Compensation of expropriated land is liable to interest from day it is offered

The law provides that interest should be added to the compensation given from the date when the government offered the compensation following an expropriation of the land.

This was held by the Lands Arbitration Board on 28 November 2023 in Clover Holdings Ltd. et vs Lands Authority. The Board was presided by Magistrate Dr Noel Bartolo.

The applicant company and others held that they are owners of a property at Bajja tal-Ġnejna limits of Mġarr.

On 1 December 2002, a notice was published in the Government Gazette that a small portion of this land was expropriated. The Authority valued this parcel of land at €614.95. The Applicants did not accept this value and asked the Board to establish the correct compensation.

The Lands Authority filed a statement of defence and stood firm that the correct value of the property was €614.95.

The Board analysed the evidence, where a witness from the Authority stated their valuation was based on the fact that the land was agricultural land.

The Applicants presented an ex parte architect’s report saying that the land in question was worth €4,950, since the rate is €35 every square metre.

The Board then appointed two architects as technical members of the Board, who then presented a report. It described the land in question as forming part of the parking.  The Local Plan indicates that the land is outside development zone overlooking the sea. The land today is being used as a parking area and a toilet.

The Board looked at a Court of Appeal judgment in the case Efrem Vella v Lands Authority that decided agricultural land at Smart city was valued in 2005 at €31 per square metre.

The technical members valued the property at €6,930 at €35 per square metre. The technical members of the Board said that they did take into consideration the expert reports of each of the parties.

Article 64 of the Government Lands Act states that the owners may file an application before the Board to receive compensation of the land which was expropriated. The compensation should reflect the value of the land when it was expropriated.  The action should have four elements. The first that the declaration should have taken place before the enactment of Government Lands Act, that the government is in possession of the land, that the Applicant must have a valid title over the land. The fourth element is that there is no agreement on the compensation.

From the evidence produced, the Declaration was issued before the enactment of the Government Lands Act. Furthermore, there is no dispute on the title that the Applicants hold. The Board pointed out that there were two declarations, one before the coming into force of Government Lands Act in March 2002 and the other in November 2003. The Board quoted from a decision delivered on 30 January 2023 in the names John Zammit Gauci vs Lands Authority. In this case the Board held that the term used in Article 64 “within the period of the publication of the Declaration …”, the law referred to when the expropriation procedure kicked off. The Board in that case held that the value of the property should be taken upon the first Declaration. In this case the first Declaration took place in March 2002.

As to the value of the property, the Board carried out a comparison between the different valuation of the same property and the different years. The discrepancy between the ex parte experts force the Board accept those of the technical members. The Board quoted from two decisions Andrew Agius et vs Director Roads Department et decided by the Court of Appeal and Alfred Cremona et vs Commissioner for Lands decided by the Board on 2 March 2018, where the valuations carried out by the technical members constituted an important evidence.

As to the interest, the Board quoted Article 66 (1) of the Government Lands Act:

“66.(1)  In the cases referred to in articles 64 and 65, the owner also has the right to receive interest with the simple rate of eight per cent on the compensation that has been established by the Arbitration Board as updated during the years in accordance to the index of inflation published in the schedule of the Housing (Decontrol) Ordinance and this interest shall start accruing from the date when the Declaration has been published”.

Therefore, interest starts when the Lands Authority offered compensation from the first time and that was in 2002.

The Board then moved to order the Lands Authority to pay the Applicants €6,634.05 together with 8% interest from March 2002.