The Court of Appeal, composed of Chief Justice Silvio Camilleri, Mr Justice Joseph A. Filletti and Mr Justice Geoffrey Valenzia, in the case Malta Industrial Parks Ltd vs KA.DO.CO. (Gozo) Co. Ltd, on January 31, 2011, held, among other things, that it was not a sufficient and good reason for a defendant to claim that he was overworked and had no time to prepare his statement of defence within the 20-day time limit.
The facts in this case were as follows.
In this case the Magistrates (Gozo) had to consider the company whether KA.D0.CO (Gozo) Ltd had good reason for not filing its statement of defence within the 20 days’ time limit from the date it was notified of the lawsuit.
By these proceedings, the company Malta Industrial Parks Ltd claimed that KA.DO.CO (Gozo) Co. Ltd violated several conditions under the contract dated April 24, 2000, in the acts of Notary E. Dimech, whereby it was granted the ċens of a factory. It was stated that:
• KA.DO.CO. (Gozo) failed to pay the ground rent (ċens) from April 24, 2004;
• That it did not employ persons, as legally obliged according to the contract;
• That it passed possession of the factory to third parties;
• And that it did not insure the property and nor did it obtain the necessary permits and licences.
Articles 158 (10) of Chapter 12 of the laws of Malta provides:
“If the defendant makes default in filing the sworn reply mentioned in this article, the court shall give judgment as if the defendant failed to appear to the summons, unless he shows to the satisfaction of the court a reasonable excuse for his default in filing the sworn reply within the prescribed time. The court shall, however, before giving judgement allow the defendant a short time which may not be extended within which to make submissions in writing to defend himself against the claims of the plaintiff. Such submissions shall be served on the plaintiff who shall be given a short time within which to reply.”
It results that on June 10, 2010, the acts of the case were notified personally upon Joseph Bonnici, who was the sole director of KA.DO.CO (Gozo) Co. Ltd. According to the notes of the Marshall, it appeared that Mr Bonnici was given two sets of judicial acts. He kept one copy and passed the other copy to J. Galea, the secretary of the company. Mr Bonnici, who was in charge of managing the business of the company, had to consult with the company lawyer in order to prepare its defence.
On July 1, 2010, Mr Bonnici met the company lawyer, who prepared a reply within the same day. It was admitted that the company was bound to pay €4,061 arrears in ċens, though apparently it had never received notice to pay.
The court noted that it was evident that for some reason Mr Bonnici did not bother to meet his lawyer before the expiry of the 20-day time limit.
From the documents, it was clear that the written statement of defence had to be filed within 20 days from notice, and that the defendant had to take advice from a lawyer without delay.
The court of Magistrates (Gozo) was of the opinion that Mr Bonnici had sufficient time to prepare the statement of defence. It was no excuse that he had delegated this task to a third party nor that he happened to be under immense pressure at work.
On June 23, 2010, Mr Bonnici was notified of the lawsuit.
After noticing that Mr Galea had not done anything, he should have made an appointment with his lawyer. He was well aware of the case, and that Malta Industrial Parks Ltd had taken action to recover the factory. Even if its statement of defence was filed only one day after the lapse of the time limit, the court had no doubt that Mr Bonnici and Mr Galea were negligent.
It held that they failed to observe the time limits which commenced from the day of notice, that is on June 10, 2010. The fact that Mr Galea was very busy was not a good enough reason to justify the contumacy, pointed out the court
It was not shown that the company could not have contacted their lawyer well before the expiry of the time limit. The court was not satisfied that the company had good reason for failing to file its defence on time.
The decision of the court was given against KA.DO.CO (Gozo) on July 7, 2010.
It held that negligence did not justify contumacy. Case law was clear, and left no uncertainty. This did not mean, however, that Malta Industrial Parks Ltd, as plaintiff, need not produce evidence in support of its claims. Contumacy was not deemed to be an admission. In addition, after the lapse of the period for hearing evidence, the court could fix the term wherein a defendant could make written submission in terms of article 158 (10) of Chapter 12 of the Laws of Malta.
Aggrieved by the decision of the first court, the company KA.DO.CO (Gozo) Co. Ltd entered an appeal calling for this revocation.
The company reiterated the argument that it had good and sufficient reason for not filing its statement of defence within the legal time limit.
It said that the Court of Magistrates (Gozo) did not consider all the circumstances of the case and the case law on contumacy. It submitted on appeal that:
1. There was no contempt or disrespect;
2. That it had clearly indicated its intentions to contest the lawsuit;
3. Its failure was excusable in the light of certain emergencies;
4. It should be given the benefit to reply;
5. Recent case law was more liberal, and was largely influenced by the principle of fair hearing;
6. There was no contumacy in the circumstance.
The Malta Industrial Parks Ltd in reply, claimed that the appeal was null, as it was filed “fuori termine”. The decision of the Court of Magistrates was an “interlocutory decree” and not a judgment and in this respect, the period to appeal was shorter.
It maintained, in addition that the decree of the Court of First Instance to be correct, meriting confirmation, as there was no good reason to justify the contumacy of KA.DO.CO Gozo Co. Ltd.
On January 31, 2010, the Court of Appeal gave judgment by dismissing the appeal and by confirming the decree of the Magistrates Court (Gozo). The following reasons were given for the court’s decision:
Nullity of the appeal: The decision of the Magistrates Court was not a judgment. It did not decide the merits of the case, in fact, the court had not even started to hear the evidence on the merits.
Article 229 (b) of Chapter 12, provides:
“The period for appeal from a decree before a definitive judgment shall be six days from the date on which the decree is read out in open court: Provided that in the case contemplated in sub-articles (3) and (4) such term for appeal shall run from the day on which the decrees in terms of sub-article (5) are read out in open court.”
The company was authorised to appeal but took 15 days to lodge an appeal. In this respect, the court said that the appeal was presented “fuori termine”; that it was irregular and null.
Notwithstanding this procedural defect, the court still considered the appeal and gave its reasons why it should be rejected. It noted that the principal reason for defendants’ contumacy was that its director was overworked. The court was, however, convinced that this was not a sufficient reason to justify contumacy.
For there to be contempt and disrespect towards the court, it was not necessary to show defiance. It was enough if it was shown that the defendant had every opportunity to file a statement of defence, but for reasons imputable to him, he still failed to file his defence. It was no excuse to plead that a person was very busy on that he appointed another to handle it.
The court said that over the years, measures were taken to relax the rigidity of procedures. The period of time was extended to 20 days from the date of notice, and that in any event, a party was free to file submission after the closure of the period for hearing evidence.
The principle was that a person in contumacy was to be deemed to oppose the claims of plaintiff. As the procedures have been relaxed, no one was entitled to make incorrect use of these procedures and avoid the consequences.
Once a defendant had 20 days instead of eight to 10 days to contest, he could not expect to be justified by pleading that he did not have enough time to reply within the period stipulated ex lege.
If he delegated this task to a third party who was also negligent, he had no excuses, as this was a self- inflicted incapacity.
If he wished to protect his interests, he should have acted more carefully and should have replied on time. Nor could the court understand why the company needed more than 20 days to prepare its defence.
If the director wished to appoint somebody to complete this task, it was up to him to select a person who was responsible. The fact that this third person did not find a person was not acceptable.
The institute of contumacy was there for a good reason, in order to instil discipline in the way a case was heard and to avoid a state of uncertainty, confusion and chaos.
As KA.DO.CO (Gozo) Co. Ltd was notified in three places, the 20-day period commenced to run from the date of the first valid service, and not from the date of the last notice.
The Court of Appeal concluded that the appeal which was filed “fuori termine” was both unfounded and null and should be dismissed.
Dr Grech Orr is a partner at Ganado & Associates.