Fraudulent donation contracts thrown out

This instalment was written by Joseph Mizzi, an associate at Mifsud & Mifsud Advocates

Mr Justice Lino Farrugia Sacco has declared two contracts of donation to be null and void as they were contracted in a fraudulent manner.

Joanne Cassar instituted a case against Joseph St John and William St John and their wives. She asked the First Hall Civil Court to declare that two contracts of donation between Joseph St John to his son William St John were fraudulently made and made with the intention of defrauding the plaintiff's rights. She also requested the Court to declare such contracts null and void.

The case stemmed from previous proceedings between Joanne Cassar and Joseph St John, which case related to a car accident between the parties in 1979. In July 2009 the First Hall Civil Court decided that the defendant Joseph St John was responsible for causing the accident and he was ordered to pay €226,313.67 in damages. As a result, St John, predicting the decision, proceeded to donate all the immovable property in his name to his son, William.

The defendants claimed that the contracts of donation were not fraudulently contracted and that the plaintiff had plenty of time to protect her rights as the case took over 28 years to be decided. Furthermore, they stated that the immovable property in question was purchased during marriage and therefore Mr St John only owned half of the shares in question.

The court, after compiling all the evidence produced by the parties, made reference to Article 1144 of the Civil Code, which reads, "It shall also be competent to any creditor in his own name to impeach any act made by the debtor in fraud of his claims..." The action envisaged by this article is generally known as the Actio Pauliana, and Judge Farrugia Sacco quoted previous judgments and authors and highlighted the reason for such action. In applying the said Article, the Court noted that the donations were made four months before the aforementioned judgment was delivered and therefore the plaintiff was instituting this case in order to reinstate the position she was in before the donations were made. The court also noted that when Mr St John was giving his property on donation to his son, he knew that he was prejudicing the plaintiff's position, as she could not have a right to claim against any other property in order to substantiate her title.

Finally with reference to the defendant's first plea, which stated that Mary St John was not a party to the first proceedings in the name Joanne Cassar vs. Joseph St John, the court, after taking into consideration a previous judgment, noted that Mrs St John knew about the case and also knew that if the Court had canonised the debt, such debt would be burdened on the Community of Acquests. Judge Farrugia Sacco also stated that Mrs St John was well aware of the situation as she entered into a contract to dissolve the Community of Acquests, in order to avoid any debts which would have been created and was receiving cheques from the plaintiff in connection with the debt in question. As a result of this, the Court denied the defendant's plea.

The Court concluded that the property in question was donated fraudulently and with the intention to prejudice the plaintiff's rights which emanated from a previous court decision. The court therefore upheld the pleas of the plaintiff and declared both contracts of donation to be null and void.