POTOMSKA AND POTOMSKI v. POLAND - 33949/05 - Chamber Judgment [2014] ECHR 1188 (04 November 2014)

In the case of Potomska and Potomski v. Poland,

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

          Ineta Ziemele, President,
          Päivi Hirvelä,
          George Nicolaou,
          Ledi Bianku,
          Zdravka Kalaydjieva,
          Krzysztof Wojtyczek,
          Faris Vehabović, judges,
and Françoise Elens-Passos, Section Registrar,

Having deliberated in private on 14 October 2014,

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

PROCEDURE

1. The case originated in an application (no. 33949/05) against the Republic of Poland lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by two Polish nationals, Mr Zygmunt Potomski and Mrs Zofia Potomska (“the applicants”), on 22 August 2005.

2. In a judgment delivered on 29 March 2011 (“the principal judgment”), the Court held that there had been a violation of Article 1 of Protocol No. 1 to the Convention in the light of the legal effects on the status of the applicants’ property stemming from the 1987 decision listing it in the register of historic monuments and the fact that the applicants had no right to compel the State to carry out the expropriation (Potomska and Potomski v. Poland, no. 33949/05, §§ 61-80, 29 March 2011).

3. Under Article 41 of the Convention the applicants sought just satisfaction of 230,000 Polish zlotys (PLN) in respect of pecuniary damage. The estimated amount consisted of possible benefits that could have been obtained from the property had it been turned into a locksmith’s workshop as the applicants had originally intended. The applicants further claimed PLN 100,000 in just satisfaction for non-pecuniary damage.

4. Since the question of the application of Article 41 of the Convention was not ready for decision as regards pecuniary and non-pecuniary damage, the Court reserved it and invited the Government and the applicants to submit, within six months, their written observations on that issue and, in particular, to notify the Court of any agreement they might reach (ibid., § 85, and point 3 of the operative provisions).

5. The applicants and the Government each filed observations.

THE LAW

6. 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.”

A. Pecuniary damage

1. The applicants’ submissions

7. The applicants stressed that the Polish law did not provide for the possibility of seeking compensation in their particular case through domestic procedures.

8. The applicants commissioned a report on the value of their property and their compensation claims. The report was drawn up by a certified real-estate valuer, Mr Z. Jaworski on 1 September 2011.

9. The expert assessed the market value of the applicants’ plot of land at PLN 49,700 as of the date of his report. The expert estimated the amount of partial compensation for the period between October 1994 and July 2011 assessed as a relation between the value of an unbuilt plot of land and the average rate of return on capital market. The estimated figure with no adjustment for inflation or interest rate was PLN 31,087. This amount adjusted for inflation equalled PLN 35,314 and adjusted for legal interest rate equalled PLN 45,157.

10. Next, the expert estimated the amount of partial compensation for the hypothetical loss of possibility of renting a two-storey building with a workshop (with a surface area of 170 square metres) assessed as a relation between the projected value of the developed property in the period from 1994 to 2011 and the average rate of return on capital market. The estimated figure with no adjustment for inflation or interest rate was PLN 337,952. The same amount adjusted for inflation equalled PLN 467,318 and adjusted for interest rate equalled PLN 686,065.

11. The applicants claimed the amount of PLN 686,065 in respect of pecuniary damage. That amount was equivalent to 157,669 euros (EUR) with reference to the exchange rate of the National Bank of Poland as of 19 September 2011 (1 EUR = 4,3513 PLN). The amount sought corresponded to the applicants’ actual damage as of the day of the Court’s judgment plus the legal interest rate.

2. The Government’s submissions

12. The Government noted that in their pleadings of 20 September 2011 the applicants increased their claims for pecuniary damage from PLN 230,000 (EUR 52,873) to EUR 157,669. They underlined that the Polish authorities could not be considered responsible for any acts or events which had occurred prior to 10 October 1994, that is before the date of entry into force of the Protocol No. 1 to the Convention with regard to Poland.

13. As far as the specific amounts are concerned the Government stated that they were of a highly hypothetical nature. The sum claimed by the applicants was estimated on the basis of the opinion of a real-estate valuer (rzeczoznawca majątkowy) concerning the value of the property (operat szacunkowy) drawn up on 1 September 2011. That opinion provided for:

a) the current value of the property assessed as an unbuilt plot of land with the possibility of building on it as of the date of the preparation of the expert opinion (PLN 49,700);

b) the value of the property assessed as an unbuilt plot of land with the possibility of building on it calculated for each year between 1994 and 2011 separately, using the prices relevant for each of those years (PLN 31,087);

c) the amount of partial compensation assessed as a relation between the value of an unbuilt plot of land in the period from 1994 to 2010 and the average rate of return on capital market (PLN 45,157);

d) the amount of partial compensation for the loss of possibility of renting the land with the hypothetical two-floor residential building with workshop on it, assessed as a relation between the predicted value of the developed property in the period between 1994 and 2010 and the average rate of return on capital market (PLN 337,952-686,065).

14. The Government maintained that the expert opinion submitted by the applicants seemed to be considerably flawed. In accordance with section 156 (1) of the Land Administration Act of 1997, an opinion on the value of the property was an expert opinion prepared by the real-estate valuer with regard to the value of a given property and thus it could not contain an assessment of the amount of compensation. An assessment of compensation did not fall within the scope of the real-estate valuer’s professional activity (cf. section 174 (3a) of the Land Administration Act) and thus he was not authorised or prepared to make such an assessment. Therefore, the amount of pecuniary damage estimated in the expert opinion could not be regarded as prepared by a professional with the necessary specialist knowledge.

15. Furthermore, the Government stressed that the major part of the applicants’ pecuniary claim (the sum between PLN 337,952-686,065) was based on very doubtful grounds. The applicants identified their pecuniary damage with the loss of possibility of renting their land between 1994 and 2010 with the hypothetical two-floor residential building with workshop on it which they had been planning to build. A presumption that if the applicants had not encountered any administrative restrictions stemming from a decision to add their property to the register of historic monuments, they would have built a house with a locksmith’s workshop and subsequently they would have leased it, was of a highly speculative character and far too hypothetical to demand on this basis a compensation for lost profit. According to the Supreme Court’s case-law (cf. judgment of 24 August 2007, case no. V CSK 174/07), there was a distinct difference between the loss of expected profit (lucrum cessans) which was to be compensated, and the hypothetical damage (szkoda ewentualna) which could not give rise to compensation.

16. In the present case, where the applicants lost only a potential possibility of realising a hypothetical investment on their property and then an equally hypothetical possibility of leasing it after the investment had been concluded, it could not be claimed that they had lost a profit they could have reasonably expected. Moreover, the applicants had not proved that they would have gained without doubt or with high probability the sums presented by them for the loss of expected profit. The applicants did not show that they had undertaken any steps to realise their investment plans on their plot of land in the past which had been subsequently stopped by the administrative decision of 1987. Bearing in mind the highly speculative character of the applicants’ claim for pecuniary damage, the Government invited the Court to reject this claim in its entirety as unsubstantiated.

17. Lastly, the Government underlined that they saw no reason why the applicants increased their claim for pecuniary damage. In the particular circumstances of the applicants’ case and bearing in mind that the claimed damage had resulted from the administrative decision taken long before the ratification of Protocol No. 1 to the Convention by Poland, the applicants’ claims for compensation for the full market value of the property and the benefits that could have been obtained from leasing the land were unjustified and if they were not to be dismissed in their entirety, they should at least be significantly reduced.

3. The Court’s assessment

18. The Court reiterates that a judgment in which it finds a breach imposes on the respondent State a legal obligation to put an end to the breach and make reparation for its consequences in such a way as to restore as far as possible the situation existing before the breach (see Iatridis v. Greece (just satisfaction) [GC], no. 31107/96, § 32, ECHR 2000-XI). The Contracting States that are parties to a case are in principle free to choose the means whereby they will comply with a judgment in which the Court has found a breach. If the nature of the breach allows of restitutio in integrum, it is for the respondent State to effect it, the Court having neither the power nor the practical possibility to do so itself. If, on the other hand, national law does not allow - or allows only partial - reparation to be made for the consequences of the breach, Article 41 empowers the Court to afford the injured party such satisfaction as appears to it to be appropriate (see Brumărescu v. Romania (just satisfaction) [GC], no. 28342/95, § 20, ECHR 2001-I; Former King of Greece and Others v. Greece [GC] (just satisfaction), no. 25701/94, § 73, 28 November 2002; Scordino v. Italy (no. 1) [GC], no. 36813/97, §§ 246-247, ECHR 2006-V).

19. The Court recalls that on 14 November 1974 the applicants acquired from the State a plot of land classified as farming land, with a surface area of 1,200 square metres. They paid 462 Polish zlotys which corresponded to less than one-fifth of the average monthly wage at the relevant time. The applicants did not carry out any development on their land. By virtue of a decision of 4 May 1987 the applicants’ plot of land was added to the register of historic monuments on the grounds that a Jewish cemetery had formerly been located on the plot. That decision had resulted in a number of far-reaching restrictions on the use of the property by the applicants in accordance with the relevant legislation.

20. In its principal judgment the Court found that the interference with the applicants’ right to the peaceful enjoyment of their possessions had been provided for by law and pursued a legitimate aim, namely the protection of the country’s cultural heritage. Nonetheless, the Court held that there had been a violation of Article 1 of Protocol No. 1 to the Convention for failure to strike the fair balance between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights. The Court had regard in particular to the fact that the domestic law did not provide a procedure by which the applicants could assert before a judicial body their claim for expropriation and require the authorities to purchase their property. It further took into account the considerable length of time for which the applicants had to put up with the interference at issue (Potomska and Potomski, cited above, §§ 61, 75, 79-80).

21. Having regard to its findings made in the principal judgment, the Court notes that the applicants cannot be deemed to have lost title to their property and that the compensation to be awarded by this Court in such cases is confined to losses emanating from the restrictions on control, use and enjoyment of their property (see, Skibińscy v. Poland (just satisfaction), no. 52589/99, § 22, 21 October 2008 where the breach of Article 1 of Protocol No. 1 resulted from the fact that the applicants’ land had been designated for expropriation at some undetermined future date).

22. Relying on the expert report, the applicants claimed EUR 157,669 for the damage sustained as a result of the violation found. The amount claimed was related to the loss of income in the period from 1994 to 2011 from renting a two-storey building with workshop that was to be built on the applicants’ land. The Government objected to these claims as entirely speculative. They observed that the applicants’ claim was based on the double assumption that they would have built a house with a workshop on their land and that they would have leased it once it had been constructed. The Court recalls that the applicants acquired from the State a plot of land in 1974 and intended to build a house and a workshop on it. However, they did not undertake any concrete steps with a view to developing their land until the decision of 4 May 1987 had listed their property in the register of historic monuments. In these circumstances, the Court rejects the applicants’ claim related to the loss of rental income from the building projected on their plot of land as entirely speculative (see, mutatis mutandis, Matos e Silva, Lda., and Others v. Portugal, 16 September 1996, § 101, Reports of Judgments and Decisions 1996-IV).

23. The Court notes nonetheless that the applicants’ use of their property was subjected to severe restrictions as a result of the decision to list their property in the register of historic monuments. The applicants were under an obligation to preserve the historical monument and protect it from damage. They were prohibited from carrying out any work on the monument unless they obtained a permit (Potomska and Potomski, cited above, § 70). In view of the above considerations, the Court finds that the applicants suffered some pecuniary damage as a result of the restrictions on the use of their property following the issuance of the listing decision.

24. When, as in the present case, the violation found does not result from an unlawful dispossession but from a failure to strike the “fair balance” between the general interest and the rights of an individual concerned, the amount of adequate compensation does not necessarily have to reflect the full value of the damage suffered (see, Debelianovi v. Bulgaria (just satisfaction), no. 61951/00, § 16, 27 November 2008).

25. The Court recalls further that the interference with the applicants’ property rights pursued legitimate “public interest” aims of the conservation of a country’s historical or cultural heritage (see, Debelianovi, cited above, § 18; Kozacıoğlu v. Turkey [GC], no. 2334/03, § 82, 19 February 2009). This aspect is taken into account by the Court in the assessment of pecuniary damage sustained by the applicants.

26. Having regard to all the elements in its possession and making its assessment on an equitable basis, the Court considers that it is reasonable to award the applicants the sum of EUR 10,000, plus any tax that may be chargeable, in respect of pecuniary damage.

B. Non-pecuniary damage

27. The applicants further claimed PLN 100,000 in respect of non-pecuniary damage on account of the distress they had suffered because of the consideration of their case over many years. In this regard they referred to their advanced age, their loss of trust in the authorities and the absence of effective procedures in their case. The amount sought was equivalent to 22,982 EUR with reference to the official exchange rate as of 19 September 2011.

28. The Government submitted that if the Court had made an award, if any, under this head it should be comparable to awards for non-pecuniary damage in other similar cases against Poland in which it found a breach of Article 1 of Protocol No. 1 (Rosiński v. Poland, no. 17373/02, 17 July 2007; Skrzyński v. Poland, no. 38672/02, 6 September 2007; Buczkiewicz v. Poland, no. 10446/03, 26 February 2008; Skibińscy v. Poland (just satisfaction), no. 52589/99, 21 October 2008; Rosenzweig and Bonded Warehouses Ltd. v. Poland (just satisfaction), no. 51728/99, 5 June 2012).

29. The Court accepts that the applicants suffered non-pecuniary damage - such as distress and frustration - which is not sufficiently compensated by the finding of a violation of the Convention. Having regard to the nature of the breach and making its assessment on an equitable basis, the Court awards the applicants EUR 4,000, plus any tax that may be chargeable, in respect of non-pecuniary damage.

C. Costs and expenses

30. The applicants claimed PLN 6,756 (EUR 1,553) for the cost of the expert report commissioned by them and produced a relevant invoice.

31. The Government did not comment.

32. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. In the present case, having regard to only a partial relevance of the expert report, the Court considers it reasonable to award the sum of EUR 800 under this head.

D. Default interest

33. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

1. Holds

(a) that the respondent State is to pay the applicants, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement:

(i) EUR 10,000 (ten thousand euros), plus any tax that may be chargeable, in respect of pecuniary damage;

(ii) EUR 4,000 (four thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;

(iii) EUR 800 (eight hundred euros), plus any tax that may be chargeable, in respect of costs and expenses;

(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;

2. Dismisses the remainder of the applicants’ claim for just satisfaction.

Done in English, and notified in writing on 4 November 2014, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Françoise Elens-Passos Ineta Ziemele
Registrar President

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