Yacht purchase: Hidden defects

The First Hall Civil Court (the “Court”) presided by Madame Justice Anna Felice on 11 January 2023, in the case “Roderick Debattista u Analise Debattista vs Charles Mifsud u Josianne Mifsud” held, among other things, for a buyer to successfully request the rescission of the sale owing to a latent defect, he had to show that he acted prudently, and with the diligence of a bonus pater familias.

The Court did not find that the buyers acted up to the standards of diligence expected from a prudent buyer by failing to rely on the services of a professional marine surveyor to inspect the yacht before purchasing it.

The facts in this case were as follows:

On 19 April 2013, Roderick and Analise Debattista bought the yacht ‘Lady Lala’ from Charles and Josianne Mifsud for €76,000.

After enjoying the yacht throughout the summer of 2013, buyers docked it in a boatyard for maintenance work. However, it was here that buyers noticed ‘osmosis blisters’, appearing in the hull of their yacht.

Buyers claimed that sellers were aware of this defect prior to the sale but failed to disclose this to them. In their judicial letter of 24 January 2014, buyers stated that they would not have acquired the boat, if they had known of this defect. Faced with this situation, they filed legal proceedings against the sellers (the redhibitory action) requesting the rescission of the sale and for the return of the purchase price per Article 1427 of the Civil Code.

Buyers proceeded to deposit the yacht under the custody of the court.

In reply, the sellers argued that:

  1. The legal action was time barred in terms of Article 1431 of the Civil Code, by the lapse of six months from the day of delivery of the yacht, a moveable.
  2. The defect could not be considered latent, as this defect was apparent and could have been discovered, if buyers were more careful.
  3. They were not aware of the defect in question prior to the sale and could not be held liable for damages.

On 21 November 2016, the Court dismissed sellers’ plea of prescription and continued with the hearing of the case.

The Court considered that prior to the sale, buyers had not commissioned a surveyor to inspect the boat, even though they were entitled to do so, as a condition precedent to the sale. Sellers also had recommended this to them, suggesting a thorough pre-acquisition inspection of the yacht.  Buyers, however, opted to carry out the inspection themselves without engaging a surveyor.

In his testimony, Roderick Debattista, the buyer, declared that he had personally inspected the yacht before the sale. He had not noticed any damage at the time, save for a minor defect in the engine, which was repaired by the sellers before the sale.

The buyers’ ex-parte expert witness, engineer Kurt Gutteridge, confirmed that it was possible that the ‘osmosis blisters’ in the hull might not have been visible to the naked eye during the pre-purchase survey, which was carried out at dry keel. Such type of damage would normally appear as soon as the boat was placed in the water.

The Court also referred to the expert report, by engineer Paul Cardona, the sellers’ ex-parte expert witness, who concluded that:

“Had the Buyer acted punctually and appointed a pre-purchase inspection, then the level of the humidity in the hull would have been discovered and the buyer would have been well informed. This lack of due diligence by the purchaser… he gave up the opportunity to be informed on the condition of the hull.”

The technical expert, engineer Philip Grima, also shared a similar opinion that: “It is also clear that the buyer was grossly negligent in not having had a competent marine surveyor attend the yacht to determine moisture content of the underwater hull prior to purchase, despite having every opportunity to do so.”

Reference was also made to ‘Helen Micallef vs Godfrey Debattista’ (27/10/2005), where the Court affirmed the elements, necessary to establish in an actio redhibitoria in particular:

  1. There had to be a defect in the object of sale;
  2. The defect had to be grave and of a serious nature, which meant that it was unfit for the purpose for which it was acquired;
  3. It had to be a non-apparent the defect; meaning that a buyer exercising the diligence of a bonus pater familias would not notice the defect by a proper examination; and
  4. That the defect existed at the time of sale.

It was not sufficient for a buyer, simply to plead ignorance. He was not exonerated from responsibility, and from his duty of care, if a technical expert would easily have noticed the ‘hidden’ damage to the boat by an on-site physical inspection.

This Court concluded that in the circumstances buyers did not act up to the standards of diligence, expected from a prudent buyer by failing to rely on the services of a professional marine surveyor to inspect the yacht before purchasing it. It also noted that the yacht could easily be repaired.

For these reasons, the First Hall Civil Court proceeded to deliver its judgement by dismissing buyers’ requests and declaring that there existed no grounds for the rescission of the sale.

All court expenses were to be borne by the buyers.

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 Malta Independent on 05/04/2023.