The Court of Appeal, composed of Chief Justice Silvio Camilleri, Mr Justice Albert J. Magri and Mr Justice Tonio Mallia, in the case Emmanuel Bonello vs I.T. Properties Ltd on May 6, 2011, held, among other things, that it was not unlawful for a married couple to agree in a contract of sale with a third party that payment should be made one half to one spouse and the other half to the other.

In the course of separation proceedings E. Bonello and his wife, transferred their home in Swieqi to the company I.T Properties Ltd for the price of LM70,000, by way of a notarial contract in the acts of Notary C. Mangion dated June 1, 1999.

It was stated in the contract that the company had to pay one half of the purchase price to Mr Bonello and the other half to his wife, within three years, without interests.

A hypothec and special privilege were registered over the property to secure the debt of the company.

After the sale, his wife acquired all the shares in the company, effectively becoming the owner of the property. As the company failed to pay Mr Bonello the sum of Lm35,000 as agreed under contract, Mr Bonello proceeded by taking legal proceedings against the company to recover the amount.

He requested the court to declare that the company owed him Lm35,000 and to condemn it pay him this amount.

The company in reply, contested the legal action to be unfounded in fact and in law.

It was submitted that contrary to what was stated in the notarial contract, Mr Bonello was not due the sum stated in the contract.

Allegedly, as part of her share in the community of acquests, his wife was allocated their Swieqi property, over which, the special hypothec was registered.

Mr Bonello had already received his share in full that was due to him and that the wife retained rights over the Swieqi property.

The notarial contract was written in English, a language which his wife did not understand. The effect was that she allegedly did not appreciate the true meaning of the contract. It was stated that his wife would not have signed the contract, if its contents were explained to her and if she had known that a special hypothec was to be registered over the property.

It was strange that the case was filed after nearly five years from the date of the contract. The court was informed of separate legal proceedings which were filed by the company.

In the other case, the court was asked to declare that the amount indicated in the contract was not due. It was also requested to order the cancellation of the hypothec over the property.

The defendant company, in addition, put forward the argument that even if the amount under the contract was to be considered due, on the basis of the fact that the company had separate, legal personality from his wife, Mr Bonello was to be deemed to have renounced his claim, as a consequence of their legal separation and the division of the property, which comprised the community of acquests.

The court was asked to lift the corporate veil and prevent Mr Bonello from abusing by claiming an amount which he was not entitled. It was alleged that the court should prevent an injustice.

On January 29, 2009, the First Hall of the Civil Court decided the case in favour of Mr Bonello. It declared that the company owed Mr Bonello €81,528 (Lm35,000) and condemned it to pay this amount.

The court was not satisfied with the reasons to justify why the company did not pay Mr Bonello.

It noted that his wife claimed she was not to be proficient in English. She admitted, however, that at the time of the contract, she was assisted by a lawyer. Besides, the notary read out the contract and neither party complained of not understanding its contents.

The notarial contract itself was ample proof that the amount was due, pointed out the court. It was clear that Mr Bonello was owed Lm35,000 by the company. Once the company was not attacking the validity of the contract, the court had to rely on its terms. The fact that his wife purchased the shares in the company, and became the owner, did not discharge the company’s obligations. The company remained, bound to pay the purchase price.

The court maintained that the contract clearly stated the obligations of the company. The contract was sufficiently clear and gave rise to no interpretation, re. L. Degabriele vs Emm. Enterprises Ltd (PA RCP) dated May 31, 2007 and E. Avallone vs C. Speranza (PA RCP) dated February 28, 2002 which made reference to Mr Zammit vs E. Petrocchino CBE noe dated February 25, 1952.

It was held that a court had to decide on the basis of evidence produced before it. A civil case need not to be proven beyond reasonable doubt; a balance of probabilities was enough.

In this respect, the company failed to prove that the amount was not due, pointed the court. The First Hall of the Civil Court accepted Mr Bonello’s case, with legal interests accruing from June 2, 2002, after the expiry of time limit as indicated in the contract.

Aggrieved by the decision of the First Hall of the Civil Court, the company entered an appeal calling for its revocation.

On May 6, 2011, the Court of Appeal gave judgment by dismissing the appeal and by confirming the decision of the First Hall of the Civil Court dated January 28, 2009.

As the appeal was declared to be frivolous, the court condemned the company to pay double costs in terms of Article 223 (4) of Chapter 12.

The following reasons were given for the court’s decision.

The contract was very clear, and gave no rise to doubt on the intention of the parties. The company argued that the notarial contract of acquisition was null and that as the property formed part of the community of acquests, the terms of payment should not have been divided ie one half to Mr Bonello and the other half, to his wife.

The court did not accept this argument.

A person could not use as a basis of nullity, his own failure. The fact that a married couple agreed to divide the proceeds of sale did not render the contract ab inito.

A similar agreement could be challenged by a third party, if he was prejudiced. However, it was not unlawful for a couple to divide the proceeds belonging to the community of acquests. This division took place with the free consent of the parties. The court did not accept Mr Bonello’s wife’s claim that she did not understand what she was signing. In this case, at the time the property was transferred to the company, the community of acquests had already been terminated, as of June 1, 1999.

Mr Bonello had to receive payment in his personal capacity and not on behalf of the community, which had ceased to exist.

At the time of sale of the property to the company, therefore, Mr and Mrs Bonello were co-owners and each co- owner was entitled to receive direct payment for their share in the property.