THE eviction of a statutory tenant from a property where this is reasonably claimed by the landlord for demolition and reconstruction of a new building is one of the exemptions of the Rent Control Law, giving the right to the landlord to have the tenant evicted. The tenant is entitled to claim either compensation for the loss of the use of the premises or a new tenancy of premises which will be part in the new building.
There is an additional remedy available to the tenant, if after the issue of the eviction order the landlord does not proceed with the intended development, the tenant has the right to claim such an amount which is considered as adequate compensation for the loss and damage he has suffered due to the issue of the eviction order. The court has wide discretionary power and when it considers the judgment or the order was obtained under false pretences or by concealment of substantial facts, it may order the landlord to pay the tenant an amount considered adequate compensation.
When applying to court, the landlord is expected to show utmost good faith. In the course of the proceedings before the court he makes certain representations, such as that he has the financial ability and intention to proceed with the demolition and reconstruction of a new building, as well as proving he has secured the relevant permits for this purpose.
The provisions of the law were interpreted in a judgement issued by the Supreme Court on 7.3.2018, whereby it upheld the first instance judgment regarding the aspect of false pretences, but not with regard to the amount of compensation adjudicated in favour of the tenant of €645,675, reducing it to the sum of €170,860. The Supreme Court held that the legislator included false pretences in the above article as a reason for compensating the statutory tenant when it is established that the judgment or the eviction order was issued as a result of them.
Moreover, this article included the concealment of essential facts and there is no distinction between a judgment or order issued after a trial or issued by consent. Both cases have essentially the same treatment. The essential time to ascertain the facts is the period between the filing the application for eviction and the issue of the eviction order. In particular, the court found the tenant had given his consent to the issue of the eviction order, since the landlord said he would construct a new building. However he did not proceed with the development.
The tenant, having proved the existence of false pretences, was entitled to receive adequate compensation for his loss suffered due to the issuance of the order and the loss of statutory possession, based on the so-called profit rent, the difference between the rental of the premises on open market and the rental actually paid.
The Supreme Court found the basic element of compensation claimed by the tenant was the loss of the “goodwill” of the shop and his valuer used a multiplier of 15 years without explaining why this multiplier was applied, since the building was in a terrible condition. Consequently, his calculations were considered wrong, making impossible the assessment of the value of the aforesaid right of the tenant and hence, its awarding by the court of first instance was not correct. Taking into consideration the tenant was entitled to receive proper compensation, the Supreme Court held there was sufficient evidence based on which a certain amount of compensation could be awarded, which was the amount the court awarded by consent to the tenant of the neighbouring shop, €170,860.