Benefit in lieu of compensation for compulsory acquisition

When part of someone’s land is taken by compulsory acquisition to become a public road, the owner can accept the issuance of a building permit in exchange, based on the building factor of the whole land without deduction. By doing this the owner binds themselves to not claiming compensation for the part of the land lost.

The increased building factor allows the owner to develop their land, without deduction, erecting more or bigger buildings. This is a substantial benefit to the owner who acquires it, acting voluntarily without filing a recourse against the building permit and/or the particular term of granting the part of his land for public road. The principle of the right and obligation applies in this case and the owner is estopped from claiming compensation and receiving the benefit, without having any loss.

The owners of a piece of land, part of which was lost to compulsory acquisition for the widening of a road network and providing access to a beach, filed recourses before the district court, claiming compensation for the 825 sq. m acquired. In addition, they requested the issuance of a building permit to erect houses. The responsible authority issued a building permit and among the terms imposed, was a term providing for the granting of part of the land. The owners accepted it without challenging its terms and went ahead with construction, in accordance with the building factor of the land as a whole.

The district court dismissed the owners recourses through which they were requesting determination of the compensation for the compulsory acquisition of part of their land. It held that they were not entitled to compensation, since the aforementioned term was not challenged before the administrative court and the owners acted in accordance with the terms of the building permit.

The owners appealed against this decision and the supreme court in its judgement in C.A. 357/2014, dated March 23, found the decision to be correct. It emphasised its conclusion that, on the one hand, the granting of the specific part of the land is not meant to bring them a profit, i.e. an increased building factor, road network and direct access to the beach and on the other hand, without there being any detrimental damage, they should be compensated.

The supreme court found the reasoning of the district court, to be absolutely correct, relying primarily on the admitted facts and that it examined the case on its own merits. It also correctly could not have failed to recognise that at the time of the compulsory acquisition, the property was already burdened with the obligation to grant the specific area based on the term of the first building permit, with the result that the compulsory acquisition does not amount to a limitation of the owners’ property.

On the other hand, the owners did not challenge the term before the supreme court and therefore they are presumed to have consented to its imposition.

Moreover, the supreme court backed the district court’s finding that the building permit prior to the compulsory acquisition was never challenged and the time for it to be expired long ago, with the owners essentially attempting to exploit the time passed to challenge the compensation decision of the acquiring authority, even ignoring that they gave consent while it was still registered in their name. It also added that the principle of right and obligation applied to the facts of the case and as the district court decided, as benefit for the granting of the specific area, the building factor was calculated on the area of the entire land and not on the remaining area. Consequently, the supreme court dismissed the owners’ appeal as unfounded with costs.

George Coucounis is a lawyer practicing in Larnaca and the founder of GEORGE COUCOUNIS LLC, Advocates & Legal Consultants, www.coucounis.law, [email protected]