Pre-1995 Lease – Tenant Evicted by the Rent Regulation Board

The Rent Regulation Board (the “Board”), presided over by Magistrate Dr Simone Grech, on 30 July 2021, in the case Ann sive Felicity Wismayer vs. Patricia Engerer dealt with an eviction request made by the plaintiff after she obtained a judgement in her favour, delivered by the First Hall Civil Court (Constitutional Jurisdiction) presided over by Honourable Mr Justice Francesco Depasquale (the “Constitutional Judgement”), confirming that Chapter 69 and Act X of 2009 infringed her human right to enjoy her property under the European Convention of Human Rights. The competence and powers of the Board were also explained in detail.

After a long string of cases dealing with pre-1995 leases, both at the European Court of Human Rights and at our local courts, it is now well-known that Chapter 69 and Act X of 2009 have been declared to be unconstitutional in various instances. They placed an excessive and disproportionate burden on owners along the years by failing to strike a fair balance between the general interests of society and the rights of owners to the peaceful enjoyment of their properties. In various constitutional cases, including the case involving the parties mentioned above, compensatory damages were awarded to the property owner(s). In this case, a favourable decision at constitutional court level did not prove to be the finish line for Ms.  Wismayer. The First Hall Civil Court (Constitutional Jurisdiction) did not consider it right and fair to order the eviction of the tenant from the plaintiff’s property as it said that this remedy is typically granted by the Rent Regulation Board utilising procedures which were purposely introduced to provide a fair and effective remedy. Consequently, Ms. Wismayer, instituted a case in front of the Rent Regulation Board requesting it to declare the lease arrangement between the parties to be null and void due to the Constitutional Judgement delivered on 16 March 2021 and to order the eviction of the defendant from the plaintiff’s property.

In its reply, the defendant claimed: (1) the lack of competence of the Board to decide on the matter in question; (2) the inexistence of a judgement or decree terminating the lease arrangement between the parties; (3) that the Board had to operate within the parameters established in Chapter 69 of the Laws of Malta, which chapter of the law did not give the plaintiff the right to evict the defendant tenant or to terminate the lease; and (4) that the plaintiff’s fundamental human rights were no longer prejudiced by the application of Chapter 69 of the Laws of Malta as recent amendments to the mentioned chapter of the law introduced a mechanism to ensure that landlords receive a just compensation.

In its decree, the Board categorised the arguments raised by the defendant into three. It started off by considering its statutory competence and powers and in so doing it referred to previous jurisprudence which tackled the matter. Article 16 of Chapter 69 of the Laws of Malta clearly gives the Board the exclusive jurisdiction to decide on all matters affecting the leases of urban property (vide Francis Cachia Caruana et vs. Ludgardo sive Riccardo Fiteni, Court of Appeal (Inferior Jurisdiction), 30 January 2017). The Board also referred to the 2008 Rent Reform Whitepaper which stated that the setting up of a separate administrative entity with jurisdiction on both the regulation and governance of the rental market was being proposed to ensure that these matters be addressed effectively. The Board continued to note that Act X of 2009 also made it clear that the general rule and not the exception is that the Board has exclusive jurisdiction to decide on matters which deal with urban leases, which includes both residential and commercial leases (vide Catherine Darmanin et vs. Miriam Cutajar Fiorini et, Court of Appeal (Inferior Jurisdiction), 16 December 2015). Considering the above, the Board ruled that it had competence to hear and decide the case in question given that there clearly was an undisputed lease arrangement between the parties, forming the subject matter of the case. Furthermore, constitutional cases dealing with pre-1995 leases have been adopting a procedure which necessitates the institution of a further ad hoc case in front of the Board by the landlord to evict the tenant from his/her property.

Secondly, the Board considered the defendant’s claim that no judgement or decree terminated the lease. The Board agreed with the defendant that the Constitutional Judgement did not terminate the lease arrangement which existed between the parties yet, it then held that a declaration of violation of the plaintiff’s human rights implicitly and naturally leads to: (i) the lease termination and (ii) the eventual tenant eviction. Hence, the simple fact that the plaintiff failed to request the lease termination should not act as an obstacle to the plaintiff’s requests to the Board. A declaration of violation of human rights cannot be considered in vacuo in these circumstances. Referring to its earlier cases, the Board stated that it is a well-established principle that a constitutional remedy does not mean a reimbursement of the full value of the property. The court considers various factors, including the length of time of the violation, the level of disproportion between the rent paid to the landlord and the market value s/he could have obtained, and the social justice attained.

In Dr Cedric Mifsud vs. Attorney General, it was established that if a court orders the payment of damages but allows the continued application of an unconstitutional law, it will effectively be prolonging the state of unconstitutionality. Instead of bringing an end to the human rights violation, it would be allowing such violation to persist on condition that damages be paid. This runs contrary to the spirit of the law which seeks to protect the fundamental human rights of an individual. Therefore, a violation of human rights declaration inevitably leads to an order being issued preventing the violator from utilising and relying on the protections afforded to him/her by the rent laws for him/her to continue to occupy the property under lease. The Board concluded that the defendant could not continue to invoke the unconstitutional dispositions of Chapter 69, as amended, to continue to benefit from the lease.

Thirdly, the Board acknowledged the amendments introduced through Act XXIV of 2021 on 1 June 2021, which establish a mechanism allowing landlords to increase the rent due for pre-1995 leases of residential properties. Having said this, the Board could not discard the Constitutional Judgement as it gave a pronouncement on the position of the parties and because Act XXIV of 2021 does not contain transitory provisions which impact or supersede judgements delivered before 1 June 2021.

In light of the above, the Board decided the case in favour of the plaintiff and ordered the eviction of the defendant from the plaintiff’s property within 30 days from the date of its judgement. The Board stressed the point that the lease arrangement between the parties was not rendered null and void ex lege yet, the violation of human rights declaration led to the same end-result and to the eventual eviction of the tenant.

The author expects Act XXIV of 2021 to lead to a reduction in pre-1995 lease cases which are identical to the Constitutional Judgement and to the one reported herein as this Act seeks to reduce the disparity which exists between landlords and tenants by giving landlords the faculty to increase the rent due in certain cases. It will not resolve the matter completely as the historical gap will persist and any prejudice suffered in the past will remain unaddressed, unless resolved in court or by any other alternative dispute resolution mechanism.

This article was first published by the Malta Independent.