Converting the right of perpetual usufruct to the right of ownership in the context of communal immovable properties K 29/13
“Extending the scope of the conversion of the right of perpetual usufruct to the right of ownership infringes the principle of protection of citizens’ trust in the state and its laws as well as the principle of social justice, and undermines the self-governing nature of communes,” stated the Constitutional Tribunal.
At the hearing on 10 March 2015 at 9 a.m., the Constitutional Tribunal (full bench) considered joined applications filed by: the City Council in Szczecin, the Commune Council in Ustronie Morskie as well as the City Council in Poznań, with regard to converting the right of perpetual usufruct to the right of ownership in the context of communal immovable properties.
The Constitutional Tribunal adjudicated that Article 1(1) and Article 1(3) of the Act of 29 July 2005 on converting the right of perpetual usufruct to the right of ownership ‑ insofar as they provided that the right of perpetual usufruct might be converted to the right of ownership by individuals and legal entities that had not been entitled to such conversion before the entry into force of the Act of 28 July 2001 amending the Act on the Management of Immovable Property and certain other acts ‑ were inconsistent with Article 2 of the Constitution; furthermore:
a) insofar as they concerned immovable properties constituting the property of the units of local self-government, were inconsistent with Article 165(1) of the Constitution;
b) insofar as they concerned immovable properties constituting the property of the State Treasury, were not inconsistent with Article 165(1) as well as Article 167(1) and (2) of the Constitution.
As to the remainder, the Constitutional Tribunal decided to discontinue the review proceedings.
This judgment is consistent with the stance adopted previously by the Constitutional Tribunal as regards the conversion of the right of perpetual usufruct to the right of ownership. Acknowledging the legislator’s competence to introduce changes in the system of property law, the Tribunal questioned the constitutionality of the arbitrary way in which the legislator had granted property rights to yet another group of individuals and legal entities.
In their applications, the communes did not challenge – and the Tribunal did not adjudicate on – the possibility of converting the right of perpetual usufruct of immovable properties allocated for housing, garages or similar development, as well as agricultural immovable properties. The owners of flats, single-family houses or garages as well as housing cooperatives may still apply for the conversion of the right of perpetual usufruct of land where such buildings are situated to the right of ownership. This also concerns those who hold the right of perpetual usufruct with regard to agricultural land. The ruling on the unconstitutionality comprises legal entities (with the exclusion of housing cooperatives) as well as individuals who have been granted the right of perpetual usufruct – in principle – for the purpose of carrying out non-agricultural economic activity. Such an extension of the scope of converting the right of perpetual usufruct to the right of ownership was challenged as one that violates the principle of protection of citizens’ trust in the state and its laws as well as the principle of social justice (Article 2 of the Constitution), and undermines the self-governing nature of communes (Article 165(1) of the Constitution).
When adjudicating on the infringement of Article 165(1) of the Constitution, the Tribunal stated that the challenged provisions manifestly undermined the self-governing nature of the units of local self-government, which – when transferring the right of perpetual usufruct to immovable properties – could not expect that the other party to the agreement would be given the right to unilaterally terminate the legal relation by converting the right granted thereto to the right of ownership. In the cases covered by the amending Act, there was statutory interference in contractually-formed legal relations. The legislator had imposed on communes the way in which they could make use of immovable properties they owned, which made it impossible for them to optimise financial and spatial planning.
When substantiation its view that there had been an infringement of the principle of social justice (Article 2 of the Constitution), the Tribunal agreed with the applicants’ stance that the challenged provisions had created property privileges for certain groups of entities. Although such a privileged position was admissible in the light of the Constitution, it had to be clearly reflected in values that are enshrined by the Constitution. In the case under examination, neither an analysis of legislative work preceding the enactment of the challenged provisions nor the review proceedings before the Tribunal made it impossible to determine what values the legislator had had in mind when he had decided to considerably extend the scope within which he had granted the right of ownership. The only criterion which determined that a new group of entities would be granted the right of ownership was – pursuant to the challenged provisions – the date of 13 October 2005; thus, the criterion is entirely arbitrary in character. Also, granting the right of ownership to economic entities is dubious in the light of the admissibility of public assistance.
Furthermore, the Tribunal noted that due to the unjustified granting of the right of ownership to a random group of entities, there was a reduction in public property, which had been established, in principle, to serve the needs of an entire community. This is of particular importance in the situation where justified claims made by persons expropriated within a certain post-WW II period have not yet been satisfied.
When determining an infringement of the self-governing nature of communes (Article 165(1) of the Constitution) by the challenged provisions, the Tribunal deemed that it was redundant to examine the violation of communes’ financial autonomy, and decided to discontinue the review proceedings within that scope.
The hearing was presided over by Judge Zbigniew Cieślak, and the Judge Rapporteur was Judge Małgorzata Pyziak-Szafnicka.