The First Hall of the Civil Court, presided over by Mr Justice Joseph Zammit Mc Keon, on September 16, 2011 in the case “Joseph Tabone vs Aldo Abela exercising business as Abela Woodworks”, held among other things, that, in case of non-performance of a valid, bilateral contract, a party should request its termination and not its annulment.
The facts in this case were as follows:
Joseph Tabone, the owner of a villa, in Santa Maria Estate, engaged Aldo Abela, of Abela Woodworks to manufacture and install 20 doors in his newly constructed villa in terms of a contract order dated September 12, 2004.
The court drew a distinction between ‘rescission’ and ‘termination of a contract’
Eighteen doors were to be of solid oak and two front doors were to be of “eroko” wood. It was agreed that the price of each door was Lm353, and that the whole work was to be completed by January 2005, i.e. within two months from when measurements could be taken.
A deposit of Lm1,500 had been paid, in addition to a further payment of Lm2,000. It was agreed that Mr Abela would be paid upon completion.
Joseph Tabone claimed however, that despite several promises, Mr Abela failed to complete the job. He also complained of the poor quality of Mr Abela’s work. It was stated that the few doors which were delivered had defects and were not of the agreed quality.
Subsequently the parties signed an additional agreement dated February 7, 2006.
Mr Tabone informed the court that the doors had to be changed. The best quality oak had to be used. The primer, spray and the filling had to be of optimum quality and that all the work had to be completed, not later than March 7, 2006.
Mr Abela failed to deliver. Mr Tabone said that the doors had not been changed. The job had not been completed until this present day, and Mr Abela instead, requested more money to finish his work. Faced with the situation, Mr Tabone filed legal proceedings against Mr Abela asking the court:
• To declare that the doors which were delivered were not of the agreed quality;
• To rescind the contract;
• To condemn Mr Abela to return the deposit of Lm3500;
• To hold Mr Abela, to be responsible for damages.
In reply, Mr Abela contested the legal action against him. He submitted that he worked up to the standards, expected according to art and trade. He denied, violating the terms of the contract.
He also proceeded by filing a counter-claim, to recover the unpaid balance, allegedly due for the doors (Lm1,781).
On September 16, 2011, the First Hall of the Civil Court decided in favour of Mr Tabone.
The court noted that it did not appear that there was any agreement to divide the work into two phases. The agreement was that Mr Abela had to finish the whole job within two months after measurements could be taken.
On January 14, 2005, Mr Tabone complained that no doors were delivered.
On May 29, 2005, Mr Tabone informed Mr Abela that the few doors which were installed were of inferior quality.
It resulted that Mr Abela installed eight doors on the first floor. The doors for the lower floor were not delivered, as Mr Abela wanted additional payments.
The technical expert appointed by the court reported that Mr Abela’s work was of inferior quality, both as regards material and finish.
Technical report: Though the court had the freedom to disregard the opinion and conclusion of the technical expert, his report should be considered as proof. The court should not dismiss the report without due consideration. It had to have good reason to disregard the technical report: Calleja vs Mifsud dated November 19, 2001; Grima vs Mamo et noe CA dated May 29,1998.
“Jiġifieri qorti ma tistax tinjora r-relazzjoni peritali sakemm ma tkunx konvinta li l-konkluzjoni ta’ tali relazzjoni ma kienetx ġusta u korretta.
“Din il-konvinzjoni però kellha tkun waħda motivata minn ġudizzju ben informat, anke fejn meħtieg mil-lat tekniku.”
(The court could not ignore the technical report unless it was convinced that it was not fair and correct. The court had to have good reasons, even if necessary, from a technical side) re: “Cauchi vs Mercieca” – Court of Appeal January 28,2000 u “Calleja noe vs Mifsud” – Court of Appeal: January 19, 2001).
It could ignore the report if it was unreasonable: Bugeja et vs Muscat et – CA dated June 23, 1969.
In this case, the court agreed with the technical report.
Damages: Mr Tabone claimed that as a result of Mr Abela’s non-performance, he could not use the premises, commercially and lost rental income. However, this court was not satisfied with the evidence, as proof of damages, suffered directly and immediately as a result of Mr Abela’s non-contractual performance.
Article 1137 of the Civil Code provides:
“Even where the non-performance of the obligation is due to fraud on the part of the debtor, the compensation in respect of the loss sustained by the creditor, and of the profit of which he was deprived, shall only include such damages as are the immediate and direct consequence of the non-performance.”
Contract of works: In Busuttil vs Fedele et dated April 9,1968, the court said that a contract of works was a bilateral contract, which was subject to a tacit resolutive condition. If there were defects, the court had to consider whether these were substantial. A defect was substantial if the object could not be used for the purpose intended. In this case the person who contracted the works could request the termination of the contract owing to non-performance. If the defects were non-essential, the person carrying out the works was obliged to repair the defects or accept a lower price.
The terms and manner of payment for the works depended on what was agreed and commissioned: Sacco vs Penza Ltd dated February 18, 2007.
If the price was agreed per unit, payment had to be for the work done. If the price was for the entire job and if the work was unacceptable, a person carrying out the works did not have a right for payment: Mallia vs Fonk CA dated January 24, 1975.
In the circumstances, therefore, Mr Abela was not entitled to be paid per unit. Payment had to be made after all doors were completed according to the standards of art and trade.
The court agreed with the principles established in Darmanin vs Agius datedOctober 9,2004, CA (inferior).
A person contracted to carry out works was obliged to execute the works, free form defects, up to the standards of art and trade. He had to work with “ordinary capacity”, and guarantee the quality of his works. If on the other hand, the work was done poorly, he was responsible for damages. He was responsible for the defects, even if the work had been accepted or if he had executed the work on the instructions and specifications given to him.
The court noted that in this case, the defects appearing on the doors were “substantial”. In this respect, Mr Abela was at fault for non-performance; owing to his failure to complete the task and to provide doors free from defects. (Kollez Vol. XXXVIII.I.292)
The court drew a distinction between “rescission” and “termination of a contract”.
If a contract was valid and subject to termination owing to non-performance, an aggrieved party could request its termination.
The court said that Mr Tabone should not have asked for the annulment of the contract, but its termination on grounds of non-performance, on the basis of a tacit resolutive condition.
Article 1068 of the Civil Code provides:
“A resolutive condition is in all cases implied in bilateral agreements in the event of one of the contracting parties failing to fulfil his engagement: Provided that in any such case, the agreement shall not be dissolved ipso jure, and it shall be lawful for the court, according to circumstances, to grant a reasonable time to the defendant, saving any other provision of law relating to contracts of sale.”
In terms of Article 1068, the lack of performance of a bilateral contract could bring about its dissolution or for the court to order its performance, if it felt it to be appropriate.
However, in this case the court was not of the opinion that it should give Mr Abela additional time to complete the work.
For these reasons, the court ordered Mr Abela to refund Mr Tabone €8,152, with legal interests from June 16, 2006. It dismissed Mr Tabone’s claim for damages as well as Mr Abela’s pleas and counterclaim.
Dr Grech Orr is a partner at Ganado & Associates.