Insights

In its judgement on the 28 January 2022, delivered in the names of Ta’ Natu Limited (the “Plaintiff”) vs F.A.D. Enterprises Limited (the “Defendant”), the Rent Regulation Board (the ‘RRB’), presided over by Dr. Noel Bartolo identified those instances when the Privilegium Fori ceases with respect to cases heard in front of the Rent Regulation Board.

The Plaintiff filed a claim on the 3 May 2021 by which, the Plaintiff explained how they had entered into a lease agreement with the Defendant in relation to a supermarket located in Mosta, whereby the rent payable for the first five years was equivalent to 5% of the income generated by the Defendant from the premises, which rent was to be paid on a weekly basis. The Plaintiff further claimed that the Defendant had failed to pay the rent owed from the 18 May till the 23 August of 2020, notwithstanding the fact that the Defendant has been ordered to pay the amount due through a judicial letter. The Plaintiff, through this judicial letter, also notified the defendant that the judicial letter served as a notification to the Defendant to perform his obligation under the lease agreement or to dissolve the lease agreement accordingly.

The Plaintiff highlighted that the Defendant not only did not pay any of the amounts due, but continued to incur further debt in rents owed to the Plaintiff by not paying the rent due from the 24 August 2020 till the 25 April 2021. The Plaintiff held that given that the amount owed was certain, liquid and due and given that in the opinion of the Plaintiff, the defendant had no rebuttal arguments to make, the case can be heard by the RRB in terms of Article 16A of Chapter 69 of the Laws of Malta (Reletting of Urban Property (Regulation) Ordinance.

Based on the above, the Plaintiff requested that the RRB:

1. Decides on the case in hand without the need to proceed to trial;
2. Declares that the Defendant is a debtor to the sums owed to the Plaintiff or to any other liquidated sum due as in the opinion of the RRB is due to the Plaintiff
3. Orders the Defendant to pay such sum due to the Plaintiff; and
4. Declares that the Defendant failed to abide by the lease agreement’s terms and conditions and to rescind the lease agreement based on this non-performance, resulting from the non-payment of rent due.

The Defendant’s replies included two preliminary pleas, being that:

1. the RRB (in Malta) had no jurisdictional grounds to hear the case, given that its registered office was based in Gozo; and
2. Given that the Plaintiff had already initiated a separate case on the same subject matter with the rent regulation board in Gozo, the current case in hand, should continue to be heard in front of the rent regulation board in Gozo as part of the other case in order to avoid a situation where two different decisions can be given by two different boards on a case having the same merits.

The RRB held that it would decide on the above two preliminary pleas made by the Defendant prior to providing its sentence on the case in hand.

With regards to the preliminary issue relating to the jurisdiction of the RRB, the RRB noted that the Defendant’s registered office was located in Gozo as per the provided memorandum and articles of association of the Defendant, amongst other documentation provided by the Defendant proving that the registered office of the Defendant is located in Gozo.

The RRB further noted that the director of the Plaintiff and the registered office of the Plaintiff are based in Malta. The RRB further highlighted that the Defendant is aware that the Plaintiff is based in Malta, since various letters were sent to a registered office in Malta. The director of the Plaintiff held that since he is based in Malta, the registered office of the Plaintiff is based in Malta and the premises which was rented out is based in Malta, the Plaintiff initiated the case with the RRB based in Malta following legal advice from his lawyers.

In assessing the above, the RRB referred to the specific articles in the Civil Code (Chapter 12 of the Laws of Malta) relating to the jurisdiction of the courts of Malta. It referred to Article 741(c) of Chapter 12 which holds that:

“It shall be lawful to plea to the jurisdiction of the court –

(c) when the privilege of being sued in particular court is granted to the defendant” – This is known as the Privilegium Fori.

The RRB further referred to Article 767 which holds that:

“The privilege referred to in article is granted to parties residing in the Island of Malta with reference to the courts of such Island, and to parties residing in either of Islands of Gozo and Comino with reference to the court of such Islands”.

The RRB noted that the Privilegium Fori ceases when:

1. The number of defendants in the Island of Malta is equal to that of the defendants residing in the Islands of Gozo and Comino (Article 769);
2. Where the action touches the obligation which, according to the agreement, was to be carried out in any one particular Island (Article 770); and
3. It is waived by the person who has a right for such Privilegium Fori (Article 772).

The RRB made reference to the case of Alfred Cremona et vs Vanda armla Bradshaw (1994) which tackled the Privilegium Fori principle given that the case was sought in front of the courts of Malta in relation to a property located in Gozo. In this instance, the court held that given that the premises was based in Gozo, and the obligations in relation to the premises in Gozo had to be undertaken in Gozo, there is not question as to Gozo being the applicable jurisdiction of choice.

Basing itself on the above principles, the RRB held that notwithstanding that the Defendant’s registered office being based in Gozo, it is clear the case is to be heard in front of a court in Malta given that the present case dealt with a property based in Malta and the business address was also based in Malta. The RRB further highlighted that given that the Plaintiff was based in Malta, rent was also received in Malta.

Based on the above, the RRB refused the Defendants first preliminary plea and held that it is competent to hear and decide on the case in hand.

With regards to the second preliminary plea, the RRB referred to Article 793 of Chapter 12 of the Laws of Malta which states:

“If two or more actions brought before one and the same court are connected in respect of the subject-matter thereof, or if the decision on one of the actions might affect the decision on the other action or actions, it shall be lawful for the court to order that the several actions be tried simultaneously.”

The RRB analysed the two different cases and held that whilst the merits of the case relate to the same subject matter and in some instances the claims are identical (being the rescission of the lease agreement), the reasons for such claims are totally different and are not co-related or depend on each other.

The case initiated in front of the rent regulation board in Gozo relates to certain obligations which the Defendant had to abide by, such as the provision of its annual turnover, the installation of a generator, and that it was not opening on Sundays as agreed upon. On the other hand, the case in hand initiated with the RRB in Malta, deals with unpaid rent which is duly owed to the Plaintiff.

The RRB thus held that both cases can perfectly be tried separately from each other, given that the outcome of one case will not affect the outcome of the other case. Based on the above, the RRB refused the Defendants second preliminary plea and held that the case is to continue being heard by the RRB in Malta.

This article was first published in the Malta Independent.