“A promise to sell a thing for a fixed price, or for a price to be fixed by one or more persons as stated in the foregoing articles, shall not be equivalent to a sale; but, if accepted, it shall create an obligation on the part of the promisor to carry out the sale, or, if the sale can no longer be carried out, to make good the damages to the promisee”

This case concerned a request by the plaintiff to the defendant to appear on a final contract of sale subsequent to entering into a promise of sale agreement (‘konvenju’).

The facts of the case were as follows:

On 28 June 1991, a permit was issued in favour of the plaintiff on behalf of the plaintiff company to develop a property in Victoria, Gozo by demolishing it and converting it into shops and a block of apartments. On 20 November 1996, Presidence Limited entered into a promise of sale with Medstar Holdings Limited whereby the former company promised to sell to the latter company who promised to acquire the immovable property consisting of airspace measuring 386.4 square metres. It was further agreed that Presidence Limited continue to develop the property in order to enable the purchaser to build and use the property being so transferred.

The konvenju was signed in light of another agreement that was entered into on the same day whereby Medstar Holdings Limited bound itself to sell to Maurice and Amata Borg shares that it held in Presidence Limited for a price of Lm40,000. Part of the price amounting to Lm15,000 was to be paid upon the signing of the konvenju.

On 6 November 2000, the parties signed another agreement wherein reference was made to the konvenju. In this agreement, the parties agreed that all that was pending was the transfer of immovable property. On 5 November 2005, the parties signed another agreement wherein they confirmed that the transfer of the property was pending. The same was agreed on 29 March 2006 and it was agreed that every agreement remain valid until 30 April 2006. On 27 April 2006, Medstar Holdings Limited and Paul Pisani called upon the defendant to appear on the final contract of sale.

It resulted that the defendant company Presidence Limited did not develop the property and since the permit to so develop was not renewed, it expired.

The plaintiffs filed a sworn application wherein they requested that the defendants be condemned to transfer to them the airspace as promised in the konvenju and as agreed in the subsequent agreements.

The defendants claimed, amongst other things, that the object of the konvenju was not determinate and that all obligations were no longer effective since the permits expired through no fault of their own and it was therefore not the defendant’s fault that it could not fulfil its contractual obligations.

The Court of Magistrates took into account all the evidence produced.

Regarding the claim that the object was not determinate, the Court stated that it was clear from the plans annexed to the konvenju that the object was airspace “... (measuring 386.40 square metres) on the third floor/level of site previously occupied by ... Victoria, Gozo.....”. Beneath such airspace, a three storey building was to be erected.

The Court referred to Article 1357(1) of the Civil Code (Chapter 16 – Laws of Malta) which holds that ‘A promise to sell a thing for a fixed price, or for a price to be fixed by one or more persons as stated in the foregoing articles, shall not be equivalent to a sale; but, if accepted, it shall create an obligation on the part of the promisor to carry out the sale, or, if the sale can no longer be carried out, to make good the damages to the promisee.’

The plaintiffs requested that the transfer of the airspace be made. One of the conditions established in the konvenju was to build the underlying storeys so that Medstar Holdings Limited could then develop the airspace accordingly, a condition which could surely not be realised since the permit to develop had expired. The Court also noted that the wording of the konvenju and its annexes showed that it was agreed that the building had to be ready by the day of publication of the final contract. The fact that so much time passed since the konvenju (20 November 1996) was also an indication that the intention was that the building would be ready by the publication of the final contract.

The plaintiff however insisted that he still wished to purchase the airspace despite the expiration of the permit and despite the fact that the building had not been built. He therefore wished to buy the airspace in his name or in the name of the plaintiff company by waiving the condition established in the konvenju, which condition was ultimately inserted for the protection of the plaintiff company which had every right to so renounce to such conditions.

On the basis of the above and other considerations, the Court ruled in favour of the plaintiffs and ordered the defendant company to transfer to the plaintiff company Medstar Holdings Limited the disputed airspace.