Bank's appeal upheld

A judgment of the Magistrates Court which had found HSBC Bank (Malta) plc to have taken the law into its own hands when it appropriated funds belonging to Paul Cauchi was yesterday annulled by the Court of Appeal.

In 1999 Mr Cauchi had obtained a Visa credit card on behalf of Middle East Consulting Services Ltd. The card had to be used for official work of the company.

Mr Cauchi said that when HSBC had acquired Mid-Med Bank he was required to sign a document concerning a credit card. Mr Cauchi had confirmed that he was responsible for this card in conjunction with the company.

However, according to Mr Cauchi, the bank had requested him to make payments which were due in respect of another credit card. The bank had, in August 2006, taken the law into its own hands and had withdrawn Lm2,110.46 from an account in Mr Cauchi's name.

The Magistrates Court had concluded that the bank had unlawfully taken the law into its own hands. According to the first court the bank had acted in violation of every principle of good faith and was guilty of misappropriation. The bank was ordered to refund the sum of €4,917.37 to Mr Cauchi.

HSBC then appealed to the Court of Appeal presided over by Mr Justice Philip Sciberras. According to the bank the first court's judgment was null and void as the court had not addressed the legal submissions made by the parties but had decided the case on the basis of the bank taking the law into its own hands. This was an issue which the parties had not raised.

The bank also submitted that the first court had ignored the two principal issues of the case, namely that of solidarity between Mr Cauchi and the company and the legal issue of offsetting a debt.

Mr Justice Sciberras found in favour of the bank and ruled that the first court had not based its decision on legal principles which had been raised. On the contrary, the first court had taken a short cut and had expressed its opinion without considering the legal issues of the case.

The Court of Appeal concluded that the first court had not sufficiently motivated its judgment and that the judgment represented a hypothetical situation.

The Court of Appeal then proceeded to examine the merits of the case and ruled that Mr Cauchi had bound himself to accept responsibility in solidarity with the company for any obligation due by the company towards the bank.

The first court's judgment was therefore revoked and the bank's appeal was upheld.