SECOND SECTION

CASE OF J&C PROPERTIES LIMITED v. MALTA

(Application no. 16680/21)

JUDGMENT

STRASBOURG

14 November 2023

This judgment is final but it may be subject to editorial revision.

In the case of J&C Properties Limited v. Malta,

The European Court of Human Rights (Second Section), sitting as a Committee composed of:

Jovan Ilievski , President , Lorraine Schembri Orland, Diana Sârcu , judges , and Dorothee von Arnim, Deputy Section Registrar,

Having regard to:

the application (no. 16680/21) against the Republic of Malta lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 26 March 2021 by J&C Properties Limited, registered in Ħamrun, Malta (“the applicant company”) which was represented by Dr M. Camilleri and Dr E. Debono, lawyers practising in Valletta;

the decision to give notice of the application to the Maltese Government (“the Government”), represented by their Agents, Dr C. Soler, State Advocate, and Dr J. Vella, Advocate at the Office of the State Advocate;

the parties’ observations;

Having deliberated in private on 17 October 2023,

Delivers the following judgment, which was adopted on that date:

SUBJECT MATTER OF THE CASE

1. The application concerns a unilaterally imposed lease under Act XXIII of 1979 amending Chapter 158 of the Laws of Malta (‘the Ordinance’) affecting the applicant company’s property at 18 St. Joseph High street, Ħamrun, as of June 2007. At that time the annual rent payable was 390 euros (EUR) which increased to EUR 450 in 2013 and to EUR 459 in 2016 and was to have further increases every three years according to the cost-of-living index. The applicant company lodged constitutional redress proceedings complaining that the application of Article 12 of the Ordinance was in breach of its property rights. It limited the time frame of the claim to the end of December 2017.

2. According to the court-appointed expert, the annual market rental value of the property in 2007 was EUR 4,590, that in 2012 EUR 6,300 and that in 2017 EUR 9,800, for a property whose sale value was estimated at EUR 320,000. The estimated market rent over the relevant period was thus around EUR 87,000. The applicant companies’ own expert estimated the values as being half those just mentioned.

3. By a judgment of 9 July 2019, the Civil Court (First Hall), in its constitutional competence, found a violation of Article 1 of Protocol No. 1 to the Convention and awarded EUR 15,000 in compensation and held that the tenant could no longer rely on the impugned law to maintain title to the property. The court noted the huge discrepancy between the two experts reports and considered that the real value was more likely to be a mean between them.

4. On appeal by the State, by a judgment of 6 October 2020, the Constitutional Court confirmed the first-instance judgment.

5. Following proceedings before the Rent Regulation Board where the rent was increased, in line with the 2018 amendments to the Ordinance, the tenants left the property.

6. Relying on Article 1 of Protocol No. 1 to the Convention alone and in conjunction with Article 13 of the Convention the applicant company complained that it was still a victim of the violation of its Convention rights given the low amount of compensation awarded.

THE COURT’S ASSESSMENT

7. The applicant company complained that it was still a victim of the violation of Article 1 of Protocol No. 1 to the Convention upheld by the domestic courts.

8 . The Court refers to its general principles concerning victim status and its established case ‑ law in cases similar to the present one (see, among many other authorities, Apap Bologna v. Malta , no. 46931/12, §§ 41, 43, 48 and 82, 30 August 2016). The Court observes that the domestic courts have acknowledged the violation and awarded EUR 15,000 in compensation. The Court takes note of the reflections of the Civil Court (First Hall), in its constitutional competence, concerning the two expert reports (namely the applicant company’s expert estimating the property at half the value estimated by the court-appointed expert) and makes them its own. However, even in view of those considerations it finds that the sum awarded for a property having a mean rental value of, for example, around EUR 7,350 annually in 2017, for a violation persisting for a decade was not adequate. This is even more so when the same sum was also meant to cover non ‑ pecuniary damage. This consideration suffices to find that the redress provided by the domestic courts did not offer sufficient relief to the applicant, who thus retains victim status for the purposes of this complaint (see, mutatis mutandis , Portanier v. Malta , no. 55747/16, § 24, 27 August 2019). The Government’s objection to this effect is therefore dismissed.

9 . The Court also dismisses the Government’s objection of non ‑ exhaustion of domestic remedies (in so far as the applicant company had not appealed to the Constitutional Court). The Court has already made relevant considerations related to the Constitutional Court’s effectiveness for the period until 2018 in Cauchi v. Malta (no. 14013/19, §§ 55 and 77, 25 March 2021) and for the period until 2019 in Pace v. Malta ([Committee], no. 53545/19, § 9, 29 September 2022), and Grima and Others v. Malta ([Committee], no. 18052/20, § 8, 7 March 2023). In the latter cases it concluded that the Constitutional Court could not be considered an effective remedy which the applicants were required to undertake in 2019. There is no reason to hold otherwise in the present case.

10. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention or inadmissible on any other grounds. It must therefore be declared admissible.

11. As to the merits, the Court refers to its general principles as set out, for example, in Amato Gauci v. Malta (no. 47045/06, §§ 52-59, 15 September 2009).

12. Having regard to the findings of the domestic courts relating to Article 1 of Protocol No. 1, the Court considers that it is not necessary to re ‑ examine in detail the merits of the complaint. It finds that, as established by the domestic courts, the applicant company was made to bear a disproportionate burden. Moreover, as the Court has already found in the context of the objection on victim status (see paragraph 8 above), the redress provided by the domestic courts did not offer sufficient relief to the applicant company.

13. The foregoing considerations are sufficient for the Court to find that there has been a violation of Article 1 of Protocol No. 1 to the Convention.

14. The applicant company also complained under Article 13 of the Convention in conjunction with Article 1 of Protocol No. 1 that it had not had an effective remedy capable of redressing the violation under Article 1 of Protocol No. 1. This complaint is covered by the well ‑ established case-law of the Court. It is not manifestly ill ‑ founded within the meaning of Article 35 § 3 (a) of the Convention, nor is it inadmissible on any other grounds. Accordingly, it must be declared admissible. Having examined all the material before it and noting that in the circumstances of the present case the applicant remained a victim of the violation complained of (see paragraph 8 above) and that the Government’s submissions in relation to the effectiveness of the Constitutional Court have been rejected (see paragraph 9 above), the Court concludes that it discloses a violation of Article 13 of the Convention in conjunction with Article 1 of Protocol No. 1 in the light of its findings in, for example, Apap Bologna (cited above, §§ 89-91) and Portanier (cited above, §§ 55-56).

APPLICATION OF ARTICLE 41 OF THE CONVENTION

15. The applicant company claimed 18,482 euros (EUR) in respect of pecuniary damage (i.e. rental losses from 2007 to 2017 amounting to EUR 66,050 on the basis of the court-appointed architect’s report, to which were applied the relevant deductions based on Cauchi , cited above), and EUR 5,000 in non ‑ pecuniary damage.

16. The Government considered that no award was necessary.

17. The Court has taken note of the considerations in relation to the two expert reports and made all the considerations applicable in this type of cases, as set out in Cauchi (cited above, §§ 102-07). Noting in particular that the award of the Constitutional Court remains payable if not yet paid, the Court awards the applicant company EUR 7,000 in pecuniary damage and rejects the claim for non ‑ pecuniary damage which can be considered covered by the domestic award.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

(a) that the respondent State is to pay the applicant company, within three months, EUR 7,000 (seven thousand euros) in respect of pecuniary damage;

(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;

Done in English, and notified in writing on 14 November 2023, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Dorothee von Arnim Jovan Ilievski Deputy Registrar President