The Labour Party is demanding the return of a section of the Malta Shipbuilding property in response to legal proceedings by the government to reclaim ownership of the dilapidated Australia Hall in Pembroke.

In a counterclaim, the PL has asked the court to order the government to return the same property in Marsa the Socialist administration had leased out in 1979 to extend the Malta Shipbuilding premises.

This is the latest twist in the controversy of the Pembroke building which is dilapidated after decades of neglect.

The historic building and two other properties had been transferred in 1979 by a Labour government to the Labour Party on perpetual lease in exchange for the former Freedom Press, restaurant and theatre in Labour Road, Marsa.

The contract had specified that if the PL lost any right to the Pembroke buildings it could request the Marsa property back - provided it adhered to a number of conditions.

Last October, the Lands Department officially requested the PL to start effecting repairs on Australia Hall within three months. Since no action was taken, the government initiated legal action to revoke the lease on the grounds that the terms of agreement had been breached because of the building's poor condition.

Since then, the PL filed an application to the Malta Environment and Planning Authority to restore the Pembroke building.

But seeing that the Commissioner of Lands has forged legally to seize the prestigious Pembroke property, Labour is now demanding the return of the Marsa properties, which comprise more than 8,800 square metres of office space.

In September 1996, Australia Hall had been scheduled as a Grade I listed building but was downgraded to Grade II in April 1997.

In December 1998, the building was engulfed by flames, amid suspicions of an arson attack. The blaze destroyed the corrugated roof and stage area, but the masonry remained practically intact.

Australia Hall dates back to World War I when Malta was converted into a hospital centre and rest area for thousands of the wounded and sick from the Dardanelles campaign. During that period, the Australian Red Cross built Australia Hall as a recreation centre for its co-nationals.

In 1998, the Labour Party had sold another Pembroke property, also transferred to it by the government in 1979, to the St Michael Foundation for almost €600,000.