Cyprus Supreme Court awards compensation and 7% interest for land acquisition delay under Constitution Art 23(4)(c).

[*240] 1972 May 15

(BOYADJIS, D.J., LAOUTAS, AG. D.J.)

IN THE DISTRICT COURT OP PAPHOS

Ioanna Georghiou Papadou,

Claimant,

and

The Republic of Cyprus,

Acquiring Authority.

(Reference No. 8/1969).

Compulsory Acquisition of land - Compensation - Assessment - Principles and Law applicable - Direct Comparison method - Article 23.4(c) of the Constitution and section 10(a) of the Compulsory Acquisition of Property Law 1962 (Law 15 of 1962) - Expert evidence by both sides - Unsatisfactory in many respects - Court not relying absolutely on evidence of either expert but proceeding to make its own assessment of the compensation by taking the evidence before it as a whole - Rashit Ali and Another v. Vassiliko Cement Works Co. (1971) 3 J.S.C. 459 followed - Land subject to restrictions imposed by section 11 of the Antiquities Law, Cap.31 - Deduction for effect of restrictions.

Antiquities Law, Cap. 31 - Assessment of compensation for land compulsorily acquired - Restrictions imposed by s. 11 of the law - Deduction for effect of restrictions - See also under “Compulsory Acquisition of Land”.

Compulsory Acquisition - Compensation - Interest – Unreasonable delay - Award of 7% interest on the assessed value of claimant’s property from date of notice of acquisition.

Compensation - Assessment - See under “Compulsory Acquisition”.

Interest - See under “Compulsory Acquisition.”

L. Nicolaides, for the Claimant.

P. Sivitanides, for the Acquiring Authority.

JUDGMENT

The judgment of the Court was delivered by:-

BOYADJIS. D.J.: The claimant is the registered [*241] owner of a field covered by registration No. 283k dated 16.9.1952; it is plot No. 102/1 of sheet/plan No. 51/10 situated at locality “Malloutena” of Kato Paphos; it was gifted to her by her mother and its extent is 8 donums, 3 evleks and 1800 sq. feet. It is shown delineated in red pencil on the D.L.O. map which is before us as Exhibit It is situated near the Kato-Paphos port and access thereto is made through an asphalted road. It is part of an area which is ripe for development for tourist or building purposes.

The Acquiring Authority is the Republic of Cyprus, the respondent in these proceedings.

For the compulsory acquisition of the claimants said field by the Republic relevant notice of acquisition was published on 25.8.1967, under section 4 of the Compulsory Acquisition of Property Law, 1962 (Law 15/62), followed by an order of acquisition published on 13.10.67 under section 6 of the same Law.

As is usually the case the Acquiring Authority made to the claimant a written offer for the payment of compensation which she turned down. Copy of the said offer has been produced in a sealed envelope marked exhibit 5.

The negotiations for a settlement of the amount of compensation having thus failed, the Acquiring Authority filed the present reference on 31.7.1969 for the determination by the Court pursuant to section 9 of the Law of the question of the aforesaid compensation to which claimant is in law [*240] entitled. The claimant filed her statement of claim on 20.3.1970 and the Acquiring Authority filed the statement of Defence on 19.10,1971.

The Reference was ultimately fixed for hearing and evidence was heard by the Court on 24.4.1972 and 25.4.1972 arid judgment was reserved till to-day.

After the case for the claimant closed on the afternoon of the first day of the hearing, acceding to a request of counsel on both sides, under Rule 20 of the Compensation Assessment Tribunal Rules, 1956, the Court visited the acquired property as well as several other comparable plots mentioned in the evidence, in the presence of the expert of the Acquiring Authority, the claimants husband and both counsel.

Apart from herself and her expert valuer 3 other witnesses gave, evidence on behalf of the claimant; they are:-

(a) C.W.3 Aristos Ioucaides, of Paphos, an advocates clerk, who gave evidence in respect of a purchase made by him in 19b7 of a field, 7 donums in extent, shown as plot 32 on the D.L.O. map - Exhibit 3. He bought it for £1,650. - and sold it towards the, end of 1970 for1 £6,150.- It is situated within Ktima town by its boundaries with Kato-Paphos village.

(b) C.W.4 Nicolas Vassiliou, of Paphos, who gave evidence with regard to the sale by him of plot 31, adjoining the property of C.W.3, for £400.- per donum towards the end of 1967.

(c) C.W, 5 Nicolas Hji. Costi, of Kato-Paphos, who is the chairman of the Ecclesiastical Committee of Theoskepasti Church, at Kato-Paphos. He gave evidence about a certain plot 323/1 shown on the D.L.O. map - exhibit 2, belonging to the Church, for which

N. P. Lanitis & Co., offered £7,500. - to acquire half thereof in 1967. The whole plot, 19 donums in extent, was finally sold to a certain Heracles Antoniades, of London, for £20,000. - on 10.3.1969; this property is adjacent to the sea.

The Acquiring Authority called only one witness, their expert valuer, namely Christos Mouzouris, of Famagusta. Before dealing with the evidence adduced, we consider it convenient at this stage to examine the legal aspect of the case.

Article 23(4) (c) of our Constitution provides that any immovable property may be compulsorily acquired “upon the payment in cash and in advance of a just and equitable compensation to be determined in case of disagreement by a civil Court”.

Section 10 of Law 15/1962 was enacted pursuant to Article 23 of the Constitution. The rules for the assessment of compensation by the Courts are laid therein. Subsection (a) thereof reads: -

Section 10(a): “The value of the property shall, subject as hereinafter provided, be taken to be the amount which the property, if sold in the open market on the date of the publication of the relative notice of acquisition by a willing seller, might be expected to realize”. [*244]

In Sri Raja Vyricherla Narayana Gaianatiraju Bahadur Garu v. Revenue Divisional Officer, Vizagapatam, (1939) 2 All E.R. 317j a Privy Council Case, lord Romer, explaining the meaning of the phrase “market value of land” in relation to assessment of compensation for compulsory acquisition, is reported to have said:

From page 321 of the Report “It is perhaps desirable in this connection to say something about this expression ‘the market price’. There is not in. general any market for land, in the sense in which one speaks of a market for shares or a market for sugar, or any like commodity. The value of any such article at any particular time can readily be ascertained by ascertaining the prices being obtained for similar articles in the market. In the case of land, its value in general can also be measured by a consideration of the prices that have been obtained in the past for land of similar quality and in similar positions ………………”.

In Cripps on Compulsory Acquisition of Land, 11th Edition at page 885 it is stated:-

“The value to be ascertained is the value to the owner of the land in its actual condition at the date of the notice to treat with all its existing advantages and with all its potentialities (but as possibilities and not as realized in the hands of the purchaser) and subject to restriction on the use and enjoyment of the land and to the possibility of their removal ……”. [*245]

Further down at page 899 it is stated:

“The prices paid for comparable properties in the neighbourhood are the usual evidence as to the market value. Comparable sales are also plainly the best evidence of market value and are to be preferred to a value deduced from rents of comparable properties. The sales, however, must be of comparable properties or of properties such that the sales are capable of comparison by making adjustment for differences; and there would be no objection to comparing sales after the date of the notice to treat if they can be related back in the same way that sales well in advance of that date, required to be related forward”.

Finally in our approach to the matter in this respect we &ad in mind the following extract from the judgment of Zekia J. (as he then was) from the case of The Commissioner of Limassol v. Marikka Kirzi, 24 C.L.R. , 197, which was cited with approval in Moti and another v. The Republic (1968) 3 J.S.C., 285:

“We are indeed inclined to think that the more appropriate method in this case was the direct comparison system which might be adopted by comparing the sale prices of the pieces of land nearer in size to the land in question… after making the necessary adjustments so that they might be accepted as concurrent sales of comparable properties”. [*246]

Our task is to assess the compensation payable to the claimant guided by the above principles. To perform this primary task we must first answer certain side issues involved therein, some being issues of fact and some being issues of law. We propose to do so here in below.

The acquired property is admittedly subject to certain restrictions imposed under the Antiquities Law, Cap. 31, enacted on 31.12.1935 and being Cap. 43 in the 1949 Edition of the Laws of Cyprus. It is evident that there is on both sides some misunderstanding and confusion as to the extent of these restrictions and that both sides were throughout labouring -under this uncertainty. It was easy and possible for them to clear this uncertainty but none looked into the matter. Reading the statement of Claim one forms the impression that the claimant alleges therein that -her property was declared as an ancient monument since 1965 under Cap. 31, presumably section 6 thereof and was subject to the restriction provided by section 8 of the Law.

On the Valuation Report of the expert filed by the Acquiring Authority pursuant to Rule 19(3) of the Compensation Assessment Tribunal Rules, 1956, it is stated that the acquired property was declared as an ancient monument and was added to the second Schedule to this Law on 22.9.1966 by order of the Council of Ministers No. 658; and that prior to that date the property was the subject of a notice No. 481/1950 published under section 11 of Cap. 31 which is identical to section 11 of the 1949 edition. [*247]

In this evidence the expert for the Acquiring Authority said that the property lies within an area which practically covers the whole built up area of Kato-Paphos and which was subject to restrictions imposed under section 11 of Cap. 31J this was done by a notification of the Governor published in the Gazette on 15.11.1950 under No. 481/1950.

As the extent and nature of the restrictions to which the acquired property is subject to is directly connected with its market value and the probable use to which it could have been put into, we had to look up the matter ourselves with a view of ascertaining the true position thereof.

From reading notification 481/1950 it was revealed that the property together with an area covering almost the whole of the built up area of Kato Paphos is indeed subject to restrictions which the then Governor of Cyprus was empowered to impose and did impose under section 11 of the Law. It was also revealed that the property is not included at all in the order No.

658 published on 22.9.1966 and it was not, therefore, declared as an ancient monument nor is it, therefore, subject to the restriction provided by section 8 of the Law.

Section 11 of Cap. 31 reads as follows: -

Section 11(1) “The Governor, with a view to ensuring that buildings in the neighbourhood of an ancient monument shall as regards height and style of architecture be in keeping with the character and style of such monument and that the amenities [*248] thereof may be preserved, may by notice to be published in the Gazette order that, within such area as may be specified in such notice no building shall be erected, reconstructed or repaired and no tree shall be felled save in accordance with the terms of a permit in writing from the Commissioner previously obtained.

(2) Before issuing a permit under this section the Commissioner may require the applicant to submit for the consideration of the Commissioner and the Director such plans, sections and drawings as to them may seem fit and the Commissioner in consultation with the Director may require such modifications to be made in the same as will ensure that the building in respect of which the permit is granted will be in keeping with the character and style of any ancient monument.

(3) Any person who is dissatisfied with any term imposed by the Commissioner in any permit issued under this section may, within one month from the date of notification of the decision of the Commissioner, appeal to the Governor whose decision thereon shall be final and conclusive”.

This section is followed by section 12 which reads as follows:-

“Where the Governor is satisfied that in order to preserve the amenities of an ancient monument it is [*249] desirable that no building should be erected upon any land in the proximity of such ancient monument or that any building in the proximity thereof should be demolished, the Governor may direct that such .land or building be acquired on payment of such amount by way of compensation as may be agreed upon and in default of agreement the amount of compensation shall be determined in the like manner and in accordance with the law for the time being in force relating to the compulsory acquisition of immovable property:

Provided that in assessing any compensation payable for such land or building no regard shall be had to any artificial rise in the value thereof due to any speculative dealings which may have taken place in regard to such land or buildings after the commencement of this Law”.

Claimant’s property is not, therefore, an ancient monument but it is only property situated in the neighbourhood of ancient monuments. We have gone very carefully through sections 11 and 12 of Cap. 31 as well as sections 2, 6, 7, 8 and 9 thereof. It is evident that the restrictions under section 11 are more limited and less onerous for the owner than the ones under section 8 of the Law. In fact we reached the conclusion that the combined effect of sections 11 and 12 is to limit the restrictions that may be imposed on new buildings to those necessary to ensure that ouch buildings as regards height and style of architecture be in keeping with the [*250] character and style of the neighbouring monument and do not go as far as empowering the Commissioner to refuse a permit for building altogether.

In Georghios D. Lordos and 2 others v. The Government of Cyprus, case stated No. 128, still unreported, Zekia J., as he then was, differentiating between the restrictions under section 8 of the Law on the one hand and those under section 11 thereof on the other hand is reported to have said:-

“If new buildings on ancient monuments could not be subject to absolute prohibition under section 8 and could only be rendered liable to restrictive terms in style and height or otherwise, undoubtedly one would have expected provisions similar to those in section 12 to follow section 8………………... As to the argument that the Director is empowered only to the imposition of a term in a permit but not to the refusal of a permit, that would be tantamount to arguing that ancient monuments in the second schedule should be treated on the same footing with neighbouring lands of such monuments which lands are subject to section 11 but surely the legislature meant to go a step further in this respect by section 8 and having declared the slopes in question as ancient monuments intended to keep them substantially unaltered architecturally and archeologically and in doing so the possession of a power to refuse a permit by the Director was unavoidable”. [*251]

As it appears from the statement of claim filed by the claimant and the statement of defence filed by the Acquiring Authority there is considerable difference as to the market value of the acquired property between the 2 sides. Claimant alleges that the property’s market value was on the relevant date £2,218.750 mils, i.e. £ 250 per donum. The Acquiring Authority on the other hand alleges that the market value of the property was only £887.500 mils, i.e. £100. - per donum.

By the statement of claim claimant raises two other matters which we consider it convenient to dispose at this stage. They are the following:-

(a) That the claimant is entitled to compensation for the diminution of the value of her property occasioned by the restrictions imposed under the Antiquities Law which should be added to the assessment of the property’s market value in its condition on the relevant date. We are unable to agree with the above allegation. Apart from the fact that no evidence at all was adduced on this matter, we have already stated that the only restrictions to which her property is subject to are those imposed under section 11 of the law; these restrictions were imposed by notice of the Governor published under proper legal authority as early as 1950, i.e. long before our Constitution came into force in 1960. On the authority of Hussein Ramadan of Limassol and The Electricity [*252] Authority of Cyprus and another (1 R.S.C.C., 49) paragraph 3 of Article 23 of the Constitution can be resorted to in respect of restrictions or limitations which have been imposed after the 16th August, I960; it is not as a rule applicable to restrictions or limitations lawfully existing before the coming into force of the Constitution, and which continue to exist without contravening the Constitution after that day;

(b) that the claimant receives £7. - yearly rent from the existence in her acquired property of a meteorological station of the R.A.F. and this income was never taken into consideration by the expert of the Acquiring Authority in arriving at his valuation.

According to the evidence of the expert for the Acquiring Authority, the land over, which the meteorological station stands does not form part of plot 102/1 and is not part of the area covered by the aforementioned registration in claimants name and it has not been acquired by the Acquiring Authority. We accept the evidence of this witness on this matter and we find that very rightly the meteorological station was disregarded during the valuation.

We now proceed to examine the evidence of the experts called on both sides.

The claimant’s expert, namely Mr. Sofianos, claimed to be an agriculturist with 20 years’ experience in land valuation. From his Valuation Report filed in Court as well as [*253] from his evidence it is apparent that he never followed any of the accepted methods of valuation. Be justified his valuation with vague and general words. We are not satisfied that he possesses the qualifications or the experience or the standard of knowledge necessary to do the task which the claimant asked him to do. His valuation is arbitrary and unfounded and the result of mere speculations. He is a middle man in land transactions and no more. In his valuation report he does not mention even one comparable sale, but confined himself to mentioning several kinds of vegetables or fruits for which the soil of the field is suitable.

The expert of the Acquiring Authority, namely Mr. Mouzouris, is a valuer who had 3 years experience when he made this valuation and was then attached to Paphos D.L.O., He is now a qualified surveyor and has studied land use Control in the North East London Polytechnic.

Subject to what we state herein below, this expert based his valuation on the best method in the circumstances, namely the direct comparison method.

Reading the evidence of this witness as a whole we are satisfied that he was throughout labouring under a misapprehension as to what Lordos Case has decided and he applied this legal principle as he had himself understood it to the valuation of the property of the present claimant. Evidently when he refers to Lordos Case of 1959 he means Case stated 128 where judgment was delivered on 26.1.1959. Be further Confused the extent of the restrictions under section 8 existing on the acquired property in Lordos Case and the restrictions [*254] under section 11 existing on the property of the claimant in the present case, we quote his own words:-

“I considered the use to which this property could be put as agricultural use only, taking into consideration the fact that it was within the restricted area and the fact that antiquities had been found in the adjacent property. In view of that I considered it most likely that antiquities would exist in this property as well. In fact later antiquities were found in part thereof………………………………………… I have in mind the case of Lordos & another v. The Government of Cyprus decided in 1959 where it was held that similar properties should-be valued for other uses excluding development use altogether and I applied this principle in this case. As the claimant’s property was within the restricted area, I made no allowance at all for the potentialities of this property for development. If I was not to exclude altogether any development potentialities in view of the said restrictions, I would assess its value higher than £100.- per donum. I cannot say exactly how much but at that time the price of properties in the vicinity outside the restricted area was about £200 - to £300. - per donum depending on their location in respect to their proximity to built up areas or other developed areas”.

It is evident from the above that the restrictions to which the claimants property was subject to under section 11 [*255] of the Law, were taken by this witness to amount to a complete prohibition of putting this land into any other use except agricultural use; this wrong assumption affected greatly his valuation of the land to the prejudice of the claimant, because he failed to take into consideration that this property was part of an area ripe for development fop tourist and building purposes and could be put into such use, subject always to the restrictions as to the height and style of any building to be built thereon which could be imposed under section 11 of the Law.

Mr. Mouzouris stated that he traced 3 comparable sales and based thereon his valuation. They are the following:-

(a) Plot 20/2 and 20/3 of Sheet/Plan 51/18, field of the total extent of 1 donum, 2 evleks and 2.960 sq. feet. It was sold and transferred cm 10.8.1966 for £140.-, i.e. £82.- per donum.

(b) Plot 28 of Sheet/Plan 51/18, field 6 donums and 1 evlek in extent. It was sold and transferred on 5 .8.1966 for £600.-, i.e. approximately £100. - 20 per donum.

(c) Plot 107 of Sheet/Plan 51/10, field 2 donums in extent sold and transferred on 7 .8.1966 for £ 200.- i.e. £100.- per donum.

The last 2 sales were made simultaneously on the same declaration between the same persons and the witness considered them as one with average sale price of £97. - per donum. [*256]

All 3 plots appear delineated in blue on the D.L.O. map which is before us as exhibit 4.

The market value of properties in the vicinity of the acquired property increased by 15a> from 1966 to 1967 according to this witness although for the ensuing years the annual increase was higher.

It is convenient to state here that in the Valuation Report filed by the Acquiring Authority it is stated that the claimant’s property as well as all 3 above comparable sales refer to plots which have been added to the second schedule to the Antiquities law by virtue of section 6 thereof. This is true as regards all 3 comparable sales only which, unlike claimant’s property, are subject to the restrictions provided by section 8 of the law. Mr. Mouzouris has lost sight of this fact or differentiation and we are satisfied that he treated all properties as being subject to exactly the same restrictions, again to the prejudice of the claimant.

We are also satisfied that Mr. Mouzouris failed to pay proper regard to certain other differences, between claimants plot on the one hand and the 3 comparable sales on the other hand and make proper adjustments. The size of the claimant’s property is bigger than the comparable plots: its shape is advantageous especially compared to plot 20/2 and 20/3, i.e. comparable sale (a) above which is so disadvantageous from point of view of shape that is rendered almost useless. Plot 28 which is nearer in size and shape to claimant’s property has no access to any public road at all and this [*257] fact which affects prejudicially its value to a, great extent has not been properly appreciated by Mr. Mouzouris in his valuation. Claimants plot is also better as regards general view and is abutting an asphalted road unlike plot 107 where access is obtained through a narrow track and from where there is no view either of the port or the sea to the south, and is situated in a much lower level than claimants field from where the view is indeed panoramic from what we have seen ourselves in our visit and from what claimants expert stated and we accept his evidence in this respect.

In view of the unsatisfactory evidence of both experts in many respects we have decided not to rely absolutely on the evidence of any one of them and on the authority of Rashit Ali and another v. Vassiliko Cement Works Ltd. (1971) 3 J.S.C. 459, we shall proceed to make our assessment of the compensation payable to the claimant by taking the evidence before us as a whole. We shall do so relying on the direct comparison method using as comparable sales those referred to by Mr. Mouzouris after making all necessary adjustments for differences and after taking into consideration all uses to which the acquired property could be put into and all its potentialities subject always to the restrictions to which it was subject. We consider all other plots mentioned, to us by all other witnesses to be of no help, as same bear no similarity at all to the acquired property; plots 31 and

32 are very far away from claimants land and are situated within Ktima town. The [*258] property of Theoskeoasti Church is adjacent to the sea next to the Municipal beach.

Having in mind that the average value per donum of the comparable sales was in 1966 about £100. - per donum and that: -

(i) There is an increase to the extent of 15 from 1966 till 1967; and

(ii) the advantage of the acquired property over the comparable plots as regards size, shape, view and road access; and

(iii) the comparable plots are ancient monuments and subject to the restrictions of section 8 of the Antiquities Law whereas the claimants property is subject to the restrictions provided by section 11 of the Law only;

We assess the value of the acquired property at a figure about £200.- per donum. We assess the value of the whole plot at the round figure of £1.570. For the purpose of checking the results of our valuation by following the course we have followed, we have approached the matter from another point of view also. Mr. Mouzouris stated that, if claimants property was not subject to the restrictions of the Antiquities Law, its value would have been something between £200. - and £300.- per donum. We take the average of £250. - per donum. We deduct therefrom 157 in respect of the effect of the restrictions of section 11 of Gap. 31 and we arrive at the figure of £212.500 mils per donum. [*259]

In Anastasia Christou Kittou v. The Republic of Cyprus (1971) 8 J.S.C. 1045, the trial Court made a deduction of 15 for the effect of section 8 of Cap. 31 and the Supreme Court refused to intervene. We made the same deduction for the effect of section 11 of Cap. 31 as v/e feel, with all due respect, that for the effect of section 8 of Cap. 31 the figure of 12T is rather on the law side in view of the practice of the Director and his reluctance to accede to any application for buildings on ancient monuments.

The above assessment of £1,750. -, made in the light of all the evidence before us, may not be strictly accurate, but it cannot be very far off the mark, one way or the other, and on the material before us, it represents the average market value on the relevant date, and the nearest We can get to the truth.

We shall now deal with the claim for the payment of interest on the assessed value.

Our duty is to allow the claimant just and equitable compensation15 as is provided by Article 23(4) (c) of our Constitution. The principle of equivalence is at the root of statutory compensation. The following American Authorities are cited with approval in the judgment of Josephides J. In Moti and another v. The Republic (1968) 3 J.S.C. 285. They are the following: -

(i) “Just compensation means the full and perfect equivalent in money of the property taken”: The Monogahella Navigation v. United States (1893) 148 U.S. 312, 326. [*260]

(ii) “The right to just compensation could not be taken away by statute or be qualified by the omission of a provision for interest where such an allowance was appropriate in order to make the compensation adequate ……….” Seaboard Air Line R. Co. v. United States, 261 U.S. 299.

(iii) “The owner is entitled to such addition (to the value of the property at the time of the taking) as will produce the full equivalent of that value paid contemporaneously with the taking”: Jacobs v. U.S.A. (1933) 290 U.S. 13; 78 Law ed. 142).

In Ali and another v. Vassiliko Cement Works Ltd. 3 J.S.C. 459, the Supreme Court allowed 7% interest on the assessed value of claimant's property from the date that the notice of acquisition was published.

On the facts of this case we feel that there was considerable delay and unreasonably long time elapsed from 25.8.1967 when the notice of Acquisition was published. In the meantime the Acquiring Authority carried in claimant's land considerable excavations and in all the circumstances we are of opinion that we shall be failing in our duty to secure that the claimant receives just and equitable compensation if we do not allow her interest at 7 per annum as from 25.8.1967, i.e. the relevant date for the purposes of assessment of the market value of her compulsorily acquired property. [*261]

For the purposes of the award as to the costs the sealed envelope exhibit No. 5 has been opened after the assessment has been made, pursuant to order 28 of the Compensation Assessment Tribunal Rules, 1956, and it was revealed that on 8.1.1968 the Acquiring Authority offered to the Claimant £887.500 mils only.

In the result judgment is hereby entered in favour of the claimant and against the Acquiring Authority in the sum of £1,750 with interest thereon at the rate of 7 per annum from 25.8.1967 until final payment with costs to be assessed by the Registrar.

Judgment and order for

costs as above.