FIRST SECTION

CASE OF ELLIS AND SCILIO v. MALTA

( Application no. 48382/17 )

JUDGMENT

STRASBOURG

21 January 2021

This judgment is final but it may be subject to editorial revision.

In the case of Ellis and Scilio v. Malta ,

The European Court of Human Rights ( First Section ), sitting as a Committee composed of:

Linos-Alexandre Sicilianos, President, Erik Wennerström , Lorraine Schembri Orland, judges, and Renata Degener , Deputy Section Registrar ,

Having regard to:

the application (no. 48382/17) against the Republic of Malta lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by two Maltese nationals, Mr Ian Peter Ellis and Ms Elizabeth Scilio (“the applicants”), on 21 June 2017;

the decision to give notice to the Maltese Government (“the Government”) of the application;

the parties ’ observations;

Having deliberated in private on 16 December 2020 ,

Delivers the following judgment, which was adopted on that date:

INTRODUCTION

1 . The application concerns the compensation for a breach of Article 1 of Protocol No. 1 to the Convention in relation to the disproportionality of the rent received by the applicants. The domestic courts have acknowledged the violation and awarded compensation. The question arises as to whether the applicants remain victims of the violation of Article 1 of Protocol No. 1, and whether an issue arises as to the effectiveness of the domestic remedy.

THE FACTS

2 . The applicants were born in in 1950 and 1947 respectively and live in Sliema , Malta, and Catania, Italy, respectively. The applicants were represented by Dr J. Grech , a lawyer practising in Birkirkara.

3 . The Government were represented by their Agent, Dr. V. Buttigieg, State Advocate.

4 . The facts of the case, as submitted by the parties, may be summarised as follows.

5 . The applicants own property No. 41, Sir Ugo Mifsud Bonniċi Street, Lija (“the property”).

6 . On 19 June 1973, the applicants ’ predecessors in title rented (under title of temporary emphyteusis) the property to a third party, for seventeen years, at 240 Maltese liras (MTL) (approximately 560 euros (EUR)) per year. According to the Government the property was at the time not in a good state of repair and the tenants had to incur significant expenses to make the property habitable. The applicants submitted that the relevant maintenance was due in terms of both the law and the contract.

7 . In 1990, on the expiry of the contract of temporary emphyteusis, the third party relied on Article 12 (2) of Chapter 158 of the Laws of Malta, the Housing (Decontrol) Ordinance (hereinafter “the Ordinance”), as amended by Act XXIII of 1979, to retain the property under title of lease at the rent applicable according to law, which at the time and until 2006 was equivalent to EUR 1,118 per year. From January 2006 onwards the rent payable was EUR 2,236 per year.

8 . The applicants instituted constitutional redress proceedings claiming that the provisions of the Ordinance ‑ which granted tenants the right to retain possession of the premises under a lease ‑ imposed on them as owners a unilateral lease relationship for an indeterminate time without reflecting a fair and adequate rent, nor an effective remedy or relevant procedural safeguards in breach of Article 1 of Protocol No. 1 to the Convention. They requested the court to award compensation for the damage suffered. They noted that their ex parte architect calculated the rental value of the property from 1990 ‑ 2009 as being EUR 213,600, and that from 1990 ‑ 2012 the market rental value amounted to EUR 253,200 while they had only received EUR 32,984.

9 . By a judgment of 4 October 2016 the Civil Court (First Hall) in its constitutional competence upheld the above ‑ mentioned claim on the basis of the relevant ECtHR case ‑ law.

10 . The court took note of the court-appointed expert ’ s valuations (excluding the improvements done by the tenants) and the fact that in 1992 the applicants only owned a quarter of the property, in 1993 a half and in 1997 three quarters, only to become full owners in 2009 and considered that the applicants ’ losses would have amounted to around EUR 130,000. Bearing in mind that the above ‑ calculated losses were only indicative and did not reflect real losses the court awarded the applicants EUR 50,000 in non ‑ pecuniary damage and ordered that the tenants could not rely on Section 12(2) of the Ordinance as amended to claim title to the property. No costs were imposed on the applicants.

11 . On appeal by both parties concerning the compensation awarded, by a judgment of 27 January 2017 the Constitutional Court upheld the finding of a violation of Article 1 of Protocol No. 1 to the Convention as well as the order that the tenants could no longer rely on the relevant law to retain the property. It however reformed the amount of compensation and, bearing in mind the improvements made by the tenants prior to 1990 but not after, it considered that the potential losses of the applicants from 1990 (date from when the calculation had to be made given that the applicants could claim damage in respect of the period during which their predecessors ’ patrimony had been affected) to 2014 amounted to EUR 156,509 (reflecting a total potential of EUR 194,064 from which had to be deducted the sum of EUR 37,455 which the applicants received in rent until 2014). However, since those were not real losses and given the social aim behind the measure as well as the remedy given to the applicants who could thereafter obtain possession of the premises, it awarded the applicants EUR 15,000 covering both pecuniary and non-pecuniary damage. The entirety of the costs of the appeal proceedings were to be paid by the applicants.

RELEVANT LEGAL FRAMEWORK

12 . The relevant legal framework is set out in Amato Gauci v. Malta (no. 47045/06, §§ 19 ‑ 25, 15 September 2009) , and Apap Bologna v. Malta (no. 46931/12, §§ 28-30, 30 August 2016).

THE LAW

13 . The applicants complained that that they were still victims of the violation of Article 1 of Protocol No. 1 upheld by the Constitutional Court given the low amount of compensation awarded. The provision reads as follows:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, 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 or to secure the payment of taxes or other contributions or penalties.”

14 . The Government submitted an objection for the first time ‑ to the effect that the applicants had lost victim status as a result of the Constitutional Court ’ s judgment in their favour and the redress meted out ‑ in their submissions on the merits and just satisfaction, them having, previously, failed to file any observations on the admissibility and merits within the required time ‑ limit.

15 . The applicants submitted that they were still victims of the upheld violation as the Constitutional Court had awarded only minimal compensation, which was further reduced due to an order to pay part of the costs. They noted in particular that the Constitutional Court had awarded EUR 15,000, covering both pecuniary and non-pecuniary damage, for the duration of the violation over several years while the court ‑ appointed expert had estimated an annual rental value in the region of EUR 12,600.

16 . The Court notes that the Government raised their objection outside the time ‑ limit for making observations on the admissibility of the application. However, the Court observes that the objection raised concerns matters that go to the Court ’ s jurisdiction ratione personae , matters which it is not prevented from examining of its own motion, even in the absence of an objection by the Government (see Buzadji v. the Republic of Moldova [GC], no. 23755/07, § 70, 5 July 2016 and, a contrario , Khlaifia and Others v. Italy [GC], no. 16483/12, §§ 51 ‑ 54, 15 December 2016 in the context of a late non ‑ exhaustion objection).

17 . The Court reiterates its general principles concerning victim status as set out in Apap Bologna v. Malta , (no. 46931/12, §§ 41 and 43, 30 August 2016). In the present case the Court notes that there has been an acknowledgment of a violation by the domestic courts. As to whether appropriate and sufficient redress was granted, the Court considers that even though the market value is not applicable and the rent valuations may be decreased due to the legitimate aim at issue, a global award of EUR 15,000, covering pecuniary and non-pecuniary damage, from which costs were to be deducted, for a property worth in the region of EUR 12,600 in annual rent, can hardly be considered sufficient for a violation which persisted since 1990. That is enough to find that the redress provided by the Constitutional Court did not offer sufficient relief to the applicants, who thus retain victim status for the purposes of this complaint (see, mutatis mutandis , Portanier v. Malta , no. 55747/16, § 24, 27 August 2019).

18 . The Court notes that this complaint is neither manifestly ill ‑ founded nor inadmissible on any other grounds listed in Article 35 of the Convention. It must therefore be declared admissible.

19 . The applicants submitted that there had been a violation of Article 1 of Protocol No. 1. They relied on the Constitutional Court ’ s findings and the case ‑ law of this Court.

20 . The Government admitted that there had been a violation but considered that the Constitutional Court had brought it to an end.

21 . Having regard to the findings of the domestic courts relating to Article 1 of Protocol No. 1, the Court considers that it is not necessary to re ‑ examine in detail the merits of the complaint. It finds that, as established by the domestic courts, the applicants were made to bear a disproportionate burden.

22 . There has accordingly been a violation of Article 1 of Protocol No. 1 to the Convention.

23 . The applicants complained that constitutional redress proceedings were not an effective remedy, in relation to the breach of their property rights, as required by Article 13 of the Convention, which reads as follows:

“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”

24 . The Court notes that this complaint is neither manifestly ill-founded nor inadmissible on any other grounds listed in Article 35 of the Convention. It must therefore be declared admissible.

25 . Relying on the Court ’ s conclusions in, inter alia , the case of Apap Bologna (cited above), the applicants contended that the domestic courts consistently failed to provide adequate redress for such breaches, as happened in their case. They complained about the low amount of compensation and added that the Constitutional Court ’ s judgment had not brought the violation to an end, with the result that the applicants had now to contend with new changes in the law, which made the possibility of the return of their property even more distant.

26 . The Government submitted that constitutional redress proceedings were an effective remedy which adequately redressed the applicants in respect of their grievances. They considered that ordering the immediate removal of the tenants would be draconian, given that they had been legitimately living in the premises. However, the Constitutional Court ’ s order, to the effect that the tenants could no longer rely on Article 12 of the Ordinance to retain the title to the property, gave the applicants a realistic opportunity of regaining possession of their property. The effectiveness of such a measure was evident in the fact that tenants would have to vacate the property or face further legal action. The Government also considered that an adequate amount of compensation had been awarded in the circumstances of the case.

27 . The Court reiterates its general principles under Article 13 as set out in Apap Bologna (cited above, §§ 76-79).

28 . As to providing adequate redress for the violation that has already occurred, the Court notes that it has repeatedly found that the sums awarded in compensation by the Constitutional Court do not constitute adequate redress. The Court makes reference to its considerations in paragraph 17 above. The Court considers that, just like an award for pecuniary damage under Article 41 of the Convention, an award for pecuniary damage made by a domestic court must be intended to put the applicant, as far as possible, in the position he or she would have enjoyed had the breach not occurred. It transpires from the information and cases brought before the Court that this is often not the case. Such pecuniary awards are also often not accompanied by an adequate award of non-pecuniary damage and burdened with an order for the payment of the relevant costs (ibid. § 55, and Apap Bologna , cited above, § 90). No domestic case ‑ law dispelling such conclusions has been brought to the Court ’ s attention in the present case.

29 . Bearing in mind the above, and given the way in which the applicant ’ s submission are couched, with reference in particular to the 2018 amendments which had not been referred to in the application form, and with no detail as to whether any eviction proceedings were undertaken, the Court does not consider it necessary to delve further into the second aspect of the complaint in the present case. The Court, however, refers to its general considerations made in Portanier (cited above, §§ 49 ‑ 53) in relation to the requirement of preventing the alleged violation or its continuation in connection with the Constitutional Court ’ s approach of ordering that the tenants can no longer rely on the law to retain the title to the property.

30 . In the light of the above considerations relating to the relevant time, the Court concludes that although constitutional redress proceedings are an effective remedy in theory, they were not so in practice, in cases such as the present one. In consequence, they cannot be considered an effective remedy for the purposes of Article 13 in conjunction with Article 1 of Protocol No. 1 concerning arguable complaints in respect of the rent laws in place, which, though lawful and pursuing legitimate objectives, impose an excessive individual burden on applicants. No other remedies have been referred to by the Government.

31 . There has accordingly been a violation of Article 13 of the Convention.

32 . Article 41 of the Convention provides:

“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”

33 . The applicants claimed 505,376.08 euros (EUR) in pecuniary damage covering EUR 222,127.98 in lost rent for the period between the expiry of the lease on 19 June 1990 and 10 April 2018 (date of the entry into force of Article 12 B of the O rdinance) and interest at 8% per annum, as per domestic law, amounting to EUR 283,248.10. The amount of lost rent was based on the court ‑ appointed expert ’ s valuation for the period 1990 ‑ 2014, to which had to be added the rent for the subsequent years (which the applicants ’ claimed at the same price fixed for the year 2014). From that they had deducted the sums actually paid to the applicants namely EUR 46,960.02. They noted that the figures were estimated by a court ‑ appointed architect independent of both parties, and that the Government had not submitted any estimate of their own. Further, the property had in fact been rented out all throughout those years and any maintenance carried out by the tenants had been an obligation in both terms of law and contract. The applicants further claimed EUR 20,000 jointly in non ‑ pecuniary damage.

34 . The Government considered that the figures arrived at by the court ‑ appointed expert, on the sole basis of which the applicants ’ made their claim, were significantly inflated. The Government considered that the method of calculation, namely adding together the estimates and subtracting the sum paid by the tenant, and finally adding a sum of interest which exceeded the total capital, yielded an unjustified profit for the following reasons. Firstly, because there was no certainty that the property would have been leased throughout the entire period of time. Secondly, the tenants had to keep the property in a good state of repair and had incurred expenses of EUR 50,000. Thirdly, the measure was in the public interest. The Government also considered that the sum in interest (at the rate of 8% since 1990) was excessive and should not be awarded. They considered the sum claimed in non ‑ pecuniary damage also to be excessive. Lastly, the Government submitted that a sum of EUR 20,000 in toto for both pecuniary and non-pecuniary damage would be sufficient.

35 . The Court finds no reason not to rely on the court ‑ appointed expert ’ s valuations and will take those valuations (in relation to the part which took account of the improvements made by the tenants prior to 1990 but not after) as a basis for its calculation. Bearing in mind the relevant considerations for calculating pecuniary damage in such cases (see, for example, Portanier , cited above, §§ 62 ‑ 64), as well as the award, which remains payable, of EUR 15,000 made by the Constitutional Court, the Court awards the applicants EUR 48,000 jointly, in respect of pecuniary damage.

36 . Further, the Court awards the applicants EUR 10,000, jointly, in respect of non ‑ pecuniary damage, plus any tax that may be chargeable on the applicants.

37 . The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.

38 . The applicants also claimed EUR 3,771.88 for the costs and expenses incurred before the domestic courts (as per submitted taxed bill of costs) and EUR 3,636.45 for those incurred before the Court.

39 . The Government did not contest the sum of EUR 3,771.80 relative to the appeal proceedings but considered that the sum of EUR 3,636.45 for expenses before this Court was grossly exaggerated. The Government submitted that a sum of EUR 2,000 in toto would be sufficient.

40 . Regard being had to the documents in its possession and to its case ‑ law, the Court considers it reasonable to award the sum of EUR 7,000, jointly, covering costs under all heads, plus any tax that may be chargeable to the applicants.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

(a) that the respondent State is to pay the applicants, jointly, within three months, the following amounts:

(i) EUR 48,000 (forty-eight thousand euros) in respect of pecuniary damage;

(ii) EUR 10,000 (ten thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;

(iii) EUR 7,000 (seven thousand euros), plus any tax that may be chargeable to the applicants, in respect of costs and expenses;

(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;

Done in English, and notified in writing on 21 January 2021 , pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

             Renata Degener Linos-Alexandre Sicilianos Deputy Registrar President