Court Decides that Act XXVII of 2018 Balances the Rights of the Owners and Tenants

The article was written by Dr. Kirk Brincau and Dr. Matthew Cutajar.

Civil Court, First Hall (Constitutional Jurisdiction), Gerald Camilleri et vs Advocate General et, 31^st October 2019

Gerald Camilleri and his wife (the ‘applicants’) purchased a property in Sliema which is regulated under the Housing (Decontrol) Ordinance, Chapter 158 of the Laws of Malta and which is tenanted by third parties having a title of lease by virtue of a previous title of emphyteusis.

The applicants initiated proceedings in front of the First Hall, Civil Court (Constitutional Jurisdiction) (the ‘Court’) claiming that their right to property safeguarded under the Constitution as well as the European Convention on Human Rights was being violated by the forced landlord/tenant relationship and requested the Court to provide an adequate remedy.

The tenants defended their position by claiming, amongst other arguments, that the legal situation of the applicants had clearly improved following Act XXVII of 2018, which Act was promulgated on the 10^th of July 2018. It was submitted that the applicants’ claims were unfounded because ordinary law (specifically the recent amendments) contemplated various circumstances under which a lease created under the operation of Article 12 of Chapter 158 of the Laws of Malta could be terminated with the eventual eviction of the tenants.

The amendments made to the law through Act XXVII of 2018 consider that the tenants must be subjected to a means test. If the means of the tenant are found to be in excess of the thresholds contemplated at law the tenant would be allowed to continue residing in the property for a period of five (5) years while being required to pay double the rent due as per the relevant articles of the law. On the other hand, should the tenant fall below the means considered in the law the rent would be increased to a maximum of 2% (per annum) of the open market freehold value of the property. The Court accepted the tenants’ defence that it was not the role of the Maltese Constitutional Courts to consider which of these circumstances existed in the present case considering that the legislator had granted this faculty to the Rent Regulation Board.

The Court also considered how the law from which the tenants’ rights derive, Act XXII of 1979, had a much needed purpose in 1979 and had been motivated by a legitimate scope to ensure that financial aspects related to contracts of temporary emphyteusis converted to rent did not rise in an uncontrolled rental environment which would have led to tenants being unable to pay rent and forced to live on the street. However, the Court noted that Act XXII of 1979, while having a legitimate purpose, did not continue to offer an equitable balance over the years and had created a disproportionate imposition on the owners of the property which the legislator himself had noted due to the various legal amendments made since its inception which had nevertheless failed to strike a fair balance.

The new amendments of Act XXVII of 2018 were seen under a different light and were differentiated from previous amendments made to the law. The Court considered that the aim of the amendments was to strike a balance between the rights of the owners and tenant and considered when the rent could be raised as well as when the tenants could be evicted. The Court, quoting from the case of Victoria Amato Gauci et vs Advocate General et decided by the Civil Court, First Hall differently presided on the 17^th of October 2018, stated that the new laws created a remedy in favour of the owners thus implying that these amendments can be seen to be in conformity with the Right to Property and the limitations permitted by law.

In its judgment the Court rejected the arguments made by the applicants – that it was impossible under ordinary law to have their property returned to them – and while the Court still found that there had been a violation of the applicants’ property rights it only referred to violations priori in tempore and directed the applicants to make use of the remedy now envisioned under Article 12B of Chapter 158 – brought in force by Act XXVII of 2018 – to regulate the future relationship with the tenants, as this article was aimed at providing a present and future remedy.

The Court ordered the Attorney General (representing the state in said proceedings) to pay the sum of €10,000 as compensation for the violations suffered by the applicants in the past, but most important thing for the tenants is the fact that the Court did not order their eviction nor did it declare the law upon which their lease is based to be unconstitutional as has been declared in numerous other cases prior to the legal amendments of 2018. The tenants have thereby been allowed to continue to reside in the premises and benefit from the protection of Act XXVII of 2018.

The tenants were represented by Dr Matthew Cutajar and Dr Kirk Brincau of Mamo TCV Advocates.