Last Updated on April 28, 2022 by LawEuro
The case concerns an imposed lease as a result of the application of Chapter 69 of the Laws of Malta. The applicant’s property originally officially numbered 68 and 68A in Republic Street, Valletta, (hereinafter referred to as “the property’) was rented out to a third-party bank for thirty years. On the lapse of the contract, the tenant continued to occupy the property according to its right to an automatic renewal of the lease by operation of the provisions of the special rent laws, namely The Reletting of Urban Property (Regulation) Ordinance (Chapter 69 of the Laws of Malta) by which it continued paying the same amount of rent which had been established in 1977, until 2009, when it started being revised in accordance with the law.
FIRST SECTION
CASE OF GERA DE PETRI TESTAFERRATA v. MALTA
(Application no. 19465/20)
JUDGMENT
STRASBOURG
28 April 2022
This judgment is final but it may be subject to editorial revision.
In the case of Gera de Petri Testaferrata v. Malta,
The European Court of Human Rights (First Section), sitting as a Committee composed of:
Erik Wennerström, President,
Lorraine Schembri Orland,
Ioannis Ktistakis, judges,
and Liv Tigerstedt, Deputy Section Registrar,
Having regard to:
the application (no. 19465/20) 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”) on 8 May 2020 by a Maltese national, Ms Agnes Gera de Petri Testaferrata, born in 1949 and living in Balzan (“the applicant”) who was represented by Dr J. Grech and Dr I. Refalo, lawyers practising in Valletta;
the decision to give notice of the application to the Maltese Government (“the Government”), represented by their Agents, Dr C. Soler, State Advocate, and Dr J. Vella, Advocate at the Office of the State Advocate;
the parties’ observations;
Having deliberated in private on 22 March 2022,
Delivers the following judgment, which was adopted on that date:
SUBJECT MATTER OF THE CASE
1. The case concerns an imposed lease as a result of the application of Chapter 69 of the Laws of Malta. The applicant’s property originally officially numbered 68 and 68A in Republic Street, Valletta, (hereinafter referred to as “the property’) was rented out to a third-party bank for thirty years. On the lapse of the contract, the tenant continued to occupy the property according to its right to an automatic renewal of the lease by operation of the provisions of the special rent laws, namely The Reletting of Urban Property (Regulation) Ordinance (Chapter 69 of the Laws of Malta) by which it continued paying the same amount of rent which had been established in 1977, until 2009, when it started being revised in accordance with the law.
2. The applicant instituted constitutional redress proceedings complaining of a violation of her property rights. By a judgment of 29 November 2019 the Constitutional Court rejected the appeals and confirmed the first-instance judgment, finding a violation of the applicant’s rights and awarding her 80,000 euros (EUR) in compensation. In particular it noted that the tenant in the present case was not in need of social accommodation but operated a commercial bank; and that the economic needs of the country developed with time. Nevertheless, the tenant was not ready to negotiate a new amount of rent in line with the expert’s valuations. Further, while it was true that the imposed lease was meant to come to an end in 2028, it could not be guaranteed that the legislator would not interfere again with the system. In any event the applicant had already suffered a disproportionate burden for twelve years in the light of the low amount of rent when compared to the expert’s estimates. As to compensation it noted that the applicant had only relied on the expert’s valuations, but it had not been shown that those were real losses, and in any event a constitutional remedy was not intended to cover civil damage, but only pecuniary and non-pecuniary losses in connection with the breach.
3. Thereafter, a new lease agreement was negotiated between the parties.
4. The applicant complained that she was still a victim of the violation of Article 1 of Protocol No. 1, despite the findings by the domestic courts, given the low amount of compensation awarded.
THE COURT’S ASSESSMENT
ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO.1 TO THE CONVENTION
5. The Court observes that the domestic courts have acknowledged the violation and awarded EUR 80,000 in compensation. The Court refers to its general principles concerning victim status and its established case‑law in cases similar to the present one (see, among many other authorities, Apap Bologna v. Malta, no. 46931/12, §§ 41, 43, 48 and 82, 30 August 2016). Bearing in mind that, according to the Government’s own architect, the property had a rental value of, for example, EUR 45,200 in 2007, EUR 54,700 in 2017 and EUR 59,500 in 2018, the Court considers that the compensation awarded for a violation persisting over a decade was not adequate and that the redress provided by the domestic courts did not offer sufficient relief to the applicant, who thus retains victim status for the purposes of this complaint (see, mutatis mutandis, Portanier v. Malta, no. 55747/16, § 24, 27 August 2019). The Government’s objection to this effect is therefore dismissed.
6. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention or inadmissible on any other grounds. It must therefore be declared admissible.
7. The general principles concerning rent control as applicable in the present case have been summarized in Zammit and Attard Cassar v. Malta (no. 1046/12, §§ 57-66, 30 July 2015), and Marshall and Others v. Malta (no. 79177/16, § 39, 11 February 2020).
8. 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 objection on victim status (see paragraph 5 above), the redress provided by the domestic courts did not offer sufficient relief to the applicant.
9. There has accordingly been a violation of Article 1 of Protocol No. 1 to the Convention.
APPLICATION OF ARTICLE 41 OF THE CONVENTION
10. The applicant claimed 864,222, euros (EUR) in respect of pecuniary losses for loss of rent for the period 2007-2019 according to her architect’s valuation which estimated the rental losses at EUR 620,570, but from which had to be deducted the sums received in rent (EUR 44,141) and those awarded by the domestic court (EUR 80,000), amounting to EUR 496,430 plus interest at 8% for each year of the violation; EUR 10,000 in non‑pecuniary damage; and EUR 11,053 in respect of costs and expenses namely, EUR 1,956.61 and EUR 3,642.33 relative to the domestic proceedings as well as EUR 1,711 relative to the ex parte report filed in the domestic proceedings, and EUR 3,740.22 incurred before the Court.
11. The Government submitted that the estimates did not show actual losses, and in particular that the property was of such high standing that it would not have been easily rented out, thus the deductions usually applied by the Court had to be further decreased. Moreover, the property could attract such rent only because the tenants had properly maintained it, at their expense. They further challenged the applicant’s calculation of interest which had no basis in the Court’s jurisprudence, and the claim for non‑pecuniary damage which they considered should be lower given the limited duration of the violation in comparison with other cases. The Government also objected to any costs claimed by the applicant in excess of EUR 1,956.61, appearing in the taxed bill of judicial costs, as those were agreed to by the applicant with her legal counsel and for which, the Government should not be made to pay. Lastly, they considered that the claim for costs before this Court was excessive.
12. The Court has made all the considerations applicable in this type of cases, as set out in Cauchi v. Malta (no. 14013/19, §§ 102-07, 25 March 2021). It notes, in particular, that the estimates appear to be on the high side and that the applicant failed to mention at what rent the premises were actually being rented out in 2019, so to substantiate the likelihood of the valuations being realistic in practice. While higher prices can certainly be expected of commercial premises, particularly in Valletta, at the values indicated the Court can accept the Government’s argument that the property may have been even less likely to be rented out throughout the relevant period. Thus, a further deduction in that respect is warranted (compare, Galea v. Malta, no. 28712/19, § 77, 7 October 2021). Conversely, no deductions are due because the tenants maintained the property in terms of law, and the deductions related to the public interest of the measure must be less given that the situation in the present case involved a degree of public interest which is significantly less marked than in other cases and does not justify such a substantial reduction compared with the free market rental value (see, Zammit and Attard Cassar, cited above, § 75, and Marshall and Others, cited above, § 95). Noting in particular that the award of the Constitutional Court has been paid, the Court awards the applicant EUR 160,000 in pecuniary damage and EUR 4,000, plus any tax that may be chargeable on that amount, in respect of non‑pecuniary damage.
13. Having regard to the documents in its possession, but particularly the well-established case-law nature of the case and related legal work, the Court considers it reasonable to award EUR 5,000, plus any tax that may be chargeable to the applicant, for costs and expenses before the domestic courts and this Court.
14. As requested, the amounts awarded are to be paid directly into the bank account designated by the applicant’s representatives.
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1. Declares the application admissible;
2. Holds that there has been a violation of Article 1 of Protocol No.1 to the Convention;
3. Holds
(a) that the respondent State is to pay the applicant, directly into the bank account designated by the applicant’s representatives, within three months, the following amounts:
(i) EUR 160,000 (one hundred sixty thousand euros) in respect of pecuniary damage;
(ii) EUR 4,000 (four thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;
(iii) EUR 5,000 (five thousand euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses;
(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;
4. Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 28 April 2022, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Liv Tigerstedt Erik Wennerström
Deputy Registrar President
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