When demolition gives way to the rights of third parties

The protection of immovable property is a fundamental principle of Cypriot law. Trespass upon land constitutes a serious infringement of the right to possession and enjoyment of property and entitles the affected owner to seek judicial protection. Cypriot case law has consistently affirmed that the tort of trespass to land is actionable per se, meaning that no proof of special damage is required, as the unlawful interference with the property right itself is sufficient to establish a cause of action. Nevertheless, the establishment of trespass does not invariably lead to the issuance of a demolition order. Courts are often required to strike a balance between protecting property rights and safeguarding the rights of other persons, particularly where third-party interests have arisen and those parties are not before the court. In such circumstances, compensation serves as an important mechanism for achieving justice and restoring equilibrium between competing interests. The facts and the Supreme Court’s ruling In Civil Appeal No. 310/2017, dated May 28, the Supreme Court examined a case involving trespass to land through the construction of a residential development. The trial court had found that a portion of land measuring 1010 square metres belonging to the respondent had been occupied by developments carried out by the appellant, including residential units, a roadway and boundary walls. The encroachment had been confirmed both by expert evidence and by a decision of the director of the Department of Lands and Surveys. The Supreme Court upheld the finding that the respondent had fully established the existence of the trespass and rejected the appellant’s argument that it should be relieved of liability because the houses had already been sold to third parties. The court further confirmed that the respondent’s knowledge of the boundary dispute at the time of purchasing the property neither created an estoppel nor amounted to a waiver of its right to pursue the remedies available in law. Why no demolition order was issued The most noteworthy aspect of the judgment concerns the refusal to grant a demolition order. Although the trespass had been conclusively established, the houses erected on the affected land had already been transferred to third-party purchasers who were not party to the proceedings. The court emphasised that, in disputes concerning immovable property, all necessary and interested parties must be before the court so that they may be heard before any order affecting their rights is issued. It was held that even the demolition of the boundary walls alone could adversely affect the rights of the owners of the houses. Consequently, the court’s discretion could not properly be exercised in favour of granting a demolition order in their absence. This approach confirms that, important as property rights are, they cannot be vindicated at the expense of persons who have not been afforded an opportunity to be heard. Compensation and the correction of the trial court’s judgment Having concluded that physical restoration was not feasible in the circumstances, the court turned to the remedy of damages. Adopting the approach established in Loizou v. Antoniou, it held that the permanent deprivation of part of the property should be compensated on the basis of the market value of the land rather than its rental value, since the loss amounted to a substantial and permanent deprivation of ownership. Particularly significant was the only issue on which the appeal succeeded. The Supreme Court observed that payment of compensation representing the full value of the disputed land had to be accompanied by a corresponding transfer of the relevant proprietary rights. It was established that the property had subsequently been transferred to the interested party, namely the bank, which participated in the appeal proceedings. For this reason, the court amended the trial court’s judgment and ordered that, simultaneously with the payment of the judgment debt, the interested party execute all necessary Land Registry documentation to enable the portion of land affected by the trespass to be registered in the appellant’s name. In this manner, unjust enrichment is avoided and a complete adjustment of the parties’ proprietary rights is achieved. At the same time, legal certainty and the final resolution of the dispute are secured. The judgment serves as a reminder that the establishment of trespass does not necessarily result in the demolition of unlawful structures. Where such an order may affect the rights of third parties who are not before the court, compensation may constitute the fairest and most appropriate remedy. At the same time, the decision highlights that financial compensation should be accompanied by the necessary land registration arrangements, ensuring that payment for the value of the land is matched by the transfer of the corresponding proprietary rights. In this way, a proper balance is achieved between the protection of property rights, the security of transactions and the rights of third parties in the modern legal environment.