Court of Appeal acknowledges rent laws violation of owners’ right to property and increases compensation

A recent decision by the Court of Appeal in Anna Galea et vs L-Avukat Generali u Saint Julians Band Club has awarded further damages to property owners aggrieved by the protective rent laws, and particularly at the fact that for decades they had been deprived of a fair rent from their property. This is the latest outcome in the case previously reported by Iuris. The First Hall Civil Court in its Constitutional jurisdiction had decided earlier this year that the plaintiff’s property rights had been violated by the State. The band club had been paying an annual rent of €100.16 which was considered by the Court as unconstitutional as it breached the owners’ right to property. The First Hall ordered the Attorney General to pay a sum of €300,000 to the plaintiff, €15,000 of which were to cover moral damages, and €285,000 to cover monetary damages, with an 8% interest rate.

Both parties contested the sum before the Constitutional Court of Appeal, with the plaintiffs arguing that they deserved a better remedy and the Attorney General claiming the very opposite. The Attorney General also appealed the interest imposed by the Courts and the legal fees.

Moral damages awarded purely in recognition of violation of property rights

The defendant put forward the argument that the plaintiff did not sustain any “suffering” or “anxiety”, and was therefore not entitled to any moral damages. The Court rejected this reasoning, arguing that moral damages are primarily awarded as a token compensation for a breach of rights. Notwithstanding this, the Court went on to say that a violation of one’s property rights is less serious than a violation one’s right to life, and calls for less compensation. It lowered the moral damages from €15,000 to €12,000.

Monetary damages increased – Court concludes property owner should carry less burden, and compensated more, for what is ultimately the State’s community responsibility

The Court went on to consider a number of factors to determine if the sum awarded to cover pecuniary damages was adequate. It distinguished between the restriction of propriety rights on the pretext of social/community needs as opposed to a deprivation from one’s property to cater for social accommodation. It reasoned that the burden on the owner in one case is greater than in the other, and thus the compensation which the deprived owner ought to be entitled to should vary. Given that community needs were not as serious as accommodation needs, the Court concluded that the State should carry more of the burden, and the property owners less. Consequently the owners deserved higher compensation for the deprivation sustained. The Court also took into consideration the fact that the plaintiffs were not only made to bear an unconstitutional rent for thirty years, but that when the property came to be sold, it had to be sold at a lesser price due to its still being subject to the old rent laws. The protected lease had also reduced the number of prospective buyers. Hence, the Court increased the pecuniary sum to €480,000.

This judgement further confirms the current forma mentis of the Maltese courts in compensating property owners aggrieved by the protective rent laws in Malta.

For more information on rent laws and property law contact Dr. Simon Galea Testaferrata or any other member of Iuris Advocates.