The State has been ordered to pay €800,000 to the owners of leased property in a prime site of Valletta, who were unjustly deprived of full enjoyment thereof once the lease expired in 1977.

The premises located at Archbishop Street were originally purchased by B. Tagliaferro & Sons Limited in 1960 and after five years, the company leased out the property to the Mizzi family at an annual rent of £900.

By means of private writing, the parties agreed that Central Mediterranean Development Corporation Limited and Hubbalit Developments Limited were also to enter into the agreement as lessees.

The lease was to expire in September 1977 but was automatically renewed in terms of the Reletting of Urban Property (Regulation) Act.

As of 2002, the owners refused to accept further payment of rent and from then on the money was deposited in court, while the landlords sought a remedy before the Rent Regulation Board.

In 2009, the board upheld their claims, ordering the property to revert back to the owners.

But that decision was subsequently reversed by the court of appeal which bound the applicants to renew the lease indefinitely, leaving them with no option but to take their grievances before the constitutional courts.

In January 2021, B. Tagliaferro & Sons Ltd instituted proceedings before the First Hall, Civil Court in its constitutional jurisdiction claiming that the current legal regime effectively breached their right to the full enjoyment of the property in terms of article 1 protocol 1 of the European Convention.

They sought all possible remedies including eviction of the tenants.

The applicable law made it impossible for them to refuse to renew the lease, vary its conditions or request an increase in the rent unless this was authorised by the Rent Regulation Board, argued the applicants.

And the board would only grant its authorisation once satisfied that certain conditions prevailed at the time when the applicants’ case was filed. 

Since those conditions were not fully satisfied, the applicants were being deprived of the full enjoyment of their property.

They were also shouldering a disproportionate and unjust burden because any rental increment in terms of the 2009 legal amendments did not reflect the market value and potential of this property which abutted two main streets at the heart of Valletta’s commercial hub. 

When delivering judgment the court, presided over by Mr Justice Toni Abela, observed that these arguments regularly featured in similar cases brought before the European Court of Human Rights when upholding breach of rights claims by owners of such protected leases.

Such interference in fundamental property rights ran counter to ensuring a just balance between the general interests of society and the need to safeguard an individual’s rights.

The State Advocate as respondent questioned the applicants’ title of ownership but that plea was rejected by the court which declared that the applicants’ legal title over the property was “undoubtedly” valid.

The tenants themselves, who were also respondents in the suit, argued that the owners had other ordinary legal remedies and could seek revision of rent before the board. 

But that plea was also shot down by the court which observed that recourse to the board would not produce an effective remedy, since any revised rent would still not match market values and any chances of regaining possession of the property were “remote”.

The court upheld the applicants’ claims for compensation and damages, taking note of various factors when calculating the awarded sum, including the period of deprivation since 1977 and the location of the premises.

Amendments to the law introduced last year meant that owners could now request a revision of rent and termination of the lease if it was proved that the tenant did not satisfy the means test in terms of that law. 

But prior to those amendments, the applicants had no option but to seek a remedy before the constitutional courts, said Abela, noting further that the owners had sought other remedies, had refused the rent since 2002 and thus could not be deemed to have adopted a passive stance. 

The applicants’ fundamental rights had been breached so they deserved compensation and damages to the tune of €800,000 that was payable by the State.

The court, however, rejected their request for eviction.

“The tenant is as much of a victim as the owner of the consequences brought about by this law, which might have made sense when it was introduced, in light of social circumstances at the time,” remarked the judge, adding that eviction could also be challenged before the civil courts.

Lawyers Edward and Nick DeBono assisted the applicants.