Court orders €250,000 refund after promises of sale collapse

On the 26 February 2026, the First Hall Civil Court (the “Court”), presided over by Madame Justice Audrey Demicoli delivered judgment in the names Pier Luigi and Olga Di Pilato (the “Plaintiffs”) vs Administration Investment Management Services Limited and Kevin Zammit for any interest which he may have (the “Respondents”). The Court confirmed that the respondent company was indebted to the Plaintiffs in the amount of €250,000, after failing to appear on a number of final contracts of sale relating to several apartments.

Background

The Plaintiffs instituted proceedings under Article 167 of the Code of Organisation and Civil Procedure (the “COCP”), commonly referred to as Special Summary Proceedings, requesting the Court to deliver judgment without proceeding to trial following the parties entering into various promises of sale.

The case concerned five promises of sale (“POSs”) relating to the purchasing of apartments forming part of a development project. The Plaintiffs had paid a total of €250,000 as deposits in connection with these POSs. According to the Plaintiffs, this amount was to be refunded should the final contracts not materialise.

The Plaintiffs also stated that during the final extension of the POSs, as well as on several occasions thereafter, the respondent Kevin Zammit assured them that the money would be repaid if the contracts did not materialise. In fact, the contracts never took place with the Plaintiffs insisting that this was due to the fact that the development remained unfinished and that no meaningful progress had been made for several years.

Since the POSs did eventually expiry, the Plaintiffs argued that they were entitled to recover the €250,000 paid on account of the price.

Court’s Considerations

(A) Special Summary Proceedings

Article 167 of the COCP provides allows a plaintiff to request judgment without proceeding to full trial where the claim concerns the recovery of a debt that is certain, liquid and due, provided that the plaintiff believes there is no valid defence.

In this case, the Respondents together with their legal representative made an appearance at the first sitting. The Plaintiffs subsequently withdrew their first claim for the case to proceed under special summary proceedings, and the Respondents were granted twenty days within which to file their reply. No reply was filed and the Respondents were therefore considered to be in a state of contumacy.

Given that the Plaintiffs withdrew their claim with respect to the special summary proceedings, the Court did not rule any further on this issue.

(B) The POSs entered into between the Parties

The Court then examined the five POSs that were exhibited in the proceedings, all of which were signed by the Plaintiffs and the respondent company, and not by Kevin Zammit in his personal capacity.

Reference was made to Article 4(4) of the Companies Act which provides that a company has a legal personality distinct from that of its members. In practical terms, this means that when agreements are entered into with a company, it is the company itself which bears the obligations arising from those agreements, rather than its shareholder or directors personally.

During his testimony one of the plaintiffs explained that Kevin Zammit had repeatedly assured him that he personally had the funds and the properties. Nevertheless, the Court referred to Articles 1002 and 1003 of the Civil Cold and held that the clear wording of the agreement must prevail and there shall be no room for other interpretation.

The Court also held that while the burden of proof always lies on the person alleging, that same person must ensure that the best evidence is produced before the Court. Numerous cases were referred to where the Maltese courts concluded that what is important for the Maltese legislator is that the evidence (testimonial and/or documentary) be relevant to the case being dealt with and that it be the best evidence that the party can offer or present.

The Court therefore concluded that while the Plaintiffs did not produce any evidence to show that Kevin Zammit was personally willing to pay for any obligations under the terms of the POSs, they did however produce evince to show that the POSs were signed by the Plaintiffs and the respondent company. In view of this the Court considered that only the respondent company was bound by the obligations arising from the POSs, and not Kevin Zammit in his personal capacity.

(C) Validity of the POSs

The Court then proceeded to examine the validity of the POSs under two legal provisions:

1. Regulation 10 of the Rules on Duty on Documents and Transfers (Subsidiary Legislation
   364.06); and
2. Article 1357 of the Civil Code.

i. Regulation 10

This regulation requires POSs to be registered with the Commissioner for Tax and Customs for them to be considered valid and for the appropriate duty to be paid. While the Court may however assess the importance of such a registration, in accordance with caselaw, it explained that it cannot raise this issue on its own initiated unless the parties themselves bring it forward during the proceedings.

Since the Respondents were contumacious in these proceedings, and therefore deemed to be contesting the Plaintiffs claim, it was nevertheless the respondent’s responsibility to raise the exception in terms of Regulation 10.

Therefore, since no objection was raised by the respondents, the Court considered the POSs to be valid for the purposes of the case.

ii. Article 1357

The Court also examined Article 1357(2) which regulates the duration of POSs and which provides that, “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 promisee 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.”

In the present case, the Court noted that the Plaintiffs had two options. They could either insist that the seller proceed with the final contract, or else, allow the promise of sale to expire.

(D) Conditions of Deposit

The Court also examined the nature of the deposits paid by the Plaintiffs. Three of the POSs states that the purchasers undertook to pay a deposit on account of the price, while the other two confirmed that the vendor had already received €50,000 as a deposit on account of the price.

The Court, once again applying Articles 1002 and 1003 of the Civil Code, concluded that these payments constituted deposits on account of the purchase price, meaning that they were to be deducted from the final price once the sale was concluded.

The court referred to several previous judgments which established that when a promise of sale expires, without the final contract being concluded, the parties must revert to the position they held before the contract. In such cases, any deposit paid on account of the price must be returned to the purchaser.

This principle differs from situations involving a forfeitable deposit, where the buyer may lose the deposit if the promise of sale fails. However, the Court held that this was not the situation in the present case. Moreover, the Court also affirmed that, on a balance on probabilities, the Plaintiffs had indeed paid the deposits within the time stipulated in the POSs.

In light of the above, the Court concluded that the respondent company was in fact indebted to the Plaintiffs in the amount of €250,000.

Conclusion

The Court ultimately held that the €250,000 paid by the Plaintiffs constituted deposits on account of the purchase price, which must be returned once the POSs expire without the final contracts being concluded. The respondent company, Administration Investment Management Services Limited was therefore ordered to refund the full €250,000 together with legal interest and costs. At the same time, the Court rejected any personal liability on the part of Kevin Zammit, confirming that the legal obligations arising from the POSs rested exclusively with the company.

Disclaimer: Ganado Advocates is responsible for contributing to this law report but was not in any way involved as legal advisor for the parties in the judgement being covered in this law report. This article was first published in ‘the Independent’ on 11/03/2026.