A judicial sale by auction of Villa Madama in Balzan was null and void as a creditor had not followed the correct proceedings, a court declared this morning.
The judgement was delivered by Mr Justice Raymond Pace in the First Hall of the Civil Court in a case filed by Anthony and Nadine Abela together with Venues Co Ltd against Ronald Cordina. Lombard Bank (Malta) plc was later called into the suit.
The court heard that In May 2008 Mr and Mrs Abela had signed a notarial deed with Mr Cordina in terms of which they declared themselves to be his debtors in the sum of €295,709.15. Venues Co Ltd guaranteed the debtors’ obligations in terms of the deed.
The agreement between the parties was that Mr and Mrs Abela were given up to May 2013 to make payment in full, while interest on the capital sum was to be paid monthly to Mr Cordina. The parties also agreed that if Mr and Mrs Abela failed to pay three instalments of interest, then they would lose the benefit of delayed payment terms.
When Mr and Mrs Abela defaulted on their payments, Mr Cordina filed a judicial letter against them and against the company requesting payment in full of €295,709.15 together with interest. In this manner, the notarial deed entered into the parties became an executive title and the deed could be enforced.
Subsequently, Mr Cordina obtained a warrant of seizure of Villa Madama in Balzan and the courts ordered the judicial sale by auction of this property which belonged to Venues Company Limited. The property was purchased by Lombard Bank which claimed it was owed money by this company.
In their court case, Mr and Mrs Abela and Venues Co Ltd claimed that the procedure adopted by Mr Cordina to enforce the notarial deed was null and void, as Mr Cordina ought to have filed a court case for a declaration that they had lost the benefit of delayed payment terms. They further claimed that Venues Co Ltd had been a guarantor in the agreement, and did not owe any money to Mr Cordina.
Consequently, plaintiffs submitted that the notarial deed could not be enforced and that the ensuing judicial sale by auction of Venues Co Ltd’s property was also null and void.
Mr Justice Pace quoted from a judgment of the Court of Appeal which had established that the normal principle was that when a contract expressly provided for a debtor to lose the benefit of delayed payment, then the creditor could proceed to execute the contract without the necessity of obtaining a court judgment. However, there might be situations when a judgement was necessary, as for example when a debtor was contesting the fact that he had lost this benefit.
In this particular case Mr Justice Pace said that a judgment ought to have been obtained. Mr Cordina was requesting payment from Mr and Mrs Abela on the basis that they had not paid interest in a timely manner. However, Mr Cordina had also included Venues Co Ltd in his claim even though the company was not a debtor but a guarantor.
The court concluded by finding that the correct procedures had not been followed and it revoked the effects of Mr Cordina’s judicial letter and of the subsequent judicial sale by auction of the company’s property.