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Cite as: [2000] ECHR 704

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FOURTH SECTION

DECISION

AS TO THE ADMISSIBILITY OF

Application no. 28856/95
by Barbro, Petri, Heidi and Jussi JOKELA
against Finland

The European Court of Human Rights (Fourth Section), sitting on 5 October 2000 as a Chamber composed of

Mr G. Ress, President,
Mr I. Cabral Barreto,
Mr V. Butkevych,
Mrs N. Vajić,
Mr J. Hedigan,
Mr M. Pellonpää,
Mrs S. Botoucharova, judges,

and Mr V. Berger, Section Registrar,

Having regard to the above application introduced with the European Commission of Human Rights on 20 September 1995 and registered on 5 October 1995,

Having regard to Article 5 § 2 of Protocol No. 11 to the Convention, by which the competence to examine the application was transferred to the Court,

Having regard to the Commission’s decision of 3 December 1997 to communicate the application,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicants,

Having deliberated, decides as follows:

THE FACTS

The applicants are Finnish citizens, born in 1935, 1963, 1965 and 1965, respectively. They reside at Nakkila. Before the Court they are represented by Ms Johanna Ojala, a lawyer in Helsinki.

A. Particular circumstances of the case

The facts of the case, as submitted by the parties, may be summarised as follows.

The applicants are the heirs of the late Mr Timo Jokela, who died on 19 September 1992. The first applicant is his widow and the other applicants his children. They are all parties to his estate.

At the time of his death Mr Jokela possessed, inter alia, the real properties Saha 1:15, Saha I 5:55, Saha I 5:78, Saha II 3:20 in the centre of the Nakkila municipality. The properties measured about 2.9 hectares in total. Mr Jokela had purchased a third of the land for FIM 300,000 in December 1989. A regional master plan (seutukaava, regionplan) of 1977 designated part of the land for traffic purposes. This designation was maintained in a municipal building plan (rakennuskaava, byggnadsplan) of 1989, whereas construction mainly for industrial purposes was allowed on the remaining part of the properties.

1. The expropriation proceedings

In June 1990 the Turku Road District requested the partial expropriation of Mr Jokela’s properties with a view to constructing an overpass in accordance with a road plan confirmed in February 1990. The overall area to be expropriated covered about half of the respective properties (1.53 hectares). The request was referred to proceedings before a land surveyor holding a State office ("the Expert") and two lay members appointed by the Expert from a list drawn up by the municipality ("the Trustees").

In the autumn of 1990 the Road District took over those parts of the properties which were to be expropriated. In December 1990 Mr Jokela sold other parts of the properties Saha 1:15 and Saha II 3:20 to the Esso corporation for a price of FIM 121 per square metre.

Having reached an agreement with the Road District in March 1991, Mr Jokela received FIM 700,000 in compensation for the removal of the buildings, equipment and vegetation from the expropriated properties. The removal took place the same year. The agreement did not concern the compensation to be paid for the land itself and the inconvenience suffered. On these points Mr Jokela and, following his death, the applicants disagreed with the Road District. The matter was referred to the Expert and the Trustees who, on 3 June 1993, fixed the “current” value of the land (in the autumn of 1990) at FIM 7,50 per square metre. They apparently arrived at this value after having disregarded three voluntary sales of land in the vicinity, considering that the sellers had been “in a dominating position" and thus able to dictate the price. Instead the Expert and Trustees took into account the purchase prices paid for land within a wider area. The applicants received about FIM 115,000 in compensation for the land and some further compensation for inconvenience suffered.

The applicants appealed to the Land Court (maaoikeus, jorddomstolen) of Southern Finland which, on 27 September 1994, heard the parties and the Expert orally. The applicants, represented by counsel, argued that the current value of the expropriated land amounted to FIM 60-112 per square metre. In support of their contention they submitted various written evidence indicating a current value ranging between FIM 21 and FIM 114 per square metre. The evidence included, inter alia:

(1) an offer of 1990 in which the Nakkila municipality had stated its interest in purchasing part of the applicants' land;

(2) a decision of the Nakkila Inheritance Tax Board (perintöverolautakunta, arvsskattenämnden) of 27 May 1993 in which the current value of the applicants' properties was estimated at FIM 600,000, i.e. FIM 20 per square metre (see below);

(3) an estimate by the Expert and the Trustees (from 1991) of the value of adjacent land which had also been expropriated due to the same road works; and

(4) an offer of 1991 in which the Nakkila municipality had proposed to lease certain land in the vicinity.

In his own appeal the representative of the Road District argued that the compensation to be awarded to the applicants should be lowered to FIM 5 per square metre. He did not comment either in writing or at the Land Court’s hearing on the above evidence adduced by the applicants.

In their written submissions to the Land Court the applicants further stated their readiness to hear the executive secretary of the Nakkila municipality (V.) as a witness in regard to the contents of the municipality's above-mentioned offer of 1991, “should the Land Court deem [such an examination] necessary”.

At the hearing the applicants allegedly also requested that the building inspector of the Nakkila municipality (S.) be heard as a witness in regard to the status of their properties from the point of view of planning. Contrary to the opinion of the Expert and the Trustees, S. was allegedly of the opinion that in the regional master plan the properties had been reserved for industrial purposes. According to the applicants, their request that S. be heard was not recorded in the Land Court’s minutes. The Government, referring to the same minutes, note that the applicants’ representative merely referred to having been in contact with S. before the hearing.

Following its hearing the Land Court inspected the area in question. In its judgment of 27 September 1994 (delivered on 11 October 1994) it granted the applicants some FIM 4,000 in further compensation for inconvenience and costs but dismissed the remainder of their appeal. The Land Court noted that in the regional master plan of 1977 the expropriated land had been designated as a traffic area. This position had been maintained in the municipal building plan adopted in 1989. The Land Court therefore agreed with the assessment of the Expert and the Trustees as to the current value of the land. It noted, among other elements, the fact that the construction of the overpass had improved the traffic connections of those parts of the applicants' properties which had not been expropriated. The Land Court expressly ignored the 1990 purchases of adjacent land for the purpose of constructing a service station near the overpass. As in reality only one plot of land could be sold for such purposes the seller had had a monopoly and the price development in respect of this land had not been free.

The Land Court's judgment neither specified the written evidence adduced by the applicants nor mentioned that they had sought to hear witnesses.

On 20 March 1995 the Supreme Court (korkein oikeus, högsta domstolen) refused the applicants leave to appeal.

2. The inheritance tax proceedings

In Finland the inheritance tax is calculated on the basis of the current value of a property at the time of the decease less 20-30 per cent. At the time of Mr Jokela's death those parts of his properties which were subject to expropriation were still considered part of his possessions. In the estate inventory proceedings which ended in February 1993 the properties as a whole were estimated at a total value of FIM 150,000.

On 27 May 1993 the Nakkila Inheritance Tax Board fixed the inheritance tax to be imposed on the second, the third and the fourth applicant. The current value of the real properties were assessed at a total sum of FIM 600,000 (i.e. about FIM 20 per square metre).

The applicants appealed, arguing that the current value of the properties should be reduced to at least FIM 150,000. On 5 September 1995 the County Administrative Court (lääninoikeus, länsrätten) of Turku and Pori declined to examine the first applicant's appeal as no inheritance tax had been imposed on her. It dismissed the other applicants' appeal as far as pertaining to the current value of the properties. It found, inter alia, that the properties measured a total of about 3,2 hectares, a third of which had been purchased by the deceased for FIM 300,000 in December 1989.

On 13 May 1996 the Supreme Administrative Court (korkein hallinto-oikeus, högsta förvaltningsdomstolen) refused the applicants leave to appeal.

B. Relevant domestic law and practice

1. Expropriation for public road purposes

In Finland the expropriation of real property for public use shall be compensated according to its current value (käypä arvo, gängse pris). This value is determined in the light of the price level in general and in view of the purpose which the property was serving at the relevant time.

According to section 35a of the Public Roads Act (laki yleisistä teistä, lag om allmänna vägar 243/1954) the compensation for expropriation shall be determined in accordance with the criteria stated in the Act on Expropriation of Immovable Property and Special Rights (laki kiinteän omaisuuden ja erityisten oikeuksien lunastuksesta, lag om inlösen av fast egendom och särskilda rättigheter 603/1977; “the Expropriation Act”). Section 67, subsection 1, of the Public Roads Act stipulates that full compensation within the meaning of the Expropriation Act shall be due for any expropriation, even if such compensation may be adjusted in view of the benefit to the remaining property which the road construction may produce.

Under section 30, subsection 1, of the Expropriation Act full compensation, corresponding to the current value of the property, shall be determined for the expropriated property. The moment of the property transfer shall be decisive for the determination of this value. If the current value would not reflect the real loss suffered by the owner of the property or special right, the assessment shall be based on the returns from the property or the investments into it. If the purpose for which the expropriation is carried out has significantly increased or decreased the value of the property, the compensation due shall be determined without taking account of such impact (section 31). In practice the current value has been adjusted to take account of other than temporary price fluctuations up to the end of the proceedings.

2. Inheritance tax

According to section 9 of the Act on Inheritance and Gift Tax (perintö- ja lahjaverolaki, lag om skatt på gåva och arv 370/1948), the assessment of inheritance tax shall be based on the value of the property at the moment of the decease. The property shall be valued in accordance with the provisions applicable to the assessment of income and capital gains (sections 10 and 29). Under the 1992 Act on Capital Gains Tax (varallisuusverolaki, förmögenhetsskattelag 1537/1992) the property shall be valued on the basis of its current price. In practice the current price for the purposes of assessing the inheritance tax is the price which would most probably be paid for the particular property at the relevant location. The current price so arrived at is normally reduced by 20-30 per cent so as to avoid any overestimation of the value of the inherited property at the time of the decease.

On receipt of the estate inventory the competent Tax Commissioner (verojohtaja, skattedirektören) was under a duty to ensure, inter alia, that the taxable property was correctly valued (section 35 of the Act on Inheritance and Gift Tax). The tax was to be imposed by the Inheritance Tax Board after careful consideration of the information pertaining to the property, including commonly known facts such as the prevailing price level in the municipality, changes in the value of such property in general (section 39 as interpreted in practice). In 1994 the inheritance tax boards were abolished and this taxation assigned to the ordinary tax authorities (Act no. 318/1994).

3. Proceedings before the land courts

Under section 331 of the Partition Act (jakolaki, lag om skifte 604/1951), as in force at the relevant time, proceedings before the land courts were governed by the provisions applicable to the general courts, unless otherwise stated. In accordance with the Code of Judicial Procedure (oikeudenkäymiskaari, rättegångsbalken) a land court could therefore decide not to admit evidence which was deemed to be irrelevant, which had been proposed in order to prove a fact which had already been established or where the evidence could be obtained in another significantly less cumbersome or cheaper manner (chapter 17, section 7).

COMPLAINTS

1. The applicants complain of a violation of their right peacefully to enjoy their possessions as guaranteed by Article 1 of Protocol No. 1. The authorities' and the courts' estimates of the current value of, on the one hand, the land at the time of its expropriation and, on the other hand, the properties as a whole at the time of Mr Jokela's death were arbitrary, thereby favouring the State's interests, depending on whether it was at the paying or the receiving end.

2. The applicants also complain that the compensation proceedings did not meet the requirements of Article 6 § 1 of the Convention. The Land Court declined to hear the witnesses proposed by the applicants and failed to provide reasons as to why it did not base its judgement on the written evidence adduced in support of their claims.

3. In their submissions of 18 May 1998 the applicants further complain that they were discriminated against in the enjoyment of their property rights in that the authorities and courts consistently favoured the interests of the State in the respective assessments of the current value of the properties. The applicants invoke Article 1 of Protocol No. 1 read in conjunction with Article 14 of Convention.

THE LAW

Article 1 of Protocol No. 1 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.

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.”

The Government submit that this provision has not been violated. The expropriation of part of late Mr Jokela’s property was based on section 29 of the Public Roads Act and served the legitimate public interest. This interference was therefore covered by the second sentence of the first paragraph of Article 1. The inheritance tax was imposed in accordance with sections 9 and 10 of the Act on Inheritance and Gift Tax and served the general interest stated in the second paragraph of Article 1.

The Government agree that the Expropriation Act did not afford the authorities any discretion as to whether or not to apply the principle of the market value in the determination of the compensation to be paid for the expropriated land. Nonetheless, as the exact market price is usually not available it has to be assessed by using various methods which are statistically reliable within certain ranges. As long as the result remains within those ranges it shall be considered to represent the market price. In practice the assessment of the current value is based on the commercial value of a property. The compensation amount shall reflect the purchase prices of comparable properties. The Government do not find the calculation method used by the Expert and Trustees as well as the Land Court flawed or inadequate or contrary to Article 1. The assessment of the inheritance tax was not arbitrary either.

To the Government, it is evident from the relevant provisions of domestic law the current value of inherited property is not determined in the same way as the current value of expropriated property. The current value was, moreover, assessed at different moments. The fact that the land on which inheritance tax was levied and the expropriated area were not identical also explains the difference between the two current values arrived at. The assessment of the inheritance tax took into account a building right existing in respect of part of the inherited - but not expropriated - property. Apart from compensation for land the late Mr Jokela was further awarded FIM 700,000 in compensation for the buildings, equipment and vegetation removed from the expropriated area.

The Government conclude therefore that the interference with the applicants’ property rights was lawful and proportionate to the respective aims sought to be achieved. Whilst Article 1 of Protocol No. 1 does not in all circumstances guarantee a right to full compensation for deprivation of property, the normal circumstances of the present case did entitle the applicants to compensation at such a level. Having regard to the wide margin of appreciation afforded to the State, the Government consider however that the compensation for the expropriated property was reasonably related to its current value at the relevant moment and to the legitimate purpose in question.

The applicants refute the Government’s assertion that the current value had to be defined differently depending on whether the case concerned payment of compensation for expropriation or payment of inheritance tax. Even if the final determination of the current value in the expropriation proceedings took place in June 1993, the current value for the purpose of the inheritance taxation had been assessed only nine months earlier. The applicants accept the current value of the properties as determined for the purpose of the inheritance taxation. THHOwhis value however could not possibly have dropped from FIM 30 - or FIM 20 following a systematic 20-30 per cent deduction preceding any imposition of inheritance tax - to FIM 7,50 per square metre during such a short period. At any rate, the starting-point when determining the current value of the expropriated land had to be the price level in the autumn of 1990, when the Road District had taken over the land in question. Domestic case-law has likewise spelled out the principle of basing the current value on reference prices at the moment of interfering with the property. Should domestic law support the Government’s view that the current value was to be assessed with reference to the price level at the moment when the Expert and Trustees examined the matter, the applicants consider that domestic law and practice in themselves are in violation of their property rights under Article 1 of Protocol No. 1: if the compensation is not based on the price level at hand at the time when the property was interfered with, the property owner’s right to compensation would depend solely on the efficiency of the authorities in processing the matter.

While it is also true that the size of the two areas differed, all of the expropriated land also formed part of the overall land for which inheritance tax was imposed. The expropriated part amounted to approximately half of the latter area and the two areas did not differ from one another. A building plan was in force on both of them and allowed construction on up to 20 per cent of the overall area. In these circumstances the current value of the expropriated area should have amounted to about half of the current value arrived at in the assessment of the inheritance tax. The compensation for removed buildings could have no bearing on the determination of the value of the expropriated land as such, given that the estate duty was also based on an estimation of the current value of the land only.

In sum, the applicants contend that the determination of the current value of the land was not governed by the same criteria in the respective taxation and expropriation proceedings. As the difference in assessment was disproportionate and arbitrary the requisite balance between the public interest and that of the applicants was not struck. Accordingly, the State overstepped its margin of appreciation under Article 1 of Protocol No. 1.

The Court considers, in the light of the parties’ submissions, that this part of the application raises complex issues of law and fact under the Convention, the determination of which should depend on an examination of the merits. The Court concludes therefore that this part of the application is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. No other grounds for declaring it inadmissible have been established. It follows that this part of the application should be declared admissible.

2. The applicants have also complained that the compensation proceedings did not meet the requirements of Article 6 § 1 of the Convention. The Land Court declined to hear the witnesses proposed by the applicants and failed to provide reasons as to why it did not base its judgement on the written evidence adduced in support of their claims.

Article 6 § 1 reads, in its relevant parts, as follows:

“In the determination of his civil rights …, everyone is entitled to a fair … hearing … by [a] tribunal established by law. …”

The Government submit that there has been no violation of this provision either. The Land Court’s decision was sufficiently detailed. Even though it did not mention all evidence adduced, especially the minutes indicated all available evidence. The Land Court admitted all written evidence adduced by the applicants. The proceedings being of a civil nature, the parties themselves had to decide which witnesses to call. The minutes indicate however that the applicants, represented by counsel, did not expressly request that witnesses S and V be examined. The applicants’ allegation that their request to examine S was not recorded in the minutes is unconvincing: the applicants did not demand that the Land Court decide separately on the hearing of that witness or on a request for postponement with a view to enabling witnesses to attend. Nor did the Land Court have to ascertain whether S claimed compensation for presenting himself at the hearing venue.

The applicants explain that witnesses S. and V. were proposed to be heard in case the Land Court would disagree with the applicants as to the planning situation in respect of the expropriated land. The applicants contend that they requested the hearing of witness S but that the Land Court failed to record this request.

The Court considers, in the light of the parties’ submissions, that this part of the application also raises complex issues of law and fact under the Convention, the determination of which should depend on an examination of the merits. The Court concludes therefore that this part of the application is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. No other grounds for declaring it inadmissible have been established. It follows that this part of the application should also be declared admissible.

3. In their submissions of 18 May 1998 the applicants further complain that they were discriminated against in their enjoyment of their property rights in that the authorities and courts consistently favoured the interests of the State in the respective assessments of the current value of the applicants’ property. They invoke Article 1 of Protocol No. 1 read in conjunction with Article 14 of Convention.

Under Article 35 § 1 of the Convention the Court may only deal with the matter after all domestic remedies have been exhausted, according to the generally recognised rules of international law, and within a period of six months from the date on which the final decision was taken. The Court notes that the final decision for the purposes of this provision was made by the Supreme Court in 1995, whereas the present complaint was lodged only in 1998.

It follows that this complaint has been lodged out of time and must be rejected in accordance with Article 35 § 4 of the Convention.

For these reasons, the Court, unanimously,

DECLARES ADMISSIBLE, without prejudging the merits, the applicants’ complaints that their property rights were violated and that a fair hearing was denied;

DECLARES INADMISSIBLE the remainder of the application.

Vincent Berger Georg Ress
Registrar President