Selling damaged property does not end the damages claim

The Court of Appeal (Superior Jurisdiction) on 10 March 2026 held that an owner who sells a damaged property keeps his interest in suing for the damage. The right to compensation is personal, and it does not pass to the buyer unless the contract says so. The court also held that a developer and his excavation contractor answer jointly to the neighbour, and it dismissed every appeal before it.

The facts

M.M. owned a house next to a lower plot and sued through a special mandatary, a person authorised to act for him. The neighbours, S.M. and his wife, had the plot excavated in 2010 by Vella Group Limited, under the supervision of their architect.

The clay site was left exposed from August to October 2010. When the rain came and more digging took place, the ground under the plaintiff's house gave way and his swimming pool shifted towards the plot. On 17 May 2022 the First Hall of the Civil Court held the neighbours and the contractor jointly liable and awarded €169,255.50.

All sides appealed. While the appeals were pending, the plaintiff sold the house in September 2025. The neighbours were then allowed to add a plea that he had lost his juridical interest (interess ġuridiku), the personal stake a plaintiff needs to bring and keep a lawsuit.

What the court held

The court was composed of Mr Justice Robert G. Mangion, presiding, Mr Justice Mark Simiana and Madam Justice Simone Grech. It first dealt with the new plea. It held that a plaintiff's interest must exist when the case starts and must last until it ends, but found that the sale had not removed it.

The reason is the nature of the right. The court explained that compensation is a right of credit, not a real right attached to the thing: "d-dritt għar-riżarċiment tal-ħsara huwa wieħed personali, mhux reali, u għalhekk mhux magħqud mal-ħaġa" (the right to compensation for damage is personal, not real, and so is not bound to the thing). It stays with the person whose patrimony suffered the loss, unless owner and buyer agree otherwise.

Under article 1483(2) of the Civil Code (Chapter 16 of the Laws of Malta), a right is litigious when it is contested in a pending case. The contract of sale said nothing about assigning that right. Instead, it stated that the buyers knew of the case and bore no responsibility for it.

The neighbours argued that the price covered the loss. The court rejected this. The contract sold the house in its present state and released the seller from the guarantee against latent defects, so the price was the price of a damaged house.

On liability, the court applied article 320 of the Civil Code. Ownership allows the fullest enjoyment of property, provided no use prohibited by law is made of it. An owner who lets others work on his land in a way that harms a neighbour makes such a use, and is at fault under articles 1031 to 1033.

The neighbours knew from a geological study that exposed clay crumbles when it dries and then gets wet. They could not shift the blame to the contractor they hired. Their remedy is recourse against it.

The contractor's fault had already been decided between it and the neighbours by the Court of Appeal on 24 August 2023. The court held that it could not ignore that final judgment between the same parties, even though under article 237 of the Code of Organization and Civil Procedure (Chapter 12) it cannot prejudice the plaintiff. It kept the joint liability, with each defendant bearing half.

The plaintiff's cross-appeal on the amount also failed. He would never carry out the repairs, so his loss could not grow with market rates. The depreciation applied by the court-appointed experts stood, since he had not cross-examined them on it.

Why it matters

A client who sells a damaged property during litigation does not have to abandon the claim. The safer course is to state in the deed who keeps the litigious right. A developer cannot escape a neighbour's claim by pointing at the contractor, and a contractor cannot rely on the owner's instructions to justify unsafe work.

Where it sits

The case applies two familiar doctrines. The first is juridical interest, which must be personal, direct and continuing. The court named the Court of Appeal (1 April 1992), the First Hall of the Civil Court (10 May 2005) and Jefpet Limited vs HSBC Bank Malta plc (First Hall, 18 May 2021). On the assignment of a litigious right, it named the Court of Appeal (2 July 1984) and the First Hall (30 September 1985).

The second is liability between neighbours under articles 1030 to 1033. Works next door do not by themselves make an owner liable, since fault and a causal link are needed. The court named the First Hall (28 January 2004 and 8 March 2005) and Is-Soċjetà APS Bank Ltd vs Is-Soċjetà Amalgamated Building Contractors Limited (Court of Appeal, 5 October 2001).

It also relied on the Court of Appeal (28 February 2014), which held that owner and contractor answer jointly to a third party and cannot blame each other. On the weight of an earlier final judgment between the same parties, it named the First Hall (19 December 1950).

Source

Court of Appeal (Superior Jurisdiction), 104/2012/2, 10 March 2026, 104/2012/2