A hint of acceptance of a debt interrupts prescription

If a debtor hints that he will pay in the future, this is sufficient to interrupt prescription. This was held in a judgment delivered by Madame Justice Jacqueline Padovani Grima on 22 January 2018 in V&C Contractors Limited -v- Tlata Limited.

In their application V&C held that it is owed €49996.15 by Tlata Limited, which is a balance of a current account between the two companies and therefore, asked the court to order the defendant company to pay up.

Tlata filed a statement in defence claiming that the action is time barred in accordance to Article 2149(a) of the Civil Code and that it does not owe any money to V&C.

The Court analysed the evidence brought before it. Starting, Kevin Callus, company secretary of the plaintiff company, said that one of his duties is to issue the invoices. The company had taken some building material from the defendant company and rented equipment from it. They then carried out excavation works for the defendant company and therefore, had a set-off system between the two. In 2011 Callus reconciled the accounts and found that his company was owed money. He explained that €29,565.51 is the balance following the set-off and a further €20,000 represents VAT. He also said that a certain Paul of Tlata always said that they will pay. He denied refusing to issue fiscal receipts and explained that they first have to be paid.

This was corroborated by Vincent Board, the director of V&C. He also explained how he rang Paul Falzon of Tlata asking for the money. Falzon accepted to pay, however, he said that the bills were at his accountant.

Paul Falzon explained that his company acts as subcontractors to other companies and when they cannot cope with the assignments, they engage other companies. This is what happened with V&C. There was a dispute on some bills until an agreement on how the work was to be charged. He testified that the plaintiff company refused to issue VAT receipts and lost €16,000 in expenses on which it could have claimed the VAT back.

The Court then analysed the legal issues. In a previous judgment Benny Camilleri -v- Ian Schembri et decided on 16 December 2002, it was held that when the debtor says that an arrangement will be made (jghidli li se jirrangaw”), then one would be justified to understand that payment will be made.  In another judgement Patrick Staines noe -v- Charles Falzon et noe decided on 3 October 2002, when the debtor admits that payment is due, then he renounces from the plea of prescription. In this particular case, although the defendant company claims that no money is due, in actual fact, Paul Falzon did concede that money is due. The court then rejected the plea of prescription.

The Court made its calculations on what is due and listed the amounts which were being contested. The Court quoted from a previous judgment Carmelo Farrugia -v- Rokko Farrugia decided on 24 November 1966, which discussed the conflict of evidence. Not all conflicts should leave the court perplexed. The Court should analyse in detail the evidence and see which version is more credible than the other. It is not for the judge to believe the explanation, but whether the explanation is plausible. In choosing which of the conflicting evidence is to believed, the judge would have to see whether any was corroborated by other facts.

The Court pointed out that the plaintiff company presented copies of invoices, which were the balance following a setting-off process. In the meantime, the defendant company explained where it did not agree with the amounts the plaintiff company was claiming. This was not contradicted by V&C. The Court pointed out that an invoice was in actual fact due to another company. The Court felt that the plaintiff company did not sufficiently prove its case, while the defendant company presented a credible version, which contradicted the plaintiff company’s version of events. On the other and it was proved that the defendant company did owe VAT amounts and the court ordered it to pay V&C €20530.71, but upheld the pleas for the other amounts.

Dr Malcolm Mifsud

Partner

Mifsud & Mifsud Advocates