A lawsuit is no joyride; court cases often involve long-winded distress, anger and a feeling of uncontrollability. Creditors often do not wish to pass through the dogfight that a court can be, unless they have some sort of assurance that the pretence they would be suing for could be enforced and will actually lead to payment. This is not foregone; it is wrong to assume that an amount awarded by the court will always be recovered.
Oftentimes, judgments are not complied with, perhaps due to the debtor’s unwillingness to abide by the decision of the court. In time, Maltese parlance created a notorious idiomatic phrase referring to judgments that are not complied with – ‘tpoġġi s-sentenza fl-inkwatru’, which humorously yet accurately depicts the pointlessness of obtaining a judgment that cannot be enforced. This is why, in these cases, it is up to the creditor to secure his claim through the legal tool known simply as ‘executive warrants’ (mandati eżekuttivi), and force payment.
However, a plaintiff need not wait for a judgment to secure his claim. He may, together with his claim (or in some cases, up to 20 days before filing the lawsuit), file what is called ‘a precautionary warrant’. A precautionary warrant may be broadly defined as a security where a claimant issues a guarantee as a security before his claim is decided by the courts, so that until the case is decided, certain funds will be secured or certain property will be put aside, so that if such claimant wins the case, he will be able to obtain satisfaction of his claim from those funds.
In this kind of warrant, the plaintiff cannot take possession of the object secured while the case is pending. In monetary claims, the amount precautionarily secured will be deposited in ‘an escrow account’ held under the authority of the courts of justice and will remain frozen until the case is decided, or until it is released by a decision of the court. Until then, the money cannot be touched.
The decision delivered by the Civil Court First Hall on December 22 in the names of ‘Catherine Spiteri v Carmelo Micallef’ discussed the timing of precautionary garnishee orders and how precautionary warrants (those filed while the case is pending) can be transformed into executive warrants (those which permit the creditor to force payment immediately).
Article 838B of the Code of Organisation and Civil Procedure (Chapter 12 of the Laws of Malta) gives the answer: “all precautionary warrants remain in force for a period of 15 days after the cause becomes res judicata” (final and no longer appealable), this unless the creditor files a note in court within 15 days from the cause becoming res judicata, demanding an extension or reduction of the effects of the warrant to an amount equivalent to the legal costs, interest and the difference in the principal amount due in terms of the judgment.
This article at law brings to the fore an incontrovertible fact: the conversion of a warrant from a precautionary one to an executive is not automatic.
In executive warrants, the plaintiff cannot take possession of the object secured while the case is pending
In these proceedings, the plaintiff was demanding the erasure of a garnishee order (mandat ta’ sekwestru) filed against him after, roughly a year earlier, he was condemned by the court to pay the respondent more than €200,000. The plaintiff argued that this judgment was already being enforced through a judicial sale by auction (subbasta) and, therefore, there was no need to retain an additional guarantee in the form of a garnishee order.
In his application, the plaintiff declared that his demand was being made under article 836(1)(c) and (f), which is the legal tool by which one can contest a precautionary warrant. This is perhaps what led the respondent to quip that the application was invalid insofar that following the judgment, the garnishee order had become an ‘executive warrant’, and that as such, the plaintiff could not file an application under article 836.
Possibly inadvertently, this legal observation by the respondent led the court to venture into the question of conversion of a precautionary warrant and to eventually find against the respondent, as will be seen.
In its decision, the court reiterated what is stated in article 838B(2) − that unless a note is filed within 15 days, a precautionary warrant is no longer effective. It quoted past judgments and stated that in this case, a note as required by the law was not filed and the 15 days had long passed. As a result, the precautionary warrant lost its validity.
The peculiarity here was that the plaintiff did not base his request for the cancellation of the precautionary warrant on account of the fact that it was no longer valid because the 15 days mentioned in article 838B had passed. The cause put forward by the plaintiff was completely different than that, and the respondent argued that the court could not decide on the basis of an argument that the plaintiff had not made in his application.
Fortunately for the plaintiff, in his application, he had also quoted article 836 (1) (f) as a basis for his request, which is a broad cause that may allow the erasure of a warrant “if it is shown that in the circumstances it would be unreasonable to maintain in force the precautionary act in whole or in part, or that the precautionary act in whole or in part is no longer necessary or justifiable”. The court stated that even if there was a judgment against the plaintiff, technically speaking, the warrant was still a precautionary one; so, it could apply article 836(1)(f) and tie it with the fact that according to article 838B, the warrant was no longer effective.
The court’s argument could be explained this way: the law states that a precautionary warrant which is not transformed into an executive warrant within 15 days from the judgment shall no longer retain force.
Therefore, article 836(1)(f) is applicable, for it would be unreasonable to maintain the warrant in force, and its removal can also be justified for that fact that it is no longer necessary or justifiable.
As a result, the court acceded to the plaintiff’s request and ordered that the garnishee order be removed.
Carlos Bugeja is a partner at Azzopardi, Borg & Abela Advocates.
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