The Maltese Superior Courts in a momentous socio-legal setting recently took the bull by the horns and confronted a legal hot potato: the landowners’ fundamental right to property. The past seventy years have seen the introduction of laws specifically aimed at safeguarding tenants from rising rental costs; an acute problem which required timely legislative intervention. However, at the other end of the spectrum lie the landlords’ rights which have been nibbled at over the years and brought to naught as the Reletting of Urban Property (Regulations) Ordinance granted no right to refuse renewal of the lease. Their efforts in seeking effective possession of their property and adequate income therefrom in a pre-1995 context where. the ‘fair rent’ as established by the protective lease laws as they still stand today is not commensurate with market rates. In a manner reminiscent of Common law pronouncements, Judges Lawrence Mintoff first and later Mark Chetcuti addressed this lacuna by making reference to both European and Maltese jurisprudence and unreservedly declaring that while the State “failed to legislate to safeguard the rights of the owners”, tenants could no longer bank on Chapter 69 of the Laws of Malta and Act X of 2009 to pursue automatic renewal of the rent as these ran counter to the provisions of European Convention on Human Rights and Article 37 of the Maltese Constitution.
Landmark decision by Constitutional Court
On 8th May 2019, the First Hall Civil Court (Constitutional Jurisdiction) presided over by Mr. Justice Lawrence Mintoff in Anthony Debono et v. L-Avukat Ġenerali et delivered a seminal judgment on yet another Maltese case challenging the constitutionality of the Maltese rented property legislation vis-à-vis landowners. The significance of this judgement lies not so much in its declaring the challenged laws to be anti-constitutional and in breach of the owner’s right to property, but rather in the Court’s decision to deny tenants the right to continue relying on such ‘unconstitutional’ laws.
Background – low rent for Sliema property
Plaintiffs Anthony Debono and Simone Dimech owned a requisitioned property on Ġuze’ Ellul Mercer Street which had been rented out to tenant Vincenza Mifsud, the grandmother of defendant Stefan Mifsud. Her nephew, who had been living with his grandmother in the leased property, continued the lease after her death in 1986. The plaintiff’s inherited the housefrom their father who died in 2004. The annual rent was of €203, which had to increase every three years according to the Inflation Index as per Article 1531C of the Civil Code.
In their application, the landlords highlighted the fact that the rent to which their property was subjected had been invariably fixed ex lege this notwithstanding the gradual and exponential rises in the rental market in Malta resulting in an ‘enormous discrepancy’ between the earnings by way of current rent and the returns garnered by the property had it been on the free market. They thus claimed that their fundamental human rights as landowners were being infringed. The owners further explained that the tenants were paying the minimum rent of €203 per annum as established by law yet the provisions of Chapter 69 in force were exclusively tied to the ‘fair rent’ of properties way back in August 1914. These provisions were marginally amended through Act X of 2009 which however brought about ‘insufficient adjustments’ and did not address ‘fair rent’ issues tied with the plaintiffs’ property, which remain tied to 1914 ‘fair rent’. The landlords therefore claimed that as the law stands they have no tangible hope of claiming effective ownership nor real income from the premises as the same law allowed the tenant’s children to continue enjoying the lease. The landowners claimed that they never gave their unencumbered consent to the property being leased under such conditions but they were ‘forced to’ by the requisitional legislation in 1954 as the premises were neither ‘decontrolled nor decontrollable’.
Recourse to securing adjustments to their rent in a manner conducive to just and equitable market practises as safeguarded by Article 6 of the European Convention was rendered unworkable through the limitations of Article 1531C of the Civil Code. Article 1531F was also critiqued for the the way in which protection was discriminately afforded to pre June 2008 dwelling house occupiers at the exclusion of landowners following the 1st of June 2008. In the aftermath of June 2008, nephews of tenants in point of fact did not enjoy the continued effectiveness of the lease acting in their favour whilst this right did not extend to them prior to June 2008. The lack of ‘fair balance’ constituted a deprivation of the property and a serious violation of landlords’ constitutionally-guaranteed and fundamental rights.
Court acknowledges ‘disproportionality’ led to infringement of owners’ constitutional rights
The First Hall Civil Court in its constitutional capacity presided over by Mr. Justice Lawrence Mintoff makes reference to a plethora of judgments. In the case of Ian Peter Ellis et v. Avukat Generali et, the Court had observed that the Rent Regulation Board was bound to fix a rent according to law which however was paltry when compared to the market values. The Court en passant described the chances of regaining possession of the property by the landlords as ‘remote’.
In its evaluation, the court reaffirms the pronouncement of the same Court differently presided over in Vincent Curmi noe et v. Avukat Generali in that the amendments of Act X of 2009 conferred no advantage to landowners owing to the longstanding breach of their fundamental right. The First Hall Civil Court in its constitutional jurisdiction goes a step further by citing Amato Gauci vs. Malta (App no. 47045/06) and Attard & Zammit Cassar v. Malta (App no. 1046/12). In the latter judgment, the EctHR made it clear that the onus of responsibility in ensuring that the “impact on a landlord’s property rights are neither arbitrary nor unforeseeable” is incumbent upon the State and in cases of alleged violation of Article 1 of Protocol Number 1, the Court “must ascertain whether by reason of the State’s interference, the person concerned had to bear a disproportionate and excessive burden.”
This ratio decidendi was reiterated in the well-known Amato Gauci v. Malta judgment wherein the EctHR identified that the disproportionate burden stemmed from a “lack of procedural safeguards in the application of the law and the rise in the standard of living in Malta over the past decades”. Whilst rejecting applicant’s plea of alleged discrimination suffered on the basis of Article 45 of the Constitution, the Court quoted from the Amato Gauci judgment once more and observed that the Court had considered the mens legis to be an attempt to establish a cut-off date from when a decision regarding the family members of the tenant had been reached i.e. they should no longer be entitled to the same protection, without creating any sort of discrimination between dwellers prior to June 2008.
Compensation for violation of constitutional rights ‘not enough’
The Constitutional Court adopted a practical stance towards the concluding part of its pronouncement as it made reference to Cassar Torreggiani v. Avukat Generali et and ultimately opined that damages which were occasioned through the breach of the applicant’s constitutional rights had to borne by the Attorney General in the amount of €20,000.
Nonetheless, in doing so the Court echoed the interpretation given in Strasbourg in the Cedric Mifsud et v. l-Avukat Generali et judgment which held that “in solely ordering compensation whilst still retaining the effectiveness of the present law between the parties, the Court would – rather than bringing the breach of fundamental rights to an end – instead allow the period of unconstitutionality to persist’. Awarding damages alone and in itself is no guarantee that the breach of fundamental rights can be efficaciously remedied.
More significantly, the Court declared such unconstitutionality should be effectively terminated and thus ordered that the tenants may no longer rely on the protection afforded to them by such laws in matters relating to this lease.
Leases predating June 1st, 1995 were declared to be up for scrutiny.
The judgement is currently under appeal.
Salient points
Put succinctly, the Court ordered that:
- The current legal regime bestowing the right to continue renewing the lease indefinitely to sitting tenants constituted a breach of Article 37 of the Constitution and Article 1 of the First Protocol of the European Convention of Human Rights vis-à-vis applicant landowners.
- Attorney General to pay €20,000 in damages to plaintiffs as unconstitutional rent was not reflective of market forces or property value in terms of Article 41 of the European Convention.
- Tenants cannot rely any longer on the provisions of Chapter 69 and Act X of 2009 thus declared unconstitutional and without effect between parties to the action.
Decision reconfirmed
On the 28th of May 2019, the First Hall, Civil Court in its Constitutional Jurisdiction presided over by Mr. Justice Mark Chetcuti declared the indefinite and abusive “forced landlord-tenant relationship” against a negligible rent to be unconstitutional. This decision was the second one to reiterate the same conclusions in the space of a few weeks and it confirms the Court’s understanding regarding the inadequacy of the legal regime as amended in 2010 and the scant comfort this had offered to landlords. In both cases, landloards, faced with no real choice, were made to accept leases without being in a position to “reasonably foresee the extent of inflation in property prices in the decades that followed”.
Such a decision, as read in light of the previous judgment, seems to suggest that the Constitutional Court has every reason to ‘let the decision stand’ and turn impetus into a consistent search for a string of judgments sharing a common and unequivocal rationale: tenants can no longer claim protection under the same legal regime which breaches the constitutional rights of landowners.
For further information on matters concerning property law and leases please contact any member of Iuris Advocates