The First Hall of the Civil Court, on October 10, 2016, in a case involving HSBC Bank Malta plc and a separated couple, held, among other things, that there was no legal requirement to file a judicial letter before presenting a lawsuit. The lack of a valid judicial letter only affected the commencement of interests.

Spouses ‘A’ and ‘B’ borrowed a sum of money from HSBC under a personal term loan agreement dated August 19, 2010, to finance the purchase of a new car, and owed the bank €24,423.

The bank requested payment on November 17, 2011, and July 27, 2012, but did not receive payment.

Faced with this situation, HSBC proceeded to file legal proceedings to recover the outstanding amount, with legal interests from June 19, 2015, until the date of payment. It asked the court to declare both defendants jointly and severally liable and to condemn both to pay the bank €24,434 with interests.

In reply, ‘B’ contested the bank’s legal action.

She submitted that HSBC’s judicial letter was null as it was incorrectly presented before the Court of Magistrates (Malta), as the amount was in excess of €11,646 and that accordingly, the bank’s legal action was also invalid.

She said that the bank’s legal action was null and void once they had not been notified of the judicial letter.

‘B’ in addition pleaded that she was an English national and although she resided in Malta, she did not understand the Maltese language. She said that she had not been served with an English translation even though she had informed the bank.

She disputed being responsible for the bank loan. Under the contract of separation with her husband, he assumed full responsibility for this debt, she pleaded.

According to clause 6 of the Flexi Credit loan, both defendants ‘A’ and ‘B’ were obliged on a joint and several basis

‘B’ also maintained that the bank’s legal action was premature and vexatious, as they were still in negotiation with HSBC on the conditions for repayment when allegedly the bank without any advance notice proceeded to file this legal action.

The court noted that ‘A’ was contumacious and failed to present any submissions in terms of article 158(10) of chapter 12.

The court accordingly considered ‘B’s submissions:

Judicial letter filed before the incorrect court: The court made reference to article 789(10(b) of chapter 12 which states that the plea of nullity of judicial acts was admissible if it was given by an incompetent court. There were, however, a number of legal provisions which mitigated the consequences.

Under article 2129 of the Civil Code, prescription was not affected even if a judicial act was filed before the incompetent court.

Prescription still ran even if the name of defendant company was stated incorrectly or if by mistake payment was requested for settlement of a ‘levy’ rather than a ‘duty’: ‘Enemalta Corp v Elbros Construction Ltd’ dated November 19, 2004, (PA) and ‘Comptroller of Customs v John G. Hayes’ dated January 28, 2006 (PA).

Interests: Under article 1141 of the Civil Code, interest commenced from the date of the judicial letter. In this case once the judicial letter was filed before the incorrect court, interest did not commence to accumulate, pointed out the court.

The court was, however, of the opinion that once the judicial letter had been notified, it was still effective as a notice to the debtor to pay the debt, as if they had been sent extra-judicially.

Invalidity of legal action: ‘B’ pleaded that the bank’s legal action was null once the bank had failed to serve a valid judicial letter.

The court disagreed. Defendants were notified of the judicial act even if it was not valid. There was no legal requirement of having to file a judicial letter before presenting a lawsuit. Nor did the failure to file a judicial letter invalidate a lawsuit.

Notifications of judicial letter: The court rejected ‘B’’s fourth and fifth pleas once they did receive the judicial letter and in fact they went to negotiate with the bank.

English translation: Reference was made to the judicial proceedings (use of the English language) chapter 189, article 5(1) and (2) provide:

(1) Where any act is to be served on any person whom the registrar has reason to believe to be English-speaking, the registrar shall provide a translation thereof to be made into the English language by an officer of the registry and service shall be effected by delivering a copy of the original and its translation.

(2)  If, for any cause whatsoever, the translation into English of any such act is not served on an English-speaking person, such person may make in the registry, or forward to the registrar, in any manner, a declaration to the effect that he is an English-speaking-person and apply for an English translation of the act served on him.

The duty to send an English translation did not rest with plaintiff but on the Registrar of Courts. The person in receipt of the judicial act was entitled to request a translation. In this case, ‘B’ did not ask for a translation and instead proceeded to file a sworn reply and filed a note of submissions in the Maltese language.

Besides, a judicial act was not invalidated if there was a breach of this provision. In this respect, the court dismissed ‘B’’s plea.

Contract of separation: The court said that a contract was only binding between the parties and did not prejudice third parties. The court said that the contract could never prejudice the bank. The bank had not consented to the contract of separation nor was it a party to it.

According to clause 6 of the Flexi Credit loan, both defendants ‘A’ and ‘B’ were obliged on a joint and several basis. The court noted that the bank took legal action only after all negotiations had failed. It did not give any prior notification as it had already served a judicial letter against them.

For these reasons, on October 10, 2016, the First Hall of the Civil Court gave judgment by accepting limitedly ‘B’s’ second plea as regards the date when interest commenced to run and dismissed her other defence pleas.

It accepted all the bank’s requests except for the date when interest commenced to run. Interest commenced only from the date of this court decision.

Dr Karl Grech Orr is a partner at  Ganado Advocates.

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