A new legal notice which obliges the pitkala traders to fork out 10 per cent of their annual turnover misunderstands the very nature of their role as middlemen between the farmer and the buyer, a lawyer told a court this morning.

Lawyer Edward Gatt said the legal notice risked eradicating the traditional pitkala middlemen, that had been around for entire generations, by changing their role completely.

It overlooked the fact that the pitkala were paid an eight per cent commission on the money earned by the farmer, after helping get the best price for the sale of the fruit and vegetables.

Therefore it did not make sense that the new legal notice asked them to fork out 10 per cent of the earnings "from the sale of agricultural produce". The key element, he said, was that they did not actually sell the produce.

Dr Gatt was making legal submissions, before Mr Justice Joseph R Micallef, on behalf of 10 pitkala who are calling on the court to stop the introduction of hefty bank guarantees. Last week the court issued a temporary injunction blocking it and a final decision is soon expected.

The traders are arguing that the excessive bank guarantees imposed by Agriculture Parliamentary Secretary Roderick Galdes risked driving some of them out of business.

According to a legal notice issued in January, the pitkala have to make a bank guarantee equivalent to 10 per cent of the turnover registered the previous year from the sales of agricultural produce.

Dr Gatt said the turnover of the pitkala was not the turnover of the farmer. The 10 per cent should have been calculated on the eight per cent commission and not on the sales.

"They could lose their livelihoods, that of their families and their employees," he said adding that this would also negatively impact the farmers.

Paul Bonello testified that he had been working in the pitkala for over 30 years and the job was in his family for at least three generations. There were about 16 pitkala in total.

He said that their business was not based on contacts but built on trust with farmers. The pitkala auctioned the produce for the best price and retained eight per cent commission.

The money would be deposited at APS bank by the buyer, through a voucher system, and divided at the end of each month.

In November government called a meeting for pitkala, for which he was not present, and informed them they would have to start collecting the money themselves, instead of the bank. Some time later they received a letter informing them about the bank guarantee.

Mr Bonello said he had asked the farmers he worked with to sign a petition objecting to the legal notice. Other pitkala did the same and the petitions were exhibited in court.

Mario Spiteri, from the agriculture directorate, said the pitakal was the middleman between the farmer and the buyer. Before this system came into force, the pitkala did not handle any money. There was a government agreement, that expired in 2012, that involved APS handling the money.

There were times when money was not deposited and the bank acted as a guarantor and paid the farmer. Sometimes the undeposited amounts reached €100,000.

Since the expiry of the agreement with APS, government could be exposed to risk so the guarantee was needed.

Dr Spiteri said meetings had taken place with pitkala and some even gave their suggestions. Eight had agreed to pay the guarantee that would be deposited in a bank and handled by the directorate.

Lawyer Abigail Caruana, representing the directorate, insisted that the guarantee was a necessary safeguard. She insisted that, contrary to what Dr Gatt said, according to law the pitkala were sellers.