Last Updated on May 16, 2019 by LawEuro
Information Note on the Court’s case-law 222
October 2018
Bradshaw and Others v. Malta – 37121/15
Judgment 23.10.2018 [Section III]
Article 1 of Protocol No. 1
Article 1 para. 2 of Protocol No. 1
Control of the use of property
Extremely low rent for owners of property rented out to band club: violation
Article 14
Discrimination
Landlords of controlled property leased out as band clubs excluded from law allowing for the termination of protected leases in 2028: no violation
Facts – The applicants were joint owners of a property located in a prime site in Malta’s capital city which they rented to a band club. By law they were obliged to renew, on an annual basis, the lease entered into by their ascendants in 1946 and could not demand an increase in rent. In 2009 amendments were introduced to allow for increases in certain rents and to establish a cut-off date for existing protected leases relating to commercial properties, which were to come to an end in 2028. Those amendments did not affect the applicants’ property. In 2014 Regulations came into force allowing for an increase in rent payable by band clubs.
Law – Article 1 of Protocol No. 1: A band club had a cultural and social role in Maltese society and as such, the Court accepted that the measure pursued a legitimate aim in the public interest. Nevertheless, other considerations could be relevant to the proportionality of the measure. In particular, the use of property for reasons other than to secure the social welfare of tenants and prevent homelessness was a relevant factor in assessing the compensation due to the owner. The situation in the applicants’ case might be said to involve a degree of public interest which was significantly less marked than in other cases and which did not justify such a substantial reduction compared with the free market rental value.
Between 1967 (when Malta ratified the Convention) to 2013 (prior to the 2014 Regulations), the applicants were being paid a rent of approximately EUR 97 per month for a multi-storey property of 864 square metres in a prime location in the capital city. While that might have been an appropriate rent in the 1960s and 1970s, it could not be said to be so decades later. On the basis of the Government’s valuation of the annual rental value of the property in 2014, the applicants had been receiving 1.25% of the market rental value. The disproportionality was clear and manifest.
As for the period following 2014, while the Regulations allowed for more or less double the rent previously received by the applicants, it still amounted to around 3% of the rental value estimated by the Government (and around 1% of that estimated by the applicants). It was also around EUR 14,000 less than the rent the band club was obtaining for the use of part of the first floor by the catering facility. The situation remained disproportionate, and without any action by the legislature, it was likely to remain so indefinitely.
While the applicants did not have an absolute right to obtain rent at market value, despite the 2009 amendments, the amount of rent was very much lower than the market value of the premises. While the overall measure was, in principle, in the general interest, the fact that there also existed an underlying private interest of a commercial nature could not be disregarded. In such circumstances, both States and the Court in its supervisory role had to be vigilant to ensure that measures, such as the one at issue, did not give rise to an imbalance that imposed an excessive burden on landlords while allowing tenants to make inflated profits. It was also in such contexts that effective procedural safeguards became indispensable. Other than constitutional redress proceedings there were no other avenues which the applicants could have pursued to ameliorate their situation. Consequently, the application of the law itself lacked adequate procedural safeguards aimed at achieving a balance between the interests of the tenants and those of the owners.
Having regard to the use made of the property, the extremely low rent of the premises and the lack of procedural safeguards in the application of the law, a disproportionate and excessive burden had been imposed on the applicants, who had had to bear and continued to bear a significant part of the social and financial costs of supporting a local custom by supplying the band club with premises for its activities, including commercial activities. It followed that the Maltese State had failed to strike the requisite fair balance between the general interests of the community and the protection of the applicants’ right to the enjoyment of their property.
Conclusion: violation (unanimously).
Article 14 of the Convention: The applicants, as landlords of controlled property leased out as band clubs, were in a comparable situation to landlords of controlled property leased out for commercial use, as they were both persons subject to controlled properties which were not used for the social welfare of tenants or to prevent homelessness. The applicants were, however, treated differently in so far as – unlike landlords whose controlled property was leased out for commercial use – they did not benefit from the change of law allowing their property to be free (from the imposed conditions) as of 2028 as provided by the 2009 amendments.
More than eight years had passed since the 2009 amendments and the situation of persons in the applicants’ position remained the same. The Court accepted that the reason behind the applicants’ continued exclusion from the amendment complained of was the Government’s will to continue to preserve local customs and in particular the functioning of band clubs, which in itself was not unreasonable. In the applicants’ case the measure complained of was that, according to the law at the time, their property would not be “released” in 2028, while that of their comparators would. Thus, such an action would come to be in respect of their comparator only in ten years’ time. The Court could not conclude that further amelioration to the applicants’ situation would not ensue until such date, even more so in the light of the violation upheld by the Court in relation to Article 1 of Protocol No. 1. The current existing difference in treatment, in law, complained of by the applicants, could at this stage be considered reasonably justified.
Conclusion: no violation (four votes to three).
Article 41: EUR 8,000 jointly in respect of non-pecuniary damage; EUR 592,000 jointly in respect of pecuniary damage.
(See also Fleri Soler and Camilleri v. Malta (just satisfaction), 35349/05, 17 July 2008)
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