The foundation of a healthy judicial system is ensuring that each person’s rights are protected. Apart from the institution of proceedings by Person A against Person B, which proceedings typically stretch over a number of years, there are other ways and means through which one’s rights and/or claims may be safeguarded.
A crucial tool in this regard is the precautionary act. A precautionary act may exist in different forms, the most popular being the precautionary garnishee order (mandat ta’ sekwestru kawtelatorju).
In a nutshell, a precautionary act is used when the creditor predicts a risk that the assets of the alleged creditor will deteriorate over time. Even though the creditor may eventually ‘win’ the case, such success would be virtually useless to them if the judgment itself cannot be executed. In such case, the only thing the successful creditor can do with the judgment is frame it!
Indeed, this is why the precautionary garnishee order can be viewed as an essential cog in the machinery of justice. However, as the name suggests, such procedure must be exercised with caution. The decree delivered by the Court of Magistrates (Civil Jurisdiction) (Malta) on July 13 in the names of ‘Jonathan Muscat Baron v Maxime Charles Veillet La Valle’, is essentially a (pre)cautionary tale, shedding light on the responsibility and diligence with which such acts must be filed.
One of the fundamental rules when filing a precautionary act such as the garnishee order is that it must necessarily be followed by the institution of a case on the same merits. The case, as per article 833A of the Code of Organisation and Civil Procedure (COCP), must be filed within 20 days from the filing of the precautionary act.
The above-mentioned case dealt precisely with this. The applicant debtor argued that since no case was instituted within 20 days from the filing of the garnishee order, then the order should be revoked. Moreover, the applicant argued that due to this, a penalty should be imposed on the creditor.
The law is clear on the 20-day rule. If the case is not filed, the warrant is liable to be revoked. No buts; no ifs. It is equally unequivocal in regard to the penalty. Should the case not be filed within the stipulated time, the creditor is liable to a penalty ranging between €1,164.69 and €6,988.12. This means that really and truly, the court’s discretion lies in the amount of the penalty imposed, and not in the imposition of the penalty itself.
Precautionary acts must be used and exercised with caution and diligence
The case in question concerned a precautionary garnishee order in the amount of €9,125 regarding an alleged non-payment of rent to the creditor on the part of the debtor. No case was filed within the stipulated time. The court noted that the creditor himself agreed that no case was filed.
In no uncertain terms, the court held that the result of this is that the precautionary act was no longer in effect and that it had no option other than to order its formal revocation.
The Court of Magistrates also delved into the issue of the penalty. The non-institution of a case within the 20-day window is one of the grounds upon which the debtor may ask the court to impose a penalty on the creditor.
The court noted that the ‘justification’ of the creditor for not filing the case was that he did not wish to further aggravate the situation. The creditor also argued that if the debtor wanted the garnishee order to be gone, he should have deposited in court the amount in question.
He continued that just because no case was filed, it did not mean that the debtor should escape responsibility. After all, the creditor argued, there was no bad faith on the part of the creditor.
In examining the above, the court held that this was not a good enough reason and in no way justified the non-filing of the court application. It also emphasised that the basis of the debtor’s application for revocation of the warrant was not that the filing of the warrant was done in bad faith or in a frivolous manner. The issue in the eyes of the court was simple: no case was filed in the 20-day window, and thus the penalty should be imposed.
Some other important considerations were made by the court. It held that in the circumstances of the issue at hand, there was a clear breach of procedure and abuse of the procedural tool bestowed by the legislator to the creditor. It highlighted that the procedure concerning precautionary acts should be used prudently and in good faith, and not in a lenient and indifferent manner without any respect to the spirit and letter of the law.
It also noted that if the true reason for not filing the court application was that the creditor did not wish to aggravate the situation, he could have simply filed a counter-warrant on his own motion, without prejudice to his rights on the merits. But he did not file such counter-warrant and is precisely what prompted the court to revoke the garnishee order and to impose a penalty of €1,164.69 on the alleged creditor.
The essence of this decree is, therefore, that while precautionary acts are an efficient tool to safeguard the creditor’s rights and to ensure that the assets of the alleged debtor are preserved over time, they must be used and exercised with caution and diligence.
Such decree, as per article 836(5), is final and irrevocable.
Mary Rose Micallef is an associate at Azzopardi, Borg and Associates Advocates.