Compensation for Marsa property dispute slashed

A court ruling on Monday determined that €10,000 in moral damages was adequate compensation for a woman whose right to enjoyment of property was breached.

The judgment overturned an earlier decision to award her just over €1 million in material damages.

Gabriella Fusco had filed a constitutional case before the First Hall of the Civil Court, claiming her right to private property had been violated. The case was filed against the State Advocate and Briar Pipeworks Limited.

The property in question, located in Marsa, had been in Fusco’s family for decades and was leased to to the company under the old rental law regime for around 60 years. Initially, the lease agreement stipulated an annual rent of €496.93, which later increased to €1,397.68 following amendments to the law.

Fusco, who inherited the property, argued that the rent was too low compared to the property's market value, especially since the lease could be renewed until June 2028.

In June 2023, the court had awarded Fusco €1,069,948 in material damages after calculating the compensation owed, in addition to €10,000 for non-pecuniary damages. The State Advocate, however, appealed, challenging the material damages as excessive.

In its appeal, the State Advocate highlighted the “poor condition” of the premises, citing an expert report that revealed significant structural damage due to lack of maintenance and water infiltration. The court-appointed architect had estimated that around €650,000 would be needed to make the property usable, in addition to the €128,000 annual rent.

Fusco countered the appeal, asserting that the court had already factored in these issues when determining compensation.

However, the Constitutional Court, in its ruling, stated that it was not bound by the expert’s report and found the assessment to be unrealistic. The court observed that the tenant had not made full use of the premises, which had been left in disrepair, and noted that Fusco had acknowledged her inability to fund the necessary repairs.

The court further highlighted that Fusco could have pursued legal remedies to evict the tenants for leaving the property in such poor condition. It concluded that while Fusco’s rights had been infringed, the losses she incurred were more due to her failure to act rather than the restrictive rent laws.

In its decision, the court deemed compensation exceeding €1 million as "absurd" and unrealistic, especially since Fusco had not suffered material losses from the rent laws. Consequently, the court revoked the earlier award in pecuniary damages and upheld the €10,000 awarded for moral damages.

The ruling was delivered by Chief Justice Mark Chetcuti and judges Giannino Caruana Demajo and Anthony Ellul.