€510,000 compensation for owner but no eviction for Hamrun band club

The noble family that owns the Hamrun property occupied by the San Gejtanu band club for the past 96 years, has been awarded €510,000 in compensation from the State, after the law under which she could neither terminate the lease, nor increase the rent, was declared to have breached her rights.

The Hamrun property on the St Joseph High Street, belongs to the heirs of Baroness Marie Christian Ramsay Pergola, who inherited the property from the Marquis Giovanni Scicluna.

In terms of the contract signed in 1926, the building was leased by Francesco Portanier to the San Gejtanu Band Club, for a period of eight years, against payment of an annual rent of £120 (€279.52). A year before that contract expired, Portanier was granted a 30-year emphyteusis over the land by the Marquis. Nine years later, in 1934, Scicluna acquired the right to use the property for the remaining period of the 30-year period, thereby consolidating his right to absolute ownership of the property at the end of the emphyteusis.

When the lease contract expired on 31 August 1942, the band club opted to renew the lease to Scicluna in terms of the Reletting of Urban Property (Regulation) Ordinance, which had been introduced in June 1931.

The plaintiff, and later her heirs, argued that because of the application of that law, today the annual rent was still only €361.32. The band club had also offered €945.75 in terms of a legal notice introduced in 2014 which regulated the Leases of Clubs Regulations. The total amount payable in annual rent was therefore €1,307.07 in 2015.

The 1,295 square metre property was valued at an estimated €2,000,000 in 2016, according to an architect’s report, which meant that the actual rental income was only 0.06% of the real value of the property.

The 2009 amendments to the Civil Code, which had introduced some protection to landlords owning commercial premises, did not apply to leases of musical, charitable, social, sporting or political party clubs that had been entered into before 1995. The law, in fact, explicitly excluded such clubs from the definition of a commercial premises.

The plaintiff argued that this situation constituted a breach of the right to peaceful enjoyment of property under the European Convention as it left her with no way to reclaim possession of her property and prevented her from increasing its rent to reflect current market rates, at the same time.

In its reply, the State, represented by the Office of the State Advocate, argued that there had been no forcible takeover of the plaintiff’s property, as the original contract of lease had freely been entered into and, indeed, renewed by the original owner.

It was also argued that the lease in question did not fall within the parameters specified by the European Convention as the protection of band club leases emerged from the law, with the legitimate aim of protecting the national socio-cultural identity.

For its part, the San Gejtanu band club also objected to the request to change the rent, arguing amongst other things, that it was not a legitimate defendant and had not violated the plaintiffs’ human rights.

Declaring that the plaintiff’s rights had indeed been breached, the First Hall of the Civil Court presided by Mr. Justice Robert Mangion, observed that the State’s right to interfere with an individual’s peaceful enjoyment of property for public purposes, “always remains the exception to the rule.”

Even in circumstances where such interference was permitted, a balance still had to be struck between the interests of society in general and those of the individual affected by the State’s actions.

While the court recognised that band clubs were an integral part of the community, to which they also contributed by providing young people opportunities to learn music, this need could not be placed on the same level as social accommodation cases where families were at risk of losing the roof over their heads.

It was not enough for the State to have been acting within the parameters of national law and in the public interest when it comes to depriving an owner of the enjoyment of his property, said the judge. “In the present case, the allegation…is that precisely by operation of a law promulgated by the State through its legislative arm, had breached a fundamental right.”

The judge ruled that the law “had and continued to place” a disproportionate burden on owners so as to protect the band clubs renting their property.

He noted that no legislative amendments had been introduced to address the imbalance in protection with respect to band clubs, unlike what had been done with residential leases. “To the contrary, the legislative intervention was to bring to nothing the executive effect of judgments which had found fundamental rights breaches by club leases.”

Awarding damages to the plaintiff, the court ordered the defendants to pay €500,000 for the loss of rental income and another €10,000 in non-pecuniary damages.

While ruling that the band club could not continue to rely on the ordinance to renew the lease, the court rejected the request for the band club’s eviction from the premises.

A court of constitutional jurisdiction was not the ideal forum to rule on this issue, said the judge, explaining that the matter was one for the courts of ordinary jurisdiction to decide.