The right to have a ‘non-refundable’ deposit returned (Court of Appeal, Malta)

11 June 2010, Valletta (Ref: Appell Civili Numru 1 / 2010). The Court of Appeal confirmed a Small Claims Tribunal ruling involving a couple who paid a deposit on a car, and then sought a refund when the car was not delivered within the stipulated time. The car dealer had refused to refund the deposit, because the agreement included a clause stating ‘Deposit strictly non-refundable’.

Plaintiffs were informed that delivery of the car would not take more than four months. However, after four months they were told that the car would not arrive before a further five months. They refused an alternative vehicle available from stock, because this cost more and was beyond their budget. The dealer on the other hand claimed that the delay was due to factors beyond its control. The Small Claims Tribunal ruled that the delay was unjustifiable when compared with the indicated period (33 weeks instead of the indicated 12-16), to the extent that clause stating that the deposit is ‘strictly non-refundable’ is no reason for not refunding, given the circumstances. The Tribunal also ruled that the clause amounts to an ‘Unfair Contract Term’ under the Consumer Affairs Act (Laws of Malta, Chapter 378). The Tribunal ordered a refund of the deposit.
 
At appeal the dealer claimed a breach of his principles of natural justice, namely audi et alteram partem, claiming that their second defence plea was not considered by the Tribunal. The Court of Appeal confirmed that while the principles of natural justice are inderogable rules of public order, if the Tribunal considered all the issues, even if summarily, it satisfies these requirements.
 
The Court of Appeal ruled that the core issue was payment of a deposit when ordering a car, with delivery within about four months. It ruled that, since the Tribunal had considered these issues, it had not breached the principles of natural justice as the appealing dealer was claiming. The Court of Appeal went on to state its agreement with the conclusions reached by the Small Claims Tribunal including that the delay was unjustified, and even labelling the ‘non-refundable’ clause as ‘abusive and unjust’.
 
To read the judgement go to http://docs.justice.gov.mt/SENTENZI2000_PDF/MALTA/TA%27%20L-APPELLI%20CIVILI%20(INFERJURI)/2010/2010-06-11_1-2010_61844.PDF