Rent accepted from a requisition tenant creates a lease

The Constitutional Court on 12 January 2026 held that a lease protected by the rent laws arose when an owner began accepting rent directly from a tenant placed in his house under a requisition order. That lease survived the lifting of the order in 2007. The court kept the pecuniary compensation awarded to the owner but reduced moral damages from €12,000 to €5,000.

The facts

Z.L. inherited a house and became its sole owner in 1983. The house had been granted in 1963 on a temporary emphyteusis of 17 years, a long lease in return for ground rent.

In 1979 the Secretary for Housing, whose place the Housing Authority now takes, issued a requisition order on the house. In 1980 the tenants moved in. From 1984 they paid rent directly to the owner's predecessor in title, after the department refused to accept it. The order was lifted in December 2007, but the tenants still live in the house.

On 15 May 2023 the First Hall of the Civil Court found a breach of article 37 of the Constitution and article 1 of the First Protocol to the European Convention. It ordered the authority and the State Advocate to pay €39,467 together. It also declared that the tenants' children and family members would not enjoy the protection of the rent laws. The State Advocate appealed.

What the court held

The court was composed of Chief Justice Mark Chetcuti, Mr Justice Giannino Caruana Demajo and Mr Justice Anthony Ellul. It dealt with four grounds of appeal.

First, the State Advocate argued that he was not the proper respondent, since only the authority issues requisition orders. The court rejected this. The owner complained not only of the order but also of the controlled rent he had to accept after it was lifted, because of laws that did not allow a fair rent. The authority answers for the order. Under article 181B(2) of the Code of Organization and Civil Procedure (Chapter 12 of the Laws of Malta), the State Advocate answers for the law.

Second, the State Advocate argued that the Housing (Decontrol) Ordinance (Chapter 158) did not apply, and that any lease ended with the order in 2007. The court agreed on the first point. No evidence showed that the tenants met the conditions of article 12(3) and (8) of Chapter 158 when the emphyteusis ended.

It disagreed on the second. When the owner's predecessor began accepting rent directly from the tenant before 1995, he recognised him as tenant. A lease arose between them, and from then on it was protected by the Reletting of Urban Property (Regulation) Ordinance (Chapter 69). The court, following its earlier case law, held that article 44(2) of Chapter 69 excludes only the placing of people in requisitioned premises by the Government, not the relationship between owner and tenant.

Third, the State Advocate argued that compensation should stop in August 2018, when article 12B of Chapter 158 gave owners a remedy. Because the lease fell under Chapter 69, the court kept the end date of 1 June 2021, when Act XXIV of 2021 came into force. The substance of the complaint was the same under either law, and the State Advocate had not said he would have defended the case differently.

Fourth, on moral damages, the court agreed with the State Advocate. The owner had not shown that he suffered any anxiety or distress. The court held: "ma hemm ebda regola illi d-danni morali għandhom ikunu ħames mitt euro (€500) għal kull sena li seħħ il-ksur" (there is no rule that moral damages must be €500 for every year the breach lasted).

Moral damages are left to the court's discretion on the facts of each case. The owner suffered nothing beyond the loss of use of his money, which the pecuniary damages make good, so the court set moral damages at €5,000. The total award became €32,467. The authority and the State Advocate pay three-quarters of the appeal costs, and the owner pays one-quarter.

Why it matters

An owner suing over a requisitioned house should cite the State Advocate as well as the Housing Authority wherever the complaint reaches the rent laws. Where rent was paid to and accepted by the owner before 1995, the claim should plead Chapter 69 rather than Chapter 158. A claim for moral damages needs evidence of real distress, or the award will stay modest.

Where it sits

The case belongs to the long line of claims under article 37 of the Constitution and article 1 of the First Protocol in which controlled rent fails to strike a fair balance between owner and tenant. A requisition under the Housing Act (Chapter 125) places the tenant in the house. The later relationship with the owner can fall under the ordinary rent laws.

On the proper respondent, the court followed its own judgments of 27 October 2025, 2 December 2024 and 9 October 2023. On the lease that arises when the owner accepts rent, it followed its judgments of 21 October 2024 and 26 January 2022.

On the end date of compensation, it relied on its judgments of 29 March 2023 and 10 June 2024. On the discretion in fixing moral damages, it referred to its judgments of 26 February 2024, 3 March 2025 and 13 October 2025.

Source

Constitutional Court, 291/2021/1, 12 January 2026, 291/2021/1