Baron’s heirs get €1 million for rent-controlled Valletta property

A court has awarded a total of over €1 million in compensation to the owner of a Valletta property which was subjected to a controlled lease

A court has awarded a total of over €1 million in compensation to the owner of a Valletta property which was subjected to a controlled lease.

The late Baron Carmel Apap Bologna Sceberras d’Amico Inguanez had filed a Constitutional case against the State Advocate and N Caruana & Sons Ltd, asking for damages due to loss of income from lease.

The 631sq.m property, subdivided into other properties, has entrances on St. Paul’s Street and Merchants Street. It was leased to the Caruana family in 1964 at Lm400 per year for the Merchants Street entrance and Lm100 per year for the St. Paul’s Street entrance.

The lease was later assigned to the company N Caruana & Sons Ltd, which is owned by the same family.

In July 1964, the parties had agreed that the lease was to last four years, but the plaintiff remained bound by the old rent laws to renew the lease at the same rate over a period of years.

It was only in 2009 that the State recognised the prejudice the plaintiff had suffered, and established a definitive date for the termination of the lease and increased the rent.

However the plaintiff complained that he had suffered serious prejudice by the lack of fair balance between the public need and the private right to enjoyment of personal property.

Defendants N Caruana & Sons Ltd argued that the rent was legal and the amount had been increasing since January 2010. The rent was protected up till 2028, they said, arguing that they also had a right of first preference on any future lease.

The State Advocate said the lease agreement was entered into voluntarily and in full knowledge of the legal regime applicable at the time.

In May 2021, the courts declared that the law had violated the plaintiff’s right to enjoy his personal property and awarded €560,000 as pecuniary and non-pecuniary damages for the breach of his rights for the period 1987 to 2019, ordering the State Advocate to pay the damages.

Apap Bologna filed an appeal from this judgment, requesting the court award damages which would continue to accrue until he is able to take back the property.

The Constitutional Court, in a judgment handed down earlier this month, ruled that the amount of pecuniary damages awarded by the first court was too low.

“It is true that compensation due is not necessarily equivalent to the full rental amount receivable on the free marked where the interference in question was justified by the general public interest…. However compensation must still be proportional to the actual damages suffered,” said the court.

The compensation awarded by the first court, representing around 15% of the loss suffered, doesn’t make good for the excessive burden imposed on the plaintiff by the old law.

The judges recognised that this case did not deal with social accommodation or safeguarding of vulnerable people from homelessness, and that the justification of the protection of commercial leases had reduced over time.

The court refused to grant compensation for the period of time until the plaintiff got back possession of the property after the judgment, ruling that doing so would be speculative. In view of this, the court established a percentage of 20% for the award of damages.

Other deductions were made due to the failure of the plaintiff to evict some of the tenants who were not maintaining the property.

After deducting these amounts the court established a total sum of €1,073,000 in damages due, plus interest. The appellant was to bear a quarter of the costs of the case, with the rest being suffered by the State Advocate.

Lawyers Mark Attard Montalto and Douglas Aquilina appeared for Carmel Apap Bologna.