GUISO AND CONSIGLIO v. ITALY
Inadmissible
Armen Harutyunyan;Guido Raimondi;Kristina Pardalos;Krzysztof Wojtyczek;Linos-Alexandre Sicilianos;Pauliine Koskelo
1. The applicants, Mr Paolo Guiso (“the first applicant”) and Mr Alessando Guiso (“the second applicant”) are Italian nationals who were born in 1962 and 1960 respectively. Mrs Vincenza Consiglio (“the third applicant”) was an Italian national who was born in 1929. She died on 2 February 2008. The first and second applicants are her heirs, and expressed their wish to pursue the proceedings before the Court. They were represented before the Court by Mr. P. Guiso, a lawyer practising in Nuoro. 3. The applicants were the joint owners of various parts of different plots of building land in Nuoro. 4. The plots in question – measuring a total surface area of 13,614 square metres – were recorded in the land register as Folio no. 43, parcel nos. 1141, 1147, 1148, 1339, 1136, 1137, 1143, and 1146. 5. By different orders issued between March and October 1991 Nuoro City Council approved a project to build a residential complex on the applicants’ land. 6. By four orders issued on 18 October 1991 by the mayor of Nuoro, through an expedited procedure and on the basis of a public interest declaration, the Nuoro municipality was authorised to take possession of the above-mentioned plots of land, with a view to subsequently expropriating them. The deadline for issuing a formal expropriation order was 31 December 1995. 7. In November 1991 the authorities took physical possession of the land and began the building works. 8. By an order issued on 12 December 1995 by Nuoro City Council, the deadline for issuing the expropriation order was extended to 31 October 1996. 9. By an order of 21 August 1996 Nuoro City Council further extended the deadline for issuing the expropriation order. 10. On 11 October 1996 an expropriation order was issued in respect of the land. 11. On 24 January 1997 the applicants lodged an application with the Sardinia Regional Administrative Court (“the Regional Administrative Court”), contesting the lawfulness of the mayor’s orders of 18 October 1991 and the orders extending the deadline for issuing the expropriation order. 12. By a judgment of 12 May 1999 the court found that the orders extending the deadline for issuing the expropriation order had been unlawful, and that the expropriation order of 11 October 1996 had consequently also been unlawful. 13. On 22 November 2000 the applicants applied to the Regional Administrative Court for compensation for their being unlawfully deprived of their property, relying on the same court’s judgment of 12 May 1999. In this connection, they sought an amount equal to the property’s market value on the date when the land had been irreversibly altered, plus a sum reflecting an adjustment for inflation and statutory interest. They further contended that the application of the “constructive expropriation” rule, which was likely to be applied in their case, had been found by the Court to be incompatible with Article 1 of Protocol No. 1 to the Convention. 14. On an unspecified date the court ordered an expert valuation of the land. A report produced in September 2004 stated that the affected surface area of the land was equal to 13,614 square metres, and that the market value of the land in May 1996 had been 122.32 euros (EUR) per square metre. 15. By a judgment of 24 January 2005 the court found that, pursuant to the constructive expropriation rule (occupazione appropriativa), the applicants were no longer the owners of the land, which had become the property of the Nuoro municipality following completion of the public works. It dismissed the applicants’ argument that the constructive expropriation rule was incompatible with Article 1 of Protocol No. 1 to the Convention. However, the court conceded that, as the transfer of property had been unlawful, the applicants were entitled to compensation. In this connection, it relied on the expert report which had assessed the market value of the land at EUR 122.32 per square metre. However, the court did not award compensation reflecting the market value, but instead proceeded to make an award based on the criteria contained in Article 5 bis of Legislative Decree no. 333 of 11 July 1992, as amended by Law no. 662 of 1996. All amounts were to be adjusted for inflation and include statutory interest from the date the occupation of the applicants’ land had ceased to be lawful, which the court identified as 1 January 1996. 16. On 24 May 2005 the applicants lodged an application with the Consiglio di Stato. They contested the lower courts’ legal classification of how they had been deprived of their property and complained that the reduction in their compensation was incompatible with their right to property. They claimed, inter alia, that they were entitled to compensation corresponding to the market value of the land, and a sum for loss of enjoyment of the land. They also complained about the fact that the award would be subject to taxation. 17. On 16 February 2006 the Nuoro municipality paid the applicants the amounts due under the judgment of the Regional Administrative Court. The sum they received jointly amounted to EUR 429,814.64. Tax at a rate of 20% was deducted at source from these sums. 18. On 2 February 2008 the third applicant died. 19. On 2 October 2009 the Consiglio di Stato issued a decision declaring that it did not have jurisdiction to decide the applicants’ claim. 20. The applicants lodged an application with the Court of Cassation in order to settle the issue of jurisdiction. 21. On 12 January 2011 it ruled, sitting as a full court (Sezioni Unite), that the administrative courts had jurisdiction to decide the applicants’ claim for compensation, as the issue at stake concerned the unlawful exercise of public authority. 22. On an unspecified date the applicants resumed their appeal before the Consiglio di Stato. They contested the lower courts’ legal classification of how they had been deprived of their property and complained that the reduction in their compensation was incompatible with their right to property. They asked the court to award an amount corresponding to the property’s market value. They also complained about the fact that the award would be subject to taxation. 23. By a judgment delivered on 12 July 2011, filed with the registry on 2 November 2011, the Consiglio di Stato confirmed that the applicants had been deprived of their property unlawfully. It further drew on the Constitutional Court’s judgment no. 349 of 24 October 2007, whereby Article 5 bis of Legislative Decree no. 333 of 11 July 1992, as amended by Law no. 662 of 1996, had been declared unconstitutional, and held that the applicants were entitled to compensation corresponding to the full market value of the property, minus what had already been paid to them under the judgment of the Regional Administrative Court. The court further stated that the applicants were entitled to a sum reflecting an adjustment for inflation as well as statutory interest from the date that they were deprived of their property. It also awarded them EUR 50,000 in compensation for non-pecuniary damage. The court stated that it lacked jurisdiction to examine the complaint about prospective taxation. 24. On 25 May 2012 the Nuoro municipality paid the applicants the remaining amounts due to them under the judgment of the Consiglio di Stato, which amounted to EUR 480,757.76. Tax at a rate of 20% was deducted at source from these sums. 25. The relevant domestic law and practice concerning constructive expropriation is to be found in Guiso-Gallisay v. Italy ((just satisfaction) [GC], no. 58858/00, §§ 18-48, 22 December 2009). 26. In judgments nos. 348 and 349 of 22 October 2007, the Constitutional Court held that national law had to be compatible with the Convention as interpreted by the Court’s case-law, and consequently declared Article 5 bis of Legislative Decree no. 333 of 11 July 1992, as amended by Law no. 662 of 1996, unconstitutional. 27. In judgment no. 349 it noted that the insufficient level of compensation provided for by Law no. 662 of 1996 was contrary to Article 1 of Protocol No. 1 to the Convention and Article 117 of the Italian Constitution, which required compliance with international obligations. 28. A number of changes in domestic law occurred following the Constitutional Court’s judgments. Section 2/89(e) of the Finance Act (Law no. 244) of 24 December 2007 established that, in cases of constructive expropriation, the compensation payable had to correspond to the market value of the property in question and could not be reduced. 29. Law no. 413 of 30 December 1991 (hereinafter “Law no. 413/1991”) was created, inter alia, to broaden the tax base and streamline, facilitate and strengthen tax administration. 30. The relevant parts of section 11(5) provide that capital gains (plusvalenza) on compensation for expropriation or unlawful forms of acquisition of property (somme dovute per effetto di acquisizione coattiva conseguente ad occupazione di urgenza divenute illegittime) paid to individuals not operating a business are taxable under the Consolidated Income Tax Act (Testo Unico delle Imposte sui Redditi). 31. As to the practical means of enforcement of the tax, section 11(7) provides that when paying the compensation mentioned in section 11(5), including, inter alia, compensation for constructive expropriation (risarcimento danni da occupazione acquisitiva) the authorities entrusted with making the payment (enti eroganti) must deduct tax at source at a rate of 20% from the entire sum. It is open to the taxpayer to opt for ordinary taxation in his or her annual tax return, in which case the sum deducted at source will be considered as an advance on the final tax payment due.