Myth Busted: Property Owners CANNOT Sue Government For Changing Planning Policies (Unless A Permit Is In Hand)

Property owners cannot successfully sue the government for restricting development through planning regulations, contrary to what is being claimed by the Prime Minister.

Legal experts consulted by Lovin Malta dismissed as legal fallacy Robert Abela’s pronouncement last week that Ħondoq Ir-Rummien cannot be shifted to Outside Development Zone (ODZ) because the land owners acquired “rights” by virtue of its designation for tourism development in the Local Plan of 2006.

Abela made his comment about changing planning designations last week following Qala mayor Paul Buttigieg’s repeated calls for Hondoq Ir-Rummien to be shifted to ODZ.

Following Abela’s pronouncement, PN promised it would buy up the land at a “reasonable” price and turn the area into a park if it is returned to government.

Malta Today reported that the land-owners wrote to the government offering to sell the land for €17 million. According to the newspaper, their lawyer, Carmelo Galea, also dangled the threat of taking the fight to the European Court of Human Rights (ECHR), presumably if the government changed the development designation or expropriated the land for less than their offer.

Yet legal analyses by Lovin Malta shows that the property owners can take no comfort from any notion of recourse to the ECHR.

Legal experts said the notion that the loosening of planning policies or the widening of development zones in the past conferred development rights to property owners was a non-starter in the Maltese and European courts.

Even someone who bought property for development on land in designated development zones has no rights at law if that land is then shifted to Outside Development Zone (ODZ) in a change of policy.

This has been clearly established in caselaw of ECHR. Only people who would have obtained a development permit would have a right for compensation, and the Ħondoq Ir-Rummien owners never got a development permit.

Despite this caselaw, Environment Minister Aaron Farrugia recently made a similar point to the Prime Minister’s, arguing that if planning policies were to be changed to reduce building heights, the country might have to pay billions in compensation to property developers who had acquired rights by the existent policies.

In talking about these so-called ‘rights’, Abela and Farrugia, who are both lawyers, were basing their arguments on Article 1 of the Protocol of the European Convention on Human Rights as well as Article 17 of the EU Charter of Fundamental Rights.

Both deal with “property rights” in similar wording, with the European Convention holding that every person is “entitled to peaceful enjoyment of his possessions” and “cannot be deprived of his possessions except in the public interest”.

Yet it adds that these rights do not “in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest”.

The ECHR has defined in detail what counts as justification for a public authority to interfere with “possessions” in the public interest. These include “adoption of land and city development plans” as well as “protection of the environment [which] is also considered in the public interest”.

This point was made resoundingly by ECHR in a case in 2007 (Hamer vs Belgium), when it held that “economic considerations and even certain fundamental rights such as the right of property should not take precedence over considerations relating to protection of the environment”.

Yet the Prime Minister and Environment Minister – and separately Ħondoq Ir-Rummien owners’ lawyer – also had in mind the legal concept of “legitimate expectations”, or the idea that a developer or any person would have bought land on the basis of its developable status, with the intention of eventually developing it, thereby gaining certain rights along the way.

But on this point the EU’s European Court of Justice (ECJ) as well as the ECHR are unequivocal.

“For an ‘expectation’ to be ‘legitimate’,” the ECHR says in its guide to property rights, “it must be of a nature more concrete than mere hope and be based on a legal provision or a legal act such as a judicial decision, bearing on the property interest in question.”

In a case thrown out on appeal in 2015, the ECJ pointed out that “the protection of the right to property afforded by Article 17 of the [EU] Charter does not apply to mere commercial interests or opportunities, the uncertainties of which are part of the very essence of economic activity, but applies to rights with an asset value creating, under the legal system, an established legal position”.

In the case of Ħondoq, for example, the owners purchased the land entirely speculatively even before it was designated a tourism development zone in 2006.

The ECJ added that “future income cannot be considered to constitute ‘possessions’ that may enjoy the protection of that article [right to property] unless it has already been earned, it is definitely payable or there are specific circumstances that can cause the person concerned to entertain a legitimate expectation of obtaining an asset”.