The First Hall of the Civil Court, presided over by Mr Justice Anthony Ellul in the case ‘George Catania v Marsovin Ltd and Vassallo Builders Ltd’ (Vassallo Builders Group Ltd was called into the proceedings) on October 6, 2014, held among other things, that the fact that a person informed another that a property was for sale did not entitle such person to a brokerage commission if the property was eventually sold. He could be due compensation for services rendered.

The facts in this case were as follows:

George Catania claimed that he was engaged by Marsovin Ltd to assist in the transfer of the property of LBM Breweries Ltd. Catania said that he had introduced Vassallo Builders Group Ltd to Marsovin, which led to the conclusion of the agreement.

Subsequently, he discovered that Marsovin Ltd had sold all its shares in LBM Breweries to Vassallo Group. Catania expected to be paid his commission and proceeded to file legal proceedings against defendant companies, Marsovin Ltd and Vassallo Group.

He asked the court to liquidate the commission due to him and to condemn both defendant companies to pay the sum so liquidated, together with interests according to law, within a short time.

Vassallo Builders Group in reply contested Catania’s claims. They denied that Catania had contributed to the negotiations of the transfer of the property of LBM Breweries Ltd. Marsovin Ltd maintained that Catania only introduced some prospective buyers but did not bring about the conclusion of the sale of shares.

They said that it was not true that Catania was instrumental in the conclusion of the transfer of the shares. Catania had not introduced Vassallo Builders to Marsovin. He did not attend any meetings between the parties. Nor was he involved in the negotiations.

The price was negotiated directly between the parties. If the court were to decide to award him a commission, this had to be calculated on the price of the shares.

The court noted that it had to decide whether Catania was due a commission as broker in the sale of the shares in LBM Breweries Ltd. It resulted that Catania had been engaged by Marsovin to sell the company. He took some interested persons to see the property.

On December 23, 2009, a contract was signed whereby 1,680,000 shares were sold to Vassallo Builders Group and one share to Vassallo Builders Ltd in the company LBM Breweries Ltd. These were all the shares in the company.

Catania had contacted Vassallo Builders but at that stage, they did not give him any reply, and were not interested in the property.

Catania said that an officer of Marsovin Ltd in November 2009 informed him that an agreement had been reached with Vassallo Builders for the purchase of LBM Breweries. They promised to pay him a commission according to law but could not agree on the exact amount.

Catania was claiming a commission under article 1362 of the Civil Code which provides: “In the absence of an agreement, brokerage shall be regulated at the rate of one per centum in the case of sale of movables, and two per centum in the case of sale of immovables.”

Article 1361 (2 “Brokerage as well as any fee due to the experts or other persons mentioned in article 1353 shall be borne by the seller and buyer one-half each.”

In ‘Michael McNamara v Mill Reef Ltd et’ dated February 28, 2014, it was held that according to case law, a person was entitled to a commission if he brought about the sale between interested persons after an active part in the negotiations.

He had to bring the parties to an agreement on the substantial and accidental parts of the contract. It was stated that once the claimant did not bring about the ‘idem placitum consensus’, no brokerage commission was due.

In ‘Anthony Degiorgio v Stephen Degiorgio’ dated November 23, 2005, the Court of Appeal confirmed that broker’s commission was not due automatically simply because the sale was concluded. For a person to be entitled to a commission, he had to lead the parties to conclude a definite agreement on all the conditions of the sale, substantial and accidental.

The court liquidated the sum of €20,000 due to Catania in view of his services, which included contacting other persons to purchase the property

In ‘Maria Dolores Portelli v Tarcision Azzopardi et’ dated July 9, 2008, the Court of Appeal held that the fact that a person gave information in the hope that the parties concluded an agreement did not entitle a person to a brokerage commission nor to compensation for services rendered, re: ‘Alfred Antignolo v Louis Magre et noe’ (CA) dated February 21, 1996. Furnishing information alone could not have brought about the conclusion of the contract and accordingly no commission was due, re: ‘Pace v Tabone’ volume 36.11.394.

The court said that it was not in dispute that:

• The transaction involved the transfer of shares of LBM Breweries Ltd;

• Catania had accepted the appointment to find a buyer for the shares;

• Catania had approached some potential buyers, including Vassallo Builders;

• Vassallo Builders showed no interest to Catania and had never accepted, express or tacit, the intervention of Catania. Vassallo Builders never accepted the services of Catania as a broker.

The court was convinced that Marsovin was prepared to pay Catania, even if he was not involved in the negotiations leading to the agreement. Although the shares were sold for €866,999, in reality the price was much higher. The acceptance of Marsovin Ltd to compensate Catania was an assumption of an obligation by Marsovin.

The court did not feel that Catania should be paid €80,000, however, as he had not brought about the sale. The fact that a person informed another that a property was for sale did not entitle such person to a brokerage commission. The court did not believe that Catania’s phone call with Nazzareno Vassallo was critical in finalising the sale.

In the circumstances, the court liquidated the sum of €20,000 due to Catania in view of his services, which included contacting other persons to purchase the property.

For these reasons, on October 6, 2014, the First Hall of the Civil Court gave judgment by declaring that while Catania had no right to a broker’s commission, he had to be compensated by Marsovin Ltd. It liquidated the compensation to €20,000 and condemned Marsovin Ltd to pay him this sum with interests.

Dr Karl Grech Orr is a partner at Ganado Advocates.

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