State ordered to pay Valletta property owner €560,000 for rights breach

The State has been ordered to pay out over half a million euros in compensation to the owner of a commercial property in Valletta for being denied his right to enjoy the property for 32 years – a situation that was caused by Malta’s old rent laws.

Mr Justice Lawrence Mintoff, presiding the First Hall of the Civil Court in its Constitutional jurisdiction, had been told how the Merchants Street property had been rented in 1964 for LM400 per year and an adjoining St. Paul’s Street property for LM100 in annual rent that the owners could not legally increase or terminate.

After the law on controlled leases was changed in 2009, as of 2010, the rent was increased by 15% annually till 2013 and then 5% from 2014.

But despite the legal amendments brought into effect in 2009, aimed at rectifying the situation, the State had failed to safeguard the rights of owners, the court ruled.

The rent in 2019 was €2,599.90 payable every 6 months in advance – a laughable amount compared to what the property would have earned at market rates, estimated in the hundreds of thousands, argued the plaintiff’s lawyers.

The judge ruled that the legislator had an obligation to ensure that any legislative measure introduced would be proportionate and offer a balance between the rights of the owners and the rights of the beneficiary. Moreover, the legislator was obliged to ensure that private citizens do not suffer prejudice due to the introduction of such laws and that owners are given just compensation for their properties.

The 2009 amendments offered scant comfort to the plaintiff in the situation he found himself in as he was restricted both in the amount of rent he could receive and the time within which he could take back possession of the property – in this case, 2028. At that point, the protected tenant would have been occupying and making use of the property for over 60 years.

The judge also noted that the family occupying the property had neglected its upkeep and had left much of the building fall into ruin.

Establishing the amount of compensation due as €10,000 in non-pecuniary damages and €550,000 in monetary damages, the court ordered the State Advocate to pay the total of €560,000 to the property owner.

The judge also stated that the fact that the dispositions of the law protecting the lease were breaching the applicant’s human rights, the defendant company could no longer rely on that law to continue its occupation of the property.

Lawyers Douglas Aquilina and Mark Attard Montalto represented the property owner.