Court decides that owners whose rights to build were at some point affected are eligible to compensation

The plaintiff company contended that the land in question was previously designated for industrial use and a permit was indeed issued for the construction of a factory, back in 1971. According to the 2006 Local Plan, “strategic open gaps” are defined as “locations which are visually important, being the first step outside urban areas offering a brief respite from the monotone visuals of heavily urbanized landscapes”, hence calling for “substantial protection”. 

Should the plaintiff company decide to demolish the present building, it follows that MEPA cannot issue a permit for redevelopment. On this basis, the plaintiff company argued that its rights were severely compromised, alleging further that it was never consulted about MEPA’s intentions during the formulation of the Plan. As a remedy, plaintiff requested the Court to declare MEPA’s actions as abusive and consequently order the reintegration of its property within the building scheme.

In reaction, the Attorney General stated that plaintiff’s arguments are legally unfounded since the Local Plans were formulated according to strict parameters set out in the law. The Authority, on the other hand, insisted that the Local Plans are approved by the Minister and should therefore not be held responsible for any damages that plaintiff may have allegedly incurred. Still, the MEPA maintained that any vested rights acquired by applicant prior to the promulgation of the Plan, remain unaffected.

The refusal to issue a building permit must be regarded as an interference with the applicant’s right to peaceful enjoyment of its property

In its preliminary assessment, the Court observed that Local Plan Policy SMCO 10 specifically provides that “urban development will not be permitted in all Strategic Open Space Gaps”. In this context, the Court made reference to a recent European Court of Human Rights (ECHR) judgment in the names Lay Lay Company Limited vs Malta, where the Strasbourg Court held that “the refusal to issue a building permit must be regarded as an interference with the applicant company’s right to peaceful enjoyment of its property” within the ambit of Article 1 of Protocol No.1 of the European Convention. The Maltese Judge also made reference to another landmark decision instituted by the Housing Association of War Disabled before the European Courts, where the latter recognised on the one hand that “contracting States should enjoy a wide margin of appreciation in order to implement their town- and country-planning policy”, but at the same time, the Court must “determine whether the requisite balance is maintained in a manner consonant with the applicants’ right of property”.

In keeping with the above legal reasoning, the Civil Court considered that the ultimate change in destination of plaintiff’s land as a result of the 2006 Local Plan should not absolve the Maltese State of its responsibility to provide adequate compensation to the relative owners. The Court concluded that the plaintiff company is eligible to a compensation for having its land designated as a “strategic open gap”.

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