Prescription period starts upon last entry of the account

A commercial account between two companies starts not when the order was effected but when the account is liquated. This was held in a judgement delivered on 23 March 2021 by Madam Justice Joanne Vella Cuschieri presiding of the First Hall of the Civil Court in Hal Far Quarries Limited -v- Mangion Bros (Zurrieq) Limited.

Hal Far Quarries Limited filed a sworn application stating that it had furnished the Defendant Company, Mangion Bros with building material since 1999. Both companies had agreed that there be a current account where the Defendant company would pay periodically and the Plaintiff company will continue supplying Mangion Bros. There was a balance €12804.08 and the Plaintiff company asked the court to order the Defendant to pay this sum.

The Defendant company replied to this by saying that the Plaintiff company should give a detailed account of what was paid and what was due. Furthermore, the company held that claims are timed barred by means of Articles 2149(a) and 2156(f) of the Civil Code.

The Court first dealt with the plea of prescription and from the evidence produced the last two payment made by the Defendant company was in November 2006 and 2007. In April 2009 the Plaintiff company filed a judicial letter under Article 166A of the Code of Organisation and Civil Procedure asking the Defendant to pay the same sum mentioned in this action. The month later the Defendant company challenged the claim by filing a note.

Article 2149(a) of the Civil Code reads:

“The following actions are barred by the lapse of two years:  actions of builders of ships or other vessels, and of contractors in respect of constructions or other works made of wood, stone or other material, for the works carried out by them or for the materials supplied by them”

Article 2156(f) reads: “The following actions are barred by the lapse of five years: (f) actions for the payment of any other debt arising from commercial transactions or other causes, unless such debt is, under this or any other law, barred by the lapse of a shorter period or unless it results from a public deed;”

The Court quoted from a previous judgement Alf Mizzi & Sons (Marketing) Limited -v- Dismar Company Limited decided by the First Hall of the Civil Court on 12 October 2004 held that in cases where there are current accounts, the prescription commences when the account is liquidated.

The Court examined a large quantity of delivery notes that were signed between 1999 and 2007 and it was obvious that the Defendant company purchased the construction material for commercial reasons and not personal ones. Furthermore, the Defendant company told the court that it paid every month as payments on account. The last consignment was on 1 October 2006, while this action was filed in July 2009. While Article 2149 was not applicable, Article 2156 of the Civil Code of a prescriptive period of 5 years did not take place.

As to the merits of the case, the Court saw the account kept by the Plaintiff company in its system. In January 2007 the account showed a balance of Lm5,496.79, equivalent to €12,804.08. This was confirmed by a number of employees of the Plaintiff company. The Defendant company held that the last two payment in 2006 and 2007 were in full and final settlement. The company held that it has made monthly payments, but could not give a clear account of what was actually paid. The Defendant Company confirmed that it paid on account. It seems that all the paperwork on these payments were lost. They managed to show a sale statement with a balance of Lm1319.48 and another of Lm1039.60. It is clear that these were paid, but the Court was not satisfied that other payments were made for other invoices. The Court was satisfied that €12,804.08 was in fact due. The Court held that the Defendant company should pay interest from when the judicial letter was filed.

The Court then moved to order the Defendant company to pay the Plaintiff company’s claim.