The notion of the freedom to contract is hard to condense in a legal article on a newspaper. On July 18, 2022 the Court of Appeal (Superior Jurisdiction) pronounced its judgement on a first instance partial judgement by the First Hall of the Civil Court given on the 14th December 2016 on application number 66/15/1 LM.
This judgement provides valuable insights on the freedom to contract under Maltese law. There are many attempts to justify a limitation to the freedom to contract and these limitations must be justified morally, politically and legally. Two generally broad ways immediately come to mind when challenging a notion of the absolute freedom to contract.
The first would be an explicit and direct legislative limitation which is relatively recent in the public understanding and is most often than not grounded in public policy (such as in environmental law and national heritage law) and the protection of weaker contractual parties (such as in consumer law). The second, albeit less direct, is limitations according to law in its broader sense and is touched upon in the commented judgement.
Most often than not parties to a contract draft and agree to terms and conditions which they voluntarily accepted and expected themselves to be bound by them through deference to common reason and the fundamental principle pacta sunt servanda (agreements must be respected). Parties are often oblivious to higher notions of legal understanding, and professionals may act likewise without negligence.
This commented case involves a scenario in which the wording adopted by the parties, as clear as can be linguistically speaking, is far from it in its legal ramifications and the courts had to depart from the apparent agreement of the parties to apply, at least to part of it, a higher law than the parties’ clear contractual will.
In this given case we are delving into the ancient legal realm of emphyteusis, a notion stemming back to ancient Greece and consolidated by the ancient Romans in their Roman law. In Malta we know it as enfitewsi, from Italian enfiteusi, although most colloquially (and erroneously) know it as “ċens”, which in reality is just the payment given for the contract of emphyteusis.
Of note is that in emphyteusis the utilista can transfer his title, and even subdivide his title, and can basically act as the actual owner of the property given to him under title of emphyteusis.
The utilista is the person who gains hold of the property and for all intents and purposes acts as if the actual owner of the same for as long as his emphyteutical title perdures. Emphyteusis grants the utilista very wide flexibility and freedom to contract on immovable property. The notions of the freedom to contract thus come to the fore with greater possible emphasis.
Turning back to our case, the parties involved were the directus dominus (bare owner), being the real bare owner of the land who constituted the original emphyteusis, and somebody who had acquired an apartment built on such a land from the previous owners of the apartment itself.
The latter were the utilisti in the original emphyteusis as constituted by the bare owner. The acquisition of the apartment by the defendants was from the utilisti and not from the directus dominus. However, the deed of sale contained a provision reserving the terms and conditions of the original emphyteusis constituted by the bare owner. The condition which led the parties at odds stated that “The building on the said land cannot be higher than two storeys from road level, and may not exceed the height of twenty seven feet.” As linguistically clear as can be and without room for interpretation. However, the law failed in allowing the straightforward explicitness of that text. How so?
The First Hall of the Civil Court had accepted the plea of the defendants that the contractual provision involved the creation of an easement (servitù) of altius non tollendi, simply put an easement which does not allow the owner from doing something involving the raising of higher structures.
The plaintiffs, who appealed to the Court of Appeal, held instead that this was a simple contractual obligation and apparently nothing more, and that it had to be respected. The Court of Appeal disagreed with the plaintiffs and held that the contractual provision amounted to altius non tollendi.
It quoted from an appeal judgement Baruni Salvino Testaferrata Moroni Viani et v. Hubert Mifsud given by the Court of Appeal on the 22nd November 1995 which stated that every obligation, including a contractual one, must have legal worth and that it must not be left in a legal vacuum but classified under a field of law.
Given the case at hand, the Court of Appeal referred to another judgement given in the names Philip Fenech et v. A & R Mercieca Limited on the 22/05/2008 so as to indicate how to determine whether a contractual provision amounted to a simple contractual obligation or an easement such as altius non tollendi.
The main determining factor is whether a tenement holds a relationship of dominance over the other in the way it is situated, and the Court of Appeal held that this was the case and one had an easement of altius non tollendi.
The above demonstrates some limitations to the freedom to contract. In reality in the judgement discussed the plaintiffs had appealed and lamented that the first Court had based itself on irrelevant considerations in relation to the first claim the plaintiffs had raised and the appeal judgement was quite of a procedural nature so to speak, however it allowed a highlight on the freedom to contract. Given that this was an appeal on a partial judgement, the case went back to the first Court to be determined in full and according to the judgement of the Court of Appeal.
Dr Edric Micallef Figallo is an Associate at Azzopardi Borg and Associates.