Issue link: https://maltatoday.uberflip.com/i/1544987
16 maltatoday | SUNDAY • 17 MAY 2026 LAW Liquidation of damages in case of breach of contract Paul Radmilli & Cedric Mifsud Mifsud & Mifsud Advocates THE Appeal Court in its judg- ment pronounced on 30 April 2026, in the case Aspider Solu- tions Malta Limited vs Red- touch Fone Limited, partially upheld the appeal filed by Aspi- der. The court ordered the liq- uidation of damages awarded by the Court of First Instance to be increased considerably from €6,659 to €158,257.04. The basis for the claim for damages was a breach of con- tract by Redtouch Fone in a contract providing mobile telephony services. The con- tract forming the merits of the case was signed between Aspider and Redtouch for a term of three years with tac- it and automatic renewals for two-year periods. The last time the said contract was renewed was on 25 October 2017 and therefore the con- tract remained valid for a fur- ther two years following this date. Notwithstanding the clar- ity in the contract as to its validity, Jason Micallef in his capacity as chief executive officer of Redtouch Fone had informed Aspider that Red- touch was to terminate the contract by the end of 2018. The Court of First Instance described the difference be- tween a renewal of contract, which requires express con- sent for such renewal, and an automatic renewal which results from tacit consent. Legally, in the latter case the express communication is re- quired only where there is no consent for such renewal. Un- der the terms of the contract, which was the merit of this case, the express termination had to be communicated by one year from the termina- tion of the current term. Following the communi- cation from Micallef, the two companies attempted to reach an out of court set- tlement which did not reach a positive conclusion. Aspi- der proceeded to formally informs Redtouch that the contract is to be terminated according to the terms stipu- lated in the contract. In view that this was a tele- communications contractual relationship whereby Aspider was the Mobile Virtual Net- work Enabler, the profits for the plaintiff depended on the customer base of Redtouch. During the period where Red- touch decided to unilaterally and in breach of contract, ter- minate its obligations, it was not acting to the degree of good faith which it was legally bound to, particularly when it started advising its customer base to shift to another mo- bile telephony service provid- er. In commercial terms this constituted what is known as porting out. Such porting out resulted in a loss of earnings for Aspider. This loss of earnings formed the basis of their court claim. The court of first instance found Redtouch's action in bad faith and illegal in terms of Article 993 of the Maltese Civil Code which states that contracts are to be binding not only in regard to the mat- ter therein expressed, but also in regard to any consequence which, by equity, custom, or law, is incidental to the ob- ligation, according to its na- ture. As always happens in cases where damages are sought, it is not enough for the plain- tiff to successfully demon- strate that there was fault on the part of the defendant, which fault resulted in a loss of earnings—known in legal jargon as the nexus between the action and the damages suffered. The plaintiff needs to quantify the damages which in this case constitute a loss of earnings resulting from the actions in bad faith of Redtouch. Such an exercise is as important as apportion- ing fault and finding a direct link between the fault and the damages suffered in view that the court has to place the plaintiff back into the po- sition they would have been had they not suffered such prejudice. Maltese jurispru- dence observes that this prin- ciple has to be observed rigor- ously. On this point, the court of first instance quoted the French professor of civil law and authority on the subject, Gabriel Baudry-Lacantinerie, who stated in his Trattato Teorico Pratico di Diritto Civile, Delle Obligazioni, "Il risarcimento dei danni, qua- lunque sia la loro fonte, deve mettere colui che ha diritto alla riparazione nella situazi- one in cui si sarebbe trovato se non avesse subito il pregi- udizio". When calculating damages, the Court of First Instance made an accounting error when it awarded the meagre sum of €6,659. For this reason, Aspider filed an appeal with its main grievance being that the court incorrectly calculat- ed the liquidation of damages in view that it decreased from the sum of lost profits the amounts which Aspider paid to Vodafone. These amounts were already accounted for in the calculation of lost profits and this resulted in double accounting—inputting a cost twice when calculating lost profit will give a faulty result. The Appeals Court upheld this grievance. This case teaches us that all three elements of an ac- tion for damages, in this case damages ex contractu, are important. Firstly, a breach of contractual obligation has to be established; secondly, the prejudice suffered as a direct result of such breach has to be shown; and thirdly, the liqui- dation of losses suffered has to be defined. In this case, an appeal was required to rectify the error committed when the court of first instance miscal- culated the losses suffered. In this case, an appeal was required to rectify the error committed when the court of first instance miscalculated the losses suffered