A law which effectively grants tenants of agricultural leases an indefinite right of renewal breaches the owners’ fundamental rights, the Constitutional Court has ruled
In a landmark judgment that cast the spotlight on agricultural leases, the court confirmed a lower court judgment declaring that the Agricultural Leases (Reletting) Act breached owners’ rights to the peaceful enjoyment of property as safeguarded under the Constitution as well as the European Convention on Human Rights.
The case revolved around some 5,000 square metres of rural land, including a farmhouse, at Żabbar, purchased in 1982 by J & C Properties, along with another four properties, for the total price of Lm26,000 (almost €60,000).
The land was leased to Nazzareno Pulis, at an annual rent of €58.23, remaining so leased until today.
The owner company filed proceedings before the First Hall, Civil Court claiming that its rights were being breached by the fact that it was being deprived of its full enjoyment of the property without being afforded adequate compensation.
The first court had upheld that claim, awarding the company €100,000 in damages.
The State Advocate appealed on various grounds, while J & C Properties also appealed, claiming that the amount of damages was too low, given the property values at stake, coupled with the fact that the first court had not ordered the eviction of the sitting tenant.
The Constitutional Court rejected the arguments put forward by the State Advocate, save for that concerning the awarded damages which the respondent claimed to be excessive, effectively slashing the sum to €22,000.
The State Advocate had argued that the owner had not availed itself of its right to ask for an increase in rent.
However, the court observed that although the first court could have lent more weight to that consideration, that factor alone would not suffice to adequately safeguard the owner’s rights.
Indeed, when revising such rent, the Rural Leases Control Board would likely consider other properties, likewise subject to long-standing and controlled leases.
While such restrictions on ownership rights had been intended for “social purposes,” was the owner receiving adequate and proportionate compensation?
Under the current legal regime, the owner could only claim back his land for farming purposes or to develop the site, save for other instances where shortcomings were proved on the part of the lessee.
This meant that if the owner did not intend to farm the land or lacked the capital to develop it, he could not claim his property back, unless the lessee agreed in writing to the termination of the lease.
On the basis of the evidence put forward, the court confirmed that the owner’s right in terms of article 37 of the Constitution and Article 1 of the First Protocol of the European Convention, had been breached, stating further that the respondents could no longer avail themselves of the law to renew the lease.
However, other issues such as eviction or the lessee’s right to compensation fell within the competence of the ordinary courts, the Constitutional Court said.
As for the awarded damages, the court observed that it had not been proved that the property was irrigated land.
This meant that the land could be acquired for development purposes and the potential developer could proceed to evict the tenants.
Moreover, the rental losses between 1982 and 2018, as calculated by the technical expert, were not “so realistic,” the court observed, thus reducing the damages to €22,000.
This judgement, the first to vindicate owners of agricultural land worth millions, leased to third parties at a paltry rent, and is expected to open the floodgates to many more cases on similar merits.
Lawyers Edward Debono and Karl Micallef represented the applicants.
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