The First Hall of the Civil Court, presided over by Madame Justice Jacqueline Padovani Grima, on January 14, 2016, in the case ‘Page Ltd v Leonardo SRL’ held, among other things, that a person who acted as mandatary of a foreign company was not automatically its commercial agent in Malta.

The company Page Ltd assisted the Italian Company Leonardo SRL to submit a tender entitled Services of Project and Construction Management (including services of quantity surveying and services of health and safety) GHRC 03/2011 FSE, pursuant to an agency agreement dated September 16, 2011, with the assistance of Page Ltd.

Leonardo SRL was successful and a contract was signed with Grand Harbour Regeneration Corporation. Page Ltd claimed its three per cent commission (€3,000) due under the Agency Agreement. Leonardo refused to pay and Page Ltd proceeded by filing legal proceedings requesting the court:

• To liquidate the amount due to it under the agency agreement;

• To condemn Leonardo SRL to pay this amount;

• To declare that Leonardo SRL was obliged to pay its €3,000 and to condemn Leonardo accordingly, together with legal costs; and

• To order Leonardo SRL to provide them with all relevant documents, including all invoices and receipts under the agency agreement.

In reply, Leonardo SRL contested the legal proceedings against it. It raised the plea that the agency agreement was null and void as the activity of a commercial agent could only be carried out by someone who was registered in terms of article 71(1) of the Commercial Code and that the acts of Page Ltd were unlawful under article 73 of the Commercial Code.

As regards the merits, it disputed its right for payment and said that its claims were unfounded in fact and at law and should be dismissed.

The First Hall of the Civil Court considered that according to the Commercial Code, a person had to apply with the Chamber of Commerce in order to act as a commercial agent and be accepted bythe Chamber.

It resulted that Page Ltd was not registered as a commercial agent according to the database of the Chamber, nor did Page Ltd ever apply with the Chamber as a commercial agent.

Page Ltd, on the other hand, maintained that the agency was more akin to a mandate for purposes of submitting a tender.

It denied acting as a commercial agent. It said that it was never appointed as a commercial agent and acted limitedly as a mandatory of Leonardo SRL in connection with the tender .

Allegedly, the argument regarding the necessity to register as a commercial agent was never brought up until this case was filed. It said that it assisted Leonardo SRL to apply for the tender.

Page Ltd decided to withdraw its offer of discount, once it had not been paid and once Leonardo SRL had participated in other tenders, without involving it.

Page Ltd enabled Leonardo SRL to make a bid for the tender, complete the forms, provide translations, as well as help in obtaining the bid bond from a bank.

Leonardo SRL’s director gave a different version. He claimed that Page Ltd acted as its commercial agent on its behalf in respect to other tenders and in respect of its Malta activities. It said that tender GHRL 03/2011 was not the only tender where Page Ltd assisted it. There was no other agreement in writing. Leonardo SRL said that it established relations with Page Ltd and that it had written to Grand Harbour Operations to inform them that they would be represented by Page Ltd.

The court considered that Page Ltd had no authorisation to act as a commercial agent. It in fact had never applied for such authorisation from the Chamber of Commerce

The court considered the definition of commission agent under article 70A Commercial Code which provides:

In this sub-title: “commercial agent” means a person not being a person in the employment of the principal, who has continuing authority to negotiate the sale or purchase of goods or services on behalf of another person (the principal), or to negotiate and conclude such transactions on behalf and in the name of that principal, but does not include:

Article 70(2) of the Commercial Code provides that the following persons did not fall within the definition of commission agent:

A partner who is lawfully authorised to enter into commitments binding on his partners;

According to Professor Felice Cremona, a commission agent is:

“A person permanently and personally employed by one or more firms abroad to promote their business in these islands and to transmit orders for acceptance. It appears from the said definition that the persons referred to by the law as ‘mercantile or commission agents’ are not mercantile agents in the juridical sense of the word as they have no power and authority to act in the name of their principal. Their function is that of an intermediary, and corresponds to some extent to the one exercised by the mandatory with no power of representation.”

In ‘Cauchi noe v Debono’ of June 18, 1954, the Court of Appeal explained that it was not enough to show that a person acted as its agent but that such person was engaged by the principal as its agent in Malta.

The principal had to appoint/give such person “l-aġenzija tagħha stabiliment”; and not just limited to one particular contract, in order to be engaged as a commission agent, in Malta.

The court considered that Page Ltd had no authorisation to act as a commercial agent. It in fact had never applied for such authorisation from the Chamber of Commerce.

Page Ltd denied acting as commercial agent of Leonardo SRL and maintained that it was simply its mandatory. Faced with conflicting testimony, the court said that it had to decide who was more credible, even as a basis of a balance of probability and preponderance of proof.

The criteria was not whether a judge absolutely did not believe a party’s version but whether the version was likely.

In case of conflicting versions by the parties, the court had to be guided bytwo principles:

• If there was any evidence which could corroborate any one of the versions which was more credible and;

• In absence of such proof, a person making the obligation had to bring satisfactory evidence.

The court found the version given by Page Ltd to be more credible as regards the juridical relations between the parties.

In this case, Leonardo SRL bore the burden of proving that Page Ltd acted as its commercial agent.

The court was not satisfied with the evidence of Leonardo SRL. Besides it noted several inconsistencies in the testimony of its director. It was not credible that Page Ltd represented it in other tenders. It was more likely that Page Ltd acted strictly on its behalf as one tender.

The court held that Page Ltd had not been appointed as its commercial agent in Malta.

It said that it was not proven that there was some form of relations of commercial agency as Leonardo SRL claimed.

For these reasons, on January 14, 2016, the First Hall of the Civil Court declared that Page Ltd did not act as commercial agent of Leonardo SRL in Malta and dismissed the preliminary plea of Leonardo SRL.

The court ordered the continuation of the case.

Dr Karl Grech Orr is a partner at Ganado Advocates.