The present application concerns a breach of Article 1 of Protocol No. 1 to the Convention in relation to the disproportionate amount of rent received by the applicant company, and the effectiveness of the available remedies in this regard.
CASE OF CHEMIMART LIMITED v. MALTA
(Application no. 29567/19)
21 October 2021
This judgment is final but it may be subject to editorial revision.
In the case of Chemimart Limited v. Malta,
The European Court of Human Rights (First Section), sitting as a Committee composed of:
Krzysztof Wojtyczek, President,
Lorraine Schembri Orland,
Ioannis Ktistakis, judges,
and Attila Teplán, Acting Deputy Section Registrar,
Having regard to:
the application (no. 29567/19) 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”) by a company registered in Malta, Chemimart Limited (“the applicant”), on 28 May 2019;
the decision to give notice to the Maltese Government (“the Government”) of the application;
the parties’ observations;
Having deliberated in private on 28 September 2021,
Delivers the following judgment, which was adopted on that date:
1. The present application concerns a breach of Article 1 of Protocol No. 1 to the Convention in relation to the disproportionate amount of rent received by the applicant company, and the effectiveness of the available remedies in this regard.
2. The applicant company was registered in 1968 in Birkirkara and its chairman R. Fava is acting on its behalf. It is represented before the Court by Dr M. Camilleri and Dr E. Debono, lawyers practising in Valletta
3. The Government were represented by their Agents, Dr C. Soler, State Advocate, and Dr J. Vella, Advocate at the Office of the State Advocate.
4. The facts of the case, as submitted by the parties, may be summarised as follows.
I. Background to the Case
5. On 30 November 1999 the applicant company purchased a property, situated at No. 3 Anglia Flats (2 formerly 39), in St. Anne’s square (formerly street) Floriana, Malta (hereinafter “the property”), aware that it was under a lease as explained below.
6. Prior to the transfer in favour of the applicant company the property was owned by G. Limited which until recently was also a shareholder of the applicant company.
7. On 1 January 1973 G. Limited had rented (under title of temporary emphyteusis) the property to a third party, for seventeen years, at 80 Maltese lira (MTL) per year (approximately 186 euros (EUR)).
8. The lease expired on 16 April 1985. However the tenant relied on Act XXIII of 1979 amending Chapter 158 of the Laws of Malta, the Housing (Decontrol) Ordinance (hereinafter “the Ordinance”), to retain the property under title of lease, at a rent provided by law amounting to approximately EUR 373 per year. As of April 2000 the rent was paid to the applicant company in accordance with the increase established by law, namely approximately EUR 532 per year and as of 2010 increased every three years so that, as of 2016, it was EUR 730 per year.
II. Constitutional redress proceedings
9. In 2017 the applicant company instituted constitutional redress proceedings claiming that the provisions of the Ordinance as amended by Act XXIII of 1979 ‑ which granted tenants the right to retain possession of the premises under a lease ‑ imposed on it as owner a unilateral lease relationship for an indeterminate time without reflecting a fair and adequate rent, in breach of, inter alia, Article 1 of Protocol No. 1 to the Convention. The applicant company argued that it needed the property for its own commercial use. It asked the court for compensation for the losses incurred and to order the eviction of the tenants.
10. According to the Government’s expert the sale value of the property in 2015 was EUR 118,000 and its annual rental value was EUR 3,245.
11. According to the court-appointed expert the sale value of the property in 2015 was EUR 140,000 and the annual rental value was estimated as being in 2015 EUR 4,900, in 2010, EUR 3,494. in 2005 EUR 2,491, in 2000 EUR 1,766, in 1995 EUR 1,266, in 1990 EUR 903 and in 1985 EUR 644.
12. By a judgment of 31 October 2017, the Civil Court (First Hall) in its constitutional competence found a violation of the applicant company’s property rights given the disproportionality in the rent payable. It awarded EUR 5,000 in compensation and ordered that the tenants could no longer rely on the protection of the impugned law to retain possession of the property. A small part of costs was to be paid by the applicant company in relation to two preliminary pleas rejected in part by the court. In awarding compensation the court considered the legitimate aim behind the measure; the lack of foreseeability of an intervention of the law at the time when the owners had rented their property; the delay it took the applicant company to institute redress proceedings; and other similar cases decided by the domestic courts.
13. The defendants appealed and in their pleadings in defence the applicant company requested the court to confirm the first instance judgment, noting however – without lodging a cross appeal – that they were not in agreement with the amount of compensation awarded by the first‑instance court.
14. By a judgment of 14 December 2018, the Constitutional Court confirmed the first-instance judgment, referring inter alia to Cassar v. Malta (no. 50570/13, 30 January 2018) where the owners had purchased the property after the introduction of Act XXIII of 1979. No appeal costs were to be paid by the applicant company.
III. Other information
15. Despite the order of the constitutional jurisdictions to the effect that the tenant could no longer rely on the relevant law, the applicant company was unable to institute eviction proceedings due to the introduction of Act XXVII of 2018 which provided that despite a judgment in their favour, it shall not be lawful for the owner to proceed to request the eviction of the occupier without first availing himself of the new procedure provided by that law.
RELEVANT LEGAL FRAMEWORK
16. The relevant domestic law is set out in Amato Gauci v. Malta (no. 47045/06, §§ 19-22, 15 September 2009) Apap Bologna v. Malta (no. 46931/12, § 25, 30 August 2016), and Cauchi v. Malta (no. 14013/19, § 22, 25 March 2021).
I. ALLEGED VIOLATION OF ARTICLE 1 OF protocol No. 1 to THE CONVENTION
17. The applicant company complained that it is still a victim of the violation of Article 1 of Protocol No. 1 upheld by the domestic courts given the low amount of compensation awarded as well as the fact that there had been no order to evict the tenants. The provision reads as follows:
“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.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
1. Victim status
(a) The parties’ submissions
18. The Government submitted that the applicant company had lost its victim status as the domestic courts had expressly acknowledged the violation and awarded appropriate redress, namely compensation of EUR 5,000 covering both pecuniary and non-pecuniary damage.
19. The applicant company submitted that it was still a victim of the violation upheld by the domestic courts, because the latter had not awarded sufficient compensation for the breach and had not brought the violation to an end.
(b) The Court’s assessment
20. The Court reiterates its general principles concerning victim status as set out in Apap Bologna, cited above, §§ 41 and 43.
21. In the present case, the Court notes that there has been an acknowledgment of a violation by the domestic courts.
22. As to whether appropriate and sufficient redress was granted, the Court notes first and foremost that that the applicant company only became the owner of the property in 1999. It is therefore the subsequent period which must be taken into consideration.
23. The Court further notes that when the applicant company purchased the property, it was aware of the applicable restrictions. Those, limitations, certainly affected the purchase price (see Cassar v. Malta, no. 50570/13, § 88, 30 January 2018). Moreover, the applicant company was aware of the rent payable (which it knew would increase according to law a few months after the purchase), and that it would continue to receive the latter rent for a number of years (at the time increases were provided every fifteen years). It opted nevertheless to purchase the property, indicating that at the time when it acquired the property it was likely to be satisfied with that amount of rent. The Court observes, that in 2000, a few months after it purchased the property, the rent being paid was EUR 532 while according to the Court appointed expert in the same year the market value was EUR 1,766 (see paragraphs 8 and 11 above). Thus, while it amounted to around half the market value the Court can accept that it could be considered reasonable at the time (ibid § 57). It, however, became disproportionate over the two decades that followed (ibid § 58) as evidenced by the findings of the domestic courts, and it is that period which had to be redressed.
24. In respect of that period, despite the above considerations which certainly impact the amount of compensation to be awarded, and even though the market value is not applicable and the rent valuations may be decreased due to the legitimate aim at issue, a global award of EUR 5,000 covering pecuniary and non-pecuniary damage for a property with a rental value of, for example, EUR 4,900 in 2015, appears insufficient for a violation persisting for various years.
25. It therefore appears that the redress provided by the domestic court did not offer sufficient relief to the applicant company, who thus retains victim status for the purposes of this complaint (see, mutatis mutandis, Portanier v. Malta, no. 55747/16, § 24, 27 August 2019).
26. However, the Court also notes that the domestic courts failed to bring the violation to an end. In particular, they failed to order the eviction of the tenants or alternatively to award a higher future rent. While the Constitutional Court confirmed the order issued by the first-instance court that the tenant could no longer rely on the Ordinance the Court cannot ignore that at the time of the Constitutional Court judgment, namely December 2018, the amendments to the Ordinance had already been promulgated and entered into force (compare Cauchi, cited above, § 30). The latter, in particular the new Article 12B (11) of the Ordinance, provided that it would not be lawful for the owner to proceed to request the eviction of the occupier without first availing him or herself of the provisions of that Article. It follows that the declaration confirmed by the Constitutional Court cannot be considered to have had any effect in bringing the violation to an end, so much so that nearly two years after the Constitutional Court judgment the applicant company continues to suffer the same violation of its property rights.
27. It follows that the domestic courts did not offer sufficient relief to the applicant company, who thus retains victim status for the purposes of this complaint and the Government’s objection is dismissed.
(a) The parties’ submissions
(i) The Government
28. The Government submitted that the applicant company had failed to exhaust domestic remedies as it had failed to appeal to the Constitutional Court, despite the fact that the Government had appealed the first-instance judgment finding in favour of the applicant company. In that situation the Constitutional Court bound by the appeal before it and the lack of an appeal by the applicant, could not have increased the compensation, but only confirmed it or lowered it. This was as also recently confirmed in the Constitutional Court judgment of 23 November 2020 in the names of Cassar Barbara vs Attorney General et. The Government noted that the applicant company’s statement that they did not agree with the compensation, could not amount to an appeal under domestic law.
29. The Government considered that the Constitutional Court was an effective remedy and relied on six examples where the Constitutional Court had increased the compensation awarded by the first-instance court, namely Angela sive Gina Balzan vs the Honourable Prime Minister (14/2015) of 31 January 2018 (from EUR 15,000 to 20,000), Azzopardi Josephine proprio et nominee vs the Honourable Prime Minister (93/2014) of 31 January 2019 (from EUR 5,000 to 20,000), Azzopardi Josephine proprio et nominee vs the Honourable Prime Minister (6/2015) of 29 November 2019 (from EUR 20,000 to 38,000), Angela sive Gina Balzan vs the Honourable Prime Minister (16/2015/1) of 8 October 2020 (from EUR 15,000 to 70,000), Michael Farrugia vs the Attorney General et of 6 October 2020 (no increase in pecuniary damage but EUR 5,000 in non-pecuniary damage were added), and Giovanni Bartoli et vs Carmel Calleja also of 6 October 2020 (from EUR 15,000 to 25,000 in pecuniary damage and EUR 5,000 in non-pecuniary damage were added). They noted that even the applicant admitted (see paragraph 39 below) that sometimes the Constitutional Court increased the compensation precisely due to the value of the property, as for example, in the last-mentioned case.
30. They also submitted that the Constitutional Court had abandoned its practice of reducing compensation on the basis that applicants had delayed initiating proceedings. Indeed, it had started to follow the Court’s findings in relation to that issue, as set out in Montanaro Gauci and Others v. Malta (no. 31454/12, § 45, 30 August 2016), as it had done, for example, in Ian Peter Ellis pro et noe vs Major Alfred Cassar Reynaud et of 27 January 2017.
31. It therefore could not be said with certainty that there had been no prospects of success, and by failing to appeal the applicant company had denied the domestic courts the opportunity of developing their case-law.
32. The Government further considered that in so far as her complaint appeared also to include a claim that Article 12B of the Ordinance also infringed her property rights (see paragraph 47 below), such a claim had never been brought before the domestic courts.
(ii) The applicant company
33. The applicant company submitted that an appeal to the Constitutional Court was not an effective remedy in the context of a challenge to rent laws as in the present case. It submitted that, even after the case of Amato Gauci (cited above) the Constitutional Court had continued to reject such claims, for one reason or another. It cited, for example, a series of Constitutional Court judgments overturned by the Court (see Emanuel Said Ltd vs Carmel Zammit and Doris Attard Cassar et of 5 July 2011 (25/2008/1); Franco Buttigieg et vs the Attorney General of 6 February 2015 (70/2012 JA)); and Anthony Aquilina vs the Attorney General et al of 13 April 2018).
34. Alternatively, when such claims had been upheld, the compensation awarded by the first-instance constitutional jurisdiction had been systematically reduced by the Constitutional Court. The applicant relied on the case of Dr Cedric Mifsud and Dr Michael Camilleri (as special mandatories) vs the Attorney General and Andrè Azzopardi of 25 October 2013, where the Constitutional Court had reduced the compensation from EUR 30,000 to 15,000 on the basis that the applicants had taken too long to initiate proceedings; and Maria Ludgarda Borg et vs Rosario Mifsud et of 29 April 2016, with similar circumstances. In this connection, the applicant submitted that before the case of Amato Gauci (cited above), the Constitutional Court would not find a breach of human rights in such situations. Therefore, any action in the Maltese courts before 2010 would have failed. Owners thus could not have been blamed for initiating proceedings at that time.
35. The applicant further relied on the above-mentioned case of Ian Peter Ellis pro et noe, where the Constitutional Court had reduced the award from EUR 50,000 to 15,000; Alessandra Radmilli vs Joseph Ellul et of 14 December 2018, where it had reduced the compensation from EUR 31,000 to 25,000; Maria Stella sive Estelle and John Azzopardi Vella vs the Attorney General, decided on 30 September 2016, where it had reduced the compensation from EUR 20,000 to 5,000; and Rebecca Hyzler vs Attorney General et, of 29 March 2019, where the Constitutional Court reduced the compensation from EUR 20,000 to 15,000.
36. The applicant company also considered that while the Constitutional Court could evict tenants, it had refused to do so, thus failing to rectify the breach. It relied on Portanier (cited above) and gave, as an example, the case of Maria Pia sive Maria Galea vs the Attorney General et of 14 December 2018, where the Constitutional Court had confirmed the amount of compensation of EUR 10,000 but overturned the order for the eviction of the tenants.
37. Furthermore, while the Constitutional Court had more recently taken the approach of ordering that tenants could no longer rely on the impugned law to retain title to property (see Portanier, cited above, § 49), the applicant company noted that that approach had become inconsistent following the amendments to the Ordinance in 2018 (by Act XXVII of 2018), it having been applied to some cases but not to others. Moreover, in its case, the Constitutional Court had confirmed the amount of compensation and the order that the tenants could not rely on the provisions of the Ordinance to continue to reside in the property, knowing that in the meantime amendments had been introduced giving rise to a contradiction.
38. In the case of Brian Psaila vs Attorney General et al, decided by the Constitutional Court on 27 March 2020, the latter had upheld the part of the judgment of the first-instance court stating that the tenants could not rely on Article 12 of the Ordinance to continue residing in the property, considering however that they could have title under the new Article 12B of the Ordinance. In the applicant’s view, this was contradictory because title under Article 12B was dependent on title acquired under the principal Article 12 of the Ordinance. Be that as it may, the situation as it stood was one where the Constitutional Court would find that the law in question did not apply between the parties but would not order eviction. It opted instead to open the door for applicants to initiate eviction proceedings – at least on paper – knowing, however, that in practice and in law such an eviction could not be successful because the RRB would reject the claim in line with the newly enacted Article 12B (11) of the Ordinance, which did not allow for such action.
39. As to the cases relied on the by the Government (see paragraph 29 above), the applicant company noted that in the Balzan case the Constitutional Court had increased the compensation because it had wanted to keep the amount of compensation awarded in line with other cases. Moreover, the title of lease in that case was under Article 12A of the Ordinance, and the ECHR had already found that during a certain amount of years the applicants could have evicted the tenants. As to the two other Aquilina cases – only two of fifteen cases lodged by the same person and concerning the same legal provision – the Constitutional Court had increased the damages in one case because the first-instance court had only awarded compensation in respect of non-pecuniary damage (known in domestic law as moral damage), and in the second case because of the value of the property (as was the case in Giovanni Bartoli et). However, in another of the cases lodged by the same person, namely Azzopardi Josephine proprio et nominee vs the Honourable Prime Minister (72/2015), the Constitutional Court had decreased the award from EUR 98,000 to 20,000, which had been the standard sum it had been awarding in the cases lodged by Mr Azzopardi. As to the case of Michael Farrugia, the Constitutional Court had not increased the pecuniary damage but solely awarded non-pecuniary damage which had not been awarded by the first‑instance court.
(b) The Court’s assessment
40. The Court reiterates its general principles as set out in Cauchi, cited above, §§ 45-50.
41. In Cauchi, §§ 55 and 77, the Court has already found that bearing in mind the parties submissions which were nearly identical to those in the present case, and the Court’s case-law on the matter, at the end of 2018, following the first-instance judgment in the applicant’s case, an appeal to the Constitutional Court could not be considered an effective remedy, and that it was therefore not unreasonable for her to come directly to the Court (in the absence of an appeal by the defendants).
42. The Court notes that the additional cases relied on by the Government to substantiate their contention that the Constitutional Court is an effective remedy in this type of complaint are all dated 2020. Thus, while there appears to be a good indication that the Constitutional Court’s practice is evolving, nothing has been brought to the Court’s attention to dispel its earlier conclusions that the Constitutional Court could not be considered an effective remedy at the relevant time, namely 2017-2018.
43. It is true that in the present case, given that the Government appealed and that the applicant company having considered the award of the first-instance court low (as shown by its statements during the appeal proceedings), it may have been more appropriate for it to attempt this avenue nonetheless, at least by means of a cross-appeal. At that stage the applicant had little to lose (save for costs) by lodging a cross-appeal. Nevertheless, and in the interests of coherence, given the ineffectiveness of an appeal before the Constitutional Court at the time, the applicant cannot be blamed for having, in line with this Court’s case-law as it stood at the time, failed to appeal to the Constitutional Court.
44. It follows that the Government’s objection that the applicant failed to exhaust domestic remedies by not appealing to the Constitutional Court is dismissed.
45. In so far as the Government raised an objection in relation to the applicant’s arguments in relation to Article 12B, which had never been brought before the domestic courts, the Court considers that bearing in mind its findings at paragraph 53 below, it is not necessary to deal with this objection.
46. The Court notes that this complaint is neither manifestly ill-founded nor inadmissible on any other grounds listed in Article 35 of the Convention. It must therefore be declared admissible.
1. The parties’ submissions
47. The applicant company submitted that an excessive and disproportionate burden was put on it due to the extension of the tenants’ rights at law for an inconsequential rent. Moreover, there had been no procedural safeguards available. It relied on the general principles and conclusions established in the Court’s case-law concerning such cases. It also considered that the new Article 12B did nothing to ameliorate the situation and only continued to perpetrate the violation.
48. The Government submitted that there had been no violation of the invoked provision, and in any event the domestic court had awarded the applicant company compensation. Subsequent to that judgment the applicant company could rely on Article 12B to ameliorate the situation, as shown by the examples submitted to the Court.
49. They further noted that the applicant company purchased the property in 1999, at a time when it was aware of the law in force and knowing that the tenants had opted in 1985 to extend their title under that law. The latter had to be given decisive weight in the assessment of proportionality according to the Court’s case-law. Indeed, there was no doubt that when the applicant company purchased the property it would have done so at reduced prices given the restrictions which existed over the property.
2. The Court’s assessment
50. The Court refers to its general principles as set out, in Cassar (cited above, §§ 44-50, and its considerations at §§ 57-59), and Amato Gauci (cited above, §§ 52-59).
51. It further refers to its considerations set out at paragraph 22 above.
52. 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 was made to bear a disproportionate burden. Moreover, as the Court has already found in the context of the applicant’s victim status (see paragraph 27 above), the redress provided by the domestic courts did not offer sufficient relief to the applicant company.
53. Furthermore, the Court considers that – without having to address the effectiveness or otherwise of the procedure introduced by Act XXVII of 2018 for the purposes of this complaint – even assuming that the new Article 12B of the Ordinance provided for any relevant and effective safeguards, these had no bearing on the situation suffered by the applicant company until the introduction of these amendments in 2018.
54. The foregoing considerations are sufficient to enable the Court to conclude that there has been a violation of Article 1 of Protocol No. 1 to the Convention.
II. ALLEGED VIOLATION OF ARTICLE 13 OF THE CONVENTION
55. The applicant company complained that constitutional redress proceedings were not an effective remedy for the purposes of Article 13 of the Convention, which reads as follows:
“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”
56. The Court notes that the complaint is neither manifestly ill-founded nor inadmissible on any other grounds listed in Article 35 of the Convention. It must therefore be declared admissible.
1. The parties’ submissions
57. Relying on the Court’s case-law, particularly Apap Bologna (cited above), which applied equally to the present case, the applicant company submitted that it had not had an effective remedy in relation to the breach of its property rights, as required by Article 13 of the Convention. In particular, the domestic courts had systemically failed to prevent the continuation of the violation and provide adequate redress, as had happened in its case. It emphasized that when eviction was ordered by the first instance-court it would be revoked by the Constitutional Court. Furthermore, it considered that the introduction of Article 12B of the Ordinance in 2018 showed a continued reluctance by the State to provide an adequate remedy.
58. The Government insisted that constitutional redress proceedings, including an appeal to the Constitutional Court, were effective remedies in relation to the applicant company’s complaint on the basis of submissions similar to those made in previous cases. In relation to the Constitutional Court (relying on specific cases where it had increased compensation on appeal (see paragraph 29 above)), they considered that the applicant company had of its own volition chosen not to appeal, despite a possibility of success, and that this should militate against the finding of a violation of Article 13.
59. They further considered that eviction would not always be necessary, and that it would be draconian to evict a tenant, outside of the context of an Article 6 compliant procedure to that effect. They insisted that eviction should only be ordered by the competent court, because the result of eviction proceedings was not automatic. They considered that an individual may wish to argue that he has another title to the property (as for example a contract between the parties), which did not derive from the impugned law. In this connection the Government relied on the case of Robert Galea vs Major John Ganado (no. 41/2017), decided by the RRB on 24 September 2018 and by the Court of Appeal on 25 February 2019, where, however, both courts found that the tenants had no other title to the property (as the contract between the parties had ultimately been based on the impugned law and could not be seen separately). The Government was of the view that the most reasonable remedy would be monetary compensation which remedies the past violation and prevents any future violation.
60. Moreover, the Government argued that even if constitutional remedies were deemed to be insufficient, the aggregate of the remedies available to the applicant satisfied the requirements of Article 13. They referred to the new Article 12B of the Ordinance, which provided the applicant with the possibility of evicting the tenants and requesting an increase in rent.
2. The Court’s assessment
61. The Court reiterates its general principles as set out in Apap Bologna, cited above, §§ 76-79.
62. The Court has repeatedly found that although constitutional redress proceedings are an effective remedy in theory, they are not so in practice in cases such as the present one. In consequence, they cannot be considered an effective remedy for the purposes of Article 13 in conjunction with Article 1 of Protocol No. 1 concerning arguable complaints in respect of the rent laws in place, which, though lawful and pursuing legitimate objectives, impose an excessive individual burden on applicants (see Portanier, cited above, § 53).
63. The Court refers to its findings at paragraph 42 above and considers that in the present case an appeal to the Constitutional Court could not be considered an effective remedy at the material time. Indeed, quite apart from the issue of compensation, the applicant company was left with an order which was of no consequence given the 2018 amendments (see Cauchi, cited above, § 31), as a result of which it remained a victim of the violation (see paragraph 27 above).
64. In so far as the Government relied on the new procedure introduced under Article 12B of the Ordinance, the Court notes that this new procedure introduced in 2018 was only available to the applicant company after it lodged its constitutional application and a few months before it was decided by the Constitutional Court. Its effectiveness is thus to be examined as a remedy following the finding of a violation by a domestic court. Indeed, the Court has also already found that this was not effective in circumstances similar to those of the present case (ibid., § 85).
65. The foregoing considerations are sufficient to enable the Court to conclude that the aggregate of the remedies proposed by the Government did not provide the applicant company with an effective remedy.
66. There has accordingly been a violation of Article 13 of the Convention.
III. OTHER ALLEGED VIOLATIONS OF THE CONVENTION
67. Lastly, the applicant company complained that the introduction of Act XXVII of 2018 impeded the execution of the judgment in its favour, as a result of which it considered that it was suffering a breach of Article 6 § 1 of the Convention, which reads as follows:
“In the determination of his civil rights and obligations … everyone is entitled to a fair … hearing … by [a] … tribunal …”
68. The Government submitted that the applicant company had failed to bring a new set of constitutional redress proceedings in relation to her complaints under Article 6. Thus, the Maltese constitutional jurisdictions had not had the opportunity to assess whether Article 12B of the Ordinance complied with the Convention, thereby denying the Court the benefit of the views of the domestic courts.
69. The applicant company considered that just as much as it was not required to institute a new set of constitutional redress proceedings to complain under Article 13 it should not be made to do so for a complaint of non-enforcement under Article 6. All these complaints were connected to the main Article 1 of Protocol No. 1 complaint which had been upheld by the domestic courts. It noted that Act XXVII of 2018 introducing Article 12B had entered into force in April 2018, that is, while the constitutional redress proceedings had been underway. At the time, it had had a legitimate expectation, based on case‑law, that following the judgment in its favour it would be able to start proceedings to evict the tenants. However, Article 12B (11) had put a stop to that expectation. It was of the view that in such a situation it should not be required to restart constitutional redress proceedings to seek to put an end to the breach of her rights under Article 1 of Protocol No. 1 which had persisted over so many years.
70. In Cauchi (cited above, § 96), concerning the same complaint, the Court has already considered that there was no suggestion that the constitutional jurisdictions would not be an effective remedy for the purposes of this type of complaint, and the Court found that there were no special circumstances absolving the applicant in that case from the requirement to exhaust domestic remedies in this regard. In the present case, nothing has been brought to the Court’s attention capable of altering that finding. The Government’s objection is accordingly upheld.
71. It follows that the complaint is inadmissible for non‑exhaustion of domestic remedies, pursuant to Article 35 §§ 1 and 4 of the Convention.
IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION
72. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
73. The applicant company claimed 62,000 euros (EUR) in respect of pecuniary damage for all the violations complained of, which persisted beyond 2018, in view of the value of the property as determined by the court-appointed expert in the domestic proceedings. It also claimed EUR 15,000 in non-pecuniary damage.
74. The Government submitted that there had been no explanation as to the applicant company’s calculation in respect of pecuniary damage. Moreover, the applicant company had already received rent from the tenants and EUR 5,000 from the domestic courts. They noted that even assuming the calculation was made on the basis of an addition of the rents evaluated by the expert this would amount to a discrepancy of around EUR 46,000 according to their calculation table (since 1985). However, the applicant company had only become the owner in 1999, therefore the discrepancy as of the year 2000 would be EUR 32,000, from which one had to deduct the EUR 5,000 awarded by the domestic court. At the same time in their submissions they considered that the sum claimed in pecuniary damage should not exceed EUR 17,000. In any event, they considered that simply adding up the alleged loss of rent would yield the applicant an unjustified profit for the following reasons: (i) they were only estimates, and not amounts that the applicant would certainly have obtained; (ii) it could not be assumed that the property would have been rented out for the whole period if the tenants had not been protected by the Ordinance ‑ particularly given the boom in property prices over recent years; (iii) the tenants had had to maintain the property in a good state of repair; and (iv) the measure had been in the public interest and thus the market value was not called for. The Government also considered that the claim for non-pecuniary damage was excessive.
75. The Court must proceed to determine the compensation to which the applicant company is entitled for the loss of control, use and enjoyment of the property which it has suffered.
76. The Court notes that quite apart from relying on the expert’s evaluation the applicant company has not explained its calculation. Thus, the Court, in assessing the pecuniary damage sustained, has as far as appropriate, considered the estimates provided and had regard to the information available to it on rental values in the Maltese property market during the relevant period (see, inter alia, Portanier, cited above, § 63).
77. It has also bore in mind the considerations applicable in this type of case as set out in Cauchi (cited above, §§ 103-104). With particular reference to the present case, the Court refers to its considerations set out at paragraph 22 above, in particular the effects of the restrictions on the purchase price and that the owners must have been more or less satisfied for at least a number of years after the purchase of the applicable rent, following which the rent increased according to law. It, however, became disproportionate over the two decades that followed.
78. The rent received and the award of the domestic court, which if not yet paid remains payable, have also been deducted, and interest added to the resulting award (see Cauchi, cited above, §§ 104-106).
79. Bearing in mind all the above, the Court awards the applicant EUR 7,000 in pecuniary damage.
80. Furthermore, the Court awards the applicant company EUR 5,000 in respect of non‑pecuniary damage, plus any tax that may be chargeable.
B. Costs and expenses
81. The applicant company also claimed EUR 3,000 for the costs and expenses it claimed to have incurred in legal fees.
82. The Government submitted that no proof of payment had been put forward.
83. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these were actually and necessarily incurred and are reasonable as to quantum. In the present case, regard being had to the above criteria, the Court rejects the claim for costs and expenses as no proof of payment to that effect has been submitted.
C. Default interest
84. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1. Declares the complaints concerning Article 1 of Protocol No. 1 to the Convention alone and in conjunction with Article 13 admissible and the remainder of the application inadmissible;
2. Holds that there has been a violation of Article 1 of Protocol No.1 to the Convention;
3. Holds that there has been a violation of Article 13 of the Convention in conjunction with Article 1 of Protocol No.1;
(a) that the respondent State is to pay the applicant company, within three months, the following amounts:
(i) EUR 7,000 (seven thousand euros) in respect of pecuniary damage;
(ii) EUR 5,000 (five thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
5. Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 21 October 2021, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Attila Teplán Krzysztof Wojtyczek
Acting Deputy Registrar President