The case involved Mr Vella’s application to the Court to remove forged mortgages from the titles to his land.
One argument that Mr Vella raised was that the Consumer Credit Code applied to the mortgages, and that the mortgages were unenforceable under the Code. The Code applies when an individual borrows money for personal, domestic or household purposes. If the Code applies and there is a mortgage securing the loan, Section 38 of the Code says that the mortgage is not enforceable unless it has been signed by the mortgagor, or the mortgagor has signed a separate credit contract.
Section 11 of the Code says that if a borrower makes a declaration under that section stating that the credit is to be applied wholly or predominantly for business or investment purposes, then the credit is presumed conclusively not to be provided for personal domestic or household purposes. Mr Vella argued that, if giving a Section 11 certificate means that the credit is presumed conclusively not to be provided for personal, domestic or household purpose, then if the certificate is not given, the credit is presumed to have been given for personal, domestic or household purposes. The court rejected this argument and said that a court should consider the substance and reality of the transaction to determine the purpose of the credit.
It said:
Assuming for the moment that Mr Vella received the money, the whole of the evidence shows that the loan was not for personal, domestic or household purposes. The loan was either for investment, for repaying business loans or for the boxing promotion business. There is just not one scintilla of evidence to suggest that it was for domestic purposes.
Accordingly, the Consumer Credit Code did not apply, and Mr Vella was not able to rely on Section 38 of the Code to have the mortgages removed from the titles to his land.
Because the mortgages were forged, the mortgages were never going to be enforceable against Mr Vella. However, Mr Vella argued that Section 38 of the Code overrode the provisions in the Real Property Act and that, had the Code applied, the mortgages would have been unenforceable whether or not the mortgages were otherwise enforceable under the Real Property Act. The commentary above is intended to highlight the comments by the Court on how Section 11 of the Code should be interpreted.