An agreement must be kept, come what may

The Court of Appeal, presided by Mr Justice Anthony Ellul, ruled that an agreement of payment should be honoured, even if the services rendered were not totally satisfactory. The judgement was delivered on 22 September, 2017 in Chris Tonna v James Borg and Stefan Borg.

Tonna had filed an action against Chris and James Borg for €1,602 for professional services he had rendered as an accountant.

The defendants presented a statement of defence, in which they claimed that the services rendered were not up to standard and caused them damages.

The Small Claims Tribunal had turned down the claim in a decision delivered on 19 October, 2016.

According to the records of the case the Borgs had had an import business since 2005 and had used the services of Chris Tonna as their accountant. Tonna used to issue invoices that the Borgs paid regularly. The two parties concluded their commercial relationship in 2012, however there existed an outstanding balance of €1,602.

The defendants raised a plea that would have rendered the appeal null and void, since they argued that when the first judgement was delivered Tonna did not indicate that he would like to appeal in terms of Articles 9 (2) of the Small Claims Tribunal Act. The Court of Appeal disagreed with this and quoted from GO plc v Josephine Cachia, decided on 8 July, 2016. In that judgement, the Court had held that the law does not state that the lack of such an indication was testament to annulment of an appeal.

Another plea presented criticised the Tribunal for not giving reasons for its judgement. Again the Court of Appeal quoted from a judgement, this time from AIL Ltd v Malta Transport Authority of 29 January, 2016, which had held that the list of reasons outlined in a judgment is an administrative requirement and does not need to be detailed. In this particular case the Tribunal had motivated the judgement and had commented on the work the accountant had performed. This plea was also turned down.

With regard to the merits of the case, the Court of Appeal held that it would change how the Tribunal considered the evidence, only for very serious reasons. Tonna criticised the Tribunal for concluding wrongly that VAT returns presented with errors, were his fault and the Tribunal was wrong to conclude that the Borgs suffered some sort of damage.

Mr Justice Ellul considered that the sum claimed was for professional services which included fees for meetings, correspondence with the VAT department and preparation of tax advice and drafting of accounts.

The Borgs justified their payment refusal on the ground that Tonna was not professional, following over-declarations that had been made in VAT returns. On concluding their relationship Tonna passed on a USB stick with documents pertaining only to 2012, but documents from 2005 to 2011 were never passed on. 

The Borgs pointed out that in 2011, the accountant had prepared VAT returns which later transpired that the Borgs paid €21,000 more than they should have and therefore paid interest on their overdraft. James Borg testified that he passed details to Chris Tonna, who prepared the returns which he signed. Tonna did not agree that the overstatement was his fault since they were based on the sales the client passed on to him.

The Court pointed out that the parties agreed in January 2013, that Tonna was to receive €5,440 as full settlement of his fees. The Borgs held that this was to be paid as long as all documents were passed on to them. They argued that not all the documents were forwarded. Payment was made, however, leaving a balance of €1,602, but this reason was given only recently and therefore constituted an excuse which was not considered as plausible. There is no evidence of other claims such as investigations from the VAT department.

The Court pointed out that once an agreement was reached that Tonna was to be paid €5,440, then that agreement must be honoured. The Court declared that it did not agree with the Tribunal’s conclusions and overturned the judgement by awarding payment of €1,602 to plaintiff Chris Tonna.

Dr Malcolm Mifsud, Partner, Mifsud & Mifsud Advocates