Posted Friday, April 26, 2019
There is a distinction between personal and corporate representation

A person cannot represent a company, if he acts on a personal basis. This was decided by the Administrative Review Tribunal on 16 April 2019 in Joseph Aquilina -v- Il-Bord tal-Gvernaturi ta’ l-Awtorita ta’ l-Artijiet, presided by Magistrate Dr Charmaine Galea.

Joseph Aquilina had filed an application before the Administrative Review Tribunal wherein he explained that in August 2018, the Board of Governors of the Lands Authority had notified him of a decision taken with regard to a property in Sliema, which was given on temporary emphyteusis to Venxa Limited. The property houses a number of shops with difference entrances, which shops are rented out. Aquilina is a director of the company and personal guarantor of the obligations the company undertook. In March 2018, Aquilina personally wrote to the governors, asking them to approve a change of use of the property.

Aquilina was not authorised by the company to make this request on behalf of the company and the   contractual relationship is limited between the Lands Authority and the company. The Board of Governors replied by refusing the request, since it is not in the government’s interest that government property is transferred. Aquilina held that the Board should have refused the request on the ground that it was not made by the company and that the refusal as put by the Board of Governors prejudiced the company’s position. Aquilina asked the Tribunal to declare that the Board of Governors’ decision of August 2018 is null and void.

The Board of Governors defended the action by filing a statement of defence in which it held that the competent authority to decide upon requests for change of use of government property is the Lands Authority and it was Aquilina who had signed the deed of temporary emphyteusis in May 2012 and he was authorised by the company at the time and therefore, he is known to the Authority as the person representing the company.

The Tribunal held that this is a unique case where the plaintiff is asking for a decision to be revoked because the application should have been made by a different person. By examining the evidence the Tribunal pointed out that the conditions of the emphyteusis states that the property cannot be rented to third parties, but it was already rented to third parties when the deed was signed. Clause 12 of the same deed states that the company cannot enter into partnership with third parties nor enter into management agreement.

The Tribunal discussed whether the Board of Governors was the correct defendant in this action. According to Article 6 of the Lands Authority Act, the Authority has a distinctive juridical personality and therefore, it is administered by the Board of Governors. This plea was not accepted.

The Tribunal also disagreed with the Board of Governors that the application was valid. The Board of Governments disregarded the notion of a distinction of corporate personality. It is true that Aquilina had signed on behalf of the company when the emphyteusis was established, but he was not doing this in his personal capacity. From the Memorandum and Articles of Association it transpires that he is not the only shareholder and director and the administration of the company is vested in two directors.

Therefore, the Board of Governors should have checked whether Aquilina had the company’s representation and authority to make any request. Even if Aquilina was the sole shareholder and director of the company, he must have been representing the company and not himself. The request lodged was made in Aquilina’s personal capacity and not by the company.

Therefore, the Tribunal moved to order the Board of Governors to revoke their decision.

 
Avv. Malcolm Mifsud
Partner
Mifsud & Mifsud Advocates
 
This article may also be accessed on Malta Today
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