Communicated on 27 March 2020 Published on 2 June 2020

THIRD SECTION

Application no. 30806/19 Marie Louise BALDACCHINO and Sergio FALZON against Malta lodged on 6 June 2019

STATEMENT OF FACTS

The applicants, Ms Marie Louise Baldacchino and Mr Sergio Falzon, are Maltese nationals, who were born in 1962 and 1964 respectively and live in Luqa and Tarxien . They are represented before the Court by Dr M. Camilleri, a lawyer practising in Valletta.

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

The applicants, siblings, co-own a property, ‘ Marserg ’ St. Thomas Street, Fgura , which they inherited from their parents.

On 8 July 1968, the applicants ’ mother rented (under title of temporary emphyteusis) the property to a third party, for seventeen years, at 80 Maltese liras (MTL) (approximately 186 euros (EUR)) per year. In 1974 the third party rented the property under title of sub-emphyteusis to another third party (Couple F.) until the end of the concession which was meant to expire on 7 July 1985.

On an unspecified date, Couple F. 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, at the rent according to law. Thus, in line with the law, in 1985 the rent was increased to MTL 160 per year (approximately EUR 373) and was to increase again in fifteen years ’ time . In the year 2000 the rent being paid was MTL 320 (approximately EUR 745) (which was more than that allowed by law which should have amounted to approximately EUR 519).

With the introduction of Act X of 2009 the rent increased every three years according to the cost of living index. I n 2015 the rent payable was EUR 720.50. Following a failed attempt to reach an agreement on a new lease the owners refused to accept the rent and the tenants (Couple F.) started depositing in court EUR 1,000 per year in rent.

In 2017 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 that the tenants no longer be able to rely on the above-mentioned law to retain possession of the property.

During these proceedings the tenants offered to pay EUR 3,567 annually on condition that no further increase of rent be imposed. The tenants were also ready to enter into an obligation that their children would not inherit the lease as allowed by law, once they died. The applicants noted that the court-appointed expert had consid ered the rental value to be EUR 4,350 and that until they instituted proceedings the tenants had only offered to pay EUR 1,000.

According to the Government ’ s expert, at the time of the drawing up of the report (2018), the property had a sale value of EUR 130,000 and had a rental value of EUR 3,300 annually bearing in mind the improvements made by the tenants.

According to the court-appointed expert the sale value of the property in 2016 was EUR 146,000 and the annual rental value was estimated as being in 1985 EUR 863, in 1990 EUR 1,269, in 1995 EUR 1,827, in 2000 EUR 2,610, in 2005 EUR 4,002, in 2010 EUR 4,220, in 2015 and 2016 EUR 4,350. Thus, the total rental value betw een 1985 and April 2016 was EUR 93,217, on the basis of improvements made b y the tenants (amounting to EUR 4,360), while the total rent paid for that period had been EUR 16,765.50.

By a judgment of 30 January 2018 the Civil Court (First Hall) in its constitutional competence found a violation of the applicants ’ property rights, awarded EUR 15,000 in compensation and declared that the tenants could no longer rely on the impugned law to maintain title to the property. No costs were to be paid by the applicants.

In particular, the court rejected the Government ’ s objection of non ‑ exhaustion of ordinary remedies, as it considered that the Rent Regulation Board ( ‘ RRB ’ ) was not an effective remedy as it would not have allowed the eviction of the tenants who were protected by law. Nor could the negotiations between the parties, who were not on an equal footing, be considered as an alternative remedy. The court was also satisfied that the applicants, sole heirs of their parents, had proved their title to the property.

On the merits, the court found a violation in line with European and domestic well-established case-law noting in particular the less weighty legitimate aim today in comparison to 1979 (especially in view of the liberalisation of the rental market in 1995 which however, and without justification, did not affect leases such as those in the present case) and the discrepancy between the rent established by law and that on the open market, irrespective of any improvements done by the tenants which both by law and by contract had to remain to the advantage of the owners.

As requested by the applicants, the court ordered that the tenants be prohibited from relying on the relevant law in any future eviction proceedings to be instituted. As to compensation - noting that the courts of constitutional competence did not need to award the market value of the property – in view of the damage caused since 1985, which should however cease in light of the above-mentioned order, it considered that EUR 15,000 plus 5% interest until date of payment would be sufficient compensation.

The parties appealed. The applicants appealed solely in relation to the award of compensation.

By a judgment of 14 December 2018, the Constitutional Court rejected both appeals and confirmed the first-instance judgment. Costs of the appeal were to be shared by the parties.

Act No. XXVII of 2018 which entered into force on 1 August 2018 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 (see Relevant domestic law below).

Thus, the applicants instituted proceedings before the RRB as required by Section 12B of the Ordinance introduced by Act No. XXVII of 2018. However, they considered that this procedure was a lengthy one, leading to a continued status quo for the applicants.

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).

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 sub ‑ 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 payable 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 complain 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 courts given the low amount of compensation awarded as well as the fact that there had been no order to evict the tenants. They also consider that constitutional redress proceedings had not been an effective remedy for the purposes of Article 13. This was even more so gi ven the introduction of Act No. XXVII of 2018 which impeded the execution of the judgment in their favour, as a result of which the applicants consider that they continue to suffer a breach of Article 6 § 1 of the Convention.

QUESTIONS TO THE PARTIES

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

2. 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)?

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)?