Published on 7 June 2021

FIRST SECTION

Application no. 22008/20 Maria Nicolina s ive Marlene AZZOPARDI against Malta lodged on 28 May 2020 communicated on 18 May 2021

STATEMENT OF FACTS

1 . The applicant, Ms Maria Nicolina sive Marlene Azzopardi, is a Maltese national, who was born in 1943 and lives in Zebbu Ä¡ . She was represented before the Court by her son Emanuel Azzopardi who in turn appointed Dr I. Refalo and Dr S. Grech , lawyers practising in Valletta, to present the application before the Court.

2 . The facts of the case, as submitted by the applicant, may be summarised as follows.

3 . The applicant owned a large tract of land known as Tal-Andar in the limits of Qormi (hereinafter “the land”), Malta, measuring approximately 3,193 square metres. The land had originally belonged to the applicant ’ s mother who passed away on 19 December 1975 and left its usufruct to her husband, and its bare ownership to her daughter, the applicant.

4 . In virtue of a Resolution of the House of Representatives approved by Parliament on 4 July 1983 and issued in terms of the Building Development Areas Act (Act 1 of 1983) (hereinafter “BDAA”), the land was declared a Building Development Area. Consequently, the owners lost possession of the property. On 14 January 1985 the applicant ’ s father was notified of this by means of a judicial letter.

5 . Once the authorities took possession of the applicant ’ s land, the property was divided into several plots and sold to third parties. At least twenty-five privately owned residential homes still stand on the land today. According to the applicant, those third parties acquired the property at cheap prices but were today the owners of very valuable homes and were able to alienate them or use them as collateral property. At the time, the applicant being already an owner of other property within which she resided, she was unable to benefit from Section 12 of the BDAA (see paragraph 23 below) which provided that the original owner could acquire one of the building plots located on the land, but only if he or she was going to establish his or her residence there.

6 . In 1992 the applicant ’ s father filed proceedings before the Land Arbitration Board (hereinafter ‘ LAB ’ ) (case 4/1992) to seek compensation for the taking of the said land, and the applicant later joined in the suit. The applicant ’ s father passed away in the course of the proceedings and the case continued in the applicant ’ s name alone.

7 . By a decision of 19 December 2013, the LAB fixed the compensation due for the taking at 4,000 euros (EUR), after considering that, in terms of Section 6 of the BDAA (see Relevant domestic law below), land declared to be a Building Development Area was to be considered agricultural land for the purposes of the compensation due for the taking.

8 . Considering that this amount was not fair compensation, the applicant instituted constitutional redress proceedings, claiming that she was a victim of a violation of Article 1 of Protocol No. 1 to the Convention. She contended that the Government had taken a large tract of land precisely to build thereon a large number of houses, which constituted valuable assets owned by third parties, at the expense of the original owners who had been paid meagre amounts (EUR 4,000 in case of the applicant). In particular, the applicant considered that it was unfair for compensation to be determined on the basis of its agricultural designation when the land had specifically been taken for the purpose of development and not for agricultural purposes. Moreover, the applicant complained that the provisions of the BDAA were themselves in violation of Article 1 of Protocol No. 1 because, in terms of that provision, once land had been declared a Building Development Area, for the purposes of compensation no consideration was given to the nature of the land, its designated use, or its potential.

9 . When considered as a building site the applicant ’ s land was worth EUR 163,000 in 1985 and its value increased to EUR 2,283,400 by 2014, according to a valuation prepared by the applicant ’ s architect.

10 . By a judgment of the 12 June 2018 the Civil Court, (First Hall), in its constitutional competence found no violation of Article 1 of Protocol No. 1.

11 . The court rejected the Government ’ s plea of non-exhaustion of ordinary remedies, considering that given the limits of the law, it was unlikely that an appeal against the LAB decision under Section 5 (3) of the BDAA would have remedied the applicant ’ s complaint, thus she had not been required to exhaust such a remedy.

12 . On the merits, the court noted that the first-instance judgment of Guza Debono et vs The Onor . Prime Minister et of 7 May 1990 (see paragraph 25 below), relied on by the applicant, had been revoked. It then referred to the judgment of the Constitutional Court of 27 February 2009 in the names of Joseph Bartolo vs the Onor . Prime Minister (see paragraph 28 below) which had established that Section 6 of the BDAA had not breached the right to fair compensation. Like in the present case, the claimant had not contested the public interest behind the measure.

13 . Relying on domestic case-law, the court noted that when assessing compensation of rural land or wasteland, the value to be taken had to be that which the owner would have obtained had he or she sold the land voluntarily. Thus, one had to consider the value on the basis of the actual use being made of the land, but also give consideration to other factors which might impinge on its value, such as whether it had potential for development. However, such an assessment had to refer to the situation in which the land was when it was expropriated, and not today ’ s, nor could one consider the use which the Government had wanted to make of it, or the value of property in the vicinity. The claimant ’ s land would have remained rural land had it not been for the BDAA which expropriated it, it therefore had no potential.

14 . According to the court the BDAA took account of building potential in so far as it provided [Section 7] that where persons had, before the enactment of the BDAA, acquired land in good faith, with the aim of development, and thus had paid a higher price for it than that which would be established under the [Land Acquisition (Public Purpose)] Ordinance (hereinafter ‘ the Ordinance ’ ); then it was that higher price which could be paid. Moreover, according to the Ordinance, developable ( fabrikkabli ) land could not be included in an area for development. This meant that the applicant ’ s land had no potential for development as otherwise it could not be expropriated under the BDAA in terms of its Section 3 (4).

15 . The value to be attributed to it had to be based on its real nature at the time of the expropriation and in accordance with the denomination ( kwalita ` ) attributed to it by the BDAA. Had it been otherwise, expropriated owners would acquire advantage according to the public purpose behind the expropriation. What the applicant should have sought was fair compensation for the type of land she owned, not to make good money. Her having obtained EUR 4,000, i.e. the fair value of the land before it was expropriated, she had not suffered any economic losses and thus there could be no breach of her property rights.

16 . The applicant appealed, noting, inter alia , that there was no social purpose behind the measure which was not intended to benefit third parties in need; that had the BDAA not been enacted there had been no restriction on the development of her land, which moreover was close to a developed area, and thus it could not be said that it had no potential. Indeed, the relevant parliamentary debates had shown that the areas to be considered Building Development Areas, were to be areas where there was a demand for development. She further noted that Section 7 of the BDAA only provided comfort to persons who had purchased property shortly before the enactment of the BDAA, and not those who had done so much before, despite the land having the same potential.

17 . By a judgment of 29 November 2019 the Constitutional Court rejected her appeal and confirmed the decision of the lower court.

18 . In relation to the claim that there had been no social purpose behind the measure, the Constitutional Court found that the applicant had not submitted any evidence concerning the value or conditions of sale of the plots to third parties, enabling the court to decide the matter.

19 . As to fair compensation, the Constitutional Court confirmed that compensation of EUR 4,000 had put the applicant in the situation she had been prior to the expropriation, and thus it had to be considered fair compensation. It also noted that the applicant had not submitted any proof that the land could have obtained a higher value due to the demand for building in the area, save for the parliamentary debates which could not serve as proof of the real potential of the area. While it was true that before the BDA it was in the Minister ’ s discretion to allow the development of any land, there was nevertheless a clear line between what was developable land or agricultural land. In the present the case, before the expropriation, the land had been agricultural and had had no other potential. Indeed, while the applicant could have applied to the Minister to obtain building permissions prior to the DBAA, she had had no guarantee that she would have obtained such permit. Thus, its only potential arose consequent to the expropriation.

20 . The fact that the land at issue had gained value over the years in favour of third parties did not in itself breach the applicant ’ s property rights, once she had obtained fair compensation. Further, in the Constitutional Court ’ s view, no third party would have purchased that land at a higher price without a guarantee that they could have developed it.

21 . While the applicant had also argued that the award she had received had become meaningless given that thirty years had passed since the expropriation, that delay had been related to issues which were not the subject of these proceedings.

22 . Prior to the BDAA it was entirely within the competent Minister ’ s discretion whether to grant a building permit to an individual, as per Section 16(1) of the Code of Police Laws in force at that time.

23 . With the institution of the BDA it became possible to build only in areas which Parliament by Resolution identified as Building Development Areas, and all prior regulatory projects were repealed. The relevant provisions of the BDAA, which was since then repealed, read as follows:

Section 3

“(1 ) The Minister may from time to time declare any land in Malta to be a Building Development Area and shall define such land in such manner as he may deem fit.

(2) Before making such declaration the Minister shall prepare a project which shall include such plans and such descriptive matter as may be necessary to show all the land that he intends to include in a Building Development Area.

(...)

(4) No land considered to be a building site in accordance with section 4 of this Act or section 17 of the [Land Acquisition (Public Purpose)] Ordinance and no land which has not been included in a Project deposited in the Department of Works in accordance with the provisions of subsection (3) of this section and open for public inspection for the period therein indicated, shall be included in a Building Development Area.

(5) Where any land has been declared to be a Building Development Area as is provided in subsection (1) of this section and the Minister has ’ prepared a project in accordance with the provisions of subsection (2) of this section ,and the procedure laid down in subsection (3) of this section has been followed and the period therein indicated has elapsed, the Minister shall cause the declaration to be placed before the House for consideration by it.”

Section 4

“(1) Land shall be deemed to be a building site for the purpose of this Act if it has a frontage on an existing street and is situated within a built-up area or, subject to paragraph 2 of this section within a distance of not more than 100 yards (91.44 metres) of a built-up area, measured along the axis of the street.

(2) In determining whether land is a building site by reason of the fact that it is situated within a distance of not more than 100 yards (91.44 metres) of a built-up area regard shall be had to the probable immediate expansion of the built -up area in the direction of the land in question.”

Section 5

“(l) Saving the provisions of Section 7 and 8 of this Act, with effect from the date of the publication of the resolution referred to in section 3 of this Act, all land within a Building Development Area shall, by virtue of this Act and without the necessity of any other formality required by law. be deemed for all intents and purposes of this and of any other law to be land acquired for a public purpose by absolute purchase in full ownership, free and unencumbered from any charge, hypothec or privilege under the provisions of the Ordinance, and there-upon all the provisions of the Ordinance which are not incompatible with this Act shall continue to apply to such land in the same manner and under the same conditions as if the land had been acquired for a public purpose by absolute purchase under the Ordinance.

(...)

(3) Any person haying a right over or an interest in the land to which this section applies, shall be entitled to have access to the Land Arbitration Board and to the Civil Court First Hall for the purpose of determining his right over or interest in such land, the amount of any compensation to which he may be entitled and for the purpose of obtaining payment of that compensation; and all the provisions of law relating to proceedings before the Land Arbitration Board and the Civil Court First Hall in matters of acquisition of land for a public purpose shall, mutatis mutandis , apply to proceedings taken by such person before the Land Arbitration Board or the Civil Court First Hall under this Act, as the case may be; and the said Land Arbitration Board and the Civil Court First Hall shall be vested with jurisdiction in such matters:

Provided that a right of appeal to the Court of Appeal from any decision of the Land Arbitration Board and the Civil Court First Hall shall vest in such person; and all the provisions of law relating to proceedings for appeals from decisions of the Civil Court First Hall, shall apply to proceedings taken by such person in an appeal under this Act and the said Court of Appeal shall be vested with jurisdiction in such matters.”

Section 6

“Any land shall be valued for the purpose of determining the compensation payable in accordance with section 5 of this Act as rural land or wasteland.”

Section 7

“(1) Notwithstanding any other provision of this Act where a person having a right over or an interest in any land included in a Project referred to in section 3 of this Act, proves by documentary evidence that such land had been acquired bona fide by him prior to the fourteenth day of February, 1983, at a price higher than the compensation otherwise payable in accordance with the Ordinance, the Minister shall cause such documentary evidence to be placed before the House together with the declaration referred to in section 3 for consideration by it, and the House may in the resolution adopting or approving such declaration either:

(a) include such land within the Building Development Area, in which case such higher price shall be payable as compensation to such person; or

(b) include such land with the Building Development Area and declare that the provisions of section 5 of this Act shall not apply to it;

or (c ) exclude such land from the Building Development Area.

(...)”

Section 8

“The provisions of section 5 of this Act shall not apply to:

(a) an existing building (other than a building occupying land of an area of less than eighteen square metres) whether complete or in the process of construction if, in the latter case, a permit for its construction is on the date of the declaration of the land as a Building Development Area, still in force in accordance with the provisions of any regulations made under the Code; or

(b) land in relation to which a permit for the construction of a building is still in force, on the date of the declaration of the land as a Building Development Area, in accordance with the provisions of any regulations made under the Code; or

(c) land in use as a quarry.”

Section 12

“ (1) Where the Minister by order published in the Gazette declares that land acquired by the Government under the provisions of section 5 of this Act shall be disposed of for development such disposal shall be made either in favour of the Housing Authority as is provided in the Housing Authority Act, 1976, or shall be made by sale and in the manner provided for in the Disposal of Government Land Act, 1976, and such disposal shall not be made unless in respect of such land a Building Development Plan has been made by the Minister and such Building Development Plan has been approved by resolution of the House:

Provided that subsection (2) of section 3 of the Disposal of Government Land Act, 1976 shall not apply to a resolution approving a policy applicable to land referred to in this section:

Provided further that as far as may be, in any policy made in accordance with the Disposal of Government Land Act 1976 providing for the disposal of such land, provision shall be made that in any sale made in pursuance of this section, preference shall be given to the owners of the land immediately prior to its declaration as a Building Development Area, for the acquisition of a plot of land on which to build a dwelling house to be occupied by such owner.

(...)

(3) The price for which land in a Building Development Area shall be sold in accordance with subsection (l) of this section shall be fixed by the Minister; however as far as may be the price shall be fixed by the equitable apportionment of the cost of the acquisition of the land in the Building Development Area to which shall be added any compensation payable to the tenants thereof, increased by eight per centum for every year or part thereof during which such land is retained by Government, between the various plots offered for sale as aforesaid.

(4) For the purposes of this section, "owner" in relation to land held in emphyteusis or sub-emphyteusis means the person holding the utile dominium or sub-utile dominium of such land and includes any person deriving title from the owner causa mortis .”

Section 13

“Notwithstanding the grant of any permit or -authority under any other law, with effect from the coming into force of this Act, no person may erect a new building on any land in Malta which is not declared to be a Building Development Area in accordance with section 3 of this Act. ”

Section 14 of the act enlisted a number of situations where the Minister, acting in accordance with a policy approved by a resolution of the House of representatives could authorise the erection of buildings outside the Building Development Area.

Section 19

“All planning schemes made in accordance with the Code before the coming into force of this Act are revoked. ...”

24 . In so far as relevant Section 27 (1) of the Ordinance, Chapter 88 of the Laws of Malta, reads as follows:

“Without prejudice to any special provision contained in this Ordinance, in assessing compensation the Board shall act in accordance with the following rules:

(a) no allowance shall be made on account of the acquisition being compulsory;

(b) the value of the land shall, subject as hereinafter provided, be taken to be the amount which the land if sold in the open market by a willing seller might be expected to realize:

Provided that –

(i) the value of the land shall be the value as at the time when the President ’ s Declaration was served, without regard to any improvements or works made or constructed thereafter on the said land ...”

Guza Debono et vs The Onor . Prime Minister et

25 . The first-instance judgment of the Civil Court (First Hall) in its constitutional competence of 7 May 1990 found that, while the expropriation was in the public interest, the criteria established by the BDAA for awarding compensation were in breach of owners ’ property rights, in so far as they did not take into consideration that the property had been expropriated for the purposes of development, as opposed to use as agricultural land or environmental conservation. They thus denied the expropriated owners the real value of their land. However, by a judgment of 13 April 1992 the Constitutional Court, on appeal, overturned the first ‑ instance judgment considering that the claims were premature given that the claimant had not yet instituted proceedings before the LAB. The first ‑ instance judgment was therefore revoked.

Joseph Bartolo vs the Onor . Prime Minister

26 . The claimant had instituted constitutional redress proceedings arguing that the amount awarded by the LAB for the taking of his land under the BDAA did not constitute adequate compensation since the land had been valued as rural or waste land while it had been used for building purposes. The claimant had been awarded approximately EUR 11,000 in accordance with Section 7 of the BDDA which stated that where the land had been acquired bona fide prior to 14 February 1983, at a price higher than the value of the land, the compensation payable was to be determined according to such higher price.

27 . On 28 June 2007 the Civil Court (First Hall) in its constitutional competence dismissed the claim holding that, at the time of expropriation, the land was not a building site and would not have fetched a higher amount on the market than the price at which it was acquired. While it was true that the land gained value as a result of the BDAA, the claimant had no right to a “windfall” profit, but only a right to compensation for the value it had prior to the taking, which was in fact awarded to him.

28 . On appeal, by a judgment of 27 February 2009, the Constitutional Court confirmed the first-instance judgment. It held that the law provided clear, objective and just criteria for the assessment of compensation creating a fair balance of proportionality vis-à-vis owners of property expropriated in the public interest. The public interest behind such measure had not been contested by the claimant. It further noted that the claimant ’ s land would have remained rural land had it not been for the act which expropriated it, it therefore had no potential. Moreover, the sum awarded for the land was equal to that which he had paid for it including an extra building notwithstanding that the latter had not been expropriated.

Emanuel Borg vs the Attorney General and the Lands Commissioner (today Lands Authority)

29 . In similar circumstances, by a judgment of 23 November 2017, confirmed on appeal on 13 July 2018 by the Constitutional Court, the claimant ’ s complaints under Article 1 of Protocol No.1, were rejected on the lines of the Bartolo judgment mentioned above. The courts noted that while (unlike in Bartolo ) Section 7 did not apply in the claimant ’ s case (which was to be considered under Section 6 of the BDAA), he nonetheless could not make a windfall profit from the expropriation. It confirmed that the potential of land had to have a bearing in calculating compensation. However, it considered that the “potential” had to be considered as stood before the measure complained of, not after. Section 27 (1) (b) of the [Land Acquisition (Public Purpose)] Ordinance provided that future potential must be taken into account and indeed that provision could establish just compensation, thus neither domestic law, nor the expropriation at issue were in violation of Article 1 of Protocol No. 1. It noted that the claimant had also failed to prove the value of the land in 1983 so to show that it had not been equivalent to that awarded to him by the LAB (EUR 2,376).

COMPLAINT

30 . The applicant complain s under Article 1 of Protocol No. 1 that the compensation liquidated by the domestic courts for the taking of her land, according to law, was not commensurate to its value. The law had therefore failed to ensure a fair balance in the circumstances.

QUESTIONS TO THE PARTIES

1. Was the applicant deprived of her possessions within the meaning of Article 1 of Protocol No. 1 to the Convention?

2. If so, was that deprivation justified in terms of this provision? In particular, was it carried out “in the public interest” and did the law provide for relevant procedural safeguards which ensured that the operation of the law and its impact on the applicant were neither arbitrary nor unforeseeable? Did the compensation terms under the relevant legislation respect the requisite fair balance? Did the applicant suffer an excessive burden?

3. The Government are requested to supply information concerning any conditions which regulated the purchase of land, designated as a Building Development Area, by third party buyers.