Favorable Supreme Court ruling in a precedent-setting dispute with a municipality
Favorable Supreme Court ruling in a precedent-setting dispute with a municipality
The Law Firm’s Client’s dispute with the municipality concerned the effects of a local spatial development plan entering into force, the invalidity of which was later confirmed by the administrative courts.
The Client owned a property on which, in accordance with an issued decision on development conditions, a multi-family residential building could be constructed. After the local spatial development plan entered into force, this type of development was prohibited, and only single-family construction was permitted. As a result of the new designation of the property, the value of the Client’s plot decreased by several hundred thousand zlotys.
The Provincial Administrative Court declared the municipal council’s resolution adopting the local spatial development plan invalid, however, this judgment was appealed to the Supreme Administrative Court. The Law Firm’s Client sold the property at a price reflecting its designation for single-family development. Almost two years later, the Supreme Administrative Court upheld the position of the Provincial Administrative Court: the resolution introducing the local spatial development plan was invalid.
On the Client’s behalf, the Law Firm applied to the municipality for compensation for the decrease in the property’s value resulting from the adoption of the local spatial development plan. The municipality refused, initially arguing that immediately before the local spatial development plan entered into force, no other local spatial development plan had been in effect, and that the decision on development conditions held by the Client confirming the possibility of multi-family development should not serve as the reference point for calculating compensation. The municipality argued that during the so-called “planning gap” period, the actual manner in which the property was used should be taken into account, and since the Client had not obtained the building permit necessary to carry out the investment, the Client had not in fact used the property for construction purposes.
The courts of both instances awarded the Law Firm’s Client compensation.
In its cassation appeal, the municipality challenged the applicability of Article 36(3) of the Spatial Planning and Development Act to the case, given that the local spatial development plan had been declared invalid before the judgment was issued and compensation was paid. It argued that a declaration of invalidity of a resolution adopting a local spatial development plan has retroactive effect — eliminating it from legal circulation as though it had never been adopted and had never produced any legal effects, which nullifies the compensation claim.
In its judgment of June 12, 2026, the Supreme Court agreed with the Law Firm’s arguments that the Client’s damage arose on the date the property was sold at a price lower than would have been possible had the local spatial development plan never entered into force. Consequently, the subsequent event of the local spatial development plan being declared invalid could have had no effect on the Client’s financial situation, since it did not remedy the Client’s damage. Furthermore, the Supreme Court confirmed the Law Firm’s position that, during a planning gap period, the potential permissible uses of the property are determined by the decision on development conditions, and that obtaining a building permit is not a precondition for relying on Article 36(3) of the Spatial Planning and Development Act. In the Supreme Court’s assessment, had no decision on development conditions been issued, reference would need to be made to the provisions of the local spatial development plan in force before the planning gap period.
As a result of losing the case, the municipality paid the Law Firm’s Client not only compensation, but also several hundred thousand zlotys in statutory interest for delay, as well as court costs.
Case ref. no. II CSKP 806/23