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Act XXIII of 1979 amending Chapter 158 of the Laws of Malta – Overview of the Case-law of the ECHR
Communicated on 31 August 2018
THIRD SECTION
Application no. 8423/17
Maria Stella AZZOPARDI VELLA and John AZZOPARDI VELLA
against Malta
lodged on 23 January 2017
STATEMENT OF FACTS
The applicants, Ms Maria Stella Azzopardi Vella and Mr John Azzopardi Vella, are Maltese nationals, who were born in 1942 and 1938 respectively and live in Sliema. They are represented before the Court by Dr M. Camilleri and Dr E. DeBono, lawyers practising in Valletta.
A. The circumstances of the case
The facts of the case, as submitted by the applicants, may be summarised as follows.
1. Background to the case
The applicants are owners of Flat 4, Holland Court, Bisazza Street, Sliema (hereinafter “the property”), which they acquired from X (a company of which they were shareholders and which was in liquidation), on 25 July 1985.
In 1977 X had rented the (de-controlled) property to a third party (couple A.), for five years at the following rents: From 1 June 1977 to 28 February 1978 at 50 Maltese lira (MTL) (approximately 116 euros (EUR)) a month, from 1 March 1978 to 29 February 1980 at MTL 660 (approximately EUR 1,537) annually and from 1 March 1980 to 31 May 1982 at MTL 726 (approximately EUR 1,691) annually.
On the expiry of the lease, couple A. relied on Act XXIII of 1979 amending Chapter 158 of the Laws of Malta, the Housing (Decontrol) Ordinance, (hereinafter “the Ordinance”), which came into force during their five year contract, to retain the property under title of lease, at the rent applicable according to law.
2. Constitutional redress proceedings
The applicants 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 them as owners 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. They requested the court to grant redress.
By a judgment of 12 February 2016 the Civil Court (First Hall) in its constitutional competence found a violation of the applicants’ property rights and awarded EUR 20,000 in compensation for damage incurred until the date of its judgment. It further ordered that the applicants be paid EUR 3,000 annually for every subsequent year during which the tenants continued to benefit from such law.
The court considered that the interference had been lawful and pursued a public interest, namely social housing. However, Article 5 of the amended Ordinance made it nearly impossible for the applicants regain possession of their property, and during such time they were receiving a derisory amount of rent. The conditions and rent had only slightly improved in the light of more recent amendments, which were thus of no comfort. Indeed couple A was paying EUR 3,400 annually ‑ although the applicants could have asked them to pay EUR 3,794 according to law ‑ that is, only a third of the rental value estimated by the court‑appointed architect [EUR 10,232 annually in 2014]. EUR 3,400 annually reflected the rent such a property could receive in 1996 according to the court appointed architect. Thus, the applicants were not even receiving half the market value of the rent of an apartment situated in a commercial area of one of Malta’s main cities. Therefore, a fair balance had not been achieved. As to compensation, the court considered that it would not award damage actually incurred but solely that connected to the finding of a violation. Bearing in mind that the applicants had waited until 2014 to institute their case the court considered that EUR 20,000 would be sufficient compensation. The court held that an order of eviction should not be automatic, especially if it is shown that the tenant was really in need of protection. However, in order to prevent the continuation of the violation, the court ordered that the applicants be paid an extra EUR 3,000 annually in rent, to be paid 2/3 by the State and 1/3 by couple A (who at the time had a joint pension of EUR 1,158 a month). Costs were to be paid by the defendants.
Both the applicants and the defendants appealed.
By a judgment of 30 September 2016, the Constitutional Court upheld the first‑instance judgment in part, it upheld the violation, diminishing however the compensation to EUR 5,000 and annulling the order for future annual payments, replacing it by another order.
The Constitutional Court considered that it was not irrelevant that the applicants had set the rent in an open market in 1977 and that recent amendments allowed for an increase in rent according to the index of inflation. A fair rent did not necessarily mean the value of the rent as established by the expert, even more so when the law pursued a legitimate interest, thus it was not necessary to receive the full rental value. However, the mere fact that the rent established maintained its value as a result of the increase in the index of inflation, based on objective criteria, as opposed to a technical expert’s valuation which was subjective, did not mean that the measure was proportionate. Indeed the applicants had set the rent thinking they would recover the property five years later, this was not the case. While the law took account of inflation, it did not take account of the fact that the applicants could not recover their property and rent it at more favourable conditions, nor did the law provide for a legal framework to assess the needs of the tenant vis-à-vis those of the applicants, thus the law failed to strike a fair balance between the competing interests involved.
The Constitutional Court considered that it was not its role to evict the tenant but it held that the tenants could no longer rely on the relevant law to retain title to the property. As to compensation, while the applicants claimed EUR 161,000 as established by the court appointed expert, the constitutional Court considered that its role was to give compensation for the finding of a breach and not to award civil damages for loss of opportunity. That loss was of relevance but was not determinative to the quantum of compensation to be awarded. Other relevant factors for such an assessment included, the legitimate aim, the fact that the disproportionality did not persist all throughout the lease, and the time taken by the applicant to institute proceedings. The court considered that the court appointed expert’s valuation was not determinative and bore in mind that the rent had been adjusted for inflation. In its view given the order that the tenants could no longer rely on the relevant law in future, it was sufficient to award EUR 5,000 for both pecuniary and non-pecuniary damage. One third of the appeal costs were to be paid by the defendants in light of inappropriate compensation claims which had to be rejected.
B. Relevant domestic law
The relevant domestic law in relation to the present case is set out in Amato Gauci v. Malta, (no. 47045/06, §§ 19-25, 15 September 2009).
COMPLAINT
The applicants complained that they were still victims of the violation of Article 1 of Protocol No. 1 upheld by the Constitutional Court given the low amount of compensation awarded.
QUESTION TO THE PARTIES
Has there been a violation of Article 1 of Protocol No. 1 to the Convention (see Amato Gauci v. Malta, no. 47045/06, 15 September 2009)?
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