(1988) 3 CLR 1386
[*1386] 1988 July 12
[SAVVIDES, J.]
IN THE MATTER OF ARTICLE OF 146 OF THE CONSTITUTION
cHARALAMBOS VAYIANOS AND ANOTHER,
Applicants,
v.
THE municipaLITY OF LARNACA,
Respondent.
(Cases Nos. 84/87and 91/87).
Compulsory Acquisition-Revocation of-The Compulsory Acquisition law,1962 (Law 15/62), section 7(1)-Offer for compensation (£5.- per sq.foot) accepted by applicants with reservation of rights-acceptance followed by references for assessing compensation—decision assessing compensation at £7.-per sq.foot—Revocation of acquisition after lapse of 7 months from such decision on ground of changed circumstances-Changes invoked as justification for the revocation became apparent years before the offer for compensation-Sub judice revocation contrary to the principles of good administration–Annulled-Michaelides v. The Republic (1984) 3C.L.R.1596 distinguished.
Generalprinciples of administrative law-Good administration-See CompulsoryAcquisition-Revocation of.
The sub judice revocation was issued years after the compulsory acquisition revoked thereby. In the meantime the respondents offered compensation which the applicants accepted, albeit with reservation of their rights, as they were entitled to do so in virtue of the Compulsory Acquisition of Property(Amending) Law, 1983. Following such acceptance, the applicants filed references for the final assessment of the compensation. The Court assessed the compensation at £7 per sq. foot of the land under acquisition, i.e. £2. - more than the price offered by the respondents.
The acquisition was originally ordered for the purpose of creating a[*1387] parking space. Seven months after the decision assessing compensation,but before payment of the compensation or any part thereof, respondentsrevoked the decision on the ground that in the light of changed circumstancesthe parking space was no longer needed.
However, the changes invoked (Building permits granted after the orderof acquisition) had become apparent years before the offer for compensationand the initiations of the Court proceedings regarding compensation.
Held, annulling the sub judice decision: (1) This case is clearly distinguishablefrom the case of Michaelidesv. The Republic (1984) 3 C.L.R.1596.
(2) The respondent conduct in revoking the order of acquisition is, inthe circumstances of this case, contrary to the principles of good administration.
Sub judice decision annulled.
Costs in favour of applicants.
Cases referred to:
Michaelides v.TheRepublic (1984) 3 C.L.R. 1596.
Recourse.
Recourses against the decision of the respondents to revoke the order of compulsory acquisition of applicant's property.
K. Michaelides, for the applicants.
G.M.Nicolaides, for the respondent.
Cur.adv. vult.
SAVVIDES J. read the following judgment. Applicants bythese recourses challenge the decision of the respondent torevokethe order of compulsory acquisition of applicants property publishedin Supplement No.3, Part II to the official Gazette No.2190 of 28th November, 1986, under Notification 1682. Both[*1388] these recourses were heard together as presenting common question of law and fact.
The issue which poses for consideration in the present cases is whether a compulsory acquisition order can be revoked by the acquiring authority after all steps for the assessment of the compensation payable have been completed.
The facts of the case are as follows:
Applicant in Case No. 84/87 is the owner of a house and yard situated within the municipal limits of Larnaca,under registrationNo. D159,plot 161 of sheet/plan XXLI/57.I.III block D of anextent of£4,965 sq. feet. He also owns half share of a house andyard adjoining the aforesaid plot under registration No. D158,plot 160 of the same sheet plan and block of an extent of 2,425sq.feet,the other half of which belongs to applicant in Case No.91/87.
By a notice of compulsory acquisition published in SupplementNo.3, Part II, to the official Gazette No. 1640 of 24th October,1980,under Notification No. 1158, the decision of the respondentof intended compulsory acquisition of the aforesaidproperties was publicized, for the purpose of public benefit described therein which was the creation of a municipal parkingspace. Applicants objected to the intended compulsory acquisitionwithin the time prescribed in such notice.
The District Officer of Larnaca by letter dated 10th November,1981 informed the applicant that the council of Ministers at itsmeeting of 10th September, 1981, considered applicants objectionsagainst the compulsory acquisition of their properties anddecided to reject same. Consequently an Order of compulsory acquisition was made for the aforesaid propertieswhich was published in Supplement No.3, Part IIof the official Gazette of the Republic No. 1719 of 25th September, 1981.
In the course of negotiations for the payment of compensation[*1389] the Chairman of the Municipal Committee who was then handling the affairs of the Municipality under the provisions of the law, by letters dated 15th November, 1983 offered to applicant 1 the sum of £30,800.- and to applicant 2 the sum of £6,000. - as compensation for the acquisition of their properties which the applicants did not accept.
By letters dated 4th February, 1984, the Chairman of the MunicipalCommittee offered to applicants the same amounts and informedthem that they could accept them with reservation of theirrights to take steps for the transfer of their properties to the respondentand resort to the Court for the determination of theamounts of compensation payable in respect thereof. Applicants accepted such offer and through their counsel repeatedly asked tobe paid the aforesaid sums which the respondent, however, failedto pay though bound to do so under the provisions of the CompulsoryAcquisition Law. In the meantime the applicants filed references 21/84 and 22/84 in the District Court of Larnaca for the determinationof the compensation payable to them for the aforesaidproperties. Respondent offered £5. - per Sq. foot but the DistrictCourt of Larnaca by its decision dated 12th April1986 foundthat the compensation payable was to be assessed on the basis of£7.- per sq. foot and made an award accordingly for such amountplus interest as provided by Law 25/83.Applicants asked repeatedly to bepaid the adjudged sums but respondent paid the costsawarded in the proceedings and failed to pay the compensationfound by the Court. Applicants counsel by letters dated 4th August, 1986, 12th Septembers, 1986 and 9th December, 1986, repeatedtheir previous demand for the payment of the adjudgedcompensation. In reply to such letters the Mayor of Larnaca byhis letter dated 18th. December, 1986 informed applicants counselthat respondent published an order of revocation of the orderof compulsory acquisition. In fact such revocation order waspublished in the official Gazette of the Republic No. 2190, SupplementNo.3, Part II, under Notification 1682. The revocationwas made, allegedly, as the acquisition was no longer necessary for the purposes for which it has been made. As a result applicantsfiled the present recourse challenging the subjudice decision [*1390]
The legal grounds on which the recourses are based are thefollowing:
That the revocation was not made in accordance with the principles of good administration and is contrary both to the spirit andthe general principles of law; the revocation was made in abuse orexcess of respondent's power as same was made for the merepurpose of avoiding payment of the compensation awarded by theCourt; respondent did not take into consideration that the purposesfor which the acquisition was made are attainable and/or desirable but it acted in an unreasonable and arbitrary manner; respondent failed to take or consider the hardship imposed on applicants or their interests.
In expounding on his grounds of law counsel for applicantcontended that the respondent in deciding so belatedly to revokethe order of compulsory acquisition was not guided by criteria as tothe suitability of applicants land for the creation of a parkingspace but acted so in an attempt to evade the judgment of the District Court determining the compensation payable to applicants at£7. -per.sq. foot plus. Interest which was much higher than theone assessed by the Lands and Surveys Department acting on behalfofthe respondent and thus such act is merely an effort to deprivethe applicants of the fruit of their successful litigation.Counsel made reference to decided cases, concerning the principles of administrative law governing the revocation of administrative acts and particularly revocation of compulsory acquisition under. 7.of the Compulsory Acquisition Law No 15/62.
Counsel further added that the object of the acquisition never ceased to exit, that in the present casethere was adjudication ofthe amount ofcompensation payable and as aresult the respondent could not have lawfully revoked the act of acquisition. Inconsequence the respondent by so doing acted under a misconception of fact and law, arbitrarily and in abuse of its powers. Itwas counsel's submission that there was no change in the factual [*1391] situation as it existed at the time of the acquisition and the time ofthe revocation and he concluded by submitting that the revocationwas made strictly for financial reasons.
Counsel for the respondent, on the other hand, submitted that
(a) The legal prerequisites on which the respondent relied for the making of the acquisition order ceased to exist due to changeof circumstances and this is the only reason of the revocation;
(b) The revocation was not made for financial reasons;
(c) Before the respondent took the Sub judice decision it obviously took into consideration the protests and complaints of theapplicants and particularly their request for the revocation of thecompulsory acquisition.
(d) The respondent proceeded to therevocation within a reasonabletime and as soon as it realized that notwithstanding itsgoodwill and desire to serve the citizens the object of acquisitioncould not be accomplished.
The main reason which was advanced by counsel for respondent as to the change of circumstances was that on 5th November,1980,the Municipality had to issue a building permit in respect of plot 525 which was one of the ploy mentioned in theoriginal notice of acquisition on which a building was erectedwith the result that one of the exits to the Properties under acquisitionwhich existed over plot 431 was blocked and also the extentof the whole area was reduced. This, according to the allegationof the respondent, was ascertained by the technical service of theMunicipality of Larnacasometime after the order of acquisitionwas published.In fact the Municipal Engineer on 19th February,1983, submitted a report explaining the situation and suggestingthe revocationof the acquisition order.As a result the respondentafter considering the report decided to authorize the Chairman ofthe Municipal Committee to make an offer to the owners of plot525 for purchase by the Municipality of part of it with the object[*1392]of extending the parking place and creating a second exit. In themeantime the building development in the area, between the years1983 -1986 turned the property under acquisition into an enclosureby high buildings so that in effect it lost its main characteristic as a parking place.
Furthermore in 1985 the Municipality made pavements coveringa large part of the square leading to the intended parkingplace, which was turned into a tourist area mostly covered, withtiles, benches and parking was prohibited. The result of these developments was that the only access to the property in questionbecame useless. As a result the Senior Technical Assistant of theMunicipality by his report to the Mayor of Larnaca dated 28th August, 1986, after earmarking the difficulties recommended the reexamination of the subject. His recommendation was accepted bythe Municipal Council which by its decision of 11th, September,1986, decided to take the sub judice decision. It should be notedthat much earlier i.e. on the 14th February, 1985, the respondentrejected a submission made by its internal Auditor to the effectthat the operation of the parking place in question would not bebeneficial to the Municipality.
Counsel further mentioned that the applicants repeatedly hadasked the revocation of the acquisition order unless compensationon the basis of £11.50 per sq. foot was paid to them againstwhich the Court awarded £1. - per.sq. foot instead of £5. -offeredby the respondent.
The allegations as to the facts which have led to the change of circumstances from the date of the acquisition till the date of therevocation were supported by the evidence of PolyviosLoizides,a Municipal employee in charge ofthe department of issue of permitsand the control of town planning of the Municipalityof Larnaca.Inhis evidence in cross- examination he admitted that theMayor ofLarnaca on the 23rd July, 1986, wrote a letter to the applicants in which he mentioned that one of the tenants who wascarrying on the business of a tailor in a ruinous conditioned room of the said property was refusing to Ieave, but he never mentioned[*1393] in the said letter that there was any problem as to the unsuitability of the property as a parking place due either to the creation of a square or to the blockage of one of the exits to the said parking space.
The order of revocation complained of is stated to have been made under s.7 of the Compulsory Acquisition of Property Law,1962 (Law 15/62) and the reasoning for such revocation was that the acquisition was no longer necessary for the purpose for which it had been made. Sub - section (1) of s.7 under which the power of revocation was exercised reads as follows:
" 7. - (1) Καθ οιονδήποτε χρόνον μετά την δημοσίευσιν γνωστοποιήσεως απαλλοτριώσεως και πρό της πληρωμής ή καταθέσεως της αποζημιώσεως ως προβλέπεται εν τω παρόντι Νόμω, η απαλλοτριούσα αρχή δύναται διά διατάγματος δημοσιευομένου εν τη επισήμω εφημερίδι της Δημοκρατίας, ν' ανάκαλέση την τοιαύτην γνωστοποίησιν καί παν δημοσιευθέν σχετικόν διάταγμα, είτε γενικώς είτε ειδικώς αναφορικώς πρός την εν τούτω αναφερομένην ιδιόκτησίαν ή μέρος ιδιοκτησίας· επί τούτω η επομένη της τοιαύτης γνωστοποιήσεως ή διατάγματος απαλλοτριώσεως διαδικασία ατονεί, καί η απολλοτρίωσις λογίζεται ως εγκαταλειφθείσα είτε γενικώς είτε αναλόγως της περιπτώσεως, αναφορικώς πρός την τοιαύτην ειδικήν ιδιοκτησίαν ή μέρος ιδιοκτησίας.
And,the English translation reads:
(" At any time after the publication of a notice of acquisition and before the payment or the deposit of compensation as in this Law provided, the acquiring authority may, by an order published in the official Gazette of the Republic, revoke such notice and any relative order of acquisition that may have been published, either generally or in respect of any particular property or pan of property refer to therein thereupon all proceedings consequential to such notice or order of acquisition shall abate and the acquisition shall be deemed to have been [*1394] abandoned either generally or in respect of such particular property or part of property,as the case may be.”)
The construction of s. 7(1) and the powers vested in an acquiring authority to revoke an acquisition previously made by it havebeen dealt with byfull Bench ofthis Court in the case of Michaelides v. the Republic (1984)3 C.L.R. 1596, the facts of which are as follows:
The appellants were owners of three pieces of land,situated within the area of AyiosSergiosvillage in the District of Famagusta,which were compulsorily acquired in June, 1972 for apublic benefit purpose,namely for the purpose of preservation,enhancement and development of the ancient monuments of salamis andits surroundings The area where the above property was situated had been since1974, under the occupation of the Turkish invasion forces andinaccessible to the State and appellants were unable to resume possession of it.
The appellants instituted proceeding in June 1975 for assessment of the compensation payable for the compulsory acquisition of their above properties. In July, 1976 and whilst these proceedings were still pending, the acquiring authority, acting under section 7 of the Compulsory Acquisition of the property Law, 1962, revoked the compulsory acquisition order affecting appellants said properties on the ground that the purpose for which the order of acquisition was issued could not be attained on account of the situation created after the Turkish Invasion,and on the ground that the acquired property had not as yet been transferred in the name of the Government. The trial Judge dismissed appellant’s recourse against the validity of the above revocation order as a result of which an appeal was filed.
After review of the Greek Case Law and the Greek Administrative Law,4th ed.,vol. C at pp. 268 and 388 the principle was formulated that the construction which should be placed on s.7 is that the construction which should be placed on s.7 is that the only prerequisite for the revocation of an acquisition is[*1395]that the revocation should be made before the payment or the deposit of the compensation,placing any other specific conditions within the discretion of the administrative authority concerned.
The judgment reads at pp.1609-1610 as follows:
“The principles of the Greek Administrative Law concerning the annulment of an acquisition,are useful in construing section 7 of the Compulsory Acquisition Law,No. 15/62.In Kyriacopoullos,Greek Administrative Law,4th Edition,Vol.C at p.388,we read:
‘Also revocation is not allowed after the completion of the procedures of the acquisition by settlement because by this a legal situation of subjective rights is created precluding further unilateral act of the administration so long as this is not based on a term or reason in the order of acquisition.’
This is in line with the provisions of sub - section (1) of section 7 of our Law, that a revocationcart only take place before the payment or deposit of compensation as provided in the Law.
This position does not arise, as the payment of compensation has never been agreed or finally determined by a decision of the Court. The act of annulment took place in the process of the hearing of a reference for the determination of compensation.”
And further at p.1611 it reads as follows:
“We find it unnecessary to embark at length on the two cases (800/1931 and 108/1972) referred to in Kyriacopoulos, and the principles underlying them, as the learned trial Judge has explicitly done so in his judgment. It suffices here to say briefly that from both these cases it emanates that though under the relevant statutory provisions in Greece, which are similar to section7 of our Compulsory Acquisition of Property Law,[*1396] 1962,a decision for acquisition can at any time, up to the finaldetermination by the Court of the compensation to be paid,be revoked by the Acquiring Authority, nevertheless, suchpower is not an absolute power but a discretionary one whichcannot be exercised arbitrarily but in a proper manner bearingin mind the spirit of the law and the conditions laid down bythe general principle of administrative law. Also, that the revocationof an acquisition with the exclusive object of servingthe financial interest of the State only, without at the sametime taking into consideration the interest of the owner amounts to awrong exercise of discretion."
We concluded in that case that bearing in mind all the circumstances of the case the acquiring authority in taking the sub judicedecision did not act arbitrarily or in abuse of power but exercised its discretion in the proper way and without violating the principles of good administration and we affirmed the decision of thetrial Judge that the respondent "actedwithin the spirit of the lawand the limits of good administration in the exercise of its discretionarypowers.”
Bearing in mind the principles emanating from the case of Michaelides(supra) I revert to the facts of the present case. As allegedby the respondent the fact that there were problems for thecreation of the parking space for which the acquisition orderswere issued became apparent since the 5th November, a 1980,few days after the notice of acquisition was published in the officialGazette of the Republic.
On the 5th November, 1980, the respondent was well awarethat the issue of a building permit for part of plot 525 would have affected one of the exits of the property under acquisition and also restricts considerably the parking space. Notwithstanding that factwhich now is raised in support of the respondent’s allegation thatthere was a change of Circumstances and notwithstanding the objections raised by the owners against the acquisition the respondent proceeded with the acquisition of the property and the orderof acquisition was published on 25th September, 1981.[*1397]
It has been further alleged that in February, 1983, the MunicipalEngineer submitted a report suggesting the revocation of theacquisition as in his opinion the property in question could notsatisfactorily be used as a parking place. Notwithstanding suchinformation the respondent instead ofrevoking the acquisition authorizedits Chairman to negotiate with the owners of plot 525with the intention of enlarging the parking space and creating asecond exit. Such effort did not materialize and in the meantimethe Municipality was granting permits for the erection of constructions which according to their allegations turned the parkingplace into an enclosure whichwas unsuitable as a parking place.
It is the contention of the respondent that due to a change ofcircumstances the object of the acquisition could not be achieveda fact which became apparent to them since 1983. Instead of revokingthe acquisition order the respondent proceeded to the development of the square opposite the entrance leading to the said parking place by turning it into a tourist centre without, however,having ever decided that the parking place in question was notnecessary. When the applicants filed their references for assessment of compensation in 1986 the respondent again instead ofproceedingtoa revocation of the acquisition order they thought fitto offer compensation to the applicants calculated at £5.-per sq.foot and fought the two references in an effort to persuade the Court that the compensation payable should be the one offered by it. The decision of the Court was delivered on the 21st April, 1986, awarding £7. -persq. foot as reasonable compensation plus interest and costs.
The respondent after such references were determined paid tothe applicants the costs of the actions and after repeated requestson behalf of counsel for applicant contained in numerous lettersfor the payment of the compensation awarded by the Court, the Mayor of Larnaca acting on behalf of the respondent, on the 23rdJuly, 1986, informed applicants counsel that a tailor occupying part of the premises refused to evacuate same and requested them to do something about it. Though as alleged by the respondent ithad found out that the property in question was not suitable for[*1398] the purposes of the acquisition due to the change of circumstances since 1983, nevertheless nothing was mentioned to the applicantsas to such intention and it was only until December, 1986, after he decision to revoke the acquisition order was taken that such decision was mentioned in reply to the claims of the applicants for compensation.
The facts of the present cases are materially different fromthose in Michaelides case (supra). In the case of Michaelideswhen a reference was made to the Court for the assessment ofcompensation the respondentsproceeded with the revocation ofthe acquisition order before the amount of compensation wasagreed upon or before anydecision of the Court fixing such compensationwas taken. In the present case the revocation was effected after a reference was made to the Court, which was foughtby the respondent whose contention was that the value of theproperty was only £5. – per.sq. foot, without raising the questionof substantial changes of circumstances which according to theevidence before me was a matter ascertained by it long before thereferences were made and it was after the lapse of seven monthsfrom the date when the Court found that the compensation payablewas£7.- per sq. foot that the respondent came forward torevoke the acquisition.
Furthermore in michaelides case it became apparent that theobject for which the acquisition was made became unattainabledue to considerable change in the factual situation between thetime of the acquisition and the time of the revocation as a result ofthe Turkish invasion and occupation of property by the Turkishforce which made the purpose of the acquisition completely unaccomplishable.
The distinction between the two cases is clearly indicated bythe reference made in Michaelides (case) to Kyriacopoulos to theeffect that a revocation is not allowed after the completion of theproceedings of acquisition by settlement because of the legal situationof creation of subjective rights precludingany unilateral actof the administration to disturb the situation so long as this is not[*1399] based on a term or reason in the order of acquisition. In that casea situation similar to that of the present case did not arise as thepayment of compensation had never been agreed or finally determinedby a decision of the Court.
Bearing in mind the circumstances of the case I have not been persuaded that the reason stated in the order of revocation thatthere was a substantial change of circumstances which made theacquisition unattainable has been substantiated in the present cases.The whole conduct of the respondent clearly indicates than inall the circumstances of the present case thoughaware as allegedby it of the fact that the property in question became unsuitable asa parking place nevertheless it waited till the Compensation wasassessed by the Court which was higher than its offer and considerabletime after the judgment of the Court it came forward withthe contention that the objects of the acquisition could not beachieved.
In my view in the present case the respondent failed to exerciseits discretion within the limits of good administration. It is clearlya case of wrong exercise of discretion which amounts in substanceto a violation of the law.
In the circumstances the sub judice decision has to be and is hereby annulled with costs in favor of the applicants.
Sub judice decision annulled
with costs in favour of applicants.
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