An agreement for payment of debt contradicts claim for non-execution of bill of exchange due to grave circumstances

The First Hall of the Civil Courts in its judgement George Spiteri -v- Marsaxlokk Football Club and Robert Micallef, held that an agreement to pay a debt for the transfer of a player contradicted Micallef’s claim that bills of exchange should not be executed due the grave circumstances. The judgement was delivered by Mr Justice Lawrence Mintoff on 27 March 2018.

The action was instituted following a judicial letter which George Spiteri filed against the Club and Micallef to pay five bills of exchange. Micallef argued in his application that he signed the bills of exchange as President of the Football Club and not in his personal capacity, but the judicial letter asked for the bills to be executed against him personally and not the Club. He asked the Court to order the suspension of the enforcement of the bills of exchange in terms of Article 253(e) of the Code of Organisation and Civil Procedure.

Spiteri objected to this by replying that Micallef was jointly and severely liable with the Club, in terms of an agreement they had signed in December 2009. He further argued that there are no circumstances mentioned in Article 253 (e ) of the COCP, which reads:

“e) bills of exchange and promissory notes issued in terms of the Commercial Code:

Provided that the court which is competent according to the value of the bill of exchange or

promissory note may, by decree which shall not be subject to appeal, suspend the execution of such a bill of exchange or promissory note in whole or in part and with or without security, upon an application of the person opposing the execution of such bill of exchange or promissory note, to be filed within twenty days from the service of the judicial letter sent for the purpose of rendering the same bill of exchange or promissory note executable, on the grounds that the signature on the said bill of exchange or promissory note is not that of the said person or of his mandatory or where such person brings forward grave and valid reasons to oppose the said execution and in such case any person demanding the payment of the bill of exchange or promissory note shall file an action according to the provisions of the Commercial Code.

“The judicial letter referred to above in this proviso shall, under pain of nullity, notify the debtor of the right given to him by this proviso.”

Mr Justice Mintoff analysed the facts of the case. One of the main witnesses was Dr Chris Bonett, the Vice President of the Malta Football Association, who explained that every transfer of a player had to be registered with the MFA. On 21 October 2010, the parties signed an agreement for the transfer of Andrew Spiteri (George Spiteri’s son) to Marsaxlokk FC. The agreement was signed by the President, Secretary and Treasurer of he Club. The player was then registered in accordance to Regulation 46 of the MFA Statute. The issue was investigated by the MFA, since when Andrew Spiteri was to leave the Club to another Club, he was still not paid. However a document showing that he was paid had a falsified signature. The MFA had taken over the Club after it found it responsible for gross mismanagement.

Robert Micallef explained to the Court that he was President of Marsaxlokk FC between 2007 and 2011. He said that the agreement was in fact not registered, since there was no agreement with Spiteri’s previous club. He insisted that he obtained approval from the committee. This was collaborated by other members of the committee. He also insisted that he signed the bills of exchange on behalf of the Club. The Court commented that Micallef failed to explain that the agreement read that he was “jointly and in Solidum” with the Club. The agreement mentioned that he had to be paid four payments of €5,000 each. If the player was to be transferred to another Club, then Spiteri was to be paid upon transfer.

George Spiteri also testified. He insisted that Micallef was a surety for the Club since he was President. When his son came to leave the Club, Spiteri was still owed €14,800, which included arrears of his son’s wages. In all he was owed €45,000, which sum was covered by bills of exchange.

The Court then considered the legal issues that were at the centre of the case. The application was based on Article 253(e) of the COCP, which states that the holder of bills of exchange may serve a judicial letter on the debtor to make them enforceable. The debtor may object within 20 days and suspend execution of the bills of exchange if the debtor shows the court that he did not sign the bills or else there is a grave and valid reason.

According to a previous judgement 240 Contracting Limited v Marsaxlokk FC decided on 19 September 2013, held that grave and valid reasons cannot be increased, and the Court does not need to investigate the obligations from which the bills of exchange are derived. All the Court needs to investigate is whether there exist grave and valid reasons for the bills of exchange not be enforced. The fact that the bills of exchange were signed on behalf of the Club and not personally are grave and valid reasons and merits an investigation by the court. However, the Court pointed out that the bills of exchange were accompanied by an agreement, which showed that Micallef was a surety. Article 1002 of the Civil Code says that words used in an agreement do not need interpretation, once they are clear. This was held in a number of judgement.

Micallef held that the first bill of exchange dated 31 August 2010, while he was notified with the judicial letter on 28 October 2015 and therefore, was time barred according to Article 2156(f) of the COCP, which stipulated a five-year period. The Court agreed with Micallef and ordered that the first bill of exchange was not enforceable. However, the others are enforceable.

Dr Malcolm Mifsud is partner Mifsud & Mifsud Advocates