Wife succeeds in stopping matrimonial house auction

The First Hall of the Civil Court yesterday ruled that a guarantee given by a husband without the consent of the wife was null and void.

The judgment was delivered in a case filed by Maria Stella Farrugia against HSBC Bank Malta plc, Carmel Joseph Farrugia and Antsat International Ltd.

Mrs Farrugia claimed that in December 1997 her husband had guaranteed the debt contracted by Antsat International Favour Ltd in favour of HSBC Bank Malta plc. The First Hall of the Civil Court had ordered Mr Farrugia to make good the company's debts.

The wife claimed she was unaware of the fact that her husband was guaranteeing the company's debts with the bank but had been served with an application for the sale by auction of her husband's undivided share of the matrimonial home in Marsascala.

Mrs Farrugia added that the guarantee given by her husband was in violation of her rights in the community of acquests existing between her and her husband and that the husband had acted in excess of his powers at law. She therefore asked the court to declare that the guarantee given by her husband was null and void and to revoke the application filed by the bank for the sale by judicial auction of the matrimonial home.

The bank pleaded that the guarantee was valid and Mr Farrugia argued that he had requested the bank, which had accepted, not to involve his wife in the grant of the guarantee. He confirmed that his wife was unaware of the guarantee.

Mr Justice Lino Farrugia Sacco declared in his judgment that the Farrugias had married in Malta and that their marriage was regulated by the community of acquests. It resulted that Mr Farrugia had in fact given the guarantee in favour of the bank with regard to the debts contracted by Antsat International Ltd and that Mrs Farrugia had not consented to this guarantee.

According to law, the grant of a guarantee was considered as an act of extraordinary administration of the community of acquests and therefore required the consent of both spouses. The wife's consent was required in order for the guarantee to affect the property forming part of the community of acquests but was not required for the validity of the guarantee. The wife's lack of consent could lead to the annulment of the legal act, such as the guarantee, insofar as it affected the community of acquests, if a request for the annulment was made.

In this case, the court ruled, Mr Farrugia ran the company Anstat International Ltd and was entitled to sign the guarantee in favour of the bank but not for property contained in the community of acquests. The effects of the guarantee could not adversely affect the wife but remained valid insofar as it bound the husband and insofar as it affected the husband's property which did not form part of the community of acquests.

The court concluded by finding that the guarantee given was valid in Mr Farrugia's regard but was null and void in Mrs Farrugia's regard.

It ordered the revocation of the application for the judicial sale by auction of the matrimonial home.