The case Pentasia Malta Limited vs PIV Game Limited decided by the Court of Magistrates presided by Dr. Consuelo Scerri Herrera, on 7 March 2018 concerned the obligation to pay for services subject to a contract. In this particular case, the plaintiff provided recruitment services to the defendant company and claimed that it was owed recruitment agency fees for the services provided.

Facts

The plaintiff company was approached by the defendant company to provide recruitment services, and a contract to that effect was signed in May 2009. The plaintiffs commenced work on the basis of this contract by carrying out extensive research to present prospective candidates to its client. The director of the plaintiff company explained that it is standard practice for invoices to be issued after candidates are chosen and engaged by the client. In one particular instance, one of the employees resigned after a few days and therefore, in accordance with the terms of business agreed between the parties, the plaintiff company was bound to find a new candidate for no additional cost to the client. The plaintiff company suggested another twenty candidates, four of which were eventually employed by the defendant. The plaintiff issued further invoices, however all invoices remained unpaid.

The plaintiffs also resorted to the special procedures for the recovery of a debt under Article 166A of the Code of Organisation and Civil Procedure (Chapter 12 of the Laws of Malta). This remedy entitles a creditor to obtain an automatic executive title on the basis of a judicial letter filed in the prescribed form for a debt that is certain, liquidated and due, if the debtor does not submit a reply within thirty days from when the debtor is served with the judicial letter.

During the proceedings, the plaintiff discovered that one of the candidates was not employed by the defendant company but by another company affiliated with the defendant company. A representative from ETC Malta (today known as Jobsplus) confirmed that the candidate in question was never employed by the defendant. Nevertheless, the plaintiff company claimed that the defendant did not honour its obligations under the contract entered into between the parties in May 2009 and requested the Court to order the defendant to pay for the services provided under the said contract.

Legal Principle

 The Court considered that anything agreed between parties by way of a contract is an expression of their will to be regulated by those terms and therefore the contract is the source of law to be considered when determining issues or disputes arising from the relationship between two parties. The Court therefore must respect the free will and freedom of the parties to enter into contracts. This principle is also enshrined in Article 992(1) of the Civil Code (Chapter 16 of the Laws of Malta) which states that ‘contracts legally entered into shall have the force of law for the contracting parties’.

The law also goes on to state that contracts should be carried out in good faith therefore it is not only the express terms of the contract itself that is binding but also ‘any consequence which, by equity, custom, or law, is incidental to the obligation’.  Therefore, if the plaintiff introduced a candidate to the defendant company, and such candidate was not employed by the defendant company directly but was employed by an affiliate company of the defendant company, this is considered as a consequence of the contract between the parties to the case.

The Court therefore ruled that the defendant company must honour its obligations under the contract and ordered it to pay the amount owed and any interest incurred to the plaintiff.

Dr Elise Dingli is an Advocate at GANADO Advocates