Person responsible for damages due to bounced cheques

The First Hall of the Civil Courts ordered man to pay damages after he participated in a fraud by issuing cheques which were not honoured. This was held in a judgement delivered by Mr Justice Lawrence Mintoff on 16 November 2018 in SG Marketing Limited -v- Silvio Sciberras.

SG Marketing filed an application where it explained that it imported bottled water to Malta and it issued three invoices to the defendant, Silvio Sciberras. Sciberras issued three cheques which covered these invoices and due to this they took in possession the water he ordered.

The defendant gave instructions to the bank to block the cheques and therefore, they bounced. The company insisted the invoices be paid and the defendant issued another cheque, but this also bounced. The plaintiff company asked the court to declare that this was fraud and to liquidate the fraud.

The defendant presented a statement of defence by stating that he did not have any judicial relationship with the company and that he did not owe any money.

The background of the case concerns the defendant’s sister, Joanne Sciberras who ordered several pallets of bottled water imported from outside Malta. The defendant issued the cheques, which cheques bounced. The defendants took the merchandise but then instructed the bank not to honour the cheques. The plaintiff company alleged that this is tantamount to fraud, since the defendant did not have money in his account to cover the amount. Furthermore, although there were lack of funds, the defendant failed to return the pallets of water.

Mr Justice Mintoff analysed the evidence produced, mainly copies of the invoices totalling to €60,711.48, and the copies of the cheques. A number of witnesses were also produced, such as the managing director of the plaintiff company. He explained that Joanne Sciberras paid for the bottled water, they had imported and therefore she  was allowed to withdraw this merchandise and it was also withdrawn from Customs.

The merchandise was distributed to various outlets and she was paid for the stock. After the three cheques bounced the defendant then issued one single cheque for the total amount. Another witness was a business which was ready to purchase the water. Joanne Sciberras asked for €28,000, because the water was held by Customs and had to first pay the duty before delivering. A son of a friend of hers made the payment but the merchandise did not arrive. Everyone concerned was worried on the state of affairs and the police was called in.

The freight forwarder involved, testified that he was approached by Joanne Sciberras to collect six containers imported by SG Marketing Limited. His services were paid by the company. Joanne Sciberras gave the instructions where the merchandise had to be delivered. A police inspector also testified confirming the defendant and his sister were investigated.

The Court pointed out that the defendant’s sister had entered into an obligation with the plaintiff company for it to import the products ordered. In fact, there are separate proceedings which were instituted against her. However, the cheque issued for this transaction was that of the defendant. Not only that, when these cheques were not honoured, he issued another cheque. Article 1149(1) of the Civil Code states: “1149. (1) A creditor cannot refuse payment tendered by a third party, if the debtor is benefited thereby.”

The Court explained that the two elements constituting fraud in Civil and Criminal law are deceit and profit. The defendant can argue that he was not the one who negotiated with the plaintiff company, but his actions were dishonest and were done in bad faith. When he issued the cheques he allowed his sister to withdraw the merchandise and then  instructed the bank not to cash them.

Then he issued a new cheque, giving the bank the same instructions. He then failed to take action to return the stock to the company. Mr Justice Mintoff quoted from Article 1028A(1) of the Civil Code, which reads: “Whosoever, without a just cause, enriches himself to the detriment of others shall, to the limits of such enrichment, reimburse and compensate any patrimonial loss which such other person may have suffered.”

The Court then ordered that Sciberras pay the company €60,711.48 for his fraudulent acts.