26.02.2022
There should be an explanation of what is considered a loss of the right to use property and compensation for it.
The topic came up in court cases where our office was an expert witness. In some cases, the courts have ruled that despite the state’s illegal takeover of property for more than 20 to 30 years, registered owners should be compensated as if the property were rented out, and the compensation should be based on lost rental income.
Our position is that the occupation of property that was illegal and continued for so long resulted in the owners effectively losing their property in terms of free use and exploitation and therefore should be compensated on a loss of use basis, since the occupation was indefinite without any restrictions.
It is one thing to rent out your property for a certain period with the necessary conditions (method of payment, increase in rental income), but another thing if the owner cannot use the property for such long periods.
One case was brought by the European Court of Justice against Turkey, which occupied a property for a very long time (approximately 30 years), and ordered the Turkish government to pay compensation to the owner in the amount of 5% of its market value (plus interest) until it is released (Case of Titina Loizidou). Thus, our approach is not only logical, but also based on these (and similar) solutions.
The difference between the decisions of the district court and our approach is significant. This is especially true when we talk about land that falls into development zones.
In one case, the approach of the land office was based on the annual lease of land for crops at a price of 1.0 euro/sq.m. Based on our approach, it should have been €5.0/sq.m.
In the same way, suppose someone rents out, say, a neighbor a plot of outdoor parking space for their home. In this case, the owner may not even bother to demand rent, but if the same neighbor asks the owner to grant him the use of the same lot for 30 years and without a vacate/vacation agreement, can he agree? Nominal lease or not? Again, I say no.
Our approach in most cases was not accepted by the courts using the land administration approach. However, the compensation to be paid (based on such an approach) would be negligible for the refugees who lost their property occupied by the Turkish army.
In another case, the owner of a farm (orchard) in the Paphos region with an area of more than 200 donums was subject to a compulsory acquisition order for the construction of a water dam. The owner/business has provided audited accounts, duly approved by the tax authority, declaring an annual income of €250,000 or more (as the orchard matures). The Land Office based its compensation approach on how many gardens of this size (1-4 donums) were rented out and offered the owner €450,000. We argued in court that a business with an annual income of 250,000 euros is certainly worth more than 450,000 euros, and filed a lawsuit for at least 1 million euros. We have presented literature on this issue and reports from the Ministry of Agriculture. In this case, we won the dispute, and our client received compensation in the amount of more than 1 million euros.
In another case, our client owned land on the beach, but the strip of land between it and the road blocked access to it. Since the strip was under expropriation, the owner could not even provide himself with a right of way, which hindered the development of the site. We argued that the expropriation had been in place for 20 years and therefore our client could not use his property for any purpose (it was a site in a tourist area in Ayia Napa). We lost this case, and the client lost the opportunity to use his property.
In another case in the Larnaca area, the land office used comparative sales data from other locations (40–50 km) to justify its approach to property valuation. The comparable plots referred to by the land office were in the Limassol area, and the undervalued plot in the village of Ormidia (unrelated) and the comparable plots in Limassol were development zone lands, while the Ormidia plot was agricultural. After a lot of legal battles, we won, but why would clients go to all lengths to prove something taken for granted?
I often wonder how a judge can make a decision in a case faced with such conflicting opinions from expert witnesses. Yes, we understand that both parties are deeply interested, but there must be a certain professionalism in their approach. There are all sorts of opinions on such matters, and sometimes I wonder if a judge is called to decide them?
George Coucunis is a lawyer practicing in Larnaca and founder of George Coucounis LLC, Advocates & Legal Consultants
