The concept of ‘prestanome mandate’ is often misconstrued, perhaps due to the wrong impression had by many that it is necessarily a product of illicit intentions.

Prestanome mandate is a legal mechanism by virtue of which an ‘apparent owner’ is appointed to act as mere administrator or holder of a property to the benefit of another person, who is the real owner. In such cases, the mandatory would be ‘lending his name’ to the real owner, and acts on his behalf without ever needing to reveal the identity of the actual owner.

Since 2004, this concept has been formally recognised by Maltese Law (article 1124A and 1124B).

Unsurprisingly, this contract – indeed, like any other – can be used for both regular and illicit purposes. After all, its very existence is characterised by its ‘secretive’ nature and the wishes of the mandator not to appear or be seen to be appearing on a contract. The Court has many times refused to accept the existence of a nominee mandate the existence of whom was merely to circumvent a provision of the law which prohibited the mandatory to appear in his own name (for example, in situations where the mandator was prohibited by law from acquiring property).

These mandates were considered by our courts to have been formed on the basis of an illicit cause (causa illecita), and therefore deemed null and void at law.

However, it has been said time and time again that despite the ‘private’ nature of prestanome mandates, they are perfectly regular and enforceable if their purpose is not illegal. Indeed, like any other mandate, it could be agreed to orally, without any need to actually put down the terms in writing.

The judgment delivered by Madam Justice Lorraine Schembri Orland on  January 31, in the case of Maxine Camilleri v Alessio Speranza (593/2015LSO – Civil Court, First Hall) illustrates the successful and legal use of this rarely used mandate.

The facts were as follows: The parties were in a relationship which started when the plaintiff was still a minor. Subsequently, the defendant acquired a property alone, and he alone appeared on the public deed of sale. However, by means of another private writing, the parties further agreed that even though the plaintiff did not appear as owner in the contract, she nonetheless owns a share of the property as well as a share of the loan.

A stellar recent example of the Court’s recognition of prestanome mandates and its effects

On this basis, the plaintiff requested the Court to order the defendant to transfer onto her a share equivalent to one-half of the property.

Now, as a general rule, a private writing is not considered sufficient to grant title to an immovable property, since only a public deed (a contract before a notary, and duly registered as such) is capable of transferring ownership of an immovable property, alone or with others. Therefore, in this case, the declaration of ownership by means of a private writing could not be considered as granting ownership of the property.

This is where the prestanome mandate came into plaintiff’s refuge. In delivering the judgment, the Court went into the detail of various civil law concepts, among which the principle of pacta sunt servanda (a Latin principle meaning that what is agreed to by the parties is law between them), the principle that contra scriptum testimonium, non scriptum testimonium non fertur (meaning that, oral testimony that seeks to counter what appears in writing is inadmissible), and at the end, the concept of prestanome mandate.

It referred to the private writing in which the parties had declared the plaintiff owned part of the property bought by the defendant, and stated that this was evident of the fact that the defendant was given a mandate by the plaintiff to buy the property in his name, but partly on her behalf, given that she was still a minor and incapable of acquiring it herself.

The Court considered that such a mandate was perfectly legal, and reflective of the parties’ wishes at the time of the purchase of the property, given that the public deed and the private writing were both signed on the same date. It threw out the defendant’s argument that the plaintiff could only request the reimbursement of the money she had forked out as her share of the payment of the bank loan, since it considered the private writing to be a clear manifestation of the parties’ intention that each should hold half of the property. It also stated that it made no difference that at the time the plaintiff was a minor, since that fact did not make the cause of the agreement an illicit one.

Having taken into account all the facts and legal issues, the Court considered that there was a prestanome mandate for that part of the property bought by the defendant on the plaintiff’s behalf. It concluded that the plaintiff’s requests merited to be upheld, and therefore it ordered the defendant to transfer onto the plaintiff half undivided share of the property.

The facts of this case will most certainly be too familiar to many. There are many circumstances which necessitate resolution by means of a judicial recognition of a prestanome mandate. Indeed, it may be the only solution for parties in weaker positions who, for a reason or another, are unable to appear on contracts in their own name, be it in business or in family matters.

Indeed, lawyers often encounter situations whereby someone would have entrusted another with funds to purchase a property, only to realise later that his trustee would then have bought it for himself. Lawyers often encounter situations very similar to those of the case at hand. Without the legal recognition of the prestanome mandate, there would have been little one could do.

The judgment of Maxine Camilleri v Alessio Speranza is a stellar recent example of the Court’s recognition of prestanome mandates and its effects, and the efforts to protect it as a legally enforceable contract at law.

Carlos Bugeja is senior associate at Azzopardi, Borg & Abela Advocates.

www.abalegal.eu

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