Court slashes Valletta landlord’s €1 million compensation to just €25,000

The Constitutional Court has slashed an award of €1 million in compensation given to the heirs of the Marquis John Scicluna for the expropriation of the Scicluna family’s property in St. George’s Square, Valletta to just €25,000, while also warning Bank of Valletta, whose offices are housed there, that the property’s continued occupation was “inconsistent with the right to protection from deprivation of property without compensation.”

Both the heirs and the Attorney General had filed separate appeals to a judgement delivered by the First Hall of the Civil Court (Constitutional Jurisdiction) last February which had found for the plaintiffs and ordered the State to pay the heirs €1 million in compensation. The Attorney General had filed an appeal on the grounds that the amount was excessive, while the heirs also filed an appeal arguing that the compensation was insufficient.

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The heirs had also asked the court to order the eviction of the bank from the property, in addition to the claim for compensation. With respect to this, the court decreed that while Bank of Valletta could not indefinitely continue to rely on the Reletting of Urban Property (regulation) Ordinance, Act XLV of 1973 and ACT IX of 1974, which created the nationalised bank and leased the property to Bank of Valletta, the issue did not fall within the court’s remit.

The case dealt with a 10-year lease agreement between the Marquis John Scicluna and Scicluna’s Bank signed in 1958. The original rent was agreed at £800 per year. That lease agreement was extended in 1968 to include four buildings in Strait Street. Scicluna’s Bank was later amalgamated with the National Bank of Malta. The lease continued to be renewed.

But after its nationalisation in 1973, the tenancy of the property was transferred to Bank of Valletta.

In 1989, the Scicluna heris Cristiane Ramsay Pergola and Mignon Marshall, filed court proceedings for the property’s return. That demand was dismissed in 2010, leading to constitutional proceedings for a supposed breach of their fundamental right to property before the First Hall and the subsequent €1 million award.

Notably, it was the State that was found responsible and ordered to pay the compensation and not the bank.

The Attorney General subsequently filed an appeal on behalf of the State, arguing the amount was excessive. Pergola and Marshall, on the other hand, filed their own appeal, arguing that the amount should have been considerably higher. They pointed to a court expert’s having estimated the annual free market rent at €159,350 – far in excess of €4,277 per year they were currently receiving. They argued that a monetary award would be an inadequate remedy, demanding that the property should also be returned to them.

In its decision, the Constitutional Court, presided by Chief Justice Silvio Camilleri, together with judges Giannino Caruana Demajo and Noel Cuschieri rejected the Attorney General’s argument that no breach of the heirs’ right to property had taken place.

It also took a dim view of the 21 years of delays. In the most part, the court held that these had been caused by Pergola and Marshall taking their time to file the case and subsequently, to conclude their evidence, the court said. It added however that the State could not be exonerated for its part in allowing proceedings to carry on for over two decades.

Taking this into consideration, the court reduced the amount of compensation from €1,000,000 to €25,000. 

The issue of whether or not to order the return of the properties to the heirs fell outside the remit of the Constitutional Court, it said, instead  ordering the bank not to continue relying on the Acts from the 1970’s or the Ordinance to justify its continued occupation of the properties.

“In this particular case, those laws are to be considered without effect as they are inconsistent with the right to protection from deprivation of property without compensation.”