Court revokes sale of Villa Madama
The judicial sale by auction of Villa Madama, a Grade 2 national monument in Balzan that has been used a wedding hall, was yesterday declared null and void.
Mr Justice Raymond Pace, sitting in the First Hall of the Civil Court, ruled that a creditor had not followed the correct procedures because the owner of the property, Venues Co. Ltd, was a guarantor of the debt and not a debtor.
The case was filed by Anthony and Nadine Abela, together with Venues Co Ltd, against Ronald Cordina. Lombard Bank (Malta) was later called into the suit.
The court heard that in May 2008, Mr and Mrs Abela had signed a notarial deed with Mr Cordina in terms of which they declared themselves to be his debtors in the sum of €295,709.15. Venues Co Ltd guaranteed the debtors’ obligations in terms of the deed.
Under the agreement, Mr and Mrs Abela were given up to May 2013 to make payment in full, while interest on the capital sum was to be paid monthly to Mr Cordina. The parties also agreed that if Mr and Mrs Abela failed to pay three instalments of interest, then they would lose the benefit of delayed payment terms.
When Mr and Mrs Abela defaulted on their payments, Mr Cordina filed a judicial letter against them and against the company requesting payment in full of €295,709.15 together with interest. In this manner, the notarial deed entered into by the parties became an executive title and the deed could be enforced.
Mr Cordina then obtained a warrant of seizure of Villa Madama and the courts ordered the judicial sale by auction of the property. Lombard Bank, claiming it was owed money by this company, stepped in to buy it.
In their court case, Mr and Mrs Abela and Venues Co. Ltd claimed that the procedure adopted by Mr Cordina to enforce the notarial deed was null and void, as Mr Cordina ought to have filed a court case for a declaration that they had lost the benefit of delayed payment terms. They further claimed that Venues Co Ltd had been a guarantor in the agreement, and did not owe any money to Mr Cordina.
Plaintiffs submitted that the notarial deed could not be enforced and that the ensuing judicial sale by auction of the property was also null and void.
Mr Justice Pace quoted from a judgment of the Court of Appeal which had established that the normal principle was that, when a contract expressly provided for a debtor to lose the benefit of delayed payment, then the creditor could proceed to execute the contract without the necessity of obtaining a court judgment. However, there might be situations when a judgment was necessary, as for example when a debtor was contesting the fact that he had lost this benefit.
In this particular case, Mr Justice Pace said that a judgment ought to have been obtained. Mr Cordina was requesting payment from Mr and Mrs Abela on the basis that they had not paid interest in a timely manner. However, Mr Cordina had also included Venues Co Ltd in his claim even though the company was not a debtor but a guarantor.
The court concluded by finding that the correct procedures had not been followed and it revoked the effects of Mr Cordina’s judicial letter and of the subsequent judicial sale by auction of the company’s property.