THIRD SECTION
DECISION
AS TO THE ADMISSIBILITY OF
Application no. 39375/98
by Union Nationale (Tourism and Sea Resorts) Ltd and Others
against Cyprus
The European Court of Human Rights (Third Section), sitting on 4 May 2000 as a Chamber composed of
MrJ.-P. Costa, President,
MrW. Fuhrmann,
MrL. Loucaides,
MrP. Kūris,
MrsH.S. Greve,
MrK. Traja,
MrM. Ugrekhelidze, judges,
andMrsS. Dollé, Section Registrar,
Having regard to the above application introduced with the European Commission of Human Rights on 20 July 1997 and registered on 15 January 1998,
Having deliberated, decides as follows:
THE FACTS
The applicants are thirty-three enterprises and individuals who are the owners and operators of hotel units and hotel apartments in Limassol. Their names are as follows : Kanika Hotels Ltd, Pavemar Hotel and Tourist Enterprises Ltd, Serendipity Ltd, C. Kynigis Hotels Ltd, Amathous Navigation Co. Ltd, Delkirtzis Tourist Enterprises Ltd, Nikolaou Bros Tourist Enterprises Ltd, Blue Med Hotels Ltd, Tamasos Hotel Enterprises Ltd, N. Karantokis Holdings Ltd, Stelios Mylonas, Xenodohiakai Epiheiriseis Plaza Ltd, Georgios F. Sykopetritis, Lanitis Tourist Enterprises Ltd, Suncoast Management Ltd, S. Akarnitis and Kyriakou Co. Ltd, Christis Doritis, Galatia Michael, Kachiricon Ltd, E.O.E. Tourist Enterprises Ltd, Lordos and Anastasiades Ltd, Lordos and Florentides Ltd, Lordos and Kasinos Ltd, Dimitris Lordos Ltd, Lordos and Epiphaniou Ltd, Union Nationale (Tourism and Sea Resorts) Ltd, the Chartered House Estate Ltd, Avenida Tourist Enterprises Ltd, Spyros Neocleous (Romios), Christakis Charalambous, K. and L. Estates Ltd, Old Bridge Hotel Apartments Ltd and Best Leisure Hotels Ltd.
They are represented before the Court by Mr M. A. Triantafyllides, Mr G. P. Kakoyiannis and Mr P. Pavlou, lawyers practising in Nicosia.
The facts of the case, as submitted by the applicants, may be summarised as follows.
Under the Limassol-Amathounta Sewage Regulations 99/91 of 1991 and Appendix I thereto, based on Article 49 of the Sewage System Law 1/71 of 1971, hotels and hotel apartments were charged with sewerage fees at the rate of 7/100 of a cent for every pound of the assessed value of each building, whereas all other buildings in the same area were charged with fees at the rate of only 1,8/100 of a cent for every pound of the assessed value.
Thirty-nine owners of hotels in Limassol, including the applicants, lodged an application with the Supreme Court, sitting at first instance, seeking a ruling that Regulations 99/91, and in particular Rule 32, as well as the decision of the Board of the Sewage System of Limassol-Amathounta (SALA) rendering the applicants liable to pay their contribution for 1991, were unconstitutional, illegal and invalid. The applicants argued that SALA acted ultra vires because Rules 32 and 33 and Appendix I fell outside the scope of Law 1/71.
By a judgment of 20 December 1991, the Supreme Court rejected the application considering that the above matter was a regulation and not an administrative decision concerning specific individuals, and thus could not be subject to judicial review according to Article 146 of the Constitution.
The applicants appealed to the Supreme Court, sitting as an appeal court, which on 29 March 1996 quashed the judgment of 20 December 1991. The Supreme Court considered that Appendix I to Regulations 99/91 constituted an executory administrative act which could be challenged under Article 146 of the Constitution.
On 17 January 1997 the Supreme Court, ruling on the merits of the case, considered that the applicants’ submission that Article 30 of Law 1/71 was limited to contributions of a repayment character was unfounded. The court referred to a previous judgment (Loizou v. the Board of the Sewage System of Nicosia) in which it had held that “the rates in this case were plainly a tax. They constituted a compulsory exaction of money by a public authority for public purposes, enforceable by Law and were not a payment for services rendered”. Article 30 did not link the power to levy a charge with the immediate availability of sewage services but expressly extended this levy to owners or occupants of immovable property which would benefit in the future from such services. Thus by levying a charge, after the initiation of works for a sewage system but before its completion, SALA had not acted ultra vires. The distinction made by the Rules between owners of hotels and hotel apartments, on the one hand, and owners of apartments in ordinary blocks of flats on the other was triggered by Article 30 of the Law 1/71, which permitted the imposition of different fees according to the nature of the property. This difference had been acknowledged in the case of Philippa Estates Ltd and Others v. SALA. The Supreme Court had then held that such a distinction was not only legally justified but also fair, having regard to the use and the benefits derived from the sewage system. Moreover, the number of tenants per square meter in hotel accommodation was, in comparison with other immovable property, much higher and, in proportion, the use of the sewage system was more extensive.
The case of Phillipa Estates Ltd and Others had been brought by certain hotel owners (including some of the applicants) who claimed that the decision on their liability to pay sewage charges for 1992 was unconstitutional. SALA had sent them notification of the charge and the hotel owners had refused to pay. They claimed that as SALA had not determined the fee due for 1992, it could not expect payment. Further, some parts of Law 1/71 were unconstitutional because they conflicted with Article 28 of the Constitution which provides for non-discrimination.
In a judgment of 22 January 1996, the Supreme Court, sitting at first instance, stressed that, according to Article 30 of Law 1/71 (1b), SALA was empowered to fix and collect fees for specific periods to be determined by it. In increasing or reducing the fee for various categories of property, SALA should take into consideration the purpose for which the property is used. The amount of the fee should remain unchanged from one year to another, unless SALA considers that it would be necessary to modify it.
Moreover, the Supreme Court found that the legislation at issue was not in breach of Article 28 of the Constitution. The legislature was entitled to provide for distinctions so as to ensure a logical and fair balance in the implementation of the law.
The Supreme Court concluded that the distinction between hotels and hotel apartments, on the one hand, and other kinds of immovable property, on the other, was logical and right, as the use of the sewage system by persons accommodated in hotels and hotel apartments was usually reckless. Thus, and in so far as the fee was only such as to cover the costs of the use of the sewage network, such a differentiation fell within the scope of the law.
COMPLAINTS
The applicants allege a violation of Article 1 of Protocol No. 1, taken alone and in conjunction with Article 14 of the Convention. They maintain that as a result of the rates imposed by SALA, a hotel and a block of flats which are next to each other and are of the same size and housing capacity, producing equal volumes of sewage, are charged in such a way that the hotel has to pay nearly four times as much as the block of flats. Furthermore, the manner in which the annual sewerage rates are calculated (on the basis of the assessed value of each building) makes the discriminatory treatment of hotels even more disproportionnate and unfair, having regard to the fact that the construction costs of the hotels, and thus their assessed value, is much higher than that of houses, industrial buildings or other premises.
THE LAW[Note1]
The applicants allege a violation of Article 1 of Protocol No. 1, taken alone and in conjunction with Article 14 of the Convention, which provide as follows:
Article 1 of Protocol No.1
“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.”
Article 14
“The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as … property ... .”
The Court finds that the obligation to pay sewerage fees under the Limassol Sewage Regulations 99/91 of 1991 and Appendix I thereto amounts to an interference with the applicants’ right to the peaceful enjoyment of possessions and that, therefore, Article 1 of Protocol No. 1 is applicable in the present case. The essential point is thus to establish whether that interference was justified.
The Court recalls that the second paragraph of Article 1 of Protocol No. 1 provides that States may levy taxes or other contributions. A financial liability arising out of the raising of taxes and contributions may adversely affect the guarantee of ownership if it places an excessive burden on the person concerned or fundamentally interferes with his financial position. However, it is in the first place for the national authorities to decide what taxes or contributions are to be collected. Furthermore, decisions in this area will commonly involve the appreciation of political, economic and social questions which the Convention leaves within the sphere of competence of the Contracting States. The power of appreciation of the Contracting States is therefore a wide one.
The Court notes that the applicants were charged sewage fees at the rate of 7/100 of a cent for every pound of the assessed value of each building. Even though these fees were not directly related to the use of the sewage system on the basis of the water consumption by the owner or occupier of the property, the Court cannot find that these obligations affect the applicants’ guarantee of ownership or interfere with their financial situation to such an extent that it could be considered disproportionate or an abuse of the respondent Government’s right under Article 1 of Protocol No. 1 to levy taxes.
As regards the applicants’ complaint under Article 14 of the Convention taken in conjunction with Article 1 of Protocol No. 1, the Court recalls that a difference in treatment will be discriminatory, for the purposes of Article 14, if it has no objective or reasonable justification, that is if it does not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be realised. Moreover the Contracting States enjoy a certain margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justify different treatment (see the Gaygusuz v. Austria judgment of 16 September 1996, Reports of Judgments and Decisions 1996-IV, p. 1142, § 42).
In the present case the Court notes that the Supreme Court held that the distinction between hotels and hotel apartments, on the one hand, and ordinary blocks of flats, on the other, was not only legally justified but also fair, having regard to the use and the benefits derived from the sewage system. Moreover the number of tenants per square meter in hotel accommodation was, in comparison with other immovable property, much higher and, in proportion, the use of the sewage system was more extensive. Lastly, the Supreme Court considered that the use of the system in hotels by travellers was usually reckless.
Having regard to the above considerations, the Court finds that the difference in treatment under examination falls within the margin of appreciation of the Contracting States in matters concerning taxation and town planning, and cannot be considered to lack objective and reasonable justification.
It follows that the application is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention and must be rejected in accordance with Article 35 § 4.
For these reasons, the Court, by a majority,
DECLARES THE APPLICATION INADMISSIBLE.
S. DolléJ.-P. Costa
RegistrarPresident
[Note1]In your reasoning specify: Complaint / Article of the Convention [/ Succinct summary of Government’s submissions / Succinct summary of applicant’s submissions in communicated case] / Court’s [Commission’s] case-law, if any / Application of case-law to facts of particular case or considerations for specific facts of case.
Remember to use automatic paragraph numbering (Alt+N) followed by a tab.
Full & Egal Universal Law Academy