Nominate Contracts – Dr Patrick Galea – Lecture 1
Our assignment is the law of lease with a specific focus on the civil code. That stated, in our
discussion of the civil code it may be necessary that we have read certain other pieces of legislation.
The reason is twofold: first, often the civil code builds on these laws. Example the rent board, the
rent regulation board, is not a specific historical creation of the civil code, it was created in the 1930s,
but it was later taken over and part of the civil code. What we are saying is why we need to visit, and
read and study other laws which will be indicated is that often these are drafted into the civil code or
in these special past laws, draft provisions of the civil code. So it is a 2 way process which will
necessitate a knowledge of the history of the law of lease. The second reason why it is important and
why perhaps it is even a more important reason is that it is very difficult to understand going beyond
a mechanical exercise and application of the law of lease unless one has a historical knowledge and
some basis of historical background. In other words, the contemporary law of lease does not exist in
vacuum but as always it is the result of history. So it is for this reason that as we discuss the articles
of the civil code we will refer to older laws.
In fact for the forthcoming lecture we need to read the initial forthcoming articles of the civil code,
and Chapter 69; the Reletting of Urban Property (Regulation) Ordinance. The articles of letting and
hiring of the civil code. Article 1530 and etc., and Chapter 69.
What we have on today’s agenda is a superficial, historical overview over the way the law of lease
developed. Starting from the civil code, historically interestingly, but we will not go there is what was
the situation under the Code de Rohan and the Code of Manoel de Vilhena because basically those
refer to roman law as the ius commune. It was written that the substantive provision are the roman
law, ius commune.
We start in 1868 and the basis of the articles of the Civil Code, in 1868, were to define the contract of
letting and hiring. By that time, it was clear that the contract of lease and the obligations of lease
were personal rights not real rights. Not real rights following erga omnes, but personal rights inter
partes. Some say that it was Pautier who finally put the discussion to rest. So the essence, however,
of the 1868 provisions was that contract of lease was a lease of an object, a corporeal object for a
period of time. And the key to the 1868 historical situation, the basis was that when the time agreed
for the lease expires, the lease terminates. In other words, there were no, or limited provisions of
renewal of the lease. If the lease expires that is it, the contract terminates. We used the term limited
provisions because in the original 1868 version, the terms lessor and landlord are going to be used
interchangeably, because although they come from different backgrounds and cultures but for
convenience, we will use them interchangeably. Earlier we made a qualified statement that when the
term agrees, the lease is up, it is not renewed. This is subject to the obligation of the lessor, the
landlord, to send a notice informing the lessee that there will be no renewal. The agreement expires
on this date, so please evict, please give back possession. No technical possession, of course, but
control. And there was also a situation that where the lessor did not tell in writing the lessee that the
lease is terminating, but allowed the lessee to stay on, then there was an automatic renewal for 1
instalment of rent. What do we mean an automatic renewal for 1 instalment of rent? It means that if
the rent was paid for example a month, 3 months in advance, the lease was automatically renewed
for a month or 3 months. And this is what used to happen if the lessor did not write to the lessee and
the lessor, landlord allowed the lessee to continue occupying by title of lease. You meet these in the
judgements. The key to the 1868 was that when the term expired the lease was over. We will see
that here in the law of lease we have a pendulum which postulates; swings one and then swings to
the other side. Sometimes there is a reaction to protect the tenant, in other situations there is a
response, a reaction to protect the landlord. So if we look historically at the law of lease it is a
swinging pendulum. And in our times, of course there is the added factor of the right to peaceful
enjoyment of property Article 1 of the First Protocol of the Declaration of Human Rights. Going
forward in time, the situation that there was basically no security of tenure because as we have seen
when the term agreed expired, that it was it, it was up. Nothing further to say, the lease is
terminated. This as happens and is not an unfamiliar problem created particularly a shortage of
housing. A social problem that people getting married, cohabiting, wanting to live on their own
found it impossible or very difficult to rent because it was really a landlord’s market. You agree and
that is it. At the end of it new conditions came into effect, if not eviction.
The next landmark piece of legislation is what is today Chapter 69, Ordinance 31 of 1931, and this is
the Reletting of Urban Property (Regulation) Ordinance. Now the details of this is that it was
amended regularly and systematically over the years. We cannot understand the law of lease without
a background of chapter 69. But historically, this ordinance introduced the principle that on the
expiration of the period agreed upon, there was an indefinite right of renewal in favour of the lessee
on the same terms and conditions. The reason was to address serious concerns of social
accommodation. This is perhaps always the most controversial issue, the most controversial aspect
of the law of lease; residential accommodation. And it is obvious that it is a concern not to see
people on the street. Of course the question is how far and on what conditions?
So the effect of this today Chapter 69 is that when the period of lease which was agreed to, expired,
it was renewed indefinitely on the same rent, on the same terms and conditions. So if you agreed
today, the tenant is there indefinitely forever. It was perhaps with today’s eyes, and what you gather
from reading history is that it was a very bad situation. The effect was that to immediately to protect
the sitting tenant. Now obviously, this meant that no protection against inflation, no protection
against increase in rent, no protection against the return on property for the landlord. That was it
and there were limited provisions whereby the lessor, the landlord, could increase the rent. For
example, if the lessor makes a capital investment in the property, very limited. And although it was
heavily weighted in favour of the lessee, one can also add that it created certain unfairnesses
because, for example, something structural had to happen it was the responsibility of the lessor.
Imagine changing a ceiling for (?) of rent, in exchange. This was 1931. In terms of the original
ordinance of 1931, the lease was inherited. So it is not the lease dies with the lessee. The children,
the heirs would inherit the lease. Historically, the situation was certainly very much weighted in
favour of the lessee. Whether it was excessive or not remains to be seen because social conditions
changed.
Now the came the Second World War, 1939 to 1945, and there were 2 factors here: the first, most
obvious, is that people’s houses were bombed and demolished, and secondly, a lot of profiteering.
Again this is a normal consequence of war. People who are in strong position take advantage of those
who are really desperate. So in 1943, we had Chapter 116, The Rent Dwelling Houses Restriction
Ordinance. Why was this very significant? Because neither the Civil Code, nor Chapter 69, Ordinance
31 of 1931, imposed a control on the initial rent. By virtue of the Civil Code, Chapter 69 did not
control the initial rent. It was market regulated, but it imposed a control on the subsequent increase
of the rent. The Civil Code, 1868, and Chapter 69 made no control on what parties initially agreed, it
was the market which regulated, supply and demand. Chapter 69 prohibited subsequent increases in
rent or change in conditions. Chapter, now, 116, the 1943 Rent Restriction Ordinance, this was an
emergency war ordinance, as it was still very much at the height of the war, but in 1943 initial
control on rent was introduced. In 1943, Chapter 116 initial control on rent was introduced. So again
this makes sense in the context of war because people with nowhere to live easily found themselves
at the mercy of those who would offer something to rent for them. And also it imposed the
possibility to request the Rent Board to reduce the rent if the agreement was excessive. Chapter 116
granted the lessee the right to petition the rent board to reduce the rent if the lessee thought that it
was excessive. The rent board was set up in 1931, what is today Chapter 69 the Reletting of Urban
Property (Regulation) Ordinance. It was set up in 1931 and remained with us till day.
War finished in 1945. One can imagine the disaster after the war, and social housing, shortage of
accommodation, in 1949, we have the what was known as the Housing Act. Now what is this Housing
Act? Basically, the Housing Act gave power to the government, at the time the housing secretary, to
requisition (a very colonial term) property. So somebody knocks at your door, I am from the Housing
Secretary Department, the place is requisitioned. You are forced to lease out this property to this
guy, on these terms and conditions. You have a right to object to these terms and conditions. So the
Housing Act of 1949, again in the wake of the disasters of the war, gave the power to the government
to take possession of and forced the owner to rent out to third parties. This Housing Act was
repealed and reenacted in 1992, when the Housing Authority was set up, and it administered
existing requisition orders and generally phased them out.
So again one can imagine that all these controls: Chapter 69, Chapter 116, and the Housing Act, had
a perhaps an adverse effect which was not intended. In the sense that while these were designed
and created to protect and to create social allocation and residential allocation, the effect was that it
depressed totally the market. Again one has to look at the context in history. And thus, it depressed
development and the land market. Nobody reasoned out why should I built property to have it
requisitioned? Why should I rent property never to see it back? So in 1959, Chapter 158, we had the
Housing (Decontrolled) Ordinance. And the intention behind this ordinance is to give an incentive to
people who develop because the policy behind the law was that a new building built after 1959
could be decontrolled. Now what does decontrolled mean? Decontrolled means taken out of the
sphere of control, it was no longer subject to the provisions of Chapters 69, 116 and the Housing Act.
That is the meaning of decontrolled, those 3 laws which were heavily weighted in favour of the
tenant against the lessor. And the idea was that an intervention in the market was necessary.
In parallel, in 1967, now we are speaking specifically on agricultural leases, Chapter 199 there was a
law to encourage and protect agricultural leases; il-qbiela. Now the characteristic of this Chapter 199
was that this was for the cultivation of crops, not for example grazing rights, or husbandry.
Chapter 158 was limited specifically to housing, which is always the controversial issue. The 1959
Ordinance, Chapter 158 was limited only to housing rent. Going forward, thus, to 1979, Act 21 of
1979 was an amendment to Chapter 158, the Housing (Decontrolled) Ordinance. So there were
amendments to reverse the clock of 1959 whereby the limited freedom from the limited release and
freedom granted from the 3 rent ordinances we spoke about; Chapter 69, Chapter 116 and the
Housing Act, was greatly, greatly diminished and reduced. In fact, prior to the 1979 amendments, at
the termination of the lease of a decontrolled dwelling house, the tenant was on the street because
it was decontrolled. By virtue of the 1979 amendments, protection was reinstated to the tenants of
decontrolled dwelling houses. Reversing thus, the pendulum now swinging to the other side. Also in
1979, protection was given to citizens of Malta who had a temporary emphyteusis of a dwelling
house which expired. To finish the point on the 1979 amendments, these amendments have been
shot down to pieces time and again by the Courts in Strasbourg and limitedly also by the
Constitutional Court because it was held that our laws were a violation of peaceful enjoyment of
possessions.
1995, we have the liberalisation of new rents. All rents: residential, commercial, office, whatever, not
agricultural, entered into after 1st June 1995 took the clock back to the Civil Code. There was no
initial control, when the lease was over that was it. The 1995 amendments were prospective. At the
time no one had the political courage, it was very sensitive and potential really risky, to touch the pre
1995 scenario. Post 1995, you knew what you were going into. But the pre 1995 scenario with all
that baggage: Chapter 69, Chapter 116, the Housing Act, the Decontrolled laws, remained in force.
And it was only slowly that there were some attempts to elevate the hardships and burdens imposed
by the pre 1995 legislation. The first was Act 10 of 2009 which were amendments to the Civil Code.
The lecturer does not understand very much the drafting, why amendments to Chapter 69 had to be
incorporated in the Civil Code. For example, the old pre 1995 commercial leases finish by 2018. The
old commercial subleases were supposed to finish in 2018, but then on the eve of the expiration, a
law was passed to grant... For example, the old protection to garages, boathouses was terminated. In
the past, if you rented a garage, it was indefinitely renewed. This applied also if you had a boathouse.
Now we have 2 final important pieces of legislation: the first one is the Private Residential Leases Act,
Chapter 604 of 2019. Again the question is residential leases, and it brought new obligations for
example short leases went up to 6 months. It was a consumer, in the sense of again protecting the
lessee. In the wake of news, there are unfounded rumours at the extreme that even an entire bed
was rented. We had recent amendments to overcrowding rented property. And we had then an act
to amend various laws, Act 24 of 2021/2019 which amended the Civil Code, Chapter 69, Chapter 158
which again regulated the old leases. There is a means test if a person is below means test then
there is a threshold of increase of up to 2% of the current market value with government subsidising
up to 10,000 euro a year of the rent. If you are below means test you are protected. If you are above
means test you have 2 years to get out.
All this is background to the Civil Code. The core task is the Civil Code. But the point is that we cannot
understand the Civil Code in vacuum.
There were provisions that protected the landlord to increase the rent.
Lecture 2
Our immediate attention goes to the civil code. Then we will stop our examination of the civil code
and move to the special laws; namely chapters 69, 158, 604, 199, and then back to the civil code. The
reason is that the civil code is drafted on theses special laws and it is important to have some
background.
Initially, we are looking at Articles 1525 to 1531b of the civil code. So the comment here is that we
will find the original articles/provisions of the civil code with significant insertions/infusions which
happened over time and sometimes transposition from other special law. The reason is generally
historical and as we have said because the law of lease is far more than structure with a lot of
branches hanging on each other, rather than a systematic statement. The reason is that thus, certain
references to other special laws.
Article 1525(1) is partly the original article of the civil code, but then there is a reference to act 10 of
2009, and it says that: a contract of letting and hiring (lease) whether of things or of work or labour.
After the articles on the law of lease are 3 short titles on other aspects of letting and hiring:
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The first is that of letting and hiring of carriers by land or sea. This is principally of historical value
because today transport by sea and by land is obviously regulated in its own way.
The other part is the hiring of a person. If you hire a person, you hire a thing not a person. In a
sense, it has today resurfaced in a different manner where a company provides people for
employment to another company. What are being hired are really personality, but we do not hire
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a person in the same way we hire an object. This has largely been superseded by the
employment and industrial relations act.
But the third subtitle at least is still partly relevant. It is the contract of works or locatio operis;
known in Italian as appalto, and in Maltese as appalt. Basically this is a contract where a
contractor is engaged to do certain work. Where a contractor is engaged to do certain work it is
called a contract of appalt, and it is characterised by the independence of the contractor from
the employer. And this is what distinguishes the contract of appalt, the locatio operis, the
contract of works from a contract of employment. In a contract of employment, the employee,
generally, is hardly independent from the employer. But in a contract of works there is a
significant degree of autonomy and independence.
When we start reading the article that is the first thing that we will see: of things, or of work and
labour. What do we mean by work and labour? It is subcontracts or situations we have just
mentioned. The historical article said that a contract of lease could be done verbally or in writing.
However, by virtue of Act 10 of 2009, as of 1st January of 2010 it is written here a contract of lease
has to be done in writing, in the case of urban, residential and commercial tenements. So
theoretically, I can rent a car or a boat or a moveable, verbally. But in the case of a lease of an urban
property, now the term urban as one can imagine is rather wide even if not easy to pinpoint what it
encompasses, but urban, commercial and residential properties as of 1st January 2010 require
writing. What is writing? It is clear that a writing on paper is an obvious form, however, we need to
have a look at the electronic contracts act and there we will find that certain lease contracts can be
done electronically. Generally, anything which is permanently recorded and stored and retrievable is
writing. So electronic writing is writing because you can store it permanently and you can retrieve it.
Then we go to something else, the unnumbered paragraphs. Two paragraphs which again, are later
additions and we have a reference to the rent regulation board. Now as we said last time, what is
today chapter 109 is Ordinance 21 of 1931. This rent board was created by Ordinance 21 of 1931,
today it is chapter 69. And by virtue of these amendments, please note the wide powers and
competence that has been granted to the rent regulation board, and it is created under chapter 69.
“all matters affecting the leases of urban tenements including residential, commercial tenements,
including occupation of urban tenements where they have expired and freezes. So please note the
following: that the powers of the rent board are to include all issues or questions where there is a
lease of urban, commercial or residential property. It is the sole competence of the rent board to the
exclusion of the ordinary civil courts, and of course when it is competent the agricultural leases
board. We are saying that the rent regulation board created by virtue of chapter 69, but it found its
appear in the civil code, is competent to decide all questions relating to urban, residential and
commercial leases. This also includes issues of damages relating to unlawful occupation when a lease
has expired. And this was specifically tasked in these wide terms because there was some doubt or
discussion whether for example when a lease has expired and the tenant left behind damages, or
unpaid water and electricity bills, who is competent to decide? Whether the supreme court, the civil
court, etc. Here it has been clarified, it is the rent board. The moment it is established that there is a
lease relationship of urban, residential and commercial property, then it is the competence of the
rent board in all questions including of course questions on eviction. The Rent Board shall also have
the competence to decide demands related to maintenance, repairs, defects and faults of the
tenement including latent ones, damages or improvements, amounts due for water and electricity
and security issues. And thus, we see the wide powers of the rent board. Please also note there is a
reference in 1525, the 4th paragraph, to the adjudicating panel. Now this adjudicating panel is a
panel created by the private residential leases act; chapter 604 of 2019. And it has its own
competence. In the 4th unnumbered paragraph of 1525(1), where it says the board has competence
over defects, maintenance, repairs, security issues, etc., this excludes the adjudicating panel in terms
of chapter 604, the private residential leases act. On questions falling under the competence of the
agricultural leases board, under chapter 199, this has retained its competence. The rent regulation
board overrides the adjudicating panel, in terms of the private leases residential act.
Are there other competences? The agricultural leases act. Of course, here there are issues. Over
time, the question arose whether a garden, a gardina, was an urban or rural because if it were rural it
fell under the rural leases board, and if it were not it fell under the rent board. The trend of the
judgements is that for example a garden adjacent to house in Sliema or Attard, even though it was a
standalone garden, the garden was still considered to be urban property because firstly, it was
adjacent to an immoveable property and secondly, it was in a built-up area. Thus, this did not fall
under the competence of the agricultural leases board. Often th question used to arise whether
something falls under the rent regulation board or the agricultural leases board, example a garden
which has an independent existence, it is separate. Very often in the past we used to have gardens
adjacent to houses whether a lease of that was an agricultural lease or an urban lease. And it was
held that it was an urban lease. And issues regarding such leases were under the rent board not the
agricultural leases board.
Leases of moveables generally remain within the competence of the ordinary civil courts board. So
here we are talking about a situation where you rent a boat or a car, not things which are accessory
to the principal lease. Renting of a boatyard is considered to be a commercial lease. What is
residuary under the civil courts? Leases of moveables, corporeal tangible moveables.
Earlier on we made a statement the competence of the rent board is triggered by the existence of a
lease relationship. In other words, if there is no lease the court is not competent. For example, if it is
a commodatum (loan). So the threshold/trigger is the existence of a lease relationship. The moment
there is a lease relationship, the rent board steps in. However, it is the ordinary civil courts who have
the competence to decide whether or not a lease exists. The existence or otherwise of a lease is
decided by the ordinary civil court. If the ordinary civil courts find that there is an existence of a lease
they stop there and say that they have no further competence. If the civil court finds that there is no
lease existence, no lease relationship/agreement or relationship in existence, then it has the
competence to continue to hear the matter. But the moment there is a lease, the ordinary civil courts
have to stop. The civil court has what we call sections:
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the ordinary/default jurisdiction – the first hall
family section
voluntary jurisdiction
commercial section
recovery of assets (on Money Laundering, confiscations, proceeds of crime, etc.)
Concluding comments on the 4th paragraph of 1525(1): it is interesting how in contemporary
language the terms jurisdiction and competence are interchangeable. The Rent Board shall have
competence to decide ... over which the Adjudicating Panel has no jurisdiction. It is an interesting
example of how the 2 terms cooperate. Jurisdiction is the power and competence is the division of
power. The civil court has many powers. The Maltese courts have jurisdiction but then there are
different powers to different courts, and this is competence. The adjudicating panel has its own
jurisdiction not its own competence. To have competence you need jurisdiction. To have jurisdiction
you do not necessarily need competence. The second point, please be aware of this linguistic and
sometimes conceptual confusion. When we start working as lawyers we will immediately come
across the term jokkupa minghajr titolu validu fil-ligi. What does this mean? Is it a squatter? Is it a
lease relationship which due to something supervening there are grounds for example non payment
of rent, gross damage, etc. The initial lease agreement was valid but then something happened
which entitles the parties to terminate it. To occupy without a valid title may mean one of 2 things:
1. That you suggest a squatter, no legal basis
2. Or that there is a title, however, circumstances exist which justifies the dissolution of this title.
For example, non payment of rent.
This vague formulation without a valid title at law can have different meanings and you have to see
the context and maybe even drafting has to be a bit more precise.
We may have 2 different situations which are commonly and not always precisely caught or
attempted to be regulated without a valid reason or title at law. It could be a squatter; absolutely
without any basis of occupation, or there could be a basis of occupation on which then there are
grounds to terminate. For example, there is a commodatum. It is not a lease agreement but there is a
legal ground to occupy because it is not a precarium. A precarium can be terminated unilaterally, a
commodatum there is an agreed time limit and unless a condition is violated the parties have to see
it through. So we have to be aware that without a valid title at law can mean either absolutely no
title or a legal basis which is subject to be dissolved or terminated.
Moving on, the subsequent articles more or less add other powers to the powers of the rent board.
Now we have some important definitions, and these definitions are 1525(3). Why are they imp?
Because these have attempted and largely been successful in putting to rest certain unclear
definitions and the background to these definitions are the anomalies which used to arise under
chapter 69. We will understand them better when we have a look at chapter 69. For example,
chapter 69 refer to commercial premises. So a shop was a commercial premise, a store (a mahzen)
was a commercial premise, lawyers’ and architects’ offices were not commercial premises, notaries’
offices were, pharmacies were, bakeries were. And the reason was that chapter 69 had the
statement: a tenement used for any art (liberal art), and the question was that, was the exercise of a
lawyer’s office an art or, a profession ? It was not protected. A clinic was not protected. And thus,
these amendments here define commercial premises. "commercial tenement" means an urban
tenement (not clearly defined) which is not a residence and which is leased to house (it’s insensitive
to put the word house instead of residence) an activity primarily intended to generate profit and
includes, but is not limited to, an office, a clinic, a tenement leased out for the sale of merchandise by
wholesale or retail, a market stall, a warehouse, a storage used for commercial purposes as well as
any tenement licensed to sell things, wines, spirits or foodstuff or drinks, theatre, or tenement mainly
used for any art, trade or profession”. These examples were all taken from chapter 69. This is a very
important definition that we know, thus, what commercial tenement in the civil code means. This
provided a very welcome clarification on the otherwise unclear provisions of chapter 69. Chapter 69
was written in 1931. At the time when it was written, in 2009 at the last moment, Act 10 of 2009
there were important amendments to garages, the old casa bottega, summer houses (the
villegjatura), commercial leases, commercial subleases, etc. but at the last moment
political clubs were retained under the old law. Both parties found this very convening. Kazini.
However we have a clarification and comes in the wake of a lot of judgement in the past this
botteghin – hole in the wall were drinks were served. It has been clarified that notwithstanding a
club, has a bottegin or more than a bottegin a commercial establishment it will still be not
considered a commercial tenement even though this club is used for generating profit.
Club means a club which is registered with the commission of police.
Reference to the private residential leases entered into after 1st January 2021.
The 1931 competence of the rent board meant that there was the original period of lease and in
1931 there was no initial control and during the original period it was the civil court and code which
applied. And the context is chapter 69. The moment there was a renewal – chapter 69 and the rent
board.
1526 – the letting of things is a contract – one of the contracting parties binds to the other the
enjoyment of a thing for a period specified which the latter binds himself to return back to the
lessee.
1526(2) Clarifies that only corporeal things can be the subject of a lease. Only corporeal tangible
things.
Corporeal tangible moveable or immoveable.
Licensing is more contractual – the protection of trade names. Here is the classical lease.
1526(1) states the basic definition. This defines the contract of lease. The grant of a thing for a period
of time for an agreed use and an agreed rent. Characteristics of rent.
In 2016, the need was felt to regulate the letting or charter of ships or aircraft including aircraft
engines and spare parts. Our jurisdiction ratified the cape town convention. This is unrelated to the
civil code and allows the security of interest of an engine. And the point of 1526(3) is that the terms
of the charter agreement of the aircraft or of the ship or of the even maybe the engine, prevail over
the terms of the civil code. And the terms of the civil code only apply subsidiarily.
There is saving the right to damages, the unilateral right of the lessee to terminate a charter of a ship
or aircraft for what it considers to be a valid reason. In other words, the lessor is entitled citing on
legal and contractual grounds... however the lessee is entitled to challenge the legality and claim
damages. This links to the term default. In the
Lecture 3
Letting re chartering of ships, aircrafts
Article 1526(3) was amended in 2016 when we had the aircraft registration act. The act incorporates
part of the cape town convention. It is a unite droit – in rome – a centre of research. The point is that
it allows the taking of finance securities. Aircraft companies have a lot of very valuable spare parts
and these can be used as security for a lender to finance a part. The gist of the amendments is that in
the case of charter of aircraft and of ships what will apply is the terms and conditions of the
agreement and the special
The provisions of the civil code will only be applied subsidiarily and then the secondary legislation. It
was specifically stated that these will prevail the rules of the civil code. Note that there is the right,
the unilateral right of the lessor on a purported breach 1526(5). The lessor is entitled in the event to
terminate the lease of a ship or aircraft engine unilaterally. The lessor and later on the mortgagee,
the lessor is entitled to unilaterally dissolve the agreement on the basis of a purported breach. This is
very one sided in the sense that a capricious or unreasonable lessor may decide to unilaterally
dissolve. It is done by termination – extra judiciary. With the unilateral right, comes the responsibility
for damages. The burden of proof is on the lessee.
The rights granted through the lessor is the right to repossess to take possession. Beyond
termination, apart from termination which happens unilaterally the lessor has the right to take
possession. And we will see there the courts providing full support to the lessor. The article of the
law speaks of mortgagee. A mortgage is something which operates in maritime and employment law.
It is a type of security which was originally derived from British practice and extended to the aircraft
registration act.
The party on favour to whom the mortgage is granted. It is a preferential ranking. If the aircraft or
vessel were to be sold the mortgagee would have a preferred entitlement to get paid before anybody
else.
The right to repossess – the right to take back the asset. These are registerable and one can access
the state of mortgage.
The mortgagee and the lessor have the right not only to sell, dissolve the lease and also the right to
repossess. The reason is, this was done to try and allay foreign investors about court delays.
There is a useful definition of default. In all finance agreements will have events of default. Non
payment, civil arrest, etc. We are given a good definition which thus, entitles the mortgagee or lessor
to act.
1526 Sub article 7b. – what the word default means – definition
There is also another customary clause which is the change in the financial condition of the lessor.
A default which is substantial under the rights of the agreement.
It deprives the mortgagee from what it was supposed to do.
Implied but not perhaps so expressly stated. An underlying theme- the way the trade goes. The
practice to trade, what to expect in trade. The general observation is on 1526(3 – onwards – which
were the 2016 amendments)
1526(7c) the lease of a ship or an aircraft involves 2 types
There are 2 types of charter bareboat charter – just for the ship of aircraft and the relationship is one
of a simple lease. And a charter by demise means that the administration is the responsibility is
surrendered in its entirety to the charter as its surrender its responsibilities to the lessor.
One of the things that we have to bear in mind is that we are constantly changing the scenario all the
time. The context is the lease of an undivided object. The first question is if i am a co-owner of a
building can i lease out qua co-owner that building.
The lease of an undivided share was never accepted but here we look at 2 leases. What happens to a
lease under a dissolvable title? We look at articles 1527 – 1531.
When the code was written there was no notion of licencing of intangibles. So the lease of an
undivided share is valid when all co-owners sign the lease. It is possible for 1 of the co-owners to
request petition. the court read Rent Board, in the case of immovables, and ordinary civil court, in
the case of movables, to approve the lease in favour of an external third party, binding therefore the
entire co-owners. So if A, B and C are co-owners, A must file a request against B and C, noting the
potential lessee, after which they all ask the board to approve the facts of the lease. It is possible for
all the co-owners to agree to grant a lease in favour of one co-owner.
If a lease terminates, certain people are preferred. In the event that where there is the lease of an
urban residential or commercial tenement by 1 co owner, without either the support of the
competent court or the consent of all the other co-owners, this lease is annullable (not null but can
be null), any one of the co-owner provided that the action can be filed within 2 months of
knowledge. Article 1527(3)
The lease by a person possessing under temporary or dissoluble title – Article 1530
A year before a temporary emphyteusis, the emphyteutic creates a year before. This scenario is of a
usufruct, a temporary right that terminates with the death of the usufructuary.
“any person possession" has created discussion but it means that the emphyteutic or usufruct. There
is no perfect similarity between 1530(1) and (2) 1 states that the lease of the persons mentioned,
who possess under a temporary or dissoluble title is valid provided that it is made in fair conditions,
and for a period not exceeding 4 years in the case of urban, or 8 in the case of rural.
Fair conditions has, in the early 80s, seen a complete revolution as prior it was understood and
interpreted as being fair conditions in terms of the old rent laws. But then the title shifted and the
meaning of fair conditions transmitted to open market conditions.
What would a willing lessee pay to a willing lessor dealing with arm’s length without any undue
pressure of whatever nature or circumstances act?
This is criterion to challenge a lease made under this title. So essentially the person bringing the
claim must confirm the basic courts one may look at the increases of the rent, the insurance issues,
the obligations that structure obligations have to be controlled by the lessor etc.
1531A - Enacted in 2009, and retouched in 2019, which states that any lease agreement of urban
property, after 1st January 2010, has to be made in writing. Act 24 of 2019 the porviisons of chapter
604 have to be adhered to.
It is written that in the absence of writing one of the elements the contract of lease shall be null.
There is no clear answer.
Null is not the same as non existence.
1531AA – refers to private residential leases and mentions all that we have mentioned. However
there is the addition, whether there is an inventory and whether any security deposit with the lessor
over and above the first payment of rent.
Lecture 4
Shop means any premises leased for the... and exercised thereon from any art or trade. The only
comment here is that this created a lot of problems. The civil code has adopted this but built upon it.
It has made it very clear that shop 9ncludes any commercial premise, any commercial office and any
office whose objective is to generate income or profit. This was introduced in the civil code in act 10
of 2009.
A lawyer’s office was not considered to be an art or trade. This led to a lot of contradictions and
anomalies.one of the problems which goes across the board is the difficulty to reconcile mentally
and as a matter of interpretation the fact that there are different laws operating in different periods
of time and sometimes even later. When we discuss the civil code act 10 of 2009, the old pre 1995
leases says that a residential premises, there is an increase in rent but then it was supplanted by the
private residential leases act. What overrides what.
The old residential leases act overrides the civil code.
The definition of tenant. In the case of a dwelling house a person who before 1st June 2001 was
recognised as a tenant who had resided 4/5 years prior to 1st June 2008. Is not this bizarre? We have
a tenant prior to 1st June 2001 resided 4/5 years prior to 1st June 2008 and continue to reside until
his or her death. The only reason is that this was a transposition from the articles of the civil code
which were introduced in 2010 and removed and then pasted in 2008. The first draft was in 2008.
Certain things continue in the first draft. This is bizarre because it does not tell us what really
happened.
Psot 1995 there was a liberalisation process where the old leases were not touched. In 2009 they
tried to limit. There was a continuity and then continued till death.
Decontrolled leases act came into force. That was the only reason.
This passes on to the children, descendants who continue to reside for 4/5 years till death.
Saving for the 2 points that we just made with regards to children and spouses, on or after 1st June
2021, if you are not recognised as a tenant then as coming into force of the act unless at that point in
time one qualified as a tenant there was no further protection. However, if a person lived for 4/5
years prior to 1st June 2008 and continued to live with the tenant there was an element of
protection. A situation where a person was living with the tenant continued to live with the tenant
till 2008 but was not recognised as a tenant. There is a 5 year protection in relation to brothers and
sisters of the tenant.
2(iii) during these 5 years the lessor had a right to request an increase.
This has not been changed with respect to shops.
An emphyteutical grant not exceeding 16 years. This led to a lot of confusion. If there is a contract of
lease which resembles emphyteusis it is deemed to be emphyteusis if not made through a public
deed. Was caught by the provisions of chapter 69. The reason why emphyteutical leases exceeded 16
years so as to refrain from this provision.
An agreement for a lodging or guesthouse, is not within the purview of the...
Article 46 of chapter 69 – the article which in 1995 liberalised for the future leases.
S.L.16.11
Lecture 5
We are examining chapter 69. The establishment of the rent regulation board which is article 16. It is
possible to have panels of the board. It is presided by different magistrates and judges sometimes
retired judges. 16(4) without prejudice to any other law. What is stated here is subject to change
according to what other articles say. The added competence. The traditional competence which
developed over the years and an added competence introduced recently.
We have a statement that questions relative to leases arising out of the civil code on the chapter of
letting and hiring are to be decided here by the rent board. This is a rather imp statement because if
one ahs to act to dissolve a lease one has to come to the rent board and includes questions relating
to the status of urban property. Sometimes a lease expires and the tenant remains in occupation and
the compensation would be for unlawful occupation and not for rent.
It shall also have the competence to decide on questions relating to maintenance, damages or
improvement of the tenement. Thus, we have this additional competence. There is the possibility
probably the clarity the certainty that where there is an adjudicating body to decide on private
residential leases, the point here is that where the question water and electricity and security
deposit are included in the demand to the board, to the exclusion of the adjudicating panel in terms
of the private residential leases act. The all encompassing competence of the rent board. Even to
deicide a question of dissolution. For example where there is a default or a condition which is not
honoured. The only competence that the board has is the question of the validity of the contract of
lease. Not only the validity of the contract of lease but also the competence of the lease. The only
instance where the board does not have competence is not invariably is issues where there is an
existence of lease.
If it is not an agricultural lease the question is between the rent board and the civil court.
The moment it is established that a lease exists. Then it is the sole competence of the rent board. It is
demanded even the competence of the adjudicating panel of the private residential leases act.
Article 16A – is a strange, a very strange copy and paste of article 167 of the code of civil procedure.
Where 167 refers to special summary proceedings. And the idea when it was introduced was to
provide a remedy for uncontested debts. Today we have 166A. A judicial letter is sent and if
unchallenged will be the equivalent of a judgement. The idea is to facilaite judicial proceedings. The
16A of chapter 69 procedure, is where it may be used both to get an executive title on unpaid rent
and also eviction. The 2 demands may be proposed simultaneously. A judgement condemning a
lessee to pay an expired rent or even illegal occupation, and also a judgement to evict. The
competence is as is familiar. Any urban or commercial tenement without a claim of rent or without a
consideration of... the crux of it is that the applicant has to state that has to confirm on oath the
following one that the amounts are due and to confirm on oath that there are no normal grounds for
defence.
Note that whereas ordinarily proceedings before the rent board are through applications (Rikors) in
the proceedings under 16A it has to be a sworn application (Rikors guramentat).
It is relevant that in these situations the respondent is not entitled to defend. This highlights the
severity of this. The court proceeds the judgement without a hearing. This is very serious. Throwing
people on the street without a proper hearing. Is it fair that squatters remain there occupying
property? Accordingly when a party is served with the sworn application one has 20 days to reply. In
this case one does not have the right to reply, but one has the right to appear before the board
assisted by a lawyer and ask and show cause for leave to defend. It means that we are given an
indication in article 16A(5) he has to show a prima facie evidence/defence or that there has been
some irregularity in the proceedings, or that the respondent made a counter claim. Then the board
should proceed the judgement. If one had to ask what can you discern a trend by the courts? This is
difficult because some judges view the fact that there is no defence as something as very serious but
others do not apply such a high bar and it is not common that summary judgement is given and the
reverses the order to the client to the first hall civil court for the respondent to defend his case. This
gives rise to human rights issues.
Article 23 and 24 –
24 – is the grounds of appeal. There are grounds to the court of appeal in its inferior jurisdiction.
Appeals are allowed always in terms of article 8 of the ordinance. Wherever there is an order for
eviction this is invariably appealed and also on a question of law decided by the board.
Article 23 is a question of judicial efficiency but also is interesting for one fact which we will refer to.
The question refers to valuations. During the board architect’s valuations are imp. They would even
sit in the board. The point is that the board, often has before it 2 different architect’s valuations. Not
identical, they differ. To avoid the easy way of going someway in between to whom does an expert
owe responsibility? It would nominate its own architect. The strong practice is that the board would
rely on its own architect. There are instances where the board may (Article23(1i)), where in other
proceedings between the same parties, the parties have unanimously agreed on an architect and a
valuation, the chair of the board, has a discretion to appoint architects but to decide on the basis of
that valuation agreed to by the parties. Also the board may decide to give weight and take as
conclusive a valuation in a case which is final. The court has the discretion to take this binding.
Very interestingly, the board and the chair is bound where the 2 other members of the board, the
architects, unanimously agree on a value, these bind the chair. Where there is no such unanimity the
chair has a discretion.
Chapter 158 – the housing decontrolled ordinance
This has an interesting history enacted in 1959. It has seen amendments in 1979 declared null by the
court but still remain on the statute book. But also this was part of the 1995 revolution on
liberalisation. The original context in 1959 was that due to a stagnation of the rental market, a
temporary measure during the war, nobody in his right commercial reasons would want to rent out
his property. It was inherited in almost indefinitely. This was a measure which was intended to
stimulate the lease residential market. It is not commercial, but it refers to the controversy of
residential leases. Normally commercial leases do not carry such regulation. They regulate
themselves.
The idea was to take way, deactivate from the control of these laws, and the idea was to encourage
people with vacant property to rent them out because there was a social problem. People did not
have places to live in. Much of it refers to chapter 69, the procedure was that at the time one could
apply and get a certificate of decontrol and the certificate meant that the rent ordinances principally
the chapter 69 and 116. Letting or lease is a copy and paste of chapter 69.
The relevant article is article 16. As we shall see among the principal effects of this chapter 158,
which came significantly later, later in time in 1979 there were various imp amendments. The effect
of this law was to take away the offeration of the rent ordinances and it was provided that where a
lease of a decontrolled dwelling house in certain circumstances the lessee was protected indefinitely
by virtue of this law. The tenant would have been on the street later it gave the right to remain in the
property for 15 years. Where the temporary emphyteusis of a dwelling house expired, the dwelling
emphyteuta was protected. The renewal of decontrolled houses provide for under this law did not
apply to leases entered into after 1st June 1995. Likewise in the case of expiration to temporary
emphyteusis of a decontrolled houses, if it was entered into after 1st June 1995 this did not apply.
Renewal of leases, of old leases, remained within the purview of
The continued occupation of a dwelling house by virtue of the provisions of chapter 158 was not
deemed to be a new emphyteusis.
Tenant the definition is the same as chapter 69. And there is the similar rights to ask for the increase.
However, what we are going to mention now is the original article 3, later amended in 1965 and in
the 90s, which basically said that it was intended to encourage people to build dwelling houses and
then rent them out. And this encouragement came, the policy behind was to encourage to build
dwelling houses and rent them out, and we see that 1st April 1959 where a dwelling is not
completed or ready for use, was occupied on 1st March 1959, was acquired under encouragement
act, for 10 years excluding summer event, a person could go to an office, still exists, the land
valuation office and apply for a certificate of decontrol. This has valuable historic significance. If one
could fit within these categories there was entitlement to apply for a decontrolled dwelling house.
Article 5 – when we read this article – subject to these, chapter 69 and the rent restriction ordinance
shall not apply to any decontrolled dwelling house after it was registered as such.
It was a social reality that because of the taking away of the decontrolled ordinances after the
expiration of the lease it was regulated by the civil code. And these amendments were brought in
force in 1979. Where on the expiration of the lease of a decontrolled dwelling house, chapter 69 in
so far as inconsistent with chapter 158 shall apply.
5(2) – since the effect of decontrol was that there was no longer protection for tenants of
decontrolled dwelling houses, this law was to protect them. Subject to this article and article 6 where
a decontrolled dwelling house is occupied by a citizen of Malta, ordinary residence, chapter 69 shall
apply but not where it is inconsistent with chapter 158.
Lecture 6
The thinking to understand in 1979 was that 20 years before there had been the housing
decontrolled ordinance and the effect of a decontrolled premises was to free from the control of the
rent ordinance and thus, there was a social reality.
We cannot judge by today’s eyes. But at the time there existed the social reality that tenants of
decontrolled dwelling house at the expiration of the lease were out on the street. And thus, the
purpose of this amendments was to give some relief and balance to the owner. Where there is the
expiration of the lease of a decontrolled dwelling house occupied by citizens of Malta as his ordinary
residence.
A partial taking on board of article 59 with article 5(2).
We are told that refusal may only happen due to non payment and the 2 weeks notice of default by
the tenant of damage to the property. A new condition saying that it is no longer the ordinary
residence. If the lessor can show that the dwelling house is no longer the ordinary residence, there is
the right to not renew or evict.
Article 9 of chapter 158 which states that the housing act does not apply.
Lecture 7
Today we finish the preamble of the private residential leases act and then we have a look at chapter
119 being the agricultural leases act. We were looking at chapter 604 and there are a few basic
relevant distinctions: first there is a specific definition of what is a residential lease, what is included
and what is excluded. There is a definition of what a short private residential lease is, which apart
from not being more than 6 months has a number of specific requirements. Also the act chapter 604
without disnction shall not apply to government property however there is an exception that private
foundations set up to provide residential accommodation are not excluded from this but are
included. Likewise tourism accommodations listed with the Malta tourism authority are not subject
to private residential leases. Those which are in the pre letting or extension period are also
registrable. A pre 2021 lease is also registrable in terms of this. Also this is significant and one has to
reflect a bit. Post 1995 leases, still in force, as at 1st January 2001 are registrable. The question is by
simple fact of being registrable does it make them subject to the provisions of chapter 604? No
because they would remain within the terms of the agreed terms. Just to make clear they are post
1995. They would be subject to the increases contemplated in the civil code. And as we shall soon
find out in 2009 there were imp increases, every 3 years but the question we are posing here is in
1995 we had the liberaltisation and most importantly there was no right of renewal, now the
question is let us say we have a lease entered into 1996, for 20 years, in 2021 it is still in force. When
this expires is it rewgulated by the 1995 amendments or will the provisions of 604 kick in? The
provisions of chapter 604 are considered to be a special type of law.
Post 1995 lease which means inter alia that on the expiration of the lease there is no further
automatic renewal. Come 2021 let us say that we have a post 1995 lease still in force, we are told
that it is registrable. The question is how far chapter 604 impinge on the post 1995 lease? On the one
hand there is the rule that it is a special law and thus, presumptively should prevail over an earlier
general law. On the other there is the argument that the post 1995 lease should run its course within
its terms on the basis of the law in force on the time it was contracted. The second option is
favourable because it was not the intention to impose the provisions on the post 95 leases which
were still in force. Second there is a distinction between registrability and the period of validity. But
again this remains a discussed and open question. There is article 6 there are a number of formalities
to be regulated by the private residential leases act. We are told that in the absence of any of these
conditions the lease is null. Registration is done online only. This can be a frustrating process as it is
not user friendly. Relevant to our purpose is that there are a number of forbidden clauses. For
example except for a default and grounds in terms of the civil code 1554, 1555, etc. For default (non
payment of rent, non use, damage to the property) a private residential lease cannot be terminated
during its course. Also it is not possible to place any additional burdens on the lessee than those
imposed in the law. For example there can be no additional charges except for condominium
contributions or water and electricity charges. The truth is that many landlords try to make a profit
from the water and electricity charge.
There is a short private residential lease – anything else is a long private residential lease so 6 months
plus.
Additional burdens are burdens beyond what is agreed, for example additional charges for use of
furniture. There can be no profit. They have to be transparent and at cost.
There are a lot of exceptions. In the case of a private residential lease it will be automatically
renewed for a subsequent period unless the lessor gives a written notice at least 3 months before
termination. Failure to do so will result in another term of the lease on the same terms and
conditions. There are conditions of exit of a lessee. In the case of a short lease the lessee can remain
for a month. In the case of a long lease it depends on the expiration period of the lease. It is however
possible, article 9D, for parties to mutually terminate the lease in which case there will be no claim
against each other. The law has allowed the substitution of the lessee with the consent of the lessor.
The lessor has a right to refuse. At the same time a fresh registration or notification is required.
There is the possibility of the lessee here to request an additional lessee be added. The conditions of
the lease will remain the same. However registration or notification is again required. This is
probably in the same spirit but not identical to the regulation which prescribed very recently the
maximum number of tenants allowed. In fact there is also 2024 amendment. Short leases terminate
on expiration. In the sense that if the lessor opts to terminate it stops.
Article 14 is worth a good read. In the sense that implied here that there is no control on the initial
rent. So the historical lessons seem to have been learnt. However, rent and a question which will
arise in this law is which provisions are mandatory or consensual? Given the way it is written, the
policy behind most provisions are non derogable, non negotiable. So bearing in mind that there is no
initial control on the rent it is mandatory of the first sentence of 14(1) rent increases can only take
place once every year. The context here is residential leases. There is reference to agreement in the
absence of any express agreement the rent cannot be revised during the term of the lease. Unless
increases which can only take place once a year are negotiated and agreed expressly there can be no
increase in rent during the period of the private residential lease.
14(2) there is a limit notwithstanding what was agreed that it cannot increase or exceed 5% per
annum and likewise yearly increases may not exceed the annual variation in the property index. This
caters for the possibility of a period of hyper inflation. The property index increases from 5 to 6%.
Inflation and property index notwithstanding any increase cannot exceed 5%. There is a general
obligation and there are subsequent laws on the adequacy of supplies of water and electricity. There
is a special tribunal because the members have to take an oath of impartiality. And they have to be
fit and proper. Adjudicating panel presided over by a lawyer and 2 other members. And this panel
has a competence on the basis of 2 criteria: valore not exceeding 5000 and competence ratione
materie. 23(2)a-c
Right of appeal to the court of appeal inferior competence composed of 1 judge.
Chapter 199 agricultural leases act – this is a law of 1967. This law was conceived may be to promote
and protect agriculture but then there are certain provisions which are difficult to understand. A
ground for terminating an agricultural lease is when there are building permits. Is this bowing to
developers? There are mixed messages in this law. It was held by a constitutional court that
agricultural leases which impose unfair conditions on the landlord because this is heavily weighted in
favour of the farmers could violate the peaceful possession of property. So there were amendments.
Interpretation article 2 – definition of agricultural land – glasshouses, etc.
Article 3(2A) by way of background there is a board which is called the rural leases control board and
which is competent to decide on matters of agricultural leases to decide to terminate leases or a
change in condition. The lessor similarly like chapter 69 is not empowered to renew on the same
terms and conditions an agricultural lease or change the conditions. However, 2022 amendments
empowered the lessor to ask for an increase in rent and conditions and in establishing the rent the
increase in rent will not exceed 1.5 on agricultural land on open market and 2% if there is a
residential farmhouse. There is a distinction. This comes at a wake where it was realised that
agricultural land had commercial value for building and development purposes. This has changed
because in the past agricultural land is seen as having no value. Today it has been established
independently of the issue of building and planning permits agricultural land has a value in itself.
Simply because it is becoming scarcer and thus, the lessor has a right to demand an increase the rent
Article 4(2) reproduces the old provisions in the sense that indicates the grounds on which the lessor
could apply to the board to take back the land. The first ground is that the lessor requires the land to
be used by himself personally or by a family member. This has been jurisprudentially interpreted the
lessor has to be a farmer or in the business of farming or agriculture itself. The second ground is
excluding irrigable land – land which can be cultivated – if the lessor requires it for the construction
of buildings or industrial purposes. If the owner can show that potentially a building permit can be
issued, the owner has the right to retain possession of the land.
Finally this is an old provision that there is a residual criteria of relative hardship in the sense that if
both lessor and lessee are in the farming business who will suffer the greater prejudice? This is a
material question of fact. There is a right of appeal on grounds of eviction, on points of law to the
court of appeal composed of 1 judge.
Lecture 8
1531B – these provisions are mostly not entirely but mostly introduced through act 10 of 2009.
Going back historically pre 1995 were not touched, post 1995 for the future we had liberalisation. So
this act was created to amend the old leases. The difficulty in putting all these laws together is that
you have to be aware of their temporal application. After 1st June 1995 the leases were liberalised.
Then we have the classical liberalisation, forgetting residences, generally the through act 10 of 2009
the pre 1995 leases remained as they were except as modified by the 2009 amendments. Where
there situations where they were unaltered regarding the pre or post 1995? We have also situations
then in the case of the old leases, we have thus, under both chapter 69 and chapter 158 we have the
amendments of the controlled leases reforms act of 2019 of maximum 2%; this applied to old leases
or leases created under chapter 158. It is very imp to bear in mind 2 points- which law applies? Pre
1995 alone, post 1995 alone, pre 1995 as amended by act 10 of 2009. Then we have specific
situations band clubs because there were amendments and judgements which come in the pre post
1995 scenario.
1995 this was a cross party agreement. They extended this rule to clubs as well. Old law of 1995
which continued to apply. Included band clubs and political clubs, etc.
Pre 1995 exclusion.
1531B – the old leases prior to 1st June 1995 will continue to be regulated by the law as at 1st June
of 1995 except for act 10 of 2009.
1531C – note without prejudice – subject to the chapter 69 and chapter 158 2 %percent
amendments there was an increase of the old rents according to the rate of inflation. The social
impact of residences. You had people who had 20 euro a year because it was the old law. The rent
restriction, the housing act, the spirit of the increase that something was better than nothing.
1531D – you had a 15% increase across the board. From 1st January 2010 till 2013 there was a 15%
increase across the board. Psot unless there is an agreement reached the rate is of 5% per annum.
What are the situations where there is nothing but a rent renewal? The rule is that where there is an
agreement on a commercial premises which is still in force on 1st January 2010 it applies. When
there is an ongoing increase the provisions of this will continue to apply.
1531I – where you have a pre 1995 lease which was a commercial premises the tenant as at first
June 2008,
Who are the tenants of a pre 1995 lease of a commercial premises?
Standalone garages – after 1st June 2010 these were no longer protected.
Pre 1995 arguments over garages – in chapter 69 more significant degree of protection over
commercial premises so people used to put some stock in a garage and say that this was a kind of
stock merchandise, warehouse.
Summer houses – in the past there was this trend were people used to have second homes by the
seaside. These were no longer protected in 2010.
Boathouses and summer houses are not the same and are protected differently.
In 2009 1531J – pre 1995 clubs which include but not limited to musical, philanthropic, social, sport
or political entity if as at 1st January 2010 there was a lease agreement in either the difermo and
rispetto period. This is something which evolved by practice, by Sicilian notaries. Difermo means
where lessor and lessee are both bound. Rispetto means that it is an option in favour of the lessee
who may or may not exercise the option for example if we say 5 years the difermo and 5 years
rispetto...
Wide definition
During the rispetto period there is an exit period for the lessee by giving for example 1 year’s notice
in advance.
Difermo both parties to a lease are bound. The period the rispetto is an option in favour of the lessee
and if the lessee takes this option to renew the lease the lessor is bound to follow it.
Band clubs if as at 1st January 2010 in a pre 1995 lease of a club it is either difermo or rispetto those
terms apply. There is no renewal thus, beyond the rispetto period. This is an interesting ... to the
contracting will of the parties. Normally it is not what the will of the parties is but rather what the
law says when it comes to leases.
The pre 1995 scenario that is to say indefinite renewal on terms and conditions continues to apply
etc.
Constitutional and human rights aspect both locally and european court level are a separate study.
Braccio case – the one of the Valletta King Zone Band club where the court made an almost political
statement in the sense that in the context of proportionality and baring of burden made a strong
statement that the owner may have to bear a stronger burden, not excluding proportionality to limit
people ending up on the street. There is no reason for the band club premises to be treated in the
same way however.
Botteghin – band club used to have a bar. Over the years this changed. And became more
professionally and ended up having a bar within a club.
s.l.16.13 – amendment that in the pre 1995 leases of clubs if at 1st January 2014 the lease was still
with the difermo and rispetto periods then this applies.
Carmen Mary Lanzon et vs Joseph Boffa and others on behalf of the Fra Antoine De Paule Band club,
COA, Judge Anthony Ellul, decided on the 23/4/2018.
FH (constitutional competence), Judge Grazio Mercieca, 26/3/2021, Peter Paul Lanzon and others vs
State Advocate and the Antoine De Paule Band Club, further judgement of 27/10/2021.
Lecture 9
We were going to start the rights and obligations of the lessor and the lessee. Articles 1531(l) and
1531(m). Of course this was written at a moment in time and then was superseded by the private
residential leases act. Leases which were enforced on or after shall be regulated by the conditions
agreed to by the parties. Saving what we have said post 1st June 1995 it is the terms agreed by the
parties and the civil code. We have a reference to what we find at the end of chapter 159 and
chapter 69. And it is clear that after residential leases act could have effect into that which were still
enforced after June 1995 are regulated by those terms.
Leases before 1st June 1995 which are not residences, or commercial tenements and subject to the
provisions of clubs, summer residences. Pre 1995 leases which are not residential which are not
commercial and subject to the rules of garages, summer houses shall continue to be regulated by the
laws enforced at the time.
Thus, what is outside these remained at the law enforced at the time. the following articles are of
historical value in the sense that for example it emanated that rent could be in kind. The rule that
where there is an ongoing lease there is a presumption that the duration of the lease is parallel to
the duration in which the rent is paid.
At the time the ideas was to phase out gently chapter 158 and chapter 69.
Let us have a look at articles 1539 – the rights and obligations of the lessee. It is deceptive because
both rights and obligations of the lessee and lessor tend to intertwine with one another.
The lessee has 3 obligations – to deliver, to maintain in a condition which is fit to enjoyment, and
peaceful enjoyment. Here we are looking at the lease of corporeal things in the traditional sense.
1. Deliver, control detention to the lessee. The lessee does not have technical possession.
Because the lessor holds on behalf of the owner. Unless the causa detentionis is changed,
the lessee will continue to acquire by prescription.
1540 – the lessee is bound to make all repairs excluding the repairs mentioned in 1556.
1540(2) the lessor is bound to all repairs except structural repairs. In 1556, the lessee is bound to all
repairs expect structural repairs. The good practice is that the lessor is responsible principally for
structural building things and the lessee is responsible for maintenance and ordinary repairs.
As it was originally cast and designed the civil code obviously had its mandatory articles but then the
civil code was designed to fill in the gaps in cases where the parties do not agree.
Innominate contract – a contract which does not have a name.
Articles 1540(4) and the 2 provisos – in a pre 1995 lease if structural repairs become necessary for
causes, reasons not attributable to responsibility, any fault by the lessor, the lessor is entitled to 6%
on the amount of repairs. The rent is increase by 6% on the amount spent on repairs. Exit route of
the lessee. And the other relates to the fact that the lessee continue to make repairs out of his own
free will.
What happens if the lessor refuses to make the repairs? Where the repairs are not urgent the lessee
has to the right to ask to the rent board to carry out the repairs itself.
1573 and also article 1548.
1548A
Lecture 10
The rights and obligations of the lessee and we will recall that the lessee has the obligations to pay
rent for the presumed agreed purpose, take care generally of the premises.
There is a contradiction or rather anomaly which we addressed in the articles.
The next question is the potential responsibility of the lessee for deterioration and damages. 15571563. What the code does not clearly explain is what happens to deterioration through normal and
fair use and fair wear and tear.
While the force majeure defence is pretty obvious. Note that along with this defence the force
majeure has to be without the fault of the lessee. If the lessee acts in a way to put something at risk
of force majeure then it could be said that the lessee could have mitigated the responsibility.
There is a presumption that in a lease agreement the object of lease is in a good condition. 1559 and
1560. The first rule is the presumption that the object leased is in a good condition. If you say
nothing or do not attach a condition report in the lease agreement the presumption will prevail that
the thing received is in a good condition. 1559 is very relevant because it focuses on a situation
where there has been a description or condition report. Parties have been diligent and have made a
report in this event then the lessee is bound to return the object in the condition received.
Where there is a condition report is the obligation of the lessee to return in good condition the
object leased saving for loss/deterioration through age or irresistible force.
1557 speaks of force majeure and 1559 speaks of irresistible force. So this means that deterioration
through age is a legitimate use. 1561 continues to add to this discussion the lessee is liable for any
deterioration or damage unless he proves that this did not happen through its fault. We are entering
the realm of culpa. Historically our courts have looked at the Francois Laurent that normal legitimate
use and fair wear and tear is not a use where the lessee is at fault.
Consequently if there is deterioration, absent malice or negligence, does not itself render the lessee
responsible. They are not easy to define.
1562 and 1563 are imp. 1563 extends on the same defence and basis the responsibility of the lessee
to family members and sublessees.
1562 – fire – the lessee is responsible for fire unless he proves that it happened without negligence
on its part or it happened through force majeure. We have both fortuitous event and irresistible
force. Or through a faulty construction. There is a presumption that the lessee is responsible for fire
which occurred in his premises.
The question is how far is it possible and allowed for a lessee to carry out structural alterations?
This article says one thing and then the jurisprudence develop it in another contradictory direction.
Prima facie this article suggests that it is not possible to carry out structural alterations.
The rules are the following is that where the lease agreement prohibits structural alterations, then
any alterations made without the consent of the lessor are prohibited and the lessor may demand
dissolution. Where this is expressly prohibited. Going back to the De Paule Band Club judgement.
Where the lease agreement is silent does not say anything structural alterations are allowed on the
following conditions – first is that they cannot change the nature of the place. The original nature
and form have to be respected and the alteration cannot be of such an extent as to alter the nature
of the place. Secondly the lessee must be able to demonstrate that there is a benefit derived from
such alterations.
The lessee has to be able to show that real benefit exists. The third requirement is that there are no
structural dangers or risks with the proposed new structure alterations.
Finally that at the end of the lease, the alterations can be unwound and the place can be undone and
returned to their original situation.
Dissolution of the lease – here there is the history catching up with us. In the sense that we have pre
1995 situations, post 1995 situations where the civil code comes into operation. 1566 – this was
amended twice by act 10 of 2009 and act 28 of 2019. The rule is that post 1995 leases which in terms
of chapter 69 and chapter 158 are regulated by... in the case of a contract of lease of an urban
property at the expiration of the original period, the lease ceases. Post 1995 leases apply to
provisions of chapter 604 but in the case of other leases, urban property not being residential a lease
is dissolved after its term expires.
Dissolution of the lease – articles 1569, and 1570 – the issue is the dissolution of a lease where there
is a violation of the condition of the lease. We all know that leases are subject to conditions. The
distinction is between a condition which is in the nature of an express resolutive condition and one
which is not.
In the event that this express resolutive condition is fulfilled then the condition is resolved.
117 of chapter 9 in commercial obligations they are presumed to be resolutive conditions
Lecture 11
Finish off the articles relating to the contract of lease and go through the final topic which is locatio
operis.
Sublease – there are towards the end a few imp articles which we tend to overlook because
mistakenly the most important articles of the sub titles are the preceding articles but this is not the
case.
The first article is 1615 which was substituted in act 10 of 2009. The scenario is a lessee allowing
people to house other people to reside in the same tenement against payment without entering into
a relationship of sublease. The presumption is that it is possible for a lessee to take in other people
against payment without creating a sublease. It is thus significant that we have this context and this
is distinguished from a sublease.
The lessee will remain responsible for the occupiers without a right of regress. Soon we will see that
the lessor does not have a relationship against the sublease. Here, the intention is to distinguish the
creation of a sub lessor and sub lessee relationship allowing people to reside against payment.
There is a very fine line between the 2 scenarios. There was the intention to distinguish. Here, this
triggers also the responsibility of the lessee for those residing in the premises unless it proves that it
was not their fault or it was a force majeure.
Faculty sui generis allowed to the lessee.
Today the trend is that the lessor will ask for a security deposit and for the services registered in his
name to have services and control.
1617 has to be read with 1616. 1616 is unrelated to urban tenements but says that when there is an
agricultural lease not in money but in portion of the produce, mezzadria.
When you have this type of rural relationship where there is the so called lease is a portion of the
produce, there can be no sub lease. This is prohibited and it is not relating to urban properties. Thus,
this nor in 1617 is found in the beginning of the article which is unusual.
Thus where there is a number of people residing in the same premises or else when there is one
access to different parts of the tenement there is no right to a sublease unless the lessor consents.
The articles we have spoken about in urban property refer to situations where there are a number of
people occupying the same property. A recent amendment is that the lessor has a right to terminate
a lease and a sub lease where there are immoral or illegal activities. This is article 1618. What is
immoral or illegal is a wide concept but it includes illegal activities and it includes the reflection of
the current society at the time. there are 3 concluding articles and then we will leave sub lease and
go to the right of preference.
1619 – the lessor has the right to cease and sell furnishings and objects which are in the property
which belong either to the lessee or sublessee. So this right is granted to the lessor for payment of
rent and enforcement of any conditions of the lease agreements before the lessor and lessee and
also for compensation of any damages.
What is significant here is that this right to cease and sell and be paid from the proceeds
1620 – the sublessee has no claim against the lessor for any claim against the lessee. The first is that
the sublessee has no claim against the lessor against any rights of the sublessee against the lessee.
And the sublessee may not act in via surrogatoria claiming any rights of the lessee against the lessor.
The sublessee may not enforce the actio surrogatoria exercising the rights of the lessee against the
lessor and this independently of whether or not sublease has been allowed or prohibited. Unless
somehow the lessor has acknowledged the sublessee instead of the lessee and thereby entered into
a direct relationship with the former sublessee.
Right of preference – we are looking at articles 1590 to 1612.
Basically as the term implies means that certain persons in the event of a new lease. This is not a
case of a renewal of a lease it is a scenario where a lease is terminated and certain persons are given
preference due to the right of preference. In general terms the right of preference is a controversial
right since there is somehow a kind of expectation of different parties that they can be given the
right of first refusal.
1590 states that the right of preference exists only in the cases contemplated in this subtitle, even if
the property is the property of the state, government of Malta. The second part is does this however
preclude contractual creation of rights of preference created by contract or specific rights which may
be created legislatively? Very often in housing schemes when there is a government lease there is a
right of preference. In commercial properties when there is a public call for tenders of tenants, the
sitting tenant has the right of first refusal on the same terms of the highest bidder.
The rights of first refusal are indicated in articles 1591 to 1594. There are basically 3
hypotheses/scenarios where these articles we are looking at in the civil code apply.
1591 – the first hypothesis is that a co-owner/co-possessor is entitled to be preferred on the same
terms and conditions in the case of a fresh new lease.
1592 a curious article because 1592 states that this right of the co-owner cannot be exercised when
the object has been validly let. If the object has been validly leased the co-owner may not be able to
exercise this right in the case of a fresh new lease.
1592 says that the right of preference of a co-owner after something has been validly let out.
Two of the articles which follow are articles of procedure where a party entitled to a preference can
exercise a right to first refusal in advance of a fresh new lease. The articles are silent if the person
going to lease discovers after the object is leased.
1. That the owner or lessor and lessee who knows or should know that there is a right of
preference, goes ahead with the lease at his own risk unless the procedure referred to here
is complied with.
2. The articles provide a sort of safety mechanism to the lessor or lessee to clear in advance the
hurdle of the right of preference.
To recap there are 3 grounds:
1591 and 1591 with respect to co-owners.
1594 is the sitting tenant. The sitting tenant is entitled to a right of preference on refreshed
terms and conditions in respect of an urban tenement if previously occupied under lease
1594(a). 1594(b) was written many years ago. The lessee of the upper part of the building in
respect of the lower part of the building. This is difficult but goes back to the time where there
was a trend in residential accommodation of one entrance and families living on different floors.
The right of preference applies in favour of the lessee of the higher tenement only in respect of
that immediately below. So for example level 5 cannot exercise the right of preference in respect
of level 4 and not level 1.
In the 1972 amendment this was codified to exclude this right of first refusal in hypotheses. The first
is where there are a number of people occupying by lease the same property.
1596 – speaks about the manner within which the right of preference is exercised. However, it is
specifically limited to 1594. And 1594 is about the sitting tenement and the tenement above in
respect of the tenement below.
Chapter 69 suspends this right of preference. The right of preference is exercised in this manner that
the lessor is to inform by means of a judicial act of the terms and conditions of the fresh lease and
the lessor is to inform of course those who are entitled to have the right of refusal.
The lessor sends a judicial letter to either the sitting tenant or the tenant of the tenement above of
the terms and conditions of the fresh lease and lessor may or may not request a guarantee for the
proper performance of the obligations.
The party entitled to the right of preference in timelimits which are mandatory being 15 days as per
1596 has to declare by judicial act whether or not it accepts the new terms and conditions and if
requested provides security.
If no security is questioned the issue of security does not arise.
Thus, if the party entitled to a right of preference in terms of 1594 does not act within 15 days from
service referred to since the term is peremptory such party will be deemed to have renounced the
exercise of the right of preference.
Chapter 69 does not apply into new leases after 1st June 1995 so the right of preference applies to
old leases.
The conclusion is that the articles in the civil code remain silent on whether there exists or if it exists
how the method of a party entitled to a right of preference under 1594 to challenge a lease. There is
no mechanism – this thus, brings us to the point which we made before.
1. There exists a right of a party entitled to a right of preference to challenge a lease in violation
of this right of preference where the clearance procedure of advanced notification has not
been carried out. Inevitably the question arises – lets say the fresh lease is for 15 years. Can
you claim this after 15 years? Then the rules of doctrine of acquiescence begin. In other
words, the inactivity when you have direct knowledge of a situation means that there is
consent and acquiescence. So what i imply is that it is true that there is a right to challenge a
lease. You can’t challenge a lease a contract of 15 years after 7 years if you knew about it.
There is a right to challenge a lease made in violation of the right to preference of 1594 after
the lease after there has been no prior notification but this is always subject to acquiescence.
You cannot leave it happen for 7 years and then object to it. There is the right to challenge
but there is not the mechanism to challenge it.
2. Why do we have the pre event notification? To send the message and the warning that any
lessor and prospective lessee who acts in violation of the right to preference without having
gone through the pre notification does so at its own risk.
3. There is a way whereby a prospective lease can be rendered immune from challenge. The
pre notification exercise is a mechanism to render immune from challenge a lease where
there are rights of preference involved. There is responsibility in damages where it is shown
that the lessor has fraudulently misrepresented the fresh terms and conditions.
The party entitled to the right of preference can challenge and annul. This is article 1605. The
right of the sitting tenant is limited in certain events by article 1607. In other words, if the sitting
tenant does not reside in Malta or has not been resided in the apartment for 2 years or has had
problems with the lessor such as non payment, etc. Or has sublet the property without the
express consent of the lessor. In this event 1594A is not applicable.
Let us say that a tenant has been successfully evicted. There are proceedings for eviction and the
tenant by order of the board or the court is evicted. The point is that it cannot set up as a
defence the right of preference to resist eviction.
Conclusion
Subletting – let me remind you that unless otherwise provided the rules which is 1613(1) the
opening article on sublease is that in the absence of special provisions or agreements the
contract of subletting is regulated by the same rules of letting. Thus, the rule of lease apply to
sublease unless there is a special provision relating to sublease. The point here is that 1622(1)
sends us to article 1591 which is that related to the right of preference of co-owner. This also
applies where there are several lessees letting out 1 thing. So if the sublease finishes anyone of
the co lessees if the sublease terminates, is entitled to preference in respect of a future fresh
sublease.
1622 sends us to 1594A. this applies also to an existing subleased. The sitting sublessee has a
preference on a fresh sublease. However, in respect of 1594(b) applies only where the lower part
was sublet to the same person of the upper part.
Locatio operis
Strangely this is not defined in the law. It is assumed that we know what locatio operis is. The
party who is contracted to carry out a job an assignment or some work. Here the definitions have
been untouched since 1868. It should be clear that the so called contractor can supply work,
material, labour or both. Sometimes the question arises whether a contract of works is a
contract of appalt or a contract of employment. It depends on the degree of autonomy and the
independence enjoyed by the contractor for the simple and obvious reason that in the case of an
employer employee relationship there is a greater degree of control of the employer over the
employee. Whereas in the case of a contract of works the relationship between both parties is
independent. We are not told how the contract of works come into effect. Normally it is in
writing but this is not necessary.
A difficulty arises as to how to distinguish between a contract of works and a contract of sale.
We do not have as the Italians have something known as lavoro dell’intelletuale. It is unclear
how far these apply. Is it an appalt?