€500,000 in damages for owners of Bank of Valletta property lost in 1970s nationalisation

European Court of Human Rights orders Malta to pay €500,000 to heirs of Marquis John Scicluna for Valletta property lease held indefinitely by Bank of Valletta

The insignia of the former National Bank of Malta
The insignia of the former National Bank of Malta

The Strasbourg court has ordered the Maltese state to pay €500,000 to one of Malta’s major landowners, the noble Marshall and Pergola-Ramsay families.

The European Court of Human Rights found a violation by the Maltese courts due to a 42-year case on a protected rent regime forced onto their prooerty.

The Marshalls and Pergola-Ramseys, heirs of the Scicluna estate, are owners of a real estate property that for decades has been subject to a lease under a “protected rent” regime.

The lease for the St George’s Square, Valletta property had been contracted in 1958 with their late ancestor Marquis John Scicluna’s own bank, Scicluna’s Bank. The bank later merged with the National Bank of Malta, which however was nationalised in 1974 by the Maltese government when a run on the bank imperilled its deposits.

The lease of the property was transferred in the name of Bank of Valletta, to which the owners objected.

Following numerous requests for the return of the property and futile attempts to agree over a new lease contract with appropriate conditions, in 1989 the applicants instituted ordinary proceedings before the civil courts.

In 2010, an appeals court found that the lease in favour of Bank of Valletta was protected and that the ordinary courts were not the competent forum to address the applicants’ complaints.

Constitutional redress was then sought by the applicants, with a final judgement in 2016 in which the Court gave them no damages for length of civil proceedings, since they were held responsible for most of the delays.

But the Constitutional Court did accept that the effect of the rental regime was disproportionate given the striking difference between the rent the applicants received, and its rental value on the market.

As to redress, though, the Constitutional Court considered that it was not the adequate forum to decide on the eviction of a tenant. In 2009 admittedly, the Civil Code had been amended to provide owners with a possibility of regaining their property, but this could only come to play after a 20-year transition period ending in 2028. Instead, it however ruled that the impugned rent-control laws could no longer be relied on as a basis for the occupation of the premises in the present case.

The Constitutional Court awarded €25,000 in damages.

The European Court of Human Rights has now declared that constitutional redress proceedings were not an effective remedy in practice in the case of rent laws which place an excessive individual burden on applicants.

“In the absence of an award covering future rent until 2028, the only remedy capable of giving adequate and speedy redress to the applicants in the present case was for the Constitutional Court to order eviction of the tenants, a course of action it had failed to undertake, as was its normal practice.

“Instead it had ordered that the tenants could no longer rely on the relevant law provisions to retain title to the property. While the Court will refrain from adjudicating on the matter in general, the effectiveness of such a measure appears unsatisfactory in the present case.”

The Court said that without Bank of Valletta being evicted, there was little justification for delaying redress in the present case, given that this was not a case where the property was being requisitioned for social housing, but for a bank.

As the law stood, the bank would in any event lose the protection of the law and therefore would have to vacate the property when the lease came to an end in 2028.

The Court also said that Maltese courts often fail to give out appropriate damages for loss of rent.

The Court also found, unanimously, violations of the right to enjoyment of property and right to fair hearing in account of the excessive length of proceedings.

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