Property owner has €1m damages downgraded to €10k

A court ruled on Monday that €10,000 in moral damages was sufficient to compensate a woman for a breach of her right to her property in Marsa, and revoked an order to pay her €1,059,948.13 in material damages.

Gabriella Fusco had filed constitutional proceedings before the First Hall of the Civil Court in its constitutional jurisdiction, claiming her right to private property had been breached.

The proceedings were filed against the State Advocate and Briar Pipeworks Limited.

The property in Marsa belonged to Fusco’s family and was leased out to Briar Pipeworks Limited for some 60 years under the old rental law regime.

The property was initially rented out at a yearly sum of €496.93 (Lm213.33).

It was subsequently increased to €1,397.68 after the law was amended.

The woman, who inherited the property, complained that the lease was too low when compared to the property’s market value. She also observed that the company could continue renewing its lease agreement until June 1, 2028.

The first court awarded the woman €1,069,948.13 in pecuniary damages after calculating the compensation due. It also ordered the State Advocate to pay the woman €10,000 in non-pecuniary damages, in a decision delivered in June 2023.

The State Advocate subsequently appealed, arguing that the material damages were excessive.

In its appeal, the State Advocate argued that Fusco would probably not manage to rent it out due to the “bad state” the premises were in.

It referred to the court expert’s report in which the architect had concluded that the site had serious structural damage, due to lack of maintenance and water infiltration.

The court-appointed architect had testified that any potential tenant would have to invest some €650,000 in the property to be able to secure it and make use of the commercial premises. This sum would be in addition to the €128,000 annual rent.

Fusco rebutted the State Advocate’s appeal, saying that the court of first instance had already accounted for these factors when calculating the compensation.

The Constitutional Court said the court is not bound by the expert’s report, and in this case agreed to the State Advocate’s claim that the estimate was not realistic.

“In fact, the state of the property shows that the tenant was not making use of all or most of the premises and it was left in ruins,” the Constitutional court observed.

It held that the losses that the woman suffered were not due to the restrictive rent laws but due to the state of the property itself, since the woman cannot even rent it out.

The court also made reference to the woman’s testimony, in which she acknowledged that she did not have the money to fix up the place.

Moreover, the woman could have made use of the remedies at law to evict the tenants for having left the premises in that state.

The Constitutional Court held that the woman’s rights had been breached, and no one was disputing that fact, however, the losses she sustained were because she did not use her remedies at law, and also because the premises cannot be leased out.

“In these circumstances, compensation that exceeds €1 million is absurd and not realistic, and certainly does not do justice,” the Constitutional Court held, adding that the woman did not suffer any material damages due to the restrictive rent laws.

The court revoked the €1,059,948.13 pecuniary damages.

The Constitutional Court was presided by Chief Justice Mark Chetcuti, together with Mr Justices Giannino Caruana Demajo and Anthony Ellul.