Company blocks transfer of licence to competitor

The First Hall of the Civil Court upheld a warrant of prohibitory injunction requested by one company against another, since it proved that it had all the legal requisites to block the transfer of a pharmacy licence it was to purchase. This was decided in Labomed Limited -v- Superintendent of Public Health on 15 September, 2016 by Mr Justice Silvio Meli. 

In an application Labomed Ltd explained to the court that it had been in discussions with Catherine Mifsud, since January 2016 to receive the transfer of a licence of a pharmacy in Mosta. These discussions continued into July when the company and Mifsud signed a preliminary agreement, where she bound herself to transfer the licence for a price. The agreement also mentioned that the company would purchase the stock and equipment at the pharmacy.

The payment had to be effected when the deed was drawn up by the notary and signed by the parties. However, after this preliminary agreement Mifsud sent an sms that she was no longer interested in selling to the company. Mifsud had entered into another agreement with the company’s competitor, Brown’s Pharma Limited, which would purchase the licence at a better price. This was on condition that the Superintendent of Public Health would accept that the transfer of the licence takes place. In fact the application was submitted on 2 August, 2016. Labomed Ltd informed the Court that further legal action was being taken against Mifsud, but it needed to block the transfer first.

The Department of Public Health disagreed that the process to transfer the licence should be halted and argued that in the process the applicant company was not a party. The department further pleaded that the company does not have any legal right to protect and that the department has a legal obligation to process such applications.

Mr Justice Meli explained that the procedure to issue a warrant of prohibitory injunction is laid down in Article 873 of the Code of Organisation and Civil Procedure. As laid down in Sammut v Sammut, decided on 5 June, 2003, the applicant must prove prima facie that it has a right to protect and that if it is not protected, it will suffer a prejudice. These two elements must both exist. From the Court’s point of view it must be objective and also give a strict interpretation to what is asked for, since the warrant of prohibitory injunction is of an exceptional nature. The Court must not enter into the merits of the case, in that if the warrant is accepted, it should not reflect the outcome of the lawsuit. 

In this particular case, the Court pointed out that there was a preliminary agreement between the applicant company and Mifsud, but it seems that Mifsud negotiated the same licence with another company. If the licence is in fact transferred then Labomed would suffer a prejudice and such prejudice is real, which permits protection by the courts. 

The Court then moved to accept that the mandate be issued permanently.

Malcolm Mifsud, Partner, Mifsud & Mifsud Advocates