In the judgement ‘Philip Agius et vs. Avv. Josette Sultana et noe et’, in the First Hall Civil Court, presided over by Hon. Judge Robert G. Mangion on the 10 July 2019, the Court delved into Article 495A of Chapter 16 of the Laws of Malta. This is a legal remedy available to co-owners which tackles situations where co-owners fail to agree in respect of a sale of a thing held in common and authorises the co-owners holding the majority of shares in the property the right to request the Court to authorise the sale. The Court is vested with the power to authorise the sale, notwithstanding the fact that certain co-owners are in opposition to the sale of the property.  

Article 495A (1) provides that on the occasion that the co-ownership has lasted for more than three years without any of the co-owners instituting an action before a court or tribunal for the partition of the property, and the co-owners fail to agree with regard to the sale of any particular property, the court shall, on the request of the owners who agree to the sale, and if satisfied, authorise the sale in accordance with the wish of the majority of co-owners (considering the value of the shares).

In order for the action to be successful, Article 495A (2)-(4) holds that it is necessary that the request is made directly to the court and shall be accompanied by a declaration of the owners who are in agreement to proceed to sell the common property. The declaration must also incorporate a prospectus showing the amount and value of the shares held by the individuals and the terms and conditions that must be observed once the sale transpires. Subsequently, the application shall be served on the minority co-owners who are not in agreement with the sale of the property. When one or more of the co-owners are not known or cannot be traced by any of the co-owners, a declaration shall be confirmed on oath by one of the applicants.

In the case at hand, the parties failed to agree on the sale of their co-owned property. The property was co-owned by seven siblings, which, as a consequence of their passing, was inherited by their descendants. The applicants, holding the majority of ownership (5/7), instituted a lawsuit against the co-owners impeding the sale, in order to request the Court to satisfy their desires and authorise the sale of the co-owned property for the price of €26,000 as manifested in the promise of sale agreement. In its judgement, the Court outlined the situations whereby one may seek the remedies of Article 495A. The respondents refrained from appointing an expert appraiser, but they still proceeded to request the court to dismiss the application put forward by the plaintiff. Hon. Robert Mangion opted to make reference to case-law which handles the elements of Article 495A.

The Court was cognisant of the fact that it was to take into consideration all relevant factors including the value and the price of the sale and is to be appraised in terms of law. It is not a necessity for the defendants to appoint an expert valuer, in fact, as aforementioned, the respondent refrained from doing so. The Court made reference to Helen Zammit et vs. Madeleine Muscat (Court of Appeal), whereby it was stated that it is not sufficient for a Court to approve or reject the applicant’s request on the basis that the respondent provided the Court with an appraisal that manifested a different value to that brought forward by the plaintiffs. In the Zammit judgement, the Court further held that the scope of this action is not to ensure the correctness of the property value, but that the price is fair and that no proprietor suffers any loss from the sale. Moreover, the Court of Appeal observed that this mechanism is a form of forced sale and the Court must therefore ensure that co-owners holding the minority of shares are in no way prejudiced when adopting this method.

The Court proceeded to quote Grech pro et noe vs. Parnis, whereby it was stated that the sale of the property in dispute will be authorised, if within the preceding three years, no action was brought by any of the co-owners to partition the property. However, the only obstacle that may prevent the sale from occurring on the occasion that the following condition is satisfied is that the dissidents are grievously prejudiced. In the Grech judgement, the Court further confirmed that the dissident cannot be merely prejudiced but must be prejudiced to a grievous extent in order to thwart the sale. The legislator therefore makes it clear that even if the conditions of the sale in question are not ideal, this should not hinder the sale. The Court also made reference to Nutar Richard Vella Laurenti et vs John Vella Laurenti et that discussed the prejudicial element of this action, whereby it was affirmed that when the law alludes to the term ‘prejudice’, it is understood that this is to be grave, meaning that the sale is to be manifestly unfair on the dissident.  

Upon deliberation, Hon. Robert Mangion commented that the Court is duty bound to ensure that the price is advantageous for all parties involved. It was observed that in order to make its decision, evidence is to be brought before it, in particular, the valuation of the immovable property specified by the court nominated expert. As previously stated, the value indicated for the property in the promise of sale agreement was that of €26,000. Inversely, the duly appointed court expert valued the property at €45,000, where the property is tenanted, while if no tenants exist, the property was to be valued at €70,000. The Court noted the discrepancies between the amounts tendered, as the value of the parties’ share was substantially less in the initial promise of sale agreement (€7,428.57), when compared to the amount that would be received if the court expert’s amount were to be adopted (€12,857.14). Therefore, due to this inconsistency, the Court was of the firm belief that the dissidents were being grievously prejudiced if it had to authorise the sale in line with that which is being proposed in the promise of sale agreement, as the value could not be deemed to be realistic and reasonable.

The Court analysed whether the co-ownership lasted more than three years without instituting an action before a court of tribunal for the partition of the property.  It confirmed that the applicants satisfied this condition stipulated in the law, to the extent that the applicants ensured that a copy of the application was published in the Gazette and in one daily newspaper. Moreover, a declaration was also confirmed on oath by one of the applicants stating that co-owners could not be traced, as is required at law in order to institute an Article 495A action. 

For the above reasons, Hon. Robert Mangion held that the existence of said provision in the law is to encourage the consolidation of property between the co-owners as it is in their general interest to reach an agreement and avoid alienating the property due to a disagreement between the co-owners. In fact, the Court authorised the sale of the property on the condition that the defendant’s shares are sold at the price of the court expert’s valuation, €12,857.14 and not at the price indicated on the promise of sale agreement.

Dr Marcus Rizzo Naudi is an advocate at Ganado Advocates