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The Court may apportion the court costs of a case to both parties and not necessarily to the party that lost the case. This was held in Antoinette Gouder et -v- Ellcee Nautical Supplies Limited on 23 September 2020 by the Court of Appeal presided by Mr Justice Lawrence Mintoff.

The applicant Gouder et, had appealed from a judgement delivered by the Rent Regulation Board, which upheld the company’s pleas and turned down the applicant’s claims. The Rent Regulation Board (RRB) ordered that the applicants pay the costs of the case, except for the first three pleas.

The facts of the case concern a property in Gzira which was rented in 1985. The applicants, Gouder et, are the owners. The lease agreement stipulated the rent was to be revised after the first 5 years according to the cost of living. The original lessee was Lawrence Camilleri and he was allowed to transfer the lease only once and the rent was to increase by 15%. If the transfer was made to a company, any transfer of shares was to be considered as being terminated. In fact, Camilleri transferred the lease to his company Ellcee Nautical Supplies Limited, whose shareholders were his wife and his two children Kenneth and Robert Camilleri. In 2015 his wife and Robert Camilleri transferred their shares to Kenneth Camilleri. The applicants held that this was a breach of the lease agreement and asked the Board to take possession of the property.

The defendant company filed a statement of defence listing a number of pleas.

The RRB pointed out that in 2010 Lawrence Camilleri’s shares were transferred after he died, but in 2015 a further transfer of shares was filed. Kenneth Camilleri became the sole shareholder of the company. The auditor of the company testified and explained that according to Lawrence Camilleri’s will, he left half of his shares to his wife, while 25% to each of his two sons. The business was in fact controlled by Kenneth, who lived abroad.

The company held that Article 1614 of the Civil Code, as amended in 2009 was applicable. The same article was then amended in 2017, however, the applicable provision is that from 2009. This article stipulates that sub-lease is not allowed unless the lessor and lessee both agree to this. Every type of concession or else an agreement gives possession of the property is a sub-lease. If the lessee is a company, the transfer of 50% of the shares or control is deemed as a sub-lease.

The applicants argued that the parties are bound by the agreement and the agreement was clear and there is no room for alternative interpretations. The applicants also argued that Article 1614 does not apply, because the lease agreement was dated 1985.

The company argued that the 2009 amendment made Article 1614 of the Civil Code applicable and that the fact that the Camilleri transferred shares between themselves in certain circumstances, did not violate the agreement. The RRB argued that Article 1531D of the Civil Code lists which laws are applicable in leases that took place in different periods. Since the lease agreement was signed in 1985 the applicable law is still Reletting of Urban Property (Regulation) Ordinance. The RRB quoted from Blackley company Limited -v- Edward Schembri et, which held that leases before June 1995 and still valid in January 2010, are to be regulated by the laws applicable in June 1995, apart from those listed in the Civil Code.

Therefore Article 1614 of the Civil Code, may be still applicable. The RRB held that the condition put in the lease agreement was not all that clear. The original lessor and lessee did not want to limit the transfer of shares, if the lease was transferred to a company, as it in fact was.

Furthermore, Article 1614(3) of the Civil Code also deals with the transfer of leases. In fact this article excludes that a transfer done by the defendants should not be interpreted as a sub-lease. The RRB then moved to reject the claim.

The applicants, Gouder et, lodged an appeal on the ground that the RRB interpreted the lease agreement, when there was no need to and should have rested on what was written. The applicants also argued that Article 1613(3) did not apply to commercial leases.

The company rebutted this by arguing that the intention of the original parties to the lease agreement was for people outside the family to be excluded.

In the appeal, the Court of Appeal was informed that in separate proceedings the defendants were ordered to vacate the property and it was to be returned to the owners. Therefore, the only issue at hand was the court costs. Article 223 of the Code of Organisation and Civil Procedure directs the courts to award court costs to the losing party.

However, if a party loses any part of the action, then the court should award the court costs proportionately. The RRB had awarded the costs to the applicants with exception to there of the pleas. Now that there is a separate judgement ordering the defendants to vacate the promises, the Court of Appeal apportioned the court costs in that each party should pay its own costs.

Av Malcolm Mifsud


Mifsud & Mifsud Advocates

This article is also available on MaltaToday.

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