State ordered to pay €200,000 over Labour Party club lease in Pieta

A company owning a building in Pieta, which has been used by the Labour Party for decades, was awarded more than €200,000 in compensation after a court declared that said company was unfairly impacted by state laws governing rental agreements.

The property, used by the Labour Party as a club, was leased in 1978 for a yearly rent of €186.35—an amount which was found to be manifestly disproprtionate to its current rental market value.

The First Hall of the Civil Court in its constitutional jurisdiction, presided over by Judge Audrey Demicoli, declared in its judgment that the Labour Party, as tenants, had acted within the law and could not be held liable for damages. Indeed, whilst the party had benefited from existing laws, it could not be held responsible for the same.

The owners of the property were unable to terminate the lease owing to the legal framework governing leases entered into before 1 June, 1995. According to said law, landlords of premises leased before this aforementioned date may not, at the expiration of the period of the tenancy, refuse the renewal of the lease, raise the rent or impose new conditions for renewal without the permission of the Rent Regulation Board.

The court said that the legal framework had effectively locked landlords into a lease agreement which did not reflect the current market value. A court-appointed technical referee estimated the rental value to exceed €8,000 in 2011. Today, that value is double.

The court passed on to establish the necessary compensation in line with the case-law of the European Court of Human Rights and that of the local Constituional Court. It was noted that over the period between 1987 (the year in which the European Convention on Human Rights was transposed) and May 2024, the landlords should have received €261,621 in rent, rather than the €6,794.06 actually received.

According to the formula established by case-law, 30% is to be deducted from the amount which could have been obtained by the landlords in view of the general interest and social aim pursued by the law, with another 20% being deducted due to uncertainty that the landlords would have managed to keep the property rented out at all times. The actual amount obtained would then be deducted from this sum.

However, in this case, the court noted that it would not be effecting the 30% reduction because the general interest element was lacking.

Ultimately, the State was instructed to pay €202,502.98 in compensation, with a further €3,000 being awarded in non-pecuniary damages.

The plaintiffs were assisted by Eve Borg Costanzi and Matthew Cutajar, while Corinne Pace appeared for the State Advocate and Ryan Ellul for the Labour Party.

PN: The Maltese people continue to foot the bill for Labour Party theft

The Nationalist Party reacted to the sentence in a ruling, highlighting a Constitutional Court decision last month which found abuse in the way a property in Birżebbuġa was handed to the PL for use as a club.

“In this case, the Court ordered the owners to be paid over €200,000 in compensation—a sum which, once again, will be paid by the Maltese people through their taxes,” the party said.

“This means that, in less than two weeks, the total amount Maltese taxpayers will have to pay for the Labour Party’s theft—as ordered by the courts—has now exceeded one million euro. In the Birżebbuġa case, the Court had ordered compensation amounting to €840,000.”