The Court of Appeal composed of Chief Justice Joseph Azzopardi, Mr Justice Joseph R Micallef and Mr Justice Tonio Mallia in the case “Darren Borg and David Borg vs Geomike Limited and John Cauchi” on 12 July 2019 held among other things that as the defendant Company had authorized John Cauchi to order the works, and had not imposed any restrictions on his mandate, to complete the works in its property, John Cauchi could not be held personally responsible for the works.
The facts in this case were as follows.
Darren Borg and David Borg carried out gypsum words, painting and other related works at Cote D’Azur Restaurant in Marsascala and were still due a balance of €22,908 as payment.
The Borg brothers demanded payment and later sued both the company Geomike Limited as well as John Cauchi.
It so happened that John Cauchi who was not a director of Geomike Ltd had ordered the works and the issue later arose whether he was authorised to bind and represent Geomike Limited or whether he contracted with Borg brothers in his own name and for his own account.
John Cauchi in reply, claimed in defence that he was not the legitimate defendant and that the works were done at the request of Geomike Ltd, which was the owner of the restaurant. Defendant Company, Geomike Ltd also disputed liability, saying that it was not the legitimate defendant. It asked to be freed from the proceedings. It denied contracting with the Borg brothers or ever ordering the works.
On 12 June, 2014 the First Hall Civil Court decided in favour of the Borg brothers and condemned both John Cauchi and Geomike Ltd to pay the balance due for the works, €22,968.
The First Court considered that the works were ordered by both John Cauchi and the defendant company.
Aggrieved by the decision of the First Court, John Cauchi entered an appeal and requested the Court to revoke that part of the First Court decision which held him liable to pay the debt to Borg brothers.
It was not disputed that the works were carried out for the benefit of Geomike Ltd. The director of defendant Company was well aware of the works, which were effected in the property of the Company and had raised no objection.
When a mandator ratified acts of his agent whether expressly or tacitly, he became bound by such act: re article 1880 (2) Civil Code. The defendant company never stopped the works nor opposed John Cauchi during the progress of the works.
The legal presumption was that a person always contracted in his personal capacity unless it appeared that he acted on behalf of another and that the third party was aware that he acted on behalf of another.
If a person failed to indicate that he appeared on behalf of a company, it was presumed that he was contracting in his personal name.
If a person acted in his own name, the mandator had no right of action against the third party nor against such person. In such case, such person in his personal capacity had obligations to the person with whom he contracted.
The person who claimed to have acted as agent on behalf of another, bore the burden of proof : Camel Brand Co Ltd VS Michael Debono (PA) dated 21 March, 2002. In Bernard Attard VS Raymond Cassar Torreggiani it was held that:
‘‘l-appellanti (konvenuti fil-kawza) kellhom jipprovaw mhux biss li n-negozju sar ghas-socjeta’ gestita mill-appellant imma wkoll illi fil-mument meta sar tali negozju s-socjeta’ attrici kienet konsapevoli tal-fatt illi min pogga l-ordni maghha u min maghha kien ikkonkluda n-negozju kien qieghed f’ dak il-mument jagixxi r-rapprezentanza tas-socjeta’ gestita mill-konvenut. Hu dak il-mument li kien rilevanti u kien f’dak il-mument illi min innegozja mas-socjeta’ attrici kelli jirrileva b’mod car u univoku illi f’dik il-kontrattazzjoni ma kienx qieghed jidher f’ismu imma f’isem persuna ohra ben identifikata’’.
The Court noted that the quotation from Borg brothers was addressed to George Cauchi and/or John Cauchi, Geomike Ltd, 1-4 St. Anthony Street, Marsascala, and their invoice to George Cauchi on behalf of Geomike Ltd.
The Borg brothers were aware that the works were carried out for the benefit of the defendant company and not for John Cauchi personally. It was clear that the contract was made with the defendant company. John Cauchi did not sign personally but only acted on behalf of the defendant company.
Even if John Cauchi had made some payments, this did not mean that he contracted in his own name; as it was possible for a person to pay a debt of a third party.
The Court had no doubts that the defendant Company had authorized John Cauchi. Nor were there any restrictions imposed on his mandate, to complete the works in the property of the defendant company.
His brother, George was well aware of the execution of the works and it could not be stated that John Cauchi exceeded his mandate. Besides defendant Company as represented by George Cauchi, had tacitly ratified John Cauchi’s acts.
The Court said that John Cauchi asked on behalf of Defendant Company as duly authorised and the works was for the benefit of the defendant company.
The Court felt that it was the internal quarrel between the Cauchi brothers which led to this court case.
The Borg brothers also knew that their work was bestowed to defendant Company and it followed that the defendant company should be held solely responsible for their claims.
For this reason on July 12th, 2019 the Court of Appeal accepted John Cauchi’s appeal. It varied the First Court’s decision of 12th June, 2014 and revoked that part which rejected the pleas of John Cauchi and declared that John Cauchi was bound in solidum with defendant Company.
The Court of Appeal dismissed the claims of the Borg brothers against John Cauchi but confirmed the remaining part of the decision against the defendant Company.
Dr Karl Grech Orr is a Partner at Ganado Advocates