Transport Malta has waived more than half the sum of €500,000 it was owed in damages by an advertising agency over a breach of contract two decades ago.
The recent out-of-court settlement came after the agency, MPS, objected to paying and filed an appeal, this newspaper has learnt.
The case revolves around a 1995 tender, won by MPS, to place advertising boards on each side of route buses. The agency pulled out of the contract, complaining the job had turned out to be possible with only a fraction of the bus fleet.
A Transport Malta spokesman declined to divulge the final amount paid by the agency, but sources said it was €200,000, just 40 per cent of the original sum awarded by the Civil Court in 2013.
“Transport Malta negotiated an out-of-court settlement which was approved by its board and the Ministry for Finance,” the spokesman said.
Transport Malta said the agreement was reached because at the time the agency “could not pay up”. However, MPS CEO George Mifsud has vehemently denied this was the case.
The case revolves around a 1995tender, won by MPS, to place advertising boards on each side of route buses
He told this newspaper that following the judgment delivered by Mr Justice Silvio Meli, MPS, on the advice of two eminent lawyers, filed an appeal based on crucial new evidence which only came to light a few weeks after the sentence was handed down.
This development was crucial as it swung the case in favour of MPS, Mr Mifsud said. He claimed that upon seeing such evidence a high-ranking Transport Malta official, whom he did not identify, admitted that “the media company was in the right”.
“During the discussions it became clear that it was in the interest of both parties to settle the 18-year issue amicably and avoid further court delays, exorbitant court charges and legal fees, which accumulated during the very period it took for the case to be decided,” Mr Mifsud said.
Instituted in 1999 by the then Awtorità Dwar it-Trasport, the case appeared before four different judges during which the transport regulator was headed by five chairmen.
The dispute had been triggered following complaints by MPS that only 100 of the 508-strong bus fleet in service at the time could have advertising boards installed on each side.
Furthermore, only 112 of the bus owners had accepted to take part in the scheme.
MPS rescinded its contractual obligations citing Article 117 of the Commercial Code relating to cases in which one of the parties fails to fulfil its obligations.
The regulator then took the agency to court ,claiming it had defaulted on payments amounting to €493,144, besides interest.
In its final decision, the court rejected the arguments raised by MPS, ruling that it should have carried out its own verifications and preliminary groundwork on the bus fleet before signing the contract.
Moreover, the judge pointed out that even in the event of one of the two parties failing to fulfil its contractual obligations, it should not automatically mean that the agreement would be rescinded, as the issue would still have to be decided by a court.