Rent law breached fundamental human rights

The Constitutional Court presided over by Honourable Chief Justice Mr Silvio Camilleri, Hon. Justice Mr Giannino Caruana Demajo and Hon. Justice Mr Noel Cuschieri on the 25 October 2013, confirmed the sentence given by the First Hall Civil Court which held that the law that converts pre-1979 temporary emphyteusis contracts into permanent rental agreements, was infringing landlords' fundamental right to the enjoyment of property and was therefore declared to be unconstitutional.  

The plaintiffs in the case were the owners of a property in Hal Gharghur, which was in the possession of the defendants by means of a temporary emphyteusis which expired on the 9 August 1991. Article 12(2) of Chapter 158, of the Laws of Malta, gave the defendants Azzopardi the right to keep the property under a title of lease. The said Article holds that before 1979, where a dwelling house has been granted on temporary emphyteusis for a period not exceeding 30 years, upon the lapse of the 30 years, the emphyteuta shall be entitled to continue the occupation of the house under the title of lease from the directus dominus. For this to transpire the emphyteuta had two satisfy two conditions; he had to be a citizen of Malta and had to occupy the house as his ordinary residence. The Article also stated that the rent due should be double the amount paid as ground-rent. 

The plaintiffs instituted a case in the First Hall Civil Court and requested the Court to state that the aforementioned Article goes against their fundamental right to the enjoyment of property as proclaimed in Article 37 of the Constitution of Malta and Article 1 of the First Protocol of the European Convention.

Before pronouncing the judgment, The First Court considered the facts of the case as well as the expert report drawn up by the architect. The architect estimated that the rent that would have been due over such property had the plaintiffs not been subject to this law amounted to €9,800 per year in 2011. Furthermore, the Court also quoted Article 1521 of the Civil Code which holds that upon termination of an emphtyeusis, the premises together with all the improvements made should return to the owner ipso jure. 

The First Court made reference to a similar case in front of the European Court Amato Gauci vs. Malta, where the Court held that a restriction on a property owner to terminate a lease resulted in excessive control on the use of such property. The same Court also stated that "the Maltese State failed to strike the requisite fair balance between the general interests of the community and the protection of the applicant's right of property".  The European Court in this case concluded that this resulted in a breach of Article 1 of the Protocol. 

The First Hall Civil Court had also considered the fact that the amendments introduced in 1995 did not offer the same protection to persons who entered into a contract of emphytheusis after 1995. In light of this, the Court stated, that the Maltese Government had realised that the social situation did not require the same level of protection and measures which could have been necessary before are not necessarily needed today. The fact that the rent due was only double the ground-rent and that it could only be increased every 15 years did not reflect today's economic reality.  

The Attorney General appealed and based his argument on the fact that the above mentioned law controlled the use of property in the general interest. The Attorney General argued that one cannot compare a property which is on the free market to a property which is being used for social housing. Furthermore the Attorney General stated that the Court had to consider the law on a broad scale, that is, from the aspect of proportionality in the light of the real economic situation of the county. 

The Court of Appeal in its judgment disagreed with the Attorney General. It stated that the First Court did in fact delve into the principle of proportionality when it considered the rent to be too low in proportion to the real economic situation of the country. The Court of Appeal confirmed the first judgment since the rent could only be increased every 15 years and it would most likely be extended to an indefinite period, without their being any real remedy to repossess the property, even if the same owner would need social housing. 

Joseph Mizzi is a Partner at Mifsud & Mifsud Advocates