When a settlement is not full and final

A full and final settlement may not necessarily be so and depends on the circumstances of the case. This was decided by Mr Justice Mark Chetcuti in Maria Stella Calleja -v- Brian Degiorgio on 5 October, 2016. 

Maria Stella Calleja filed an application explaining that the defendant, Degiorgio, signed two private writings on 6 February, 2007, binding himself to compensate the plaintiff for services rendered. Payment was never made, although in 2013 a cheque was drawn in the plaintiff’s favour, which cheque was never honoured. Calleja asked the Court to order Degiorgio to honour her commitment.

The defendant rebutted this claim by saying that this issue was settled in March 2012 and what had to be paid was in fact paid.

Mr Justice Chetcuti looked into the evidence produced by the parties. In March 2007, the defendant signed that he owed the plaintiff €58,234. The plaintiff was co-owner of a property that the defendant wanted to purchase. The plaintiff promised the defendant that she would render a service, in that he would be in a position to purchase all the shares in the property if he paid her €58,234. The plaintiff’s family did not own all the shares in this particular property and therefore, had to negotiate with all the co-owners. The purchase of the property took place in February 2011.

The plaintiff held that the defendant did not have the money to pay what was agreed on in 2007 and the defendant asked for an extension of six months to two years to pay with interest of 4%. There is no copy of this agreement, because the defendant kept it. However, a cheque dated 1 March, 2013, for the amount due was given on 1 March, 2012 through which the defendant paid €2,340 in cash, representing interest. She was presented with a printed document which she signed for receiving the interest. The sum was deposited in a bank account. Again this document was kept by the defendant, Degiorgio. The same payment was made in March 2013, but this time no money was deposited in the bank. The capital was not paid and he asked her for a further extension of two months, since he wanted to sell a property. She took the cheque for €58,234 to the bank, but it could not be cashed.

The defendant explained that when he was to purchase the property in 2011, he asked the plaintiff for some time to pay her. She asked for a post-dated cheque, which he gave unsigned. He argued that the private writing in fact guaranteed payment. On 1 March, 2012, he paid her €58,234 in cash. €50,000 were borrowed from a certain Darren Grima and the balance he had paid. He claimed that the plaintiff tore up the previous private writings since a new one was signed. She asked to write down a different figure, since she did not want to disclose how much she earned from this transaction. This last private writing was one that held that the payment made was in full and final settlement. She did not return the post-dated cheque. After a while the plaintiff asked for a further €15,000 to pay off tenants in order for the property to be developed. He denied that he only paid the interest of 4%. Darren Grima confirmed that he gave Degiorgio €50,000 in cash.

The Court held that there are two contradictory versions and as held in Mercurcy Investments Limited -v- Roberta Grech decided on 21 April, 2016, the evidence does not need to reach the level of being beyond reasonable doubt.

Not every contradictory evidence would leave the Court in a position that it cannot decide, but the Court may be convinced by one version not another and the reasons should be well motivated in its judgement.

In this particular case the defendant only produced as his evidence the private writing of 1 March, 2012, where he had paid €2,330 as full and final settlement. However, the 2011 agreement imposed a 4% interest until the capital would have been paid on 1 March, 2013, as per cheque which was handed to her. The sum of €2,340 corresponds to the interest due.

The Court was not impressed with what the defendant had to explain. The plaintiff was unaccompanied and the document was kept by the defendant. The Court was not convinced with the version he gave, that a different figure was written, in order for her to hide the actual sum paid, since she had kept the cheque and the payment of €2,340 matches the interest due. The Court could neither decide that this last private written was a settlement as provided in Article 1718 of the Civil Code.

Regarding the cash payment of €50,000, the Court held that there was no proof of how Darren Grima had withdrawn this amount. Grima testified that he was unaware of the true reason of this loan, but it was repaid in August of 2012. However, there is no evidence that this money was in fact used to repay the plaintiff. 

The Court pointed out that the private writing was written in English and the plaintiff does understand English. She asked the defendant to assure her that this was a receipt for the interest, which he did and she therefore signed it. 

The Court quoted William Bugeja v Stephen Carter, decided on 28 March, 2008, saying a full and final settlement declaration does not mean that one cannot claim the balance of a claim due. One would have to examine the individual cases. In this particular case, the version of the plaintiff is more truthful and therefore, the court ordered that the defendant pay the plaintiff €58,240.

Malcolm Mifsud, Partner, Mifsud & Mifsud Advocates