A couple whose properties were foreclosed by their bank after they ran into financial trouble want to change Malta’s laws to ensure banks do not end up making a killing on such sales while leaving debtors high and dry.
Leo and Ines Micallef are paying €500 a month just to cover interest payments on debt they owe HSBC while a civil case they have against the bank plays out in court.
The couple say that they have been waiting more than four years for an appeals court to appoint their case for hearing – a delay which they believe is a violation of their fundamental rights.
The couple have now filed a constitutional case arguing that the court’s delay to hear their case is a violation of reasonable time requirements established in jurisprudence, while also highlighting what they believe is an unfair balance of power in Malta’s law when it comes to bank foreclosures.
The Micallefs have already had two properties they owned in Paola foreclosed by HSBC, and in their constitutional case they argue that local laws allow banks to buy up such properties at a pittance and then sell them on at a tidy profit, pocketing the balance without any benefit to debtors.
According to Maltese law, offers for property or commercial enterprises cannot be accepted if they are lower than 60 per cent of the asset’s estimated value.
In the first case, the couple’s lawyer noted, the bank had foreclosed a property valued at €325,000 for €99,000. In the second, HSBC paid €26,000 for a property valued at €180,000.
The bank is now seeking to foreclose two other properties the Micallefs own, including their family home in Tarxien.
Under Maltese law, creditors can acquire properties at far less than their real value and then sell them on at a profit, without the balance being struck from the money the debtor owes.
“There is nothing stopping the bank from selling the property at a greater price, making a profit and then sticking resolutely to its demand for [debtors to pay] the total balance [owed],” the appeal argues.
The lack of legal provisions in this regard, the couple believe, goes against the spirit of the European Convention of Human Rights’ protection of property rights.
In their case, the couple are seeking damages for both the financial and emotional toll that their four-year wait in court has caused them, and want the court to declare the local law allowing sales at 60 per cent of an asset’s estimated value recognised as a violation of ECHR principles.
The couple are also asking the courts to order HSBC to adjust the amount they are owed by taking into account profits made from the sales of the two foreclosed properties.
The Micallefs are being represented by lawyer Tonio Azzopardi.