Communicated on 1 June 2015

FIFTH SECTION

Application no. 50570/13 Albert CASSAR and Mariella CASSAR against Malta lodged on 23 July 2013

STATEMENT OF FACTS

The applicants, Mr Albert Cassar and Ms Mariella Cassar , are Maltese nationals, who were born in 1945 and 1951 respectively and live in Sliema . They are represented before the Court by Dr Ian Refalo , and Dr Sarah Grech lawyer s practising in Valletta .

A. The circumstances of the case

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

1. Background to the case

On 15 June 1962 a house in Sliema (hereinafter “the property”) owned by a third party was rented out under a contract of temporary sub ‑ emphyteusis to JG, for twenty five years, at 100 Maltese Liras (MTL), approximately 233 Euros (EUR) annually. According to the contract the tenant was responsible for all maintenance works, both ordinary and extraordinary, internally and externally.

On 15 June 1987, by operation of law (Act XXII of 1979), that contract turned into one of lease, and the owner continued to receive rent.

On 11 January 1988 the applicants acquired the property from the above mentioned third party at the price of MTL 11,000, approximately EUR 25,600. At the time the applicants lived in the United Kingdom. Initially they asked JG whether he was willing to vacate the property, but he did not consent to do so. Eventually the applicants agreed that JG and his wife, at the time 76 and 77 years old respectively, would continue to reside in the property against the rent as adjusted by law (EUR 466 yearly ), they thus recognised them as tenants.

In 1993 the applicants returned to Malta. In out-of-court discussions they requested JG and his wife to vacate the premises. Eventually, given the latter ’ s advanced age (80 and 81 respectively) and the fact that the latter ’ s children owned properties of their own - thus it was unlikely that they would return to live in the premises - the applicants decided not to take formal steps to evict them.

However, the applicants were unable to find an apartment to rent in Malta given that, at the time, owners were reluctant to lease property to Maltese residents because of the rent laws in force at the time. In consequence the applicants had to reside in their smaller apartment in the island of Gozo and the first applicant was obliged to commute by boat on a daily basis to get to work.

In 1995 the Maltese rent laws were amended and a free and open market re-established. Subsequent to the change, the applicants found an apartment in Malta which they rented at the price of EUR 2,795 annually. Allegedly the applicants spent EUR 12,000 in maintenance and furnishings.

In 2003, PG, the daughter of JG and his wife, who had been living in England for thirty years in a house she owned, returned to live with her parents in the property in Malta. In 2004 and 2008 respectively her parents passed away.

On 6 June 2008 the applicants requested PG to vacate the property. PG refused and requested that she be recognised as tenant in accordance with Article 2 of Chapter 158 of the Laws of Malta, as she had been residing in the property at the date of her father ’ s death.

The applicants refused to recognise PG as tenant and refused to accept rent from her. They also insisted she had to undertake works in the property as established in the original contract.

PG has a constant and considerable income (a pension of 900 British Pounds (GBP), and during her stay in Malta she was renting her property in England at the price of GBP 1,000 a month), she eventually sold her property in England for GBP 305,000. She recently inherited various assets and sold them at a considerable price. In the constitutional redress proceedings (mentioned below) , she declared that she needed the spaciousness of the property in order to store her parent ’ s furniture.

In 2009, the enactment of Act X of 2009 was meant to ameliorate the position of land owners subjected to controlled rents over their properties. The amendments operated to bring rates of rent up to EUR 185 per year where these were below this figure; however this increase did not apply to the applicants ’ property, the rent of which was already more than EUR 185. According to the current law the rent applicable in the applicants ’ case is increased every three years according to the increase in the index of inflation.

2. Constitutional redress proceedings

On 17 February 2010 the applicant instituted constitutional redress proceedings. They claimed that they were suffering a violation of Article 1 of Protocol No. 1 to the Convention as a result of the laws in force which allowed the tenant to enjoy a title of lease over their property, and made it impossible for them to regain possession of it despite their own need for housing. They noted that they were renting property at EUR 2,795 per month, while they were only earning EUR 39 per month (EUR 466 per year) from their own house, which had a lease market value of EUR 3,500 per month. The applicants further invoked Article 14. The applicants requested the court to order the eviction of the tenant, the latter to pay for ordinary and extraordinary repairs, and to award damages for the loss sustained as a result of the low amount of rent received, and in connection with the disbursements they had to make for their own housing.

By a judgment of 31 October 2011 the Civil Court (First Hall) in its constitutional jurisdiction found a violation of Article 1 of Protocol No. 1 to the Convention as a result of the application of Articles 2 and 12 of Chapter 158 of the Laws of Malta and ordered that the tenant be evicted within four months of the date of judgment. It considered that the rent payable, namely EUR 466 annually was derisory, bearing in mind that such property had a rental market value of EUR 3,000 monthly. Furthermore the burden on the applicants had been greater as this arrangement went on beyond the death of the original lessor, and was now benefitting his daughter.

The court rejected the remainder of the claims.

The Government and the tenant appealed and the applicant cross-appealed.

By a judgment of 22 February 2013 the Constitutional Court reversed the first-instance judgment and found no violation of the said provision, and rejected the remainder of the applicants ’ appeal. It considered that Act XXII of 1979 which provided for the conversion of a temporary emphyteusis to a lease constituted interference with the applicants ’ right of property as it created a forced landlord-tenant relationship for an indeterminate time, during which they could not use their own property and during which they suffered financial losses as a result of the low amount of rent received which was established by the law in force. The interference pursued a legitimate social policy aim, namely the social protection of tenants. However, the applicants, fully aware of the factual and legal situation, opted of their own free will to purchase the property and to enter into the existing agreement with KG, whose emphyteusis had just been converted into a lease on 15 June 1987, and from whom they continued to receive rent. It followed that the applicants ’ had not suffered any imposition in so far as they willingly entered into that contract at a point where the law was crystal clear as to the consequences which would ensue.

3. Subsequent happenings

In or around 2013 the applicants were given notice to vacate the premises they leased as their ordinary residence since 1996. The applicants are now of pensionable age.

B. Relevant domestic law

1. Emphyteusis contracts

According to Article 1494 (1) of the Civil Code, Chapter 16 of the Laws of Malta, emphyteusis is defined as:

“ a contract whereby one of the contracting parties grants to the other, in perpetuity or for a time, a tenement for a stated yearly rent or ground-rent which the latter binds himself to pay to the former, either in money or in kind, as an acknowledgement of the tenure.”

Other articles of the Civil Code related to this form of contract, in so far as relevant, read as follows:

Article 1521 (1)

“A temporary emphyteusis ceases on the expiration of the time expressly agreed upon, and the reversion, in favour of the dominus , of the tenement together with the improvements takes place, ipso jure .”

Article 1505

The emphyteuta shall keep, and in due time restore the tenement in a good state.

Article 1507

The emphyteuta is bound to carry out any obligation imposed by law on the owners of buildings or lands:

Provided that if for the carrying out of any such obligation a considerable expense is required, and the emphyteusis is for a time, the court may, upon the demand of the emphyteuta, compel the dominus to contribute a portion of such expense, regard being had to the covenants of the emphyteusis, to the remaining period of the grant, to the sum of the ground-rent and to other circumstances of the case.”

2. The 1979 Act

Section 12 of Act XXIII of 1979 amending Chapter 158 of the Laws of Malta (the Housing (Decontrol) Ordinance ), in so far as relevant, reads as follows:

“(1) Notwithstanding anything contained in the Civil Code or in any other enactment the following provisions of this section, and of section 12A shall have effect with respect to all contracts of temporary emphyteusis made at any time.

(2) Where a dwelling-house has been granted on temporary emphyteusis –

( a ) for a period not exceeding thirty years, if the contract was made before 2l June 1979, or

( b ) for any period, if the contract is made on or after the date aforesaid, and on the expiration of any such emphyteusis the emphyteuta is a citizen of Malta and occupies the house as his ordinary residence, the emphyteuta shall be entitled to continue in occupation of the house under a lease from the directus dominus -

(i) at a rent equal to the ground-rent payable immediately before the expiration of the emphyteusis increased, at the beginning of the lease of the house by virtue of this article, 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 ground-rent payable immediately before such commencement or the commencement of each subsequent fifteen year period, being an amount not exceeding such ground-rent, as represents in proportion to such ground-rent the increase in inflation since the time the ground-rent to be increased was last established; and

(ii) under such other conditions as may be agreed between them, or failing agreement, as the Board may deem appropriate.

(3) Where on the expiration of an emphyteusis as is mentioned in sub-article (2 )( a ) or ( b ) the dwelling-house is subject to a lease, the provisions of the Reletting of Urban Property (Regulation) Ordinance, shall not apply in respect of such lease:

Provided that where the tenant under the said lease is a citizen of Malta and occupies the house as his ordinary residence he shall, on the termination of the lease, be entitled to continue in occupation of the house under a new lease from the directus dominus at the same rent and under the same conditions as are mentioned in sub-article (2 )( i) and (ii) in respect of the emphyteuta.

(4) On the expiration of a temporary emphyteusis of a dwelling house occupied by a citizen of Malta as his ordinary residence at the time of such expiration, not being an emphyteusis mentioned in sub-article (2) ( a ) or ( b ), the emphyteuta shall be entitled to convert the emphyteusis into a perpetual one under the same conditions of the temporary emphyteusis with the exception of those relating to the duration and the ground-rent. The ground-rent payable with effect from the conversion of the emphyteusis into a perpetual one and until fifteen years from that date shall be equal to six times the ground-rent payable immediately before such conversion, and shall thereafter be increased every fifteen years by so much of the then current ground-rent, being an amount not exceeding such rent, as represents in proportion thereto the increase in inflation since the time the said ground-rent was last established.

(5) If the emphyteuta does not exercise the right granted to him by sub-article (4) within six months from the date such right is exercisable, such right shall, with the necessary modifications, pass to the occupier of the house who shall be entitled to demand, to the exclusion of the emphyteuta, that the dwelling-house be granted to him by the owner in perpetual emphyteusis under the same conditions as could have applied if the emphyteuta had converted the emphyteusis into a perpetual one.”

Section 2 of the Act defined the notion of “tenant” as follows:

( a ) the widow or widower of a tenant provided husband and wife were not, at the time of the death of the tenant, either legally or de facto separated;

( b ) where the tenant leaves no widow or widower such members of the tenant ’ s family as were residing with him or her at the time of his or her death; and

( c ) any sub-tenant in relation to the tenant:

Provided that for the purposes of sections 5 and 12, “tenant” shall not include any of the persons included under paragraph ( b ) or ( c ) of this definition but shall include, instead, the children, and any brother or sister, of the tenant who are not married and who reside with the tenant at the time of his or her death and any ascendant of the tenant who so resides with the tenant.

3. The 1995 amendments

According to section 12(3) of the Housing (Decontrol) Ordinance:

“Where on the expiration of an emphyteusis ... the dwelling-house is subject to a lease, the provisions of the Reletting of Urban Property (Regulation) Ordinance, shall not apply in respect of such lease:

Provided that where the tenant under the said lease is a citizen of Malta and occupies the house as his ordinary residence he shall, on the termination of the lease, be entitled to continue in occupation of the house under a new lease from the directus dominu s at the same rent and under the same conditions....”

According to section 16(3) of the Housing (Decontrol) Ordinance as amended in 1995:

“The provisions of section 12 shall not apply to any contract of temporary emphyteusis entered into on or after the 1st June, 1995.”

4 . The 2009 amendments

The 2009 amendments include the introduction of various articles of the Civil Code, Chapter 16 of the Laws of Malta, which in so far as relevant, and as amended again in 2010, read as follows:

Article 1531C

“( 1) The rent of a residence which has been in force before the 1st June 1995 shall be subject to the law as in force prior to the 1st June 1995 so however that unless otherwise agreed upon in writing after the 1st January 2010, the rate of the rent as from the first payment of rent due after the 1st January 2010, shall, when this was less than one hundred and eighty-five euro (€185) per year, increase to such amount:

Provided that where the rate of the lease was more than one hundred eighty ‑ five euro (€185) per year, this shall remain at such higher rate as established.

(2) In any case the rate of the rent as stated in sub-article (1) shall increase every three years by a proportion equal to the increase in the index of inflation according to article 13 of the Housing (Decontrol) Ordinance ; the first increase shall be made on the date of the first payment of rent due after the 1st January 2013:

Provided that where the lease on the 1st January 2010 will be more than one hundred eighty-five euro (€185) per year, and by a contract in writing prior to 1 st June 1995 the parties would have agreed upon a method of increase in rent, after 1 st January 2010 the increases in rent shall continue to be regulated in terms of that agreement until such agreement remains in force.”

Article 1531E

“ The external ordinary maintenance of a tenement leased prior to 1 st January 2010, save unless otherwise agreed upon in writing between the parties, shall be at the expense of the tenant and not of the lessor.”

Article 1531F

“In the event of a lease of a house used as an ordinary residence made prior to 1 st June 1995 that person who will be occupying the tenement under a valid title of lease on the 1st June 2008 as well as his or her spouse if living together and if they are not legally separated shall be deemed to be the tenant; when the tenant dies the lease shall be terminated:

Provided further that a person continues the lease after the death of the tenant under the same conditions of the tenant if on the 1 st June 2008 -

(i) such person is the natural or legal child of the tenant and has lived with the said tenant for four years out of the last five years; and after 1st June 2008 continues to live with the tenant until his death:

Provided that, if more than one child has lived with the tenant for four years out of the last five years before the 1st June 2008 and they continued to live with the tenant until his death, all such children will continue the lease in solidum ; this lease shall not extend to the wife, husband or offspring of the child, or

(ii) such person is the brother or sister of the tenant, who on the death of the tenant is forty-five years of age or more, or brother or sister of her husband or his wife who is forty-five years of age or more, and who has lived with the tenant for four years out of the last five years before 1st June 2008 and who after that date continued living with the tenant until his death:

Provided that, if there are more than one brother or sister who are over forty-five years of age and who have been living with the tenant for four years out of the last five years before the 1st June 2008 and have continued living with him until his death, all such brothers or sisters shall continue the lease in solidum ; this lease shall not extend to the wife, husband or children of the said brother or sister, or

(iii) such person is the natural or legal child of the tenant, who is younger than five years of age and after 1 st June 2008 has continued to live with the tenant until his death, or

(iv) such person is the natural or legal ascendant of the tenant, who is forty-five years of age, and who has lived with the tenant for a period of four years out of the last five years before the 1st June 2008 and has continued living with the tenant until his death; this lease shall not extend to the wife, husband or children of the ascendant:

Provided that if on the death of the tenant, there are several children, siblings, or ascendants who all satisfy the criteria of paragraphs (i), (ii), (iii) or (iv), all those persons shall have the right to continue the tenancy together in solidum :

Provided further that a person shall not be deemed not to have lived with the tenant for the sole reason that she has been temporarily absent from the residence of the tenant due to work, study or medical care:

Without prejudice to the provisions of this article, a person shall not be entitled to continue the lease following the death of the tenant, unless such person satisfies the means test criteria which the Minister responsible for accommodation may introduce from time to time.”

Article 1540

“(1) The lessor is bound to deliver the thing in a good state of repair in every respect.

(2) During the continuance of the lease, the lessor is bound to make all repairs which may become necessary, excluding, in the case of buildings, the repairs mentioned in article 1556, if he has not expressly bound himself to this effect.

(3) For the purposes of this Title with regard to an urban, residential and commercial tenement, "structural repairs" shall be deemed to be those relating to the structure of the building itself, including the ceilings.

(4) When the lessor in the case of a residence leased prior to the 1st June, 1995 carries out structural repairs which have become necessary not due to his own fault, then the rent shall be increased by six per cent of the costs incurred:

Provided that where the structural repairs have not become necessary due to a fault of the lessee, then the said lessee has the right to terminate the lease even though the period of the lease has not yet lapsed:

Provided that in the cases where the lessor is willing to carry out these repairs, the lessee may choose to carry out such repairs at his expense, and in such an event the rent shall remain unchanged; however the lessee shall in such case have no right for any full or partial compensation for such structural repairs at the termination of the lease.”

Article 1555

“If the lessee uses the thing leased for any purpose other than that agreed upon by the parties, or as presumed in the previous article, or in a manner which may prejudice the lessor, the lessor may, according to circumstances, demand the dissolution of the contract.”

Article 1555A

“(1) In the case of a residential tenement, failure to use the tenement for a period exceeding twelve months shall be deemed to be bad use of the thing leased in terms of article 1555.”

Article 1556

“The lessee of an urban tenement is responsible for all repairs other than structural repairs.”

Article 1570

“A contract of letting and hiring may also be dissolved, even in the absence of a resolutive condition, where either of the parties fails to perform his obligation; and in any such case the party aggrieved by the non-performance may elect either to compel the other party to perform the obligation if this is possible, or to demand the dissolution of the contract together with damages for non-performance:

Provided that in the case of urban, residential and commercial tenements where the lessee fails to pay punctually the rent due, the contract may be terminated only after that the lessor would have called upon the lessee by means of a judicial letter, and the lessee notwithstanding such notification, fails to pay the said rent within fifteen days from notification.”

Article 39 (1) and (4) of Act X of 2009 provided as follows:

“(1) Leases which were in force before the 1 st of June 1995 and which are still in force on the 1 st January 2010, shall continue to be regulated by the laws which were in force before the 1 st of June 1995, other than the provisions of Title IX Part II of Book Second of the Civil Code, Of Contracts of Letting and Hiring, as amended by this Act and subject to any regulations made in virtue of the amendments introduced by this Act.”

“(4) The provisions of Title IX of Part II of Book Second of the Civil Code, Of Contracts of Letting and Hiring, shall also apply to the letting of urban tenements where terminated contracts of emphyteusis or sub-emphyteusis have been or are about to be converted into leases by virtue of the law:

Provided that in the case of leases made by virtue of the Housing (Decontrol) Ordinance, the provisions of the said Ordinance defining the person to be considered as the lessee and the provisions providing for the transfer of the lease after the demise of the lessee shall continue to apply notwithstanding the aforesaid provisions of the Civil Code.”

COMPLAINT

The applicants complain ed under Article 1 of Protocol No. 1 to the Convention that the forced landlord-tenant relationship coupled with the low amount of rent received by them made them suffer an excessive individual burden. The breach was even more blatant given that the advantages provided by law were in favour of a third party who was not in need of social housing, and thus the interference did not pursue any legitimate aim.

The applicants further invoked Article 14 in conjunction with Article 1 of Protocol No. 1 in so far as their lease was subject to different and less favourable laws than leases entered into after 1995. Furthermore Act X of 2009 treated the applicants differently in so far as they could not benefit from an increase in rent, unlike owners of other properties which had been rented at a sum lower than EUR 185. Furthermore the sum of EUR 185 had also been discriminatory as it made no distinction according to the size, value or condition of the property.

QUESTIONS TO THE PARTIES

1. H as there been a violation of Article 1 of Protocol No. 1 to the Convention ? In particular, did the interference with the applicants ’ property pursue a legitimate aim and if so was it proportionate to the aim pursued? Did the applicants have at their disposal adequate procedural safeguards aimed at achieving a balance between the interests of the tenants and those of the owners ?

2. Has there been a violation of Article 14 of the Convention in conjunction with Article 1 of Protocol No. 1 to the Convention? In particular, in so far as the 2009 amendments applied an across the board provision which allowed for an increase in rent solely in respect of property the rent of which was below EUR 185, irrespective of the difference in size, state and location of the properties, does the failure to distinguish the applicants ’ situation have an objective and reasonable justification (see, for general principles, Thlimmenos v. Greece [GC], no. 34369/97, § 44, ECHR 2000-IV) ?