SECOND SECTION
CASE OF CACHIA AND OTHERS v. MALTA
(Application no. 6335/21)
JUDGMENT
STRASBOURG
24 October 2023
This judgment is final but it may be subject to editorial revision.
In the case of Cachia and Others v. Malta,
The European Court of Human Rights (Second Section), sitting as a Committee composed of:
Pauliine Koskelo, President,
Lorraine Schembri Orland,
Davor Derenčinović, judges,
and Dorothee von Arnim, Deputy Section Registrar,
Having regard to:
the application (no. 6335/21) against the Republic of Malta lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 18 January 2021 by 12 Maltese nationals, the relevant details of whom are listed in the appended table (“the applicants”) and who were represented by Dr J. Ellis, a lawyer practising in Valletta;
the decision to give notice of the application to the Maltese Government (“the Government”), represented by their Agent, Dr C. Soler, State Advocate, and Dr J. Vella, Advocate at the Office of the State Advocate;
the parties’ observations;
Having deliberated in private on 3 October 2023,
Delivers the following judgment, which was adopted on that date:
SUBJECT MATTER OF THE CASE
1. The application concerns the applicants’ property no. 16-18, The Strand, Sliema which has been rented out since 1976, as commercial premises, and is affected by the restrictions applicable under the Reletting of Urban Property (Regulation) Ordinance, Chapter 69 of the Laws of Malta. The applicants hold the property by title of utile dominium which will expire in 2028.
2. The original lease expired in October 1991 and thereafter the tenants maintained title to the property by operation of the above-mentioned law. By a judgment of 25 July 1995, the Rent Regulation Board (‘RRB’) established the rent at 15,140 euros (EUR) annually. As of 2010 the parties disagreed as to the applicable increments in rent. In 2015 the applicants instituted constitutional redress proceedings complaining that they were suffering a disproportionate burden as a result of the application of the law. According to the court-appointed expert the annual rental value of the property in, for example, 2016 was EUR 139,680 and in 2011 EUR 132,750 on the basis of a 4.5 % yield on its sale value.
3. By a judgment of 29 January 2020, the Civil Court (First Hall) in its constitutional competence found a violation of Article 1 of Protocol No. 1, awarded the applicants EUR 100,000 in compensation and declared that the tenants no longer be able to rely on the law to maintain title to the property.
4. On appeal by the applicants and the State, by a judgment of 20 July 2020 the Constitutional Court increased the compensation, including non‑pecuniary damage, to EUR 250,000 plus 5% interest from the date of that judgment. The Constitutional Court questioned the estimates presented which were made many years after the actual years at issue, gave results not consonant with reality and were in any event subjective. Inter alia, it took note of the following: the reduced public interest, the property being a commercial property; that although under the law the applicants could ask for increases on an annual basis as per the original contract, they had only asked for increases in 2010; considerable expenses had been made by the tenants regarding the property; the rent deposited in court; while the applicants could not foresee the inflation in property prices over the years, the property being commercial and the original rent not having been restricted by law, they could nonetheless have entered into a contract which protected them better as they were aware of the law when they entered into it; and that the applicants’ utile dominium was to come to an end at the same time as the contract.
5. A new lease agreement was reached between the parties for the period of 2020 onwards at EUR 180,000 annually with further increases until 2027, date when the lease will come to an end in accordance with the law.
6. The applicants complained that they were still victims of the violation found by the domestic courts in view of the low amount of compensation awarded.
THE COURT’S ASSESSMENT
ALLEGED VIOLATION OF ARTICLE 1 of Protocol No. 1 tO THE CONVENTION
7. The applicants complained that they were still victims of the violation of Article 1 of Protocol No. 1 to the Convention found by the domestic courts. In particular, they considered that they should have obtained an award covering all the lost rent, with no 30 % deduction as usual due to the legitimate aim pursued, given that the impugned lease had been in favour of a healthy commercial business, nor a 20 % reduction on the basis that the property might not have been rented out all throughout, given that it was in a prime site.
8. The Court refers to its general principles concerning victim status and its established case‑law in cases similar to the present one (see, among many other authorities, Apap Bologna v. Malta, no. 46931/12, §§ 41, 43, 48 and 82, 30 August 2016). It observes that the domestic courts have acknowledged the violation and the Constitutional Court, increasing the compensation granted at first instance, awarded EUR 250,000 in compensation plus interest (which appears to be based on a wrong mathematical calculation).
9. In so far as the applicants’ submissions are relevant for the calculation of compensation, the Court considers that the rent control measure, although applied to commercial premises, may still be considered as being in the general interest, although the latter is less marked than in other cases, and thus a lesser deduction is justified for the purposes of compensation (see Zammit and Attard Cassar v. Malta, no. 1046/12, § 75, 30 July 2015, and Marshall and Others v. Malta, no. 79177/16, § 95, 11 February 2020). The Court also considers that if the property had not been subject to the impugned regime, it would not necessarily have been rented out throughout the entire period despite its prime location. Therefore, it is acceptable to consider that the actual losses were less than those claimed (see Cauchi v. Malta, no. 14013/19, § 104, 25 March 2021). Nevertheless, and even considering that the expert’s valuation was on the high side, the property having a rental value of, for example, around EUR 132,750 in 2016, the Court considers that the compensation awarded for a violation persisting over several years was not adequate and that the redress provided by the domestic courts did not offer sufficient relief to the applicants, who thus retain victim status for the purposes of this complaint (see, mutatis mutandis, Portanier v. Malta, no. 55747/16, § 24, 27 August 2019). The Government’s objection to this effect is therefore dismissed.
10. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention or inadmissible on any other grounds. It must therefore be declared admissible.
11. The general principles concerning the compatibility with Article 1 of Protocol No. 1 of rent control measures as applicable in the present case have been summarized in Zammit and Attard Cassar (cited above, §§ 57-66) and Marshall and Others (cited above, § 39).
12. Having regard to the findings of the domestic courts relating to Article 1 of Protocol No. 1, the Court considers that it is not necessary to re‑examine in detail the merits of the complaint. It finds that, as established by the domestic courts, the applicants were made to bear a disproportionate burden. Moreover, as the Court has already found in the context of the objection on victim status (see paragraphs 8-9 above), the redress provided by the domestic courts did not offer sufficient relief to the applicants.
13. There has accordingly been a violation of Article 1 of Protocol No. 1 to the Convention.
APPLICATION OF ARTICLE 41 OF THE CONVENTION
14. The applicants claimed a total of 3 million euros (EUR), namely EUR 2,860,516 in respect of pecuniary damage for what they believed was lost rent for the period from 1991-2019 and the rest (EUR 139,484) in interest and non‑pecuniary damage. They made no claims for costs and expenses.
15. The Government submitted that the applicants had inappropriately formulated their claims. Moreover, the sum claimed by the applicants in pecuniary damage appeared to be a median value between the rental value established by the expert and the sale value of the various shares of the property, which thus had no relevance, and the remaining sum was totally unexplained. In any event, the Government challenged the expert’s evaluation as it had not offered any explanation as to how the historical rental values had been established. During the domestic proceedings the expert had even testified that he had not seen any contract of lease to substantiate such figures, or use any other documentation, but rather relied on his experience. They also considered that, given the values established, it was unlikely that the property would have been rented out throughout the whole period, as few businesses could have afforded such rates. Moreover, few would have invested in such a property knowing that they would have to vacate it in 2028. Lastly, the Government noted that the values obtained for the property today were a result of the maintenance kept up by the tenants, a factor which should also be taken into consideration.
16. The Court has made all the considerations applicable in this type of cases, as set out in Cauchi (cited above, §§ 102-07). Noting in particular that the award of the domestic court remains payable if not yet paid, the Court awards the applicants, jointly, EUR 100,000 in pecuniary damage and rejects their claim for non‑pecuniary damage which can be considered covered by the domestic award.
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
Declares the application admissible;Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention;Holds(a) that the respondent State is to pay the applicants, within three months, EUR 100,000 (one hundred thousand euros), jointly, in respect of pecuniary damage;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
Dismisses the remainder of the applicants’ claim for just satisfaction.Done in English, and notified in writing on 24 October 2023, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Dorothee von Arnim Pauliine Koskelo
Deputy Registrar President
APPENDIX
List of applicants:
Application no. 6335/21
No.
Applicant’s Name
Year of birth
Nationality
Place of residence
1.
Mario CACHIA
1965
Maltese
L-Ibraġġ
2.
Alfred GRECH
1953
Maltese
Mosta
3.
Carmen BAJADA
1959
Maltese
Sliema
4.
Margaret BORG
1945
Maltese
Sliema
5.
Stephen CACHIA
1964
Maltese
Sliema
6.
Inez BORG
1919
Maltese
Attard
7.
Doreen BUSUTTIL
1946
Maltese
Sliema
8.
Marie Louise BUSUTTIL
1950
Maltese
Swieqi
9.
Carmen WAREING
1969
Maltese
St. Andrews
10.
Godwin BORG
1947
Maltese
San Gwann
11.
Joseph GRECH
1950
Maltese
Santa Venera
12.
Natalie GRECH
1949
Maltese
Sliema