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THE FACTS
The applicant, Mr Robert Mirailles, is an estate agent. He is a French national who was born in 1941 and lives in Marseilles. He was represented before the Court by Mr V. Delattre, of the Strasbourg Bar. The respondent Government were represented by Mr R. Abraham, Director of Legal Affairs at the Ministry of Foreign Affairs.
A. The circumstances of the case
The facts of the case, as submitted by the parties, may be summarised as follows.
In a deed dated 6 June 1983 the Compagnie des Salins du Midi gave the applicant an option to purchase about 12.5 hectares of land in Hyères, adjacent to the airport, with a view to the development of a residential leisure park. There were three conditions precedent: that the local and regional authorities having a prior option to purchase did not exercise it; that the purchaser obtained all the administrative authorisations and agreements necessary for the development of a light residential leisure complex on the land; and that the purchaser obtained finance for the transaction amounting to 70% of the purchase price plus fees. It was stipulated that these conditions were to be met by 15 October 1983 at the latest.
The option to purchase was taken up when an initial payment of 250,000 French francs (FRF) was made, it being agreed that the balance was to be paid on the exchange of contracts.
On 10 June 1983 the applicant was granted planning permission, which was renewed on 27 December 1983.
In a letter of 3 October 1983 the mayor informed the applicant that he supported the project and mentioned a number of necessary modifications. He pointed out that the project should “comply with the provisions of the district council's land-use plan and those laid down in connection with joint development zones”.
By 15 October 1983, the second of the three conditions precedent had not been met.
On 20 January 1984, that is after the date of 15 October 1983 stipulated in the initial purchase option, the mayor told the applicant that he agreed to the creation of a joint development zone so that the project could be completed. He confirmed his agreement on 27 April 1984.
On 20 December 1984 the district council accepted the joint development zone proposal.
There followed a period of regular, close cooperation between the applicant and the district council.
On 11 July 1985 a law on planning in respect of areas near airfields came into force. On 18 July 1985 a law on the definition and implementation of planning principles came into force; this was supplemented by an implementing decree of 14 March 1986.
On 19 July 1985 a new clause was added to the purchase option of 6 June 1983.
On 19, 20 and 21 December 1985 the joint development zone project was examined at a public inquiry.
On 2 April 1986 the mayor wrote to the applicant in the following terms:
“I have the honour to inform you ... that following the entry into force of the decree modifying the procedure in respect of joint development zones it would now appear to be impossible for your project to go ahead under the joint development procedure.
The new legislation provides that a joint development zone must be set up by a resolution of the district council on the basis of a project file including a presentation of the project, an impact study, a map of the surroundings and a map showing the perimeter of the zone.
... I can only invite you to compile the necessary file as quickly as possible and supply all the material you have been requested to provide ...”
On 5 May 1986 a second purchase option, extending the initial option to a further plot of land, was signed by the Compagnie des Salins du Midi and the applicant. This was subject to the same conditions precedent as the first, with the added condition that the first sale had to have been completed. It was stipulated that these conditions had to be met by 31 March 1986, that is, on a date prior to the second purchase option but after the first, except as regards the administrative authorisations, in respect of which the deadline was to be 30 June 1986. A payment of FRF 71, 000 was made, with the balance to be paid on the exchange of contracts.
On 12 May 1986 the completed project file was handed over to the district council.
On 16 May 1986 the mayor confirmed to the Compagnie des Salins du Midi that the joint development zone would be set up in accordance with the procedure introduced by the Law of 18 July 1985 and its implementing decree of 14 March 1986. The relevant letter was forwarded to the applicant on 27 May 1986.
By a resolution of 30 May 1986, the district council decided to set up the Salins Joint Development Zone. When the prefect came to verify the lawfulness of the above decision he requested the district council to rescind its resolution and “bring the provisions of the municipal land-use plan into line with the requirements of the Law of 11 July 1985”.
A revised land-use plan was finalised on 26 June 1986.
On 30 June 1986, therefore, the condition precedent relating to the necessary administrative authorisations had not been met.
On 2 August 1986 the applicant wrote to the mayor, complaining of the heavy financial loss he had sustained in pursuit of the project, particularly on account of the entry into force of the Law of 11 July 1985. He complained that no representative of the district council had ever spoken to him about possible obstacles to his plans.
On 14 August 1986 the prefect referred the case to the Nice Administrative Court on account of the unlawfulness of the resolution of 30 May 1986. The applicant was informed of this on 15 September 1986.
On 3 October 1986 the district council rescinded the resolution in question and the prefect withdrew his application.
In the letter he sent to the applicant informing him of the prefect's decision, the mayor wrote:
“As it stands today, the project appears unlikely to avoid the court's criticism ... At a forthcoming session I shall put a new joint development zone resolution before the council based on a meticulously prepared file.”
In a letter of 9 October 1986, the Compagnie des Salins du Midi expressed its doubts to the applicant, saying, “It seems that the plan to set up a joint development zone covering the whole [site] has fallen through in that all forms of housing, even of a temporary nature, have been rejected by the administrative authorities”, and asked him for his opinion.
On 24 October 1986, at the request of the Compagnie des Salins du Midi, the mayor wrote to the applicant, expressing doubt as to whether the project was still viable and informing him that it had “run into difficulties in the processing of the joint development zone application” because
“under the airfield's noise exposure plan, the land in question has been designated part of Noise Zone B. The entry into force of the Law of 11 July 1985 on town planning in the proximity of airfields has led the State services to adopt a position likely to make it inadvisable to continue”.
On 27 December 1986 the applicant made a further investment of FRF 320,000.
In a resolution of 25 June 1987, the district council approved the revised land-use plan, which placed the land on which the project was to be sited in an area where development was required to take the form of a joint development zone or be undertaken under a law enacted on 18 July 1985.
On 17 November 1987 the Compagnie des Salins du Midi and the applicant signed a clause modifying the purchase option of 6 June 1983 extended by that of 5 May 1986, stipulating:
“the sale will go through if all the administrative authorisations and agreements needed for the creation of a complex through development carried out under the Law of 18 July 1985 ... are obtained; in that case the regulations covering zone UI will be applicable ... to the procedure which [the applicant] favours unless Hyères district council requests that development in that zone be carried out under a different planning application procedure. The final date for the condition precedent set out above is hereby put back ... until 30 April 1988.”
On 20 November 1987 a further meeting was held with a view to submission of a new project based on one of the above two procedures.
At its session on 4 December 1987, the district council announced that it wished to revive the project and organised new talks from 22 February to 11 March 1988. On 30 March 1988 a project timetable was adopted. On 29 April 1988 the mayor informed the applicant that the revised land-use plan had been declared null and void by the administrative court and that the project would go no further.
On 30 April 1988 the condition precedent regarding the necessary administrative authorisations had still not been satisfied.
On 19 April 1991 the applicant sent the mayor a complaint as a preliminary step in a compensation claim. He criticised the district council for the encouragement it had given him after the enactment of the Law of 11 July 1985 and for errors committed in the procedure for adoption of the resolutions of 30 May 1986 and 25 June 1987, and requested compensation.
That compensation claim being implicitly rejected when no answer was given, the applicant referred the case to the administrative court on 3 October 1991.
At the same time he made a claim under the urgent procedure, which was served on the defendant authority on 10 October 1991. The defendant authority and the applicant filed submissions on 4 and 21 October respectively. The claim was rejected by the urgent applications judge in an order of 22 November 1991, served on 27 November 1991.
In the main proceedings, the application was served on Hyères district council on 21 October 1991; the council filed their defence on 29 October 1991 in a pleading which was forwarded to the applicant on 16 January 1992. The applicant filed a reply on 17 February 1992. This was sent to the district council on 1 April 1992. On 26 June 1992 the council sent the court additional documents which were forwarded to the applicant on 15 December 1992, and filed a rejoinder on 2 July 1993. This was communicated to the applicant on 9 July 1993.
On 8 March 1996 the court gave notice that the investigation stage was to end on 28 March 1996. It then held a hearing on 3 April 1996.
In a judgment of 18 April 1996, served on 15 July 1996, the administrative court rejected the applicant's claim. It noted in particular that the applicant had no contractual link with the district council, that the annulment of the resolution had not altered the classification of the relevant sector, that the council had not entered into any precise undertaking regarding the creation of the joint development zone and that in any event the loss claimed by the applicant was either not documented or purely hypothetical.
On 9 September 1996 the applicant appealed against the above judgment. On 30 September 1996 a reporting judge was appointed. The appeal was served on the district council on 10 October 1996. On 22 January 1997 the council was put on notice to file its submissions by 17 February 1997, and it did so on that date. The applicant replied to these submissions on 21 February and the district council filed a further pleading on 15 July 1997.
By an order of 29 August 1997, the Lyons Administrative Court of Appeal transmitted the application to the Marseilles Administrative Court of Appeal.
On 5 September 1997 the applicant filed further observations and on 10 September 1997 an application for discovery.
A reporting judge was appointed on 16 October 1998 and the Administrative Court of Appeal upheld the impugned judgment in a judgment of 10 November 1998.
On 8 January 1999 the applicant gave notice of intention to appeal to the Conseil d'Etat. He submitted his statement of the grounds of appeal on 10 May 1999.
In a decision of 8 October 1999, served on 22 October 1999, the Conseil d'Etat declined to entertain the applicant's appeal on points of law, as none of the grounds was admissible.
B. Relevant domestic law
The Civil Code
Article 1181
“An obligation entered into subject to a condition precedent is one which depends either on a future event not certain to occur or on an event that has already taken place but of whose occurrence the parties are as yet unaware.
In the first case the obligation cannot be discharged until after the event.
In the second case the obligation shall take effect from the day on which it was entered into.”
Article 1182
“Where the obligation was entered into subject to a condition precedent, the goods which form the subject matter of the contract shall remain at the risk of a debtor who has entered into an obligation to deliver them only in the event of the condition being satisfied.
If the goods have perished completely through no fault of the debtor, the obligation shall lapse.
If the goods have deteriorated through no fault of the debtor, the creditor may choose either to terminate the obligation or to request delivery of the goods in their present condition without any reduction in the price.
If the goods have deteriorated through the fault of the debtor, the creditor is entitled either to terminate the obligation or to request delivery of the goods in their present condition, with damages and interest.”
Article 1589
“An option to purchase counts as a purchase where there is mutual agreement between the two parties about the goods and the price.
If the option to purchase concerns developed land or development sites, its acceptance and the resulting contract will be validated by a part-payment of the price, whatever name is given to such part-payment, and by entry into possession of the land.
The date of the contract, even when drawn up in due form subsequently, will be that on which the first part-payment was made.”
COMPLAINTS
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2. Relying on Article 1 of Protocol No. 1, the applicant argued that the fact that the district council had encouraged him to pursue his plan after the enactment of the Law of 11 July 1985, and the unlawful acts committed by the council when adopting its resolutions of 30 May 1986 and 25 June 1987, had caused him to purchase land with the sole purpose of building a complex of light leisure dwellings on it, even though such a project was no longer legally possible, and had made him lose large sums of money. He complained of an interference with his possessions on account of the wrongful conduct of the Hyères district council in the handling of his property development project.
THE LAW
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2. The applicant complained of an interference with his possessions on account of the wrongful conduct of the Hyères district council in the handling of his property development project and relied on Article 1 of Protocol No. 1, which provides:
“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.”
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The Court reiterates that an applicant can allege a violation of Article 1 of Protocol No. 1 only in so far as the decisions of which he complains related to his “possessions” within the meaning of that provision.
The concept of “possessions”, for the purposes of Article 1 of Protocol No. 1, applies to “existing possessions” (see Van der Mussele v. Belgium, judgment of 23 November 1983, Series A no. 70, p. 23, § 48), but can also cover 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 Pine Valley Developments Ltd and Others v. Ireland, judgment of 29 November 1991, Series A no. 222, p. 23, § 51). In that case, the Court held that the applicant company – which had purchased a plot of land, relying on the existence of planning permission which implied approval of its development project – had at least a legitimate expectation of being able to carry out the development.
In the present case the Court notes in the first place that the purchase of the land by the applicant was never completed. Admittedly, under French law, an option to purchase counts as a purchase, provided there is agreement about what is to be purchased and the price, but it is still necessary for the option's conditions precedent to be satisfied (or for the conditions subsequent, if any, not to be satisfied); but that was not so in the present case as regards the condition precedent (which was ultimately decisive) requiring the future purchaser to obtain the necessary administrative authorisations.
Secondly, and even if it is accepted that the district council's resolution of 30 May 1986 can be deemed to have amounted to an administrative authorisation, including permission for the buildings the applicant was planning to put up, the Court notes that it was rescinded within the time allowed for that purpose and in accordance with the proper legal procedure. It cannot, therefore, be considered to have been an administrative authorisation satisfying the condition precedent attached to the purchase option. It follows that ownership of the property concerned was not transferred to the applicant, either on that date or later, since the last extension of the time allowed for the condition precedent to be satisfied (to 30 April 1988) was not sufficient to enable that to be done.
Consequently, the alleged interference did not affect the applicant's “existing possessions”.
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The Court considers that a number of aspects of the case reveal the persistence of serious doubt about the project's viability. Although there was regular, close cooperation between the applicant and the district council, the latter informed the applicant of potential difficulties on a number of occasions. In addition, the applicant complained, as early as 1986, of the heavy financial loss he had suffered, particularly on account of the entry into force of the Law of 11 July 1985, but continued his investments nevertheless. The Court notes that the applicant is a property developer who incurred expenditure to set up a residential leisure park project. Such an activity entails risks of which a property developer should be aware and must be prepared to accept. Moreover, the applicant's financial investment was made in pursuance of an economic objective, namely future financial gain. The Court reiterates that future income can only be considered to constitute a “possession” if it has already been earned or where an enforceable claim to it exists (see Størksen v. Norway, no. 19819/92, Commission decision of 5 July 1994, Decisions and Reports 78-A), which was not the position in the present case.
In the final analysis, the Court considers that there is a difference between a mere hope kept alive (rightly or wrongly) by the attitude of the domestic authorities regarding a property development project and a “legitimate expectation” for the purposes of Article 1 of Protocol No. 1, which must be more concrete and be based on a statutory provision or legal instrument, such as a final judicial decision (see Pressos Compania Naviera S.A. and Others v. Belgium, judgment of 20 November 1995, Series A no. 332, p. 21, § 31; Beyeler v. Italy [GC], no. 33202/96, § 105, ECHR 2000-I; and Stretch v. the United Kingdom, no. 44277/98, §§ 32-35, 24 June 2003).
Moreover, it is obviously not sufficient for someone to complain that he has suffered a financial loss on account of a local authority – which in any event the French courts did not accept in the present case – in order for the alleged prejudice to be capable of constituting an interference with his right of property, actual or potential, otherwise every financial dispute could be considered to fall within the scope of Article 1 of Protocol No. 1; such an interpretation has never been entertained by the Court.
The Court accordingly considers that the applicant's hope of seeing his project come to fruition, becoming the owner of the land and thus securing a return on his investment by building on it cannot be regarded as a kind of “legitimate expectation” within the meaning of the case-law relating to Article 1 of Protocol No. 1. It therefore concludes that the applicant cannot lay claim to a “possession” as contemplated in Article 1 of Protocol No. 1 and that the facts complained of fall outside the scope of that provision.
It follows that the complaint under Article 1 of Protocol No. 1 is incompatible ratione materiae with the provisions of the Convention, within the meaning of Article 35 § 3, and must be rejected pursuant to Article 35 § 4.
For these reasons, the Court unanimously
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Declares the remainder of the application inadmissible.
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