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... by a court of its agricultural nature and use.

Can a fallow field be recognised as agricultural real estate? The reply to this question, which a Regional Court in Warsaw will soon deliver, will determine the level of a perpetual usufruct fee on a plot in the Wilanów district of Warsaw that a client of the firm will have to pay. The case is conducted by legal adviser Monika Hartung, a partner of Wardyński & Partners. The defendant is a government agency.

The company was a perpetual usufructuary of extensive terrain in Wilanów. In August 2001, its value was established on the basis of an estimate for 14 August 2001 in the amount of PLN 105,237,280. An annual perpetual usufruct fee at the rate of 1% was calculated on the basis of this value.

However, a subsequent estimate was drafted in November 2003 upon commission of the defendant Agency. The value of the real estate established therein was PLN 117,764,835. At the same time, the Agency repealed the perpetual usufruct fee imposed on the plaintiff and set it the rate of 3% of the real estate value. The non-agricultural allocation of land served to justify the increase.

The described real estate is part of the State Treasury Agricultural Property Resources. According to the State Treasury Agricultural Property Management Act of 19 October 1991, the annual perpetual usufruct fee is 0.1 %, of the property value if it is utilised for national defence or fire protection purposes. If used for agriculture, residential housing purposes, technical infrastructure or other public purposes, the fee is 1 %. If the usufructuary has different use, the fee is 3 % of the property value.

The firm's client did not agree with the assessed change of land designation and change of fee. He turned to the Self-Government Board of Appeal (SKO) to establish that the updating of the perpetual usufruct fee was unjustified. He also questioned the propriety of drafting a new estimate. The case ended with partial success. The SKO determined that the company must pay the Agency an annual fee on the newly established the value, but at the rate of 1%.

The Agency appealed this judgment. At the same time, the court, in recognising its demand, issued an order for payment through proceedings by writ of payment for a lesser value which the company appealed.

The company's arguments are similar to those presented to the SKO. The company claims that there was no change in 2003-2004 in either the status or manner of utilizing the real estate. The flaw in the estimate commissioned by the Agency arises from the fact that its authors erroneously applied a comparative method. According to a then binding executive regulation of the Council of Ministers dated 27 November 2002 on detailed principles for appraisal of real estate as well as principles and manner of drafting an estimate, more than a dozen similar properties should be selected for comparison that were the subject of market trade. Meanwhile, the transactions selected for comparison did not concern similar real estate. These were small building sites with access to full technical infrastructure. They cannot be compared with the significantly larger property situated on the so-called Wilanów fields that are completely devoid of infrastructure. In 2003-2004, the real estate covered by the dispute over fee levels was utilised for agricultural purposes as a pasture. Adjacent fields were cultivated with wheat, sunflower, rapeseed or vegetables.

Perhaps this land will undergo a change of purpose. In resolutions dated 11 and 18 January 2001, thus, prior to the Agency drafting the estimate, the Warsaw-Wilanów district council accepted a local zoning plan. It allocated the real estate for residential and service development. In 2003 – 2004, it nevertheless was not utilised in any manner other than in previous years. A change of real estate allocation in a zoning plan does not yet change its nature or constitute a basis for change of entry in the land register. The land register continues to disclose that the real estate is comprised of III, IV and V class agricultural land. Therefore, it is intended for agricultural purposes and constitutes agricultural land within the meaning of art. 46¹ of the Civil Code.

The company also rejects Agency claims that the land plot is not utilised for agricultural purposes, since it is covered with weeds and young trees. It states that uncultivated farming land does not lose its agricultural nature.

The dispute continues, however, a court expert filed an opinion in this case at the end of last year. He concurred with classification of this real estate as arable land, even though it is not cultivated.