The Court of Appeal has thrown out Maltapost's attempt to overturn a €10,159 charge imposed after it fell short of its postal delivery targets for 2019.

The court ruled the postal operator had failed to show that the summer temperatures had made it impossible to meet its obligations.

Judge Lawrence Mintoff upheld an earlier decision by the Administrative Review Tribunal, which dismissed Maltapost's challenge to the Malta Communications Authority's demand.

Under its licence, Maltapost must deliver 95% of ordinary local mail on the next working day after posting.

For the financial year running from October 2018 to September 2019, the company achieved a delivery rate of 93.21%, falling 1.79 percentage points short of its target.

It did, however, narrowly clear its two-day delivery target, reaching 98.1% against a required 98%.

In August 2020, the MCA informed Maltapost that it owed €10,159 under the "collective compensation scheme". The postal operator challenged the demand before the tribunal and, having lost that battle, took its case to the Court of Appeal.

'Not a fine at all'

Maltapost said that the €10,159 charge was, in substance, a fine. If that were the case, the company argued, the authority should have followed the procedure for imposing penalties, including notifying Maltapost in advance that a fine was being considered and giving it a chance to respond.

Both the tribunal and the Court of Appeal dismissed that interpretation.

The tribunal explained the procedure applied to measures taken under a separate article dealing with fines for breaches of the law. That provision did not cover the charge in question.

The €10,159 was instead compensation payable under a scheme introduced in 2005.

Under the scheme, Maltapost must pay the MCA a percentage of the annual turnover of the relevant postal product, multiplied by 0.25, if it fails to meet its next-day delivery target.

The tribunal calculated the amount by multiplying the €2,270,093 turnover from local single-piece mail by the 1.79% shortfall and then applying the 0.25 factor.

It was a prescribed calculation, the courts found, rather than a fine imposed at the authority's discretion.

Maltapost given a chance to make its case

Maltapost also argued that it had not been given a proper opportunity to explain its position before being presented with the bill. The tribunal was not persuaded.

It pointed to a lengthy paper trail between the company and the authority, beginning well before the charge was issued.

In July 2019, Maltapost had asked the MCA to grant it a concession from its obligation for July and August, warning that "heatwaves have led to increased levels of employee unavailability, significant attrition in employee retention and increase in on-the-job accidents."

The request came during a particularly hot summer. At the time, June 2019 was the hottest June recorded in Malta since 1923, while temperatures reached 39.6°C in July.

The MCA turned down the request, saying it was not in a position to approve a two-month concession before the summer had properly begun. It also said temperatures above 32°C were a common occurrence in Malta and "should definitely not be considered as a force majeure".

Maltapost tried again in October 2019, submitting more detailed statistics, and returned to the issue in February 2020. Both attempts came before the MCA issued its decision in August 2020.

The tribunal concluded that it was "certainly not true" that Maltapost had been denied the opportunity to make submissions. The authority had simply rejected the arguments put forward.

Was the heatwave 'force majeure'?

Much of the case turned on whether the extreme heat of summer 2019 amounted to force majeure. Force majeure covers events that are genuinely beyond a party's control and make it impossible, rather than merely more difficult or expensive, to fulfil an obligation.

The tribunal examined the doctrine at length, drawing on Maltese, Italian and French case law.

The authorities cited in the judgment distinguished between circumstances that make performance more onerous and those that make it impossible. Financial or operational difficulties, the tribunal said, could not in themselves amount to force majeure.

The evidence did little to bolster Maltapost's position.

Leanne Rapinett of the Met Office testified that the summer of 2019 had seen only two genuine heatwaves-one lasting three days in June and another lasting three days in July.

Under the Met Office's definition, a heatwave involves temperatures at least five degrees above the seasonal average for three consecutive days. August recorded no heatwave, Rapinett said.

Most heat warnings that summer were yellow. Only two reached orange, and none reached red.

Postal workers were still delivering in the afternoon

Joseph Bugeja, a postal workers' union representative, spoke about the difficulties faced by postal workers working in the heat, including a collective agreement allowing them to stop work once authorised hours had ended.

Postpersons were expected to finish their rounds within their paid working hours, Bugeja explained, but the pressure to clear their deliveries could see them working well into the afternoon.

He recalled workers calling to say they were still out delivering at 2pm or 3pm, despite their working hours having ended.

But the tribunal found his evidence remained general and did not establish that Maltapost's operations had been rendered impossible during the financial year in question.

The Court of Appeal upheld the tribunal's conclusions.

It agreed that "high temperatures in summer" did not amount to force majeure and said Maltapost had failed to show it had taken adequate steps to adapt its working practices.

The margin-of-error argument

Maltapost also sought to rely on a margin of error in the performance report prepared by Informa Consultants.

The company argued that its 1.79% shortfall fell within the report's stated margin of error of ±2.27% and so should not count as a miss at all-the true figure could, mathematically, be as high as 95.47%. But that argument fell through.

The court warned that Maltapost's interpretation was one-sided: If the margin of error were applied in the company's favour when it fell short, it would also have to be applied against it when its performance appeared to exceed the target.

The MCA made a similar point, saying Maltapost had to remain consistent in its arguments and could not expect factors to be applied only when they worked in its favour.

The compensation scheme did not provide for any margin-of-error adjustment, the court noted, and it declined to read one into the rules.

Acting as legislator, regulator and judge?

Maltapost's final argument was that the MCA had improperly combined legislative, administrative and judicial functions within a single body.

The authority had set the delivery targets, devised the compensation formula and then decided that Maltapost had failed to meet its obligations. But the Appeals Court was not persuaded.

It found the MCA had "acted within the parameters and powers given to it by law", operating as the competent regulator of the postal sector.

Nothing in the process indicated that the authority had acted "with impunity" or breached Maltapost's right to a fair hearing, the court held.

The appeal was dismissed on all grounds and the tribunal's decision confirmed in its entirety. Maltapost was ordered to pay the costs.