Refund of deposit takes place when promise of sale expires

The Court ordered that a deposit paid on a promise of sale of a property be refunded not because of a breach of the agreement but because the agreement expired. This was held in a judgement delivered by Mr Justice Silvio Meli on 17 April 2018 in Deborah Lia v Angelo Zahra.

Lia in her application explained that the parties entered into a promise of sale agreement, where she was to purchase an apartment in San Gwann. She paid €17,500 as a deposit and the balance of the price was to be paid on the contract. However, Zahra failed to appear on the final contract and the sale did not go ahead.  Since the promise of sale expired, she asked for a refund of the deposit and that she is awarded damages.

Zahra filed a statement of defence and a counter claim arguing that he did not receive any judicial acts to appear on contract and that he is owed more than €17,500. He denied that he caused any damages to Lia. In the counter-claim Zahra alleged that on signing of the agreement Lia took possession of the property and the latter painted the apartment a colour to her liking. Apart from this there are pending electricity bills. Zahra asked the Court, to order Lia to pay compensation for possession of the property and other expenses.

Lia disagreed and said that she resided in the premises with Zahra’s consent and said that all utility bills were not sent to him.

The Court dealt first with whether a refund of the deposit should be effected. There is no contestation that €17,500 was paid as a deposit on the price of the apartment. The Court quoted a previous judgement Joseph Cauchi v Anthony Vassallo dated 11 December 2003, wherein it pointed out that these cases are not on non-performance. The agreement was governed by a period which expired and therefore the purchaser should receive the deposit he had paid. The Court, agreed with this judgement and ordered that Zahra refund Lia €17,500.

With regard to the claim of damages, the Court quoted a previous judgement Vincent Schiavone et v Michael Psaila et of 29 May 2014 which held that the plaintiff would have to prove that the defendant was responsible for the event, the damages sustained and that the event caused the damages.

The evidence produced showed that the notary had informed Zahra of the date of the contract, but Zahra did not turn up. As to the quantum of the damages, the plaintiff showed that she had paid €815 in tax, but this can be refunded by the tax department with a simple request. The other expenses that she paid were €200 for legal expenses and €162 for home loan charges.

The Court dealt with the counter claim presented by Zahra. With regard to the possession of the apartment the Court pointed out that he had asked for the property back in October 2013 and therefore, before this time, Lia was living there with Zahra’s knowledge and consent. Therefore, no compensation is due.

As regard to outstanding bills from ARMS, this amounted to €221.55. Since the consumption was done when Lia was in the apartment, therefore this is due.

The Court concluded by saying that Zahra had to pay Lia €17,500 and €362, while Lia had to pay Zahra €221.55

Dr Malcolm Mifsud is partner Mifsud & Mifsud Advocates