Government ordered to raise compensation in 1974 expropriation case

The Maltese government has been ordered by the European Court of Human Rights to pay 11 owners of a piece of land €93,000 as pecuniary damage after their land in Ghaxaq was expropriated in 1974. They were also awarded €2,500 each in non-pecuniary damage. The government had been ready to pay €58,457.

Rosaria, Saviour, Carmel, Anthony and Emanuel Schembri, Michelina Farrugia, Catarina Formosa, Mary Fenech, Rosanna Mula, Anna Zammit and Sr Rosangela Schembri had sought compensation of €2.2 million - for the value of the property in 2008, based on an architect's valuation, and €50,000 in respect of non-pecuniary damage, plus costs and expenses.

The judgement by the court yesterday followed a judgement delivered on 10 November 2009 when the Court found a violation of the Convention of Human Rights. It held that by awarding compensation for the taking of property reflecting values applicable decades before, and deferring the payment of such for at least 20 years until the date of the relevant decision, which did not take into account this delay, the national authorities rendered that compensation inadequate and, consequently, upset the balance between the protection of the right to

The applicants and the government were then invited to submit their observations on the issue and to notify the court of any agreement they might reach.

The applicants claimed compensation based on the current value of the land, namely €2,641,320 as established by an architect's valuation (based on the advertisements of a private real estate agency) dated 5 January 2010. They submitted that bearing in mind the lapse of time between the dispossession and the judgement of the Court, and the fact that during this time the Government have been using the property without legal title (since the de jure transfer has not yet taken place) compensation should be calculated on the basis of the current value of the property in line with the approach of the Court in other cases.

The land, which borders a major arterial road at Ghaxaq, had a total area of approximately 2001 square metres and was subdivided into two main plots. It forms part of the schemed development of Ghaxaq and had now been divided into fourteen separate plots. The applicants submitted commercial valuations showing the price of similarly situated land in a nearby village, which varied from €1,281 to €1,812 per square metre.

The Government submitted that the value which had to be considered as the basis for the calculation was the value of the land at the time of its taking as established by the Land Arbitration Board, namely €17,185.

The government argued that the taking over the land while determination of the value was still pending was expressly provided for by law. In consequence, the only value to be taken into consideration was that of 1974 when the land at issue was agricultural land. The area only started to develop into an urban one subsequently, by means of the Government's construction of a housing estate.

Moreover, any other evaluations submitted by the applicants have never been put to any form of judicial determination and did not make reference to the date of the taking of the property. Moreover, they were speculative and based on prices which land with the most beneficial building permits could fetch in a "seller's market" situation.

It contended that in 1995 the Land Arbitration Board had fixed the publication of the deed of transfer for 22 January 1996. However, this had had to be postponed due to the applicants' appeal, which was eventually declared null and void as there was no right of appeal in such cases. In its judgement the Court of Appeal fixed the date for the publication of the deed of transfer for 22 September 1997. The applicants, however, failed to turn up on the specified date and on 18 May 1998 they filed constitutional proceedings, pending which the deed was never concluded.

The Government submitted that the conclusion of the deed would not have entailed a renunciation of the applicants' rights before the constitutional jurisdictions, and in consequence the Government could not be held responsible for the failure to conclude the deed from 1995 onwards.

In order to conclude the matter and establish legal title the Government were willing to pay the sum of €58,457, that being the value of the land, progressively adjusted for inflation on a year by year basis from 1974 to 2009, plus interest at the statutory rate of five per cent per annum on the value as adjusted year by year during the said period.

The Court's assessment

The court, after considering its own previous judgements and Maltese law, said that the sum to be awarded to the applicants should be calculated on the basis of the value of the land at the time of the taking (1974), to be converted to the current value to offset the effects of inflation, plus simple statutory interest applied to the capital progressively adjusted. As in the present case the applicants had not yet received any payment at the national level, no such deductions were necessary. While the Court accepted the average statutory rate to be 5 % over the relevant period, it did not accept the Government's calculation of interest.

Payment of compensation and damages

The Court said it considered that the applicants must have experienced frustration and stress having regard to the nature of the breach. It therefore awards the applicants €2,500, each, in respect of non-pecuniary damage.

It also award the sum of €6,000 to the applicants covering costs under all heads.

It then ordered the Maltese government to pay the applicants €93,000, jointly, in respect of pecuniary damage.