The owners of a building being used as the Marks and Spencer outlet in the heart of Sliema have seen their compensation upped to €350,000 after the European Court of Human Rights found their right to the enjoyment of their property was breached by the old rent laws.
The owners were deprived of their fundamental right to enjoy their property when, since 1976, they were forced to accept the paltry sum of €1,261 a month for the rental of their property, the court established.
The European court was ruling on a case instituted by the 12 owners of the property on The Strand who had leased out the premises in 1976 to a business entity at an annual rent of Lm4,000, subject to a five per cent increment every five years, for three consecutive terms.
In 1994, the landlords sought to negotiate a new lease agreement, for an annual rent of Lm8,000, equivalent to €18,635.
However, no agreement was reached and the matter ended up before the Rent Regulation Board, which fixed the rent at Lm6,500. That decision was confirmed on appeal but the landlords refused to accept payment of the rent. They claimed a breach of rights and argued that the current rent, €29,195, was inadequate in view of the dimensions and location of the premises.
In 2020, the parties reached an agreement for the rent to increase to €180,000 a year, with other increments due until 2027 when the lease comes to an end.
In 2020, the parties reached an agreement for the rent to increase to €180,000 a year, with other increments due until 2027 when the lease comes to an end
The Maltese courts had found an “enormous disparity and complete lack of proportionality” suffered by the landlords who had to continue to shoulder the excessive and unjust burden until the lease expired. It had awarded the landlords €100,000 in moral and pecuniary damages but this was increased to €250,000 on appeal.
The landlords took the case to the European court, arguing that the compensation they were due should have reflected the loss of rental income over the years. They calculated this at €3 million.
However, the state advocate contested this figure, arguing that the expert valuation was not backed up with how the historic rental value had been worked out. Moreover, given the values, it was unlikely that the property would have been rented throughout the period as few businesses could afford such rates. Additionally, few would have invested in such a property knowing they had to vacate it in 2028.
The court agreed, stating that, had the property not been subject to the impugned regime, it would not necessarily have been rented out throughout the entire period despite its prime location.
Nevertheless, and even considering that the expert’s valuation was on the high side, the court considered the compensation awarded for a violation persisting over several years as being inadequate and that the redress provided by the domestic courts did not offer sufficient relief to the applicants, who retained victim status.
It, therefore, topped the compensation amount by a further €100,000, for a total of €350,000.
State Advocate Chris Soler represented the State while lawyer Joseph Ellis appeared for the landlords.