The Housing Authority would be badly affected if the government sanctioned the lease of the General Workers’ Union’s headquarters to third parties despite criticism by the Auditor General, legal experts say.
Social housing contracts signed by the Housing Authority over the past decades contain a clause laying down that redemption of the ground rent does not extinguish conditions tied to its use.
The law is clear.It is a political decision that now needs to be taken
The condition was introduced to ensure that those benefiting from government land at discounted prices do not end up exploiting the benefit received and to avoid land speculation.
The clause was upheld in different court judgments, lawyers approached by the Times of Malta pointed out.
After the Auditor General concluded there were “irregularities” in the GWU lease of parts of its Valletta headquarters to three companies, the Prime Minister said he preferred to wait for the advice of the Attorney General on the matter before taking a stand.
‘Redeeming ground rent does not end conditions’
The National Audit Office report said the GWU broke the original lease conditions when it sublet office space to ARMS Ltd, Vjaġġi Untours and the restaurant Sciacca Grill.
It added that “guided by the advice provided by the Attorney General, the Government Property Division argued that, even though the ground rent was redeemed, the emphyteutical concession conditions and any subsequent conditions imposed by a public deed between the government and the GWU relating to the property were still valid”.
The law was clear, the legal experts said: “It is a political decision that now needs to be taken.”
If the government were to accept the union’s argument that the subletting of parts of its headquarters was regular because the GWU had redeemed the emphyteusis for just over €16,000, it would open up a Pandora’s Box for the Housing Authority, the lawyers said.
“The move by the GWU has placed the government between a rock and a hard place.
“If the government accepts the union’s argument, its implications on social housing contracts are far reaching,” one lawyer said, preferring to remain anonymous.
This stand is acknowledged by the government. A spokesman referred to the possible ramifications on the legal status of property granted on emphyteusis over the years at discounted prices.
Case law shows that redeeming the ground rent does not extinguish conditions tied to its use.
This newspaper reported that, according to a valuation made in 2008, the union should have paid at least €3.2 million for its Valletta headquarters before leasing it to third parties.
That is the amount the GWU should have paid to free itself from the conditions imposed in the original 1957 contract (with the government), which stated the union could not lease the property to a third party unless it owned 51 per cent of it.
The GWU has no such stake in the three companies.
The government is insisting that, in its conclusions, the Audit Office report also allowed the possibility of other means of resolving the issue.
The report actually recommends two lines of action: “In the first case, for breaches registered prior to the redemption of ground rent, the NAO recommends that the GPD institutes legal action against the GWU for the evident breaches of conditions set in the emphyteutical contract.
“In the second case, in de-termining whether breaches persisted post-ground rent redemption, the NAO urges the GPD to establish, through legal action, whether the conditions of the emphyteutical contract survive the redemption, and in the affirmative, institute judicial action against the union, or any other type of action deemed suitable.”
caroline.muscat@timesofmalta.com