The party subject to a precautionary warrant, such as a garnishee order must choose carefully which procedure to use in order to ask the court to revoke it. This was held in a judgement delivered by the Court of Appeal on 3 September 2024 in MPM Capital Investments Limited, Alexander Mangion and Melvyn Mangion vs Alfred Anton Zarifa and Oleba Viktorivna known as Elena Zarifa. The Court of Appeal was presided by the Chief Justice Mark Chetcuti and judges Christian Falzon Scerri and Josette Demicoli.
The case concerns a garnishee order issued by the First Hall of the Civil Courts in January 2019 and whether it could be revoked and whether the party who issued the warrant should pay for damages.
The Plaintiffs filed a sworn application after the Zarifas filed a garnishee order for over €3 million. They claimed the Plaintiffs hand mismanaged their money. They argued that Article 836(b) and (f) of the Code of Organisation and Civil Procedure applies. The Court turned down their application. The Zarifas had issued a warrant of prohibitory injunction against the Plaintiffs, but the Court had revoked it. The Plaintiffs argued that the garnishee order was pointless and contrary to law. The true intention was revenge since the Plaintiff had issued another garnishee order against the Zarifas, therefore, they issued one in return. The Plaintiffs asked the court to revoke the warrant and to liquidate the damages they suffered.
The Defendants, the Zarifas, filed a statement of defence and held that the law provides that the warrant should be examined prima facie (on the face of it) and the merits of the case should be dealt with in the case proper. Furthermore, the present case should only examine whether the Court issued the warrant according to law and should not examine the merits of the action being requested. The Defendants also argued that they had a right to safeguard their interest.
The Court of First Instance in its judgement first made reference to Article 836(5) of the Code of Organisation and Civil Procedure, which states that there is no appeal or contestation on any decree on counter-warrant. The only option left was for the plaintiffs to file the action, in which they asked for the revocation of the warrant. The Court quoted from Joseph Camilleri et vs Anthony Gove et decided by the First Hall of the Civil Court, in which the court is to examine the evidence on a prima facie level. The merits are to be examined in another action. The Plaintiffs have to prove that the basis on which the warrant was issued does not exist any longer. This was echoed in Graziella Attard et vs Khaled Barkat Zaky Ahmed Abdelrazek et on 7 August 2017 and other judgements.
The First Hall of the Civil Court pointed out that the Plaintiffs did not complain that when the warrant was issued the principles of natural justice were not adhered to or the law was not followed. The Plaintiffs seem to ask the court to reconsider the reasons why the warrant was issued. The Court held that it cannot reconsider its position, if the Plaintiff failed to show valid reasons that the warrant should be withdrawn. The Court pointed out also that when discussing the warrant, they were given an opportunity to make submissions.
The Plaintiffs appealed this judgement. The grounds of the appeal were that there was sufficient evidence to show that the garnishee order was substantially wrong. It was issued as a pay back. The evidence produced showed that the Defendants did not make any loss on their investment and therefore no damages were sustained. Furthermore, there was no evidence to show that the garnishee order of over €3million was necessary. They also argued that the evidence showed that the Zafiras dealt with the Plaintiff company and not with the shareholders personally.
The Court of Appeal stated that it disagreed with the Court of First Instance when it held that the request to remove a garnishee order depends on whether the request to remove the decree was turned down to revoke the warrant. The request to remove the garnishee may be entertained if the request to revoke the decree dismissed the request to revoke the warrant.
The Court of Appeal said that this type of action is often used. The decree ordering a precautionary warrant such as a garnishee order is not definitive neither is it an interlocutory decree. This decree does not bind the court neither is it incidental to the action. The decree is limited to the acts of the warrant and not part of the court case. If the decree is not interlocutory, then it cannot be appealed. This was held in Rosa Borg vs Dr Frank Chetcuti et noe, decided on 8 February 1946.
There are two instances when a precautionary warrant may be revoked. The first is by a simple application based on one of the reasons listed in Article 836(1) of the Code of Organisation and Civil Procedure (COCP). The second is that if the ground is not found in Article 836(1), a sworn application has to be filed, asking the court to revoke or amend the warrant.
In this case, the Plaintiffs used the second method asking it to revoke the warrant and to revoke the decree turning down the revocation. By using this procedure, they cannot invoke Article 836(1) of the COCP, but another ground has to be found.
As to the decree which turned down the request to revoke the warrant, the Court would have to investigate whether the principles of natural justice were adhered to, if there was a breach of a law, or else an obvious mistake or else if the decision to issue the warrant beyond what was asked of it.
The Plaintiffs in this case are asking the Court to revoke the garnishee order based on Article 836(1)(d) of the COCP. Therefore, as explained the Court of Appeal cannot entertain this request once they chose to file a sworn application. The Court held that there is no ground to revoke the garnishee order when the Plaintiffs first filed an application to revoke the garnishee order, they did not list Article 836(1)(d) of the COCP.
The Court then moved to turn down the appeal.
Av. Malcolm Mifsud
Partner
Mifsud & Mifsud Advocates
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