THIRD SECTION

CASE OF ELLIS AND SCILIO v. MALTA

( Application no. 165/17 )

JUDGMENT

STRASBOURG

30 June 2020

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 ( Third Section ), sitting as a Committee composed of:

Georgios A. Serghides, President, Erik Wennerström, Lorraine Schembri Orland, judges, and Olga Chernishova , Deputy Section Registrar ,

Having regard to:

the application 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 20 December 2016;

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

the parties ’ observations;

Having deliberated in private on 9 June 2020 ,

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

INTRODUCTION

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

1 . The applicants were born in 1950 and 1947 respectively and live in Sliema. The applicants were represented by Dr I. Refalo, Dr M. Refalo and Dr S. Grech, lawyers practising in Valletta, Malta.

2 . The Government were initially represented by their Agent, Dr P. Grech, Attorney General, and later by their Agent Dr V. Buttigieg, State Advocate.

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

4 . The applicants own property No. 49, Old College Street, Sliema (“the property”) which they inherited from their parents who died on 4 February 2009 and 26 March 2010.

5 . In 1957 the property had been requisitioned in favour of a third party. Upon agreement between the parties, as of 9 February 1958 the third party paid the applicants ’ father 61 British pounds (GBP) annually under a lease agreement covered by the special laws concerning protected leases, in this case the Reletting of Urban Property (Regulation) Ordinance, Chapter 69 of the Laws of Malta (which applied various restrictions on the lease agreement, such as the impossibility of increasing the rent and the obligation to renew the lease which was inheritable by the tenant ’ s descendants).

6 . On 29 July 1958 the property was derequisitioned and remained in the tenant ’ s possession under title of lease according to the above-mentioned law and conditions.

7 . In 1980, upon agreement between the parties, the rent was fixed at 100 Maltese liras (MLT) (approximately 233 euros (EUR)) annually). The same rent continued to be deposited in the court ’ s registry by the heir of the third party, who inherited the lease in 1998, but was not recognised as a tenant by the owners. Between 2004 and 2010 the rent had been accepted during negotiations between the parties in relation to the vacation of the property.

8 . Amendments to the law improved the position of the owners from 2010 onwards in line with Article 1513C of the Civil Code which established a minimum rent of EUR 185 until 2013, of EUR 197 as of 2013 and EUR 210 as of 2016 until 2019.

9 . The applicants instituted constitutional redress proceedings claiming, inter alia , that the provisions of the Reletting Urban Property Ordinance, Chapter 69 of the Laws of Malta ‑ which imposed on them the obligation to renew the lease on a yearly basis without a possibility of increasing the rent was in breach of Article 1 of Protocol No. 1 to the Convention. They asked the court to award compensation for the damage suffered and to evict the tenants. In their submissions, they limited their claim to the period of 1987 onwards (when Malta introduced the right of individual petition).

10 . By a judgment of 30 November 2015 the Civil Court (First Hall) in its constitutional competence, inter alia , found a violation of Article 1 of Protocol No. 1 [for the period 1987 onwards], refused the request to evict the tenants but awarded the applicants EUR 20,000 in compensation. The court also found a violation of Article 14 in this connection. Costs were to be paid by the Attorney General (except for those related to a first ‑ instance decision quashed in an interlocutory appeal).

11 . The court noted that, according to the court-appointed expert, in 2012 the property had a sale value of EUR 560,000 and a rental value of EUR 16,800 annually (EUR 1,400 monthly) while in 1987 it had a rental value of EUR 2,703 annually. The court noted that the parties had not requested the appointment of additional experts. Thus, the rent payable to the applicants was substantially inferior to its market value and consequently a fair balance between the interests involved had not been reached. Bearing in mind the court ‑ appointed expert ’ s valuations and that the applicants ’ complaint concerned the period after 1987 as well as the legitimate aim pursued by the measure and the fact that the applicant only complained in 2010, it awarded EUR 20,000 arbitrio bon viri .

12 . On appeal by both parties, by a judgment of 24 June 2016 the Constitutional Court, inter alia , upheld the finding of a violation of Article 1 of Protocol No. 1 to the Convention, reduced the compensation to EUR 10,000 covering both pecuniary and non-pecuniary damage and ordered that the tenants could no longer rely on the relevant law to retain the property. It noted that it was not for courts of constitutional competence to award material damage which could be obtained in ordinary proceedings, but rejected the Government ’ s argument that the applicants could have requested the Rent Regulation Board (RRB) to increase their rent since this would not have significantly improved their situation. It reversed the judgment in relation to the complaint under Article 14 which had been upheld by the lower court. Part of the costs of the appeal was to be paid by the applicants.

13 . Following the Constitutional Court judgment the parties negotiated a new reduced rent on condition that the lease would terminate within eighteen months. On an unspecified date in 2017, the tenants vacated the property.

14 . The relevant domestic law in relation to the present case is set out in Zammit and Attard Cassar v. Malta (no. 1046/12 , §§ 26-27, 30 July 2015) and Montanaro Gauci and Others v. Malta (no. 31454/12 , §§ 31 and 34 ‑ 36, 30 August 2016) .

THE LAW

15 . 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.”

16 . The Government submitted an objection for the first time – to the effect that the applicants had lost victims status as a result of the Constitutional Court judgment in their favour – 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. Similarly, in the same submissions on the merits they considered that the applicants had no property rights prior to inheriting the property in 2009 and that the ancestor of the applicants had voluntarily entered into a lease agreement, thus the applicants had suffered no violation prior to 2009.

17 . The applicants submitted that they were still victims of the upheld violation as the Constitutional Court had not evicted the tenants and 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 10,000 for the duration of the violation while the court-appointed expert had estimated an annual rental value of EUR 16,800. They further submitted that their father had had no choice to consent to the lease as the pro perty had been requisitioned in 1957. Furthermore, they noted that as legal heirs, they had inherited all the rights and obligation of their father and thus they had been entitled to complain and request redress for the breach as accepted by the domestic courts.

18 . The Court notes that the Government raised their objections outside the time-limit for making observations on the admissibility of the application. However, the Court observes that the objections raised concern matters that go to the Court ’ s jurisdiction ratione personae and materiae respectively, 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 Pasquini v. San Marino , no. 50956/16, § 86, 2 May 2019 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).

19 . The Court notes, firstly, that the application of legislation affecting landlords ’ rights over many years constitutes a continued interference for the purposes of Article 1 of Protocol No. 1. Thus, in circumstances such as those of the present case, both the applicants ’ father and subsequently the applicants suffered interference with their property rights (see, mutatis mutandis , Anthony Aquilina v. Malta , no. 3851/12 , § 53, 11 December 2014). Further , the Court notes that it has already held, in similar circumstances, that, at the time, the owners (ancestors of the applicants) could not reasonably have had a clear idea of the extent of inflation in property prices in the decades to come, and that the decisions of the domestic courts regarding their request challenging such laws constituted interference in the applicants ’ (heirs) respect (see, mutatis mutandis , Zammit and Attard Cassar , v. Malta , no. 1046/12 , §§ 50-51 , 30 July 2015 ). As with this Court ’ s practice, the domestic court has also accepted the applicant ’ s standing, in relation to their possessions, over the entire period complained of.

20 . Secondly, 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 10,000 covering pecuniary and non-pecuniary damage for a property worth EUR 16,800 in annual rent can hardly be considered sufficient for a violation which persisted since 1987. 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).

21 . The Court notes that the 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.

22 . 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.

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

24 . 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.

25 . There has accordingly been a vio lation of Article 1 of Protocol No. 1 to the Convention.

26 . 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.”

27 . 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.

28 . Relying on the Court ’ s case-law the applicants submitted that they had not had an effective remedy in relation to the breach of their property rights, as required by Article 13 of the Convention. In particular, in their case the Constitutional Court had not prevented the continuation of the violation, nor provided adequate redress. The applicant referred to a systemic pattern of cases where the Constitutional Court reduced the award made by the first-instance court, and ordered that the applicants pay part of the costs; and reversed any order of eviction made at first-instance. They considered that an order that the tenant could not rely on the law to retain the title to the property on the basis of the impugned law was not equivalent to an order for eviction, firstly because it could happen that the owner does not manage to retrieve the property, or even if he or she did it would not be without a further struggle. In their case the applicants had negotiated the release of the property with the tenant, however this had taken some time.

29 . The Government submitted that constitutional redress proceedings were an effective remedy which adequately redressed the applicants in respect of their grievances. In particular, following the Constitutional Court ’ s order to the effect that the tenants could no longer rely on Chapter 69 of the Laws of Malta to retain the title to the property, the tenants had vacated the 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.

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

31 . The Court also refers to its considerations made in Portanier (cited above, §§ 47-53) 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. It further notes that, as in Portanier , it suffices for the purposes of the present case to find that in the instant circumstances the applicants have been successful in regaining possession of the premises following the Constitutional Court ’ s judgment thus the violation no longer persists.

32 . 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 20 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.

33 . 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.

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

35 . 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.”

36 . The applicants claimed EUR 621,935.67 in pecuniary damage, covering EUR 304,014.10 in lost rent (namely EUR 311,002 estimated by the court-appointed expert from which had to be deducted the EUR 6,987.90 paid by the tenants) and EUR 317,921.66 in interest (at 8% provided in domestic law). They noted that during the domestic proceedings the Government had not rebutted nor contested such valuations. Moreover, while the Government had claimed that such a valuation was inflated, in reality the one commissioned by them, solely for the purposes of these proceedings, produced similar results. They further claimed EUR 40,000 in non-pecuniary damage.

37 . The Government submitted that the conclusions of the court ‑ appointed expert could not be relied on as they were significantly inflated. The Government thus submitted their own architect ’ s report, although the architect had not had access to the property since the Government alleged that attempts to contact the owners were futile. According to this report, which described the property as a “majestic double fronted town house” (considered as habitable for the purposes of the report) in 2017, the sale value of the property was EUR 720,000; the annual rent for the same year was EUR 19,800; and the total rent the property could in theory obtain in the open market from 1987 to 2017 was EUR 271,050. However, the Government considered that to award such an amount would be awarding the applicants an unjustified profit. Firstly, because there was no certainty that the property would have been leased throughout the entire period of time had it not been requisitioned. Secondly, the tenants had to keep the property in a good state of repair and, thirdly, the measure was in the public interest. The Government also considered that the sum in interest was excessive and should not be awarded. In their view a sum of EUR 40,000 would be sufficient pecuniary damage and EUR 5,000 jointly (beyond the EUR 10,000 paid following the Constitutional Court judgment) sufficient non-pecuniary damage.

38 . Bearing in mind the relevant considerations for calculating pecuniary damage in such cases (see, for example, Portanier , cited above, §§ 62-64), the Court awards the applicants EUR 148,000, jointly, in respect of pecuniary damage .

39 . Bearing in mind the Constitutional Court ’ s award, which remains payable to the applicants, the Court need not award a further sum in non ‑ pecuniary damage, it therefore rejects such a claim.

40 . As requested, the amount awarded is to be paid directly into the bank account designated by the applicants ’ representatives (see, for example, Denisov v. Ukraine [GC] , no. 76 639/11, § 148, 25 September 2018, and as provided for in p. 22 of the Practice Direction on Just Satisfaction Claims (issued by the President of the Court in accordance with Rule 32 of the Rules of Court on 28 March 2007)).

41 . The applicants also claimed EUR 4,157.79 for the costs and expenses incurred before the domestic courts (as per submitted bill of costs, which were still to be paid to the Government) and EUR 4,834.60 for those incurred before the Court.

42 . The Government submitted that part costs of the domestic proceedings were due to their failed complaint under Article 14 of the Convention. For the remainder costs related to the domestic proceedings the Government submitted that no proof of payment had been brought. Lastly, they considered that the sum for proceedings before this Court should not exceed EUR 2,000.

43 . Regard being had to the documents in its possession and to its case ‑ law, as well as to the justification related to the part of the imposed costs domestically, and the fact that su m s owed to the Government remain due, the Court considers it reasonable to award the sum of EUR 5,000, jointly, covering costs under all heads, plus any tax that may be chargeable to the applicants.

44 . As requested, the amount awarded is to be paid directly into the bank account designated by the applicants ’ representatives.

45 . 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.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

(a) that the respondent State is to pay the applicants, jointly, within three months, the following amounts, to be paid into the bank account designated by the applicants ’ representatives :

(i) EUR 148,000 (one hundred and forty-eight thousand euros) in respect of pecuniary damage;

(ii) EUR 5,000 (five 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 30 June 2020 , pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Olga Chernishova Georgios A. Serghides Deputy Registrar President