€240,500 Vassallo Builders garnishee in Lowenbrau case revoked

The Court of Appeal has upheld a request by Marsovin Ltd for the revocation of a garnishee for €240,525 filed by Vassallo Builders in a case relating to the Lowenbrau deal.

The land once occupied by the Lowenbrau beer factory in Qormi, had been sold in 2009 to Nazzareno Vassallo’s Vassallo Builders Group, where the site is today used for a wedding hall and conferences centre.

The 21,000 square metre plot had been granted to Marsovin’s Lowenbrau by the Maltese government back in 1990 for Lm10,000 in annual rent (€23,294).

The minister of the day had established that the allocation was to be made on a perpetual basis against the annual payment of a non-revisable ground rent of Lm10,000. The contract stipulated that the land was to be used specifically for the production of beverages.

It became the subject of controversy after LBM Breweries – then owned by Marsovin – was acquired in 2009 by Vassallo Builders Group (VBGL) which proceeded to redeem th eground rent, and acquire the land freehold and removing the use condition for €465,875.

On 1 December 2009, LBM Breweries requested the redemption of the perpetual ground rent from the Government Property Division (GPD), which endorsed this request only the next day on 2 December 2009, simultaneously authorising the cancellation of all the conditions burdening the land in Qormi, which effectively rendered the site free and unencumbered.

The case became the subject of an Auditor General’s inquiry in 2017, dragging out Labour minister Owen Bonnici and Nationalist MP Jason Azzopardi, one-time lands minister, into a feud as to whether political pressure was brought to bear on the process.

The cancellation of the lease was formalised in a 3 December 2009 contract for €465,875, a deal that has been attacked in court actions.

The garnishee had been filed by VBGL after a Civil Court ordered Marsovin and subsidiary Agrico Ltd to pay VBGL €240,525 in damages for breaches of guarantees made in a private writing. That decision is currently the subject of an appeal.

VBGL tabled three precautionary warrants against Marsovin, each for the sum of €240,525: one garnishee to banks, another garnishee to Cassar-Camilleri Limited, and a precautionary warrant seizing the shares Marsovin had in Cassar-Camilleri.

The defendant, Marsovin, had requested the revocation of the Cassar-Camilleri share garnishees, pointing out the value of the warrant of seizure already exceeded the amounts being secured: 18,777 out of the 560,111 share capital seized would satisfy the credit, it said.
VBGL objected, in view of the fact that Marsovin had not made any deposits under the garnishee, despite the passage of over a year.

In a decree from chambers, the Court of Appeal presided by Chief Justice Mark Chetcuti, Mr Justice Giannino Caruana Demajo and Mr Justice Anthony Ellul denied the request for the partial revocation of the warrant over the shares. It said the shares were sufficient to guarantee the credit being vaunted by the plaintiff, including costs and interests. Therefore, said the court, the request for the revocation of the garnishee notified to Cassar-Camilleri was justified.

The legality of the 2009 contract was called into question in 2011, with the Commissioner of Land (COL) noting that the transfer of the land following the cancellation of the conditions had probably been in breach of the Disposal of Government Land Act, which allowed for the sale of such land to be made only through a call for tenders or through a parliamentary resolution.

According to a committee established to determine the freehold value of the land as at 1990, the value of the land in Qormi was established at €706,400. In 2012, VBGL sued Marsovin and the Commissioner of Lands for damages.

A NAO investigation was launched at the request of the government, and in 2016 the Auditor General found that – although it could not find “direct evidence of political pressure” – the manner by which the GPD concluded the 2009 contract was “highly suspect”, and that by its own calculation, the freehold value of the land in 2012 was €7.8 million, or €8.4 million together with the direct dominium in 2009.

The NAO said the application of 1990 rates to the direct dominium was “fundamentally flawed” and that the architects’ valuation “grossly understated” the true value of the land.