Issue link: https://maltatoday.uberflip.com/i/1080741
maltatoday 13 | SUNDAY • 10 FEBRUARY 2019 CULTURE ENVIRONMENT LAW & PLANNING ANY loan agreement which hides the fact that more than 8% interest is being charged is not to be accepted. This was held in a judgement delivered by Mad- ame Justice Anna Felice on 5 February 2019 in Av. Graziella Attard, mandatory in the name of Lara Rose Goulding and Tom Macmillan, William Spiteri, Chris- ta Deguara and David Zarb Jenkins. In their application, the plaintiffs explained that they had transferred €33,903 to the defendants, on condition that the sum would be returned to them. The money was to be used to purchase a property. The amount was sent to Zarb Jenkins and Deguara, because Spiteri lived in the UK and had no Maltese bank account. When Spiteri returned to Mal- ta, he entered into a written agreement with the plaintiff Goulding, where it was established that if the sum was not paid by December 2014, he was to pay a pen- alty of €6,830. The plaintiff registered a total claim of €40,733 with interest and costs. Zarb Jenkins and Deguara had filed a statement of defence, wherein they claimed that they were not parties to the agreement and therefore, they had been wrongly sued. In fact, the Court had de- livered a preliminary judgement, which held they there were not responsible for the claims. William Spiteri also filed a statement of defence stating that he does not have any judicial relationship with Ian Macmillan, however, the private agreement does not state for what he is paying £5,000. The plaintiff merely held that that is a pen- alty for late payment. This, in fact, is not legal and amounts to usury and attempt for the plaintiff to earn a 'quick buck". From the evidence produced, Gould- ing and Spiteri had a romantic relation- ship, but Spiteri had financial difficul- ties. Christa Deguara paid Spiteri's bank loan on condition he pay it back. The bank loan was used to purchase prop- erty in Mosta. Spiteri agreed to pay back €15,000 and then pay in monthly pay- ments. Ian Macmillan is Goulding's step fa- ther, who lent Spiteri another €15,000 to pay off Deguara. The payment was sent to Zarb Jenkins's account. Goulding and Spiteri signed an agreement in February 2012, wherein it was agreed that Gould- ing had lent Spiteri £15,000 to purchase the property in Mosta and the latter had agreed to pay her back by March 2013 and also he agreed to pay an additional £5,000 by March 2014. The plaintiff argued that the £5,000 was a penalty, but this was disputed. A second loan of £7,000 was made and it was used to pay the notary's expenses on the purchase deed. The plaintiff is asking for a refund of €12,052. These payments were made because Goulding was under the im- pression that she was going to purchase half of the Mosta property, but before entering the notary's office, Spiteri told her that he was purchasing the property on his own. Spiteri argued that all he borrowed from Macmillan was €15,000 and that Goulding never contributed to the monthly payments made to Zarb Jen- kins. With regard to the plea that the de- fendant had no judicial relationship, Madame Justice Felice had quoted from a Court of Appeal, citing Justice Frankie Refalo -v- Jason Azzopardi and decided on 5 October 2001. The court in that judgement held that for a court to es- tablish whether a party for the legitimate party, it had to verify whether he or she were parties to a negotiation. In this case the plaintiff lent money to the defendant and therefore, there is a judicial con- nection between the two. The plea was turned down. The defendant pleaded that the £5,000 mentioned in the June 2012 agreement was not a penalty but interest and there- fore, this was illegal. Article 986(2) of the Civil Code states: "(2) Saving the provisions of article 1852 and of any other provision of this Code or of any other law, any obligation to pay a rate of interest exceeding eight per cent per annum is also void in regard to the excess." Article 1852 states that if more than 8% interest is charged then only that rate will be enforced and if any additional interest is paid, then it will be reduced from the capital. On usury, the Court quoted from Jo- seph Mary Farrugia -v- Gontran Borg decided on 15 November 1985, wherein it stated that any contract contracted by fraud is subject to rescission. At the same time the law stipulates that inter- est on interest is not permitted. In Maria Dolores Montebello et -v- Saviour Chet- cuti pro et noe decided by the Court of Appeal on 27 January 2017 held that usury does not annul the contract, but reduces the interest to 8%. In this case the Court held that the so- called penalty was, in fact, interest which exceeded 8% and therefore this obliga- tion was rendered null. The Court then moved to order Wil- liam Spiteri to pay Ian Macmillan €15,000 with interest from January 2012. Court does not accept clauses that hide an elevated interest rate on loan LAW AT issue was a planning application for the construction of nine dwellings in a plot sandwiched between Triq Edmund Halley and Triq N. Coperni- cus in Mellieha. However, the propos- al was turned down after the Environ- ment and Planning Review Tribunal observed that the site in question was designated as a Residential Prior- ity Area forming part of Tal-Qortin Comprehensive Scheme in Mellieha. The Tribunal made specific reference to policy NWML4 of the North West Malta Local Plan which stipulates that development in this area had to be limited to residential units having a maximum height of two floors and 30% site coverage as well as the provi- sion of a public open space measuring 260sq.m within the site precincts. For this reason, the Tribunal held that ap- plicant was entitled to a maximum of four dwelling units and applicant's ap- peal to have nine units was rejected. Aggrieved by this decision, appli- cant made an appeal before the Civil Court of Appeal, pin pointing that the Tribunal had ignored paragraph 17.1.4 of policy NWML3 which states that any demand for new dwelling units in the area result- ing in an increase in density could be considered. Indeed, the Court agreed with plaintiff and ordered the Tribunal to reassess the case. For its part, the Tribunal reassessed the merits of the case as ordered by the court, reiterating, however, that 'the development of the area should not increase the existing residential densities'. In addition, the Tribunal underlined that any new develop- ment should not have an adverse impact on the existing residential character, meaning that no further extensions to existing buildings be- yond their footprint could be per- mitted. More so, the Tribunal reaf- firmed the principle that any new development in Tal-Qortin was restricted to 'a maximum height of two floors' and 30% site coverage. A 260sq.m public open space was also to be provided. The Tribunal proceeded to ana- lyse whether appellant was correct in claiming that according to para- graph 17.1.4 of policy NWML3, he was entitled to nine units (and not four) since this same paragraph highlights that "an increase in densi- ty is envisaged on another site with- in the area of Tal-Qortin and this should accommodate any demand for new dwelling units in the area". Nevertheless, the Tribunal held that this proviso was not relevant in the given circumstances since the context had to be respected so as to avoid 'an adverse impact on the existing residential character.' For a second time, the Tribunal con- firmed that permission should not be issued. robert@robertmusumeci.com ASK ROBERT Dr Robert Musumeci is an advocate and a perit having an interest in development planning law PLANNING Permission in Qortin villa area not issued despite Court decision mmifsud@mifsudadvocates.com.mt ASK MALCOLM Dr Malcolm Mifsud is partner at Mifsud & Mifsud Advocates