TUNAITIS v. LITHUANIA - 42927/08 (Judgment (Merits) : Court (Fourth Section)) [2015] ECHR 1033 (24 November 2015)

In the case of Tunaitis v. Lithuania,

The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of:

     András Sajó, President,
     Vincent A. De Gaetano,
     Boštjan M. Zupančič,
     Nona Tsotsoria,
     Paulo Pinto de Albuquerque,
     Egidijus Kūris,
     Iulia Antoanella Motoc, judges,
and Françoise Elens-Passos, Section Registrar,

Having deliberated in private on 3 November 2015,

Delivers the following judgment, which was adopted on that date:

PROCEDURE

1. The case originated in an application (no. 42927/08) against the Republic of Lithuania lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Lithuanian national, Mr Vytautas Tunaitis (“the applicant”), on 19 July 2008.

2. The applicant was represented by Ms A. Martinaitienė, a lawyer practising in Kaunas. The Lithuanian Government (“the Government”) were represented by their Agent, Ms E. Baltutytė.

3. The applicant alleged that he had been deprived of his property by a decision of a domestic court and had not received adequate compensation, in breach of Article 1 of Protocol No. 1 to the Convention.

4. On 29 June 2012 the application was communicated to the Government.

THE FACTS

I. THE CIRCUMSTANCES OF THE CASE

5. The applicant was born in 1959 and lives in Kaunas.

6. In 1989 the local authorities assigned a plot of land measuring 0.03 hectares to the applicant for the construction of a house (hereinafter “the land”). In 1991 Kaunas City Council confirmed the validity of that decision.

7. Between 1992 and 1994 the applicant obtained a building permit and began laying the foundations. According to the applicant, he subsequently had to suspend the building works due to the worsening economic situation, thus the house was not completed.

8. In 1994 the applicant bought the land for a nominal price of 24 “single-use investment vouchers” (investiciniai čekiai) and 98 Lithuanian litai (LTL - approximately 28 euros (EUR)), which he paid to the Kaunas County Administration. In 2005 he signed a land purchase agreement with the Kaunas County Administration. The plot was subsequently registered in the Land Registry in his name.

9. In 2006 third parties V.P. and T.I. brought a civil claim seeking restoration of their ownership rights to the land. They argued that they had already submitted requests for restitution of property in 1992, 2001 and 2003, so the land had been assigned and later sold to the applicant unlawfully.

10. On 16 August 2007 the Kaunas City District Court allowed the civil claim. The court held that the applicant had been assigned the land unlawfully because the local authorities had an obligation to resolve restitution claims before assigning plots to new owners. Applying the principle of priority of former owners’ rights, the court annulled the administrative decisions assigning the land to the applicant and the land purchase agreement, and ordered the Kaunas County Administration to return LTL 122 (EUR 35) to the applicant. The land was returned to the State.

11. On 23 January 2008 the Kaunas Regional Court upheld that decision.

12. The applicant lodged a cassation appeal. On 30 April 2008 the Supreme Court refused to examine it on the ground that it did not raise any important legal issues.

13. In September 2008 the applicant requested the Kaunas regional prosecutor to investigate whether V.P. and T.I. had produced false documents proving their ownership rights. The prosecutor refused to launch an investigation on the ground that no crime appeared to have been committed. The domestic courts upheld that decision.

II. RELEVANT DOMESTIC LAW AND PRACTICE

14. For relevant domestic law and practice, see Pyrantienė v. Lithuania (no. 45092/07, §§ 16-22, 12 November 2013) and Albergas and Arlauskas v. Lithuania (no. 17978/05, §§ 21-33, 27 May 2014).

15. In addition, Article 5 § 1 (2) of the Restitution Law at the material time provided that land in urban areas could be returned in natura to its former owners, in accordance with plans prepared by the municipal authorities, provided that no buildings had been built on the land.

THE LAW

I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION

16. The applicant complained that the State had unlawfully deprived him of his property and had not provided him with adequate compensation. He relied on Article 1 of Protocol No. 1 to the Convention, which 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 ...”

A. Admissibility

17. The Government submitted that the applicant had failed to exhaust domestic remedies by not initiating separate judicial proceedings against the State under Article 6.271 of the Civil Code for redress for his allegedly inadequate compensation.

18. The applicant argued that such a remedy would not have been effective because no violation of his rights had been established at the domestic level, so there were no grounds for him to receive compensation under that provision.

19. The Court refers to its findings in the cases of Pyrantienė (cited above, § 27) and Albergas and Arlauskas (cited above, § 44), where it was not demonstrated that at the time the application was lodged with the Court, a claim under Article 6.271 of the Civil Code would have been an effective remedy with any prospect of success (see, mutatis mutandis, Beshiri and Others v. Albania, no. 7352/03, § 55, 22 August 2006). The Court does not find any reasons to reach a different conclusion in the present case.

20. Accordingly, the Court dismisses the Government’s objection that the applicant failed to exhaust domestic remedies.

21. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention, and that it is not inadmissible on any other grounds. It must therefore be declared admissible.

B. Merits

1. The parties’ submissions

22. The applicant submitted that he had acquired the land lawfully and in good faith, on the basis of the decisions of Kaunas City Council and the Kaunas County Administration. He claimed that he had been using the land from 1989, had acquired neighbouring plots of land and had started building a house for his family, so that losing the plot had seriously affected his and his family’s well-being.

23. The applicant further submitted that the market value of the plot at the time he had lost title to it was much higher than the LTL 122 returned to him, which meant that he had not received adequate compensation for the loss of his property.

24. The Government admitted that the applicant had been deprived of his property, but argued that such deprivation was in compliance with Article 1 of Protocol No. 1 to the Convention. They submitted that the land had been assigned and sold to the applicant in breach of “imperative legal norms” protecting the interests of former owners, so the relevant administrative decisions and purchase agreement had been annulled in accordance with the Civil Code. They also maintained that the interference with the applicant’s property rights was justified as being “in the public interest”, namely in defence of the rights of former owners who had lost their title to land during the Soviet regime.

25. The Government further submitted that the applicant had acquired the land under preferential conditions and had not made any major improvements to it; despite his plans to build a house there, building works had been suspended soon after they had started and the house had never actually built. Moreover, as the applicant lived elsewhere, the property did not constitute his “only home”. The Government also contended that the applicant had owned the property for a relatively short period of time: the land purchase agreement was signed on 28 October 2005, and the third parties lodged their civil claim on 20 January 2006, so the time to be taken into account was only three months. Accordingly, the Government submitted that the applicant had not been disproportionately affected by the interference in question.

26. Lastly, the Government argued that any errors made by the domestic authorities had occurred in the context of land reform, which was linked to the process of restoration of former owners’ rights to property that had been previously nationalised by the Soviet regime. According to the Court’s case-law in the context of central and eastern European States, the circumstances concerning the transition from a totalitarian regime to a democracy and the specific circumstances of each case therefore had to be taken into account.

2. The Court’s assessment

(a) General principles

27. The relevant general principles are set out in Pyrantienė (cited above, §§ 37-40).

(b) Application of the above principles in the present case

28. In the present case, it is not disputed that there has been a “deprivation of possessions” within the meaning of the second sentence of Article 1 of Protocol No. 1. The Court must therefore ascertain whether the deprivation in question was justified under that provision.

(i) Lawfulness of the interference

29. The domestic courts’ decision to annul the land purchase agreement signed in 2005 was based on Articles 1.80 and 6.147 of the Civil Code and Article 5 § 2 (1) of the Restitution Law. The courts also relied on the principle of the priority of former owners’ rights which had been established in the Supreme Court’s case-law. The Court therefore finds that the deprivation was in accordance with the law, as required by Article 1 of Protocol No. 1.

(ii) Legitimate aim

30. As in Pyrantienė and Albergas and Arlauskas (both cited above), the measures complained of were designed to correct the authorities’ mistakes and to defend the interests of former owners by restoring their ownership rights to land in natura. The Court thus considers that the interference pursued a legitimate aim (see Pyrantienė, cited above, §§ 44-48; see also Bečvář and Bečvářová v. the Czech Republic, no. 58358/00, § 67, 14 December 2004).

(iii) Proportionality

31. The Court reiterates that any interference with property must, in addition to being lawful and having a legitimate aim, also satisfy the requirement of proportionality. A fair balance must be struck between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights, the search for such a fair balance being inherent in the whole of the Convention. The requisite balance will not be struck where the person concerned bears an individual and excessive burden (see Sporrong and Lönnroth v. Sweden, 23 September 1982, §§ 69-74, Series A no. 52; Brumărescu v. Romania [GC], no. 28342/95, § 78, ECHR 1999-VII; and Anthony Aquilina v. Malta, no. 3851/12, §§ 58-59, 11 December 2014, and the cases cited therein).

32. On several occasions in similar cases which, as in the present case, concerned the correction of mistakes made by the State authorities in the process of restitution, the Court has emphasised the necessity of ensuring that the remedying of old injuries does not create disproportionate new wrongs (see Velikovi and Others v. Bulgaria, nos. 43278/98, 45437/99, 48014/99, 48380/99, 51362/99, 53367/99, 60036/00, 73465/01 and 194/02, § 178, 15 March 2007). To that end, the legislation should make it possible to take into account the particular circumstances of each case, so that individuals who have acquired their possessions in good faith are not made to bear the burden of responsibility, which is rightfully that of the State which confiscated those possessions. In other words, the risk of any mistake made by the State authority must be borne by the State, and errors must not be remedied at the expense of the individual concerned (see Gladysheva v. Russia, no. 7097/10, § 80, 6 December 2011, and Pyrantienė, cited above, § 70).

33. In order to assess the burden borne by the applicant, the Court must examine the particular circumstances of each case, such as the conditions under which the disputed property was acquired and the compensation that was received by the applicant in exchange for the property, as well as his or her personal and social situation (see Pyrantienė, cited above, § 51).

34. In the present case, the applicant became entitled to a plot of land following decisions taken by the local administrative authorities in 1991 and 1994, and purchased it from the State in 2005. The Court notes in this respect that although the purchase of the land was only formalised in 2005, the applicant had acquired a proprietary interest in 1991 when the administrative authorities confirmed the validity of the Soviet decision assigning him a plot of land (see paragraph 6 above).

35. The procedures for the sale of the land were conducted by official bodies exercising the authority of the State, and the land purchase agreement signed by the applicant and the Kaunas County Administration incorporated the standard conditions of sale (see paragraph 8 above). The Court considers that the applicant had very little opportunity, if any, to influence the terms of the contract or the purchase price, as this was within the State’s exclusive competence. The authorities were therefore under an obligation to verify the applicant’s eligibility for allocation of the land and the conformity of the land sale with the procedures and laws in force (see, mutatis mutandis, Gladysheva, § 79, and Pyrantienė, § 54, both cited above).

36. The applicant’s title to the land was invalidated after the former owners lodged a civil claim, which was then allowed by the domestic courts. It was established that the local authorities had not been entitled to transfer the disputed property to the applicant before the question of restoration of the former owners’ rights had been resolved. The Government argued that the errors made by the domestic authorities had occurred in the context of land reform, which was linked to the complex process of restoration of former owners’ property rights in Lithuania. In the Court’s view, although it is true that States face complex legal and factual issues when resolving such matters, in the present case the hindrance to the peaceful enjoyment of the property is attributable exclusively to the respondent State, and the existence of any justifying exceptional circumstances has not been demonstrated by the Government (see Nekvedavičius v. Lithuania, no. 1471/05, § 88, 10 December 2013, and Albergas and Arlauskas, cited above, § 62).

37. In this context, the Court reiterates the particular importance of the principle of good governance, which requires that where an issue pertaining to the general interest is at stake - especially when it affects fundamental human rights, including property rights - the public authorities must act promptly and in an appropriate and consistent manner (see Beyeler v. Italy [GC], no. 33202/96, § 120, ECHR 2000-I; Rysovskyy v. Ukraine, no. 29979/04, § 71, 20 October 2011; and Pyrantienė, cited above, § 55).

38. The Court further notes that the applicant’s good faith concerning the acquisition was never disputed at the domestic level (see, mutatis mutandis, Vistiņš and Perepjolkins v. Latvia [GC], no. 71243/01, § 120, 25 October 2012). The applicant was an ordinary citizen and the purchase was based on laws applicable to all persons having the same status, so there are no grounds to find that he took advantage of his privileged position or otherwise acted unlawfully to acquire property (see Albergas and Arlauskas, cited above, § 68). The applicant was unaware that the land had been sold to him in breach of the law; the unlawfulness of the land purchase was only established by the District Court for the first time on 16 August 2007 (see paragraph 10 above). In this connection, the Court is satisfied that the applicant was a bona fide owner, and that his proprietary interest in the enjoyment of the land was sufficiently established (see Pyrantienė, cited above, § 60, and Albergas and Arlauskas, cited above, §§ 68-69).

39. Moreover, the Court considers that the applicant was also entitled to rely on the fact that the administrative decisions taken between 1991 and 2005 and the land purchase agreement signed in 2005, on the basis of which he had acquired the property, would not be retrospectively invalidated to his detriment. In these circumstances, the “legitimate expectation” is also based on a reasonably justified reliance on administrative decisions which have a sound legal basis and which bear on property rights (see Kopecký v. Slovakia [GC], no. 44912/98, §§ 45-47, ECHR 2004-IX, and Pyrantienė, cited above, § 61). Even assuming that the applicant had paid a preferential price for the land in question, for the Court this fact is immaterial in terms of his rights of ownership (see Digrytė Klibavičienė v. Lithuania, no. 34911/06, § 36, 21 October 2014). As a result, it finds that the applicant had a “legitimate expectation” of being able to continue to enjoy that possession.

40. After the applicant lost his title to the land, he was paid LTL 122 (EUR 35), the nominal price of the land in 1994. According to the assessment submitted by the applicant, the market value of the plot in July 2008 was LTL 35,000 (EUR 10,136). While no estimates in this regard have been made by the domestic authorities, the Court finds it reasonable to conclude that the market value of the land in 2008, when the final judgment of the Supreme Court was adopted, was higher than the nominal price paid by the applicant in 1994. It should also be noted that the LTL 122 returned to the applicant had obviously suffered considerable devaluation and could not be reasonably related to the value of the land fourteen years later. Accordingly, the Court finds that the compensation of LTL 122 paid to the applicant in 2008 was clearly insufficient for the purchase of a new comparable plot of land (see, mutatis mutandis, Velikovi and Others, cited above, § 207).

41. The Court reiterates that the taking of property without payment of an amount reasonably related to its value will normally fail to respect the requisite fair balance between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights and will constitute a disproportionate burden on the applicant (see The Holy Monasteries v. Greece, 9 December 1994, § 71, Series A no. 301-A, and Former King of Greece and Others v. Greece [GC], no. 25701/94, § 89, ECHR 2000-XII). In line with the Court’s case-law in similar cases concerning expropriation of property, the balance mentioned above is generally achieved where compensation paid to the person whose property has been taken reasonably relates to its “market” value as determined at the time of the expropriation (see Pincová and Pinc v. the Czech Republic, no. 36548/97, § 53, ECHR 2002-VIII; Vistiņš and Perepjolkins, cited above, § 111; and Guiso-Gallisay v. Italy (just satisfaction) [GC], no. 58858/00, § 103, 22 December 2009). It follows that the amount of compensation for the applicant’s loss of title to the land must be calculated using the value of the property on the date ownership was lost.

42. The Court takes the view that in the present case, as the applicant had acquired the land for a very low price, the authorities were in principle justified in deciding not to compensate for the full market value of the property (see, mutatis mutandis, Vistiņš and Perepjolkins, cited above, §§ 118 and 130). However, the Court considers that awarding the applicant compensation of LTL 122 did not sufficiently mitigate the negative consequences for him of losing his title to the property. The disproportion between the land’s market value and the compensation awarded is too significant for the Court to find that a “fair balance” was struck between the interests of the community and the applicant’s fundamental rights (see, mutatis mutandis, Urbárska Obec Trenčianske Biskupice v. Slovakia, no. 74258/01, § 126, 27 November 2007; Pyrantienė, cited above, § 68; and Albergas and Arlauskas, cited above, § 74).

43. The foregoing considerations are sufficient to enable the Court to conclude that the conditions under which the applicant had his title to the land removed imposed an individual and excessive burden on him, and that the authorities failed to strike a fair balance between the demands of the public interest on the one hand and the applicant’s right to peaceful enjoyment of his possessions on the other. There has, accordingly, been a violation of Article 1 of Protocol No. 1 to the Convention.

II. OTHER ALLEGED VIOLATIONS OF THE CONVENTION

44. The applicant complained under Article 6 § 1 of the Convention about the unfairness of the proceedings. He argued that the domestic courts had erred in interpreting the domestic law and assessing the evidence in the case.

45. The Court reiterates that it is the role of the domestic courts to interpret and apply the relevant rules of procedural and substantive law (see, among many other authorities, Baumann v. Austria, no. 76809/01, § 49, 7 October 2004). In the present case, the domestic courts’ interpretation of the relevant provision of domestic law does not appear to be arbitrary or unreasonable, and therefore does not appear to be in breach of Article 6 § 1 of the Convention. The Court thus considers that this complaint must be declared inadmissible as manifestly ill-founded, pursuant to Article 35 §§ 3 (a) and 4 of the Convention.

III. APPLICATION OF ARTICLE 41 OF THE CONVENTION

46. Article 41 of the Convention provides:

“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”

47. The applicant claimed a total sum of 110,000 Lithuanian litai (LTL; 31,860 euros (EUR)) in respect of pecuniary and non-pecuniary damage, as well as costs and expenses. According to the applicant, that sum comprised the market value of the land at the time of deprivation (LTL 35,000 (EUR 10,136)), which reflected the estimate given in the expert report issued at his request in July 2008, as well as LTL 30,000 (EUR 8,690) for non-pecuniary damage and LTL 6,330 (EUR 1,830) for costs and expenses incurred before the domestic courts and the Court.

48. The Government rejected the findings of the expert’s report as lacking objectivity and depending exclusively on the method of calculation. The Government also argued that the Court could not award compensation for pecuniary damage unless the matter had been examined by the domestic courts. However, the Government did not submit any alternative assessment of the market value of the land in support of their arguments.

49. The Government also considered that the applicant had failed to prove a direct causal link between the non-pecuniary damage allegedly incurred and the alleged violation of his right to peaceful enjoyment of his possessions.

50. Lastly, the Government submitted that the applicant had failed to substantiate that the costs and expenses claimed by him had actually been incurred, necessary and reasonable. Accordingly, they requested the Court to dismiss the applicant’s claims concerning just satisfaction as excessive and unsubstantiated.

51. In the circumstances, the Court considers that the question of the application of Article 41 is not ready for decision. It is therefore necessary to reserve the matter, due regard being had to the possibility of an agreement between the respondent State and the applicant (Rule 75 §§ 1 and 4 of the Rules of Court).

52. Accordingly, the Court reserves this question and invites the Government and the applicant to submit, within six months from the date on which the judgment becomes final, in accordance with Article 44 § 2 of the Convention, their written observations on the amount of damages, costs and expenses to be awarded to the applicant and, in particular, to notify the Court of any agreement that they may reach.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

1. Declares the complaints concerning Article 1 of Protocol No. 1 of the Convention admissible and the remainder of the application inadmissible;

2. Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention;

3. Holds that the question of the application of Article 41 is not ready for decision, and accordingly:

(a) reserves the said question in whole;

(b) invites the Government and the applicant to submit, within six months from the date on which the judgment becomes final, in accordance with Article 44 § 2 of the Convention, their written observations on the amount of damages, costs and expenses to be awarded to the applicant and, in particular, to notify the Court of any agreement that they may reach;

Done in English, and notified in writing on 24 November 2015, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Françoise Elens-Passos András Sajó
Registrar President

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