrest of the contacts were done with John Cauchi, Spiteri was given a number of payments from January 2008 to September 2009. The payments were given, except for one from John Cauchi. During this period the brothers John and Gino fell out. The plaintiff reduced the sum claimed to €5,032.44, since the calculations were revised. The court commented that the Cauchi brothers did not contest that they had engaged Spiteri as an interior designer. John Cauchi held that although he was involved with the design of the restaurant, but this was on behalf of Geomike Ltd.

Gino Cauchi testified that he was the shareholder and director of the company. He effected two payments to Spiteri from the Company's bank loan account. He held that there are also no funds to pay Spiteri. In the initial meeting with Spiteri, the Cauchi brothers had given their names. Gino Cauchi held also that his brother had made some payments and that the Company was waiting for some money from abroad.

The Court held that this shows that Spiteri's services were given to Geomike Ltd. The financial arrangements show they had a joint account and two loans. Therefore, the company's position, that it did not contract anything with Spiteri and did not authorise anyone to negotiate on its behalf, was not credible. The truth is that the funds had dried up. The Court also held that John Cauchi was acting on behalf of the Company and dealt with the works carried out in the restaurant.

Apart from this, Gino Cauchi was also involved and in the Court's opinion, John Cauchi was duly authorised by the Company to act on its behalf. The fact that John Cauchi was neither a director nor a shareholder does not mean that he could not represent the company. The representative of a company does not need to be registered with the Registrar of Companies.

The Court upheld John Cauchi's pleas and Spiteri's claim against the company. The defendant company was ordered €5,032.44.

Malcolm Mifsud is a partner at Mifsud & Mifsud Advocates

More in Law Report

Get access to the real stories first with the digital edition