Prescription comes after proof that a debt exists

The Court of Appeal (Superior Jurisdiction) on 26 February 2026 set aside a preliminary judgment on prescription in A.G. vs B.C., a claim for repayment of a loan with interest. Chief Justice Mark Chetcuti, Mr Justice Christian Falzon Scerri and Madam Justice Josette Demicoli held that prescription cannot be examined before the court establishes whether any creditor-debtor relationship exists. The court sent the case back to the First Hall of the Civil Court, to be heard by a different judge.

The facts

A.G. and his wife sued B.C. and Western Company Limited in 2015 for €116,871.62. They said this was €68,699.60 lent to the defendants and €48,172.02 in commercial interest up to 30 June 2015. The money had been advanced in 2000 through an accountant who handed it out against bills of exchange.

The defendants pleaded prescription under articles 2156(d), (e) and (f) of the Civil Code and articles 238 and 542 of the Commercial Code (Chapter 13 of the Laws of Malta). They also pleaded that they had never done business with the plaintiffs and did not know them.

The accountant was called into the suit at the request of the defendants. He denied acting in his own name, denied borrowing anything and also pleaded prescription.

On 31 October 2024 the First Hall decided only the prescription pleas. It found that part-payments up to January 2007 and a judicial letter had interrupted prescription against the defendants. It upheld the plea of the accountant under article 2156(f) and ordered the case to continue against the defendants alone.

What the court held

The Court of Appeal decided the appeal without a hearing under article 152(5) of the Code of Organization and Civil Procedure. It began from the purpose of extinctive prescription, which is to end obligations between parties after a set time so that disputes do not run without end.

From that purpose, the court held that “mingħajr xi forma jew oħra ta’ obbligazzjoni jew rabta ġuridika bejn il-partijiet, il-preskrizzjoni estintiva ma tista’ ssib ebda applikazzjoni” (without some form of obligation or legal tie between the parties, extinctive prescription can find no application). It relied on article 2107(2) of the Civil Code.

Here both defendants and the accountant denied any legal tie with the plaintiffs. The First Hall had itself noted that the prescription pleas contradicted the plea that the defendants never dealt with the plaintiffs. A decree of 17 May 2016 had also said that all the pleas should be decided in one judgment.

The court held that the First Hall had put the cart before the horse. It could not decide whether the claims were time-barred before deciding who, if anyone, had borrowed the money.

Solidarity raised a second obstacle. Under article 1100 of the Civil Code, an act that interrupts prescription against one joint and several debtor interrupts it against the others. Without a finding on joint liability, the court could not say whether a cheque endorsed by B.C. interrupted prescription for the company or for the accountant.

Deciding those questions on appeal would deprive the parties of two levels of review. Evidence had so far been heard only on prescription. The court therefore set aside the judgment in full.

It directed the First Hall to decide, in this order, the nullity plea, whether a creditor-debtor relationship existed, and whether there was solidarity. Next come which prescription article applies, whether the period ran and was interrupted and for whom, and the prescription pleas themselves. The merits come last.

Each party bears its own costs of the appeal. The court applied the maxim error iudicis error partis (a mistake of the court is borne by the parties).

Why it matters

A defendant who denies any debt and pleads prescription in the alternative should expect the court to hear the relationship first. Asking for a preliminary judgment on prescription alone may only add years to the case. The same holds for a third party called into the suit who denies any part in the debt.

Where it sits

Article 2107(2) defines extinctive prescription as a means of release from an action when the creditor has not exercised the right within the time the law sets. The five-year periods for interest, loans and commercial debts are in article 2156. Interruption by a judicial act or by part-payment falls under articles 2128 and 2134.

Article 1100 extends an interruption against one joint and several debtor to the others and to their heirs. That is why the question of solidarity has to be answered before anyone can tell whose time has run.

On the purpose of prescription the court cited a judgment of 7 November 2024 and the Court of Appeal (16 July 2024). Otherwise it decided on the articles of the Civil Code and the Code of Organization and Civil Procedure.

Source

Court of Appeal (Superior Jurisdiction), 734/2015/1, 26 February 2026: 734/2015/1