Russian courts wrongfully deny reimbursement of litigation costs – say lawyers from St Petersburg University

Project ‘Monitoring law enforcement’

Pursuant to the Resolution of the Constitutional Court of the Russian Federation dated 11 July 2017 No 20-P, a plaintiff cannot be denied reimbursement of litigation costs if previously established cadastral value of the object is so much higher than the market value determined by the court that it may indicate an error made in mass assessment of cadastral value. However, no legislative act specifies the extent to which the cadastral value should exceed the market value for the plaintiff to be able to expect the reimbursement of costs.

In cases analysed by St Petersburg University lawyers, some courts recognised an error in determining cadastral value if the difference between cadastral value and market value ranged from 41% to 82%. Other courts, however, recognised the difference between the cadastral value and the market value in the range of 3% to 67% as admissible and not indicative of an error.

Thus, there is no certainty in court practice as to the difference between the cadastral value and market value, which entitles the reimbursement of litigation costs. This impedes the exercise of the right to legal protection: the claimant might decline to apply to court, because he/she does not know whether the difference in value in his or her particular case will be considered sufficient for the reimbursement of costs.

 

This situation can be explained by the fact that the legislator has not yet implemented the instruction of the Constitutional Court of the Russian Federation on clarifying the rules for the distribution of litigation costs in cases regarding the establishment of cadastral value of real estate in the amount equal to their market value (Resolution No 20-P).

In order to address this problem, experts from St Petersburg University have suggested that it is necessary to establish a range of permissible deviations in cadastral value as a presumption available to be rebutted by the applicant. As such, the lawyers recommend establishing a double difference between cadastral and market value.

Monitoring included collecting public court decisions issued since 11 July 2017. A total of 66 court acts were used, of which three were acts of the Constitutional Court of the Russian Federation, 30 were decisions of courts of appeal, and 33 were decisions of courts of first instance of general jurisdiction.

The study also found that the approach of some courts is contrary to Resolution No 20-P of the Constitutional Court of the Russian Federation, according to which compensation of litigation costs is impossible without establishing a specific error in cadastral value calculation. According to the position of the Constitutional Court of the Russian Federation, the error may be proved by the very difference between the cadastral and market value.

The monitoring of law enforcement also showed that the courts have almost completely ignored the conclusion of the Constitutional Court of the Russian Federation on the grounds for reimbursement of litigation costs if they are not related to the procedural conduct of the plaintiff after filing a claim. Costs that are not related to the procedural conduct of a plaintiff include the payment of the state duty, the costs of drawing up a pre-trial report, and the costs of forensic examination, if it is commissioned by the court. In accordance with Resolution No 20-P, these costs should be reimbursed to the plaintiff in all cases concerning the setting of cadastral value at the amount of market value, if the plaintiff's claims were satisfied, regardless of the difference between cadastral and market value. However, the courts have not applied this provision of the Constitutional Court in any of the analysed cases.

The monitoring also demonstrated that the courts unjustifiably assume that the insignificant difference between the cadastral value and the market is a sufficient reason to refuse to reimburse the litigation costs. According to the experts, in order to resolve the issue of reimbursement of litigation costs, the courts should also assess whether the plaintiff's claims to adjust the cadastral value to the market value have been contested by the defendant or the interested party, and whether the claimed fees are attributable to the plaintiff's procedural conduct.

The lawyers from St Petersburg University concluded that the identified problems resulted from the difficulties of the courts in interpreting Constitutional Court Resolution No 20-P. Most of them can be resolved through the respective interpretations on the part of the Supreme Court of the Russian Federation. Experts think that in order to establish the presumed range of permissible deviations in cadastral value, it is necessary to make legislative amendments to the Code of Administrative Judicial Procedure of the Russian Federation.