Communicated on 7 April 2020 Published on 2 June 2020

THIRD SECTION

Application no. 58910/19 Benjamin TESTA and Others against Malta lodged on 8 November 2019

STATEMENT OF FACTS

A list of the applicants is set out in the appendix.

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

The applicants are represented before the Court by Dr M. Camilleri and Dr K. Micallef , lawyers practising in Valletta.

The applicants own a property, no. 223, Madonna ta ’ Pinu , F.S. Caruana Street, Birkirkara .

On 17 November 1966, the applicants ’ father rented (under title of temporary emphyteusis ) the property to a third party, for seventeen years, at 50 Maltese liras (MTL) (approximately 116 euros (EUR)) per year. Sometime later, the applicants ’ parents died and the applicants inherited the property.

Following the expiry of the concession in November 1983, the tenants relied on Act XXIII of 1979 amending Chapter 158 of the Laws of Malta, the Housing (Decontrol) Ordinance, (hereinafter “the Ordinance”) to retain the property under title of lease. They started paying MTL 100 per year (approximately EUR 233). As of 16 November 1998, according to law the rent could be increased to MTL 135.63 (approximately EUR 316) per year, as of 16 November 2013 to MTL 191.86 (approximately EUR 447) per year and as of March 2016 to EUR 456.13 per year. However, the tenants continued to pay MTL 100 per year without the further increases granted by law. It appears that the applicants had not asked the tenant to pay the rent with the relevant increases. It was only in 2014 that the applicants refused to accept the rent and asked for a higher rent, at which point the tenant started depositing the MTL 100 in court. At this point the applicants did not institute proceedings to evict her for failure to pay the rent according to law.

During the tenancy Mr Z. died, it was thus only Ms Z. who lived in the property thereafter. She was in 2018, seventy-two years of age and retired receiving a pension of EUR 600 a month. She owned no other property.

In 2018 the applicants instituted constitutional redress proceedings claiming that the provisions of the Ordinance as amended by Act XXIII of 1979 ‑ 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, in breach of, inter alia , Article 1 of Protocol No. 1 to the Convention. They requested the court to award compensation for the damage suffered and to order the eviction of the tenants. The applicants argued that prior to 1979 they had had no other option than to rent the property under title of temporary emphyteusis , in order to avoid it being requisitioned as was common at the time.

The Government objected, inter alia , on the basis that the applicants had had an ordinary remedy to evict the tenants, mainly proceedings before the Rent Regulation Board (“RRB”), on the basis that the tenant had not been paying the rent due.

Relying on the newly introduced (2018) Article 12B of the Ordinance (see Relevant domestic law below), the tenant (also party to the proceedings) argued that the newly enacted procedure amounted to an ordinary remedy which had now cured any prior defects in the law in so far as it had achieved a fair balance, and thus no violation persisted.

According to the court-appointed expert the sale value in 2017 was EUR 105,000 and the annual rental value was estimated as being in 1983 EUR 494, in 1988 EUR 679, in 1993 EUR 933, in 1998 EUR 1,282, in 2003 EUR 1,761, in 2008 EUR 2,420, in 2013 EUR 3,324 and in 2017 EUR 1,662.18 per six months.

By a judgment of 30 May 2019 the Civil Court (First Hall) in its constitutional competence found a violation of the applicants ’ property rights, awarded EUR 20,000 in compensation and declared that the tenants could no longer rely on the impugned law to maintain title to the property.

In particular, the court was satisfied that the applicants had proved their title to the property. It also considered that the fact that the applicants had not taken any other steps did not prejudice their right to bring their claims before the courts of constitutional competence. It also considered that the procedure provided for under the new Article 12B of the Ordinance was outside the parameters of the present case. Moreover, the provision had only been in place since 2018 and could not in any way affect the previous years.

On the merits, the court considered that while the law had a legitimate aim when it was introduced in 1979 the situation in Malta was different in 2019, and the law had created a disproportionate burden on owners. In fact the legislator liberalised the rental market in 1995 with exceptions such as the present one, which was however affected by amendments in 2009 and 2010. The latter amendments allowed for an increase in rent every three years (as opposed to every fifteen years as was the case with the 1979 amendments). However, the quantum of the increase was again limited by the law, thus the disproportionality of the measure persisted, so much so that the legislator felt the need of introducing further changes. In consequence, Act XXVII of 2018 came into force. However, this could only ameliorate future situations and had no impact on the situation until now. There had therefore been a violation of the applicants ’ property rights.

The court refused to order the eviction of the tenant, considering that it was not the appropriate court to take such action. In particular, the court noted that Act XXVII of 2018 also aimed at regulating evictions, and the new Article 12B (11) of the Ordinance provided that an owner could not ask for the eviction of the tenant before going through the new procedure before the RRB, provided by the same new provision. The court considered that it was not for it to decide on the effectiveness of this new remedy. It, however, ordered that the tenants be prohibited from relying on the relevant law to retain title to the property.

For the purposes of compensation, the court considered: the discrepancy in the rent received and the market value; the legitimate aim at issue namely social housing; the location and situation of the property; the fact that additional rooms had been built without a permit; that the tenant took good care of the property; the fact that the applicants continued to accept the rent for thirty-four years, thus, while they had been victims since 1983 they had only brought constitutional redress proceedings in 2018; and the inertia of the State in amending its legislation in order to avoid such a disproportionate burden on owners. It also noted that the improvements made by the tenants had no relevance for the calculation of compensation as this had been their obligation under the law. It therefore awarded EUR 15,000 in pecuni ary damage and EUR 5,000 in non ‑ pecuniary damage. A small part of costs in relation to the tenant ’ s upheld pleas was to be paid by the applicants.

3. Other information

The applicants did not appeal because, as had been confirmed by the European Court of Human Rights, the Constitutional Court was not an effective remedy since it systematically reduced the awards given by the first ‑ instance courts of constitutional competence. The respondent State did not appeal either.

Despite the order of the first-instance court to the effect that the tenant could no longer rely on the relevant law, the applicants were unable to institute eviction proceedings due to the introduction of Act No. XXVII of 2018 which provided that despite a judgment in their favour, it shall not be lawful for the owner to proceed to request the eviction of the occupier without first availing himself of the new procedure provided by that law.

The relevant domestic law is set out in Amato Gauci v. Malta (no. 47045/06, § 19-22, 15 September 2009) and Apap Bologna v. Malta , (no. 46931/12 , § 25, 30 August 2016).

Further, Section 5 (3) (b) and (c) of the the Housing (Decontrol) Ordinance reads as follows:

“(b) The lessor may only refuse to renew the lease, and may only resume possession of the house, at the termination of the lease, if he shows to the satisfaction of the Board, on an application to resume possession, that in the course of the lease, the tenant has failed to pay the rent due by him in respect of two or more terms within fifteen days from the day on which the lessor called upon him for payment, or has caused considerable damage to the house, or otherwise failed to comply with the conditions of the lease or his obligations thereunder, or has used the premises for a purpose other than mainly as his ordinary residence.

(c) The rent payable under the same lease after the date of the first renewal of the lease made by virtue of this sub-article may be increased by the lessor, upon such renewal and after the lapse of every fifteenth year thereafter during the continuance of the lease in favour of the same tenant, by so much of the rent payable immediately before such renewal or before the commencement of each subsequent fifteen year period, being an amount not exceeding the said rent, as represents in proportion to such rent the increase in inflation since the year the rent to be increased was last established.”

Section 12B of the Ordinance introduced by Act No. XXVII of 2018 published on 10 July 2018 and which entered into force on 1 August 2018 reads as follows:

“ (1) Where a person is in occupation of a dwelling house under title of lease created by virtue of a previous title of emphyteusis or sub- emphyteusis which commenced before the 1st June 1995 through the application of article 5, 12, or 12A the following conditions shall, insofar as they are inconsistent with the provisions of the said articles of this Ordinance apply in respect of such lease as from, the 10th April 2018 notwithstanding the provisions of the said articles of the Ordinance or of any other law.

(2) The owner shall be entitled to file an application before the Rent Regulation Board demanding that the rent be revised to an amount not exceeding two percent per annum of the open market freehold value of the dwelling house on the 1st January of the year during which the application is filed and that new conditions be established in respect of the lease.

(3) The procedure applicable to the hearing of applications before the Rent Regulation Board shall apply to the hearing of an application made under s ub ‑ article (1):

Provided that:

( i ) the Housing Authority shall be notified with the application and shall have a right to fully participate as amicus curiae in the proceedings; and

(ii) the tenant and the landlord shall always be entitled to the benefit of legal aid in proceedings filed in terms of this article if they are not in full-time gainful employment; and

(iii) at the initial stage of the proceedings the Board shall conduct a means test of the tenant which shall be based on the means test provided for in the Continuation of Tenancies (Means Testing Criteria) Regulations issued under articles 1531F and 1622A of the Civil Code or any regulations from time to time replacing them.

The means test shall be based on the income of the tenant between the 1st January and the 31st December of the year preceding the year when the proceedings are commenced and the capital of the tenant on the 31st December of the said year.

The means test shall be conducted with particular reference , inter alia , to regulations 4 to 8 of the said regulations which shall apply mutatis mutandis.

(4) Where the tenant does not meet the income and capital criteria of the means test the Board shall, after hearing any evidence and submissions produced by the parties, give judgement allowing the tenant a period of five years to vacate the premises. The compensation for occupation of the premises payable to the owner during the said period shall amount to double the rent which would have been payable in terms of articles 5, 12 or 12A.

(5) Where the tenant meets the income and capital criteria of the means test the Board shall proceed according to the following subarticles .

(6) In establishing the amount of rent payable in accordance with sub-article (1) the Board shall give due account to the means and age of the tenant and to any disproportionate burden particular to the landlord and it may determine that any increase in rent shall be gradual. The Board, after briefly hearing the parties and examining any evidence which it considers relevant, may also order that an increased amount of rent be paid whilst the hearing of an application filed in terms of sub-article (1) is pending.

(7) Where an amount of rent is established in terms of sub article (1) that rent shall apply in respect of the lease of the dwelling house, unless the lease is previously terminated, for a period of six years, after which it shall be subject to being revised in accordance with sub-article (1) unless an agreement is reached between the parties.

(8) (a) Upon the happening of a material change in circumstances during the continuance of a lease established in accordance with article 5, 12 or 12A the owner shall be entitled to file an application before the Board demanding that the conditions of the lease be revised on account of their causing a disproportionate burden upon him.

(b) The owner may also demand the dissolution of the lease if he can prove through unequivocal evidence that the tenant is not a person in need of the social protection provided by articles 5, 12 or 12A and by this article:

Provided that:

( i ) the provisions of paragraph (a) of this sub-article shall not apply where the hearing of an application under subarticle (1) is pending or has been determined for less than three years;

(ii) the tenant shall always be deemed to be a person not in need of the social protection provided by articles 5, 12, 12A and by this article if the Housing Authority or the landlord offer alternative accommodation suitable to the tenant and guarantees the availability of such accommodation to the tenant for at least ten years for a rent which is not in excess of that which would have been payable by the tenant had the tenant continued the lease under articles 5, 12 or 12A.

(9) (a) Any person who has a right to be recognised as a tenant in terms of the proviso to the definition "tenant" in article 2 shall, unless the said is a person referred to in paragraph (a) of the said definition, only acquire a right to occupy the dwelling house for a period of five years upon the expiration of which he shall vacate the said dwelling house. The compensation for occupation of the dwelling house payable to the owner during the said period shall, unless the occupier meets the income and capital criteria of the means test referred to in paragraph (iii) of sub-article (3), amount to double the rent which would have been payabl e in terms of articles 5, 12 or 12A.

(b) Any dispute as to whether the occupier meets the criteria of the means test may be referred by either party to the Board by application and the provisions of sub ‑ article (3) shall apply.

(10) The provisions of article 1555A of the Civil Code shall apply in respect of any lease which came into effect by virtue of articles 5, 12, 12A or this article.

(11) The provisions of this article shall also apply in all cases where any emphyteusis , sub- emphyteusis or tenancy in respect of a dwelling house regulated under articles 5, 12, or 12A has lapsed due to a court judgment based on the lack of proportionality between the value of the property and the amount receivable by the landlord and the person who was the emphyteuta or the sub- emphyteuta or the tenant still occupies the house as his ordinary residence on the 10th April 2018. In such cases it shall not be lawful for the owner to proceed to request the eviction of the occupier without first availing himself of the provisions of this article.”

COMPLAINTS

The applicants complained under Article 1 of Protocol No. 1 alone and in conjunction with Article 13 of the Convention that they were still victims of the violation of Article 1 of Protocol No. 1 upheld by the domestic court given the low amount of compensation awarded as well as the fact that there had been no order to evict the tenants. They also considered that constitutional redress proceedings were not an effective remedy for the purposes of Article 13. This was even more so given the introduction of Act No. XXVII of 2018 which impeded the execution of the judgment in their favour, as a result of which they considered that they were suffering a breach of Article 6 § 1 of the Convention.

QUESTIONS TO THE PARTIES

1. ( a) Bearing in mind the specific circumstances of the case, in particular the actions and/or omissions of the applicants before and after 2014, are the applicants still victims of a br each of Article 1 of Protocol No. 1 to the Convention?

( b) Has there been a violation of Article 1 of Protocol No. 1 to the Convention in the present case (see Amato Gauci v. Malta , no. 47045/06, 15 September 2009)?

2. ( a ) Did the action of the national authorities, namely the introduction of Act No. XXVII of 2018, and in particular its Section 12B (11), interfere with the enforcement of a judicial decision in favour of the applicants, unduly delaying and possibly preventing its execution, in breach of Article 6 § 1 of the Convention (see Immobiliare Saffi v. Italy [GC], no. 22774/93, ECHR 1999-V)?

(b) If so, bearing in mind that the applicants could have after 2014, and may still today, undertake ordinary proceedings before the Rent Regulation Board to evict the tenant (following her incomplete payments as of 2014), did the applicants suffer a significant disadvantage in relation to the interference with the enforcement of the decision in their favour of 30 May 2019 (see Borg and Vella v. Malta , ( dec. ), no. 14501/12, 3 February 2015)?

3. Did the applicants have at their disposal an effective domestic remedy for their complaints under Article 1 of Protocol No. 1, as required by Article 13 of the Convention (see Apap Bologna v. Malta , no. 46931/12, 30 August 2016)?

APPENDIX

No.

Applicant ’ s Name

Birth year

Nationality

Place of residence

1Benjamin TESTA

1952Maltese

Birkirkara

2Alfred ATTARD

1970Maltese

Buġibba

3Jason ATTARD

1973Maltese

Birkirkara

4Emanuela GHERXI

1943Maltese

Birkirkara

5Marika SANT

1973Maltese

Birkirkara

6Alfred TESTA

1954Maltese

Buġibba

7Charles TESTA

1946Maltese

Birkirkara

8Joyce VELLA JAMES

1938Maltese

Birkirkara