Fiorino d’oro Company Limited vs The Government – Director of Roads

Judges

Vincent Degaetano

Joseph D. Camilleri

Joseph A Filletti

Court of Appeal

17 February 2006

This was an appeal from a First Hall, Civil Court judgement of January 2003 which ruled in favour of Plaintiff Company, tenant of premises from which it carried on the trade of Fiorino d’Oro (restaurant) in the area known as tas-Salini.

First Hall, Civil Court

Plaintiff Company

1. 20 April 2001 – Defendant ordered commencement of construction of road and ancillary services and utilities.

2. The contractor in charge informed Plaintiff Company that works would last from one-and-a-half years–two years.

3. The planning of the project and its implementation by 2-3 workers contributed to the excessive length of time for completion.

4. Although the project was being carried out in and for the public interest, Defendant had a duty to ensure that the least damage possible is caused to third parties.

5. The involvement of few workers for such a large project was the prime reason of lengthy works requiring more workers and better means to ensure completion in a reasonable time.

6. Defendant remained inactive notwithstanding the filing of a judicial protest (14 September 2001).

Plaintiff Company requested the Court to:

1. Declare Defendant responsible for damages suffered due to excessive delays in works carried out in the public interest not being proportionate to the inconvenience/damages suffered by Plaintiff Company;

2. Liquidate the damages due;

3. Condemn payment of such by Defendant.

Defendant

Among various pleas raised:

1. The contractor involved should be called into the suit;

2. There was an alternative access to the restaurant;

3. Plaintiff’s pleas had no basis in fact/law;

4. No responsibility should be imputed onto him.

Court

The road undergoing works was the only one leading to the restaurant. The contractor bound himself contractually with government in December 2000 to finish works within a year on pain of damages if not respected. Works did not commence till 20 April 2001 and were still incomplete up till the date when the judgement was delivered. Access to the road and to the restaurant was closed and when re-opened, it was made one-way and full of rubble, rendering access difficult and uncomfortable leading to a drastic diminution to the restaurant’s clientele (Earnings in the year 2000: Lm47,000; 2001: Lm21,500; 2002: not more than Lm10,000).

In Malta, unlike in other countries, in the realm of governmental liability there is no concept of government compensating the private individual for discomfort caused in the execution of works in the public interest. Other countries feel that private citizens should not suffer damages and be prejudiced even if it is a national project done in the public interest – the citizen need not prove negligence on the part of government authorities but proving prejudice is enough even though the work was carried out with due diligence.

The Maltese legal system deals with governmental liability in the same way in which it deals with liability of ordinary persons in cases of tort or quasi-tort under the Civil Code. For government to be found liable, those involved must have acted without “…the prudence, diligence, and attention of a bonus paterfamilias” since “any person who makes use, within the proper limits, of a right competent to him, shall not be liable for any damage which may result therefrom.”

Various judgements stipulated that since the Civil Code provisions on tortuous liability did not make any exception vis-a-vis government, it is presumed that government too may be found liable for damages. Here, government had an obligation in the public interest to provide good roads for its citizens and it could also expropriate private land for such purposes.

Usually, works are tendered to private contractors for more efficiency. Yet in this case, works still took very long and were not done properly. The excessive length was at issue here and the contractor claimed not to have enough workforce and adequate machinery. The architect tendering evidence euphemistically claimed that the contractor was trying to eat more than he could chew, and could not cope with all his projects.

Government could not shed responsibility since it assigned a contract of works to private third parties. The citizen has no interest in the relationship and conditions created between government and contractors in such contracts. In the citizens’ eyes, government is responsible for the maintenance of roads and has a duty to ensure that the works are carried out and if not, it should take remedies such as terminating the contract of works, appointing other contractors or using government employees.

Lack of remedial action to minimise damages being suffered by private individuals rendered government responsible. The fact that the contract had a penalty clause which would be enforced due to non-completion within the stipulated time-limit was irrelevant to the private individual. Works were being carried out without adequate planning, rendering access to the restaurant difficult or inaccessible.

Government is not normally obliged to pay damages in cases where citizens are prejudiced in the course of a project taking place except when it fails to exercise the diligence, prudence and standard of care of a bonus pater familias.

Furthermore, government would not be responsible for damages caused within the time necessary for completion of a project (in this case, the 12 months within the signing of the contract). In Malta, the citizen must suffer for the benefit of social solidarity and for the supreme interest of the country, so long as works are carried out with due diligence. Upon the lapse of a reasonable time, the citizen has a right to expect completion and government cannot expect the citizen to endure the contractor’s deficiencies when government remained inactive to remedy the situation.

Lm20,000 in damages to Plaintiff were liquidated by the Court, with interests and with a reservation for other compensation if works after December 2002 caused further prejudice.

Court of Appeal

Defendant’s claims and Court’s considerations

1. The Court observed a total lack of interest by Defendant who never attended for sittings personally or through lawyers. Defendant’s claim that the first Court was erroneous when it refused his request to call the contractor in charge of the project into the suit, was rejected but without prejudice to what could have resulted as the case progressed further.

The Court mentioned the procedural utility of the institute of joinder of parties: to economise on judgments and for the sake of completion however, the Court is NOT legally obliged to do so to protect the interests of the parties. Although the request for the contractor to be called into the suit was at that early stage denied because he lacked juridical interest, yet, this was done “without prejudice to what resulted further in the records of the case”. This would have enabled Defendant to look after his interests. Instead, a request for reconsideration or an appeal was never made. Furthermore, Defendant never repeated the request as the case progressed further and never appeared in Court personally or through legal representation.

2. Defendant’s pleas that the reference by the First Hall to uncertain foreign legal sources revealed inadequacy of Maltese law on governmental liability was refused; Courts have a right to make comments which they deem necessary for the good of justice.

3. Allegations of an erroneous interpretation of the concept of “abuse of right” under Article 1030 (Civil Code) was refused. Every individual, including government must complete the assigned task within a reasonable time and with the least prejudice to third parties; failure would mean that the right was not exercised within proper limits and exercise of such right in such a manner will expose such person (including government) to liability for damages – any person who makes use, within the proper limits, of a right competent to him… means that if limits are not in fact proper, the exercise of the right degenerates into abuse. In this case, completion date went beyond that agreed. Social solidarity was definitely important yet government exposed itself to liability in its omission to take remedial action to protect aggrieved citizens. Government did not use its rights within the proper limits and did not act with the prudence of a bonus pater familias, namely what one normally expects from an ordinary reasonable person.

4. Although Plaintiff was not a party to the contract, it was a sound legal basis upon which the Court based its appreciation for the reasonableness of the time-limit for the completion of the project. The fact that the contractor exceeded the time-limit stipulated in the contract of works rendered government liable for not acting within the proper limits of its rights as it failed to take remedial measures. Damages did not arise out of contract but out of failure by government to exercise its rights within the proper limits.

5. Defendant’s pleas on quantum of damages due to lack of causality between the works and the alleged drop in sales, for failure by Plaintiff to minimise damages and because of lack of certainty were also refused. The Court argued that evidence presented on this issue and upon which the Court of First Instance based its calculations remained uncontested. Plaintiff was not bound to offset loss of sales by trying to attract people through special offers. Damages claimed could not be liquid and certain – the grounds giving rise thereto were of an ongoing nature rather than as a result of an instantaneous nature. This was why the First Hall provided for ulterior damages.

The social benefits which were to be reaped from the project upon its completion were also irrelevant in that both Plaintiff and society at large already paid for such benefits through taxes.

The Court of Appeal did not uphold the appeal. It confirmed the calculation of damages as correct and just, and condemned Defendant to pay all expenses.