Posted Tuesday, November 8, 2022
Violation of the Right to Property – Post Introduction of Controlled Rent Residential Leases Act
The operations of the Reletting of Urban Property (Regulations) Ordinance, Chapter 69 of the Laws of Malta and Act X of 2009 violated the fundamental rights of the plaintiff as provided by Article 1 Protocol 1 of the European Convention of Human Rights, but the amendments introduced by virtue of Act XXIV of 2021 do not breach these rights. This was held in a judgment delivered by the First Hall Civil Court in its Constitutional competence by Honourable Mr. Justice Grazio Mercieca on the 18th October 2022, in the names of ‘Dottor Anna Busuttil v. L-Avukat tal-Istat et.’
 
The plaintiff, a co-owner of half an undivided share of a casa bottega, inherited in 1997, has been renting the property to a tenant who is also a co-owner way back before 1995, with today’s rent amounting to €138 every six months. The plaintiff claimed that the value of the rent of the property is much more than that established in the dispositions of Chapter 69 of the Laws of Malta which were then amended by Act X of 2009. Furthermore, the plaintiff claimed that these dispositions do not bolster the principle of proportionality between the rights of the owner and those of the tenant, thus going against the provisions of the Constitution and Article 1 Protocol 1 of the European Convention of Human Rights.
 
In his defence, the tenant claimed that he did not violate any rights pursuant to the owner since he was abiding to the law as stipulated by Chapter 69. Furthermore, the State Advocate as the primary defendant to the case, stated that the plaintiff had remedies at law which safeguard her rights, namely Article 1531D of the Civil Code and Article 4A of Chapter 69 which allow for the rent to go up to 2% of the current market value of the property. These remedies were introduced by virtue of Act XXVII of 2018 and Act XXIV of 2021. The State Advocate claimed that these articles have the necessary strength at law in creating social justice in the public interest, provide for a just balance between the tenant and the owner, and in certain cases it could also lead to the termination of the lease.
 
The Court established that the current local free rental market is generally at the rate of 3.5% of the value of the property on the market. Act XXIV of 2021 gives the right to increase the rent up to 2% of the current market value of the property. The Court also stated that jurisprudence from the European Court of Human Rights in Strasbourg established that the owner is entitled to less than the standard commercial rates, due to the consideration of social protection of residential accommodation. Hence, such a rate is just, and from the promulgation of this Act, these dispositions of the law do not violate the fundamental rights to the enjoyment of property. However, prior to the promulgation of this Act, the plaintiff is correct in her claims to be given a fair compensation since the Court acknowledged that the laws at that time did not offer the necessary balance between the rights of the owner and the tenant. The Court interestingly also remarked that the State Advocate’s plea in relation to the fact that the owner has an effective remedy at law to safeguard his property rights, is valid after the promulgation of Act XXIV of 2021.
 
The Court refers to jurisprudence of the Court of Human Rights which state that, in order to establish whether the State’s interference is permissible regarding Article 1 Protocol 1, three elements need to be investigated, these being; (i) that the measure has been carried out under a legal framework; (ii) that its purpose was legitimate; (iii) and to maintain a good and proportional balance between the social goal and the need to respect the fundamental rights of the owners.
 
Article 1 Protocol 1 of the European Convention of Human Rights states that:
 
Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
 
Although the Court infers that the Protocol allows for the interference of enjoyment of the property for the public interest, the Court has to establish if the owner had to bear a disproportionate and excessive burden by examining all the elements involved, not only the conditions of the rent and the interference of the State in rental contractual relations but also on the existence of procedural safeguards that ensure the operations of the system and the impact it has on the rights of the owner are not arbitrary or unpredictable. The uncertainties of the legal, administrative and authoritative practices is a key factor that is taken in consideration on judging the conduct of the State.
 
The Court further remarked that as once the State’s obligation is to safeguard a balance between the private interest in the enjoyment of their property and the need of the State to provide for social accommodation, the compensation that the Court can provide is based on this balance and not connected to the rules of the free market.
 
Thus, the Court concluded that the laws provided by Chapter 69 (before the introduction of Act XXIV of 2021) and Act X of 2009 violate the fundamental rights of the plaintiff as provided by Article 1 Protocol 1 of the European Convention of Human Rights. Furthermore, the balance between the rights of the owner and the tenant has not been reached, as the current rent rate based on these laws do not reflect the current market and the property value for the years between 1987, (which is the year in which the European Convention of Human Rights was transposed into Maltese law) and 2021.
 
Based on this decision the Court liquidated damages in favour of the plaintiff, establishing a compensation of €90,000 reflecting pecuniary damages incurred and also €1,000 in non-pecuniary damages, condemning the State Advocate to pay these amounts together with legal annual interest of 8%.
 
Avv. Ian Barbara
Junior Associate
 
This article may also be accessed on Malta Today.  
 
 
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