No need of interpretation when the wording of a contract is clear

The Court does not need to try to interpret an agreement, when the wording is clear and will apply that clear wording. This was decided in De Tigne Limited -v- Cut Coiffeur Company Limited decided on 15 January 2017 by Madame Justice Jacqueline Padovani Grima.

The plaintiff company explained in its application that it rented a shop to the defendant company in Sliema. On 7 November 2008 the parties signed an agreement, where Cut Coiffeur had to vacate the premises and was to pay all rent and utility bills. A number of bills of exchange were not paid and there was an outstanding balance of €16,516. The same plaintiff company had also rented to the defendant company an office in the same building, but it vacated it without paying what was due and there was an outstanding debt of €4674.93. The company asked the Court to order the defendant company, to pay both sums.

Cut Coiffeur filed a statement of defence stating that it did not owe De Tigne any money. It explained that it was owed €6988.11 by the plaintiff company. It explained that it had to vacate the office because it was not fit for purpose. It further pleaded that the action was time barred in accordance to Article 2156(f) of the Civil Code.

Madame Justice Padovani Grima examined the evidence produced, where Mark Sammut in his affidavit held that the defendant company rented the office in June 2010, but rent was never paid and the utilities remained unpaid also. There was a leakage problem, but this was solved.  With regard to the shop, upon the termination agreement, €58234.33 were owed by De Tigne, monies owed by Cut Coiffeur were to be set off. He confirmed that the sums mentioned in the application were in fact due.

David Bajada testified explained that the ceiling of the office caved in after a downpour of rain. He informed the landlords, but they failed to do anything and therefore, his company had no option but to vacate. As to the shop, he confirmed that the agreement took place, but when the set off took place, nothing was due. The sums claimed were not mentioned in the agreement.

The Court then dealt with the legal issues, namely the prescription plea. Article 2156(f) reads:

“2156. The following actions are barred by the lapse of five years:

(f) actions for the payment of any other debt arising from commercial transactions or other causes, unless such debt is, under this or any other law, barred by the lapse of a shorter period or unless it results from a public

deed;”

Article 2133 of the Civil Code further reads:

“2133. Prescription is interrupted if the debtor or possessor acknowledges the right of the party against whom such prescription had commenced.”

In the 2008 agreement, the defendant company accepted that it owed money for rent and utilities, which sum was yet to be established. The defendants are in disagreement that the agreement bids them to pay anything else apart from the electricity and water bills. The Court quoted from a number of judgements namely John Zammit -v- Michael Zammit Tabona decided on 28 February 1997, where in the Court of Appeal, held that when he wording is clear, the interpretation of the agreement must rest of that clarity. In Anton Spiteri -v- Alfred Borg decided by the First Hall of the Civil Coirts on 30 November 2000, the Court held that this principle is derived from Article 1002 of the Code of Organisation and Civil Procedure. Other judgements have confirmed this principle such as John Spiteri -v- Popeye Investments Limited decided by the Court of Appeal on 3 November 2006, Charles Zammit Endrick -v- Direttur tax-Xogholijiet decided on 30 May 1973 by the First Hall of the Civil Courts and Lay Lay Company Limited -v- L-Ghajn Construction Company Limited decided by the Court of Appeal on 28 June 2011.

The relevant clause of the 2008 agreement of the parties stipulated that the plaintiff company had to pay the defendant company €58,234.33, from which the outstanding rent and utility bills had to be reduced. The Court held that this was straight forward. Therefore, the Court cannot interpret the agreement differently. The defendants claimed that the rent referred to the rent of the utility meters. However, the Court had nothing of this and claimed that the objective meaning of the clause referred to the rent of the shop. If the parties wanted to refer to the rent of the meters, they would have said so in so much words.

The Court deducted €1276.83 which reflected an expense for an airconditioner of the shop, since the claim was time barred. Then the Court ordered the defendant company to pay €15239.77.

With regard to the office, the Court took into account the condition it was and the fact that there was no contestation on the large quantity of rainwater that entered the office. The defendants were allowed not to pay for the rent.

Dr Malcolm Mifsud

Partner

Mifsud & Mifsud Advocates