FOURTH SECTION

CASE OF SAVERIADES v. TURKEY

(Application no. 16160/90)

JUDGMENT
(Just satisfaction)

STRASBOURG

26 October 2010

This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision.

In the case of Saveriades v. Turkey,
The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of:

Having deliberated in private on 5 October 2010,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1.  The case originated in an application (no. 16160/90) against the Republic of Turkey lodged with the European Commission of Human Rights (“the Commission”) under former Article 25 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Cypriot national, Mr Christos Saveriades (“the applicant”), on 26 January 1990.
2.  In a judgment delivered on 22 September 2009 (“the principal judgment”), the Court dismissed various preliminary objections raised by the Turkish Government and found continuing violations of Article 8 of the Convention by reason of the complete denial of the right of the applicant to respect for his home and of Article 1 of Protocol No. 1 to the Convention by virtue of the fact that the applicant was denied access to and control, use and enjoyment of his properties as well as any compensation for the interference with his property rights. Furthermore, it found that it was not necessary to examine the applicant's complaints under Articles 1 and 14 of the Convention (Saveriades v. Turkey, no. 16160/90, §§ 12, 22, 31 and 34, and points 1-4 of the operative provisions, 22 September 2009).
3.  Under Article 41 of the Convention the applicant sought just satisfaction of 6,181,646 Cypriot pounds (CYP – approximately 10,561,960 euros (EUR)) for the deprivation of his properties concerning the period between January 1987, when the respondent Government accepted the right of individual petition, and 31 December 2007. Two valuation reports, setting out the basis of the applicant's loss, were appended to his observations. Furthermore, the applicant claimed CYP 278,000 (approximately EUR 474,990) in respect of non-pecuniary damage and approximately EUR 74,590 for the costs and expenses incurred before the Court.
4.  Since the question of the application of Article 41 of the Convention was not ready for decision, the Court reserved it in whole and invited the Government and the applicant to submit, within three months, their written observations on that issue and, in particular, to notify the Court of any agreement they might reach (ibid., §§ 53 and 56, and point 5 of the operative provisions).
5.  On4 March 2010 the Court invited the applicant and the Government to submit any materials which they considered relevant to assessing the 1974 market value of the properties concerned by the principal judgment. The applicant was moreover invited to submit written evidence that the properties at stake were still registered in his name or to indicate and substantiate any transfer of ownership which might have taken place.
6.  The applicant and the Government each filed observations on these matters. On 27 May 2010 the applicant produced certificates of ownership of Turkish-occupied immovable properties issued by the Department of Lands and Surveys of the Republic of Cyprus. It transpires from these documents that on 19 April 2010 the properties described in paragraphs 14 and 15 below were registered in the name of “Christos Saveriadis”.
THE LAW
I.  PRELIMINARY ISSUE
7.  In a letter of 22 April 2010 the Government requested the Court to decide that it was not necessary to continue the examination of the applicant's just satisfaction claims. They invoked the principles affirmed by the Grand Chamber in Demopoulos and Others v. Turkey ([GC] (Dec.), nos. 46113/99, 3843/02, 13751/02, 13466/03, 10200/04, 14163/04, 19993/04, 21819/04, 1 March 2010) and argued that the applicant should address his claims to the Immovable Property Commission (the “IPC”) instituted by the “TRNC” Law 67/2005. They reiterated their position on the issue of exhaustion of domestic remedies in the present case and in other similar cases on 8 and 22 June 2010.
8.  The Court first observes that the Government's submissions were unsolicited; they were received by the Registry long after the expiration of the time-limit for filing comments on just satisfaction and almost two months after the delivery of the Grand Chamber's decision in Demopoulos. It could therefore be held that the Government are estopped from raising the matter at this stage of the proceedings.
9.  In any event, the Court cannot but reiterate its case-law according to which objections based on non-exhaustion of domestic remedies raised after an application has been declared admissible cannot be taken into account at the merits stage (see Demades v. Turkey (merits), no. 16219/90, § 20, 31 July 2003, and Alexandrou v. Turkey (merits), no. 16162/90, § 21, 20 January 2009) or at a later stage. This approach has not been modified by the Grand Chamber, as the cases of Demopoulos and Others had not been declared admissible when Law 67/2005 entered into force and when Turkey objected that domestic remedies had not been exhausted.
10.  Furthermore, the Court considers that its previous finding in the present case that the applicant was not required to exhaust the remedy introduced by Law 67/2005 constitutes res judicata. It recalls that after the compensation mechanism before the IPC was introduced, the Government raised an objection based on non-exhaustion of domestic remedies. This objection was rejected in the principal judgment (see paragraph 12 of the principal judgment and point 1 of its operative provisions). The Government also unsuccessfully requested the referral of the case to the Grand Chamber.
11.  It follows that the Government's request to stay the examination of the applicant's claims for just satisfaction should be rejected. The Court will therefore continue to examine the case under Article 41 of the Convention.
II.  APPLICATION OF ARTICLE 41 OF THE CONVENTION
12.  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 and non-pecuniary damage
1.  The parties' submissions
(a)  The applicant
13.  In his just satisfaction claims of 3 December 2002, the applicant requested CYP 3,960,739 (approximately EUR 6,767,318) for the pecuniary damage suffered with respect to the two properties concerned by the principal judgment: a four-bedroom apartment and a school in Famagusta. He relied on an expert's report assessing the value of his loss which included the loss of annual rents collected or expected to be collected from the use of his school and from renting out his apartment, plus interest from the date on which such rents were due until the day of payment.
14.  The applicant's apartment was located at no. 128 of the commercial and touristic central street named Kennedy Avenue; it was indicated by no. 703 on a building erected upon a building site with plot no. 937 of block C and sheet/plan 33/21.2.3. It was registered in the name of the applicant under registration no. 1057 (see paragraph 8 of the principal judgment). The rents claimed were for the period dating back to January 1987, when the respondent Government accepted the right of individual petition, until 31 December 2002. The applicant did not claim compensation for any purported expropriation since he was still the legal owner of the property. He underlined that his family bought the apartment in Kennedy Avenue from a certain Georghios Michael Nicolaides in 1968 for CYP 6,300 (approximately EUR 10,764), as evidenced by the relevant sale agreement. Calculating a 12% annual increase, in 1987 this property was worth CYP 54,206 (approximately EUR 92,616) and an annual rent of CYP 3,527 (approximately EUR 6,026) could have been obtained from it. The total rent expected to be collected in the period 1987-2002 was CYP 70,779 (approximately EUR 120,932).
15.  The applicant further owned land in Famagusta on which was located an Intercommunal Secondary Grammar school, known as the “Centre of Higher Studies”. This land covered a total area of 6,299 m², on plot no. 900 of block D and sheet/plan 24/59W2. It was registered in the name of the applicant under registration no. D-4840. On this land the applicant had erected a three-storey building, which had a total area of 2,020 m², comprising a basement, ground floor and two vertical floors above it. The applicant submitted that he was the owner and headmaster of the above-mentioned school, the premises of which are now part of the “Eastern Mediterranean University” (see paragraph 9 of the principal judgment). As far as the applicant's school was concerned, the valuation report took into account the following damages:
(a)  the trade disturbance for not being allowed to conduct the established course of business and for being forced to relocate and restart the business in Nicosia in 1992 (amounting to CYP 2,155,519); in this respect, the expert noted that the profits which could have been expected from running the school were CYP 118,818 (approximately EUR 203,012) in 1987 and CYP 170,732 (approximately EUR 291,712) in 1992, while the profits obtained by the applicant from the business he restarted in Nicosia were, in 1992, only CYP 102,236 (approximately EUR 174,680);
(b)  the rents expected to be collected from renting or leasing the school until 1991 (the annual rent in 1987 being estimated at CYP 23,054 – approximately EUR 39,390);
(c)  the rent paid by the applicant from 1992 onwards for occupying the premises in Nicosia where he had restarted his business (amounting to CYP 220,757);
(d)  the statutory interest on the above sums.
16.  The calculations made in the valuation report were based on the Consumer Price and Rent and Housing Indices for the years 1960-2002 (issued by the Department of Statistics and Research of the Government of Cyprus), on the financial picture of Famagusta, on the expected growth of the applicant's business, on the location of the premises and on their expected increase in value.
17.  The expert presumed that the price of the applicant's apartment would have risen constantly by 12 % each year for the period from 1968 to 1987. He then aggregated the rents that could have been collected from 22 January 1987 until 31 December 2002, calculated as 6.25 % of the estimated market value of the property for each of the years in question, plus interest from the date on which such rent was due until the date of payment.
18.  On 25 January 2008, following a request from the Court for an update on developments of the case, the applicant submitted updated claims for just satisfaction, which were meant to cover the loss of use of the properties from 1 January 1987 to 31 December 2007. He produced a revised valuation report, which, on the basis of the criteria adopted in the previous report, concluded that the whole sum due for the loss of use was CYP 4,272,291, plus CYP 1,909,355 for interest. The total sum claimed under this head was thus CYP 6,181,646 (approximately EUR 10,561,960).
19.  On 27 May 2010 the applicant produced another revised valuation report, which was meant to cover the loss of use for the period between 1 January 1987 and 30 June 2010. The expert appointed by the applicant considered that the whole sum due to his client for pecuniary damage was EUR 11,739,173.
20.  On 22 June 2010 the applicant produced a “report on 1974 property prices ... in Turkish occupied northern Cyprus”, prepared by “EMS Economic Management Ltd.”, to which were annexed 43 copies of files of the Bank of Cyprus relating to loans, mortgages and valuations undertaken in the period 1971-1974 with respect to acquisition of properties in Famagusta. Their content was summarised in a synoptic table. It appears from these documents that Famagusta could be divided in areas with different prices for real estate. In particular, the average 1974 price of a square metre of constructible land was: (a) CYP 102 for the areas on the beach or close to it, plus the new town centre; (b) CYP 44 in Ayios Nicolaos and Varoshia; (c) CYP 18 in Stavros Famagusta; (d) CYP 16 to 25 in Kato Varosi e Ayios Memnon; (e) CYP 41 in Ayia Zoni; (f) CYP 8 in Ayios Loucas. The study concluded that in view of its location on the beach front, the 1974 value of the applicant's apartment was CYP 12,435 (approximately EUR 21,246). The applicant further submitted a research from the archives of a property development company, showing the sales of twenty apartments in the period 1970-1974. Four apartments were sold in 1974 for prices ranging from CYP 16,200 (two bedrooms) to CYP 19,000 (three bedrooms). According to this research, the compound annual appreciation of the apartments since the Turkish invasion had been 9.50% per year.
21.  In his just satisfaction claims of 3 December 2002, the applicant further claimed CYP 228,000 (approximately EUR 389,560) in respect of non-pecuniary damage. In particular, he first claimed CYP 38,000 (approximately EUR 64,926) for the anguish and frustration he suffered on account of the continuing violation of his property rights. He stated that this sum had been calculated on the basis of the sum awarded by the Court in the Loizidou case ((just satisfaction), 28 July 1998, Reports of Judgments and Decisions 1998-IV), taking into account, however, that the period of time for which the damage was claimed in the instant case was longer. The applicant also claimed CYP 114,000 (approximately EUR 194,780) for the distress and suffering he had been subjected to due to the denial of his right to respect for his home and CYP 76,000 (approximately EUR 129,853) for the violation of his rights under Article 14 of the Convention.
22.  In his updated claims for just satisfaction of 25 January 2008, the applicant requested the additional sum of EUR 50,000 for non-pecuniary damage.
(b)  The Government
23.  In reply to the applicant's just satisfaction claims of 3 December 2002, the Government challenged the conclusions reached by the Court in the Loizidou case ((just satisfaction), cited above). They considered that in cases such as the present one, no award should be made by the Court under Article 41 of the Convention. They underlined that the applicant's inability to have access to his properties depended on the political situation of the island and, in particular, on the existence of the UN recognised cease-fire lines. If Greek-Cypriots were allowed to go to the north and claim their properties, chaos would explode on the island; furthermore, any award made by the Court would undermine the negotiations between the two parties.
24 submitted that as an annual increase of the value of the properties had been applied, it would be unfair to add compound interest for delayed payment. Moreover, Turkey had recognised the jurisdiction of the Court on 21 January 1990, and not in January 1987. In any event, the alleged 1974 market value of the properties was exorbitant, highly excessive and speculative; it was not based on any real data with which to make a comparison and made insufficient allowance for the volatility of the property market and its susceptibility to influences both domestic and international. The reports submitted by the applicant had instead proceeded on the assumption that the property market would have continued to flourish with sustained growth during the whole period under consideration.
25.  The Government produced a valuation report prepared by the Turkish-Cypriot authorities, which they considered to be based on a “realistic assessment of the 1974 market values, having regard to the relevant land records and comparative sales in the areas where the properties [were] situated”. This report contained two proposals, assessing, respectively, the sum due for the loss of use of the properties and their present value. The second proposal was made in order to give the applicant the option to sell the properties to the State, thereby relinquishing title to and claims in respect of them.
26.  The report prepared by the Turkish-Cypriot authorities specified that the properties claimed by the applicant, currently possessed by refugees and by the Ministry of Education, could not form the object of restitution but could give entitlement to financial compensation, to be calculated on the basis of the loss of income (by applying a 5% rent on the 1974 market values) and increase in value of the property between 1974 and the date of payment. Had the applicant applied to the IPC, the latter would have offered CYP 287,279.03 (approximately EUR 490,844) to compensate the loss of use and CYP 305,991.12 (approximately EUR 522,816) for the value of the properties. According to an expert appointed by the authorities of the “TRNC”, the 1974 open-market value of the apartment claimed by the applicant was CYP 5,000 (approximately EUR 8,543), while the property described in paragraph 15 above was worth CYP 45,000 (approximately EUR 76,887). Upon fulfilment of certain conditions, the IPC could also have offered the applicant exchange of his properties with Turkish-Cypriot properties located in the south of the island.
27.  In their comments of 22 June 2010, the Government recalled that in the case of Demopoulos and Others (cited above) the Grand Chamber had found that the IPC was an adequate domestic remedy for those claiming a violation of Article 1 of Protocol No. 1. Notwithstanding the adoption of a judgment on the merits, it would still be open to the applicant to apply to the IPC, which would calculate the current value and the 1974 value of the properties “in a credential way based on actual data”. On 27 May 2010 the IPC had sent a letter to the applicant's representative, inviting his client to introduce an application before it.
28.  The Government recalled that under Law No. 67/2005, the following means of redress were available: a) restitution; b) compensation; c) exchange. The relevant provisions of the law at issue are described in Demopoulos and Others (cited above, §§ 35-37).
29.  The Government further noted that in making its assessment as regarded compensation for the loss of use, the IPC had collected data from the Department of Lands and Surveys on the 1973-1974 purchase prices for comparable properties. It had also examined the development of interest rates of the Cyprus Central Bank. The loss of income was then calculated by assuming that the obtainable rent would have been 5% of the value of the properties; this last value had been modified every year on the basis of the land market value index. Cyprus Central Bank interest rates had been applied on the sums due since 1974.
30.  Being in possession of the land registers, the 
Turkish-Cypriot authorities were in a better position than the applicants and the Greek-Cypriot authorities to assess the market values of the properties in a realistic and reliable manner. The applicants had put forward exaggerated claims and had tended to inflate the 1974 values of their possessions. The Government therefore requested the Court to rule on compensation on the basis of the calculations made by the Turkish-Cypriot authorities, which were “credential and objective in every aspect”.
31.  The report prepared by the Turkish-Cypriot authorities confirmed that it would not be possible to envisage restitution of the properties described in paragraphs 14 and 15 above. Had the applicant applied to the IPC, the latter would have increased its offer up to CYP 328,571.41 (approximately EUR 561,397) to compensate the loss of use and up to CYP 334,949.83 (approximately EUR 572,295) for the value of the properties. The expert appointed by the authorities of the “TRNC” also confirmed the 1974 open-market values of the applicant's properties as indicated in paragraph 26 above.
32.  Finally, the Government considered that the amount claimed in respect of non-pecuniary damage was excessive and unrealistic; given the existence of an effective domestic remedy, the Court should keep the award for such damage to a minimum.
2.  The Court's assessment
33.  The Court recalls that it has concluded that there had been a continuing violation of the applicant's rights guaranteed by Article 8 of the Convention and Article 1 of Protocol No. 1 by reason of the complete denial of the rights of the applicant with respect to his home and the peaceful enjoyment of his properties in Famagusta (see paragraphs 31 and 22 of the principal judgment). Furthermore, its finding of a violation of Article 1 of Protocol No. 1 was based on the fact that, as a consequence of being continuously denied access to his land and real estate since 1974, the applicant had effectively lost all access and control as well as all possibilities to use and enjoy his properties (see paragraph 20 of the principal judgment). He is therefore entitled to a measure of compensation in respect of losses directly related to this violation of his rights as from the date of deposit of Turkey's declaration recognising the right of individual petition under former Article 25 of the Convention, namely 22 January 1987, until the present time (see Cankoçak v. Turkey, nos. 25182/94 and 26956/95, § 26, 20 February 2001, and Demades v. Turkey (just satisfaction), no. 16219/90, § 21, 22 April 2008).
34.  In connection with this, the Court observes that the affirmations of ownership of Turkish-occupied immovable properties produced by the applicant (see paragraph 6 above) show that on 19 April 2010 he was still the owner of the properties described in paragraphs 14 and 15 above.
35.  In the opinion of the Court, the valuations furnished by the applicant involve a significant degree of speculation and make insufficient allowance for the volatility of the property market and its susceptibility to influences both domestic and international (see Loizidou (just satisfaction), cited above, § 31). An even higher degree of speculation is involved in the calculations concerning the profits which the applicant could have earned from running his school. Accordingly, in assessing the pecuniary damage sustained by the applicant, the Court has, as far as appropriate, considered the estimates provided by him (see Xenides-Arestis v. Turkey (just satisfaction), no. 46347/99, § 41, 7 December 2006). In general it considers as reasonable the approach to assessing the loss suffered by the applicant with reference to the annual ground rent, calculated as a percentage of the market value of the properties, that could have been earned during the relevant period (Loizidou (just satisfaction), cited above, § 33, and Demades (just satisfaction), cited above, § 23). Furthermore, the Court has taken into account the uncertainties, inherent in any attempt to quantify the real losses incurred by the applicant (see Loizidou v. Turkey (preliminary objections), 23 March 1995, § 102, Series A no. 310, and (merits) 18 December 1996, § 32, Reports 1996-VI).
36.  The Court notes that in response to its request to submit material relevant to assessing the 1974 market value of the applicant's properties, the Government have relied on the accuracy of the IPC's calculations (see paragraphs 25 and 29-30 above), while the applicant has produced two detailed studies on the prices in northern Cyprus at the relevant time (see paragraph 20 above).
37.  In any event, at least for one of the properties concerned by the principal judgment (namely, the apartment in Famagusta described in paragraph 14 above) objective data can be retained: the flat at issue was bought in 1968, which is six years before the Turkish invasion, for approximately EUR 10,764 (see paragraph 14 above). It follows that the estimate provided by the “TRNC” authorities (approximately EUR 8,543 – see paragraph 26 above) seems lower than the 1974 market price.
38.  The Court further observes that the applicant submitted an additional claim in the form of annual compound interest in respect of the losses on account of the delay in the payment of the sums due. While the Court considers that a certain amount of compensation in the form of statutory interest should be awarded to the applicant, it finds that the rates applied by him are on the high side (see, mutatis mutandis, Demades (just satisfaction), cited above, § 24).
39.  Finally, the Court is of the opinion that an award should be made in respect of the anguish and feelings of helplessness and frustration which the applicant must have experienced over the years in not being able to use his properties as he saw fit and to enjoy his home (see Demades (just satisfaction), cited above, § 29, and Xenides-Arestis (just satisfaction), cited above, § 47).
40.  Having regard to the above considerations, the Court is of the opinion that the sums claimed by the applicant in respect of pecuniary and non-pecuniary damage (respectively EUR 11,739,173 and EUR 439,560 – see paragraphs 19 and 21-22 above) are manifestly excessive. At the same time, the amount which the “TRNC” authorities could have offered the applicant in respect of loss of use (approximately EUR 561,397 – see paragraph 31 above) does not seem to take into due account the nature of the properties owned by the applicant and described in paragraphs 14 and 15 above. They consisted in an apartment in Famagusta and in a plot of land of a total area of 6,299 square metres, on which the applicant had erected a three-storey building, which had a total area of 2,020 square metres. An established course of business was being carried on in these premises before the Turkish invasion. Even if it is difficult to speculate on the profits which could have been earned from the business at issue (see paragraph 35 above), it is reasonable to assume that the impossibility to use the property has created a significant financial disturbance and that the finding of similar premises in the unoccupied parts of Cyprus has entailed a relatively high cost for the applicant. Making its assessment on an equitable basis, the Court decides to award the applicant EUR 1,100,000 in respect of pecuniary and non-pecuniary damage.
B.  Costs and expenses
41.  In his just satisfaction claims of 3 December 2002, relying on bills from his representatives, the applicant sought CYP 5,932.14 (approximately EUR 10,135) plus V.A.T. (to be calculated at a rate of 15%) for the costs and expenses incurred before the Court. This sum included CYP 3,250 (approximately EUR 5,552) for the costs of the expert report assessing the value of his properties. On 14 July 2003, the applicant submitted additional bills of costs from his lawyers, amounting to a total of CYP 10,350 (approximately EUR 17,684) plus V.A.T. On 15 January 2004, he claimed additional expenses amounting to CYP 2,645 (approximately EUR 4,519). In his updated claims for just satisfaction of 25 January 2008, the applicant submitted additional estimated bills of costs amounting to EUR 39,297.83 and EUR 2,955.5. Finally, on 27 May 2010 the applicant submitted that his further legal fees and expert report's costs amounted to EUR 2,955.5 and EUR 26,372.276 respectively.
42.  The Government did not comment on this point.
43.  According to the Court's case-law, an applicant is entitled to reimbursement of his costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and were reasonable as to quantum (see, for example, (just satisfaction) [GC], no. 31107/96, § 54, ECHR 2000-XI).
44.  The Court notes that the case involved perusing a certain amount of factual and documentary evidence and required a fair degree of research and preparation. In particular, the costs associated with producing valuation reports in view of the continuing nature of the violations at stake were essential to enable the Court to reach its decision regarding the issue of just satisfaction (see Demades (just satisfaction), cited above, § 34).
45.  Although the Court does not doubt that the fees claimed were actually incurred, it considers the amount claimed for the costs and expenses relating to the proceedings before it excessive and decides to award a total sum of EUR 8,000.
C.  Default interest
46.  The Court considers it appropriate that the default interest 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.  Dismisses the Government's request to stay the examination of the applicant's claims for just satisfaction;

2.  Holds
(a)  that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts:
(i)  EUR 1,100,000 (one million one hundred thousand euros), plus any tax that may be chargeable, in respect of pecuniary and non-pecuniary damage;
(ii)  EUR 8,000 (eight thousand euros), plus any tax that may be chargeable to the applicant, 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;

3.  Dismisses the remainder of the applicant's claim for just satisfaction.
Done in English, and notified in writing on 26 October 2010, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
	Fatoş Aracı	Nicolas Bratza
	Deputy Registrar	President