Landmark ruling says housing law protecting tenants from eviction is ‘illegal’

The Court of Constitutional Appeal has confirmed a landmark ruling that found that the automatic conversion of temporary leases into rental agreements, is illegal: a decision that means MPs might have to legislate to give landlords the right to take back their property after the expiration of a temporary lease.

The ground-breaking decision will be met with trepidation by tenants in rent-controlled houses, because it attacks directly the Housing Decontrol Ordinance, the 1959 law that allows tenants to permanently rent a house even after the expiration of the original lease.

Under the law, tenants living in houses on a temporary lease retained the right to stay in these houses, and pay an annual rent equivalent to double the lease they paid. The law was introduced at the time as a way of providing some form of social housing - but the effect has been a legacy of paltry rents payable to landlords, with no chance of taking back their rightful property, and having to review rents only every 15 years.

Lawyers Cedric Mifsud and Michael Camilleri, who submitted the constitutional claim on behalf of their clients, said the ground-breaking case had declared as unconstitutional a law currently used by many people in Malta to permanently reside in homes they had leased, to the detriment of the legitimate owners.

"It is a so-called legal form of 'squatting'. People who have been deprived of their property, on the basis of an archaic form of social law, may finally see a glimmer of hope through this judgment," Mifsud and Camilleri told MaltaToday.

"This is due to the fact that people who thought they had a permanent right to occupy a property which was not theirs, are now faced with a flawed legal basis for their right. This is also a wake-up call for the government to bring about much needed changes to the law, unless it wants to be confronted with numerous amount of claims for compensation."

Illegal law

The law found to be unconstitutional by the Maltese constitutional court is the Housing Decontrol Ordinance (1959), after the court found that Article 12(2) - which allows a temporary emphyteusis [Maltese: cens temporanju] to be converted into a permanent rental agreement - was "inconsistent" with the European Convention of Human Rights.

Specifically, the Civil Code gives landlords the right to reclaim their property upon termination of a lease.

But in 1979, the government passed a law to protect tenants so that - under the Housing Decontrol Ordinance - any lease of up to 30 years contracted before 21 June 1979, can be turned into a rent.

The Court of Constitutional Appeal this week confirmed the first court's decision that tenants Andrè and Tessie Azzopardi could not avail themselves of this right at law to rent a property at Lm100 (€233) a year, after the lease terminated back in 1991.

The Azzopardis previously paid an annual emphyteusis of Lm50 (€116), before the lease was automatically converted to a rental agreement. The rent at law could be reviewed every 15 years.

The landlords, the heirs of Bartolomeo and Giuseppa Bezzina, said the law was preventing them from their right to enjoy their property as laid down in both the Maltese Constitution and the European Convention of Human Rights. The Bezzinas had leased out their Gharghur property to the Azzopardis back in 1974, for a period of 17 years on an annual rent of Lm50. In 1991, the Azzopardis availed themselves of the right accorded to them by the Housing Decontrol Ordinance, and started renting out the property for Lm100 a year. In their court application, the landlords said that the rental compensation itself was disproportionate, claiming the real rental value as verified by the court-appointed expert was €2,900 a year in 1991, €8,800 in 2006, and €9,800 in 2011.

In the first decision, the Constitutional Court also ordered the Attorney General to pay the Bezzinas €30,000 in compensation for the rent, which has now been reduced to €15,000 on appeal.

European decision

Both the Constitutional Court and the Court of Constitutional Appeal referred to the judgement of the European Court of Human Rights in the case of Amato Gauci versus Malta of 2009, and used the same reasoning.

In the Amato Gauci case, the ECHR said that although governments were better placed to appreciate what is in the "general or public interest" - in this case Malta's housing needs - a fair balance had to be struck between the demands of the general community, and the protection of an individual's fundamental rights.

Given the low rent payable in the Amato Gauci case, the European Court said that the Maltese government had "failed to strike the requisite fair balance" and awarded the landlord compensation.