Court may turn down claims, even if Defendant did not file statement of defence

The lack of a statement of defence does not mean that the Defendant is admitting to the claims filed by the Plaintiff. This was held in a judgment delivered by the First Hall of the Civil Court in Sunshine Aviation Limited vs Skyfirst Limited. The court was presided over by Mr Justice Giovanni Grixti.

The Plaintiff Company Sunshine Aviation Limited presented a sworn application in which it explained that the dispute between the parties was with regard to a Temporary Aircraft Management Agreement dated 7 April 2014. The Plaintiff Company had to offer technical services to an aircraft registered in Malta. The final agreement was not signed and therefore the Plaintiff company sent a termination notice on 7 September 2014. The Defendant company held on to the aircraft’s documents in breach of the agreement. The Defendant company did engage another service provider. Since the aircraft depreciated substantially the Plaintiff suffered substantial damages. The Plaintiff referred to another action where it is the Defendant, but these damages were not part of the proceedings. The Plaintiff asked the court to award it damages.

The Defendant did not file a statement of defence and was declared in default.

The Plaintiff company produced the relations manager of Costruzioni srl, and Italian company, which has a 15% stake in Sunshine Aviation Holdings Limited, which has 99.91% in the Plaintiff company. He explained that after the termination of the temporary agreement the parties discussed how to move forward but no agreement was reached, until the Defendant filed an action against Sunshine Aviation Limited. This action is now before the Court of Appeal. In July 2015, the aircraft was to have its maintenance done by a company by the name TAG Aviation. The Defendant blocked this, even though the Defendant was prepared to pay for the maintenance. The Defendant wanted a guarantee that the Plaintiff would pay it all the pending dues. A new aircraft manager was appointed but the aircraft documents were held by the Defendant and the aircraft did not fly for two months and no maintenance was done. A London law firm was engaged to negotiate the control and payment of the aircraft. In September 2015, Sunshine Aviation took possession of the aircraft documentation following a warrant of seizure. The warrant was then withdrawn. The aircraft was then sold by the Plaintiff company in February 2018 for USD3 million. Skyfirst offered to purchase the aircraft for USD3.5million. This was turned down since the aircraft was valued at USD10.9 million, but offered to sell it for USD8.5million.

Furthermore, the owners of Costruzione srl were entangled in legal proceedings with the Albanian government and held that this was an abuse of power of the police for political reasons. Skyfirst took advantage of this and managed to block the sale of the aircraft.

The Plaintiff had a temporary arrangement to fly the aircraft in April 2014, but there was no permanent arrangement. Although the agreement lapsed in May 2014, Skyfirst still was the registered operator, and it was in control of the aircraft. Skyfirst blocked the aircraft receiving maintenance. The Defendant Company, Skyfirst has a claim of €274,513 on works carried out on the aircraft. The Plaintiff in the same action is asking for the liquidation of damages. This action is still pending on appeal.

The Court held that case law shows that the fact that a defendant does not file a statement of defence does not mean that he or she is admitting to the claims presented by the plaintiff. This was held in Francis Busuttil vs Mary wife of Anthony Azzopardi et, decided on 25 January 2023. The Court held that it must see whether the claims have been proven. Article 562 of the Code of Organisation and Civil Procedure dictates that who alleges must prove the case. In Eucharisto Zammit vs Eustracio Petrococchino noe., decided on 25 February 1952, the judge must decide whether to uphold a claim when he/she is morally convinced that the evidence is sufficient. The level of proof in civil case is that of probability.

The Court then moved on to see whether correspondence between lawyers on a without prejudice basis is admissible as evidence. The Court held that it was not to take into account this type of evidence and held that this evidence should not have been presented to it. The Court pointed out that the 7 April 2014 temporary agreement was never filed.

From the admissible evidence, the Court concluded that there was a contractual relationship between the parties from April 2014 until September 2015. Sunshine Aviation did not take any steps to terminate that agreement in September 2015 and it knew that Skyfirst was in possession of the aircraft. It took possession of the aircraft’s documents in November 2015. In March 2017 the aircraft was valued at $10,853,000 but in October 2017 Sunshine Aviation was prepared to sell it at $4,500,000 which included a set off of the claims made by Skyfirst. The Plaintiff company failed to explain to the Court what happened to the aircraft after December 2015. In the sale contract, there was written that the aircraft was not airworthy and that it had taxes to pay in Switzerland.

Skyfirst pointed out in its submissions that no explanation was given on why the aircraft was not sold and no maintenance was given and Sunshine Aviation just made a vague declaration, but no objective evidence was provided. As such the Court was not convinced that Skyfirst should be held responsible for the reduction in value of the aircraft.

The Court then moved to turn down the Plaintiff company’s claims.