Defendant had no legal title to use the property

In the case Martin Farrugia vs Joseph Gambin the defendant filed an appeal on the ground that he had a verbal agreement with Farrugia to use the warehouse until his death.

The Court of Appeal considered the facts of the case – in 1979, the defendant was then the owner of the warehouse. During this period Gambin was going through financial difficulties and the bank had brought an action against him to sell the property in a judicial sale by auction.

To avoid the judicial sale, the defendant had asked the plaintiff to buy the property, to which the plaintiff agreed, also verbally agreeing to allow the defendant to use the warehouse. During the court proceedings the facts of this verbal agreement, which dated back to 1979, were disputed. The plaintiff was alleging that he had allowed the defendant to use the warehouse until he needed it; on the other hand, the defendant stated that they had agreed that he could use the property until his death.

The First Hall of the Civil Court in its judgment stated that even if the parties agreed that the defendant could use the property until his death, which contract is known as one granting the right to ‘use and habitation’, the Civil Code requires such agreement to be drawn up in the form of a public deed – a verbal agreement does not suffice.

Furthermore, the first court also noted that the agreement reached between the parties, as alleged by the defendant, does not even fall within the definition of commodatum found in the Civil Code. Article 1824 defines such contract as follows:

“Commodatum or loan for use, is a contract whereby one of the parties delivers a thing to the other, to be used by him, gratuitously, for a specified time or purpose, subject to the obligation of the borrower to restore the thing itself.”

Therefore a borrower in a contract of commodatum had to return the object borrowed to the owner and since the defendant is alleging that he had a right to use the property until his death it was not possible for him to return the warehouse to the plaintiff.  The First Hall of the Civil Court concluded that the defendant had no legal title over the property in question. 

The Court of Appeal proceeded to verify which contract the parties had entered into, concluding that the relative contract was that of precarium as defined in Article 1839 of the Civil Code

The Court of Appeal in its judgment stated that the first court had to verify which of the parties was telling the truth. It noted that the testimony of the plaintiff was substantiated by the testimony of his wife, who was also the defendant’s sister, and who happened to be present when the verbal agreement was made.

The defendant’s version of the facts was not upheld by anyone. The plaintiff held that he had purchased the property out of compassion for his brother-in-law.  The Court of Appeal also noted that the defendant never paid anything to use the property and therefore it decided that the version of the plaintiff was more credible.  

After establishing the correct version of the facts, the Court of Appeal proceeded to verify which contract the parties had entered into, concluding that the relative contract was that of precarium as defined in Article 1839 of the Civil Code which holds:

“Precarious loan or precarium is the same contract of loan for use defined in article 1824 with the only difference that the lender has the power to take back the thing when he pleases.”

Therefore the court held that the legal title of the defendant over the property in question terminated as soon as the plaintiff requested the property to be returned to him. 

In view of its considerations, the Court of Appeal decided the case by denying the appeal and confirming the judgment handed down by the First Hall of the Civil Court and subsequently ordered the defendant to vacate the property within one month. 

Joseph Mizzi, Mifsud & Mifsud Advocates