Court keeps garnishee order intact

This was decided by Mr Justice Joseph R. Micallef on 13 August, 2015 in Av. John Refalo as special mandatory of the foreign company Jiaxing Stone Industries Limited -v- Calibre Consultants Limited and Steel Eagle Commerce Limited. 

The application for the removal of the garnishee order was filed by Steel Eagle Limited which also asked the court to penalise the foreign company for filing the warrant, as provided in Article 836(8)(b) and (d) of the Code of Organisation and Civil Procedure.

According to the facts of the case the warrant was issued following a claim for €146,308.72 following a sale of goods. Money was taken from the defendants’ accounts and deposited in court. 

The court pointed out that since one defendant had filed an application for the revocation of the warrant, the other defendant cannot benefit from this application and therefore, if the request was upheld then this would only be in regard to Steel Eagle and not Calibre Consultants.

The court then moved on to deal with each of the grounds which were submitted by the defendant company to revoke the warrant. The first was that the amount claimed was prima facie not justified or excessive. Steel Eagle held that it had nothing to do with the claim which the foreign company was making and it had no judicial relationship with it.

The applicant of the warrant argued that this was not the case and that this was to be decided by the court which would decide the merits of the case and not as this stage. The court agreed with this argument since it is the court which is dealing with the merits of the case that will declare whether the Maltese courts have jurisdiction or whether the defendant party should be a party to this action.

In order to revoke a precautionary warrant on this ground the court must examine whether on the face of it there is a basis for a claim and whether this claim brings about its liquidation. Then in order to prove that the amount mentioned in the garnishee order is excessive, it has to be shown that the claim is less. This difference has to be shown to be obvious and that common sense would dictate that the real claim is less than that sought in the warrant. This is not the case in the present case and therefore, the court dismissed the request to revoke the garnishee order.

With regard to the request to revoke the warrant on the ground that this is justified, Mr Justice Micallef held that even if the court which will decide the merits of the case, finds the claim to be not valid at law, this does not mean that the garnishee order is not justified. The validity of the garnishee order does not depend on the final outcome of the case. This ground for revocation was also turned down.

Finally the court dealt with the request to impose a penalty for issuing this garnishee order. This is within the court’s discretion, and may be imposed if any of the circumstances mentioned in Article 826(8) of the Code of Organisation and Civil Procedure. One of these circumstances is if the alleged debtor were to receive a request of payment 15 days before the warrant is filed. The Court pointed out that there is no need of a formal request, such as a judicial letter or a court case. Even a verbal request is sufficient. The applicant in this case did not show the court why it should impose a penalty. Neither did the applicant show that the garnishee order was frivolous and vexatious.

Malcolm Mifsud, Partner, Mifsud & Mifsud Advocates