Issue link: https://maltatoday.uberflip.com/i/1530615
8 maltatoday | SUNDAY • 15 DECEMBER 2024 OPINION & LAW Law Report IN a landmark judgment delivered by the First Hall Civil Court presided by Judge Henri Mizzi on Tuesday 3 December 2024, the Court rejected a request by Kroll Trustee Services Limited to approve the private sale of M/V JAY 1 because the pro- posed sale, involving a set-off agreement, failed to meet legal standards for fairness and creditor protection. Kroll Trustee Services Limited, having an executive title over the vessel M/V JAY 1 for a claim of over $67 million, sought to ac- quire the vessel through a private sale of $13 million, offsetting the price against its claim. This followed an earlier unsuccessful judicial sale by auction. In their application, Kroll argued that ac- quiring the vessel through private sale would maximise recovery efforts. However, Neriman Associates SA, a sepa- rate creditor of the vessel, opposed the sale. They argued that allowing an executing creditor to purchase the vessel could disad- vantage other creditors and that a set-off was not possible in a court approved private sale, in accordance with Chapter 12 of the Laws of Malta. They argued that whilst Sub-Title IV of Chapter 12, which regulates judicial sales by auction refers to the possibility of a set- off, this is excluded in Sub-Title V regulating private sales. Moreover, the proposed price of $13 million was deemed low compared to other offers received during earlier proceed- ings. During the oral submissions, Kroll made reference to a judgment given by the First Hall Civil Court on 18 February 2016 pre- sided by Chief Justice Mark Chetcuti; Pacif- ic Seaways Shipbuilding Inc. vs M/V KAY whereby the Court held: "What makes this sale a little bit different is that the prospec- tive buyer is the same creditor who is re- questing the sale. He is asking for permission to acquire the vessel in partial payment of the credit owed to him. The Court does not make a restriction on who can be the acquir- er and as in a normal judicial sale by auction, any creditor can participate in the sale animo compensandi." Judge Mizzi emphasised that in those pro- ceedings there was only one creditor and there was no opposition to the sale as pro- posed. The Court stated that the argument that a judicial sale by auction is intended to protect all creditors and therefore, since a set-off is allowed there, it should be allowed in a court approved private sale, could have convinced the Court in the Case of Pacific Seaways. However, in this case, the Court held that even if a creditor can be a purchas- er, it cannot offset the price against its claim. Article 363 of Chapter 12 of the Laws of Malta states that the price of the vessel is to be deposited in Court within seven days from when the sale is finalised. The Court held that the word "price" should be given its ordinary meaning where it is intended to protect the interests of all known creditors, and not a technical meaning where it can mean the way of ending an obligation. The Court did not accept Kroll's submission that the price can be considered deposited in the form of a set-off because this has no value to other creditors. The Court further stated that the set-off cannot be extended to Sub-Title V of Chap- ter 12 because the legislator chose to allow and regulate the possibility of a set-off in the provisions of the law pertaining to judicial sales by auction only. If the Court were to al- low a payment by set-off in a court approved private sale when there are other creditors, a precedent would be created that could by- pass protections embedded at law. The Court also found that Kroll failed to provide adequate evidence that the sale price was reasonable or reflective of the market value. Although two valuations were sub- mitted, Neriman argued they were underval- ued. Furthermore, the absence of efforts to market the vessel to potential private buyers raised questions about the transparency and fairness of the process. As a result, the Court ruled that the pro- posed private sale did not meet the legal re- quirements for protecting creditors' interests or ensuring transparency and rejected Kroll's request. Neriman Associates SA was represented by lawyers Cedric Mifsud and Jodie Darmanin. Court rejects the private sale of M/V Jay 1 amid set-off payment controversy JODIE DARMANIN Junior Associate Mifsud & Mifsud Advocates PN overreach on GWU's Valletta premises is punitive ON Monday, members of parliament will vote on a resolution that will change the conditions of the State's 1957 origi- nal emphyteutical deed for the General Workers' Union historical premises in Valletta – the Workers' Memorial Build- ing. The Opposition already declared it will be voting against as it has done already at committee level and during a plenary debate. They claim they want to be con- sistent with their past decision to initiate court action against the GWU. The motion to amend the emphyteu- tical deed allows the GWU to sublet its unutilised basement and ground floor portions to commercial entities, without the onerous condition that it be a 51% shareholder in those entities. It is regretful that a party that sublets its village każini to commercial entities, and whose historic precedents on the disposal of public land betray any pretensions of financial probity, finds this vote to be a politically litigious cause. The PN's overreach has been punitive and merciless towards the GWU since its former leader Simon Busuttil launched this lawsuit in 2017. Did the PN hope that the eviction of the country's largest trade union could be deemed a political victory? Do MPs of a party aspiring to be a government-in-waiting, find the un- dermining of a trade union representing 51,000 workers, a truly honourable cause? This seems to be the situation inside the PN, with its latest crop of MPs trying to uphold the misguided battle launched by its former leader. 40 years after the GWU was granted the Valletta property lease, in 1997 the House of Representatives voted to allow the un- ion to sublet portions of its premises – the condition was that the union be a 51% shareholder in the letting operation. It is pertinent to point out that the WMB is owned by our members and what we are doing is just widening an existing right. In 2014, on trusted legal advice, we re- deemed our ground rent in favour of the State so that the GWU could sublet its unutilised space. Our belief was that sub- letting these two shopfronts, was legally not a 'transfer' as laid down in the em- phyteutical deed. The courts disagreed, and we were mistaken – for that we are willing to pay the State its rightful dues. But the Courts in 2024 did not uphold the PN's egregious request for the union's eviction. To safeguard the union's financial health, we have now requested that the House of Representatives once again amend the emphyteutical deed; the GWU will pay a total amount of €1.99 million to the Lands Authority for the possibility of subletting parts of the Workers' Memori- al Building without the previous restric- tion. MPs are voting on one fundamental change to the deed – that the GWU pays for the concession to lease these bottom floors without restriction, while the re- maining 3,800sq.m of legally delineated office space, is strictly utilised for the GWU's trade union activities. How is this a matter that continues to occupy the PN's pathological antagonism towards the trade union's activities? Op- position MPs want to vote against this motion even though government policy has long been that of supporting busi- nesses, social partners as well as volun- tary organisations to remain financially viable to continue safeguarding the rights of those they represent. It is a transparent motion being present- ed to the House, that puts to shame the precedents set by previous PN adminis- trations, whose arbitrary decisions bene- fited private interests exclusively. In March 2013, the government expro- priated a restaurant at the picturesque Fekruna Bay in Xemxija by swapping the land for two government plots in San Ġwann. The NAO and IAID found the State had lost €1.1m on that deal by overvaluing the €4.9m Fekruna plot – the GWU did not hunt down former lands minister Jason Azzopardi for its pound of flesh! In 2009, the State again facilitated a hasty deal to allow the Marsovin company to redeem the ground rent on public land it had occupied for a Qormi brewery so that they could transfer their concession to Vassallo Builders Group for €8 million – the sale depended on the removal of the brewery condition. The State obliged, re- moving the onerous condition in just 48 hours, without even taking the matter to the House. Just as the GWU submitted itself to the court's decision on the emphyteutical deed, it will respect the decision of the House on this motion. Democracy should no longer be a parlour game for historic grudges, or to give vent to one's prejudice towards workers' unions. The GWU can only look to the future to strengthen its mission to further workers' rights. For its adversaries, this is yet an- other steep incline on the political learn- ing curve. Josef Bugeja is secretary general of the GWU Josef Bugeja