Court of Appeal orders payment despite alleged unsatisfactory service

Court of Appeal orders payment despite alleged unsatisfactory service

Litigation and Arbitration services

A lawsuit in the names of Chris Tonna v James Borg and Stefan Borg delivered by the Court of Appeal on 22nd September 2017, ruled that an agreement of payment should be honoured, even if the services rendered were not totally satisfactory.

Summary of the facts

An action was brought by the claimant before the Small Claims Tribunal for the amount of €1,602 in connection with professional services he had rendered as an accountant. The defendants presented a statement of defence, in which they claimed that the services rendered were not up to standard and they suffered damages.

The Small Claims Tribunal had turned down the claim in a decision delivered on 19 October, 2016 further to which he filed an appeal.

According to the records of the case, the respondents had had an import business since 2005 and had used the claimant’s accountancy services. The claimant used to issue invoices that were paid regularly until the two parties concluded their commercial relationship in 2012, leaving an outstanding balance of €1,602.

The defendants purported to justify their payment refusal on the ground that the claimant was not professional in delivering his services, following over-declarations that had been made in VAT returns resulting in the defendants paying €21,000 more than they should have and therefore paid interest on their overdraft. Evidence showed that the defendants passed on relevant details to the claimant, who in turn prepared the returns which were duly signed by the director/s of the company. The claimant did not agree that the overstatement was his fault since they were effectively based on the sales information which the client passed on to him.

Court’s deliberations

The Court pointed out that the parties had agreed in January 2013, that the claimant was to receive €5,440 in full and final settlement of his fees. The defendants held that this was to be paid as long as all accounting documents were handed over to them. Payment was in fact made, leaving a balance of €1,602. The defendants argued that this balance was not due since not all the documents were delivered to them as agreed. The Court however considered that this constituted an excuse which was not plausible, particularly since it was not raised earlier on in the proceedings. Moreover there was no evidence of other claims resulting from investigations by the VAT Department causing damages to the defendants.

Conclusion

The Court concluded that once there was an agreement between the parties that the claimant was to receive the amount of €5,440 for services rendered, then that agreement must be honoured. The Court declared that it did not agree with the Tribunal’s conclusions and overturned the judgement by awarding payment of €1,602 to the plaintiff.

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