This case concerned a claim of nullity of a contract on the basis of incapacity to contract.

The facts of the case were as follows:

The Plaintiffs were the siblings/relatives of the Defendant X who lived in a house that belonged to their parents/grandparents who died in 1962 and 2005 respectively. The inheritance of the deceased consisted of this house, which to the date of these proceedings had not been partitioned between the heirs. The Defendant X, on 3 September, 2007 entered into a promise of sale agreement for his one-tenth undivided share of the same property with the Defendant Company Y Limited. On 13 October, the Defendants appeared on the final contract of sale where the price of such portion of the property was declared to be e35,599.35. The Plaintiffs were not party to the contract.

The Plaintiffs instituted proceedings for the recession of the contract. They claimed that the Defendant had been unwell for a few years and was also treated for mental illness and did not have the capacity to not enter into any contracts. The Plaintiffs further claimed that the price of the sale was not properly declared in an attempt to avoid the effects of Article 912 of the Civil Code (Chapter 16 - Laws of Malta) considering the exclusion of an assignee from the partition by co-heirs.

The Plaintiffs therefore requested the Court to

• declare that Defendant X was incapable of contracting when he entered into an agreement with the Defendant Company since he did not have the use of reason as is required by law and furthermore, the contract effecting such transfer had an illicit consideration.

• declare that the contract of 13 October 2007 was null and without effect;

• order that the contract be rescinded accordingly;

• fix a day, time and place so that the contract of rescission be published.

Defendant X, in his sworn reply claimed that

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

• at the time of the contract as well as at the time these proceedings were being held, he always was in complete control of his mental aculties and such allegations could be rebutted by a doctor’s certificate produced by himself as evidence to this effect;

• the allegation of an illicit consideration was unfounded and frivolous;

• the Plaintiffs’ claims should be rejected on the grounds that the Plaintiffs’ application was nothing more than an attempt to rescind a perfectly valid contract for their own ulterior motives, particularly because they did not want a third person as was the Defendant Company involved in their inheritance.

Y Limited, in its sworn reply, also claimed that X was fully capable of reasoning and put forward X’s claims.

The Court considered all the evidence produced. It referred to Article 968 of the Civil Code relevant to the case which states that “Any contract entered into by a person who has not the use of reason, or is under the age of seven years is null.”

The Court held that the presumption is always that at the time of contracting, the parties had the capacity to so contract. The Court noted that there was no existent decree interdicting or incapacitating the Defendant. In terms of Article 1212 of the Civil Code, “Any agreement which is defective by reason of the absence of any of the conditions essential to the validity of contracts, or which is expressly declared by law to be null, shall be subject to rescission.” However, the Court stressed that rescission of a contract can be pleaded only by a party to the disputed contract. This provision protects incapacitated persons who may prove that their consent on a contract was not valid due to their incapacity to contract at the time. The Court referred to a series of cases wherein it was held that the action for rescission of a contract was only available to one of the parties to the contract and not to third parties.

The Court examined the medical certificate produced as evidence wherein a doctor established that the Defendant was in a good state of mental health and was not suffering from any impairment of judgment and reasoning and was thus in full possession of his higher mental facilities.”

Furthermore, the Court noted that the burden of proof of such alleged incapacity was on the Plaintiffs, who, in this case failed to prove such allegations to the satisfaction of the Court.

Regarding the allegation of an illicit cause, in terms of Article 987 of the Civil Code, “An obligation without a consideration, or founded on a false or an unlawful consideration, shall have no effect.” Furthermore, Article 990 of the Civil Code holds that “The consideration is unlawful if it is prohibited by law or contrary to morality or to public policy.”

The Plaintiffs claimed that the price of LM 17,000 established in the contract was not the real price and that the actual price was that of LM10,000. The Court noted that there were conflicting versions of such facts from all involved parties.

The Court held that this was not an action whereby the Plaintiffs were acting in pursuance of Article 912 of the Civil Code which holds that “(1) Where any of the co-heirs has, under an onerous title, assigned his rights over the inheritance to any person, not being a co-heir, the other co-heirs or any of them may, even if the assignee is a relation of the deceased, exclude him from the partition by reimbursing to him the price of the assignment, the expenses incurred on the occasion of such assignment, and the interest on the price as from the day on which such price shall have been paid to the assignor.”

The Plaintiffs were, rather, requesting that the contract be rescinded and therefore, should their demand be upheld, everything be returned to its original state of affairs. Furthermore, in the event that they were indeed acting in pursuance of Article 912, their sworn application would have been drafted differently.

On the basis of the fact that the Plaintiffs allegations of incapacity of X were not proven to the satisfaction of the Court, the Court ruled in favour of the Defendants, rejecting the Plaintiffs demands, yet subject to the issue as to whether the disputed contract whose object formed part of an inheritance that was not yet partitioned, was valid or not.