Third party, no party: How a decade of litigation ended on a question of standing

Facts of the Case

In April of 2010, Mr. Roland Darmanin Kissaun (the “Plaintiff”) was approached by a certain Thomas Knott, who was acting as the agent for Turkish shipbuilder MTH Yatcilik Sanayi Ve Ticaret Anonim Sirketi (“MTH”) and for Mr and Mrs Peter and Yvonne Moore (the “Moores”) as the sellers of the vessel.

Mr. Knott had asked the Plaintiff to incorporate a Maltese company under the name Blade One Yachts Limited (the “Company”) urgently, so that a yacht, the Pantera 80GT (to be renamed Blade I), (the “Vessel”) could be registered under the Maltese flag. Given the urgency, the Plaintiff agreed to temporarily act as the sole shareholder and as a director of the Company until the proper documentation could be obtained.

The Moores provided the Plaintiff with a bill of sale dated 28th April 2010, along with a declaration that the Vessel had never previously been registered elsewhere and a builder’s certificate from MTH stating that the Vessel had finished construction in September of 2009. On the basis of these documents, the Plaintiff effected the Vessel’s registration under the Maltese flag.

It quickly became apparent to the Plaintiff that the documents were altered with incorrect information as it transpired that the Vessel was in fact registered in the Cayman Islands since 2006 and had been successively transferred to Eurotrade LLC and then to Panther Yachting LLC, thus establishing that the Moores did not have the proper ownership title to transfer the Vessel.

The builder’s certificate was also not the original as an earlier version from June 2006 already existed which was fabricated to make the Vessel appear as a ‘newbuild’. The apparent purpose behind these amendments to the documents was to facilitate bank financing for the Moores, with the intention of using Maltese registration to secure such financing.

Once the Company’s shares were transferred from the Plaintiff to the Moores and the Vessel further transferred to a BVI company and renamed Liquid Blue, the whole deception unravelled. Panther Yachting LLC arrested the Vessel in San Remo and MTH launched proceedings in Malta, naming the Plaintiff as a defendant and alleging that he had breached his fiduciary duties as trustee when he transferred the shares. It was against this backdrop that the Plaintiff filed his own action in December 2011.

The Plaintiff’s Claim

The Plaintiff sought the nullity of the bill of sale, whereby he relied on Article 981 of the Civil Code (Chapter 16 of the Laws of Malta), which provides that fraudulent conduct (għemil doluż) is a ground for nullity of an agreement when the deception is of such a nature that, without it, the other party would not have contracted. His argument was straightforward, in that the Moores had deceived him and had he known the truth, he would never have accepted the bill of sale on behalf of the Company.

In May 2014, the Plaintiff died during the proceedings, and his widow, Maria Dolores Darmanin Kissaun (also referred to as the “Plaintiff”), continued the action as his universal heir.

The First Court upheld the defendants’ preliminary exception and dismissed the claim on the ground that the plaintiff lacked the necessary legal standing, as the Court identified two fatal obstacles.

Firstly, Article 981 is an action available only to parties to a contract and since the bill of sale was entered into between the Moores (as transferors) and the Company (as transferee), the Plaintiff could not avail himself of the remedy under this article as he was not a party in his personal capacity. The Court was clear in its ruling, in that a company possesses separate legal personality, and a shareholder or director cannot claim the contractual rights of the company as his own. Since Article 981 exists to protect a contracting party whose consent was vitiated, it was simply unavailable to a third party.

Secondly, the declaration of nullity sought could produce no practical benefit to the Plaintiff, as the bill of sale did not in itself, prejudice his own personal rights. The Court observed that the correct remedy, had he wished to protect his position, would have been to attack the Vessel’s registration which he had effected on the basis of the falsified documents, or to seek nullity of the share transfer which he had been asked to make. Instead, he chose to challenge a contract to which he was not a party to.

The Court drew on the well-established criteria for legal interest in Maltese law by making reference to the case of Mr Bookmaker.com Ltd v. Stichting De Nationale Sporttotalisator (2011) which stated legal interest is to be current, direct, legitimate, juridical and capable of producing a useful or advantageous result arising from a violation of a right belonging to the claimant.

The Decision of the Court of Appeal

The Plaintiff raised six grounds of appeal, all of which were dismissed by the Court of Appeal which also condemned the Plaintiff to all costs and imposed an additional €1,000 payable to the Registrar as it deemed the appeal as one of a frivolous and vexatious nature.

The Plaintiff’s first ground was claiming that had legal standing as the company’s principal shareholder and director to which the Court reaffirmed that Article 981 operates strictly between contracting parties. It cited the First Court’s earlier decision confirming that an action to rescind a contract for vitiated consent is personal between the parties. Article 1001 of the Civil Code further provides that contracts bind only the parties and cannot, as a general rule, benefit or prejudice third parties and further confirmed that his position as a shareholder was irrelevant.

On the second ground, the Plaintiff claimed that the bill of sale prejudiced his personal rights by exposing him to third-party claims and reputational damage, to which the Court remained unpersuaded. The proceedings brought by MTH had expired, declared abandoned in May 2017 and no evidence showed any further action pending against him. The alleged prejudice was hypothetical. Moreover, legal interest must subsist both at the moment proceedings are commenced and throughout their duration. When the Plaintiff had filed his claim in December 2011, he was not even a shareholder as the share transfer to the Moores had occurred on 14th February 2011.

Another ground raised by the Plaintiff was that no alternative remedy had been available, and that the First Court was wrong to suggest that there was, to which the Court of Appeal declined to entertain. It was not the Court’s role to advise a litigant on what action to bring. The chosen action under Article 981 was simply unavailable to a non-contracting party.

On the fourth ground, the Plaintiff held that the standing exception had been improperly raised as a subsequent defence rather than in limine litis (at the start of litigation). The Court noted that the original curators had filed no substantive defence, merely reserving their position and that the Moores’ representative, when he subsequently assumed conduct, raised the exception in a proper sworn reply, which the Plaintiff had not objected at the time. In any event, lack of legal interest is a peremptory exception under Article 732(1) of the Code of Organisation and Civil Procedure (Chapter 12 of the Laws of Malta) and may be raised at any stage, including on appeal.

The fifth and sixth grounds focused on insufficient analysis made by the First Court and the failure to consider the claims against the Company separately, and how these were both dismissed briefly. The core issue was not whether the action might abstractly produce a useful result, but whether the Plaintiff had standing to bring it in the first place. Since he did not, the action failed against every defendant, irrespective of which of them had raised the exception.

Lessons Learned

This case reinforces a principle that is fundamental yet often underestimated, in that an action for nullity of a contract based on fraudulent conduct is personal to the contracting parties. A person who acts as the vehicle through whom a company transacts, however deceived or aggrieved, cannot substitute themselves for the company and attack the contracts in their own name under Article 981.

This case also illustrates the strict application of juridical interest under Maltese law in that a genuine sense of grievance, however understandable, is not enough. A plaintiff must identify a right of his own which has been violated, an action capable of remedying said violation and a practical benefit that would flow from a successful outcome. Where the wrong instrument is chosen to vindicate a real but differently situated complaint, the courts will not rescue the action by reimagining it. The plaintiff carried a genuine grievance; but submitted the wrong claims.

The appropriate remedies, as the courts suggested, might have included an action to annul the Vessel’s registration effected on the basis of false documents, or a claim for damages against those who had manipulated him. Those roads were not taken. After over a decade of litigation, the action ended not on its merits, but on the question of standing — a reminder that before asking whether a wrong was committed, a court must first ask whether the person before it is the right person to complain of it.

Disclaimer: Ganado Advocates is responsible for contributing 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 22/04/2026.