Communicated on 9 March 2020 Published on 30 March 2020

THIRD SECTION

Application no. 14019/19 David PSAILA against Malta lodged on 11 March 2019

STATEMENT OF FACTS

The applicant, Mr David Psaila , is a Maltese national, who was born in 1961 and lives in Attard . He 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, may be summarised as follows.

The applicant owns a property, Flat no. 4, Plymouth Flats, Testaferrata Street, Msida , which he acquired (not by inheritance) from his father and uncle (G. and C.) in 1992.

On 1 November 1971 G. and C. rented (under title of temporary emphyteusis ) the property to a third party, for seventeen years, at 65 Maltese liras (MTL) (approximately 151 euros (EUR)) per year, to take effect as of 1 January 1972. The third party rented the property under title of sub ‑ emphyteusis to another third party who did the same, and the latter did the same. The sub ‑ empyhteutae on the date of the termination of the emphyteusis , i.e. 31 December 1989, was a certain B.

On the termination of the emphyteusis B. 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 of MTL 130. By virtue of a contract signed on 2 February 1989 G. and C. granted the property under title of temporary emphyteusis to B., for twenty one years, at MTL 130.

On the termination of the emphyteusis on 1 February 2010 A. (the son of B.) relied on Act XXIII of 1979 amending the Ordinance to retain the property under title of lease, at a rent of EUR 510.69 per year.

By virtue of Act X of 2009 the rent payable according to law was EUR 544.69 per year, as of 1 January 2013 and EUR 555.93 as of 1 January 2016. However, A. had not paid rent since 2010, nevertheless, the applicant did not take up eviction proceedings against him. The property is currently abandoned, uninhabited and access to it is barred.

On 21 November 2017 the applicant 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 him 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. He requested the court to award compensation and to order the eviction of the tenant. The applicant argued that prior to 1979 his family 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 tenant who had been notified did not attend any hearings nor did he make submissions.

According to the Government’s expert, at the time of the drawing up of the report during domestic proceedings, based on a mirror flat given that no access to the flat was possible, the sale value was EUR 59,000 and the rental value was EUR 2,070 annually.

According to the court-appointed expert the sale value in 2010 (date when the grant terminated) was EUR 46,235 and the annual rental value was estimated as being EUR 1,618, and that in 2016 EUR 2,002. The total rent for the period 2010-2016 was EUR 16,100.

By a judgment of 27 September 2018 the Civil Court (First Hall) in its constitutional competence found a violation of the applicant’s property rights, awarded EUR 15,000 in compensation and ordered that the tenant could no longer rely on the impugned law to maintain title to the property.

In particular, the court was satisfied that the applicant had proved his title to the property. It also rejected the Government’s objection of non ‑ exhaustion of ordinary remedies – in so far as the applicant had not sought to evict the tenant on the basis of his failed payments – and opted to take cognisance of the merits of the case. In reply to a further objection by the Government, it considered that while it was true that in 1989 G. and C. granted the property under title of temporary emphyteusis , B. could in any event have held the property under title of lease, as Act XXIII of 1979 had come into force before the prior emphyteusis came to an end. The court was of the view that G. and C. would have acted differently had the legal regime not been imposed.

On the merits, it extensively cited ECtHR and domestic jurisprudence and considered that as a result of Article 12 (2) (b) ( i ) of the Ordinance a forced landlord-tenant relationship had been imposed on the applicant; the rent received by the applicant was extremely low compared to the market value, the economic situation of the country was by far different to that in 1979 when the impugned law was enacted; while because of legislative amendments the rent was increased every three years it still did not reflect the social and economic reality of the country, and the applicant was still bound by the rent stipulated by law which could not be increased further; and recovery of the property was uncertain. It followed that the applicant was suffering a disproportionate burden.

In awarding compensation, the court considered that constitutional redress was not the same as civil damage for losses incurred. Nevertheless, a number of factors had to be taken into consideration, namely that the market value was not payable given the legitimate aim; the disproportionality in the rent payable; the uncertainty as to the recovery of the property and the fact that the violation lasted from 2010 to 2017 (date when their application to the domestic courts was introduced). The court considered that the applicant’s family could not have imagined the increase in property prices in future, when they entered into the emphyteusis contract in 1971. Indeed according to the expert reports there was an evident discrepancy between the rent paid and its market value. The court also considered the most recent sixteen domestic judgments concerning the same subject matter where it had liquidated the same amount of compensation. Moreover, in the present case the applicant had not been particularly involved as it was his brother who took care of the property which was situated in an area notorious for being frequented by persons of a dubious reputation. In that light it considered that EUR 10,000 in pecuniary damage and EUR 5,000 in non-pecuniary damage was adequate compensation.

The court refused to order the eviction of the tenant, considering that it was not the appropriate court to take such action. It sufficed to consider that the impugned law could no longer have any effect on the parties involved as its application was in breach of the applicant’s rights.

Costs were to be shared equally between the parties.

The applicant did not appeal given that 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 applicant claimed to have been 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).

Further, Section 5 (3) (b) of the Ordinance reads as follows:

“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.”

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 sub-articles.

(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 sub-article (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 applicant complains that the introduction of Act No. XXVII of 2018 which impeded the execution of the judgment in his favour, resulted in a breach of Article 6 § 1 of the Convention.

QUESTIONS TO THE PARTIES

1. 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 applicant, 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)?

2. If so, bearing in mind that the applicant could have undertaken, even prior to the lodging of the constitutional proceedings, and may still today, undertake ordinary proceedings before the Rent Regulation Board to evict the tenant (following his failed payments as of 2010), did the applicant suffer a significant disadvantage in relation to the interference with the enforcement of the decision in his favour of 27 September 2018 (see Borg and Vella v. Malta ( dec. ), no.14501/12, 3 February 2015?