Issue link: https://maltatoday.uberflip.com/i/1543384
A guarantor to a bank loan must have at least paid back part of the sum due instead of the main debtor before taking legal action against the debtor. This was held in a judgement in the case George Catania and Maria Catania personally and as representatives of Tarcam Com- pany Limited vs Martin Cachia and Liberty Fishing Co. Limited. The judgment was delivered by the First Hall of the Civil Court on 12 February 2026, presided by Judge Rachel Montebello. The plaintiffs filed a sworn application in December 2013, wherein they explained that Banif Bank (Malta) plc had giv- en a loan to Liberty Fishing Co. Limited. The plaintiffs were sureties to that loan through an- other contract signed in October 2010 and corrected in March 2011. Liberty Fishing Co. Limited was accused of breaching the de- fault clauses of the loan contract and in fact it received a letter in November 2013 from the bank. The plaintiffs were also notified with this letter, since they were the guarantors for the loan. The plaintiffs asked the court to declare that Liberty Fishing failed to pay the bank and as a re- sult, Liberty Fishing and Martin Cachia were now creditors of the plaintiffs. The plaintiffs asked the court to order the defend- ants in solidum to pay €136,469. The defendants filed their reply late and therefore it was not ac- cepted. The court analysed the loan agreement, which stated that if the principal debtor, Liberty Fishing, failed to pay the loan, the plaintiff had to pay in their stead and a penthouse would be sold by judicial sale. On the other hand, the defendants had provided the vessel by the name Liberty V as a guarantee. The court criticised the plain- tiffs for not producing the cor- rect and relevant evidence, such as the loan contract, specifically the clauses that dealt with de- faults. Neither was the guarantee contract of March 2012 filed in the proceedings. The judgment BNF Bank plc vs Liberty Fishing did quote from these contracts, however still they were not pro- duced in these acts. The Court of Appeal confirmed that the defendants were debtors to the bank. Judicial proceedings in the case under review started after the plaintiffs received a letter from the bank, informing them that they had become debtors of the bank. The plaintiffs asked the court to declare that they were the creditors of the defendants. However, the court thought dif- ferently in that the acts of the case did not show that the de- fendants in December 2013 were bound to pay the bank together with the plaintiffs as guarantors. In fact, at the time, the plaintiffs did not pay the bank. The plaintiff's claim was based on Article 1942 of the Civil Code, which reads: "(1) A surety who has paid has a right to relief against the prin- cipal debtor, whether the surety- ship has been contracted with the consent of the debtor or without his knowledge." In order to make use of this article of the law, the guarantor must pay at least part of the debt. In fact, Article 1943(1) allows that interest may be charged on the sum paid. However, the plaintiffs failed to show that they paid any of the debt, therefore they could not take action to be refunded unless they showed that they did pay a sum of mon- ey. It is essential that there is evi- dence of payment. The court then moved to up- hold the first request to declare that due to the judgment BNF Bank plc vs Liberty Fishing of 30 April 2024, the parties were all debtors of the bank. However, it rejected the subsequent claims made by the plaintiffs. 8 maltatoday | SUNDAY • 22 FEBRUARY 2026 OPINION & LAW Guarantor must show that they are bound to pay MALCOLM MIFSUD Mifsud & Mifsud Advocates Matthew Zerafa CEO Housing Authority Unlocking potential in empty homes IN recent years, Malta has faced a strain in its housing sector. Property prices, a substantial increase in demand, and af- fordable rentals have intensi- fied debates about housing pol- icy, urban decay, and the best way to make under-utilised properties contribute posi- tively to the community. One response from the Parliamen- tary Secretariat for Accom- modation, together with the Housing Authority, has been the Rehabilitation of Vacant Units (RVU) scheme—a target- ed programme that encourages the refurbishment of long-idle residential units with the dual goal of improving social hous- ing options and concurrently revitalising neighbourhoods. Leaving these homes un- used and even neglected has multiple drawbacks: It wastes built resources, contributes to neighbourhood decline, and does little to ease pressure on the rental market. The scheme addresses these issues by incentivising owners to bring these properties back into productive use. At its core, the programme targets vacant residential units that have been unoccupied for at least one year and may require significant re- pair or upgrading to meet basic residential standards. Parliamentary Secretary for Housing Andy Ellul recent- ly announced that the one- time grant given as part of this scheme will effectively double from €25,000 as at the end of last year to €50,000 from 2026. This will further incentivise property owners to carry out rehabilitation works such as structural repairs and water and electrical upgrades. Once refurbished, the proper- ty must be leased to the Hous- ing Authority for a period of 10 years, under the Nikru Biex Nassistu scheme. During this lease period, the Housing Au- thority sublets the home to eli- gible householders on its social housing waiting list. This model provides owners with a reliable revenue stream while ensuring properties are professionally maintained and occupied. The Rehabilitation of Vacant Units Scheme can be consid- ered a symbiotic programme to the Nikru Biex Nassistu scheme, aimed at increasing the stock of social housing on the market. By enabling the conversion of vacant dwellings into homes for families in need, the scheme helps reduce the social housing waiting list. It also helps sus- tain vibrant communities by reducing dereliction. It also promotes private investment in property improvement. Eligibility and application To qualify for the scheme, a property must generally be a residential dwelling that has been vacant for at least one year and constructed at least 20 years ago. The dwelling has to be in a state where it can be made suit- able for occupation through works covered by the grant. The property owner has to commit to a 10-year lease with the Housing Authority once re- habilitation is complete. Prospective applicants must submit a formal application, including relevant plans and documentation, via the Hous- ing Authority's online portal. Once approved, the grant helps cover a portion of the rehabili- tation costs. The RVU scheme represents a strategic effort to turn empty homes into valuable communi- ty assets . By blending state support with private initiative, it aims to enhance social housing ca- pacity, revitalise urban areas, and unlock the potential of long-unused residential stock.