Issue link: https://maltatoday.uberflip.com/i/919364
50 maltatoday SUNDAY 24 DECEMBER 2017 T he Court of Appeal ruled that even though there is a fixed price contract, if there is an extension of the service, then the contractor would be justified to make it more than that agreed. This was held in a judgment delivered on 19 December 2017 in an appeal between Design & Technical Resources Ltd and Konig, Heunisch und Partner -v- Direttur Generali tal-Kuntratti u l-Awtorita ghat-Trasport f 'Malta. The parties were part of arbitration proceedings, where the plaintiff companies explained that they had entered into a contract with Transport Malta in May 2005 to carry out supervision works on the Manuel Dimech Bridge. They had quoted a price of Lm169,000. The project consisted of 6 phases, the first 5 had to take 14 months. The plaintiff companies carried out the first 3 phases on time. The fourth phase was for the defendants to adjudicate a tender for the civil works on the bridge. The plan was that this phase would take until March 2006, but in fact the defendants took until August to decide, an increase of 22 weeks. This moved the fifth phase a further 20 weeks. The contractors who carried out the works had to complete the job by January 2007, but the plaintiffs' had to carry out their supervision work until August 2008. The plaintiff blamed the defendants for this delay. They asked the authorities to pay them for this extra length in time, which was not their doing. Transport Malta (TM) disagreed by replying to the claim that this was not according to the agreement they had signed, since it was a lump sum contract, which could not have been varied. The Director of Contracts also argued that the contract provided for one fixed price and the delay was due to the contractor and not the Director of Contractors. The Arbitration award upheld the companies' claims and awarded them €206,150 Both defendants appealed from this award. The Director of Contracts argued that the award was legally f lawed and went contrary to Article 1639 of the Civil Code and Regulation 72 of the Regulations on Public Contracts. The two companies replied to the appeal by first claiming that the appeal could not be lodged because the arbitration was an international commercial arbitration, where appeals have to be expressly agreed upon, but also that the award was a just one. The Court of Appeal, presided by Mr Justice Anthony Ellul, first dealt with the whether the appeal could have been filed. Article 69A(3) of the Arbitration Act reads: "Recourse against an arbitral award delivered under Part V may be made to the Court of Appeal by an appeal on a point of law only if the parties to the arbitration agreement have expressly agreed that such right of appeal is available to the parties in addition to the rights of recourse as contemplated in article 34 of the Model Law. In such cases the provisions of articles 61(5), 70A, 70B and related articles shall apply." Article 55 of the same Act, states "(1) Subject to this Part, the Model Law shall form part of the Laws of Malta and shall be enforceable as such. (2) In the Model Law: 'State' means Malta and any foreign country; 'this state' means Malta." The criteria for an international arbitration if the place of business is in different countries and one is outside Malta. The Court pointed out that from the special conditions of the contract, both companies gave the same address in B'Kara and the lead partner was Robert Sant. Although the plaintiff companies are different from one another, they are represented by the same person and the same place of business. The service was given in Malta. Therefore, as a consequence this arbitration cannot be considered as international in terms of Article 70a of the Arbitration Act: "70A. (1) A party to arbitral proceedings may appeal to the Court of Appeal on a point of law arising out of a final award made in the proceedings unless - (a) the parties have expressly excluded such a right to appeal in the arbitration agreement or otherwise in writing; or (b) notwithstanding anything stated in the arbitration agreement, the parties have expressly agreed that no reasons are to be given in the award in accordance with article 44(3)." The Court rejected this ground of appeal and allowed the appeal to continue. The Court then dealt with the merits of the case, in whether the plaintiff companies could ask for more money. The plaintiffs argued that Article 1639 of the Civil Code allows them to charge more, since the delays were not their fault. The contract the parties signed was an all-inclusive fixed price and therefore should not be revised. The Court analysed what the arbitrators had decided in their award. From the evidence, the contract provided for 40 weeks of work, but TM issued a contract with the contractor for 52 weeks. In actual fact, the project took 99 weeks. The arbitration panel quoted Article 1639, which states: "1639. A contractor who has undertaken the construction of a building or other considerable work , according to a plan determined and agreed upon between him and the employer, cannot claim any increase in the price, on the ground of an increase in the rate of wages or the cost of the materials, or on the ground of deviations from or additions to the plan, which are not onerous to the contractor." According to Topserv Limited -v- Vella noe, decided by the Court of Appeal on 17 February 2003, the contractor may ask for more money in exceptional circumstances, when involved in a big project and it is not to blame for the extra works required. This is intended to allow a remedy that avoids an unjust prejudice to the damage is not caused by the contractor. The Court of Appeal, held that this article could be applied in this particular case. The contract did not allow a revision in prices, if not specified in the contract and this is binding. Contracts are to be entered into in good faith and as a consequence in this case, the contracting authority did not stop the plaintiff companies from continuing their duties after the lapse of the time frame mentioned in the contract. The Court then moved to reject the appeal. Dr Malcolm Mifsud is partner in Mifsud & Mifsud Advocates Opinion A planning application entitled "Rehabilitation of an existing uninhabited residential building into separate residential units, including proposed minor internal alterations, proposed additional fourth floor and receded floor and proposed class 4A use at ground floor" was rejected by the Planning Commission. This proposal concerned an old palazzo situated in situated in a corner adjoining St Fredrick Street and St Christopher Street in Valletta. In refusing the application, the Commission gave the following reasons to justify its decision: 1 The proposed height of development runs counter to Urban Objectives 2.3 and 2.4 of the Strategic Plan for Environment and Development which promote a context driven approach for the control of building heights within Urban Conservation Areas in order to protect the traditional urban skyline. The proposal also runs counter to policies P35 and P39 of the Development Control Design Policy, Guidance and Standards 2015 which require that building heights are based on a streetscape analysis in order not to create an unacceptable visual impact; 2 The proposed development runs counter to the provisions of policy P32 Minimum Dwelling Areas and Mix of Dwelling Sizes of the Development Control Design Policy, Guidance and Standards 2015 which specifies that the residential units in relation to the number of bedrooms shall respect the minimum gross floor area; 3 The proposed development runs counter to the provisions of policy P45 Development Amenity of the Development Control Design Policy, Guidance and Standards 2015 which specifies that residential units should have an adequate outlook on the public road. In reaction, applicant lodged an appeal with the Environment and Planning Review Tribunal, insisting that the Commission's decision should be reversed. In his defence, applicant (now, appellant) stated that his proposal sought 'to give value to the rehabilitation of an abandoned and disused residential building which has been in a dilapidated state for several years'. It was also highlighted that the topmost floors were being proposed on 'a land-locked property located on the upper level of Valletta's sloping terrain', adding that his site was surrounded with high buildings. Appellant maintained that the 'additional floors' would be in keeping with the 'vernacular architecture predominate in Valletta', thus ensuring 'compatibility with the urban fabric to enrich the street character'. Moreover reference was made to a number of planning applications, where permission was granted even though the minimum floor area requirements were not being adhered to. In his concluding arguments, appellant underlined that his design philosophy was 'to restore and rehabilitate a disused and dilapidated building into a landmark high-end and high quality residential project, giving it a new lease of life and setting a benchmark for future developments in Valletta'. In reply, the Planning Authority disagreed with appellant's arguments, reiterating that the adjoining buildings did not have roof structures as applicant had purported. According to the case officer, the proposed receded roof structure, thus, ran counter to SPED Objectives 2.3 and 2.4 which promote a context driven approach for the control of building height in an Urban Conservation Area with a view to protect the traditional urban skyline. The Tribunal was likewise reminded that the development as proposed would adversely impact the skyline of a World Heritage Site. In its assessment, the Tribunal was satisfied that, since the proposal concerned the rehabilitation of an old palazzo, the dwelling floor areas were deemed to be adequate even though the proposal fell short of the minimum policy requirements. On the other hand, the Tribunal was concerned with the proposed designs given that the façade elevations were not in keeping with the streetscape characteristics. In addition, the Tribunal felt that the resultant massing was objectionable from an aesthetics point of view. Against this background, the Authority's decision was confirmed. Dr Robert Musumeci is an advocate and a perit www.robertmusumeci.com SPED Objectives 2.3 and 2.4 promote a context driven approach for the control of building height in Urban Conservation Areas Robert Musumeci Malcolm Mifsud Extension of contract means an increase in payment Valletta palazzo remains without a planning permit