The First Hall Civil Court presided by Mr Justice Grazio Mercieca on April 29, 2021, in the case " Maria Concetta sive Connie Caruana Gatto vs State Advocate and Carmela Spiteri, held among other things that Chapter 69 of the Laws of Malta imposed an excessive and disproportionate burden upon owners and that the State failed to strike a fair balance between the general interests of society with the rights of the owners.
At issue was whether the protection granted to a tenant under Chapter 69 and Act X of 2009 infringed Connie Caruana Gatto's rights as an owner to enjoy her property in terms of Art. 37 of the Constitution, and the European Convention of Human Rights, Art. 1, of the First Protocol.
Caruana Gatto was the owner of No. 117/119, Capuchins' Street, Kalkara, which was originally leased to Emanuel and Grace Spiteri, and later succeeded by their daughter Carmela Spiteri, under Chapter 69 of the laws of Malta.
She had acquired the property by a contract of division dated 3 November 2016 in the acts of notary Dr Alicia Agius. The annual rent paid by the tenant Carmela Spiteri was Euro 210, which was well below the rental market rate for this kind of property.
In terms of Act X of 2009, the rent could only be increased every three years according to the rate of inflation. The next increase was only due in January 2022. Art. 1531C of Chapter 16 did not establish a rent that was in line with the market rate and was not fair for owners. The property was not decontrolled.
Caruana Gatto contested the validity of Chapter 69 under our Constitution and the European Convention of Human Rights; in the sense, there was no fair balance of proportionality between the rights of the owner and those of a tenant. The low rent, the state of uncertainty of an owner to recover the leased property, the lack of adequate legal safeguards, as well as the low rate of inflation, gave rise to a disproportionate imbalance and placed an excessive burden upon owners, pleaded Caruana Gatto.
Reference was made to case-law of the European Court of Human Rights: Amato Gauci vs Malta decided on 15 September 2009 and Zammit and Attard Cassar vs Malta dated 30 July 2015. In the decision of the First Hall Court (Constitutional sitting) in the case Anthony Debono et vs the Attorney General et on 8 May 2019, it was decided that Chapter 69 and its amendments under Act X of 2009 violated the owners' human rights and failed to protect the rights of the owners.
There was little doubt that in the light of the case-law of the European Court of Human Rights, claimant Caruana Gatto was denied her human rights to enjoy her property as safeguarded by Art. 1 of the First Protocol of the European Convention of Human Rights and Art. 37 of the Malta Constitution.
Faced with the situation, claimant Caruana Gatto requested the
Court to declare Chapter 69 and Act X of 2009 to have infringed her
human rights under the Constitution (Art. 37), and the European
Convention of Human Rights. She also asked the Court to evict her
tenant and to award her compensation, plus damages.
The State Advocate as well as the tenant disputed Caruana Gatto's legal action.
The Court considered:
The State Advocate claimed that the owners leased the property in 1989 in the knowledge that our law protected tenants and should therefore have to accept the situation.
The Court however said that this did not mean that the owners relinquished the right of protection under the European Convention of Human Rights. Our law still had to strike a fair balance.
The claimant complained that the rent fell short of market rates. The Court noted that the rent itself need not be equivalent to the market rate, provided a fair balance was reached. This was what was crucial, underlined the court.
The State Advocate defended the validity of Chapter 69 on the basis that it served as a social measure, in the general interests of society. This notwithstanding, the court emphasized that our law had to be fair and proportionate vis-à-vis the social needs and the rights of the owners. The caselaw of the European Court of Human Rights introduced the concept of a balance between the rights of the owners and the public interest. This Court had to see whether the burden imposed upon owners was disproportionate and excessive by considering the interests of all parties and the procedural safeguards.
In consideration of all factors, in this case, the Court was of the opinion that Chapter 69 imposed an excessive and disproportionate burden upon owners and that the State failed to balance the general interests of society with the rights of the owners.
As regards, the claim that Caruana Gatto as owner suffered unfair discrimination under Art. 14 of the European Convention of Human Rights, the Court did not find any grounds for unfair discrimination. The Court said that Caruana Gatto was treated in the same manner as other owners.
Reference was made to the decision, in Amato Gauci vs Malta, where the European Court of Human Rights noted that "... The introduction of the amendment does not appear arbitrary or unreasonable in any way. On the contrary, in the instant case, the fact that the effects of the impugned law were abolished in respect of contract concluded after 1995, a decision which fell within the State's margin of appreciation can be deemed to be reasonably and objectively justified to protect owners from restrictions impinging on their rights".
Compensation: The Court said that the remedy to be granted by this court was for a breach of human rights and not for civil damages, in order to redress any lost opportunities. Nor should this Court simply compute the damages to be the difference between the actual rent and the market rate of the rent for such property.
A number of factors had to be taken into account by the Court: the effective loss, the social purpose of the law, the burden borne by the claimant, the material damages, and the effects of the court order in case it were to accept claimant's pleas upon the occupant of the property.
The Court felt that in the circumstances, claimant Caruana Gatto's rights as owner under our Constitution and European Convention of Human Rights were violated and that State was obliged to pay moral and material damages, amounting to Euro14,000. Out of the total amount of damages, the moral damages were calculated to be Euro 1,500.
This Court said that it could not order the eviction of the tenant as it was not the competent tribunal. The claimant, therefore, had to present her claim for the eviction of her tenant before the competent Court.
On 29 April, 2021, the Court proceeded to deliver its judgement.
It declared Chapter 69 and Act X of 2009 to be in violation of claimant Caruana Gatto's human rights as safeguarded by the 1st article of the First Protocol of the European Convention of Human Rights by perpetuating an indefinite renewal of the lease of her property, 119 Capuchin Street, Kalkara to defendant Carmela Spiteri.
The Court held the State Advocate to be responsible to pay claimant Caruana Gatto compensation and for the damages suffered by her as a result of the implementation of Chapter 69 and Act X of 2009 by fairly balancing the rights of the owners and those of the tenant.
It awarded her Euro12,500 material damages and Euro1,500 moral damages and ordered the State Advocate to pay her the Euro14,000 compensation with legal interests from the date of this decision to the date of payment.
This was first published in the Malta Independent.
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