Updated 4pm - Added PN statement 

A controversial deal to hand over government land to entrepreneur Marco Gaffarena has been partly cancelled by the courts. 

The Lands Department deal would have seen Mr Gaffarena receive more than 10 football pitches worth of land in exchange for his share of a palazzo in Valletta's Old Mint Street. 

In a statement, the Nationalist Party said the court ruling proved it right. 

"This scandal is one of the many in which Joseph Muscat gave away property for a pittance, among them in Żonqor, Cafe Premier and the three public hospitals," the PN said in a statement by Simon Busuttil, spokesman on good governance.

Two other statements, issued by the Labour Party and the government, took a different approach and praised the Prime Minister for having sued Mr Gaffarena. 

"Any MP could have filed this suit, including the former Opposition leader [Simon Busuttil]," the PL said. "But it was only the Prime Minister who chose to do so. This ruling is further proof that the rule of law works as intended in our country." 

The case and ruling

In 2015, Times of Malta had revealed that the government paid €1.65 million to Mr Gaffarena for part-ownership of the Valletta property, which he had bought for a fraction of that price just weeks prior to the deal. 

On Tuesday, the courts rescinded government land involved in the part-exchange deal and revoked all transfers made in two expropriation contracts. All assets involved, the courts ruled, had to return to the government. 

In its ruling, the civil court found that the Commissioner for Lands was wrong to only offer compensation to Mr Gaffarena and his wife, when the Old Mint property was jointly owned by a group of people. 

"The Commissioner should have compensated each of the owners pro-rata," the court ruled. "The government effectively acquired part of the property belonging to all its owners and only paid one owner for it." 

It also dismissed Mr Gaffarena's attempts to discredit the property valuations established by the auditor general in his report into the case (see below). 

Revelations about the Old Mint Street deal had prompted an investigation by the auditor general which led to the sacking of parliamentary secretary Michael Falzon. 

As fallout from the scandal picked up pace, the prime minister announced he would be suing Mr Gaffarena in court to recoup government property handed over as part of the deal. 

Mr Falzon was returned to cabinet following the 2017 general election and now serves as Family Minister. 

Just last week, Times of Malta reported that Mr Gaffarena had filed planning applications to turn part of the land he must now return to the government into an agritourism complex.

 Expropriation part-exchange

Aside from making a €685,000 profit in just two months by investing in the Old Mint Street property and flipping it to the government, Mr Gaffarena had also gained several tracts of land as part of the expropriation deal which has now been struck down by the courts. 

Through two separate contracts signed a few months apart, Mr Gaffarena gained:

a. almost 25,000 square metres of land in Żebbuġ
b. around 5,000 square metres of land in the White Rocks area of Naxxar 
c. almost 6,000 square metres of land in Ta' Kandja, Siġġiewi 
d. almost 10,000 square metres of property at Ħandaq in Qormi
e. a property in Manwel Dimech street, Sliema 

How did valuations differ?

The court also noted the wildly varying price valuations for the lands in question, highlighting the inflated original valuations which formed the basis for compensation to Mr Gaffarena, and contrasted them to revised estimates established by architects hired by PriceWaterHouseCoopers on the auditor general's behalf.