The Court of Appeal, composed of Chief Justice Silvio Camilleri, Mr Justice Giannino Caruana Demajo and Mr Justice Noel Cuschieri, on January 25, 2013, in the case ‘Joseph Mifsud vs A.F. Ellis Ltd’ held, among other things, that it was not possible for a buyer to request the rescission of the sale (actio redhibitoria) if he retained the purchased item in his possession.
The facts in this case were as follows:
If Mifsud had removed the granite from his residence and deposited it with the sellers, he would have exonerated himself from any responsibility
Joseph Mifsud had ordered yellow granite from A.F. Ellis Ltd to be delivered, laid and polished in his residence at Rustika, Notabile Road, Attard, on February 27, 1988. The price for the granite was Lm3,400. Mifsud paid a deposit of Lm1,000, leaving a balance of Lm2,400.
After the granite was polished, Mifsud noticed latent defects in the granite, which were not previously apparent. The defects, which consisted in variation of colour and small holes on the surface, allegedly rendered the yellow granite unfit for the use intended. Furthermore, Mifsud said that if he had known of these defects, he would not have agreed to purchase the granite.
Faced with this situation, Mifsud proceeded to file legal proceedings, the so-called actio redhibitoria, to rescind the sale on grounds of latent defects and to recover his Lm1,000 deposit.
In reply, the company contested the legal action against it. It submitted that the action was time-barred, as more than one month had passed on the date of the presentation of this lawsuit from when the works had been completed.
It contended that the court should dismiss Mifsud’s claims as it was not possible for Mifsud to request the rescission of the sale, yet keep the goods in his possession. The company also denied the existence of latent defects.
It filed a counter-claim against Mifsud, demanding payment of the outstanding Lm2,400 for the granite. Mifsud, on the other hand, reiterated that there were latent defects in the granite.
Article 1427 of the Civil Code provides:
“In the cases referred to in articles 1424 and 1426, the buyer may elect either, by instituting the actio redhibitoria, to restore the thing and have the price repaid to him, or, by instituting the actio aestimatoria, to retain the thing and have a part of the price repaid to him which shall be determined by the court.’’
It resulted that on February 27, 1988, there was an agreement between the parties so that the company would deliver yellow granite to be laid in Mifsud’s residence. The works were carried out in the beginning of June 1988. The defects were discovered after the granite was polished and Mifsud refused to pay the unpaid balance.
The Court of First Instance noted that legal proceedings were taken within the one-month time limit.
Mifsud, however, could not keep the goods and file the actio redhibitoria (for the cancellation of the contract) re: Busietta vs Borg Cardona dated October 6, 2000. The buyer was obliged to refuse the object ridden with the latent defects and return the goods to the seller. If he kept the goods, he was implicitly agreeing to accept the goods in their present condition: re Vella vs Mifsud dated November 2, 1990. (Commercial Court).
In reply to the company’s counterclaim, it was not possible for Mifsud to plead per via di eccezzioni latent defects. A separate lawsuit had to be filed.
The court maintained that once it could not accept Mifsud’s requests, the company was entitled to recover Lm2,400. It declared that Mifsud’s legal action was not legally possible. It freed the company from these legal proceedings, accepted its counterclaim and condemned Mifsud to pay Lm2,400, together with legal interests.
Aggrieved by the decision of the Court of First Instance, Mifsud entered an appeal, calling for its revocation.
On January 25, 2013, the Court of Appeal gave judgment, by dismissing the appeal and by confirming the decision of the First Court. The following reasons were given for the court’s decision:
The court did not accept the argument put forward by Mifsud that under article 1427 of the Civil Code, the return of the purchased object and the refund of the price/ deposit could take place simultaneously.
According to case-law, for the actio redhibitoria to succeed, it was crucial that the purchased item was returned.
While it was probable that part of the granite could have been damaged if it were removed, the buyer had an obligation to preserve the purchased object in the same condition when he noticed the defects.
The buyer had to refuse to keep the purchased object and return it in the same condition as at the time of the agreement, in case he intended to take action to rescind the sale agreement (acto redhibitoria).
The return of the defective purchased object was a crucial requisite of the redhibitoria action; re: Busietta et noe vs Borg Cardona et noe (CA) dated October 6, 2000.
The court maintained that Mifsud failed to safeguard his position in order to utilise the redhibitoria action. It did not agree that the return of the purchased object and the deposit could take place simultaneously. The court said that the buyer should return the purchased object as soon as he noticed the latent defects. If he were to continue to retain the object, he would be accepting it implicitly, complete with its defects. Besides, as more time passed, the purchased product would deteriorate and it would be impossible for the parties to be restored to their original condition.
In this case, the granite was purchased in 1988 and today, 25 years later, the granite was still in Mifsud’s possession.
The granite was certainly not in its pristine condition. If Mifsud had removed the granite from his residence and deposited it with the sellers, he would have exonerated himself from any responsibility, pointed out the court.
Even though the granite had some defects, the court could still not accept Mifsud’s claims, and it had no other alternative but to accept the company’s counterclaims.
Dr Karl Grech Orr is a partner at Ganado Adovates.