The Malta Independent 8 December 2021, Wednesday

Law report: Formalities surrounding a Contract of Sale of Immovable Property

Ganado Advocates Wednesday, 7 April 2021, 07:40 Last update: about 9 months ago

Bettina Gatt

The First Hall of the Civil Court (the “Court”) presided over by Honourable Judge Toni Abela on the 15 March 2021, in the case Alexander Baldacchino (the “Plaintiff”) vs. ACS Developments Ltd (C 11833) (the “Defendant”) dealt with Articles 1233(1) and 1363 of the Civil Code (Chapter 16 of the Laws of Malta). Honourable Judge Toni Abela, through this judgment, highlighted the formalities surrounding the sale of an immovable property.

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The facts of the case are as follows:

In 1998, the Plaintiff and the Defendant (collectively the “Parties”) both agreed to the sale of three (3) garages, which belonged to the Defendant company. The Parties both agreed that the purchase price would be equivalent to the sum of LM12,500, payable by the Plaintiff to the Defendant. Prior to purchasing the full amount, the Plaintiff was engaged by the Defendant company to assist in the provision of services. The Parties agreed that the provision of such services would set off part of the purchase price which the Plaintiffs were to pay. Considering this, the Plaintiffs settled the total sum of LM5,200 in cash, and the remainder (LM7,300) was settled by the Plaintiff through the works carried out for the Defendant company. Following the completion of works, the Defendant handed over the keys as well as possession of the three (3) garages to the Plaintiff. The Parties deemed the sale complete, so much so that the Plaintiff immediately began to carry out the necessary works required in such garages, these included the supply of water and electricity in one of the garages.

Despite the above (i.e., the fact that the Parties both fulfilled their obligations, and both deemed the sale to be complete), neither a private writing nor a public deed was ever drawn up. Although the Plaintiff requested, countless times, that the Defendants put pen to paper and ultimately enter into a public deed, such formality was never done. The Plaintiff claimed that the Defendants ignored her request and hence defaulted on their obligation, claiming that the act of drawing up a public deed was merely a formality and was thus not the be all and end all of the sale.

The Plaintiff principally requested that the Court demands the Defendant company to appear on and enter into a contract with the Plaintiff. The Plaintiff also requested that curators be appointed to represent the company and that a notary be appointed to publish the contract.

On the other hand, the Defendants claimed that given that the Parties failed to enter into a public contract (re the sale), or any form of private writing (re the promise of sale), the garages were never actually transferred to the Plaintiffs and hence remained the property of the Defendant company.

The Defendants went on to claim that in terms of article 1233(1) of the Civil Code, no sale ever took place given that the necessary formality required by law for the sale of an immovable property to occur did not happen in practice. Article 1233(1) states that Saving the cases where the law expressly requires that the instrument be a public deed, the transactions here under mentioned shall on pain of nullity be expressed in a public deed or a private writing: (a) any agreement implying a promise to transfer or acquire, under whatsoever title, the ownership of immovable property, or any other right over such property.”

Furthermore, the Defendants referred to article 1363 of the Civil Code which states that “the sale of immovable property shall be null if not made by a public deed”.

The Defendants requested that the garages are returned to the rightful owner.

The Courts Analysis:

The Court started by acknowledging the fact that it was clear that at the time of the transfer of the three (3) garages, both Parties agreed to the terms of the sale and were fully aware of the transfer taking place. The issue which remains unclear between the Parties is the price, which was actually paid by the Plaintiff. The Defendant company claimed that this was never settled, and that despite being requested to show proof of payment, the Plaintiff failed to do so. The Plaintiff stated that he took the Defendant companies word and was therefore no longer in possession of the requested receipts and hence, could not present them in Court. That being said, the Plaintiff held that in accordance with article 562 of the Code of Organisation and Civil Procedure (Chapter 12 of the Laws of Malta), “the burden of proving a fact shall, in all cases, rest on the party alleging it.”

Given the lack of concrete evidence, the Court referred to previous case law, in particular, the judgement concerning Maria Xuereb et. vs. Clement Gauci et (2004), which stated that in such situations the Court would have to examine the versions put forward by both Parties and determine which is to be considered as being most credible.

The Court held that the Plaintiffs statement held more water. Additionally, the Court found it difficult to comprehend why the Defendant company never requested the Plaintiff to refrain from using / occupying the disputed garages had they deemed the sale to never have occurred. Had the Defendant company deemed that the Plaintiff failed to settle the full purchase price one would assume that over the course of the past 20 years, settlement would have been requested.  

The Court proceeded to delve into Articles 1233(1) and 1363 of the Civil Code and concluded that the former is not applicable in such a scenario, since the point of dispute in this case is whether the sale occurred or not. Article 1233(1) deals with the obligations surrounding a promise of sale, and not the actual sale.

However, when considering Article 1363 of the Civil Code, the court concluded, and hereby agreed with the Defendant, that in terms of this article, the sale of immovable property never took place and is therefore deemed to be null given that it was not done by means of a public deed. Additionally, the Court went on to state that Article 1378 of the Civil Code makes reference to the fact that “the seller has two principal obligations, namely, to deliver, and to warrant the thing sold”.

In understanding what amounts to the “delivery of the thing sold” the Court refers to article 1379 which states that “the delivery of immovable property takes place ipso jure on the publication of the contract of sale.”  It therefore became even more clear that the sale never took place, the court noted.

Conclusion

The Court, in reaching its conclusion, acknowledged the fact that morally the Plaintiff was justified in believing that the transfer had occurred. That being said, the Court must respect and cannot ignore the letter of the law which unambiguously declares that the sale of an immovable property must be done by virtue of a public deed, and that the delivery of such immovable property is deemed official upon publication of such deed. The Court decided in favour of the Defendant.

Bettina Gatt is an Associate at Ganado Advocates.

 

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