Investment Forum - Real Estate

Neighbours from Hell - How neighbours can ruin an investment


Neighbour intervention has become an inevitable concomitant of any development project of a certain proportion

The context

Urban development is commonly viewed in Malta as the best investment opportunity for Joe Citizen. The impressive number of operators in the construction industry, together with the relatively loose regulation of the sector and the high demand for property in Malta, make this sort of investment opportunity highly popular among private individuals.

Such developments often comprise the demolition of terraced houses to give way to multi-storey apartment blocks, some of which are sold off as primary residences, while others are being bought as buy-to-lets. Neighbours may pose obstacles both at construction stage and, particularly when a commercial activity is being undertaken, at actual operation stage.

Such development has come to occupy a central place in public debate, with the construction industry falling into disrepute over the past years. This general sentiment must be framed in the context of Malta’s particular demographic and economic landscape: namely a flawed construction industry which is a main economic driver in the EU’s smallest and most densely populated country.

This unfavourable perception of the industry is not misplaced. Chamber of Architects president Perit Andrè Pizzuto, in an interview given earlier this year, pointed out that there has been a significant increase of operators in the field who lack the “required knowledge, skills, awareness of risks and understanding of health and safety on construction sites”. He also complained of a “rapid decline in the quality of the workmanship, lack of understanding of roles on sites and disregard or challenging of instructions provided on site.”

Concern, and in certain cases fear, felt by residents living next door to a development site have intensified following the death of Ms Miriam Pace in 2020, who died when her house collapsed as a result of construction works being carried out in the adjacent property. Two architects, Roderick Camilleri and Anthony Mangion, have already been found guilty of Ms Pace’s involuntary homicide in a judgment delivered by Magistrate Dr Joseph Mifsud on the 1st of July 2021.

In light of the above, neighbour intervention (some valid, some not) has become an inevitable concomitant of any development project of a certain proportion. The ways and stages at which neighbours can act to halt a development project are various. It is therefore important that developers are aware of these risks which have become the norm as they can lead to obvious financial consequences.

Pre-construction

Firstly, there is the possibility of filing an objection to a development application during the representation period, which possibility is not limited to next-door neighbours but to any member of the general public. This would automatically make the objector a registered third party for the purposes of the application process, thereby becoming vested with the right of appeal before the Environment and Planning Review Tribunal if the permit is subsequently issued.

Apart from this legal procedure, another common pre-construction tactic to delay developments is for neighbours to come up with pretexts to make it difficult for the architect of the developer to inspect their property to compile condition reports for insurance purposes. This is common and can delay the project by a few weeks, sometimes even up to a couple of months.

Court proceedings – Construction stage and operational stage

The other primary method of halting the development process, not just at construction stage but at any subsequent point, is initiating proceedings before the Courts of Malta in their Civil Jurisdiction. If such recourse is made at construction stage, then it would normally involve the filing of a warrant of prohibitory injunction.

The scope of this type of precautionary warrant is to restrain a person from doing anything which might prejudice the rights of the person suing out the warrant, until the case is decided on its merits. This right of recourse is available to those who are able to show juridical interest in the matter at hand; something which the next-door neighbour of a construction site would invariably be highly likely to satisfy.

The above right of recourse to the courts is altogether independent of the issuing or otherwise of a development permit by the Planning Authority. It is a well-established legal principle (as encapsulated in Article 72(1) of the Development Planning Act) that such permits are issued ‘saving third-party rights’.

The right of ownership

Before entering into a discussion of what these third-party rights actually are, an analysis of the legal conception of the right of ownership is in order. Article 320 of the Civil Code provides that “Ownership is the right of enjoying and disposing of things in the most absolute manner, provided no use thereof is made which is prohibited by law.”

One can speak of two limbs of this definition clause; on the one hand, the near-absolute nature of the right of ownership, and on the other, a generic limitation of the same right. It is this latter limb which serves as the basis of legal interventions by neighbours against development projects and commercial operations.

Limitations – Public Law

The term ‘prohibited by law’ encapsulates both the spheres of public and private law, and refers to all enforceable legislation within the Maltese legal system. While as a general rule, public law rules such as the Trading Licences Regulations, the Avoidance of Damage to Third Party Property Regulations, and the Code of Police Laws, are enforced by administrative authorities and not by private individuals, this rule is not without exceptions.

There are instances where such laws create what are known as praedial easements for a public utility which can be enforced by private individuals. An easement is defined by Article 400(1) of the Civil Code as “a right established for the advantage of a tenement over another tenement belonging to another person, for the purpose of making use of such other tenement or of restraining the owner from the free use thereof.”

Therefore, when these “special laws and regulations” (Article 402(1) of the Civil Code) create rights in favour of one property over another property, these rules can also be enforced by neighbours themselves, and not just by public authorities. This was clearly established in Risiott vs Bajada (5th October 2001), wherein the Court of Appeal held:

“The legal position, therefore, seems to be that building regulations create two relationships: (a) an administrative relationship between the public authority and the person in whose favour the permit is issued, and in this relationship third parties cannot intervene, and (b) a civil relationship of an easement between neighbours, private owners.”

Limitations – Private Law

Then there are provisions of a private law nature. The intention of the legislator here is not to protect the general public, but to protect particular persons in particular circumstances, as well as the relationship between owners of property and third parties, particularly neighbours. The best illustration of such rules would be the various praedial easements which the Civil Code lays down which burden the owner of the servient tenement (the property against which the easement is exercised) with restrictions on his right to use and enjoy his property freely.

Limitations – the Abuse of Rights Theory

However, there exists a third type of restriction which can be used by neighbours to disrupt the exercise of the right of ownership – the abuse of rights theory. Developed by the French Courts and adopted by the Maltese Courts, the abus de droit theory points to the clash between the exercise of the right of ownership by different owners at the same time. It was inferred from the law of obligations provision which is equivalent to our Article 1030 of the Civil Code:

“Any person who makes use, within the proper limits, of a right competent to him, shall not be liable for any damage which may result therefrom.”

Inversely, any person who makes use of a right competent to him beyond the proper limits is liable for the damage which may result therefrom. The first recorded judgment which embraced this theory is Bugeja vs Washington (5th May 1897), wherein the First Hall of the Civil Court held:

“The right of the owner to make use of his property freely and to modify it as he deems convenient ceases at the point in which this creates grave inconvenience to his neighbour.”

What qualifies as a ‘grave inconvenience’ which goes ‘beyond the proper limits’ is a factual appreciation which the courts carry out on a case-by-case basis. There are no hard and fast rules which determine what inconveniences are grave or not so grave. The Maltese Courts regularly invoke, however, the notion of the so called buon vicinato – the good neighbour – in deciding disputes between neighbours. This was clearly explained by the Court of Appeal in Bajada vs Camilleri (25th January 2013):

“The absolute nature of the right of ownership does not mean that the owner can do anything he wishes with his property; it means only that no other right gives wider faculties than those which the right of ownership gives, which, however, also has its limitations.

[…] The obligations of the ‘buon vicinato’ [good neighbour] are essentially that, whilst the owner should firstly reduce as much as possible the inconvenience he causes to his neighbours through the use of his property, the neighbours are however obliged to tolerate that residual, inevitable inconvenience if and to the extent that this is normally tolerable in the particular circumstances.”

Final remarks

The conclusion to be drawn from all the above considerations is simple. Interested persons should ensure that they carry out their investments professionally, respecting all legal obligations (by consulting with lawyers and architects worth their salt, if need be) and meeting the highest standards in the field. If investors positively adopt measures which diminish the inconvenience suffered by neighbours, then the investment will have no reason to be shackled by neighbours – not even by neighbours from hell!

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kris

Kris read law at the University of Malta in 2010. He joined AE in 2012 and was admitted to partnership in 2018.

Kris has garnered a breadth of experience in both commercial law, having advised a number of international corporates, as well as in dispute resolution and litigation which is now his main focus.

As the firm’s Litigation Partner, he leads a team of other litigators who have deep experience in tax litigation, commercial and civil law disputes. He has been engaged in several cases involving internet based parties and is closely following the development of the legal framework regulating virtual financial assets in Malta and other jurisdictions , as its rise will inevitably become the merit of local and cross-border litigation.

Kris is a member of the Chamber of Advocates and holds a certificate in ‘Trust Law & Administration’ (2011) and ‘An Introduction to the Virtual Financial Asset Act’ (2018) from the Institute of Financial Service Practitioners.


DISCLAIMER: The content of this article does not necessarily reflect or represent the views and opinions of The Malta Chamber of Commerce, Enterprise and Industry. 


Neighbours from Hell - How neighbours can ruin an investment