FIRST SECTION

CASE OF APAP BOLOGNA v. MALTA

(Application no. 47505/19)

JUDGMENT

STRASBOURG

9 December 2021

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

In the case of Apap Bologna v. Malta,

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

Krzysztof Wojtyczek, President, Erik Wennerström, Lorraine Schembri Orland, judges, and Attila Teplán, Acting Deputy Section Registrar,

Having regard to:

the application (no. 47505/19) 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 a Maltese national, Mr Louis Apap Bologna (“the applicant”), on 6 September 2019;

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

the parties’ observations;

Having deliberated in private on 16 November 2021,

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

INTRODUCTION

1. The case concerns a unilaterally imposed commercial lease under Chapter 69 of the Laws of Malta, in respect of which an insufficient amount of rent (to be paid to the applicant) is provided for by law, as well as the effectiveness of remedies in that regard.

THE FACTS

2. The applicant was born in 1944 and lives in Sliema. He was represented by Dr S. Grech and Dr I. Refalo, lawyers practising in Valletta.

3. The Government were represented by their Agents, Dr C. Soler, State Advocate, and Dr J. Vella, Advocate at the Office of the State Advocate.

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

5. The applicant was originally the owner of one-half undivided share of the premises at nos. 295 and 296 in Republic Street, Valletta, used as a shop, which he inherited on 30 April 1980. The other half undivided share belonged to G & F.

6. The premises had been leased by the applicant’s predecessors in title by means of an agreement signed on 22 January 1922 in virtue of which the premises were leased for a period of four years at the rent of one hundred pounds sterling (GBP) per annum. At the time the owners leased the tenement, the duration and conditions thereof were regulated entirely according to the agreement reached between the parties.

7. Following Acts in 1925 and 1926 granting temporary protection to tenants, in 1933 Act XXI (today Chapter 69 of the Laws of Malta) introduced a perpetual protection for the tenant, with the lease being renewed indefinitely. The owners of the premises at issue were thus forced to continue leasing the commercial premises at the same rent applicable in 1922 and in their situation, they had no legal grounds to evict the tenant.

8. In 1964 the owners managed to negotiate a rent of GBP 150.

9. By a contract of 11 September 1980 G & F and the applicant partitioned the property, each keeping half of the shop with a separate entrance, thus the applicant became the full owner of the interconnected shop at no. 296.

10. At around the same time, following two successions and two contracts whereby part of the tenancy rights was transferred, the tenancy of the shop nos. 295/296 came into the hands of another three tenants K. I. and V. The latter were not recognised by the landlords. Moreover, it appeared that they had also entered into agreements with third parties affecting the running of the shop. Eviction on these grounds was also unsuccessful.

11. The landlords continued to refuse rent which as of 18 April 2001 began to be deposited in court. The first deposit was made on the 18 of April 2001 and was for the amount of 2,828.84 Maltese liri (MTL) which covered the rent from 22 January 1982 until 22 January 2001. Subsequent deposits were made for MTL l50 (approximately 395 euros (EUR)) per annum, to cover the period until the end of December 2009.

12. When Act X of 2009 was enacted the rent was increased by law at the rate of 15% per annum for the period between 1 January 2010 and 1 December 2013. Thus, for the years 2010-2013 the annual rent of the entire shop (nos. 295/296) was EUR 401.82, EUR 462.09, EUR 531.41 and EUR 611.11 respectively. For the period commencing 1 January 2014, the rent according to law was to increase according to the Index of Commercial Value of Property (ICVP) which had to be enacted by the competent Minister, or (in default) the rent was to increase by 5% per annum. Since the ICVP was never published the rent increased by 5% every year as follows: EUR 641.67, EUR 673.75, EUR 707.44, EUR 742.81, EUR 779.95 and EUR 818.95 for the years 2014-2019 respectively.

13. On 22 February 2017 the applicant filed constitutional redress proceedings claiming a breach of his rights under Article l of Protocol No. 1 to the Convention insofar as his interest in the property at no. 296 was concerned. He argued that he was suffering a disproportionate burden given the low amount of rent being received for the commercial premises at issue when compared to the real rental value of the property.

14 . During these proceedings the court-appointed architect valued the sale value of the property (in its entirety i.e. nos. 295 and 296) in 2017 at EUR 1,500,000 and its rent as being EUR 86,540 annually, having considered its prime location, the nature and good conditions of the premises, as well as the fact that it was a going concern (i.e. an operating business making a profit). In that same year the rent due to the landlords according to the law was approximately EUR 743 annually. According to the same court ‑ appointed architect, having estimated the annual market rents for every year since 1986, the total amount of rent at market prices over the entire period would amount to EUR 1,603,499.

15. By a judgment of 4 June 2018 the Civil Court (First Hall), in its constitutional competence, found, in line with ECtHR’s case law, that the applicant had suffered a violation of his property rights under Article 1 of Protocol No. l to the Convention (but not under the Constitution) given the disproportionate burden he had to carry due to the low amount of rent he was receiving. It awarded him EUR 100,000 by way of compensation for pecuniary and non-pecuniary damage. It apportioned the costs of the lawsuit as to half for the applicant and half for the Attorney General.

16. In determining compensation it considered, in particular, the fact that premises consisted of a shop in a Republic Street Valletta; the rent paid; the rent increases over the years; the current market value; the disproportion between the rent payable and the market rental value; the fact that the lease will end in 2028 according to law; the years during which the applicant suffered an interference but also the interval of time which passed before the applicant instituted constitutional redress proceedings.

17. The parties appealed; the applicant appealed in so far as he considered that the redress was insufficient and was further reduced by the order to pay part costs. He also requested that the premises be returned to him.

18. By a judgment of 29 March 2019 the Constitutional Court confirmed the finding of a violation but reduced the compensation to EUR 55,000 (EUR 50,000 in pecuniary damage and EUR 5,000 in non ‑ pecuniary damage). It refused to order the eviction of the tenants – considering it was not the court with the appropriate jurisdiction to do so – but declared that the provisions of Chapter 69 of the Laws of Malta were to be without effect as regards the relations between the applicant and the tenants, and therefore the latter could no longer rely on those provisions to justify their occupation of the premises. As regards costs, it decided that those at first-instance were to remain as apportioned by that court whereas the costs of the applicant and the Attorney General’s appeals were to be divided as to half for the Attorney General and half for the applicant whereas the tenants had to bear their costs of their cross-appeal.

19. In relation to the compensation the Constitutional Court, reiterating that its award could not reflect civil damage which could be awarded by an ordinary civil court, remarked that the value established by the court ‑ appointed architect reflected the rental value for the entire shop whereas the applicant’s interest was limited only to the divided part of the shop (no. 29). As to the costs awarded at first instance it noted that since the applicant’s constitutional complaints had not been upheld, as opposed to the conventional ones, it was appropriate that he pay the costs for his unsuccessful claim.

20 . Following the Constitutional Court judgment and the lodging of the application with the Court the applicant approached the tenant in order to secure new terms for the lease, as an alternative to lodging eviction proceedings. As a result, a new agreement was signed at a rent of EUR 140 daily, in other words EUR 51,100 per year, which was even more than that which had been estimated by the court-appointed expert. This agreement took effect as of 1 October 2019, and the tenant paid a lump sum to make up fair rent from the date of the Constitutional Court judgment to the start of the agreement. The applicant was satisfied that he was obtaining fair rent following the Constitutional Court judgment.

21. For completeness sake he also informed the Court that subsequently he reached a new agreement with the tenant at EUR 50 daily, in the light of the difficult situation resulting from the outbreak of the Coronavirus pandemic.

RELEVANT LEGAL FRAMEWORK

22. The relevant provision of the Reletting of Urban Property (Regulation) Ordinance, Chapter 69 of the Laws of Malta, enacted in June 1931 and subsequently amended, and those of the Civil Code, Chapter 16 of the Laws of Malta, as amended in 2009, are set out in Zammit and Attard Cassar v. Malta (no. 1046/12, §§ 26-27, 30 July 2015).

THE LAW

23. The applicant complained that the compensation awarded by the Constitutional Court covered the equivalent of one year’s market rental value while the property had been under controlled leases as of the 1920s. He thus considered that he continues to be a victim of a breach of Article 1 of Protocol No. 1 to the Convention which 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.”

24. The Government submitted that the applicant had lost his victim status as the domestic court had given sufficient compensation, as well as a declaration that the tenant could no longer rely on the relevant law to maintain title to the property. This had opened the way for the applicant to institute fresh proceedings before the RRB to evict the tenant, however he had failed to do so. The applicant could not therefore retain victim status on the basis of his inaction.

25. The applicant originally claimed that he had victim status both because the Constitutional Court had not awarded sufficient compensation and because it had failed to evict the tenant. However, in his submissions after communication, following the arrangement reached with the tenant pursuant to the Constitutional Court judgment (as a result of which he did not seek eviction) the applicant submitted that he continued to be a victim of the violation only for the period until the Constitutional Court judgment given that he had not been adequately redressed for the breach suffered until then.

26. 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).

27. 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, as well as because they were based on the property being a going concern, a global award of EUR 55,000 covering pecuniary and non-pecuniary damage for a breach which has persisted for decades in relation to a property with an estimated rental value of, for example, more than EUR 40,000 in 2017 (EUR 86,540 reflecting the rental value of the entire property, see paragraph 14 above), is insufficient.

28 . That is enough to find that the redress provided by the domestic court in the present case did not offer sufficient relief to the applicant, who thus retains victim status for the purposes of this complaint (see, mutatis mutandis , Portanier v. Malta , no. 55747/16, § 24, 27 August 2019).

29. 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.

30. The applicant submitted that he had suffered a violation as upheld by the domestic courts.

31. The Government contested that there had been a breach and noted that in any event it had been redressed.

32. The Court refers to its general principles and their application as set out, for example, in Zammit and Attard Cassar v. Malta (no. 1046/12, §§ 47 ‑ 66, 30 July 2015).

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

35. The applicant complained that the Constitutional Court had not been an effective remedy as provided in 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.”

36. 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.

37. Relying on the Court’s case-law, which applied equally to the present case, the applicant submitted that he had not had an effective remedy in relation to the breach of his property rights, as required by Article 13 of the Convention, since the redress granted by the Constitutional Court was inadequate.

38. The Government submitted that the Constitutional Court was an effective remedy as it had upheld the violation, afforded adequate redress and declared that the applicant could no longer rely on the law to maintain title to the property, opening the door for the applicant to pursue eviction proceedings. While it was true that the Constitutional Court had reduced the award made by the first-instance court this was because the first court had calculated compensation on the value of both properties as prepared by the court-appointed architect. They further noted that the applicant had only managed to obtain a lucrative rental agreement with the tenant as a result of the declaration made by the domestic court, which had put the tenant in a corner in the absence of any other title to hold onto. This went to prove that the remedy was effective.

39. The Court reiterates its general principles as set out in Apap Bologna v . Malta (cited above, §§ 76-79).

40. The Court has repeatedly found that although constitutional redress proceedings are an effective remedy in theory, they are 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 (see, for example, Portanier , cited above, § 53). No domestic case-law has been brought to the Court’s attention to dispel those conclusions, relevant to the material time. Moreover, those conclusions are reinforced by the circumstances of the present case where the applicant had been awarded insufficient compensation for the breach suffered over the years (see paragraph 28 above).

41. This is sufficient for the Court to find that there has been a violation of Article 13 of the Convention taken in conjunction in Article 1 of Protocol No. 1.

42. 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.”

43. The applicant claimed losses of rent from 1980 (date when he inherited the property) to 2019 amounting to EUR 967,871.50, plus interest at 8% in pecuniary damage. The calculation was based on the court-appointed architect’s estimate of loss of rent for the period 1986 ‑ 2017 as amounting to EUR 1,603,499 (see paragraph 14 above) which had to be halved to reflect the value of the applicants property - no. 265 - and to which had to be added the remaining years. The applicant calculated an additional EUR 86,450 for the subsequent two years until 2019 and an additional EUR 21,612 for each of the initial six years as of 1980. He further deducted the EUR 50,000 awarded by the domestic court.

44. The applicant further claimed EUR 20,000 in non-pecuniary damage. The legal representatives indicated their firm’s bank account to receive payment of all the sums awarded by the Court.

45. The Government considered the claims excessive. Firstly, they challenged the claims based on the court-appointed experts’ valuation, as they considered that it had evaluated both properties together. There was therefore no guarantee that only one of the properties (no. 295 in the present case) would fetch half that valuation. While it was true that the applicant did find a tenant at such prices, it was also true that the same tenant had also leased the adjacent premises. Furthermore, the applicant unilaterally decided that the rent payable from 1980 until 1985 was that of EUR 21,612 annually without providing any form of evidence or expert report to substantiate this. Moreover, the addition of EUR 86,450 for the two subsequent years until 2019, when the judgment of the Constitutional Court was delivered on 31 January ( sic. ) 2019, was uncalled for. The applicant had further failed to deduct the rent he had received during such period. They further challenged the calculation of interest which had no support in the Court’s jurisprudence.

46. In any event, they considered that simply adding up the alleged loss of rent according to the valuation was not appropriate for the following reasons: (i) they were only estimates, and not amounts that the applicant would certainly have obtained; (ii) it could not be assumed that the property would have been rented out for the whole period if the tenants had not been protected; (iii) the tenants had had to maintain the property in a good state of repair, even more so in the case of a going concern, and the valuations had been based on any such improvements ; and (iv) the measure had been in the public interest and thus the market value was not called for.

47. The Court must proceed to determine the compensation to which the applicant is entitled for the loss of control, use and enjoyment of the property which he has suffered until the Constitutional Court judgment of 29 March 2019, bearing in mind that an agreement was reached thereafter (see paragraph 20 above).

48. The Court notes that the court-appointed architect’s report in the present case provides market values dating back only to 1986. Moreover, the valuation is based on the fact that in 2017 the property was a going concern (i.e. an operating business making a profit) – a factor dependant on the current tenants – with calculations then being back dated to prior years. Further as noted by the Government the valuation covers both linked properties and does not necessarily reflect the exact value of premises no. 265 on their own. Thus while the court-appointed architect’s valuation is of some relevance and offers an indication of the rental value of the property in assessing the pecuniary damage sustained, the Court has only as far as appropriate, considered the estimates provided and it also had regard to the information available to it on rental values in the Maltese property market during the relevant period (see, inter alia , Portanier , cited above, § 63 and Marshall and Others v. Malta , no. 79177/16, § 95, 11 February 2020).

49. The Court also bears in mind the considerations applicable in this type of cases (see Marshall and Others , §§ 95-97, and Cauchi , § 104, both cited above).

50. Noting in particular that the award of the domestic court remains payable if not yet paid, the Court awards the applicant EUR 238,000 in pecuniary damage.

51. 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. 76639/11, § 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)).

52. Bearing in mind the Constitutional Court’s award in respect of non ‑ pecuniary damage, the Court does not find it necessary to make an award under this head, it therefore rejects this claim.

53. The applicant claimed the sum of EUR 8,690.78, covering EUR 3,839.25 (as per taxed bill of costs) relative to the domestic proceedings and EUR 1,593 relative to an ex parte report used in the domestic proceedings, and a total of EUR 3,258.53 for the costs and expenses incurred before this Court.

54. The Government disputed the costs for the ex parte report, since the applicant had demanded the appointment of a court-appointed expert during the proceedings, it had therefore not been necessary to provide an ex parte report. In any case, the applicant could have demanded that the expenses relative to the ex parte report would be included in the taxed bill of judicial costs. Having failed to do so, the expense, which in any case appears unnecessary, should not be payable by the Government. The Government also considered the claimed costs for proceedings before this Court to be excessive.

55. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these were actually and necessarily incurred and are reasonable as to quantum. In the present case, regard being had to the above criteria, the Court awards the applicant EUR 6,000 in respect of costs and expenses. As requested, the amount awarded is to be paid directly into the bank account designated by the applicant’s representatives.

56. 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 applicant, within three months, the following amounts:

(i) EUR 238,000 (two hundred and thirty-eight thousand euros) in respect of pecuniary damage;

(ii) EUR 6,000 (six thousand euros), plus any tax that may be chargeable to the applicant, 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 9 December 2021, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

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Attila Teplán Krzysztof Wojtyczek Acting Deputy Registrar President