Issue link: https://maltatoday.uberflip.com/i/1332685
maltatoday | SUNDAY • 24 JANUARY 2021 15 THE late submission of a reply before the Arbiter for Financial Services will not be considered as valid and the general proce- dural law applies. This was held in a judgement delivered by the Court of Ap- peal on 20 January 2021 pre- sided by Mr Justice Lawrence Mintoff in Michael Barbara vs. Bank of Valletta plc. This appeal is from an award delivered by the Financial Ser- vices Arbiter, after Barbara lodged a complaint in terms of Act 26(3)(c) of Arbiter for Financial Services Act against the bank claiming a loss of over €10,000 in an investment made. Barbara explained that he had accepted an offer to invest over €31,000 in a La Vallette Multi Manager Property Fund. The investment was sold by a bank employee and he was registered as an experienced investor. Since he was categorized as an experienced investor, he was not sold a savings product as he was meant to and as a result lost €10,201. The bank rebutted this com- plaint by saying that the Arbi- ter was not competent to hear the complaint and that the bank was not the correct party and that Barbara himself declared he was an experienced investor. The Arbiter in his decision dealt with the fact that the bank did not reply to this complaint on time. The Arbiter held that the Courts have held that in such a situation may there is still a contestation of the claim and the complainant still has to prove that he has a valid case. The service provider has a right to make submissions at the end of the case. The submissions cannot be used for the default party to present pleas and the court should ignore these pleas. The Arbiter adopted the princi- ple of law. As regard to the sale of the in- vestment to Barbara the Arbi- ter analyzed the evidence, The Fund was sold on the premise that he was a retail client of the bank and received a letter from the bank stating that he held an experienced investor status. An experienced investor is that person who invests $50,000 and over in 5 years. This was not the case for Barbara. The Arbiter held that the service provider had to take prudent steps to arrive to the conclusion that Barbara was an experienced investor and act with due skill, care and dili- gence in the best interest of the investor. The Arbiter concluded that since the investment was not appropriate for Barbara, the sale was a wrongful one and ordered that he pay €10,201.33. The Bank appealed this Award and asked the Court of Appeal to revoke the decision because the Arbiter misinterpreted the law, facts and calculations. The Bank held the Arbiter was too rigid in the application on the law of late submission of the statement of defence. The Arbiter for Financial Services Act does not provide for such instances and does not state that the Arbiter should apply the Code of Organization and Civil Procedure. Article 158(10) of the Code of Organisation and Civil Procedure (COCP) should not have been applied by the Arbiter. Article 22(3) of the Arbiter for Financial Services act binds the Arbiter to apply the rules of natural justice and therefore he should not have ig- nored their reply or statement of defence. The Court of Appeal agreed with how the Arbiter ap- plied the law. The Arbiter for Financial Services Act gives the defendant 20 days to file reply. The bank failed to convince the Arbiter that there was a justi- fied reason to accept the late re- ply. Irrespective of this the bank was allowed to make submis- sions and contested the com- plaint. Therefore, the Court of Appeal took into consideration the evidence and submissions of the complainant and the submissions of the bank. The Bank's reply was not removed from the acts of the case but the Arbiter did not take judicial no- tice of it. The Court of Appeal agreed with this position. 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