Company can contest suit filed against it by a director

The Court of Appeal on Friday upheld a request by a company to contest a case that had been filed against it by one of its directors.

This judgment was delivered in a case filed by Joseph and Victoria Borg against Agrotec Industries Limited.

The company had appealed from the judgment of the First Hall of the Civil Court to the Court of Appeal, composed of Chief Justice Vincent Degaetano, Mr Justice Albert J. Magri and Mr Justice Tonio Mallia.

On appeal, the court heard that the Borg couple had filed a writ before the first court claiming that they had signed a promise of sale agreement with the company to purchase a plot of land in Gzira.

The agreement was extended a number of times, and in September 2004, the Borg couple filed a writ against the company in which they requested the court to order the company to sell them the property.

The first court had found in favour of the Borg couple after noting that their claim had not been contested by Agrotec. The company then appealed to the Court of Appeal. Agrotec claimed that it had not been correctly served with the writ before the first court and it was for this reason that it wished to contest the case on appeal.

The Court of Appeal noted that the shareholders of the company were Mr Borg and his partner Ferdinand Grech. It further resulted that when the Borg couple's writ was supposed to have been served on the company, it had in fact been served on Mr Borg. The first court had not accepted the validity of this service, and the writ had once again to be served on the company.

When issued a second time, the writ was served on a certain Simon Balzan, who was not an official of Agrotec and who had not passed on the writ to the company's director Mr Grech. It further resulted that Mr Balzan was Mr Borg's son-in-law.

The Court of Appeal declared that the manner in which the Borg couple had dealt with the service on the company was wrong, abusive and aimed at ensuring that their writ was not contested by Agrotec.

The court further added that the original writ had not been properly issued against the company. According to the company's statute, the company was supposed to have two directors.

At the time the Borg couple's writ was issued, there was only one director. Consequently, the writ ought to have been filed against curators to represent the company's interests.

In conclusion the court upheld Agrotec's appeal and revoked the judgment delivered by the first court.