This case involved an alleged simulated donation. The facts of the case were as follows: Maria Vella, mother to all the parties, died intestate in 1997. The parties were unsure as to whether they should accept the inheritance or renounce it, retaining the right to the reserved portion. Before making any decision, the plaintiffs desired all the properties belonging to their deceased mother to be identified and pooled into the estate.

It was however noted that in 1982, the mother had transferred by a contract of datio in solutum (something given in settlement of something due) a property situated in Nadur, Gozo to her son Michael Vella. The plaintiff (today deceased) together with other plaintiffs, Carmela Zahra and Joseph Vella requested the Court of Magistrates (Gozo) (Superior) to declare that the contract published by Notary Michael Refalo on 4 December, 1982, be declared to be a simulated donation and hence be considered null as an onerous contract and valid only as a donation.

It was also alleged that Maria Vella was not even the proper owner of the tenement at the time of the transfer. Plaintiffs stated that the mother did not have a title over the property at the time she transferred it to her son. The same property was transferred to her by a contract in 1994. It was also claimed that the value of the property transferred to defendant was of a greater value than that indicated in the contract.

It November 2004, the Court of First Instance decided that the contract was indeed a simulated donation as opposed to a datio in solutum.

The plaintiffs requested the Court to:

• Declare that at the moment that the contract was published and the immovable property transferred by Maria Vella to her son, this same property did not appertain to her;

• Declare that the contract was null and void because you cannot transfer a property which does not belong to you in accordance with the maxim nemo dat quod non habet;

• Should the Court not agree with the above claims, that it declare that the contract of datio in solutum was substantially a simulated donation under the guise of an onerous contract and hence should be declared valid only insofar as it be deemed a donation.

Defendants made various pleas inter alia:

• The action was time barred by virtue of Article 2140 of the Civil Code dealing with prescription;

• Plaintiffs’ claims were unfounded in fact and in law;

• The property was given to their mother as part of her dowry more than 30 years before she transferred the same property to her son;

• The property now belonged exclusively to defendant Michael Vella since it was validly acquired publicly and peacefully and not clandestinely. Plaintiffs were fully aware of this transfer;

• Defendant had rendered services to his mother and it was only in the last three years of her life that she was cared for by her daughter.

The Court took into consideration all evidence including the statement presented by the legal expert appointed by the Court to give the exact evaluation of the property at the time of the disputed transfer.

The Court essentially had to decide as to whether the contract in question could really be deemed to be one of datio in solutum whereby defendant Michael Vella was truly compensated for having rendered services to his mother or whether datio in solutum was merely a simulated donation to strip the other siblings of their hereditary rights.

It has long been established that the contract of datio in solutum can easily be used to disguise a simulated donation. The Court noted that simulation is a form of fraud and whoever alleges it has to present conclusive and persuasive evidence of the same simulation. This evidence can be produced in any manner. The Court further noted that this evidence has to be even more persuasive when the simulated contract in question is a public deed. The intention to simulate the contract must be unequivocal. The legal expert established the value of the property in 1982 (at the time of the transfer) as being of Lm7,000. The contract however revealed a value of Lm2,000. The Court, in accordance with case law (Vassallo et vs Vassallo et. [1995]) stated that this in itself gives a good indication of simulation.

The contract actually said that the property in question was being given to Michael Vella as compensation for services rendered to his mother from 1972-1982. The defendant married late in life and hence lived with his parents for a long time. It was found that during the same 10 years, the other siblings did not help their mother much either due to the fact that they were overseas or due to being occupied looking after their own children. The Court hence believed that Maria Vella truly wished to compensate her son for having cared for her. The quantum of this compensation was determined legally by the parties on the contract of datio in solutum. The fact that Maria Vella kept on residing in the house was deemed irrelevant.

The Court reached the conclusion that since the property was valued at Lm7,000 as opposed to Lm2,000, the contract was indeed a simulated donation in respect of the Lm5,000 discrepancy between the true value and the stated value. The Court thus deemed the contract in question as being a simulated donation of Lm5,000 (in excess of the Lm2,000 actually stated in the contract).

The Appeal Judgement delivered on 28 September 2007 will be reported next Wednesday.