In Supreme Court, a sports bar triggers complex exchanges on constitutional law

The Murga Bar, best known for sport and cold beers, was at the centre of complex legal exchanges in the Supreme Court this week, as its owner challenged the decision to terminate its lease amid plans to redevelop Victoria Stadium into new facilities for the Gibraltar FA.

The termination certificate was issued last year by the Governor on application from the Gibraltar Government as landowner under Section 66 of the Landlord and Tenant Act, which allows for the compulsory acquisition of Government-owned property for redevelopment if the wider public interest requires it.

The Victoria Stadium is being demolished to make way for a new Gibraltar FA national stadium that includes commercial and residential units, and the Government, which has highlighted the project’s wider economic significance, was required to hand over a vacated site under its agreement with the association.

But in court this week lawyers for VSB Ltd, the company that owns the bar, argued the termination breached legal safeguards and constitutional rights.

They said too that the case raised fundamental questions about whether the relevant section of the Landlord and Tenant Act complied with Gibraltar’s Constitution.

The case was lodged not just against the Gibraltar Government, responsible for the policy and decisions at the heart of the case, but also against the Office of Governor as the constitutional authority who issued the certificate, and the Attorney General as the principal legal officer of the Crown in Gibraltar.

On one side in court representing VSB and its director and shareholder, Allan Asquez, were father-and-son legal team Charles and Nicholas Gomez.

On the other, representing the three respondents, was one of the UK’s leading advocates and a renowned specialist in public and constitutional law and human rights, Lord Pannick, KC, accompanied by another UK specialist in public law and human rights, Jason Pobjoy, KC, and assisted by Gibraltarian barrister Owen Smith.

UNCONSTITUTIONAL

In setting out VSB’s case, Mr Gomez said the relevant section of the Landlord and Tenant Act, Section 66, lacked the procedural safeguards, compensation guarantees and judicial oversight required under Gibraltar’s Constitution.

The Constitution, he argued, affords protection to property rights and requires that domestic legislation be compliant with Gibraltar’s constitutional framework and its obligations under the European Convention on Human Rights.

Section 66, he said, was “unconstitutional” and did not provide for his client’s right, for example, to an extended period of tenancy ahead of termination, or to an alternative site within any new development in lieu of other compensation.

In a separate line of attack, Mr Gomez also questioned the ownership of the land and whether the Gibraltar Government was, in fact, the landlord with the power to issue a termination notice under Section 66.

The powers in that section could only be used in respect of land that belonged to or was held for a Government department, and not in support of a redevelopment scheme being carried out by a third-party private entity such as the Gibraltar FA, the court heard.

The evidence showed the Victoria Stadium site was sold to a Gibraltar FA company, GFA National Stadium Ltd, in 2018 for £16.5m, meaning the Gibraltar Government did not hold the premises, the court was told.

Mr Gomez argued the immediate landlord of the Murga Bar was the Gibraltar FA and that while the “superior landlord” was the Crown, this was not to say the Gibraltar Government owned the site.

The Government, he said, was not a statutory corporation capable of holding title except by express grant.

“Crown ownership does not equal Government ownership,” Mr Gomez told the court, adding Crown property and sovereign rights were distinct from the Gibraltar Government’s assets.

Mr Gomez’ proposition on ownership prompted exchanges with Chief Justice Anthony Dudley, who is hearing the case and put it to Mr Gomez that the proceeds of the sale and lease of the site went to the Gibraltar Government, not the Governor as King’s representative or the UK Government.

But Mr Gomez said Gibraltar’s landholding framework was rooted in the Treaty of Utrecht of 1713, which ceded perpetual title to the British Crown, and that constitutionally and legally therefore, ownership of the land rested with the King.

The Governor, who represents the King in Gibraltar, is “not a mere ceremonial actor” but has a “dichotomous” and practical role expressing the Crown’s military and sovereign authority.

The court explored this issue, including the dual constitutional roles played by the Governor, who represents King Charles in respect of the UK Government, but also in respect of the Gibraltar Government.

In essence, the core question before the court was this: Who owns the land in Gibraltar, and who makes decisions in respect of that land?

Among several other strands, Mr Gomez also raised the issue of “institutional bias”, in the sense that constitutionally, the Office of Governor is part of the Government of Gibraltar.

In his view, that meant there was no independent oversight of a decision under Section 66 to terminate someone’s lease on public interest grounds, and the Governor should have recused himself from the matter.

The Governor, being a part of the Government of Gibraltar, “should not have the power to determine such a matter”, Mr Gomez said.

‘CONSTITUTIONAL REALITY’

Lord Pannick countered the arguments presented by Mr Gomez and said Section 66, “properly understood”, was compliant with the Constitution because it allowed for reasonable compensation and could, if necessary, be challenged in court.

The European Court of Justice had examined the issue and established that there was “not even a right to full compensation” in cases that concerned the public interest, just to “reasonable compensation”, and that governments were afforded “a wide margin of discretion” in international law.

On the issue of the Governor and “institutional bias”, he said the Governor’s role in assessing whether a termination notice should be issued was “quasi-judicial”, and that there was no evidence in this case to suggest it was anything other than “independent and impartial”.

“His Excellency is not bound by the views of anyone on the issue, including ministers,” Lord Pannick said, adding: “He makes up his own mind.”

The Governor’s decision could in any event be tested before the Supreme Court, either through judicial review or, as in this case, though a constitutional motion.

“And the court decides on the legality of the Governor’s decision,” he added.

And while it was correct that constitutionally the Governor was part of the Gibraltar Government, this was theoretical concept that had to be seen against a “constitutional reality”.

“The constitutional reality is that no reasonably minded person could possibly think that His Excellency the Governor, for these purposes, is a member of the Government of Gibraltar,” Lord Pannick said.

On the issue of land ownership, Lord Pannick was clear.

“The land is owned by the Crown in right of the Government of Gibraltar,” he told the court, adding that other than in respect of MoD sites, land in Gibraltar was not held in right of the UK Government or by the King for his own possession.

He said “it makes no sense whatsoever” to argue a distinction between the Crown and the Government of Gibraltar, adding it was ministers who took decisions in respect of Crown land and that to argue otherwise was to be “centuries out of date”.

COSTS CONTROVERSY

There was some controversy outside court too following reports that Lord Pannick was being paid £5,000 an hour.

That prompted the Gibraltar Government to issue a statement saying the agreed fees were “substantially lower”, though it would not reveal them at this stage.

The Government said VSB was seeking compensation exceeding £2m – the company denies this – and that this vastly exceeds what the law provides for.

“Given the constitutional and legal significance of the claim, the Government, Office of the Governor and Attorney General have instructed Lord Pannick KC, one of the United Kingdom’s most respected public law barristers, to lead its legal team,” No.6 Convent Place said.

And it added: “Crucially, should Mr Asquez's challenge fail, the court may order that Mr Asquez pay the legal costs incurred by the Government in responding to his claim. This action, therefore, seeks to avoid an unreasonable financial burden on the taxpayer.”

Lawyers for VSB said the Government’s statement on Monday broke with the convention that parties in ongoing litigation should refrain from public comment pending judgement.

“The Government’s statement appears animated by a desire to deflect public scrutiny concerning its legal strategy, including questions about the cost to the public purse of retaining leading London counsel,” they said in a statement.

“That, of course, is not a matter for our client, but for the Gibraltarian taxpayer.”

“It is notable, however, that while the Government has issued a denial of a specific figure alleged in public discourse, it has declined to provide any transparency as to what it is in fact paying its legal team.”

“More concerning still is the implied suggestion that our client should face financial reprisal, by way of a punitive costs order, for having had the temerity to seek judicial protection of his legal rights.”

“That is regrettable.”

“The use of the costs jurisdiction should never become a weapon of deterrence for those who seek to vindicate constitutional or statutory rights against the State.”

In court on Tuesday, Mr Gomez raised the issue of the “threat” of a major adverse costs order as he closed his submissions but was interrupted by the Chief Justice.

“Just because one side has Maclaren cars doesn’t mean they are entitled to recover for Maclaren cars,” Mr Justice Dudley said.

“Maybe they are entitled to recover for high-end Mercedes.”

After two days of submissions from both parties, Mr Justice Dudley reserved his position and will deliver his ruling in the coming weeks.

Trainee lawyer Luke Stagnetto assisted Lord Pannick and his legal team.