Communicated on 16 March 2020 Published on 18 May 2020

THIRD SECTION

Application no. 29567/19 CHEMIMART LIMITED against Malta lodged on 28 May 2019

STATEMENT OF FACTS

The applicant, Chemimart Limited, is a Maltese company, registered in Malta in 1968, and its chairman R. Fava is acting on its behalf. It is represented before the Court by Dr M. Camilleri and Dr E. Debono , lawyers practising in Valletta.

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

On 30 November 1999 the applicant company purchased a property, situated at No. 3 Anglia Flats (2 formerly 39), in St. Anne ’ s square (formerly street) Floriana , Malta (hereinafter “the property”), aware that it was under a lease as explained below.

Prior to the transfer in favour of the applicant company the property was owned by G. Limited which until recently was also a shareholder of the applicant company.

On 1 January 1973 G. Limited had rented (under title of temporary emphyteusis) the property to a third party, for seventeen years, at 80 Maltese lira (MTL) per year (approximately 186 euros (EUR)).

The lease expired on 16 April 1985. However , the tenant 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 a rent provided by law amounting to approximately EUR 373 per year. As of April 2000 the rent was paid to the applicant company in accordance with the increase established by law, namely approximately EUR 532 per year and later, as of 2016, EUR 730 per year.

In 2017 the applicant company instituted constitutional redress proceedings claiming that the provisions of the Ordin ance as amended by Act XXIII of 1979 ‑ which granted tenants the right to retain possession of the premises under a lease ‑ imposed on it as owner 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. The applicant company argued that it needed the property for its own commercial use. It asked the court for compensation for the losses incurred and to order the eviction of the tenants.

According to the Government ’ s expert the sale value of the property in 2015 was EUR 118,000 and its annual rental value was EUR 3,245.

According to the court-appointed expert the sale value of the property in 2015 was EUR 140,000 and the annual rental value was estimated as being in 2015 EUR 4,900, in 2010, EUR 3,494. in 2005 EUR 2,491, in 2000 EUR 1,766, in 1995 EUR 1,266, in 1990 EUR 903 and in 1985 EUR 644.

By a judgment of 31 October 2017 the Civil Court (First Hall) in its constitutional competence found a violation of the applicant company ’ s property rights given the disproportionality in the rent payable. It awarded EUR 5,000 in compensation and ordered that the tenants could no longer rely on the protection of the impugned law to retain possession of the property. A small part of costs were to be paid by the applicant company in relation to two preliminary pleas rejected in part by the court. In awarding compensation the court considered the legitimate aim behind the measure; the lack of foreseeability of an intervention of the law at the time when the owners had rented their property; the delay it took the applicant company to institute redress proceedings; and other similar cases decided by the domestic courts.

The defendants appealed and in their pleadings in defence the applicant company requested the court to confirm the first instance judgment, noting however - without lodging a cross appeal - that they were not in agreement with the amount of compensation awarded by the first-instance court.

By a judgment of 14 December 2018 the Constitutional Court confirmed the first-instance judgment, referring inter alia to Cassar v. Malta , (no. 50570/13, 30 January 2018) where the owners had purchased the property after the introduction of Act XXIII of 1979. No appeal costs were to be paid by the applicant company.

Despite the order of the constitutional jurisdictions to the effect that the tenant could no longer rely on the relevant law, the applicant company was unable to institute eviction proceedings due to the introduction of Act 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.

Relevant questions of domestic law are set out in Amato Gauci v. Malta (no. 47045/06, § 19-22, 15 September 2009).

Section 12B of the Ordinance introduced by Act 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 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 applicant company complains under Article 1 of Protocol No. 1 alone and in conjunction with Article 13 of the Convention that it is still a victim 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. It also considers 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 XXVII of 2018 which has impeded the execution of the judgment in its favour, as a result of which the applicant company considers that it has also suffered a breach of Article 6 § 1 of the Convention.

QUESTIONS TO THE PARTIES

1. Has the applicant company suffered 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 XXVII of 2018, and in particular its Section 12B (11), interfere with the enforcement of a judicial decision in favour of the applicant company, 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 applicant company have at its disposal an effective domestic remedy for its 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 ) ?