The Ministry of Defense must return the fine of 10 million to Brno

Prague - Brno won a court case against the Ministry of Defense. The office must return ten million crowns to the city, which Brno initially paid as a contractual penalty for planned commercial use of the former barracks building at Kraví hora. The appellate Municipal Court in Prague confirmed today the ruling, according to which the ministry had no right to order Brno on how to handle the property.
    "Brno was not obligated to pay the contractual penalty. Therefore, in this case, it is a matter of unjust enrichment, which the defendant must return," stated appellate panel member Jiří Körbler. The office must also pay the city interest on late payment and the costs of the court proceedings, which climbed to 916,000 crowns.
    Brno acquired the former barracks through a gratuitous transfer from the state in 2003. At that time, it contractually committed to using the land in a non-commercial manner for the following ten years. Otherwise, it was to pay a penalty amounting to the value of the property, i.e., 9.7 million crowns.
    However, the Brno-střed city hall planned the construction of a multipurpose building named Wilson with approximately 80 apartments and numerous shops on the acquired land after the transfer. The project was backed by Wilson Properity, which obtained the land from Brno for a fifteen-year lease at a symbolic price of one crown per square meter per year in 2006. The Ministry of Defense considered this a violation of the agreement, and therefore imposed a penalty on the city.
    Brno paid it, but subsequently filed a lawsuit against the ministry in 2010 for the return of unjust enrichment. It argued that the concluded agreement was invalid. The district court then upheld the lawsuit this February, which has now also been confirmed by the appellate panel. The ruling can now only be contested by an appeal to the Supreme Court.
    "The Ministry of Defense respects the court's valid decision. However, it will decide on further steps in this matter only after receiving and reviewing the written version of the ruling," informed Petr Sýkora from the press department of the ministry to ČTK. The office must pay the money within three days of receiving the verdict.
    Judge Körbler stated today that the ministry prepared and signed the agreement with Brno based on the law on the property of the Czech Republic, according to which it was possible to transfer state property free of charge only in the public interest. However, Brno signed the agreement only after a special law on the transfer of unnecessary military property became effective. This law established that in connection with the gratuitous transfer of military property, a territorial self-governing unit could be restricted in property rights only by establishing a real burden. Thus, previously agreed limitations of property rights that did not concern real burdens were also abolished. Consequently, the limitation requiring Brno to use the land non-commercially was also rendered ineffective.
    According to the mayor of Brno-střed, Libor Šťástka (ODS), the whole matter could have been resolved years ago if Brno had not paid the penalty and had immediately sued the ministry instead. "I urged the councilors to this effect in 2008, but they decided otherwise. I welcome today's court ruling. We have said from the beginning of this dispute that the ministry is wrong," Šťástka told ČTK, adding that the affected area at Kraví hora still remains unused.
    The money will now go to the Brno City Hall, which will then transfer it to the Brno-střed municipality. It was from its budget that the penalty was taken years ago. "The money will return to the general budget and can be used, for example, for repairs of kindergartens and schools or for the construction of playgrounds and sports facilities," the mayor noted.
    The Wilson project cost the political career of former Brno-střed mayor Dagmar Hrubá (ODS). She faced accusations of abuse of power and violation of duties in managing foreign property, but the courts ultimately acquitted her. Hrubá denied the guilt and pointed out, among other things, that Wilson Properity was supposed to take care of the decontamination of the land under the stipulated conditions. If the city were to do so, it would reportedly have to pay many millions of crowns.