Court rules that promise of sale is enforceable

The First Hall of the Civil Court, in its judgement of 30 June, 2015 in the names of GX3 Holdings Limited -v- Lucy Agius, Salvina Scicluna, Joseph Buttigieg and Rose Farrugia represented by Joseph Buttigieg, held that a promise of sale signed and extended should be followed by a final contract of sale.

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Malcolm Mifsud
10 July 2015, 8:00am
The plaintiff company held that on 1 April, 2008 Gordon and Lara Ann Agius signed a promise of sale agreement to purchase one fourth of a property in Bahar ic-Cahaq from Raymond and Lucia Agius. This agreement was valid for a year. The Agiuses then decided to purchase the remaining three quarters portion of the same property from Salvina Scicluna, Joseph Buttigieg and Rose Farrugia. The promise of sale agreements were extended and various payments were made. On 9 and 29 February, 2012 the Agius couple filed two judicial letters calling upon the defendants to sign the final contracts. The Agius couple then transferred their rights to a company, GX3 Holdings Limited. The plaintiff company is asking the court to order the defendants to order the transfer of the property.

Salvina Scicluna, Joseph Buttigieg and Rose Farrugia held that they were willing to sign the final contract and it was not signed because the Agius couple did not have the adequate finances. 

Mr Justice Joseph Zammit McKeon, who presided the court, analyzed the evidence brought. Lara-Ann Agius told the court that she wanted to buy her grandmother’s property in Bahar ic-Cahaq, with a view to demolish it and build a block of apartments. They purchased a garage for easier access. They then asked the bank to finance the purchase of this property. She explained that with every extension of the promise of sale agreements the defendants changed the conditions of the transfer. The property in question was demolished with the authorisation of the defendants and instead a block of apartments was built. The plaintiffs had found the sale of two of the apartments, but since the price of the property increased so much due to interest on the price, it became impossible to sell. 

Salvina Scicluna testified that when the promise of sale agreements were to expire she called Gordon and Lara Agius to see whether they were to purchase the property. She also mentioned that she had no agreement with GX3. Carmel Mifsud, a director of the plaintiff company held that the company acquired the rights of the Agius couple on the promise of sale agreements. Since the defendants failed to appear on the contract, he was forced to file the judicial letters.

The Court then moved to consider the legal aspects of the case a quoted Article 1357(2) of the Civil Code: “The effect of such promise shall cease on the lapse of the time agreed between the parties for the purpose or, failing any such agreement, on the lapse of three months from the day on which the sale could be carried out, unless the promise calls upon the promisor, by means of a judicial intimation filed before the expiration of the period applicable as aforesaid, to carry out the same, and unless, in the event that the promisor fails to do so, the demand by sworn application for the carrying out of the promise is filed within thirty days from the expiration of the period aforesaid.”

Mr Justice Zammit McKeon commented that the agreements were an expression of what the parties had agreed upon and the agreements may be terminated or amended only by the parties themselves. In a previous judgement Beacon –v- Spiteri Staines of 5 October, 1998, the Court of Appeal had held that the terms of an agreement should be respected and are an expression of the voluntary will of all the parties involved. 

As such the court held that it was proved that on 13 February, 2012 the agreements were extended to 29 February, 2012 and Gordon and Lara Agius’s rights had ceased in favour of the plaintiff company. The judicial letters were then filed on the final day before the agreements expired. This was essential for the plaintiffs to retain their rights under the promise of sale agreements and notification was not essential. Furthermore, the action was instituted on the 30th day as stipulated by law.

The Court then concluded by upholding the plaintiffs’ requests that the defendants were to sign the contract that transferred the contract and if they failed a lawyer was being appointed to sign in their stead.

Av. Malcolm Mifsud

Partner

Mifsud & Mifsud Advocates

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Malcolm Mifsud is a partner at Mifsud & Associates.