Band club lease laws again found in breach of landlords’ fundamental rights to fair hearing and enjoyment of property

In a recent decision delivered by the Constitutional Court concerning the lease of De Paule Band Club in Paola, Parliament was taken to task for enacting laws which undermined the very foundations on which a democratic state is built.

After having obtained an order for the eviction of the band club from their property, the landlords were faced with another unfair, if not absurd situation, which precluded them from enforcing the eviction judgement. The owners had to endure years of injustice, consisting of a forced lease at a nominal rent and unauthorized structural alterations to their property. They had to go through long drawn-out battles before the Rent Regulation Board and the Court of Appeal. If this were not enough the property owners were now expected to accept a forced lease with the very same tenant that was evicted by the Court of Appeal due to its having infringed the previous lease conditions, and this by virtue of a subsequent amendment to the article in question (1531J, Civil Code), as enacted by Act XXVII of 2018. The owners would have none of this and filed a constitutional lawsuit before the First Hall of the Civil Court challenging this law on the grounds that it breaches their right to a fair hearing, as well as their right to property. When that court upheld their claims an appeal was filed by the State Advocate and the tenant band club before the Constitutional Court. The owners themselves filed their cross-appeal, and won. Hereunder are the salient points of this important judgement delivered in October this year.

This is not the first time band clubs have been found benefitting from the archaic and unfair rent laws to the detriment of the owners of the property they lease. Nor is it the first judgement declaring the amended article 1531J of the Civil Code in breach of these human rights.

Article 6 – right to fair trial

Article 6 of the European Convention (First Schedule) incorporated into the European Convention Act lays down that “In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law”.

The Constitutional Court adopted the reasoning of the First Hall in that such a right ought to be upheld not only during the trial, but even thereafter. It explained that the ultimate purpose of this right is to ensure justice is meted out through valid court judgements. The effectiveness and implementation of such judgements is therefore of paramount importance, and forms an integral part of the right to a fair hearing. Measures which impede or otherwise undermine the enforcement of judgements would stand in the way of this basic human right.

Admittedly State interference, be it by the Legislature or by the Executive, may, in “limited and compelling circumstances”, be justified. In fact the State Advocate attempted to bring forward such a justification, on the grounds of predictability and general interest. However, both courts maintained that there was nothing predictable in these measures – it was not foreseeable that the Legislature would intervene to allow band clubs to carry out structural alterations without the owner’s consent; nor was it foreseeable that such a measure would be made to apply retroactively, as in this case, in such a way as to render inapplicable a judgement that was validly obtained and that had become final. Neither was it foreseeable that the State would legislate purposely to sanction one’s contractual infringements; the court was convinced, based on the evidence provided, including an interview and parliamentary debate by the Justice Minister of the time (Owen Bonnici) declaring the Government’s intention to assist the band club, that this amendment was drawn up with this case in mind and with the specific intent of frustrating the execution of the eviction order. If at all, the court maintained, the contrary was to be expected of the State. The Constitutional Court in fact declared this argument was unfounded and vexatious, and went on to state that in a country founded on the rule of law and separation of powers, the legislator’s unjustified interference in court judgements to render them useless and unenforceable, can never be anticipated because it runs counter to these most basic principles upon which the State is built, one being the independence of the Judiciary.

The First Hall held that this intervention by the State was not justified as it reduced to nothing what was otherwise a valid judgement of the Court of Appeal. This not only undermined the significance and independence of the Judiciary, but it also amounted to a clear violation of the plaintiff’s right to a fair hearing as protected under Article 6 of the Convention, given that such a right included the legitimate expectation by a party to a suit that the final decision of the court be respected and enforced. These principles of legal certainty and finality of court judgements are essential requisites to a democratic society based on the rule of law and the separation of powers, the first court held.  This was replicated by the Constitutional Court which declared that the introduction of retroactive legislation was not justified merely if enacted in the ‘general interest’; it would be compatible with the right to a fair hearing, and hence justified, only if there existed ‘compelling reasons of public interest’. The Constitutional Court went on to quote from Okyay & Others vs. Turkey which stated that “the execution of a judgement given by a court is to be regarded as an integral part of the ‘trial’ for the purposes of Article 6 ……. The right of access to a court guaranteed under that Article would be rendered illusory if a Contracting State’s legal system allowed a final binding judicial decision …… to remain inoperative to the detriment of one party”.

Article 1 of the Frist Protocol of the European Convention – the right to enjoyment of one’s property

The First Court held that the amendment to article 1531J constituted ‘an undue interference with the right to peaceful enjoyment of the property’, because after the Court of Appeal had confirmed the tenant club’s breach and ordered its eviction, the amendment imposed on the owners a new indefinite lease to the sole benefit of the club. It therefore considered it disproportionate and rejected it on this ground. However, in its deliberations on this issue the First Hall had considered the intervention to be both lawful (because it was promulgated by a legislative act) and in the general interest (because it concerned a band club in the Maltese social context played an important role).

While the Constitutional Court agreed with the First Hall in that the amendments were not proportionate and were detrimental to the landlords’ rights, it did not share its views regarding the lawfulness and general interest of this State intervention. Considering the measure was given retroactive effect without a valid reason, and that it was done in breach of Article 6 in total disregard to the fundamental principles of legal certainty and the finality of court judgements, and in total disregard to the independence of the Judiciary, it could hardly be deemed lawful. It held that a law which neutralizes a final judgement by a court of law without there being compelling reasons can never be considered lawful. The court did not mince its words, declaring the introduction of this amendment as ‘a clear abuse of power’. Similarly, simply because the measure was intended to safeguard band clubs’ premises does not automatically mean it was in the ‘general interest’. The mere fact that such clubs serve a social purpose and may give a valid contribution within the Maltese community, will not justify any measure. The court went on to state that a measure deliberately protecting band clubs from the legal repercussions of their voluntary breach of their contractual obligations, namely the rescission of the lease and consequential eviction from the premises, can never be deemed a legitimate measure.

Compensation for Human Rights Violation & Interests

The State Advocate appealed for the reduction of the €74,000 compensation awarded by the first court, arguing that the First Hall did not take into account the fact that the amended law provides for an increase in rent. This argument was rejected by the Constitutional Court firstly because it maintained that the State remained in duty bound to compensate for wrongs sustained as a result of its acts or omissions, but also because the rental increase is nevertheless still too low to provide adequate compensation for such injustices. It therefore awarded a higher sum. In so doing it took into account the actual rent lost based on the calculations made by the court appointed architect, yet applying a 20% reduction due to the uncertainty as to whether the plaintiffs would have leased the property afresh immediately at such market rates, post-vacation.

The plaintiffs claimed that the First Hall ought to have awarded interests even though these were not specifically requested in their writ. They based this submission on article 1141 (2) of the Civil Code which states that “interest shall be due as from the day of an intimation by a judicial act, even though a time shall have been fixed in the agreement for the performance of the obligation”. The Court upheld this request stating that there is no need for one to make a specific request for interests in view of what is provided in said article 1141 (2). It also observed that the law does not in itself prohibit the imposition of interests in such cases, and therefore proceeded to award legal interests on the compensation from the date of the judgement of the First Hall.

For more information of issues concerning human rights and property law, contact any member of Iuris Advocates.