FIRST SECTION
DECISION
Application no. 26635/12
ALEKSANDRIJA A DOOEL
against North Macedonia
The European Court of Human Rights (First Section), sitting on 2 July 2019 as a Committee composed of:
Aleš Pejchal, President,
Tim Eicke,
Raffaele Sabato, judges,
and Renata Degener, Deputy Section Registrar,
Having regard to the above application lodged on 26 April 2012,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,
Having deliberated, decides as follows:
THE FACTS
1. The applicant company, Aleksandrija A DOOEL, is a company registered in Skopje. It was represented before the Court by Mr T. Menkinoski, a lawyer practising in Skopje.
2. The Government of North Macedonia (“the Government”) were represented by their former Agent, Mr K. Bogdanov, succeeded by their current Agent, Ms D. Djonova.
A. The circumstances of the case
3. The facts of the case, as submitted by the parties, may be summarised as follows.
1. Demolition of the applicant company’s building
4. On 13 August 2002 the applicant company bought a restaurant from company M. against which bankruptcy proceedings were ongoing. The restaurant was registered as a temporary building (објект од времен карактер). It had been built on State-owned land.
5. On 2 October 2002 the applicant company signed a short-term lease contract (договор за краткотраен закуп - “the lease contract”) with the relevant Ministry for the plot of land on which the temporary building was sited. The duration of the lease was from 1 October 2002 to 1 October 2007. Under clause 8 of the contract, the lease could be terminated (може да се раскине) if the urban plan in respect of the plot of land was to be implemented (реализација на урбанистички план). In that event, the applicant company was under an obligation to remove the building within five days of the termination of the lease.
6. On 8 October 2002 the applicant company obtained a permit for urban and reconstruction measures (одобрение за урбани и санациони мерки ‑“renovation permit”) in respect of the restaurant. After completion of the renovation, the restaurant started operating on 6 March 2003.
7. On 12 December 2003 the Ministry sold several plots of land (including the one on which the applicant company’s restaurant was sited) to company R. for the construction of a commercial facility (деловен‑трговски комплекс). The sale contract had been awarded directly (непосредна спогодба) to company R.
8. On 19 December 2003 the Ministry issued a decision ordering the applicant company to demolish the restaurant within ten days of receipt of the demolition order. It said that the demolition was being ordered under section 71 of the Building Land Act 2001 (see paragraph 19 below) for the purpose of implementing the urban plan for that area. The applicant company received the demolition order on 19 March 2004. In the meantime, on 10 March 2004 effective possession of the land was handed over to company R.
9. As the applicant company did not comply with the demolition order, the Ministry ordered its enforcement on 30 March 2004. On 3 May 2004 the building was demolished.
10. The applicant company unsuccessfully challenged the demolition and enforcement orders before the relevant second-instance commission, and subsequently, before the Supreme Court. By means of two separate judgments of 27 April 2005, the Supreme Court dismissed the applicant company’s administrative actions. Relying on section 71 of the Building Land Act 2001, the court found that the demolition order had been lawful and that the applicant company had been required to remove the temporary building, since the authorities had begun to implement the urban plan for the area. Furthermore, the demolition had been ordered by the competent authority, as provided for under the relevant domestic law.
2. Compensation proceedings
11. On 10 April 2007 the applicant company lodged a compensation claim against the State. It claimed 31,081,909 denars (MKD) in respect of pecuniary damage for the demolition of its building. It further claimed MKD 18,201,543 for loss of profit, representing the sum it would have obtained had the restaurant continued to operate until the expiry of the lease contract.
12. On 26 March 2009 the Skopje Court of First Instance (Основен суд Скопје – “the first-instance court”) dismissed the applicant company’s claim. Relying on the Supreme Court’s judgments in the administrative proceedings (see paragraph 10 above), the court found that the demolition of the building had been lawful and that no responsibility could be attributed to the State for any losses sustained.
13. The applicant company appealed, arguing that, inter alia, the lease contract had not been terminated and that the lower court had not adduced any evidence to show that implementation of the urban plan had begun.
14. On 2 December 2009 the Skopje Court of Appeal (Апелационен суд Скопје – “the Court of Appeal”) dismissed the appeal. It held that the demolition of the building had been lawful. It further found that the terms of the lease contract were conditional on the implementation of the urban plan. The fulfilment of that condition would terminate the contract ex nunc (раскинлив услов), as provided for under section 66(3) of the Obligations Act, without requiring any further actions by the contractual parties. In such an event, the parties were not entitled to make any further claims (сите нивни права и обврски за во иднина престануваат и една од друга немаат што да побаруваат). The Court of Appeal considered that there was no causal link between the State authorities’ actions and any damage sustained by the applicant company. The authorities had begun to implement the urban plan and the applicant company had been required to remove the building.
15. The applicant company lodged an appeal on points of law, reiterating that the courts should have established when the implementation of the urban plan had begun and when the lease contract had been terminated. It argued that the urban plan’s implementation would have begun when the construction work had commenced at the location, once all the necessary building permits had been obtained. It claimed that the lease contract had still been valid at the time of the demolition of its building and that the State was liable for damages.
16. On 14 September 2011 the Supreme Court dismissed the appeal on points of law and upheld the lower courts’ reasoning.
B. Relevant domestic law
1. Building Land Act 2001
17. Section 2 of the Building Land Act (Закон за градежно земјиште, Official Gazette no. 53/2001), as in force in the material time, provided that building land was a public asset which enjoyed special protection, as provided for under the Act. The development of building land was in the public interest.
18. Section 40(1) and (2) of the Act provided that the right to a short‑term lease could be acquired on the basis of a written contract to which the relevant provisions of the Obligations Act were applicable.
19. Section 71 provided that temporary buildings erected on building land prior to the entry into force of the Act, on the basis of a legal act drawn up by a competent authority, could remain in place until the expiry of the time-limit stipulated in the legal act authorising the temporary use of the land, or until the implementation of the relevant urban plan.
2. Spatial and Urban Planning Act
20. Section 17 of the Spatial and Urban Planning Act (Закон за просторно и урбанистичко планирање, Official Gazette nos. 04/1996, 28/1997, 18/1999, 53/2001, 45/2002), as in force at the material time, provided that draft detailed urban plans were subject to a public survey (јавна анкета) organised by the local authority.
21. Section 26-a of the Act provided that a renovation permit (одобрение за урбани санациони мерки) may be issued to owners of buildings which were not included in the relevant urban plan, for the purpose of securing the minimum hygiene and technical standards in those buildings. Such permits were valid until the implementation of the urban plan.
COMPLAINT
22. The applicant company complained that it had been deprived of its property in circumstances which were incompatible with the requirements of Article 1 of Protocol No. 1 to the Convention.
THE LAW
23. Relying on Article 1 of Protocol No. 1 to the Convention, the applicant company complained that the domestic authorities had ordered the demolition of its building before the expiry of its five-year lease. Article 1 of Protocol No. 1 to the Convention reads as follows:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
1. The parties’ submissions
(a) The Government
24. The Government submitted that the complaint was incompatible ratione materiae with Article 1 of Protocol No. 1 to the Convention. They argued that the applicant company had been fully aware, when it had purchased the restaurant, that it had been a temporary building erected on State-owned land, in respect of which there were plans for commercial real-estate development. The terms of the lease contract provided for a possibility of early termination in the event that the urban plan was to be implemented. Therefore, the applicant company had been fully aware of the risk of its investment and had no legitimate expectation to be able to operate the restaurant for the full duration of the lease.
25. In any event, there had been no violation of the applicant company’s rights. The restaurant, being in a temporary building, enjoyed limited protection under domestic law and its demolition had been lawful, as confirmed by the domestic courts. The land sale contract with company R., which had been lawfully concluded, had indicated that implementation of the urban plan had begun and that the conditions for termination of the lease had been met. The urban planning documents had been adopted in a public procedure and it could not be considered that the applicant company had been unaware of them.
(b) The applicant company
26. The applicant company relied on the case of Pine Valley Developments Ltd and Others v. Ireland (29 November 1991, Series A no. 222), arguing that it was similar to theirs. It asserted that the five-year lease on the land, entitling it to use it for the operation of a restaurant, together with the renovation permit, conferred on it a legitimate expectation and that therefore Article 1 of Protocol No. 1 was applicable in the circumstances of the case.
27. The applicant company further argued that the State’s interference with its possession had amounted to deprivation of property and was neither lawful, nor in the public interest. The sale contract with company R. had been unlawfully concluded, in contravention of the applicant company’s lease and domestic law. The terms of the lease contract stipulated that early termination was possible only if the urban plan had been implemented at that location, which had not been the case. The applicant company claimed that it had been aware of neither the adoption of the detailed urban plan nor the sale contract with company R., since the land had been sold without any notice to interested third parties. There had been no public interest at stake since the location had been used for the construction of a privately-owned shopping mall and a bank office building. The domestic authorities had not afforded any compensation to the applicant company.
2. The Court’s assessment
28. The Court finds that two issues arise in the present case: the first concerns the applicant company’s alleged expectation to operate the restaurant for the full duration of the five-year lease, and the second relates to the demolition of its building.
29. As regards the first issue, the Court reiterates that in accordance with its established case-law, “possessions” can be “existing possessions” or assets, including claims, in respect of which an applicant can argue that he has at least a “legitimate expectation” of obtaining effective enjoyment of a property right (see, inter alia, Pine Valley Developments Ltd and Others, cited above, § 51, and Pressos Companía Naviera S.A. v. Belgium, 20 November 1995, § 31, Series A no. 332). Although Article 1 of Protocol No. 1 does not guarantee a right to acquire property, in certain circumstances a “legitimate expectation” of obtaining an asset may also enjoy the protection of Article 1 of Protocol No. 1 (see, among many authorities, Anheuser-Busch Inc. v. Portugal [GC], no. 73049/01, §§ 64-65, ECHR 2007-I).
30. In the present case, the Court notes that under the lease contract the applicant company had the right to use the land on which the building was located for a five-year period. However, the salient question is whether, having regard to the terms of the lease, the applicant company could have legitimately expected to use that land for the full duration of the lease. The Court considers that the situation in the present case is different from those cases where it found that the applicants had had “legitimate expectations” based on a reasonably justified reliance on a legal document on the basis of which they had incurred financial obligations and which had subsequently been retrospectively invalidated to the applicants’ detriment (see Pine Valley Developments Ltd and Others, cited above, § 51, and Stretch v. the United Kingdom, no. 44277/98, §§ 33-35, 24 June 2003). The possibility of early termination of the lease had been included in the terms of the contract which the applicant company had willingly accepted; it had therefore assumed that risk. This was confirmed by the domestic courts’ interpretation of the relevant domestic law, when they dismissed the applicant company’s civil action for compensation (see paragraph 14 above). Therefore, no “legitimate expectation” can be said to arise where there is a dispute as to the correct interpretation and application of domestic law and the applicant’s submissions are subsequently rejected by the domestic courts (see Kopecký v. Slovakia [GC], no. 44912/98, § 50, ECHR 2004‑IX).
31. In such circumstances the Court does not consider that the applicant company had a legitimate expectation to operate the restaurant for the full duration of the five-year lease contract, and it therefore did not have a “possession” within the meaning of the first sentence of Article 1 of Protocol No. 1.
32. It follows that this part of the application is incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3 and must be rejected in accordance with Article 35 § 4.
33. Different considerations apply, however, to the building that the applicant company purchased in August 2002 and which was registered in its name. That building undoubtedly amounted to a possession and Article 1 of Protocol No. 1 is applicable in that part. The demolition of the restaurant thus amounted to an interference with the applicant company’s possession (see Mkhchyan v. Russia, no. 54700/12, § 69, 7 February 2017).
34. Furthermore, given that it was meant to ensure compliance with the implementation of the special planning and development policies, that interference amounted to “control [of] the use of property” (see Saliba v. Malta, no. 4251/02, § 35, 8 November 2005, and Ivanova and Cherkezov v. Bulgaria, no. 46577/15, § 69, 21 April 2016). It therefore falls to be examined under the second paragraph of Article 1 of Protocol No. 1.
35. The demolition order had a clear legal basis in section 71 of the Building Land Act (see paragraph 8 above). The lawfulness of the demolition order was upheld, following adversarial proceedings, by the Supreme Court (see paragraph 10 above). This finding was also confirmed by the domestic courts in the civil proceedings (see paragraphs 12, 14 and 16 above). The Court finds no grounds to hold otherwise. The interference was therefore lawful for the purposes of Article 1 of Protocol No. 1.
36. The Court observes that the interference was justified by the need to implement the urban development plan for that location. In accordance with the Court’s established case-law, the national authorities should exercise discretion in their choice and implementation of planning policies and in that context they enjoy a wide margin of appreciation (see Gorraiz Lizarraga and Others v. Spain, no. 62543/00, § 70, ECHR 2004‑III; Lay Lay Company Limited v. Malta, no. 30633/11, § 83, 23 July 2013; and Crash 2000 OOD and others v. Bulgaria, (dec.), no. 49893/07, § 57, 17 December 2013). The Court therefore concludes that the interference pursued a legitimate aim that was in the general interest.
37. It remains to be ascertained whether the aim sought can be considered proportionate to the interference caused by the demolition of the building. It is the Court’s well-established case-law that interference must strike a “fair balance” between the demands of the general interests of the community and the requirements to protect the individual’s fundamental rights.
38. The Court observes that the temporary building was built on State-owned land which the applicant company leased for a five-year period. The terms of the lease contract included a possibility of early termination in the event that the urban plan was to be implemented at that location and an obligation on the part of the applicant company to remove the erected structure, which was from the outset classified as a temporary building. It is undisputable that the applicant company signed that contract and was bound by its terms.
39. In such circumstances, the Court considers that the applicant company cannot be said to have borne an individual and excessive burden as a result of the demolition of its building without compensation (compare, Depalle v. France [GC], no. 34044/02, § 91, ECHR 2010, and Mkhchyan, cited above, §§ 74-76). Any investment in the renovation of the restaurant had been made with the applicant company’s full awareness that the structure was of a temporary character and could be removed under the terms of the lease contract.
40. The Court considers therefore that in the particular circumstances of the present case the interference with the applicant company’s rights under Article 1 of Protocol No. 1 was justified. It follows that this complaint is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Done in English and notified in writing on 25 July 2019.
Renata DegenerAleš Pejchal
Deputy RegistrarPresident
Full & Egal Universal Law Academy