Author: Christian Ellul, Trainee Associate
The case of Cauchi vs Malta decided by the European Court of Human Rights on the 25 March 2021 revolved around a house situated in Hal-Ghaxaq of which the landlord was the applicant. This property was rented way back in 1967 to third parties at an annual rent of €58 under a title of temporary emphyteusis. It was later transferred to other third parties as a sub-emphyteusis. Although the emphytheutical term ended in February 1984, the sub-emphytheuta availed himself of Act XIII of 1979 which to the owner’s detriment meant that the emphytheuta could still retain the property under a title of lease. With the introduction of Act X of 2009, from January 2010, the sub-emphytheuta started paying €185 yearly which increased to €200 yearly in January 2017 for property which was valued at €174,000 by the government’s own expert.
The owner instituted proceedings in 2017 and the First Hall of the Civil Court in its Constitutional Jurisdiction, holding in favour of the owner, declared that the landlord was not receiving fair and adequate compensation in exchange for the burden imposed by law by these rent laws. Consequently, the First Instance court liquidated EUR 20,000 in pecuniary and non-pecuniary damages. However, regrettably the court stopped short from ordering eviction and instead declared that the tenants could no longer rely on Article 12(2(b)(i) of the Housing (Decontrol) Ordinance which was granting the perpetual protection.
The owner, unhappy with the compensation but also mindful of a pattern of Constitutional Court judgments which “systematically reduced the awards given by first-instance courts” resorted with an application before the European Court instead of appealing to the Constitutional Court. Indeed, the applicant reasoned that had he pursued his case further domestically, the Constitutional Court would unlikely accede to his claim of eviction which is the only remedy which could bring an end to the breach of his fundamental rights under the Convention.
In response to the plea raised by the State Advocate that local remedies had not been exhausted prior to the ECHR application, the European Court clarified that the rule in Article 35 of the Convention obliging an exhaustion of local remedies prior to a filing a petition before the ECHR is based on the understanding that such domestic remedies are sufficiently to deal with the substance of an “arguable complaint” and which may grant appropriate relief. The international court reiterated that there are special circumstances which absolve the applicant from the obligation to exhaust the domestic remedies. In this light, the ECHR rejecting the plea of the State Advocate, held that although the constitutional redress proceedings are an effective remedy in theory, they are not so in practice. This is because the Constitutional Court has regularly failed to prevent continuation of the violation in a two-fold manner. Firstly, by failing to order eviction and secondly, by awarding compensation not deemed to be adequate.
However, the significance of this judgment was the ECHR pronouncement on the amendments made to Chapter 158 by Act XXVII of 2018 which were pleaded by the State as giving a suitable remedy to the owners. Prior to the introduction of this amendment act, an owner in possession of a judgment declaring that his tenant can no longer rely on the perpetual protection provided by Chapter 158 had tangible prospects of re-possessing his property.
However, this position had changed through these amendments. Indeed, the applicant argued that the introduction of Act No. XXVII of 2018 not only failed to provide a suitable procedural safeguard but was another cumbersome legal obstacle. Via the new procedure, a tenant who qualified under the established means test (which is not particularly onerous) would continue to reside in the property at a protected rent set at a maximum of 2% of the market value of the property. Even if he did not qualify under the means test, the tenant would be able to continue residing there for 5 years. The court was critical of this “new” law. The ECHR held that it cannot accept a situation where an unmeritorious tenant who does not qualify under a means test continues to live in the tenement for at least 5 years. On the other hand, the court held that even in cases which merit protection, the methodology to be employed by the Rent Regulation Board (RRB) as stipulated in Article 12B is one which can still leave the owner to bear most of the social and financial costs of providing housing to the individual as opposed to the State. Although the rent can increase to 2% of the property’s sale value, this is nothing more than the maximum than can be paid. In fact, the amount to be paid is likely to be much less given that the board must take into consideration the means of the tenant. The court concluded that the method established in Article 12B of Chapter 158 is still likely to result in low rents, consequently it fails to deal effectively and meaningfully with the issue of the disproportionate interference arising from the applicable rent laws.
Whilst also noting in orbiter, in reference to Article 12B(11), that this novel procedure was introduced with the aim of stultifying court judgments ordering eviction, the court declared that the right to property of the owner and the right to an effective remedy under Article 1 Protocol 1 of the Convention and Article 13 of the Convention had been violated by Act XXVII of 2018 . Consequently, it ordered the state to pay the victim a global amount of 31,440 euros covering pecuniary, non-pecuniary damages and costs.
Dr. Edward DeBono and Dr. Michael Camilleri assisted the applicant.
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