In a significant development for corporate governance in Malta, the Court of Appeal has clarified that fiduciary duties extend beyond directors and trustees to encompass senior employees entrusted with substantial responsibilities. This clarification emerged from the case of Associated Supplies Limited (ASL) v. Joseph Mizzi, where the court affirmed that fiduciary obligations arise from the nature of an individual’s role and the trust placed in them, rather than their formal title.
Case Background
Joseph Mizzi served as the General Technical Manager at ASL, where he was involved in negotiations with Burmeister and Wain Scandinavian Contractor (BWSC) for a consultancy opportunity related to a power station project in Delimara. Although ASL had made significant progress in discussions with BWSC, the latter insisted on Mizzi’s continued involvement, a condition ASL declined, leaving the agreement unsigned.
Subsequently, Mizzi fell ill and resigned from ASL. It was later discovered that he had independently pursued the BWSC project through his own company, Typeset Company Limited, allegedly utilising confidential information obtained during his tenure at ASL. ASL initiated legal proceedings against Mizzi, claiming a breach of his employment contract and fiduciary duties.
Court Findings
On October 4, 2023, the First Hall Civil Court ruled that Mizzi had breached his fiduciary duties, awarding ASL €1,697,658.25 in damages, equivalent to the commission Mizzi earned from BWSC. Mizzi appealed the decision, arguing that the court had misapplied the law concerning fiduciary duties.
However, on March 11, 2025, the Court of Appeal upheld the lower court’s ruling, confirming that Mizzi had breached his fiduciary obligations under Article 1124A of the Civil Code. The court emphasised that fiduciary duties are not confined to formal titles but are determined by the nature of the role and the trust reposed in the individual.
Specifically, the court found that Mizzi had misused confidential information and exploited business opportunities gained during his employment for personal benefit. It was noted that Mizzi had replicated the Advisory and Cooperation Agreement negotiated between ASL and BWSC when later signing a nearly identical agreement through his company, Typeset Company Limited. The court also highlighted that fiduciary obligations continue to apply beyond the termination of employment when confidential information and client relationships are exploited post-resignation.
Implications
This ruling reinforces the principle that fiduciary duties are based on the responsibilities and trust associated with a role, rather than formal job titles. It serves as a critical reminder for employees in positions of trust and influence that they are bound by fiduciary obligations, which persist even after the conclusion of their employment. The decision marks a significant step in strengthening corporate governance principles in Malta.
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