A Maltese court has ordered Steward Malta Management Ltd to pay more than €154,000 in outstanding catering bills linked to Gozo General Hospital and Karin Grech Hospital, in a judgment that traces the debts back to the period in which the company was running hospitals under the now-defunct Vitals-Steward concession.

Judge Mark Simiana on Monday ordered Steward Malta Management to pay Malta Healthcare Caterers Ltd €154,072.18, together with commercial interest running from 5 April 2023 until payment, as well as the costs of the case and a related garnishee order.

The dispute concerned catering services supplied at Gozo General Hospital and Karin Grech Hospital while the hospitals were being operated under the controversial public hospitals concession.

Malta Healthcare Caterers had claimed €32,844.34 for catering supplied at Karin Grech Hospital in 2023, another €24,562 arising from price increases connected to catering services there in 2022, and €96,665.84 for services at Gozo General Hospital from February 2023 onwards.

The company originally provided catering at a number of state hospitals through agreements with public authorities. Its relationship with the hospital operator developed after the concessionaire took over the management of Gozo General and Karin Grech hospitals. According to the court, invoices were subsequently issued to the operator and payments were made by it.

In the case of Gozo General Hospital, Steward also signed an agreement in October 2022 recognising that it had engaged the catering company under the terms of the earlier government catering contract. That agreement was intended to remain in force until October 2024 and also set out additional services and payment rates.

Steward contested liability on several grounds. Among other arguments, it said catering at Karin Grech was supplied under an agreement with the government rather than with Steward itself, and argued that some payments depended on funding it received from the Health Ministry's Central Procurement and Supplies Unit.

It also argued it should not be liable for services supplied after the hospitals concession had ended.

The court rejected all of those arguments.

Judge Simiana found that Steward had expressly accepted responsibility for payments due to the catering company, even where the underlying contract had initially been signed with another party. That acceptance created a separate obligation on Steward to honour the payments, the court said.

The judge also rejected Steward's argument that its obligation depended on receiving money from the government.

Evidence showed that Steward received a fixed sum from the government from which it was expected to pay subcontractors, rather than receiving specifically earmarked sums to pass on to Malta Healthcare Caterers, the judgment said.

Once Steward had undertaken to pay the catering company, that obligation remained in place regardless of whether the government paid Steward, the court concluded.

Debt stems from Vitals-Steward hospitals concession

The dispute is another legal consequence stemming from the public hospitals concession first awarded by the Maltese government to Vitals Global Healthcare.

In November 2015, the government entered into agreements with Vitals covering the redevelopment and operation of Gozo General Hospital, St Luke's Hospital and Karin Grech Rehabilitation Hospital. The concession was later transferred to US healthcare group Steward Health Care. The government publicly welcomed that transfer in December 2017, saying Steward would take over the projects and remain bound by the original concession arrangements.

The concession subsequently became the subject of a series of highly critical National Audit Office reports.

In its review of the original procurement process, the NAO said an agreement had been reached between government representatives and investors connected to the eventual Vitals bid before the formal request for proposals was issued. It said the overlap created "major doubt and concern" over the integrity of the concession process and concluded there were grounds for Vitals to have been disqualified from the tender.

A later NAO investigation into Steward's takeover found that most of the major concession milestones remained unfulfilled, apart from the completion of the Barts Medical School and what the auditor described as other limited areas of progress. The NAO was also sharply critical of the government's handling of negotiations following Steward's entry into the concession.

The concession unravelled in court in 2023.

In February of that year, the Civil Court annulled the hospitals agreements following a case filed by former Opposition leader Adrian Delia. Steward appealed, but in October 2023 the Court of Appeal dismissed that challenge and confirmed the annulment of the concession.

The catering case dealt with the separate question of who remained liable for services supplied around the end of Steward's operation of the hospitals.

The court noted that, following the change in management, Malta Healthcare Caterers was instructed in June 2023 to bill government-controlled Malta Health Ltd for services supplied at Gozo General Hospital after 5 April 2023. Those amounts were excluded from the sum being sought from Steward.

A November 2023 agreement between the caterer and Malta Health Ltd subsequently released Steward from obligations arising from 5 April onwards, while preserving liabilities and payment obligations that had arisen before that date.

The court found the €154,072.18 claimed against Steward was supported by the evidence and ordered the company to pay the full amount.

Commercial interest will run from 5 April 2023, the date the court considered the relationship between the catering company and Steward to have ended.

The applicant company was represented by lawyer Maurice Meli.