Commissioner of Lands ordered to pay €273,777 to former Marsaxlokk restaurant owner

A court has ordered the Commissioner of Lands to pay a former Marsaxlokk restaurant operator almost €274,000 in compensation for terminating the lease of the property housing the restaurant without regard for the value of the business he had built up.

The Commissioner of Lands had originally leased the site, at Ponta tal-Qrejten in Marsaxlokk, to a company called Air Supplies & Catering Co. Ltd in 1980. However, that same year, Anthony Gatt took over the lease, building an 11-room guest house and a fully-equipped 200-cover restaurant at a cost of Lm200,000 (€465,875).

In 1993, Gatt had been approached by a certain Joe Baldacchino, who wished to lease the restaurant from Gatt, but Gatt had informed him that this was not possible because of the conditions of the original lease. To circumvent this, a management agreement was signed between Gatt and J&H Company Limited – owned by Baldacchino – allowing it to operate the restaurant, renamed as “Is-Sajjied Restaurant”.

However Baldacchino only paid Gatt up till 2003, leaving Gatt to pay the rent due to government out of his own pocket. Gatt fell behind in rent payments and is also embroiled in several lawsuits in which he is attempting to recover the amount due under the management agreement. An eviction order was issued against Gatt in 2006.

Gatt negotiated with the Commissioner of Lands at the time, Albert Mamo, to transfer the lease to J&H Company in return for LM70,000, however soon after this an eviction letter was sent to Gatt. Confronted with this fact, Mamo had reassured Gatt that he would, at least, be compensated for the goodwill of the going concern.

However, when the tender process was concluded in 2009 Gatt realised that, contrary to what had been agreed and contrary to the norm in such tenders, there was no clause in the tender wherein the new tenant would pay for the goodwill obtained by his predecessor. He exhibited similar agreements for the Beach Haven, a Bugibba property, and property in Għadira. Baldacchino had, in fact, confirmed to the court that he had received “a complete restaurant,” furnished and fitted with all necessary equipment.

After several meetings between the Commissioner of Lands, Gatt, Mamo and his lawyer, an agreement had been reached whereby the winning bidder would pay Lm130,000 to Gatt for the goodwill and had been approved by Tonio Borg, then minister.

However, before this could be formulated into a specific tender, a cabinet reshuffle and a change in the Commissioner of Lands resulted in the tender being issued without the goodwill sum being included.

Judge Jacqueline Padovani Grima held that “government is one entity, and a change in ministers should not result in the revocation of previously approved decisions,” adding that in this case, such a revocation had resulted in a “substantial injustice.”

Joseph Baldacchino, sole director of J&H Company, had been “gifted a restaurant on which Lm200,000 had been spent and managed to escape paying rent to the plaintiff with impunity.”

She ordered the Commissioner of Lands to pay the plaintiff the sum of €273,777, which represented the remainder of value of the going concern, after deducting the amount of rent outstanding.

Lawyer Edward Gatt represented Anthony Gatt.