Court dismisses compulsory acquisition compensation claim where land value increase offsets acquisition cost.

[*227] 1980 April 9

(PIKIS, P.D.C)

IN THE DISTRICT COURT OF LARNACA

Antonakis Yiangou Stylianou,

Claimant,

v.

The Republic of Cyprus, attention Attorney-General and/or Minister of Interior through the District Lands Officer, Larnaca,

Acquiring. .Authority.

(Reference No. 53/78).

Compulsory acquisition - Compensation - Extent of the land in respect of which it may he claimed - The area encompassed’ In the order of acquisition - Sections 4, 6, 7 and 13 of the Compulsory Acquisition. of Property Law, 1962 (Law 15/62) - Betterment - Determined at the date of trial - Carrying out of works envisaged by acquisition improved area, considerably - Value of remaining land of claimant enhanced because of acquisition due to betterment - Claimant not entitled to compensation.

Estoppel - Equitable estoppel - Whether applicable in matters of public administration

A.S. Angelides with N. Cleanthous, for the Claimant.

G1. HadjiPetros, on behalf of the Attorney-General, for the Acquiring Authority.

JUDGMENT

The following judgment was delivered by:-

PIKIS, P.D.C.: On 25th May 1973, [*228] notice was published of the intention of the Acquiring Authority to expropriate part of the claimant’s property, an area of 304 square feet, for the purpose of widening, straightening and generally improving Makarios III avenue at Larnaca. The notice was implemented by an order of acquisition published on 28th September, 1973, whereby the aforementioned property of the claimant was compulsorily acquired for the purposes earlier signified. It was some time before the works envisaged by the acquisition were carried out and work did not commence before 1975. Apparently the unsettling events of 1974 played a part in the delay that followed the order of acquisition. The project was eventually completed just before Easter 1977. The area actually taken for the purposes of acquisition was 222 square feet, i.e. a smaller area than that originally envisaged.

At the outset the parties agreed that the per square foot value of the land acquired was, at the time of notification, £1.500 mils and further agreed that no compensation is recoverable for an area of 32 square feet that was subject to a street widening order. Two issues remain for consideration:-

(a) The extent of the land, in respect of which claimant should be compensated; and

(b) Whether the Acquiring Authority is entitled to a set off, and if so, the extent of it, because of any enhancement, if any, in the value of the remaining land of the claimant resulting from the acquisition.[*229]

Subsequent to the institution of the present proceedings on 28th December 1979, the claimant sold the land for £17,500.-, but reserved his rights to compensation for the area acquired. The extent of the land was, before acquisition, 3,312 square feet. In his final address learned counsel for the claimant submitted that the Acquiring Authority is estopped from raising the issue of betterment because of its previous conduct, namely its omission to raise a similar claim in the case of claims, of compensation raised by other owners: of property along the same road, It is a fact that the Acquiring Authority claimed no set off for betterment in settling numerous cases of compensation, a fact evidenced, inter alia, from the proceedings in Damali: v.

The Republic, decided by this Court on 26th June 1978 (See Ref. 1/79). Indeed it seems that no set off for betterment was claimed in the

settlement of claims for compensation raised by owners of property along Makarios III Avenue until February 1979, that is a few months after the institution of the present proceedings. It is common ground that no offer was at any time made by the Acquiring Authority to compensate the claimant for his loss. Before resolving issues relevant to the conduct of the Acquiring Authority and deciding whether any estoppel operates against them it is partinent to determine whether the acquisition has enhanced the value of the remaining property of the claimant and, if so, to what extent, an issue on which we received conflicting evidence from two experienced valuers, namely Mr. Neophytos Pantelides, a retired Lands Officer now in private practice [*230] and Mr. Lazaros Anastassiou, the officer in charge of the valuation section of the Larnaca Lands Department. Before attempting to decide this issue the ground must be cleared and decide what is the extent of the land in respect of which the claimant may validly claim compensation. The law is, I believe, clear on

the subject for on a consideration of the provisions of section 4, 6 and 13 of the Compulsory Acquisition Law - 15/62 it is manifest that the land acquired that will eventually vest in

the Acquiring Authority after the payment of compensation is that encompassed, in the order of acquisition, in this case an area of 304 square feet. This view is strengthened by the provisions of section 7 of the same law, establishing a procedure of disclaimer with regard to parts of the acquired property not utilised for the purposes of acquisition. Therefore having regard to the agreement of the parties that no compensation is recoverable for an area of 32 square feet the claimant must be compensated in respect of an area of 282 square feet at £1.500 mils per square foot. I find that the market value of the land acquired was, at the time of notification, £423 (see s. 10(a) - Law 15/62).

Before the implementation of the acquisition works the road was in a poor state with earthen berms on either side, hardly justifying its description as an avenue. Though the road had a width of 40 feet only a portion of it was asphalted, 20 feet wide, and visibility along this road was limited by a number of bends. The area had primarily a risidential character. Because of the [*231] acquisition the road was straightened and improved and pavements were built on either side of the road and the overall width of the road was extended to about 60 feet. Now the tarmac has a width of 44 feet and the road is divided into four lanes, a fact that facilitates the flow of traffic. The character of the locality is changing rapidly and houses come, down fastly to make room for the construction of shops and business premises generally.

Mr. Anastassiou maintained in his report that he adopted and in evidence before me that the claimant reaped considerable benefits from the acquisition because of the enhancement in the value of the remaining portion of his land that he eventually sold in December 1979 for a price exceeding £5.500 mils per square foot whereas it was purchased a month after the publication of the order of acquisition at £1.220 mils per square foot. In fact the land was sold in December 1979 at a price much higher than that estimated by Mr. Anastassiou in April 1979, when the report of the Acquiring Authority was filed in Court.

It was then estimated at £14.837 mils. According to the valuer of the Acquiring Authority the betterment resulting from the acquisition comes to £6,360.- , a sum that more than sets off the compensation otherwise payable to the claimant amounting to only £423. The way Mr. Anastassiou went about in establishing the element of betterment attributable to the acquisition is as follows: He endeavoured first to establish the natural increase in the value of land at Larnaca between 1973 and 1979, estimated at approximately [*232] 12 to 12½ per cent and then adjusted accordingly the value of land as it stood at the time of acquisition in order to discern what its value would be had it not been for the improvement works carried out pursuant to the scheme of acquisition.

The resulting figure, £8,477.-, is then compared to the estimated value of land at the time of the submission of the report, viz. £14,837.- and thereby the element of betterment is established. In his opinion the values of building sites along Makarios III Avenue rose at a ratio much higher than that noticeable in areas of the town not affected by improvement works, a fact he tried to establish graphically, in appendix ‘A’ attached to his report. And whereas the natural increase in land values at Larnaca from 1973 to 1 979. was, as mentioned, about 12½ per cent, in the area under consideration it was in the region of 70 per cent, a difference attributable to the improvement of the area resulting from the acquisition.

For the purpose of establishing the natural increase of properties at Larnaca he chose an area that did not benefit from any works of improvement near the police station on the road to Limassol. His data would have been more persuasive had he indicated sales of properties in more than one areas and had he also referred to sales effected by more than one owners. Mr. Pantelides shares the view that properties rose considerably in value since the day of notification but attributes this increase entirely to. factors other than the improvement works effected thereat.

He explained there are two ways of discerning betterment: [*233] The first is the common sense approach through which a valuer may assess the impact of improvements and their repercussions on the value of land. The adoption of this method entails primarily an examination of the character of the locality before and after the implementation of the acquisition works. And if the character of the locality is substantially unchanged one could argue that the acquisition had no impact on the value of land; whereas if a change to the better came about one could naturally attribute it to improvement works carried out.

Surprisingly Mr. Pantelides turned a blind eye to the vast changes in the character of the locality following the implementation of the scheme of acquisition and virtually ignored the fact that ever since the area is rapidly becoming a commercial centre. To him it is a matter of little significance that the road was considerably widened and improved. Such is his under-estimation of the impact of improvement works that referring to another ‘area, namely Phaneromeni, he ventured the view that it is of little significance whether a road is asphalted or not.

This, to my mind, is absurd. In the end Mr. Pantelides paid only lip service to the common sense approach in determining betterment, overlooked the impact of improvements and relied on the second method, that of comparing the value of properties before and after the acquisition, as a means of determining the causes for rises in the value of land. Here again Mr. Pantelides does not allow himself to evaluate in a correct perspective the great increases in the value of land in the area and warns [*234] against the risk of comparing properties not strictly comparable in character.

He attributes the entire rise in the value of land in the area to factors other than the improvements effected, notably the expected natural increase, the explosion of the town population following the Turkish invasion and the foreseeable benefits to the area from the construction of the Larnaca port. In order to demonstrate that this increase did not manifest itself exclusively at Makarios III Avenue, he makes reference to increases in the. value of land in other parts of Larnaca, particularly Phaneromeri. It emerged in evidence that the Phaneromeni area, like Makarios III avenue, benefited considerably from improvement works carried out after the acquisition involving the construction of a large avenue in the place of an unasphalted road as well as the building of a Gymnasium, making the area attractive to residents with children of school age.

And no doubt the proximity of the area to the airport added to its value.

I have considered with the greatest care the reports and the evidence of both valuers in an effort to determine the impact of the acquisition works on the values of land in the area. The implementation of the acquisition works improved the area considerably, making it more attractive as a business and commercial centre. The improvement of the road made the flow of traffic thereto easy and rendered properties on its side conspicuous.

It is now well settled that betterment must be determined at the date of trial. Any other approach would [*235] be self defeating for, as it was judicially recognized, improvement works affect an area gradually and it is not before the effluxion of some time that the impact of improvement works has a reflection on the values of land. (See D.J. Pomades & Sons Ltd. v. The Republic (1977) 1 C.L.R. 189; Birmingham Corporation v. West Midf Baptist (1969) 3 All E.R. 72 at p. 178 letters F-G.). In Wilson

v. Liverpool City Council 197l) 1 All E.R. 628 at p. 634, Lord Denning points out that a scheme of acquisition affects

values of land progressively and its impact has, in his own words, a progressive effect on values; At first it has little effect because it is so vague and uncertain. As it becomes more precise and better known so its impact increases until it has an important effect. It is well established that in evaluating the compensation payable to the claimant the Court is not bound by the assessment of either valuer and must, in the end, strive to find what is a fair compensation duly payable to him, a sum equal to the loss, if any, suffered because of the acquisition. (See Rashid Ali and Another v. Vassiliko Cement Works Ltd. (1971 ) 1 C.L.R.146 and Louisos v. M’ ty F’ sta (1978) 1 C.L.R, 36.)

Reference proceedings are, in many respects, in the nature of an inquiry designed to elicit what is fair and reasonable compensation in the circumstances of a case, thereby ensuring compliance with constitutional dictates on the subject (Art. 23).

I have given careful consideration to the rival opinions and examined the evidence before me in its totality [*236] in order to resolve whether the value of the remaining property of the claimant was enhanced because of the acquisition and, if so, to what extent. I find as a fact that the carrying out of the works envisaged by the acquisition improved the area considerably and brought about radical changes in the character of the locality. Whereas the area was, before, the acquisition, predominantly residential it is rapidly becoming a major commercial, centre. This change would be hard to contemplate without, the improvements brought about by the implementation of the acquisition, scheme. It is a fact that the scheme of acquisition was not the sole factor that contributed to the great rise in the value of land in the areas mainly noticeable after the year 1977. The increased demand for residential business and commercial accommodation resulting from the displacement of thousands of people following the Turkish invasion as well as the increased traffic at the Larnaca port, were also factors that contributed to the development of the area. However even if we were to assume that the rise of land in the particular area was higher than the general rise in the values of land at Larnaca for reasons unconnected with the acquisition it is to me manifest that the one single factor that contributed more than anything else to the rise in the values of land in the area are the improvement works that made immediately feasible the development of the area into a business and commercial centre. It is not altogether easy to define in arithmetical terms the precise extent of betterment. In my [*237] judgment the natural rise in the values of land at Larnaca, split between the date of the acquisition and the date of trial, was in the region of 25 per cent; whereas before the acquisition it was less than 10 per cent. These rises mainly reflect added demand for the acquisition of land following the Turkish invasion. In the area under consideration the rise in the value of land likewise split between the date of the acquisition and the date of-trial was much higher, something in the region of 70 per cent. The higher rise in the value of land in the area under consideration is mainly due to the acquisition works.

Having sifted the evidence as well as I could I find that the element of betterment exclusively attributable to the acquisition is no less than £1,500 mils per square foot. Therefore the value of the remaining land of the claimant was enhanced because of the acquisition, because of betterment, by no less than £4,500.-, whereas the loss resulting from severance is only £423. Consequently unless the claimant succeeds on any other ground he is entitled to no compensation.

Equitable Estoppel and Public Administration

It has been submitted on the part of the claimant that the Acquiring Authority, that is the Republic of Cyprus, is estopped from setting up a set off in diminution, in this case extinction, of the claim of the owner for compensation on the ground that no such set off was [*238] raised in the case of other owners of property along Makarios III avenue. And it was argued that to allow the Acquiring Authority to pursue its case for betterment would be tantamount to allowing the Government of Cyprus to extending unequal treatment to persons similarly circumstanced. Mr. Angelides argued that the equitable doctrine of estoppel, as developed by English Courts, is applicable in the case of both private citizens and public authorities. In support of this submission he cited Kyriacopoulos

Greek Administrative Law, 4th edition, volume 1, at p. 136 et seq., where the subject is discussed of the application of principles

of the civil law in the sphere of administrative law where the jurisprudence of

the latter is silent on a given subject. Also he made reference to Garner On Administrative Law. Notwithstanding the submission of counsel on the subject in Garner’s Administrative Law, 5th edition, at 320 the author

doubts the application of the principle of the doctrine of estoppel in the sphere of public administration although there are conflicting judicial pronouncements on the subject. (See Garner, at p. 172 et seq.) For reasons that will be mentioned hereafter it is unnecessary to give in these proceedings a final answer to whether estoppel, or any form of it, has any application in the field of public law. Certainly it cannot be invoked to support illegal action of a Government servant. Short of that if left to decide the matter unaided by authority I would subscribe to the view that Government, like private citizens, should be bound by unequivocal representations both in the area of public and [*239] private law. This is consistent with the credibility that must attach to actions of public bodies.

The Acquiring Authority deny charges of affording preferential treatment to other owners of land or any deliberate attempt to treat the claimant in a way unequal compared to other owners in similar circumstances . Mr. Anastassiou explained in evidence that it was not before 1979 that they had satisfactory data to make out a case for betterment whereupon they felt duty bound to define their case in that perspective. I am satisfied there was no deliberate attempt on the part of the authorities to treat owners along Maka-rios III avenue in a dissimilar manner although with more vigilance they could have defined a case for betterment at an earlier stage than they did. In the case of Damali (supra) I pointed out there were obvious signs of betterment, a fact to which they should have paid more heed.

The notion of equality of treatment, as repeatedly pointed out by the Supreme Court, is a relative one in the sense that the rights of a citizen must be determined at the time when they have to be defined. And as judicially enjoined we must discern the rights of the claimant to compensation at the time of the trial because the impact of betterment or injurious affection must be determined at the date of trial. Therefore it cannot be validly argued that the authorities are treating the claimant in a way different from fellow owners of property for in their case the element of betterment was not manifest or as well defined as it became in due course. In this case the element [*240] of time is essential for the definition of the rights of the owners. Even if I were to assume that equitable estoppel can be set up in order to prevent a public authority from pursuing a certain course it could not be invoked in the circumstances of this case for the Acquiring Authority has done nothing estopping them from asserting case for betterment. I will not dwell at any great length on the implications of equitable estoppel. On any definition of it there must be, before a party’s rights are compromised, an unequivocal representation by word or conduct causing the representee to alter his position in a way that it would be unjust

to allow the representor to insist on his strict legal rights. (See General London Pty. Trust Ltd. v. High Trees (1956) 1 All

E.R. Law Reports 256. Ajay v. R.T. Briscoe (Nig.) Ltd. (1964) 1 W.L.R. 1326. Woodhouse Ltd. v. Nigerian Produce Ltd. (1972) 2 All E.R. 271, Moorgate Ltd. v. Twitching (1976) 225 and Crabb v. Arun D.C. (1976) 1 Ch. 179, Georghios HadjiYannis v. Attorney-General (1970) 1 C.L.R. 80, Margarita Ikosi v. Andreas Karayannis and Others (1971 ) 1 C.L.R. 189.)

There is no suggestion that the Acquiring Authority made any direct representations to the claimant by word or by conduct that they would raise no set off for betterment nor is there any allegation that the claimant modified his position in any way because of the conduct of the Acquiring Authority. It has been submitted that the failure of the Acquiring Authority to make an offer to compensate the claimant within one month from the [*241] publication of the order of acquisition and in fact their total failure to make any kind of offer to the. claimant raises an estoppel against them. Firstly section 9, Law 15/62 does not cast a positive obligation on the Acquiring Authority to make an offer to compensate but merely contains a directive provision for the holding of negotiations with a view to settlement. Therefore there is nothing in the nature of a statutory omission in failing to make an offer. The claimant was all the time at liberty to refer the matter of compensation to the Court at any time after the publication of the order of acquisition. By this I don’t wish to excuse the conduct of the administration in failing to make an offer to the claimant for compensation. As I had occasion to point .out many times in the past the valuation of the Acquiring Authority must be ready at the time the order of acquisition is published and an offer for compensation must be made immediately thereafter. Indeed I did recommend the amendment of the law in a way casting a duty on the Acquiring Authority to make an offer for compensation immediately after the sanctioning of the acquisition.

Neither the failure of the Acquiring Authority to make an offer to compensate the claimant nor the offer made to other claimants, if at all relevant, caused the claimant to modify his position in any way. On the contrary the claimant felt perfectly free to raise a claim for compensation defined in the notice of reference as ranging between £1,000 to £3,000.[*242]

At one time I entertained the view that it would be fair to recommend to the appropriate authority to pay to the claimant notwithstanding my judgment, compensation equal to that paid to other owners on grounds of fairness and equality. On reflection I am prepared to make no such recommendation for it has in due course become manifest that the claimant reaped considerable benefits from the acquisition and to suggest the payment of compensation in such circumstances would, to say the least, be tantamount to imposing an unjustified burden on public revenue. I need only mention that in some countries there is legislation in force for the payment of a betterment levy where the owners of adjoining land derived financial benefits from improvement works carried out by a public authority.

For all the above reasons I find that the enhancement in the remaining value of land resulting from the acquisition more than sets off the compensation otherwise payable to the claimant. Therefore I direct that the subject property be registered in the name of the Acquiring Authority without the payment of any compensation.

In the case of Demades (supra) it was pointed out that recourse to an advocate and a valuer is essential for the definition and clarification of one’s nights to compensation and a prerequisite to asserting them. Therefore costs should be awarded to the claimant independently of the result. However the scale upon which such costs will be awarded is very much a question of discretion and in my [*243] judgment such costs should be assessed on the scale of claims between £100 to £200 for one advocate; such costs to be assessed by the Registrar and approved by the Court. In awarding costs a fair amount must be awarded for the fees of the valuer.

Order for registration of property inthe name of Acquiring Authority. Order for costs as above.