The owner of a Valletta property he could not repossess because of the old rent laws has been awarded over €300,000 in compensation by a court.

The Court of Constitutional Appeal found that the €60,500 compensation ordered by the First Hall of the Civil Court was too low when considering the rental income which the owner was missing out on.

Presided over by Chief Justice Mark Chetcuti and judges Giannino Caruana Demajo and Anthony Ellul, the court found that while it was true that compensation was not based on market value, the court had to strike a balance when awarding payment.

The court was ruling in an appeal filed by property owner Henry Deguara Caruana Gatto against the state advocate and tenant Georgina Grima.

The palazzo in East Street, Valletta, had been owned by his ancestors and had been passed on to his mother through inheritance. He inherited the property in 2014 after his mother died and he bought out his siblings. 

The applicant told the court that the property was first rented out to the tenant’s father, Filippo Grima, in 1962 for a period of 17 years, against a rent of €233 a year.

In January 1979, the government had issued a requisition order but this was repealed in October that year.

However, in the meantime, the government had introduced the 1979 rent laws which gave the tenants the automatic right to continue occupying the property which had become their habitual residence. A new contract, covering 21 years, was drafted and the rent was increased to almost €350 a year.

Deguara Caruana Gatto argued that since the temporary emphyteusis originally granted by his mother to Filippo Grima was converted into a protected tenancy in terms of the old rent laws, he could not take possession of the premises in question, as Grima still resided in the palazzo under the same title of lease. He filed a case before the First Hall of the Civil Court in which he complained that he is suffering a violation of his fundamental rights.

The court upheld his claims and awarded him €60,500 as pecuniary damages and €9,000 as non-pecuniary damage.

He appealed the case arguing that the compensation he was awarded was too low when considering that according to a court expert, the annual rental value was around €72,000.

The Court of Constitutional Appeal upheld his complaint, noting that the amount of compensation awarded by the first court was just six per cent of the total rental income he had lost.

It rubbished an argument put forward by the state advocate that the applicant had to bring evidence that he had someone who was ready to rent the property at that annual rent.

The judges, however, said that although the compensation could not be based on the market value, as decided by the European Court of Human Rights, it had to reflect the real losses suffered by the applicant who could not repossess his property.

It noted that between 2000 and 2018, the applicant could have potentially made around €976,000 by renting out the property.

The court observed that the tenants were owners of various other properties so there was no argument that the rent could not be afforded. It, therefore, ordered a fivefold increase in compensation to €300,000, as well as the €9,000 in non-pecuniary damage as compensation for the human rights breach.

As for the eviction request, the court said it agreed with the first court that this was a matter that had to be decided by the Rent Regulation Board.

Lawyers Mark Attard Montalto and Douglas Aquilina were counsel to the property owner.