Occupier without title has no right of retention

The Court of Appeal on 26 March 2026 dismissed an appeal by an occupier ordered to leave a shop owned by a company. He had argued that he could keep the shop until he was repaid money he said he had spent on it. The court held that the right of retention exists only where the law grants it, and that an occupier without title lacks the possession article 550 of the Civil Code requires.

The facts

Vicarist Limited filed a sworn application on 26 January 2021, asking the First Hall of the Civil Court to order B.P. to leave a shop it owns. It argued that he occupied the shop without any valid title and had ignored two judicial letters calling on him to leave.

The company used the summary procedure in article 167 of the Code of Organisation and Civil Procedure (Chapter 12 of the Laws of Malta). The First Hall found that B.P. had prima facie pleas and allowed him to file a reply.

B.P. pleaded the ius retentionis, the right to keep a thing until what is owed on it is paid. He said he had paid €7,000 as two years' rent in advance and a €5,000 gift to a man who, he said, dealt with him about the shop. He also said he had paid for two aluminium doors, a floor and €3,000 to an architect for a shop permit.

He argued that the money was wasted because an unpaid €12,000 electricity bill left the shop without power. On 31 October 2024 the First Hall rejected his pleas and ordered him to leave within two months. He did not dispute that the company owns the shop.

What the court held

Chief Justice Mark Chetcuti, Mr Justice Christian Falzon Scerri and Madam Justice Josette Demicoli decided the appeal without a hearing, under article 152(5) of Chapter 12. They rejected both grounds of appeal: the assessment of the evidence and the treatment of retention.

On the evidence, the court held that the burden of proof is shared: reus in excipiendo fit actor (a defendant who raises a plea must prove it). B.P. brought only his own testimony. He produced no lease, no receipt and no proof of the works or the permit, and he never called the witness he said had seen him pay.

His evidence also varied on whether he had paid two or three years' rent. The court added that a written lease was needed: "L-iskrittura tal-kirja kienet meħtieġa ad validitatem." (The written lease was required for validity.) Any doubt about his allegations went in the company's favour.

On retention, the court turned to article 1997(1) of the Civil Code. It preserves a creditor's right to keep a thing only "meta jkun hemm dan il-jedd skont il-liġi" (where that right exists under the law). The courts read it restrictively and do not extend it beyond the cases the law names, such as the depositary under article 1919.

Article 550 lets a possessor who has spent money on another's thing keep it until repaid. The court held that this covers only possession as defined in article 524(1), holding a thing as one's own. Under article 526, acts of mere tolerance cannot found possession.

The court found that B.P. did not occupy the shop by any legal right. It held: "Bl-ebda mod ma jista’ jistrieħ fuq il-ius retentionis biex jitħallas tal-flus li jgħid li ħareġ fir-rigward tal-fond inkwistjoni, ladarba l-pussess li għandu fuq il-fond mhux dak il-pussess ikkontemplat fl-Artikolu 550 tal-Kodiċi Ċivili." (He cannot rely on the ius retentionis to be paid what he says he spent on the property, since his possession is not the possession article 550 contemplates.)

The court also held that the First Hall's order that each side bear its own costs did not mean it had found for B.P. on the merits. It dismissed the appeal, with the costs of the appeal against him.

Why it matters

An occupier facing eviction cannot hold on to property by pleading retention for money spent on it, unless he first shows possession as owner or a provision of law that grants the right. Counsel pleading ius retentionis should name the article relied on and bring documents proving each sum. A defendant who alleges payments carries the burden of proving them, even when the plaintiff brings no contrary evidence.

Where it sits

The case applies the distinction between possession and detention. Possession under article 524(1) needs both physical holding and the intention to hold as owner; a person who holds in another's name, or by tolerance, is only a detainer. The right of retention is an exceptional form of self-help, available only where the law provides for it.

The court relied on the Court of Appeal (3 December 1999), which held that retention flows from article 1997 and is not extended beyond the cases in the law. The Court of Appeal refused retention to a borrower for use (20 December 1946) and over a garage held by tolerance (14 March 2024).

The Court of Appeal (21 October 2021) and Select Properties Limited vs Pickless Limited (Court of Appeal, 13 July 2020) require the person claiming retention to hold the thing for his own reasons. The First Hall let a mechanic keep a vehicle until paid, because the debt was tied to the thing itself (13 March 2009), but refused retention to a tenant holding on a precarious title (7 May 1955).

Source

Court of Appeal, 61/2021/1, 26 March 2026.