The parties to a contract enter into it in good faith and are bound by what is written. This was held in Michael Micallef vs Daryl u Ritianne Borg on 23 January 2026. The court was presided over by Judge Miriam Hayman.
Micallef explained that on 10 May 2014 he entered into a contract of works with the defendants. The defendants were to develop a land in Birkirkara and were to be paid €50,000 to build garages, shops at ground floor level and apartments. The works had to be concluded in February 2016 and if there were any delays, they were to pay a penalty of €50 per day. The works were not concluded, and judicial letters were sent in July 2016 and October 2017. The plaintiff asked the court to order the defendants to pay the penalty.
The defendants challenged these claims, insisting they were untrue. They argued that the works were completed on time, pointing out that according to the contract, the finishings were limited to the façade.
The court analysed the contract signed by the parties. The dispute revolved around the finishings and the construction of a ramp. The plaintiff claimed that to finish the works, the defendants had to place two balconies—an iron one and a typical Maltese balcony. The plaintiff calculated that the penalties amounted to €167,700.
The defendants testified that they had to develop land in Birkirkara and were to be paid by the airspace on top of the three apartments. The finishings they were bound to carry out were limited to the façade and the common areas. When the works started, they found a hole and this led to higher expenses. The defendants agreed with the plaintiff to fork out half of these extra expenses. All these works were concluded on time. The ramp was not completed because they were waiting for the plaintiff to level the area. They insisted that the finishings were never agreed upon in detail. Since the Planning Authority issued permits for five floors, the plaintiff felt that the payment by means of the airspace was excessive.
The First Hall of the Civil Court in its judgement held that the general principle of contract law is that the parties would have entered into a contract in good faith. The Court quoted from Saint James Hospital Limited vs Degiorgio Group Limited, decided by the Court of Appeal on 10 December 2025. In this case the Court of Appeal held that there are two principles governing contract law. The first is pacta sunt, which means that the agreement is binding on both parties. The other principle is that of contra scriptum testimonium non scriptum testimonium non fertur, which means that oral testimony cannot contradict what is expressly stated in writing. Therefore, a party to a written agreement cannot try to insert fresh heads of agreement by testifying orally.
In another judgement John Spiteri vs Popeye Investments Limited delivered on 3 November 2006, it was stated that the interpretation of a written contract has to be done on that contract and not on any exterior source. A judge, when reading the document, must interpret the wording in their ordinary sense of the meaning and on how the parties wanted to bind themselves. The same judgement went into the meaning of good faith which is a concept that banks on justice, reasonableness and honesty.
Judge Hayman ruled that the contract of works did not lay down that was meant by “finishings” and that the balcony was to be built in wood. It is obvious that the contractor had to build the balcony in a way that was possible. If the plaintiff wanted the finishings in a particular way, then they should have been written down and specified. This was not done and so the Court turned down the plaintiff’s claims.
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