The Court of Appeal, composed of Chief Justice Silvio Camilleri, Mr Justice Tonio Mallia and Mr Justice Joseph Azzopardi, on October 31, 2014, in the case ‘Emmanuel and Rita Mallia and others v Le Terrain Ltd’, held, among other things, that the buyer was not justified to withdraw from the sale of a field, simply owing to discrepancy in its size, especially when the sale was ad corpus, an identifiable plot of land.
Emmanuel and Rita Mallia, Francis and Celestina Mallia and the company Bonavia Properties Ltd stated that they entered a promise of sale agreement (konvenju), dated December 18, 2007, with Le Terrain Ltd.
Le Terrain Ltd undertook to purchase a field in Għargħur known as Ta’ Xwieki, from them specifically marked in a site plan, measuring 5555.8 square metres. Le Terrain Ltd paid a deposit of €23,300 but failed to pay the second instalment of €34,940 by April 18, 2008, in terms of the konvenju, even though requested by the judicial letter dated April 23, 2008.
The final contract had to be published by December 18, 2008. Three payments had to be made of €349,500 each. In fact, an appointment was fixed with notary Victor Bisazza to publish the final deed. However, Le Terrain Ltd failed to appear without any reason, claimants maintained.
Faced with this situation, the claimants filed legal proceedings to enforce the konvenju, to condemn Le Terrain Ltd to purchase the field and to pay the balance of the price and this, within a short time and subject to such provisions which the court felt to be appropriate, and to appoint a notary to publish the notarial act on the day, time and place to be fixed by the court.
In reply, Le Terrain Ltd contested the legal action which it said was unfounded in fact and law, and that it should be dismissed with costs.
It submitted that it had a good and valid reason at law not to appear for the final contract, as there was an apparent discrepancy in the size of the field.
According to the konvenju, the field had to be 5,555 square metres. However, from its searches, the land was substantially smaller and they claimed to be justified not to appear for the final contract.
On November 26, 2010, the First Hall of the Civil Court accepted the requests of claimants and condemned Le Terrain Ltd to appear for the final contract in order to purchase the field from the claimants.
The price which they had to pay was €1,083,153. The court also ordered them to pay legal interests on €34,940 as from April 18, 2008.
The court nominated notary Bisazza to publish the act of sale in the superior courts, Valletta, and appointed a curator to appear in case the buyers failed to appear.
The court considered that there was a discrepancy in the size of the field, and that this was brought to the attention of the parties by the notary at the time of the konvenju. The notary testified that this did not appear to be an obstacle and the konvenju was signed.
Claimants in fact made a deed of correction on December 26, 2008, after the expiry of the konvenju on December 18, 2008, in order to reconfirm the actual area of the plot: that was the last day when the contract of sale with Le Terrain Ltd had to be published. In this deed, it was declared that the land was 5,505 square metres.
The Court of Appeal noted that the object of sale, the field, was specifically identified in the konvenju. The parties were aware of what field was to be transferred. The sale was ad corpus, and not on the basis of the size of the land
At issue was whether the difference in the area of the field entitled Le Terrain Ltd to terminate the sale.
Claimants argued that the real motive of the company to withdraw from the konvenju was that they failed to obtain the necessary planning permits. The konvenju was not made conditional to the grant of the permits.
The uncertainty was not whether the claimants as sellers had legal title but as to the precise area of the field. If it was true that the area was smaller, the buyer had the right to request a reduction of the price in terms of article 1402 of the Civil Code.
The court said that Le Terrain Ltd could not be released from the konvenju for reasons only of a discrepancy in the size of the field, when it obliged itself to acquire a specifically marked-out field.
Aggrieved by the decision of the first court, Le Terrain Ltd entered an appeal, calling for its revocation.The claimants, on the other side, asked the court to dismiss the appeal. They filed an incidental appeal requesting legal interests on the whole balance of the purchase price.
The Court of Appeal noted that the object of sale, the field, was specifically identified in the konvenju. The parties were aware of what field was to be transferred. The sale was ad corpus, and not on the basis of the size of the land.
The court maintained that Le Terrain Ltd had to carry out its obligations and was not entitled to withdraw from the contract after it failed to obtain the necessary planning permits, as the konvenju was not conditional to obtaining planning permits.
This appeared the only reason why it refused to purchase the property, said the court and it was not justified not to purchase the property owing to a discrepancy in the size of the field.
In addition, Le Terrain Ltd pleaded that there was a fiscal impediment to the sale of the property, as the causa mortis declaration was not correct. In fact, it had been amended after the lapse of the konvenju.
The court maintained that the declaration causa mortis was not necessary before the deed of transfer.
It could be done simultaneously with the deed of transfer. It was the responsibility of the notary, but as far as the buyer was concerned, it was a res inter alios acta.
The court said that the failure to submit a correct causa mortis declaration did not affect the validity of the buyer’s title.
If the notary found that the tax was not paid, he could deduct it from the seller’s share of the price once the transfer was completed.
This was a fiscal matter affecting the seller and was not an impediment to the publication of the final deed, which remained valid despite the omission in the declaration of causa mortis, pointed out the court.
The court dismissed the incidental appeal of claimants. Interest could only be charged on €34,940, from April 18, 2008.
It could not be stated that the remaining balance was certain, liquidated and due. The payment of the price was due only on signing of the contract of sale.
For these reasons, on October 31, 2014, the Court of Appeal gave judgment by dismissing the appeal of Le Terrain Ltd, and by confirming the decision of the First Hall of the Civil Court. It fixed the final contract for November 28, 2014, at 10am.
As the court found the appeal to be wholly unfounded and vexatious, it condemned Le Terrain Ltd to pay double costs in terms of article 229(a) of chapter 12 of the Laws of Malta.
Dr Karl Grech Orr is apartner at Ganado Advocates.