FOURTH SECTION

CASE OF MERCIECA AND OTHERS v. MALTA

(Application no. 21974/07)

JUDGMENT

STRASBOURG

14 June 2011

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 Mercieca and Others v. Malta,
The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of:
	Nicolas Bratza, President,
	Lech Garlicki,
	Ljiljana Mijović,
	Päivi Hirvelä,
	Ledi Bianku,
	Zdravka Kalaydjieva, judges,
	David Scicluna, ad hoc judge,
and Lawrence Early, Section Registrar,
Having deliberated in private on 24 May 2011,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1.  The case originated in an application (no. 21974/07) against Malta lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by Paul Mercieca, Andrew Manduca, Raphael Aloisio, Steve Cachia, Stephen Paris, Malcolm Booker and Edward Camilleri, Maltese nationals, (“the applicants”), on 22 May 2007.
2.  The applicants were represented by Dr Stefan Frendo, Ganado & Associates, and Dr Tonio Azzopardi, lawyers practising in Valletta. The Maltese Government (“the Government”) were represented by their Agent, Dr Silvio Camilleri.
3.  The applicants alleged that the Court of Appeal’s restrictive interpretation had deprived them of access to court by denying their appeal.
4.  On 17 December 2009 the President of the Fourth Section decided to give notice of the application to the Government. It was also decided to rule on the admissibility and merits of the application at the same time (Article 29 § 1).
5.  Mr V. De Gaetano, the judge elected in respect of Malta, was unable to sit in the case (Rule 28 of the Rules of Court). The President of the Chamber accordingly appointed Mr David Scicluna to sit as an ad hoc judge (Rule 29 § 1(b)).
THE FACTS
I.  THE CIRCUMSTANCES OF THE CASE
6.  The applicants were born in 1952, 1954, 1961, 1960, 1964, 1963 and 1945 respectively and live in Malta. They are certified public accountants acting personally and in their capacity as partners of the partnership Deloitte & Touche Certified Public Auditors & Accountants.
A.  Background of the case
7.  On an unspecified date the applicants were sued, personally and in their capacity as partners of the partnership Deloitte & Touche Certified Public Auditors & Accountants, as auditors of PCO Ltd, in a civil action by a company, V. The latter claimed that the applicants’ audit firm had acted negligently and fraudulently in its drawing up of PCO Ltd’s audit report/financial statements, and was therefore liable for the losses sustained by V as a result of its reliance on those documents.
8.  During the proceedings the applicants raised a preliminary plea to the effect that reliance by V. on the audit report when taking a particular credit decision, and knowledge on the part of the applicants of such reliance when taking that decision, were lacking. These requirements were fundamental to this type of action.
9.  On 1 December 2003 the Civil Court dismissed this plea in a preliminary judgment.
10.  On 3 December 2003 the applicants requested special leave to appeal the preliminary judgment under Article 231 (1) of the Code of Organisation and Civil Procedure (“COCP”). On 12 December 2003, the Civil Court in its ordinary jurisdiction granted leave to appeal.
11.  On 29 December 2003 the applicants lodged an appeal.
12.  On 8 June 2004, having heard the parties’ arguments, the Court of Appeal dismissed the appeal as out of time. It noted that while the legislator had clearly established that the time-limit for lodging an appeal against an interlocutory decree ran from the date of authorisation to appeal, in respect of an appeal against a “judgment” the legislator had made no distinction between a “judgment” and a “partial judgment” (sentenża parżjali). It followed that the twenty-day time-limit which ran from the date of delivery of a judgment according to Article 226 (1) of the COCP applied also to appeals necessitating prior leave to appeal.
B.  The constitutional redress proceedings
13.  On 17 September 2004 the applicants instituted constitutional redress proceedings before the Civil Court in its constitutional jurisdiction, claiming that such an erroneous interpretation by the Court of Appeal deprived them of access to court.
14.  On 15 November 2006 the Civil Court upheld the applicants’ claims, finding that a right to appeal could not arise before leave to appeal had been given. Moreover, an appellant did not have to tolerate the delays of a court in giving leave to appeal. The Court of Appeal’s interpretation had therefore deprived the applicants of access to court in violation of Article 6 of the Convention. It declared the Court of Appeal’s judgment null and void.
15.  On 2 March 2007 the Constitutional Court, on appeal by the Attorney General, acknowledged that the interpretation given to the law had been erroneous, thereby depriving the applicants of their right to appeal at an early stage. Nevertheless, it did not uphold the first-instance judgment, since a wrong interpretation did not suffice to lead to a violation of the Convention. While reiterating that an appeal could be heard before the Court of Appeal only once, it considered that the applicants had the opportunity to appeal in the civil case after the final judgment. Thus, given that a defect in first-instance proceedings could be remedied on appeal, the right to a fair hearing would similarly not be violated if a remedy which had been inappropriately denied became available at a later stage of the proceedings.
II.  RELEVANT DOMESTIC LAW
16.  Article 231 (1) of the Code of Organisation and Civil Procedure (“COCP”) (Chapter 12 of the Laws of Malta), at the relevant time, read as follows:
“Where several issues in an action have been determined by separate judgments, appeal from any such judgments may only be entered after the final judgment and within the prescribed time, to be reckoned from the date of such final judgment; and in such an appeal express mention of the judgment or judgments appealed from shall be made:
Provided that an appeal from such separate judgments may be entered before the final judgment only by leave of court to be read out in open court; such request for leave to appeal shall be made either orally immediately after the delivery of such judgment or by application within six days from such judgment.”
17.  The Article was amended in 2005, whereby the following phrase was added to the proviso:
“and when such leave to appeal from such separate judgments is granted the time for the filing of the appeal in respect thereof shall commence to run from the day on which the said leave is read out in open court.”
18.  Article 226 (1) of the COCP reads as follows:
“An appeal is entered by means of an application to be filed with the registry of the Court of Appeal within twenty days from the date of the judgment.”
THE LAW
I.  ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION
19.  The applicants complained that the judgment of the Court of Appeal was based on an erroneous interpretation of the law and deprived them of access to court as provided in Article 6 § 1 of the Convention, which reads as follows:
“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”
20.  The Government contested that argument.
A.  Admissibility
1. The Government’s objection based on lack of victim status
21.  The Government submitted that the applicants could not claim to be victims under the Convention as they had had access to court and were currently parties to the civil proceedings. Moreover, they had two opportunities to appeal. They forfeited one such opportunity by missing the statutory time-limit. The other opportunity would be available to them at the end of the proceedings, after the determination of the claim at first instance.
22.  The applicants submitted that the law granted a right of appeal at that stage of the proceedings, which was confirmed by their successful request for leave to appeal. It was the fact that their appeal was eventually dismissed as a consequence of a wrong and restrictive interpretation of procedural rules that rendered them victims of a violation of Article 6. They recalled that justice delayed was justice denied also in such a context.
23.  The Court reiterates that a decision or measure favourable to the applicant is not in principle sufficient to deprive him of his status as a “victim” unless the national authorities have acknowledged, either expressly or in substance, and then afforded redress for, the breach of the Convention (see, for example, Dalban v. Romania [GC], no. 28114/95, § 44, ECHR 1999-VI, and Jensen v. Denmark (dec.), no. 48470/99, 20 September 2001, ECHR 2001-X).
24.  The Court notes that the basis of the alleged violation is the Court of Appeal’s dismissal of the applicants’ appeal on 8 June 2004. It observes that the Constitutional Court, although acknowledging that the interpretation of the Court of Appeal had been erroneous, did not find a violation of the Convention. In such circumstances the Court finds no reason to doubt the applicants’ victim status.
25.  In consequence, the Court rejects the Government’s preliminary objection.
2. The Government’s objection based on non-exhaustion of domestic remedies
26.  The Government submitted that the applicants could still appeal against the partial judgment of 1 December 2003 after the delivery of the first-instance judgment determining the merits of the case. They had not, therefore, exhausted domestic remedies. Similarly, since the first-instance proceedings were still in progress, the application was premature.
27.  The applicants submitted that even assuming that it were possible to appeal the first-instance judgment when delivered, this could not remedy the fact that they had been denied the right to appeal at the preliminary stage.
28.  In accordance with Article 35 § 1 of the Convention, the Court may only deal with an issue after all domestic remedies have been exhausted. The purpose of this rule is to afford the Contracting States the opportunity of preventing or putting right the violations alleged against them before those allegations are submitted to the Court (see, among other authorities, Selmouni v. France [GC], no. 25803/94, § 74, ECHR 1999-V). Thus, the complaint submitted to the Court must first have been made to the appropriate national courts, at least in substance, in accordance with the formal requirements of domestic law and within the prescribed time-limits (see Micallef v. Malta [GC], no. 17056/06, § 55, ECHR 2009‑...).
29.  The Court notes that, following the impugned decision, the applicants instituted constitutional redress proceedings before the Civil Court (First Hall) alleging a breach of the right to a fair trial as guaranteed by Article 6 of the Convention in view of the Court of Appeal’s decision allegedly depriving them of access to court. The Civil Court (First Hall) upheld their claims. The Government subsequently appealed and the Constitutional Court reversed the first-instance judgment on the merits. The Court considers that, in raising this plea before the domestic constitutional jurisdictions, which did not reject the claim on procedural grounds but examined the substance of it, the applicants made normal use of the remedies which were accessible to them and which related, in substance, to the facts complained of at the European level (see, Micallef, cited above § 57).
30.  It follows, that the Government’s preliminary objection as to exhaustion of domestic remedies must be dismissed. The other considerations mentioned by the Government in their submissions under this heading are more appropriately addressed on the merits.
3. The Government’s objection ratione materiae
31.  The Government submitted that Article 6 was not applicable as the applicants were not seeking the determination of a civil right or obligation but trying to avoid such a determination. Moreover, the issues raised in the appeal were formal and procedural in nature. Furthermore, the applicants could not rely on Article 6 because that provision did not guarantee a right of appeal.
32.  The applicants submitted that Article 6 was applicable as the proceedings concerned a civil case for damages arising out of the negligence of auditors in the exercise of their profession. They argued that Article 6 safeguards should also apply outside the context of final decisions.
33.  The Court reiterates that Article 6 in its civil “limb” applies only to proceedings determining civil rights or obligations. It notes that in the recent Micallef judgment (cited above, §§ 79-80), the Grand Chamber held that the exclusion of interim measures from the ambit of Article 6 was no longer justified by the fact that they do not in principle determine civil rights and obligations. The Grand Chamber considered that in circumstances where many Contracting States faced considerable backlogs in their overburdened justice systems, leading to excessively long proceedings, a judge’s decision on an injunction would often be tantamount to a decision on the merits of the claim for a substantial period of time, even permanently in exceptional cases. It followed that, frequently, interim and main proceedings decided the same “civil rights or obligations” and had the same resulting long-lasting or permanent effects.
34.  The Grand Chamber, however, considered that not all interim measures determined such rights and obligations and the applicability of Article 6 would depend on whether certain conditions were fulfilled (ibid § 83). First, the right at stake in both the main and the injunction proceedings should be “civil” within the autonomous meaning of that notion under Article 6 of the Convention. Second, the nature of the interim measure, its object and purpose as well as its effects on the right in question should be scrutinised. Whenever an interim measure could be considered effectively to determine the civil right or obligation at stake, notwithstanding the length of time it is in force, Article 6 was applicable. However, the Court accepted that in exceptional cases - where, for example, the effectiveness of the measure sought depended upon a rapid decision-making process - it might not be possible immediately to comply with all of the requirements of Article 6 (see Micallef, cited above, §§ 84-86).
35.  The Court notes that in the present case the applicants complained that they were denied an interlocutory appeal against a preliminary judgment. The latter can be equated to interim or provisional measures and proceedings. Thus, the same criteria are relevant to determine whether Article 6 is applicable. In the present case, the main proceedings dealt with civil liability and therefore the first requirement is satisfied. Had the Civil Court upheld the applicants’ pleas in its preliminary judgment, there would have been no scope for a further determination, since the applicants’ liability would have been excluded at that stage. The interlocutory appeal would, therefore, have determined the same civil rights and obligations at issue in the main proceedings. It follows that the second requirement is also met and Article 6 is in principle applicable to the present case.
36.  The Government argued that Article 6 was not applicable to appeal proceedings because the Convention did not guarantee a right of appeal. The Court acknowledges that Article 6 § 1 does not guarantee a right to appeal from a decision of first-instance. Where, however, domestic law provides for a right of appeal, the appeal proceedings will be treated as an extension of the trial process and accordingly will be subject to Article 6 (see Delcourt v. Belgium, 17 January 1970, Series A no. 11, § 25). The Court notes that no other reasons have been established by the Government to limit the scope of the application of Article 6 in any respect in view of the interlocutory nature of the proceedings at issue.
37.    It follows that Article 6 is applicable to the proceedings complained of and the Government’s objection must therefore be dismissed.
4. Admissibility
38.  The Court notes that the application is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
B.  Merits
1. The parties’ observations
39.  The applicants submitted that the law was interpreted erroneously by the Court of Appeal, and that the judgment of the Constitutional Court acknowledging the latter but not annulling the said judgment deprived them of access to court. Their appeal had been rejected without any examination of the merits, notwithstanding that they had been granted leave to appeal, which had given them a legitimate expectation that their appeal would be heard. They argued that the domestic courts’ legal interpretation of the relevant provision was erroneous, as confirmed by the Constitutional Court, thereby reducing their time for lodging an appeal and denying them access to court at that particular stage of the proceedings. The fact that it was not the first time that the court had interpreted the provision along those lines did not detract from the violation. The applicants made reference to Miragall Escolano and Others v. Spain (nos. 38366/97, 38688/97, 40777/98, 40843/98, 41015/98, 41400/98, 41446/98, 41484/98, 41487/98 and 41509/98, ECHR 2000‑I) where the Court held that parties must be able to avail themselves of the right to bring an action or to lodge an appeal from the moment they effectively apprise themselves of the relevant court decisions. In relation to the application of time-limits, the Court found in Escolano that the domestic courts’ particularly strict interpretation of a procedural rule deprived the applicants of the right of access to a court.
40.  The applicants argued that once the law provided for an appeal at an early stage of the proceedings which could have concluded the determination of their claims, and the consideration of that appeal was then thwarted, a further appeal at the end of the main proceedings could not compensate for that defect. Furthermore, the fact that proceedings were still pending could not cancel out the violation that had already occurred. Had their appeal not been rejected there was a chance that the proceedings would have ended much sooner.
41.  Moreover, the applicants expressed doubt as to whether a future appeal would be examined. They submitted that once an appeal had been decided no further appeal could be lodged on the same issue.
42.  The Government submitted that to determine whether there had been a breach of fair trial guarantees the proceedings had to be seen as a whole. However, that was impossible at this stage of the proceedings and it could not be said that the incident complained of was so prominent as to be decisive for the outcome of the proceedings as a whole. They stated that the right of access to court implied the right to commence proceedings and to rebut the claims at issue, but did not imply a right to an appeal after the adoption of a judgment, whether final or partial, at first-instance.
43.  Nevertheless, as held by the Constitutional Court, the applicants would still have access to an appeal when the judgment of the first-instance court was delivered. This right was not prejudiced when the issues raised by them had not yet been debated and had not formed part of the subject matter of a determination by the Court of Appeal. According to the law, when a preliminary judgment was declared null and void by the Court of Appeal the party concerned could still appeal against that preliminary judgment together with an appeal against the final judgment. Thus, the only thing the applicants had lost was the opportunity to avail themselves of the available remedies at an earlier stage of the case, an opportunity which did not give rise to a legitimate expectation.
44.  The loss of this opportunity was due to the applicants’ negligence as they had missed the statutory deadline, although they still had nine days within which to appeal after the judgment confirming their leave to appeal had been delivered. The Government submitted that there was nothing extraordinary in the way the domestic court had interpreted and applied the legal provision. A judgment along the same lines had already been delivered by the same court and the applicants could have expected the same outcome. They reiterated that requirements such as time-limits for lodging appeals established a balance between the parties to the proceedings and the right to a fair hearing within a reasonable time. They further submitted that the present case could not be compared to Escolano and Beles where the first-instance judgment had already been pronounced. In the present case the applicants could still have their claims heard on the merits in the context of an appeal at a future date. Thus, the consequences of the judgment of 8 June 2004 did not deny the applicants access to an appeal, but only delayed such a right.
1. The Court’s assessment
45.  The “right to a court”, of which the right of access is one aspect, is not absolute; it is subject to limitations permitted by implication, in particular where the conditions of admissibility of an appeal are concerned, since by its very nature it calls for regulation by the State, which enjoys a certain margin of appreciation in this regard. However, these limitations must not restrict or reduce a person’s access in such a way or to such an extent that the very essence of the right is impaired; lastly, such limitations will not be compatible with Article 6 § 1 if they do not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be achieved (see, among other authorities, Brualla Gómez de la Torre v. Spain, 19 December 1997, § 33, Reports of Judgments and Decisions 1997‑VIII and Edificaciones March Gallego S.A. v. Spain, 19 February 1998, § 34, Reports 1998‑I).
46.  The rules on time-limits for appeals are undoubtedly designed to ensure the proper administration of justice and compliance with, in particular, the principle of legal certainty. Those concerned must expect those rules to be applied. However, the rules in question, or the application of them, should not prevent litigants from making use of an available remedy (see Osu v. Italy, no. 36534/97, § 32, 11 July 2002).
47.  Thus, while time-limits are in principle legitimate limitations on the right to a court, the manner in which they are applied in a particular case may give rise to a breach of Article 6 § 1 of the Convention. It is not the Court’s task to resolve problems of interpretation of domestic legislation but to verify whether the effects of such interpretation are compatible with the Convention (see Miragall Escolano and Others v. Spain, no. 38366/97, §§ 33-39, ECHR 2000-I, and Maresti v. Croatia, no. 55759/07, §§ 36-38, 25 June 2009).
48.  In the present case, the applicants’ time to appeal was reduced from twenty days to nine days. While it is true that the applicants could have lodged their appeal within those nine days, the Constitutional Court specifically acknowledged that the law had been wrongly applied by the Court of Appeal, with the consequence that the applicants’ appeal had been unfairly rejected (see paragraph 15 above). In these circumstances, notwithstanding the Government’s argument, the Court finds no reason to second guess this decision. Thus, in the present case, the applicable rules were construed in such a way as to prevent the applicants’ appeal being examined on the merits, with the consequence that their right under domestic law of access to the Court of Appeal at that point in time was impaired.
49.  However, the Constitutional Court considered that there had not been a violation of Article 6 of the Convention since the applicants could avail themselves of an appeal at a later stage of the proceedings. The Court points out that in certain cases the Convention organs have found that the possibility exists that a higher or the highest tribunal may, in certain circumstances, make reparation for an initial violation of one of the Convention provisions (see, for example, De Cubber v. Belgium 26 October 1984, Series A no. 86, § 33, and De Haan v. the Netherlands, 26 August 1997, § 54, Reports of 1997‑IV, in respect of impartiality). However, in the recent Micallef judgment the Grand Chamber was not convinced that a defect in civil interim proceedings could necessarily be remedied at a later stage, namely in proceedings on the merits governed by Article 6, since any prejudice suffered in the meantime might by then have become irreversible (§ 80).
50.  In the present case, it has not been disputed that the proceedings in issue would have ended at that stage had the applicants’ appeal been heard on the merits and upheld. That eventuality would have avoided the applicants the expense and anxiety related to the continuation of burdensome court proceedings. In consequence, the Court is of the view that an appeal at the end of proceedings on the merits, even if this could be guaranteed under domestic law and practice (a matter which remains hypothetical for the reasons argued by the parties), would not have sufficed to annul the consequences suffered by the applicants as a result of the wrongful dismissal of their appeal at an earlier stage.
51.  It follows, that in the present circumstances, the domestic courts’ restrictive interpretation of the relevant procedural rules denied the applicants the right to lodge an appeal permitted by law. There has therefore been a violation of Article 6 of the Convention.
II.  APPLICATION OF ARTICLE 41 OF THE CONVENTION
52.  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
53.  The applicants claimed 1,150 euros (EUR), supported by a taxed bill of costs, representing the sum incurred by the applicants in connection with the rejected appeal, in respect of pecuniary damage.
54.  The Government submitted that these claims were not a direct consequence of the violation complained of.
55.  The Court does not discern any causal link between the violation found and the pecuniary damage alleged, as it cannot speculate on what the outcome would have been had the Court of Appeal declared the applicants’ appeal admissible and proceeded to hear it. Accordingly, the Court rejects this claim.
B.  Costs and expenses
56.  The applicants also claimed EUR 6,169.54, vouched by an attached bill of costs, for the costs and expenses incurred before the domestic courts and EUR 14,320 (EUR 7,190 + EUR 7,130) in lawyers’ fees incurred before the Court.
57.  The Government submitted that the costs of the domestic proceedings claimed by the applicants included the costs of the Attorney General (EUR 2,261) which had not been claimed by the latter and would not be claimed by the latter in the event that the Court were to find a violation in the present case. As to the claims for proceedings before this Court, the Government submitted that they were grossly exaggerated and that there was no justification for doubling the fees on account of the fact that two lawyers were consulted about the proceedings. In their view, it was appropriate to award EUR 2,000.
58.  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, the Court considers the amounts claimed for legal fees to be excessive. Regard being had to the documents in its possession and the above criteria, notably the absence of details as to the number of hours worked and the rate charged per hour, and noting that the costs of the Attorney General in the domestic proceedings will not be claimed and are therefore to be deducted from this award, the Court considers it reasonable to award the sum of EUR 6,000 covering costs under all heads.
C.  Default interest
59.  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
1.  Declares the application admissible;

2.  Holds that there has been a violation of Article 6 § 1 of the Convention;

3.  Holds
(a)  that the respondent State is to pay the applicants, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, EUR 6,000 (six-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 amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;

4.  Dismisses the remainder of the applicants’ claim for just satisfaction.
Done in English, and notified in writing on 14 June 2011, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
	Lawrence Early	Nicolas Bratza	Registrar	President