Communicated on 4 January 2017
FOURTH SECTION
Application no. 37121/15
Sean BRADSHAW and others
against Malta
lodged on 20 July 2015
STATEMENT OF FACTS
A list of the applicants is set out in the appendix. They are represented before the Court by Dr J. Camilleri, a lawyer 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 joint owners of the property at number 274, Republic Street, Valletta. The property is known as the “King’s Own Band Club” and is located in a prime site in Malta’s capital city.
Initially, the property belonged to the applicants’ ascendants. In 1946, the applicants’ ascendants entered into a rent agreement, whereby they willingly rented the said property for 500 sterling annually (around 1,164.69 euros (EUR)). By law, the applicants are now obliged to renew, on an annual basis, the rent entered into by their ascendants, and may not demand an increase in rent. According to the applicants, the property’s current market rental value is EUR 269,100 annually.
Part of the property is being utilized as a band club, and part of the property is being operated as a restaurant and bar. The operation of the restaurant and bar is allegedly a profitable economic activity that generates an income to the lessee of around EUR 150,000 or more annually.
2. Constitutional redress proceedings
In 2011, the applicants filed proceedings before the Civil Court (First Hall) in its constitutional jurisdiction. The proceedings were brought against the Attorney General (hereinafter referred to as “the AG”), the Prime Minister (hereinafter referred to as “the PM”) and the King’s Own Band Club (the lessee, hereinafter referred to as “the KOBC”). They claimed that their right to peaceful enjoyment of the property as protected under Article 1 of Protocol No. 1 to the Convention was being breached. The applicants were being denied the use of their property without being provided with adequate compensation. The applicants further submitted, that in 2009, the law had been amended, allowing for an increase in rent and the establishment of a cut-off date for existing “protected rents”, however, the amendments in the law did not cover properties rented as clubs. Therefore, in contrast with other commercial rents, the annual rent for the club could not be raised, and the rent contract could not be terminated. The applicants claimed that the law was discriminatory and was therefore in violation of Article 14 of the Convention.
On 8 October 2013, the court found that the applicants had suffered a violation of Article 1 of Protocol No. 1 to the Convention in so far as the measure had not been proportionate. The applicants had submitted that the property had a rental value of EUR 269,100 a year, while the AG and the PM had submitted that the property had a rental value of EUR 93,000 a year. Irrespective of which value one was to consider, the court concluded that the rent being received by the applicants was disproportionate. Keeping in mind the estimated rental values presented before the court, and the income that the KOBC was generating from its bar, the court awarded EUR 300,000 in damages to the applicants (to be paid half by the AG and the PM jointly, and half by the KOBC). The costs of the proceedings were to be paid, half by the AG and PM, and the other half by the KOBC.
The court further concluded that the applicants had not suffered any discrimination as no satisfactory proof had been presented showing that they were discriminated against when compared to other owners leasing their property as a club.
The AG, PM and KOBC filed an appeal before the Constitutional Court.
On 6 February 2015 the Constitutional Court overturned in part the judgment of the first-instance court, and concluded that there had been no violation of the applicants’ rights. The Constitutional Court ordered that the costs of proceedings at both instances be paid by the applicants.
The Constitutional Court found that, contrary to that pleaded by the Government, the applicants did have title of ownership over the property at issue. However, in line with domestic jurisprudence the Constitutional Court concluded that, because the agreement had been entered into voluntarily with full knowledge of the consequences it would lead to (that is, that the rent due could not be raised and the rent agreement could not be terminated), then the applicants could not allege a violation of their rights. This was so, even if due to the rate of inflation throughout the years, the rent due was now to be considered low. The Constitutional Court further held that the amendments to the law of 2009, mentioned by the applicants, did not affect their position which remained the same as that when the rent agreement had been entered into, and therefore there was no reason for the principle of pacta sunt servanda not to continue to prevail.
3. Retrial proceedings
On 6 May 2015, the applicants filed an application for retrial. They claimed that the Constitutional Court had committed an error of fact and applied a wrong interpretation of the law. Nevertheless, they also instituted proceedings before this Court on 20 May 2015.
On 3 February 2016 the Constitutional Court denied the applicants’ application for re-trial. The Constitutional Court decided that, as the law stood, retrial cannot be applied in regard to a case of a constitutional nature. The costs of the proceedings were to be paid by the applicants.
B. Relevant domestic law
Article 1531I and Article 1531J of the Civil Code, Chapter 16 of the Laws of Malta, read as follows:
“1531I. In the case of commercial premises leased prior to 1st June, 1995, the tenant shall be considered to be the person who occupies the tenement under a valid title of lease on the 1st June, 2008, as well as the husband or wife of such tenant, provided they are living together and are not legally separated, and also in the event of the death of the tenant, his heirs who are related by consanguinity or by affinity up to the grade of cousins inclusively:
Provided that a lease of commercial premises made before the 1st June, 1995 shall in any case terminate within twenty years which start running from the 1st June, 2008 unless a contract of lease has been made stipulating a specific period. When a contract of lease made prior to the 1st June, 1995 for a specific period and which on the 1st January, 2010 the original period "di fermo" or "di rispetto" is still running and such period of lease has not yet been automatically extended by law, then in that case the period or periods stipulated in the contract shall apply. A contract made prior to the 1st June, 1995 and which is to be renewed automatically or at the sole discretion of the tenant, shall be deemed as if it is not a contract made for a specific period and shall as such terminate within twenty years which start running from the 1st June, 2008.
1531J. In the case of a tenement leased to an entity and used as a club before the 1st June, 1995 including but not limited to a musical, philanthropic, social, sport or political entity, when its lease is for a specific period and on the 1st January, 2010 the original period "di fermo" or "di rispetto" is still running and the lease has not yet been automatically extended by law, then in that case the period of lease established in the contract shall apply. In all other instances where the contract of lease was made prior to the 1st June, 1995 the law and all definitions as in force on the 1st June, 1995 shall continue to apply:
Provided that notwithstanding the provisions of the law as in force before the 1st June, 1995, the Minister responsible for accommodation may from time to time make regulations to regulate the conditions of lease of clubs so that a fair balance may be reached between the rights of the lessor, of the tenant and the public interest”.
Article 2, of the Reletting of Urban Property (Regulation) Ordinance, Chapter 69 of the Laws of Malta, in so far as relevant, reads as follows:
“In this Ordinance, unless the context otherwise requires -
the expression "club" means any club registered as such at the Office of the Commissioner of Police under the appropriate provisions of law”
In 2014, the Conditions Regulating the Leases of Clubs Regulations, Subsidiary Legislation Chapter 16.13 of the Laws of Malta were introduced through Legal Notice 195 of 2014. In so far as relevant, these Regulations provide that:
“2. (1) The rent of a club as referred to in Article 1531J of the Civil Code which is paid on the basis of a lease entered into before the 1st June 1995 shall, unless otherwise agreed upon in writing after the 1st January 2014, or agreed upon in writing prior to the 1st June 1995 with regard to a lease which was still in its original period di fermo or di rispetto on the 1st January 2014, as from the date of the first payment of rent due after the 1st January 2014, be increased by a fixed rate of ten per cent over the rent payable in respect of the previous year and shall continue to be increased as from the date of the first payment of rent due after the 1st January of each year until and including the year 2016 by ten per cent over the previous rent.
(2) The rent as from the first payment of rent due after the 1st January 2017 shall be increased by a fixed rate of five per cent over the rent payable in 2016. Such rent shall continue to be increased by five per cent per annum until the 31 December 2023 and the rent shall thereafter increase every year according to the index of inflation for the previous year.
3. (1) Where club premises or part thereof to which these regulations apply are used for the generation of income through an economic activity carried out in the said premises, then as from the 1st January 2015 the tenant of the said premises shall also pay the person entitled to receive the rent a sum equivalent to five per cent of the annual income derived by the club from the said economic activity, other than income derived from fundraising or philanthropic activities organized and managed by the club itself:
Provided that for the purposes of this regulation, income generated from economic activity means any income which is directly or indirectly derived from the bar and, or restaurant and from any lease, sub-lease, leas of a going-concern or a management agreement of the said premises that is leased out as a club or part thereof.
(2) The amount referred to in sub-regulation (1) shall be calculated on an annual basis and shall be payable by the 30th September of the following year with the first payment being due in respect of the year 2015 by the 30th September 2016.
(3) The annual income referred to in sub-regulation (1) shall be calculated on the basis of financial statements signed by a certified public accountant in the case of clubs having an income of less than €200,000 per annum and by audited financial statements in the case of clubs having an income of €200,000 or more per annum”.
COMPLAINTS
The applicants complain about the ongoing interference with their property rights in breach of Article 1 of Protocol No. 1 to the Convention.
The applicants also submit that they are being discriminated against with regard to the enjoyment of their property, since as the law stands, they are obliged to renew their rent agreement on a yearly basis, while people having commercial rents had been freed from such obligation of renewal through amendments introduced to the Civil Code in 2009. The applicants invoke Article 14 in conjunction with Article 1 of Protocol No. 1 to the Convention.
QUESTIONS TO THE PARTIES
1. Has there been an interference with the applicants’ right to peaceful enjoyment of their possessions, within the meaning of Article 1 of Protocol No. 1?
2. If so, was the interference in question in the public interest, within the meaning of Article 1 of Protocol No. 1?
3. If so, did that interference impose an excessive individual burden on the applicants? In particular, was the rent received by the applicants until 2014, proportionate to the interference complained of? Was the rent received after 2014 in line with the relevant amendments, proportionate to the interference complained of?
4. In the periods before and after 2014, did the applicants, as heirs to the property in question, have at their disposal adequate procedural safeguards ensuring that the operation of the system and its impact on their property rights as landlords were neither arbitrary nor unforeseeable?
5. Have the applicants suffered discrimination in the enjoyment of their Convention rights contrary to Article 14 of the Convention read in conjunction with Article 1 of Protocol No.1, in connection with the fact that while other commercial premises were freed from the obligation of renewal of the leases by the legislative amendments of 2009, these changes did not apply to band clubs? Did that difference in treatment pursue a legitimate aim; and did it have a reasonable justification?
Appendix
No.
Firstname LASTNAME
Birth date
Nationality
Place of residence
Sean BRADSHAW
09/09/1957
Maltese
Swieqi, Village Madliena
Anna ABELA
07/07/1955
Maltese
Swieqi
Philip BRADSHAW
06/03/1951
Maltese
Swieqi
Richard Sive Rick BRADSHAW
01/03/1950
Maltese
Swieqi
Julian BUGEJA
17/07/1967
Maltese
Sliema
Philip BUGEJA
23/10/1964
Maltese
Sliema
Alberta Sive Berta CAMILLERI
22/11/1945
Maltese
Swieqi
Vivien Sive Vivienne CASSAR
22/10/1943
Maltese
St. Julian’s
Jason CASSAR DESAIN
30/06/1970
Maltese
Sao Teotonio
Mark CASSAR DESAIN
04/05/1965
Maltese
Siggiewi
Michael CASSAR DESAIN
09/03/1950
Maltese
Gharghur
Rachel CASSAR DESAIN
16/11/1967
Maltese
Naxxar
Maureen CROSSEY
24/06/1974
Maltese
Rabat
Christine DELIA
21/07/1942
Maltese
St. Julian’s
Caroline FALZON
22/10/1952
Maltese
Attard
Alfred FALZON SANT MANDUCA
07/10/1942
Maltese
Mellieha
Joanna Marion LEGAULT
09/07/1945
Maltese
Quebec
Mary Ann MASON
25/04/1965
Maltese
Mellieha
Mercury Plc MERCURY PLC
26/12/2000
Maltese
St. Julian’s
Andrew SAID
15/06/1971
Maltese
Swieqi
Stephen SAID
02/06/1968
Maltese
Attard
Francesca SALOMONE
03/11/1969
Maltese
Swieqi
Nathalie SAVILL
19/12/1946
Maltese
St. Julian’s
Veronica VON BROCKDORFF
15/06/1941
Maltese
Sliema
Michele WALSH
04/11/1967
Maltese
Sliema
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