Court dismisses compensation claim where remaining property value increase fully offsets acquisition cost under Compulsory Acquisition Law.

[*279] 1981 Nov.9

(BOYIADJIS, AG. P.D.C, AND PAPAS, D.J.)

IN THE DISTRICT COURT OF PAPHOS

Maria Kyriacou Hji PapaPolydorou,

Claimant,

v.

The Republic of Cyprus,

Acquiring Authority.

(Reference No. 6/79).

Compulsory acquisition - Compensation – Principles applicable - Date at which compensation is assessed - Increase in the value of the remaining property of claimant which occurs by reason of the acquisition - Date at which such increase is assessed - No compensation payable to claimant because compensation payable to him for the acquisition completely set off and extinguished due to the increase of the remaining property - Section 10(a) and

(f) of the Compulsory Acquisition of Property Law, 1962.

E. Komodromos, for the Claimant.

Gl. H jiPetrou for him Ph. Charalambous, for the

Acquiring Authority.

JUDGMENT

The judgment of the Court was delivered by;-

BOYIADJIS, AG. P.D.C. :- The claimant is the owner[*280]

of a field 5 donums in extent, covered by registration No. 5512, plot No.28 of sheet/plan 45/52 of Mesoyi village.

In pursuance of its scheme to divert to the west of Mesoyi village the existing Paphos-Polis main road, the Acquiring Authority published on 21.12.1973 a notice of Acquisition, P.I. 848, manifesting its intention to acquire part of the claimant’s said property of an extent of 3 evleks and 3800 square feet necessary for the construction of part of the new road. The notice was followed by an order of acquisition, P.I. 145, dated 8::9:1974.

From what it may be gathered from the evidence, the Acquiring Authority, which is the Republic of Cyprus, has implemented Its scheme soon after the acquisition by the construction of the new road through claimant's land. It failed, however, to make an offer to the claimant for the payment to her of any amount of compensation until the 30th April, 1979, when by filing the present proceedings, the claimant referred to the Court the question of the assessment of the compensation payable in respect of the acquisition, praying that same be assessed at £2,000.- plus interest.

Pursuant to the Compensation Assessment Tribunal Rules, 1956, the claimant has filed on 3.9.1979 a statement of claim with a valuation report increasing the amount of compensation claimed thereby to £6,076.- plus interest. On 4.1 .1980 the Acquiring Authority filed its written valuation alleging therein that no compensation at all is in law payable to the claimant in as much as the increase in the value of her property remaining after the acquisition, and[*281]resulting from the works carried out by the Acquiring Authority, far exceeds the market value of the part of the land acquired.

Mr. Modestos Englezakis, a retired Assistant Lands Officer, on whose valuation the claimant relies, found the market value of the property acquired to be £6,075.-. He denied that the value of the remaining property of the claimant was increased due to the works of the Acquiring Authority and alleged that the value of such property has on the contrary be decreased by an amount of £700.-. This last assertion has been withdrawn by counsel for the applicant.

Mr. Ioannis Komodromos, a valuer first grade attached to the valuation section of the Paphos D.L.O. who made the valuation on behalf of the Acquiring Authority, found the market value of the part acouired to be £887.500 mils and the increase in the value of the remaining part to be £6,682.

Mr. Englezakis stated in his written report that he has employed two methods of valuation, namely the direct comparison method combined with the development method. Mr. Komodromos chose the direct comparison method of valuation. Speaking generally, both these methods are accepted methods of valuation and resort may be made to either method depending on the circumstances of each case. When, however, there are concurrent sales of comparable properties, the best method to be employed is the direct comparable method, but when this is not available, the residual method can be resorted to. See in this respect the case of The Commissioner of Limassol v. Marikka N. Kirzi (24 C.L.R. 197).[*282]

The valuer for the Acquiring Authority based his valuation on the sale of four plots of land which he considered to be comparable properties. Particulars of these plots are set out in Schedule I attached to his report. The valuer for the claimant challenged the opinion of Mr. Komodromos on the ground that none of these four plots is situated within the built up area of Mesoyi village. They are, however, situated on either side of the main Paphos-Mesoyi road along which there are scattered houses and other buildings. The. distance from Mesoyi to Paphos is about three miles and the distance of the four comparables from Mesoyi is half a mile approximately.

It is our view that the four plots relied by Mr. Komodromos are susceptible of comparison with the claimant's property subject to the necessary adjustments.

Be that as it may, even if we were of the opinion that the residual method could have been properly employed in this case the market value of the claimant's land acquired should have been found with reference to 1973 when the notice of acquisition was published. Mr. Englezakis has admitted, that he found the value

of the claimant's property which could be fetched in the open market in 1979. It is further common ground that by 1979

the market value of propertiesin the area, compared with that of 1973, had been greatly increased. It follows that the valuation of Mr. Englezakis is defective in this respect let alone the fact that he took no account of the payment of commission to an estate agent and he made no allowance or provision for deferment. We cannot, therefore, rely on it.[*283]

The principles governing the assessment of compensation in cases of compulsory acquisition are laid down in section 10 of the Compulsory Acquisition of Property Law (Law 15 of 1962).The equivalence of the compensation to the loss suffered by the claimant as a result of the acquisition is the cornerstone of the aforesaid statutory provision as interpreted and applied by our Courts having regard to Article 23.4(c) of our Constitution, in a number of authorities including Yiannis Anastassi Moti and Another v. The Republic (1968) 1 C.L.R.102 and Demades & Sons Ltd. v. The Republic (1977) 1 C.L.R.189.

The main head of compensation is the market value of the land acquired which, in accordance with paragraph (a) of section 10 of the Law, is to be found with reference to the date when the relevant notice of acquisition was published* In the present case the material date is the 21st December,1973 Pacts affecting the value of land in the open market, which should be born in mind, include the location of the land, what use it may be put into, and its present as well as future prospects of development. The value to the owner and not to the Acquiring Authority must in each case be found. The characteristics and prospects of the land part of which has been acquired in the present case are not in dispute. The land lies in the western outskerts of Mesoyi village and it abutted a narrow earth road leading from the village to the fields. Its total extent is 5 donums. Although it is described as a field and although water and electricity had not reached its boundaries, yet, in view of its. proximity to the built up area of the village, it was ripe for development for building purposes.[*284]

One possible way of development was its division into 7 building sites as suggested on map "B" attached to the valuating report of Mr. Englezakis. It should, however, he horn in mind that prior to the acquisition the built up area of Mesoyi village did not tend to expand in the direction of the land acquired. The rate of the natural average annual increase in the value, of similar properties in the area was approximately 13 per cent for the period 1969 till 1978. This is the result of a study carried out by the valuer for the Acquiring Authority ignoring the repercussions of the creation of the new road, and which has not been seriously challenged by the claimant. It is to be found in an Appendix attached to the report of Mr. Komodromos,

The Comparables.

All four comparables relied upon by Mr. Komodromos are situated to the south of Mesoyi village, on the main road to Paphos town. The distance from these plots to the centre of Mesoyi is approximately half a mile. Their prospects of development are the same with those of the claimant’s land. Although there is no. evidence how close to these plots the supply of electricity and water had reached, the fact remains that there are buildings near these plots. Furthermore, they have the advantage of abutting a main asphalted road compared with the claimant’s land which abutted a narrow earth road leading to the fields. Their shape, however, viewed together with the width of their frontage on the road and their extent, is such that in our opinion their division into building sites may entail a greater waste of land or higher[*285]cost compared with the claimant's land. Taking all plus and minus into consideration we think that the average value of these four plots represents fairly the market value of the claimant's property. The four plots are the following:-

(1) Plot 108 of sheet/plan 45/52 shown deliniated in blue on the map marked "T" attached to the valuation report of Mr. Komodromos. It is a field. donums and 2 evleks in extent. The whole share therein was sold on 30.8.1973 at £1,200.- per donum.

Approximate value per donum as at 21.12.1973 ..£1,250.-

(2) Plot 110 of sheet/plan 45/52 shown deliniated in blue on the same map. It is a field 1 donum and evleks in extent. The whole share therein was sold on. 8.1.1972 at £1,143. - per donum.

Approximate value per donum: as at 21.12.1973 ..£1 ,440. -

(3) Plot 392 of sheet/plan 45/51 shown deliniated in blue on the map marked "D" attached to the valuation report of Mr. Komodromos. It is a field 9 donums in extent. The whole sharetherein was sold on 31.3.72 for £1,333.- per donum.

Approximate value per donum on 21.12.1973 ..£1,600.-

(4) plot 377/1 of sheet/plan 45/51 shown delineated in blue on the same map. It is a field 8 donums and 1 evlek in extent. The whole share therein was sold on 21.6.1972 at £1,091.- per donum.

Approximate value per donum on 21.12.1973 ..£1,300.[*286]

The average market value of the above four comparable properties as at the material time to these proceedings is £1 ,400.-. This is in our opinion the per donum value of the claimant's land on the date when the relevant notice of acquisition was published. The part of the property acquired being only 3 evleks and 3400 square feet in extent, is slightly less than one donum, we assess its value at £1,350.-.

The next question to be considered is the allegation of the. Acquiring Authority that as a result of the works underlying the acquisition and carried out by the Acquiring Authority there has resulted an increase in the value - of the property of the claimant remaining after the acquisition. This increase has been estimated by Mr. Komodromos to be £6,662.-. This aspect of the case is governed by paragraph (f) of section 10 of the Law which reads:-

"In the case of property of which a part only is acquired under this Law, account shall be taken of the increase or decrease, if any, in the value of other property held by the owner together with the part so acquired, which will occur by reason of the acquisition".

In Demade's Case (supra) it was held that such increase, if any, crystallises on the date when thecompensation is to be assessed.

It follows that, in assessing the compensation payable in respect of property compulsorily acquired under Law No. 15 of 1962, the-Court must take into account any amount representing any proven -increase in the value of the remaining[*287]property of the claimant, found with reference to prices prevailing at the hearing of the case. Such amount is deductible from the amount representing the market value of the part of the property which has been acquired, and only the balance, if any, is payable to the claimant.

The strip of land acquired and the road constructed thereon extends from south to north along the whole width of the claimant’s property which is thus divided into two parts. The one part of the west of the road is shown marked as plot 28/1 on the map attached to the valuation report of Mr. Komodromos, It is of an extent of 2 donums, 2 evleks and 2000 square feet. The other part to the east is shown as plot 28/2 on the same map. Its extent is 1 donum, 1 evlek and 1800 square feet and it may conveniently be divided into two building sites without the claimant incurring any expenses. Both valuers agree on this matter. Plot 28/1 may be divided, according to Mr. Englezakis into only 3 building sites as shown on his plan marked "T" attached to. his report. A large part thereof, marked "A" on this map, is. wasted. Mr. Komodromos alleged that plot 28/1 may properly be divided into 4 building sites as shown on the sketch - Exhibit 2 which he has produced. By limiting slightly the depth of the 3 building sites proposed by Mr. Englezakis, the area marked A, as widened, may easily be sold as the fourth building site. The extent as well as the depth of the 4 building sites into which plot 28/1 nay be divided is larger than the minimum allowed and may be built upon even taking into consideration the prohibition of building anything at a distance[*288]of less than 50 feet from the road boundary which the declaration of the new road in 1979 as a major road entails. The division of plot 28/1 into 4 building sites may be achieved without the construction of any road other, than the widening of the existing earth road along the southern boundary of the claimant's land.

It follows that the claimant has benefited from at least one resulting advantage from the construction of the new road at the expense of the Acquiring Authority, namely the considerable diminution in the cost of constructing the roads necessary for the conversion of his land into building sites. Mr. Englezakis estimated the cost of construction of the roads at £4,900.- i.e. £700.- per each building site. This cost has now been reduced considerably. Judging from the length of the roads envisaged by the proposed development plan attached to the report of Mr. Englezakis, compared with the present need of only widening part of the road on the south boundary of plot 28/1, we may say that definitely less than half the cost is now needed. In terms of money, the claimant has in this respect benefited by an amount exceeding £2,000.-, i.e. much more than what the part of his land acquired was worth at the material time.

Be that as it may, we are satisfied from the evidence of Mr. Komodromos that the construction of the new road in the vicinity opened new horizons for a more profitable development of the property remaining to the claimant after the acquisition. The valuer for the Acquiring Authority carried out a study regarding the market value of building[*289]sites in Mesoyi village, which do not a but the new road. The study is with reference to the year 1977 and mostly 1978. The conclusion was that such building sites were being sold in the open market at about £900.- each. The opinion of Mr. Komodromos in this respect has not been challenged by the claimant. The sales relied upon are set out in paragraph A(I), (II), (III) and (IV) in page 2 of the written report of Mr. Komodromos.

At page 3, paragraphs B(I) and (II) of the same report two other sales of building sites abutting the new road are mentioned, which occurred in 1977 and in 1975, i.e. after the construction of the new road. One of these sales refers to part of plot 55/1 of sheet/plan 45/52 of Mesoyi, which appears coloured green on the map marked "T" attached to the report of Mr. Komodromos. This part of an area equal to that of a building site was sold in June, 1975, for £2,400.- i.e. about 200 per cent more than what other building sites in the area, but not abutting the new road, were being sold. The other sale refers to part of plot 28/1 remaining to the claimant after the acquisition. This part appears delineated in yellow on the map marked "Z" attached to the report of Mr. Komodromos. Its extent is that of a building site. It is in fact about half of plot 28/1 occupying the northern part thereof. The claimant has sold this part of his land in January, 1977, for £2,700. - i.e. 300 per cent more than what similar building sites in Mesoyi, but not abutting the new road, were fetching in the market. The extent of the part sold is slightly less than

3 evleks. Let us say for a moment that it is 3 evleks. The per donum[*290]value of plot 28/1 would then he £3,600.- in January, 1977, i.e. 3 years after the date of the publication of the notice of acquisition, when the per donum value of the land was assessed by us to have been £1,400.-. Adding on this last figure the equivalent of 40 per cent representing 3 years annual increase, the per donum value would have been about £2,000 - in January,1977.

This difference of £1,600.- in the per donum value of the claimant’s land remains unexplained by the claimant’s valuer. We are satisfied, however, that it represents the increase in the per donum value of the claimant’s land resulting from the construction of the new road underlying the acquisition. The total extent of the remaining property of the claimant after the acquisition. i.e, plots 28/1 and 28/2, of a total extent of about 4 donums, had its value increased by 1977 to the extent of £6,400.- i.e. by an amount far exceeding the market value of the part acquired.

This increase became greater by 1979, when, according to the evidence, the claimant sold the other half part of plot 28/2 to another purchaser for £4,000.-. We do. not believe that any useful purpose would be served if we embark in mathematical calculations on the basis of the last sale of part of plot 28/2 for £4,000.-. The result of such calculation would only be an increased enhancement in the value of the remaining property of the claimant as a result of the acquisition. In view of the fact that there is no other evidence with reference to the time after 1979, we conclude this aspect of the case by saying that we are[*291]satisfied that there has occurred as a result of the acquisition an increase in the value of the claimant's property remaining after the acquisition, which is equal to the amount of £6,400.- i.e. about 5 times bigger than the market value of the part of his property which has been acquired. Taking into account this tremendous increase, the market value of the land payable under para. (a) of section 10 is completely set off and extinguished and nothing remains in law to be paid to the ... claimant by way of compensation.

The learned counsel for the claimant submitted that paragraph (f) of section 10 of the Law is unconstitutional on, the ground that its effect is to discriminate among citizens because, he can envisage, as he said, cases where other citizens might profit from the construction of this road without being called upon to pay anything in consideration.

The claimant may legitimately complain of discrimination only in cases and vis-a-vis other persons with whom he is in the same boat, i.e. owners whose part of their land has been compulsorily acquired and whose remaining property had its value increased as a result of the construction of the road. There is nothing in the section discriminating against the claimants vis-a-vis any such other owner or owners. We find no merit in the alleged unconstitutionality of paragraph (f) of section 10 of the Law and we do not accept the submission of the learned counsel for the claimant.

In the result, we direct that the ownership in the part of the property of the claimant compulsorily acquired[*292]and described in the present notice of reference be vested forthwith with the Acquiring Authority without the payment of any compensation.

With regard to the costs, in the circumstances of this case where the Acquiring Authority, said nothing to the claimant 6 years after the acquisition, we direct that each party should bear its own costs.

Order accordingly.

Each party to bear its own costs.