There are certain obligations which arise by operation of the law. These are known as ‘ex lege’ obligations. A typical example of these are servitudes, wherein the law creates certain obligations.
On the other hand, there are also obligations which are not created by the mere operation of the law, but which arise out of the following categories:
We only find one indirect reference to natural obligations in Chapter 16 of the Laws of Malta[1], namely under article 1021 which speaks of ‘indebiti solutio’ and provides that:
“A person who receives, whether knowingly or by mistake, a thing which is not due to him under any civil or natural obligation, shall be bound to restore it to the person from whom he has unduly received it.”
Albeit the law is clear that if a person has received something in fulfilment of a natural obligation, then he is not obliged to restore it to the person from whom he received it, the law stops short from defining what a natural obligation actually is.
In order for natural obligations to arise, there has to be 2 elements:
A typical example is an obligation which is barred by prescription. If a loan is given and 5 years elapse from the day when the loan should have been re-paid, the creditor cannot sue the debtor for payment since the action would be time-barred. However, if, after the 5-year period lapses, the debtor pays the creditor the amount lent to him, the debtor may not seek later on, to have the payment reversed. This is due to the fact that even though there was no enforceable obligation, there still existed a natural obligation to pay the creditor the amount which he had originally lent the debtor.
Therefore, if a debtor mistakenly pays the creditor, thinking that he was under an enforceable obligation to do so, and later on learns that he was under no obligation to do so, he will not be able to go to court to retrieve back his money and plead that the payment was made erroneously and that upon submitting payment, he was acting under a mistaken frame of mind. In fact, the intentional element has nothing to do in these situations.
Therefore, whereas the general rule is that if a person pays something by mistake when there is no natural obligation to do so, he is entitled to get his money back, in the case of natural obligations, this is not so.
In the case of ‘Gio Maria Muscat vs Carmelo Vella’ (25/02/1950)[2] the parties agreed on an amount of rent which the tenant duly paid for the first few years. He subsequently took legal advice, and proper workings were carried out and discovered that he was paying more than the fair rent. He instituted an action to recover the extra amount of rent he had paid. The court went on to say that the landlord was indeed breaking the law however also said that the tenant was not entitled to recover the extra amount of rent he had paid.
“Il-Kerrej li jaċċetta l-għoli, iħallas, igawdi l-fond, u mbgħad wara żmien idur kontra s-sid għar-ripetizzjoni, imur kontra kwalunke prinċipju ta’ ekwità, ta’ unur u ta’ morali; u hekk il-kerrej li jaċċetta l-għoli tal-kera mingħajr awtorizazzjoni tal-Bord, u jħallas il-kera hekk awmentat, ikun qiegħed jeżegwixxi obligazzjoni naturali, u għalhekk ma għandux dritt jirrepeti dak il-għoli ta’ kera hekk imħallsa”
This principle and view was also shared in the case of ‘Cachia vs Debono’[3] where the court stated that the tenant who pays high rent and enjoys the tenancy, then seeks to recover the amount, goes against all principles of equity, honour and morality.
When the law is based on a matter of public policy, the situation is different. A typical example of this is the law which prohibits the charging of interest of 8%. In Malta, charging an interest higher than 8% is tantamount to the criminal offence of usury. In the event a person borrows money with a higher interest rate and pays up the interest, our courts have decided that since this law is in the interest of public policy, then a natural obligation is not created and therefore the extra interest paid may be recovered. This was confirmed in the case of ‘Felix Farruġia vs Direttur tas-Sigurta Soċjali’ (19/10/2005)
In the case of ‘Parascandalo vs Lanzon’ (17/05/1925)[4] the court stated that natural obligations exist independantly of whether one is ignorant of the law as to the nature of his obligation of otherwise.
For further information or assistance, feel free to contact us at info@gtg.com.mt.
Author: Dr Delilah Vella
[1] The Civil Code.
[2] Volume 34B (1950), Part No. 2, Section, Page 498, first Hall, Civil Court.
[3] Civil Court, First Hall, reference: 39/1986/1
[4] Court of Appeal.