Communicated on 14 December 2016
SECOND SECTION
Application no. 28766/06
KIPS DOO and Risto DREKALOVIĆ
against Montenegro
lodged on 16 July 2006
STATEMENT OF FACTS
The applicants are KIPS DOO (the first applicant), a company with its seat in Podgorica, Montenegro, founded in 1990, and Mr Risto Drekalović (the second applicant), a Montenegrin national, who was born in 1952 and lives in Podgorica. The second applicant is the first applicant’s founder and director, and the owner of 99,5 % of its shares. The remaining 0,5 % is owned by the second applicant’s wife.
A. The circumstances of the case
The facts of the case, as submitted by the applicants, may be summarised as follows.
1. Background information
On 3 August and 11 November 1998 respectively the first applicant concluded two contracts with the Development Land Social Fund (Društveni fond za građevinsko zemljište, poslovni prostor i puteve Podgorica). By means of the first contract the first applicant obtained the right to use (pravo korišćenja) four plots of development land (građevinsko zemljište), on which it planned to build a shopping centre and an administrative building. The second contract specified the communal charges for the necessary infrastructure on the land at issue (naknada za uređenje građevinskog zemljišta). On an unspecified date thereafter the four plots of land were joined into one, marked as no. 2090/1036.
Pursuant to sections 419 and 420 of the Property Act 2009 (see at B.1 below) the first applicant became the owner of the land at issue on 9 December 2011.
2. The Detailed Urbanistic Plan and its changes
On an unspecified date in 2004 the first applicant’s project for the shopping centre and the administrative building was registered in a Detailed Urbanistic Plan (Detaljni urbanistički plan, “DUP”).
In December 2004 the DUP for the relevant area was changed, one of the changes being that the plot of land no. 2090/1036 and an adjacent plot of land were joined into one urban plot (urbanistička parcela).
On 6 June 2005 the President of the Municipality decided to further change the relevant DUP, which decision entered into force on 7 July 2005. Construction in the area was prohibited thereby for the next 90 days except in the case of those investors who had already obtained a building permit prior to this decision.
On 6 October 2005 another decision was issued, providing that the DUP would be changed within 90 days and construction was prohibited until the adoption of a new DUP but for up to one year at most. The ban did not apply to the investors who had already obtained a building permit. This decision entered into force on 14 October 2005.
On 20 January 2006 a new decision to change the DUP was issued, repealing the previous two decisions. As regards its contents it corresponded to the decision from 6 October 2005. It entered into force on 23 January 2006.
On 21 July 2006 a new DUP was enacted, and it entered into force on 29 July 2006. Thereby the adjacent plot of land that was previously added to plot no. 2090/1036 was apparently split into three. It would also appear that the first applicant’s plot of land was decreased, and the organisation of the space within the plot of land itself was changed by planning two buildings instead of the shopping centre planned by the first applicant.
On an unspecified date in 2013 the DUP was changed again, apparently providing for the construction of buildings similar to those initially planned to be built there by the applicants.
3. The “completion” of the urban plot
Following the changes of the DUP of December 2004, on 25 January 2005 the first applicant addressed the Property Secretariat (Direkcija za imovinu) in the Podgorica Municipality seeking to “complete” the urban plot; having received no reply it renewed its request on 23 May 2005 and 2 August 2005.
On 27 January 2005 the Spatial Planning Secretariat of Podgorica Municipality issued Urban Technical Conditions (“the UTC”), which stated that the plot of land no. 2090/1036 was smaller than the relevant urban plot and that it needed to be “completed” (potrebno je izvršiti njeno dokompletiranje).
On 23 February 2005 the Ministry of Environmental Protection and Spatial Planning granted the first applicant a location for the construction of business premises on plot no. 2090/1036, in accordance with the 2004 DUP. The decision specified that the UTC of 27 January 2005 were a constituent part of this decision.
On 15 August 2005 the applicant appealed in the absence of any reply from the Secretariat. The same day the Secretariat informed the first applicant that no completion of plots could be done given that the revision of the DUP was ongoing at the time.
On 23 May 2016, after at least six remittals either by the Municipality’s Chief Administrator (as the competent second-instance body) or the Administrative Court, the first applicant’s request was pending again before the Administrative Court.
4. The calculation of the communal charges
(a) Administrative proceedings
On 8 July 2005 the first applicant requested the Agency for Construction and Development of Podgorica (Agencija za izgradnju i razvoj Podgorice; “the Agency”), a legal successor of the Development Land Social Fund, to calculate final communal charges for the plot no. 2090/1036.
On 13 September 2005 the KIPS made its own assessment of communal charges in the amount of 131,324.65 euros (EUR) and made the payment. The payment was returned the next day as it had been made “on no grounds” (uplaćen bez osnova).
By 1 December 2005 the applicant’s request had been refused by the Agency at least four times on the grounds that the construction was banned pursuant to either the decision to change the DUP of 6 June 2005 or the decision of 6 October 2005. The Agency also held that the calculation could not be done as the first applicant had no building permit.
In the course of the proceedings the applicant repeated its request on several occasions, including between 5 and 14 October 2005, submitting that the construction ban as the basis for refusal was unlawful and/or the ban was not in force at the relevant time.
On 1 December 2005 the second-instance body rejected the first applicant’s appeal on the grounds that this was not a matter for administrative proceedings. The first applicant initiated an administrative dispute before the Administrative Court in this regard but in view of the opinion of the second-instance body withdrew that claim, and instead pursued the proceedings before the Commercial Court.
(b) Judicial proceedings
On 16 September 2005 the first applicant instituted proceedings before the Commercial Court (Privredni sud) in Podgorica against the Agency for refusing to calculate the communal charges.
On 7 April 2006 the Commercial Court ruled in favour of the first applicant. The court considered in particular that the first decision to change the DUP, which prohibited the construction, had entered into force on 7 July and expired on 5 October 2005, while the next decision had entered into force on 14 October 2005. Therefore, there was no construction ban before 7 July 2005, and between 5 and 14 October 2005, when the first applicant requested the communal charges to be calculated and when the Agency was bound to calculate them. The court also noted that the Agency’s reasoning for refusing the first applicant’s request, notably that “the calculation [could] not be done as the first applicant had no building permit” was illogical, since the calculation of charges was a pre-condition for getting a building permit.
The Court of Appeals and the Supreme Court upheld the previous decision on 18 April and 29 December 2008 respectively. The Supreme Court held, inter alia, that the first applicant had been granted the location for construction by the competent Ministry before it was decided that the DUP would be changed and that a decision to change the DUP could not affect the investors who had been already granted the location.
On 13 October 2008, upon the first applicant’s request, the Commercial Court issued an enforcement order, which provided that the Agency would calculate the charges within 30 days or it would face a penalty of EUR 550, and would have to calculate the charges within the following 15 days. The enforcement order remains unenforced to date.
5. Proceedings for building permit
(a) The first proceedings
On 8 July 2005 the first applicant requested a building permit for the shopping centre from the Ministry of Environmental Protection and Spatial Planning.
On 23 September 2005 the Ministry dismissed the first applicant’s request on the grounds that it had not paid the communal charges or completed the urban plot pursuant to the UTC.
On 18 November 2005 the first applicant instituted an administrative dispute before the Administrative Court. It submitted, inter alia, that the requirement to buy an adjacent plot of land was additionally introduced and was unnecessary given that the shopping centre was entirely envisaged on the plot of land no. 2090/1036. It also maintained that the refusal to calculate the charges was groundless as the ban related to the construction only and not to the calculation of the charges, and that it was a deliberate obstruction.
On 29 December 2005 the Administrative Court dismissed the first applicant’s claim on the grounds that there was no contract between the first applicant and the Agency concerning the communal charges, that the first applicant had failed to submit all the evidence required by the relevant statutory provision in order to obtain a building permit, and it had failed to obtain an adjacent plot of land as required by the UTC. The court did not deal with the first applicant’s explicit submission that the said requirements were unlawful and/or unnecessary.
On an unspecified date thereafter the first applicant lodged a request for judicial review before the Supreme Court maintaining that there was a contract between the first applicant and the Agency concluded in 1998, and that the courts blamed the first applicant for not paying the charges and completing the plot, while it had done everything it could to do so, and actually complained about unlawfulness of the relevant State bodies’ refusing to cooperate in these matters.
On 2 March 2006 the Supreme Court upheld the previous decision, considering that the first applicant indeed had failed to submit the proof that it had paid the communal charges and completed the urban plot as requested.
(b) The second proceedings
On 29 August 2014, following the change of the DUP in 2013, the first applicant requested a building permit from the Municipality’s Spatial Planning Secretariat, which proceedings, after four remittals, are currently pending before the Administrative Court.
6. The proceedings before the Constitutional Court
Between 15 August 2005 and 20 September 2006 the first applicant filed three initiatives with the Constitutional Court for the assessment of the constitutionality and legality of the decisions to change the DUP issued on 6 June 2005, 20 January and 21 July 2006 respectively.
On 30 January 2006 the Constitutional Court discontinued the proceedings (obustavlja se postupak) upon the first initiative as the impugned decision of 6 June 2005 was no longer in force.
On 6 December 2006 and 27 June 2007, respectively, the Constitutional Court rejected the other two initiatives.
7. Other relevant facts
On 14 August 2006 the relevant Ministry sent a letter to the presidents of all Municipalities. The letter stated, in substance, that “certain local government units” interpreted section 33 of the Spatial Planning and Development Act (Zakon o planiranju i uređenju prostora), which provided for a possibility of a construction ban where appropriate, in a way which was incompatible with its contents, essence and meaning. The Ministry further explained that a decision on ‘a construction ban’ related exclusively to a ban on issuing a decision granting a location, as a document on the basis of which a building permit was issued, and that in a case where the decision on location had been issued prior to the construction ban, the competent body had a duty to issue a building permit to an investor, providing that the conditions provided in section 34 of the Construction Act (Zakon o izgradnji objekata) were fulfilled, regardless of whether the construction ban in the relevant area was in force.
B. Relevant domestic law
1. The Property Act 2009 (Zakon o svojinsko-pravnim odnosima; published in the Official Gazette of Montenegro - OGM - no. 019/09)
Sections 419 and 420, taken together, provide, inter alia, that the users of socially-owned, later State-owned land, shall become the owners thereof, and that the Real Estate Office shall accordingly make the changes in the Real Estate Registry.
This Act entered into force on 21 March 2009.
2. The Development Land Act (Zakon o građevinskom zemljištu; published in the Official Gazette of the Republic of Montenegro - OG RM - no. 55/00)
Section 10 provided, inter alia, that before building on land urban plots were to be formed.
Section 17 provided that the communal charges for the land (naknada za uređivanje građevinskog zemljišta) were paid by the investor who was building thereon. A local government unit would set up the criteria necessary to calculate the said charges.
Section 18 provided that the local government and the investor building on the land would regulate their relations in respect of the infrastructure on the land and the communal charges therefor by an agreement.
Section 22 provided that the user of the development land was bound to tolerate (dužan je da trpi) changes of the boundaries of the urban plot.
3. The Construction Act (Zakon o izgradnji objekata; published in the OG RM no. 55/00 and OGM no. 40/08)
Section 34 specified, inter alia, which documents needed to be submitted in order to have a building permit issued, one of them being proof that communal charges for the land at issue had been paid.
4. The Spatial Planning and Development Act (Zakon o planiranju i uređenju prostora; published in OG RM no. 28/05)
Section 26 defined a detailed urbanistic plan and its contents.
Section 33 provided that a decision on a detailed urbanistic plan could, when needed, provide also for a construction ban, which could last up to one year at most.
This Act entered into force on 13 May 2005.
5. The Spatial Planning and Construction Act (Zakon o uređenju prostora i izgradnji objekata; published in OGM nos. 51/08, 40/10, 34/11, 40/11, 47/11, 35/13, 39/13, and 33/14)
Sections 58 and 59 provide that urban plots can consist of one or more cadastral plots of land or parts thereof and that the owners of cadastral plots are bound to tolerate changes of the boundaries of urban plots.
Section 66 provides, inter alia, that the investor pays for the communal charges of the development land. The conditions, method, time-limits and the procedure for the payment thereof shall be stipulated by the local government, with the Government’s previous consent.
Section 93 specifies the documents on the basis of which a building permit is issued, one of them being proof that the communal charges have been paid.
This Act entered into force on 30 August 2008 and thereby repealed the previous three Acts.
6. The Obligations Act 1978 (Zakon o obligacionim odnosima; published in the Official Gazette of the Socialist Federal Republic of Yugoslavia nos. 29⁄78, 39⁄85, 45⁄89, 57⁄89 and the Official Gazette of the Federal Republic of Yugoslavia no. 31⁄93)
Sections 154 and 155 set out different grounds for claiming civil compensation, including pecuniary and non-pecuniary damage.
Section 172 (1) provided that a legal entity, which includes the State, was liable for any damage caused by one of “its bodies”.
7. The Obligations Act 2008 (Zakon o obligacionim odnosima; published in the OGM nos. 47⁄08 and 04⁄11)
This Act entered into force on 15 August 2008 thereby repealing the Obligations Act 1978. Sections 148, 149 and 166 (1), however, correspond to sections 154, 155, and 172 (1) of the previous Act.
COMPLAINTS
The applicants complain under various Articles of the Convention about an interference with their property rights, notably their alleged legitimate expectation to get a building permit to build a shopping centre. They also complain about the length of the administrative and enforcement proceedings, and lack of an effective domestic remedy in that regard.
QUESTIONS TO THE PARTIES
1. Are the second applicant’s complaints compatible with the provisions of the Convention, ratione personae, given that he is the founder and the director of the first applicant and the owner of 99,5% of its shares (see Agrotexim and Others v. Greece, 24 October 1995, § 66, Series A no. 330‑A; see, also, mutatis mutandis, Pine Valley Developments Ltd and Others v. Ireland, 29 November 1991, § 42, Series A no. 222; Eugenia Michaelidou Developments Ltd and Michael Tymvios v. Turkey, no. 16163/90, § 21, 31 July 2003; and Kin-Stib and Majkić v. Serbia, no. 12312/05, § 74, 20 April 2010)?
2. Have the applicants exhausted all effective domestic remedies, as required by Article 35 § 1 of the Convention? In particular, was there an effective remedy within the meaning of this provision in respect of the applicants’ complaint under Article 6 of the Convention about the length of the administrative proceedings (for the completion of the urban plot) and the enforcement proceedings (in respect of the Commercial Court judgment of 7 April 2006) (see, for example, Boucke v. Montenegro, no. 26945/06, §§ 74-79, 21 February 2012)?
3. Has there been a violation of Article 6 § 1 of the Convention? In particular, does the impugned length of the administrative and/or the enforcement proceedings amount to a violation of this provision (see Živaljević v. Montenegro, no. 17229/04, § 65, §§ 67-68 and §§ 75-78, 8 March 2011; Stakić v. Montenegro, no. 49320/07, §§ 39-41, §§ 47-51, 2 October 2012; Boucke, cited above, §§ 74-75, § 79 and §§ 89-94; and Vukelić v. Montenegro, no. 58258/09, §§ 98-102, 4 June 2013)?
4. Has there been a violation of Article 13 taken together with Article 6 § 1 of the Convention? In particular, did the applicants have at their disposal an effective domestic remedy to expedite the administrative and the enforcement proceedings, and/or obtain compensation for the past delay (see Stakić, cited above, §§ 55-60, and Milić v. Montenegro and Serbia, no. 28359/05, §§ 71-76, 11 December 2012)?
5. Has there been an interference with the applicants’ peaceful enjoyment of possessions, within the meaning of Article 1 of Protocol No. 1? If so, was that interference in accordance with the law and did that interference impose an excessive individual burden on the applicants (see Lay Lay Company Limited v. Malta, no. 30633/11, §§ 81, 83 and 88, 23 July 2013; Beyeler v. Italy [GC], no. 33202/96, § 120, ECHR 2000‑I; M SRL v. Moldova, no. 21151/04, §§ 72 and 74, ECHR 2008; and Immobiliare Saffi v. Italy, [GC], no. 22774/93, § 59, ECHR 1999-V)?
Full & Egal Universal Law Academy