Published on 6 April 2021

FIRST SECTION

Application no. 19465/20 Agnes GERA DE PETRI TESTAFERRATA against Malta lodged on 8 May 2020 communicated on 15 March 2021

STATEMENT OF FACTS

The applicant, Ms Agnes Gera de Petri Testaferrata , is a Maltese national, who was born in 1949 and lives in Balzan . She is represented before the Court by Dr J. Grech and Dr I. Refalo , lawyers practising in Valletta.

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

The applicant is the owner of the premises originally officially numbered 68 and 68A in Republic Street, Valletta (hereinafter referred to as “the property ” ). They are made up of a ground floor of 90 sqm and a basement of a similar size.

As of 1 October 1977 the property was leased (by the applicant ’ s uncle, from whom she derived her title) to the limited liability company Lombard Bank Malta Limited (“the tenant”) for a total period of thirty years. The first fifteen years were certain, whereas the second were optional to the tenant.

The lease was made subject to the terms and conditions stipulated in the relative lease agreement dated 11 November 1977 including the payment of an annual rent payable quarterly in advance, which started off at the rate of 580 Maltese l ira (MTL) (approximately 1,351 euro s (EUR)) and had to increase up to MTL 934 (approximately EUR 2,176) by the end of the term agreed upon, namely 30 September 2007. The agreement explained how originally there were two leases, which were being consolidated into one lease which was, from then onwards, regulated by this agreement. The purpose for which the lease was given to the tenant was for its banking business and in fact the tenant adjoined the property with another tenement already occupied by it and used them altogether as one of its bank branches.

In April 1990 Lombard Bank Malta Limited became a public limited company and its name changed to Lombard Bank Malta plc.

By means of a letter dated 23 August 2007, the applicant notified the tenant that she did not intend to renew the lease beyond the stipulated thirty ‑ year period and requested the tenant to vacate the property at the end of the lease. However, the tenant continued to occupy the property even after the lapse of the thirty years, claiming that it had a right to an automatic renewal of the lease by operation of the provisions of the special rent laws, namely The Reletting of Urban Property (Regulation) Ordinance (Chapter 69 of the Laws of Malta) by which it continued paying the same amount of rent which had been established in 1977, until 2009.

On 19 June 2009 amendments to the rent laws were enacted by the Maltese Parliament by virtue of Act X of 2009 which came into force on 1 January 2010 providing for rental increases. Following these amendments, the tenant paid rent as increased by 15% every year from the first payment due on 1 January 2010 till 31 December 2013 and by 5% every year from 1 January 2014 onwards, in line with the law. The revised amounts (rounded up to the nearest euro) were as follows:

- EUR 2,420 for the period 1 October 2009 to 30 September 2010

- EUR 2,783 for the period 1 October 2010 to 30 September 2011

- EUR 3,201 for the period 1 October 2011 to 30 September 2012

- EUR 3,681 for the period 1 October 2012 to 30 September 2013

- EUR 3,948 for the period 1 October 2013 to 30 September 2014

- EUR 2,048 for the period 1 October 2014 to 30 September 2015

- EUR 4,857 for the period 1 October 2017 to 30 September 2018

The applicant tried to negotiate a better rent. However, relying on the relevant law the tenant refused to do so, despite the fact that between the years 2016 and 2019 it generated profits of between EUR 6.6 and 14 million.

In 2017 the applicant initiated constitutional redress proceedings claiming that the applicable rent laws, including the amendments which came in force in 2010, were in breach of, inter alia , Article 1 of Protocol No. 1 to the Convention, in particular in view of the low amount of rent payable.

The applicant relied on a valuation by her architect (G.A.) dated 12 May 2017 which showed the clear divergence between the rental value of the property on the free market and the rent payable by law. By way of example, he considered that it had an annual rental value of EUR 29,425 in 2007, EUR 48,400 in 2012, EUR 87,000 in 2017 and EUR 90,000 in 2018 (updated during the proceedings). The Government ’ s architect (P.B.) estimated that it had an annual rental value of EUR 45,200 in 2007, EUR 54,700 in 2017 and EUR 59,500 in 2018. According to the applicant ’ s architect, who testified during the proceedings, the amount which would have been due by way of rent for the period of time commencing from the date when the term of the original lease had lapsed (October 2007) until the end of 2018 was EUR 563,125 while according to the Government ’ s architect it was EUR 581,500.

By a judgment of 28 May 2019 the Civil Court (First Hall) in its constitutional competence upheld the applicant ’ s claims in part. It considered that even accepting the Government ’ s expert ’ s estimates the disproportion was considerable. It thus found a violation of the applicant ’ s property rights and awarded EUR 80,000 in compensation. It further declared that the tenant should no longer enjoy the protection granted to it by Chapter 69 of the Laws of Malta and the relevant amendments, but it refused to evict the tenant. Costs were to be paid by the Attorney General.

Both parties appealed, in particular the applicant ’ s appeal concerned the amount of damage awarded.

By a judgment of 29 November 2019 the Constitutional Court rejected the arguments brought forward by each one of the parties in their respective appeals and confirmed the first-instance judgment in its entirety. In particular it noted that the tenant in the present case was not in need of social accommodation but to operate a commercial bank; and that the economic needs of the country developed with time. Nevertheless, the tenant was not ready to negotiate a new amount of rent in line with the expert ’ s valuations. Further, while it was true that the imposed lease was meant to come to an end in 2028, it could not be guaranteed that the legislator would not interfere again with the system. In any event the applicant had already suffered a disproportionate burden for twelve years in the light of the low amount of rent when compared to the expert ’ s estimates.

As to compensation it noted that the applicant had only relied on the expert ’ s valuations, but it had not been shown that those were real losses, and in any event a constitutional remedy was not intended to cover civil damage, but only pecuniary and non-pecuniary losses in connection with the breach.

Lastly, it confirmed that it would not evict the tenant. While noting in this respect the findings of the European Court of Human Rights in Portanier v. Malta (no. 55747/16, 27 August 2019) it considered that there were no good reasons to reverse the local jurisprudence on the matter. Indeed, the applicant in that case had managed to evict the tenant within a year and a half of the judgment finding that the tenant could no longer rely on the relevant law.

Following the judgment of the Constitutional Court, the sum of EUR 80,000 was paid to the applicant by the State and a new lease agreement was negotiated between the parties to the lease.

The applicant brought to the Court ’ s attention that the total amount of rent paid by the tenant from October 2007 until the date of the Constitutional Court judgment, i.e. November 2019, had been EUR 44,141. However, based on the calculations of the parties ’ architects during the proceedings, a fair rent during such time would have averaged between EUR 620,806 and EUR 602,141.

The relevant provisions 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 ttard Cassar v. Malta (no. 1046/12, §§ 26-27, 30 July 2015).

COMPLAINT

The applicant complains under Article 1 of Protocol No. 1 to the Convention that the Constitutional Court judgment in her favour failed to give her appropriate redress for the violation suffered, she therefore remained a victim of the violation acknowledged by the domestic courts.

QUESTION TO THE PARTIES

Has there been a violation of Article 1 of Protocol No. 1 to the Convention in the present case?