Recent amendments to the Civil Code confirm that the Civil Courts have jurisdiction to decide on whether a lease agreement is valid or not. This was decided on 10 January 2022 by the First Hall of the Civil Court presided by Mr Justice Toni Abela in Ronnie Camilleri -v- Abdalhady Hamood.
In this case, the Applicant, Ronnie Camilleri filed an application before the Rent Regulation Board. Camilleri explained that in 2018, he had rented a property to Hamood for 20 years. Article 1531A(1) of the Civil Code lists the elements which must be included in a lease agreement, which include the address of the property, the scope of the lease, the lease period and whether the lease may be extended and the amount of the rent. Camilleri is claiming that the use of the property was not specified and that the amount of the rent was also missing in their lease agreement. He asked the Board to declare the lease null and void.
The Rent Regulation Board (RRB) held that the validity of the lease agreement was something that the Civil Court had to decide, and it was not competent to decide this issue and ask that the acts of this case be sent to the First Hall of the Civil Court.
The First Hall of the Civil Court issued a decree on 12 November 2020, in which it made reference to Article 16 of the Reletting of Urban Property (Regulation) Ordinance, which states that issues on the validity of a lease agreement must be decided by the Civil Courts and not by the RRB. This is a 2019 amendment to the Ordinance. The lease agreement subject to this case was signed in September 2018. A new law is retroactive, only when it specifies this and the Court held that since the agreement was signed prior to the amendments, then the old law should apply.
In fact, Article 39(5) of the Third Schedule of the Civil Court, stipulates that the RRB should decide on all issues concerning rents contracted after 1 January 2010.
The Court quoted from a Court of Appeal judgement delivered on 25 January 2019, Cane Camilleri -v- Josephine Micallef where the Court held that it is the RRB which is competent to see whether all the requisites listed in Article 1531A of the Civil Code exist in a lease agreement. Therefore, the Court decided it is not competent to decide this issue but referred the matter to the Court of Appeal to give a final ruling.
The Court of Appeal did so on 26 November 2020 and held that the Civil Court is competent to decide the issue of validity of a lease agreement. The Court of Appeal reasoned that the 2019 amendments also amended Article 1525 of the Civil Code which stipulated that the Civil Court is competent to decide on the validity of lease agreements.
The First Hall of the Civil Court then moved to decide on the validity of the lease agreement.
The Court held that when the law stipulates on the form that is to be used, with the pain of nullity, then if it results that that form was not adhered to, then the Court is bound to declare that the agreement is null. This was also held in Deidre Cachia -v- Gaba Diamonds Company Limited decided by the First Hall of the Civil Courts on 8 November 2000 and Vella -v- Carroll decided by the Court of Appeal on 12 June 1944.
The Court examined the contents of the agreement between the parties. The agreement does not establish the amount of rent, but the tenant has to carry out extensive works in the properties belonging to Camilleri.
Article 1623 of the Civil Code reads: “A contract of letting of work and industry is a contract whereby one of the contracting parties binds himself to do something for the other, for a reward which the latter binds himself to pay to the former.”
The Defendants obligation to carry out works in the properties of the Applicant amounts to a contract of letting of work and industry and therefore this is payment for the concession given by the Applicant. The fact that there is no exchange of money means that there is an exchange as per Article 1485(1). This article of the Civil Code explains that an “exchange is a contract whereby the parties mutually bind themselves to give to one another a thing, not being money”. The Court concluded that this agreement is a sui generis agreement where the law does not provide for and therefore one must apply the general law. The Court also quotes from Article 1533 of the Civil Code which states:
“(1) The rent may be either in money or in kind, or even in a portion of the fruits produced by the thing”
Since there is not value mentioned in the agreement, it cannot be interpreted as a lease. It would be impossible for there to be termination of a lease on the ground that the tenant did not pay the rent as provided in Article 1570 of the Civil Code.
The Court concluded that the agreement is not a lease agreement, but a sui generis agreement and it was not based on Article 1531A of the Civil Code. The Court then moved to reject the claim the agreement was null and void.
Av. Malcolm Mifsud
Mifsud & Mifsud Advocates
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