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SECOND
SECTION
CASE OF
JÁNOSI v. HUNGARY
(Application
no. 19689/05)
JUDGMENT
STRASBOURG
29
September 2009
This
judgment will become final in the circumstances set out in Article 44
§ 2 of the Convention. It may be subject to editorial
revision.
In the case of Jánosi v. Hungary,
The
European Court of Human Rights (Second Section), sitting as a Chamber
composed of:
Françoise
Tulkens,
President,
Ireneu
Cabral Barreto,
Vladimiro
Zagrebelsky,
Danutė
Jočienė,
Dragoljub
Popović,
András
Sajó,
Nona
Tsotsoria,
judges,
and
Françoise Elens-Passos, Deputy
Section Registrar,
Having
deliberated in private on 8 September 2009,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 19689/05) against the Republic
of Hungary lodged with the Court under Article 34 of the Convention
for the Protection of Human Rights and Fundamental Freedoms (“the
Convention”) by two Hungarian nationals, Mr and Mrs József
Jánosi (“the applicants”), on 20 May 2005.
- The
applicants were represented by Mr A. Cech, a lawyer practising in
Budapest.
The
Hungarian Government (“the Government”) were represented
by Mr L. Höltzl, Agent, Ministry of Justice and Law Enforcement.
- The
applicants alleged that their property rights had been violated in
that they had been effectively deprived of the ownership of their
real estate on the basis of a purported purchase contract. Moreover,
they also alleged that they did not have an effective remedy
available to them to enforce their rights under Article 1 of Protocol
No. 1 to the Convention and that the proceedings had lasted an
unreasonably long time.
- On
19 November 2007 the Court decided to give notice of the application
to the Government. Under the provisions of Article 29 § 3 of the
Convention, it decided to examine the merits of the application at
the same time as its admissibility.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
- The applicants were born in 1955 and 1958,
respectively, and live in Szolnok.
- The
applicants intended to set up an enterprise and started to raise
funds in March 1994. They contacted a loan agency and signed a real
estate sales contract with an individual concerning their detached
house on 12 March 1994. Change of ownership was registered on
the basis of this contract on 14 July 1995.
- In
August 1995 the applicants brought an action before the Szolnok
District Court requesting the court to order restitutio in
integrum by declaring the contract invalid. The fact of the
existence of these proceedings (perfeljegyzés) was
registered in the Land Registry. This case ceased after a six-month
stay by mutual agreement of the parties. However, for unknown
reasons, the registration of the proceedings was not deleted from the
register until July 1998.
- In
June 1998 the real estate was sold to a third party. After the
deletion of the registration of the civil proceedings described above
from the land register, the new owner was entered in that register on
25 August 1998. On 21 September 1998, after having been informed
about these events and having unsuccessfully attempted to settle the
case otherwise, the applicants brought an action before the Szolnok
District Court, identical to the previous one, together with claims
about other loan contracts between the same parties.
- On
4 March 2004, after holding a hearing in June 2002, the District
Court dismissed the applicants’ action in part. It established
that, although the contract was ostensible, restitutio in
integrum was impossible since the applicants had failed to bring
their action before the court in due time.
- The
District Court pointed out that the purchase contract evidently
concealed a loan and was thus invalid. However, this could not have
any effect on the acquisition by a third party, whose good faith had
not been successfully challenged by the applicants. It relied on
paragraph 31(2) of Law-Decree no. 31 of 1972 on the Land Registry
which provided – in order to secure the legal certainty of the
real estate market – that in such disputes, a third-party
proprietor could not be deprived of his acquisition after sixty days
of his date of entry in the register, provided that he had acted in
good faith and the decision to make the entry in the register had
been served on the former owner.
- However,
applying paragraph 237(2) of the Civil Code, the court restored the
financial balance between the parties, taking into account the
ostensible purchase contract and other loan contracts. All in all, it
obliged the defendants to pay the applicants 8,082,214 Hungarian
forints (HUF) (approximately 32,300 euros (EUR)) plus accrued
interest, from which HUF 4,160,000 (approximately EUR 16,300)
was to compensate for the loss of the property.
- All
the parties appealed. The Jász-Nagykun-Szolnok County Regional
Court upheld the first-instance decision on 20 October 2004.
- The
Regional Court confirmed that restitutio in integrum was
impossible in this case, although it gave different reasoning. It
noted that the sixty-day deadline could not be applied since the
decision to enter the third party’s acquisition in the register
had not been served on the applicants. It also observed that, flowing
from the above-mentioned provision of the Law-Decree, after three
years no change could be made at all to this entry in the land
register. It further stated that paragraph 63(2) of the new Act on
the Land Registry (no. 141 of 1997) ruled the same way. The Regional
Court saw no reason to depart from the remaining findings of the
District Court, including the value of the real estate, which was not
in dispute during the appellate proceedings.
- The
applicants lodged a petition for review with the Supreme Court. On 24
May 2005 the Supreme Court dismissed their petition.
B. Relevant domestic law and practice
1. The Constitution
Article 2
“(1) The Republic of Hungary is an independent,
democratic state based on the rule of law.”
Article 13
“(1) The Republic of Hungary secures the right to
property.
(2) Property may be expropriated only exceptionally in
cases prescribed by law in the public interest and for complete,
unconditional and immediate compensation.”
Article 57
“(1) In the Republic of Hungary, everyone is equal
before the courts and is entitled to have ... his rights and
obligations determined by an independent and impartial tribunal
established by law ....”
2. Act no. 4 of 1959 on the Civil Code
Section 207
“(6) An ostensible (színlelt)
contract is invalid and if it covers another contract it should be
adjudicated according to the concealed one.”
Section 234
“(1) Unless provided otherwise by the law, any
person may refer to the invalidity of a contract which is null and
void (semmis) without any time limit. (...)”
Section 237
“(1) If a contract is invalid, the situation
existing prior to its conclusion shall be restored.”
(2) If the situation existing prior the conclusion of
the contract cannot be restored, the court shall declare the contract
effective until the delivery of the judgment. ... In these cases it
must decide concerning the reimbursement of such services as remained
without counter-service.”
3. Law-decree no. 31 of 1972 on the Land Registry (as
in force until 31 December 1999)
Section 31
“(2) An action for cancellation may be initiated
within sixty days from the delivery of the enrolment [of the new
right] against the person who, by virtue of the new enrolment and
trusting the validity of the previous one, acquired the right in good
faith and for counter-value, provided that the decision about the
original invalid enrolment [to the land register] was delivered to
the party suffering damages. If there was no such delivery, the
action for cancellation may be brought within three years [from the
enrolment].”
4. Act no. 141 of 1997 on the Land Registry (as in
force from 1 January 2000)
Section 5
“(5) A right enrolled or a fact recorded in favour
of a third party acting in good faith based on an invalid document
cannot be deleted from the land register after three years from the
date authoritative to the rank of registration [of the right or
fact].”
Section 63
“(2) An action for cancellation may be initiated
within sixty days from the delivery of the enrolment [of the new
right] against the person who, by virtue of the new enrolment and
trusting the validity of the previous one, acquired the right in good
faith, provided that the decision about the original invalid
enrolment [in the land register] was delivered to the party suffering
damages. If there was no such delivery, the action for cancellation
may be brought within three years [from the enrolment].”
Section 91
“(1) This act comes into force on 1 January 2000,
the pending proceedings have to be finished under the previous
provisions [i.e. under those of the Law-Decree no. 31 of 1972 on the
Land Registry].”
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 (LENGTH OF PROCEEDINGS)
OF THE CONVENTION
- The
applicants complained that the length of the proceedings had been
incompatible with the “reasonable time” requirement of
Article 6 § 1 of the Convention. The Government contested that
argument.
- The
Court reiterates that the period to be taken into consideration
lasted six years and eight months for three levels of jurisdiction.
In view of such lengthy proceedings, this complaint must be declared
admissible.
- The
Court has frequently found violations of Article 6 § 1 of the
Convention in cases raising issues similar to the one in the present
application (see e.g. Frydlender v. France [GC], no. 30979/96,
§ 43, ECHR 2000-VII). Having examined all the material submitted
to it, the Court considers that the Government have not put forward
any fact or convincing argument capable of persuading it to reach a
different conclusion in the present circumstances. Having regard to
its case-law on the subject, the Court finds that the length of the
proceedings was excessive and failed to meet the “reasonable
time” requirement. There has accordingly been a breach of
Article 6 § 1.
II. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO 1. TO
THE CONVENTION
- The
applicants also complained that although the domestic courts had
established that the original purchase contract had been invalid,
they had refused to order restitutio in integrum, since
the pertinent provisions of the Law-Decree on the Land Registry
excluded this possibility and had only awarded them compensation
which amounted to a breach of Article 1 of Protocol No. 1 to the
Convention.
- The
Government submitted that the restriction which the applicants
suffered was a necessary and proportionate measure in accordance with
the general interest. They pointed out in this connection that the
protection of credibility of the Land Registry and in particular, the
safety of the interests of those who obtain property in good faith,
justified the legal background as well as the impugned court
decisions offering only financial compensation for the lost real
estate to the applicants but not restitutio in integrum.
- The
applicants contested these views and stated in essence that the
interest of protecting the Land Registry and of the bona fide
third parties totally overruled their rights under Article 1 of
Protocol No. 1. Therefore, the impugned measure could not be
classified as proportionate or compatible with the Convention.
- The
Court observes that the applicants agreed to the termination of
proceedings which had been initiated in 1995. Therefore, when the
third party acquired the ownership of the real estate, he was able to
do so in good faith.
- The
Court is of the view that the applicants could have prevented this by
not agreeing to the termination of the abovementioned lawsuit. Had
they done so, the fact of the existence of the proceedings would have
remained on record with the Land Registry, which would have prevented
any third party from purchasing the property in good faith. The Court
considers that the applicants cannot refer to prejudice they
allegedly suffered due to the application of a legal provision which
could have been excluded by themselves. It follows that this part of
the application is manifestly ill-founded and must be rejected,
pursuant to Article 35 §§ 3 and 4 of the Convention.
III. ALLEGED VIOLATIONS OF ARTICLE 6 (FAIRNESS) AND
ARTICLE 13 OF THE CONVENTION
- The
applicant also complained under Article 6 § 1 of the Convention
about the unfairness of the proceedings. The Court observes that
there are no elements in the case file to suggest that the courts
lacked impartiality or that the proceedings were otherwise unfair or
arbitrary. It follows that this part of the application is manifestly
ill-founded and must be rejected, pursuant to Article 35 §§
3 and 4 of the Convention.
- Lastly,
the applicants complained that the domestic court proceedings,
because of the short time-limit in question, did not provide a real
chance to recover their lost real estate, in breach of Article 13 of
the Convention.
The Court reiterates that Article 13 requires a remedy in domestic
law only where an individual has an “arguable claim” that
one of his rights or freedoms set forth in the Convention has been
violated (see, for example, Boyle and Rice v.
the United Kingdom, judgment of 27 April 1988, Series A
no. 131, p. 23, § 52).
- In
this connection the Court refers to its above findings according to
which the applicants’ complaints concerning their property
rights and the unfairness of the proceedings are manifestly
ill-founded. It follows that their complaint under Article 13 cannot
be considered “arguable”. It follows that this part of
the application is likewise manifestly ill-founded and must be
rejected, pursuant to Article 35 §§ 3 and 4 of the
Convention.
IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION
- Article 41 of the Convention provides:
“If the Court finds that there has been a
violation of the Convention or the Protocols thereto, and if the
internal law of the High Contracting Party concerned allows only
partial reparation to be made, the Court shall, if necessary, afford
just satisfaction to the injured party.”
A. Damage
- The
applicants claimed HUF 18,020,000 (approximately
EUR 67,200) for
pecuniary damage and HUF 10,000,000 (approximately EUR 37,300) for
non-pecuniary damage.
- The
Government considered the applicants’ claims excessive.
- The
Court considers that the applicants must have suffered some
non-pecuniary damage on account of the protraction of the
proceedings. Accordingly, on the basis of equity, it awards them
jointly EUR 1,500 under this head.
B. Costs and expenses
- The
applicants also claimed EUR 129,000 for the costs and expenses
incurred in the domestic proceedings. Moreover, they claimed EUR
2,000 for those incurred in the proceedings before the Court. For the
latter item, they submitted a detailed statement of the hours
billable by their lawyer, corresponding to twenty hours of work (two
hours for client consultations, four hours for studying the file, six
hours for case-law research and eight hours for the preparation of
submissions) spent by their lawyer on the case, charged at an hourly
rate of EUR 100.
- The
Government found the applicants’ claim excessive.
- According
to the Court’s case-law, an applicant is entitled to the
reimbursement of costs and expenses only in so far as it has been
shown that these have been actually and necessarily incurred and are
reasonable as to quantum. In the present case, regard being had to
the information in its possession and the above criteria, the Court
rejects the costs claim related to the domestic proceedings and finds
it reasonable to award the claim concerning the proceedings before to
Court in its entirety.
C. Default interest
- The
Court considers it appropriate that the default interest should be
based on the marginal lending rate of the European Central Bank, to
which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
- Declares the complaint concerning the length of
proceedings admissible and the remainder of the application
inadmissible;
- Holds that there has been a violation of Article
6 § 1 of the Convention;
- Holds
(a) that the respondent State is to pay the applicants
jointly, within three months from the date on which the judgment
becomes final according to Article 44 § 2 of the
Convention, the following amounts, to be converted into Hungarian
forints at the rate applicable at the date of settlement:
(i) EUR 1,500 (one thousand five hundred euros), plus any
tax that may be chargeable, in respect of non-pecuniary damage;
(ii) EUR 2,000 (two thousand euros) plus any tax that may
be chargeable to the applicants, in respect of costs and expenses;
(b) that
from the expiry of the above-mentioned three months until settlement
simple interest shall be payable on the above amounts at a rate equal
to the marginal lending rate of the European Central Bank during the
default period plus three percentage points;
- Dismisses the remainder of the applicants’
claim for just satisfaction.
Done in English, and notified in writing on 29 September 2009,
pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Françoise Elens-Passos Françoise Tulkens
Deputy Registrar President
