Court dismisses writs by wives of Priceclub directors

The First Hall of the Civil Court yesterday dismissed writs filed by the wives of two former directors and a financial controller of Price Club Operators Ltd for the annulment of credit application forms signed by their husbands.

Mr Justice Tonio Mallia delivered the judgments in the cases filed by Claudette Gauci, Domenica Fino and Angela Demarco.

Plaintiffs had filed their writs against Chris Gauci, Wallace Fino, David Demarco, Price Club Operators Ltd, Paolo Bonnici Ltd, George Borg Ltd and Anthony Farrugia Co Ltd.

The women submitted that certain creditors of Price Club Operators Ltd were making claims against their husbands on the basis of credit application forms. In terms of these forms, the men had given a personal undertaking to make good for the debts of Price Club Operators Ltd.

Plaintiffs claimed that at the time of the signing of the credit application forms their marriages were subject to the laws regulating the community of acquests and that, therefore, their signatures had been required in order for the guarantees given to be valid.

The women declared that they had not consented to the signing of the forms and that, therefore, the credit application forms signed by their husbands could be declared null.

The court was requested to declare that the personal undertakings on the part of the husbands to make good for the debts of Price Club Operators Ltd were null and could not take effect on the community of acquests.

The creditor companies, defendants to the suits, pleaded that the signing of the credit application form constituted a normal act of trade and thus affected the community of acquests.

Furthermore, the consent of the wives was not required at law.

In yesterday's judgments the court pointed out that Chris Gauci and Wallace Fino were directors of Price Club Operators Ltd while David Demarco was also involved in the company's business as its financial controller. Price Club had been given certain credit facilities as it used to buy in bulk from local wholesalers.

The men had then assumed personal responsibility for payment of the outstanding amounts owed by the company.

None of their wives had signed the agreements, even though the community of acquests existed with respect of their marriages.

When Price Club Operators Ltd found itself in financial difficulties, the creditors had sued the company, the signatories to the credit application forms and also their wives and it was then that the wives had taken legal action to annul the application forms.

According to law, any contract for the provision of a guarantee had to be signed by both spouses together and the spouse who did not consent to the giving of a guarantee was entitled to annul the guarantee provided the action was brought within the legal time limit.

With regard to Demarco's writ, the court noted that one could not conclude that the signing of the credit application form by her husband was a contract in the normal course of his business, for Demarco was not a director of the company but worked as its financial controller.

With reference to the writs filed by Gauci and Fino, the court noted that the guarantees signed by their husbands affected both immovable and movable property forming part of the community of acquests.

If Gauci and Fino were correct in their submissions, this did not necessarily bring about the nullity of the guarantees for the obligation undertaken by their husbands could be classified as a paraphernal debt and could not be enforced against property of the community of acquests.

Although the law stipulated that the granting of a personal guarantee was an act of extraordinary administration, and therefore liable to attack by the spouse who did not sign, the law also provided that such acts did not require the consent of the other spouse when it was a normal act in the running of a business.

The granting of credit facilities was now, normally in the course of business, accompanied by a personal guarantee by the debtor and the signing of the guarantees by Gauci and Fino was therefore a normal act of business and not liable to attack on the grounds of nullity by their spouses.

It further resulted that Gauci and Fino had terminated the system of community of acquests with their husbands.

However, as the termination took place after the debts were created, the rights of the creditors could not be prejudiced.

Mr Justice Tonio Mallia therefore dismissed the writs filed by Gauci and Fino.

However, when referring to Demarco's writ, the court noted that David Demarco was not the owner of the business, nor was he a director. It could not therefore be said that the signing of the guarantee was a normal act of administration of his business.

The court therefore declared, while dismissing Demarco's writ, that the rights of any of her husband's creditors (in terms of the credit application form he had signed) could only be exercised against his personal property which was not part of the community of acquests.