The Court of Appeal, composed of Chief Justice Silvio Camilleri, Mr Justice Tonio Mallia and Mr Justice Joseph Azzopardi, on December 5, 2014, in the case ‘David James and Carmen Sammut v advocate Tonio Azzopardi and legal procurator Louisa Tufigno as curators of Joseph Gilbert and Grace Warner’, held, among other things, that for purposes of signing a promise of sale agreement (konvenju), a power of attorney did not have to be in writing. Grace Warner continued the case also as successor of her husband who passed away.

On December 11, 2003, David James and Carmen Sammut entered into a promise of sale agreement with Joseph Gilbert Warner to acquire a terraced house in Munxar Street, Marsascala, together with a garage for the price of Lm97,000. Lm7,000 was the price of the garage.

Warner’s wife signed on his behalf without any power of attorney in the written form. Although she was a co-owner of the property, the wife signed the promise of sale agreement (konvenju) as an attorney on behalf of her husband and not also in her personal capacity. The promise of sale was in vigore until March 31, 2004.

It so happened that the sellers later refused to transfer the garage to the Sammuts, either because they sought a higher price or wished to keep it for themselves.

The Sammuts purchased the house for Lm90,000 on March 30, 2004, and immediately thereafter they proceeded, on the very same day, to take legal action against the Warners to enforce the konvenju in respect of the garage in terms of article 1357 of the Civil Code.

The contract of acquisition dated March 30, 2004, made no mention of the garage.

The Sammuts requested the court:

• to order the Warners to sell the garage for Lm7,000 subject to the terms and conditions as stipulated in the konvenju;

• to appoint a notary to fix a day, the time and the place of publication of the deed; as well as

• to appoint curators in case any party failed to appear on the deed of sale.

They also asked for payment of damages owing to the Warners’ failure to honour their contractual obligations.

The Warners in reply contested the legal action against them. They submitted in their defence that:

• The promise of sale agreement dated December 11, 2003, was not valid, as it had not been registered with the Inland Revenue Department according to Chapter 364 of the Laws of Malta;

• The Sammuts had renounced their rights under the konvenju when they appeared in the contract of acquisition dated March 30, 2004, to purchase the house;

• The contract of acquisition allegedly gave rise to novation which extinguished all obligations arising from the konvenju.

The court held that a spouse could sign a konvenju on the basis of an oral power of attorney. Such konvenju would be valid and binding. A power of attorney in written form would be necessary to enter into the public deed of acquisition unless both spouses appeared jointly

The First Hall of the Civil Court dismissed the Sammuts’ requests, on the basis that defendant Grace Warner was not authorised to represent her husband to enter the promise of sale on his behalf. Her power of attorney was restricted to the sale of the house and it did not include the garage.

The court was of the opinion that Joseph Gilbert Warner was not validly represented on the promise of sale and, in this respect, the promise of sale was not binding upon him. Sammut failed to show that Joseph Gilbert Warner was a party to the konvenju, it said.

In addition, Grace Warner only appeared as mandatary of her husband and the konvenju was not binding upon her.

The court noted that as, the konvenju was signed before December 31, 2003, and the deed was published before November 1, 2004, no notice to the Inland Revenue was necessary.

The contract of acquisition did not have the effect of any renunciation of rights by the Sammuts under the promise of sale nor to any novation. There was no substitution of debt created under the promise of sale, the court said.

Moreover, under article 1180 (2) of the Civil Code, novation could not be presumed. In this respect the first court dismissed the defendants’ first three pleas of defence.

Aggrieved by the decision of the First Hall of the Civil Court, the Sammuts entered an appeal, calling for its revocation insofar as their claims had been rejected. They maintained that a power of attorney in writing was necessary for the contract of sale but not for the entry of a promise of sale agreement.

They contended that Grace Warner should not be permitted to take advantage of her own failure to procure proper authority to represent her husband and, in addition, she should be held liable for damages as it was owing to her fault that the agreement was invalid.

Defendants Joseph Gilbert and Grace Warner also lodged a cross-appeal, asking the court to accept all their pleas of defence.

The Court of Appeal considered that, under article 1322 (6) of the Civil Code, a spouse required a power of attorney to carry out an act of extraordinary administration, if the object formed part of the community of acquests. The list under article 1322 as to what constituted an act of extraordinary administration was exhaustive: re ‘Elmo Insurance Services Ltd v Pace’ (PA) dated October 3, 2003.

The court held that a spouse could sign a konvenju on the basis of an oral power of attorney. Such konvenju would be valid and binding. A power of attorney in written form would be necessary to enter into the public deed of acquisition unless both spouses appeared jointly.

It was possible for the vendor in a konvenju not to be the owner, subject to the understanding that he would acquire ownership to transfer the property in a public deed. If he failed to do so, he would be liable to damages: ‘Zahra v Cutajar’ (PA) dated October 30, 2006.

The court said that it was clear that Joseph Gilbert Warner wanted to sell their house and garage. He manifested his consent in a proper way and was accordingly bound. After his wife signed this agreement on his behalf, he never took action to repudiate it. The promise of sale was, therefore, valid and enforceable, pointed out the court, but only against Joseph Warner, once his wife did not sign it in her personal capacity.

Grace Warner was not a party to this agreement and not binding upon her. Nor could she be compelled to transfer her one half undivided share.

The Sammuts, on the other hand, never contested that the konvenju did not fully represent the vendors’ true intentions. Joseph Warner was obliged under the konvenju to transfer his share for Lm3,500 (€8,152).

For these reasons, on December 5, 2014, the Court of Appeal accepted in part Sammut’s appeal only against Grace Warner as successor of her husband. It ordered her to transfer one-half share in the garage to the Sammuts in terms of the konvenju dated December 11, 2003.

A notary and a curator were appointed and the date of the final contract was scheduled for January 23, 2015.

No damages were awarded as there was no evidence that the buyers suffered any damages, nor was it the Warners’ fault that the promise of sale was so drafted.

The court also rejected the pleas of the defendants.

Dr Karl Grech Orr is apartner at Ganado Advocates.