FOURTH SECTION
CASE OF YAVASHEV
AND OTHERS v. BULGARIA
(Application no.
41661/05)
JUDGMENT
STRASBOURG
6 November 2012
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 Yavashev and Others v. Bulgaria,
The European Court of Human Rights (Fourth Section), sitting as
a Chamber composed of:
Lech Garlicki, President,
David Thór Björgvinsson,
Päivi Hirvelä,
George Nicolaou,
Ledi Bianku,
Vincent A. De Gaetano, judges,
Pavlina Panova, ad hoc judge,
Fatoş Aracı, Deputy Section Registrar,
Having deliberated in private on 16 October 2012,
Delivers the following judgment, which was adopted on that
date:
PROCEDURE
The case originated in an application (no.
41661/05) against the Republic of Bulgaria lodged with the Court under Article
34 of the Convention for the Protection of Human Rights and Fundamental
Freedoms (“the Convention”) by two Bulgarian nationals,
Mr Anani Vladimirov Yavashev and Mr Stefan Vladimirov Yavashev,
and a national of the United States of America, Mr Christo Vladimirov Javasheff
(“the applicants”), on 14 November 2005.
The applicants were represented by Ms S.
Margaritova-Vuchkova, a lawyer practising in Sofia. The Bulgarian
Government (“the Government”) were represented by their Agent, Ms R.
Nikolova, of the Ministry of Justice.
The applicants alleged, in particular, that they
had been unjustifiably deprived of property that they had obtained by
restitution.
On 16 June 2008 Zdravka Kalaydjieva, the judge
elected in respect of the Republic of Bulgaria, withdrew from sitting in the
case. On 4 April 2012 the President of the Fourth Section appointed Pavlina
Panova as an ad hoc judge from the list of three persons whom Bulgaria
had designated as eligible to serve as such judges (Article 26 § 4 of the
Convention and Rule 29 § 1 of the Rules of Court).
In the meantime, on 15 March 2011 the Court
declared the application partly inadmissible and decided to give the Government
notice of the complaint concerning the applicants’ alleged deprivation of a
plot of land and two buildings. It also decided to rule on the admissibility
and merits of the remainder of the application at the same time (Article 29 § 1
of the Convention).
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
The applicants were born in 1932, 1938 and 1935
respectively. The first and second applicants live in Sofia, Bulgaria, and the third applicant lives in New York, the United States of America. They are
brothers.
A. Background
7. The
applicants’ father owned a factory, together with the adjacent plot, in the
town of Gabrovo. In 1947 the property was nationalised under the Nationalisation
of Private Industrial and Mining Undertakings Act 1947. In the following years
the authorities added a storey to the main factory building, transformed the
factory into a school, and transformed the adjacent plot, together with other
plots, into a schoolyard. The transformation was reflected in the relevant
zoning plan. In 1964 the property was entered in the State properties register.
In 1983 the applicants’ father died, leaving them
as his only heirs.
After the
Restitution of Ownership of Nationalised Real Property Act 1992 (“the 1992 Act”
- see paragraphs 25-30 below) came into force on 25 February 1992,
the applicants asked the mayor of Gabrovo to strike the property out of the State
properties register. On 30 November 1992 the mayor granted their request,
reasoning that the conditions for restitution were in place and that the
applicants had become owners of the property by the operation of the Act. The restituted
property consisted of a plot of land of 3,730 square metres, the first storey of
the two-storey main building of 620 square metres (the second storey, which, as
noted above, had been added by the authorities after the nationalisation, remained
the property of the municipality), a one-storey accessory building of 200 square
metres, and a second one-storey accessory building of 60 square metres. On 28 March
1996 the applicants obtained a notary deed certifying their title to the
property.
In the following
years the municipality continued to use the building as a school, with the
applicants’ consent. However, the municipality sought to settle the issue of its
use of the school. In a letter of 13 March 1995 the mayor invited the second
applicant to a meeting to discuss the future amount of rent to be paid by the
municipality. The outcome of the meeting was not specified by the parties. In a
letter of 3 September 1996 the mayor advised the applicants that the
municipality intended to start a procedure for the expropriation of the
property or its purchase. When the applicants objected, this initiative was
abandoned.
In a contract of 3
August 1998 the applicants allowed the municipality to use the property in return
for a monthly rent of 3,646,000 old Bulgarian levs (BGL). The municipality
also agreed to pay the applicants BGL 34,637,000 as compensation for use of the
property between 15 October 1997 and 3 August 1998.
On 21 January 1999 the municipal council adopted
a resolution to start a procedure for the purchase of the property. It appears
that the resolution was subsequently abandoned.
On 17
May 2001 the municipal council adopted a resolution for the purchase of the
property. The price was set at the equivalent of 180,000 United States dollars.
B. The administrative and judicial review proceedings
against the municipal council’s resolution of 17 May 2001
On 22 June 2001 the
regional governor of Gabrovo ordered the suspension of the execution of the
municipal council’s resolution of 17 May 2001. She noted, in particular, that
since 1960 the main building and the yard had accommodated a school. She went
on to say that the property served the needs of the local community and was
municipal public property, that it had never been returned to the applicants, and
that the mayor’s decision to strike it out of the State properties register had
been made in error.
The governor
also brought judicial review proceedings to have the resolution set aside. On 31
October 2001 the Gabrovo Regional Court dismissed her claim. It found that the
governor’s assertions that the property had not been returned to the applicants
and had remained municipal property were ill-founded. On appeal, in a final
judgment of 15 July 2002 the Supreme Administrative Court disagreed and set the
resolution aside. It held, inter alia, that the school was
municipal public property by virtue of the Constitution of 1991 and interpretative
decision no. 19 of 1993 of the Constitutional Court (see paragraph 31 below), and had never been returned to the applicants. The court went on to say that
since it had not been possible to return the property to the applicants, they
were entitled to compensation under the Compensation of Owners of Nationalised
Real Property Act 1997 (“the 1997 Act” - see paragraphs 35-39 below).
C. Civil proceedings concerning the applicants’ title
to the property
Meanwhile, on 1 April
2001 the municipality stopped paying rent to the applicants. On an unspecified
date in 2002 they filed a claim for non-payment of rent against the
municipality with the Gabrovo District Court. The municipality filed a
counterclaim, seeking a judicial declaration that it was the owner of the property.
On 3 July
2002 the Gabrovo District Court granted the applicants’ claim and dismissed the
municipality’s counterclaim. The municipality appealed, but on 20 December 2002
the Gabrovo Regional Court upheld the lower court’s judgment.
The
municipality appealed on points of law. On 14 October 2004 the Supreme Court of
Cassation granted its claim in respect of the main building. It held, in
particular, that the municipality had reconstructed that building in such a way
that a new building, different from the nationalised one, had been created. That
building had been earmarked to accommodate a school and thus serve the needs of
the community. The court went on to say that in view of that, the main building
could not have been returned to the applicants and had remained the property of
the municipality. The judgment in this part was final. The court remitted the
remainder of the case, which concerned the two accessory buildings and the plot
of land, for re-examination. It instructed the lower court to examine
which part of the plot existed independently of the school, because only that
part could have been returned. As for the accessory buildings, the lower court had
to determine whether they had been part of the school compound and on that
basis decide whether or not they had been subject to restitution.
Having
re-examined the case, on 7 October 2005 the Gabrovo Regional Court dismissed
the applicants’ claim and allowed the municipality’s counterclaim. It found, in
particular, that under the relevant zoning plan the plot of land, together with
another plot, had been earmarked to serve the school. The court went on to say that
the two accessory buildings and the plot of land were functionally connected
with the main building and served the needs of the school. Therefore, they could
not have been severed and returned to the applicants.
On 12
December 2007 the Supreme Court of Cassation upheld that judgment and held that
the property in question had always belonged to the municipality. In the court’s
view, the property had been municipal public property at the time when the 1992
Act had come into force, and had therefore not been subject to restitution. The
adoption in 1996 of the State Property Act 1996 and the Municipal Property Act 1996
(see paragraph 32 below) had not in itself transformed State and municipal
property into private and public property, as that transformation had already
been envisaged in the Constitution of 1991. The two Acts had simply laid down
the detailed rules governing those types of property. The court went on to say that
since the property could not be returned to the applicants, they were entitled
to compensation under the 1997 Act (see paragraph 26 below). In addition to
those findings, the court also endorsed the findings of the Gabrovo Regional
Court and held, in particular, that the disputed plot of land was part of a bigger
plot, did not feature as a discrete plot in the zoning plan, and could not
therefore have been returned.
D. Further developments
Following
the Supreme Court of Cassation’s ruling of 14 October 2004 in respect of the main
building (see paragraph 18 above), in 2005 the municipality lodged a claim for
unjust enrichment against the applicants with the Sofia City Court. It sought
repayment of allegedly wrongly paid rent in the amount of 151,207 new Bulgarian
levs (BGN), plus interest for the period between 3 August 1998 and 31 March
2001. The proceedings are still pending.
On 24
November 2005 the applicants applied for compensation under the 1997 Act (see
paragraphs 35-39 below). On 25 January 2006 the governor dismissed the application,
saying that the applicants had missed the one-year time-limit laid down in the
Act, which had expired in 1998. The applicants sought judicial review. In a
final judgment of 17 May 2007, the Supreme Administrative Court upheld the
governor’s decision.
On 27 March 2008 the applicants sent a letter to
the chairperson of the municipal council and the mayor of Gabrovo, seeking
compensation. Meetings with representatives of the municipal council followed.
On 25 May 2008 the applicants sent another letter to the council’s chairperson
and the mayor, reiterating their request. According to the applicants, the
authorities did not react to that letter.
On 21 October 2010 the municipal council adopted
a resolution to close down the school. In April 2011 the applicants sent letters
to the mayor, the municipal council and the regional governor, saying that after
the closure of the school the property had become private municipal property
and should be returned to them.
II. RELEVANT DOMESTIC LAW
A. Restitution of property taken under the Nationalisation
of Private Industrial and Mining Undertakings Act 1947
In 1992, after the fall
of the communist regime, Parliament adopted the Restitution of Ownership of
Nationalised Real Property Act 1992 (Закон
за
възстановяване
собствеността
върху
одържавени
недвижими
имоти). It came into force on 25
February 1992 and provided, in section 2(1) and (3) and section 4, that former
owners, or their heirs, of real property nationalised under, inter alia,
the Nationalisation of Private Industrial and Mining Undertakings Act 1947, regained
ownership of their nationalised properties if (a) the properties still existed
in their state prior to nationalisation, (b) they were still owned by, in
particular, the State or municipalities, and (c) no adequate compensation had
been received by the owners at the time of nationalisation.
Section 3(3)
provided that where restitution was impossible the former owners or their heirs
were to be compensated in a manner to be set out in a separate statute. That
statute - the Compensation of Owners of Nationalised Real Property Act 1997 -
was adopted and came into force in November 1997 (see paragraphs 35-39 below).
Section 6(3) read
in conjunction with (2) of the 1992 Act provided that if a restituted property had
accommodated, among others, hospitals or schools, they could continue to use it
for a period of three years after the Act’s coming into force, but had to pay,
from the date of restitution, regulated rent to the persons in whose favour the
property had been returned. The meaning of that provision was not entirely
clear. It appears that it concerned property which was being used as a hospital
or a school; even if all the conditions for the restitution of such property
were in place, in view of its designated use it was warranted not to return it
immediately to its former owners, so that its pre-restitution occupiers could
continue to use it for a certain period of time (реш.
№ 515 от 10 май 1995 г.
по гр. д. № 1381/1994 г., ВС,
IV г. о.).
The restitution
of ownership under the 1992 Act was by operation of law. There was no need for
an administrative or judicial decision certifying that the conditions for
restitution were in place. In particular, mayors’ decisions to strike property out
of the State properties register were internal acts with no effect on property
rights (реш. № 115 от 21
март 1994 г. по гр. д.
№ 3428/1993 г., ВС, III г. о.).
The Bulgarian courts have sought to clarify the restitution conditions laid
down in the 1992 Act, in particular the exact meaning of the condition that the
property had to still exist in its state prior to nationalisation (see paragraph
25 above). In an interpretative decision of 17 May 1995 (тълк.
реш. № 1 от 17 май 1995 г.
по гр. д. № 3/1994, ВС, ОСГК),
the former Supreme Court found that condition not to mean that a property should
have remained in the exact same state it had been at the time of nationalisation.
Subsequent modifications concerning its designated use did not preclude restitution.
It was enough for the property to exist as a discrete object of a property
right and within the boundaries that it had had at the time of nationalisation.
The above-mentioned
condition was further clarified in subsequent case-law. In particular, the
Supreme Court of Cassation has held that if the designated use of the
nationalised property has been modified by virtue of a zoning plan and the
property has been transformed into an element of the public infrastructure, such
as a public square, the property does not constitute a discrete object of a property
right and does not exist in its boundaries at the time of nationalisation. In
such cases, restitution is not possible (реш.
№ 1343 от 21
октомври 2001 г.
по гр. д. № 1233/2001 г., ВКС,
IV г. о.).
B. The concept of “municipal public property”
The Constitution of 1991 provides that property is private and public
(Article 17 § 2), and that the legal regime of property that belongs to the
State and the municipalities is to be governed by statute (Article 17 § 4). In its
interpretative decision no. 19 of 21 December 1993 (реш.
№ 19 от 21 декември
1993 г. по к. д. № 11 от 1993
г., обн., ДВ, бр. 4
от 12 януари 1994 г.),
the Constitutional Court held that although Article 17 § 2 of
the Constitution made a distinction between public and private property, it did
not lay down criteria for that distinction. The leading criteria were: who had title
to the property, the property’s nature and designated use. The court went on to
say that only the State and the municipalities could own public property. By contrast,
private property could be owned not only by the State and the municipalities, but
also by private persons. Lastly, the court noted that it was within the power
of the legislature to give a definition of property belonging to the public
domain.
The State Property
Act 1996 and the Municipal Property Act 1996 came into force on 1 June 1996. At
the material time the Municipal Property Act 1996 provided, inter alia,
that municipal public property was property designated as such by statute or
property that served the needs of the community in a permanent manner (section
3(2)(1) and (2)(3)). Such property is inalienable - it cannot be transferred to
third parties or acquired by adverse possession (section 7(1) and (2)). The
State Property Act 1996 contains similar provisions in respect of State public
property.
In its decision no. 4 of 11 March 1998 (реш.
№ 4 от 11 март 1998 г.
по к. д. № 16 от 1997 г.,
обн., ДВ, бр. 30 от 17
март 1998 г.), the Constitutional Court
held that restitution was possible only in respect of private property as only the
private property of the State or the municipalities could be transferred to
individuals or non-State entities. In particular, the restitution of State
public property had been prohibited by the 1992 Act and the 1997 Act. This was
so because restitution could not affect property that belonged to the public
domain and was protected by the Constitution because it served constitutionally
established public interests.
In line with the two
1996 Acts, in March 1998 the National Education Act 1991 was amended to provide
that property earmarked for use by municipal schools was in the public domain
and constituted municipal public property (section 10(3) (since 2009 subsection
(4)) in fine).
C. Compensation in lieu of restitution
In November 1997 Parliament
adopted the Compensation of Owners of Nationalised Real Property Act 1997 (Закон за
обезщетяване
на
собственици
на одържавени
имоти). It came into force on 22 November 1997
and provided for the compensation of former owners of nationalised property or
their heirs in cases where it was impossible to return the property because it
had become State or municipal public property, had been acquired in good faith
by third parties, or had been transformed by construction or otherwise (section
2(1)).
Under section 6(1),
applications for compensation had to be made to the regional governor or the
relevant minister within one year after the Act had come into force, that is, until
22 November 1998.
The former owners could choose the manner of compensation, except in cases
where the property had become State or municipal public property before 25
February 1992, the date on which the 1992 Act had come into force (section 2(4)).
In that case, compensation was only in the form of compensatory bonds (реш. № 9371 от 7
декември 2001 г.
по адм. д. № 3193/2001,
ВАС, III о., реш. № 7511
от 16 юли 2003 г. по
адм. д. № 2202/2003 г.,
ВАС, III о.), which could be used, in
particular, in tenders for the privatisation of State-owned companies (section
4(2)).
If the property
had become State or municipal public property after 25 February 1992, the
former owners were entitled to compensation equal to the fair market value of
the property at the time when the 1997 Act had come into force (section 2(7)).
In its above-mentioned decision no. 4 of 11 March 1998 (see paragraph 33 above), the Constitutional Court held that the reason for the difference in the manner
of compensation was in the fact that any transfers of property to the State which
had taken place after the coming into force of the 1992 Act in effect amounted
to expropriations and called for the payment of compensation equivalent to the fair
market value of the property.
D. State liability for damages
Section 1 of the State
Responsibility for Damage Caused to Citizens Act 1988 (Закон
за
отговорността
на държавата
за вреди,
причинени на
граждани), in July
2006 renamed the State and Municipalities Responsibility for Damage Act (Закон за
отговорността
на държавата
и общините за
вреди - “the 1988 Act”), provides that
the State and municipalities are liable for damage suffered by individuals (and
since 1 January 2006 also legal persons) as a result of unlawful
decisions, actions or omissions by their organs and officials committed in the
course of or in connection with the carrying out of administrative action.
Section 8(2) provides that if another statute provides for a special manner of
indemnification, the Act does not apply. It seems that the domestic courts are not
inclined to allow claims under section 1 of the Act in situations where, as in
the present case, the claimants have failed to make applications for compensation
under the 1997 Act in a timely manner (реш.
№ 4137 от 23 март 2011 г. по
адм. д. № 15208/2010 г.,
ВАС, ІІІ о.).
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No.
1
The applicants complained that with its judgment
of 12 December 2007 the Supreme Court of Cassation had unjustifiably deprived
them of their property, namely the plot of land and the two accessory buildings.
They relied on Article 1 of Protocol No. 1, which reads as follows:
“Every natural or legal person is entitled to the peaceful
enjoyment of his possessions. No one shall be deprived of his possessions
except in the public interest and subject to the conditions provided for by law
and by the general principles of international law.
The preceding provisions shall not, however, in any way impair
the right of a State to enforce such laws as it deems necessary to control the
use of property in accordance with the general interest or to secure the
payment of taxes or other contributions or penalties.”
A. Admissibility
The Government submitted that the applicants had
failed to exhaust domestic remedies as they had not brought a claim against the
relevant authorities under section 1 the 1988 Act (see paragraph 40 above) or applied for compensation under the 1997 Act (see paragraphs 35-39 above).
The Court finds that the question of exhaustion
of domestic remedies is closely related to the merits of the complaint. The Court
therefore joins the objection to the merits.
The Court further considers that any issues relating
to the compatibility ratione materiae of the complaint with the
provisions of the Convention are more appropriately addressed at the merits
stage (see, mutatis mutandis, Valkov and Others v. Bulgaria,
nos. 2033/04, 19125/04, 19475/04, 19490/04, 19495/04, 19497/04, 24729/04,
171/05 and 2041/05, § 75, 25 October 2011).
Lastly, the Court considers that the complaint
is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of
the Convention or inadmissible on any other grounds. It must therefore be
declared admissible.
B. Merits
1. The parties’ submissions
The Government submitted that the 1992 Act had
not produced any effects on the disputed property because the conditions for
restitution had not been met. They further argued that the mayor’s decision to
strike the property out of the State properties register could not create any
possession or give rise to any legitimate expectation. In their view, the
applicants were not in possession of the plot and the rental agreement between
them and the municipality was irrelevant for their alleged title to the plot.
The Government further submitted that even assuming
that the applicants had an existing possession or a legitimate expectation and
that the Supreme Court of Cassation’s judgment of 12 December 2007 had amounted
to interference with their possessions, that interference had been in the
public interest and proportionate because the applicants had been entitled to
compensation under the 1997 Act. The fact that, although knowing that
restitution was impossible, they had failed to avail themselves of that opportunity
within the statutory time-limit could not be attributed to the authorities.
The applicants maintained that they had had a
possession within the meaning of Article 1 of Protocol No. 1 because their
property had been returned to them by the operation of the 1992 Act. They
relied, in particular, on the wording of section 6(3) of that Act which, in
their view, allowed the restitution of properties accommodating schools. Moreover,
the municipality had been recognising their ownership for ten years. Also, the
applicants had a notary deed certifying their title, and were paying property
taxes.
The applicants submitted that the Supreme Court
of Cassation’s judgment of 12 December 2007 had unjustifiably interfered with
their possessions. In their view, that court’s finding that the 1992 Act had
never produced any effect because the property at issue had been municipal
public property had been in breach of domestic law. That approach had been arbitrary
because the concept of “municipal public property” had been introduced as late
as 1996. The applicants argued that the court’s further findings that the
conditions for restitution had not been met on account of the transformation of
the property into a school had been also arbitrary and in breach of domestic
law.
In the applicants’ view, the situation had in
effect amounted to a new expropriation, which had been disproportionate because
they could not have applied for compensation. In contrast with the situations
obtaining in Ivanova and Others v. Bulgaria ((dec.), no. 66467/01, 1 December
2009) and Velikin and Others v. Bulgaria ((dec.), no. 28936/03, 1
December 2009), in the present case they had been in possession of the property,
and the municipality had not contested their title. They could not therefore have
been reasonably expected to apply for compensation within the time-limit laid
down in the 1997 Act.
2. The Court’s assessment
(a) Scope of the complaint
The Court notes at the outset that it is
competent to examine only that part of the complaint which concerns the plot of
land and the two accessory buildings. The applicants’ complaint under Article 1
of Protocol No. 1 in respect of the main building was declared
inadmissible in the partial decision in the present case (see Yavashev and
Others v. Bulgaria (dec.), no. 41661/05, 15 March 2011).
(b) Existence of an interference with possessions
The parties disagreed as to whether the
applicants had had a property interest amounting to a possession within the
meaning of Article 1 of Protocol No. 1. The Court must therefore start by
determining whether the applicants’ position with regard to the plot of land
and the two accessory buildings was such as to attract the protection of that Article.
In that connection, the Court agrees with the
applicants’ argument that the present case must be distinguished from Velikin
and Others and Ivanova and Others (both cited above). In those cases,
the applicants’ rei vindicatio claims based on alleged restitution
by the operation of the 1992 Act had been dismissed by the domestic courts on
the grounds that the properties in issue had always been State or municipal public
properties, which had rendered restitution impossible. The Court, for its part,
found that the applicants had never obtained effective restitution of those properties
and had therefore not had an existing possession within the meaning of Article
1 of Protocol No. 1. Nor had they had a legitimate expectation because their
alleged title to the properties had always been contested by the authorities
and the applicants had been unable to enter into possession of the properties.
Turning to the present case, the Court takes
note of the applicants’ averment that their property was returned to them by virtue
of the 1992 Act. However, having regard to the wording of the relevant
provisions of that Act and the subsequent case-law of the domestic courts (see
paragraphs 25-30 above), the two Acts adopted in 1996 and the legislative
amendment of 1998 (see paragraphs 32 and 34 above), and the Supreme Court of
Cassation’s judgment of 12 December 2007 which found that the property had
never been returned to the applicants (see paragraph 20 above), the Court does not consider that it is for it to determine whether the property
was or was not subject to restitution under Bulgarian law. It observes that no
legitimate expectation can be said to arise where there is a dispute as to the
correct interpretation and application of domestic law and the applicants’
submissions are ultimately rejected by the national courts (see Kopecký
v. Slovakia [GC], no. 44912/98, § 50, ECHR 2004-IX).
That said, the Court cannot overlook the fact
that for a number of years the Gabrovo municipality - which was competent to manage
the property - treated the applicants as its owners (contrast Velikin and
Others, cited above, §§ 67 in fine and 68). Not only did the mayor
strike the property out of the State properties register in November 1992, but in
1995 the municipality initiated negotiations for the payment of rent (see paragraphs
9 and 10 above). Later, in spite of the legislative changes in 1996-98,
which elucidated the concept of property belonging to the public domain and made
it clear that premises accommodating schools were in the public domain, the
municipality started effectively paying rent to the applicants and agreed to
pay them compensation for its past use of the property, thus continuing to
acknowledge them as owners (see paragraph 11 above).
The Court is mindful of the fact that in
contrast to other cases against Bulgaria, where the recognition of title to
restituted property had been made by an authority mandated by law to decide
whether the conditions for restitution had been met (see Debelianovi v.
Bulgaria, no. 61951/00, § 9, 29 March 2007; Naydenov v. Bulgaria,
no. 17353/03, § 68, 26 November 2009; Mutishev and Others v.
Bulgaria, no. 18967/03, § 123, 3 December 2009; and Lyubomir Popov v.
Bulgaria, no. 69855/01, §§ 111 and 117,
7 January 2010), in the instant case no such authority was
envisaged by the relevant law (see Ivanova and Others, cited above). Nevertheless,
the Court considers that the general wording of the 1992 Act, coupled with the
municipality’s continued recognition of the applicants’ title for almost ten
years, gave rise to a proprietary interest protected under Article 1 of
Protocol No. 1 (see, mutatis mutandis, Zwierzyński v. Poland,
no. 34049/96, §§ 63-64, ECHR 2001-VI; Öneryıldız v.
Turkey [GC], no. 48939/99, §§ 127-29, ECHR 2004-XII; Bruncrona
v. Finland, no. 41673/98, § 79, 16 November 2004; Osman v. Bulgaria,
no. 43233/98, §§ 96-97, 16 February 2006; Hamer v. Belgium,
no. 21861/03, §§ 75-76, ECHR 2007-V (extracts); Depalle v. France
[GC], no. 34044/02, §§ 62-68, ECHR 2010-...; Brosset-Triboulet
and Others v. France [GC], no. 34078/02,
§§ 65-71, 29 March 2010; and Bilozir and Rizova v. Ukraine
(dec.), no. 37863/05, 28 September 2010). In addition to that, although the
courts later decided that the property in question was not subject to
restitution under domestic law, it cannot be overlooked that the applicants had
a right to compensation in lieu of restitution, which could be regarded as
another proprietary interest protected under Article 1 of Protocol No. 1. It is
true that this right became time-barred before the applicants could exercise it.
However, the only reason for their failure to file a compensation claim within
the statutory time-limit was the continued recognition - later found erroneous
- of their title by the authorities. Article 1 of Protocol No. 1 is therefore
applicable.
The Court further considers that the judgment of
12 December 2007 in which the Supreme Court of Cassation held that the plot of
land and the two accessory buildings had never been returned to the applicants
because they did not exist independently of the main building and had always
been municipal public property interfered with the applicants’ right to
peaceful enjoyment of their possessions. However, the Court does not consider
it necessary to determine whether that interference amounted to a deprivation
of property. The complexity of the factual and legal position in the present
case prevents it from being classified in a precise category. In view of that, and
bearing in mind that the situation envisaged in the second sentence of the
first paragraph of Article 1 is a particular instance of interference with
peaceful enjoyment of possessions as guaranteed by the general rule set forth
in the first sentence, the Court considers that it should examine the situation
complained of in the light of that general rule (see, mutatis mutandis, Beyeler
v. Italy [GC], no. 33202/96, § 106, ECHR 2000-I, and The Synod
College of the Evangelical Reformed Church of Lithuania v. Lithuania
(dec.), no. 44548/98, 5 December 2002).
The Court must now determine whether the
interference with the applicants’ rights under Article 1 of Protocol No. 1 was
lawful and in the public interest, and whether it struck a fair balance between
the demands of the general interest of the community and the applicants’
rights.
(c) Justification for the interference
The first and most important requirement of
Article 1 of Protocol No. 1 is that an interference by a public authority
with the peaceful enjoyment of possessions should be lawful. The Court has
consistently held that the terms “law” or “lawful” in the Convention do not
merely refer back to domestic law but also relate to the quality of the law,
requiring it to be compatible with the rule of law (see, among many other
authorities, James and Others v. the United Kingdom, 21 February
1986, § 67, Series A no. 98).
Concerning the applicants’ assertion that the
manner in which the domestic courts applied the concept of “municipal public
property” to their case was arbitrary, the Court firstly observes that it has
only limited power to deal with alleged errors of fact or law committed by the
national courts (see, among many other authorities, Kopecký, cited above,
§ 56). Secondly, the Court refers to its findings in Velikin and Others (cited
above, §§ 70-74) and Ivanova and Others (cited above), where it
examined in detail analogous rulings of the Bulgarian courts in respect of similar
facts and found that those rulings were not arbitrary. It went on to say that the
courts’ approach had not run counter to the principle of legal certainty. It sees
no reason to hold otherwise in the present case.
. As
to whether the impugned interference was in the public interest, the Court
reiterates that because of their direct knowledge of their society and its
needs, the national authorities are in principle better placed to appreciate what
is “in the public interest”. In the case at hand, the impugned domestic court
judgments did nothing more than enforce binding legal rules on the status of
certain properties (see, mutatis mutandis, Maslenkovi v. Bulgaria,
no. 50954/99, § 32, 8 November 2007). Their aim was to correct a perceived mistake
in the application of those rules by the municipal authorities. In those
circumstances, the Court is satisfied that the interference pursued a
legitimate aim in the public interest (see, mutatis mutandis, Moskal
v. Poland, no. 10373/05, § 62, 15 September 2009).
However, even if it is lawful, devoid of
arbitrariness and in the public interest, an interference with the right to the
peaceful enjoyment of possessions must strike a fair balance between the
demands of the general interest of the community and the applicants’ rights. In
particular, there must be a reasonable relationship of proportionality between
the means employed and the aim sought to be realised (see, among many other
authorities, Sporrong and Lönnroth v. Sweden, 23 September 1982, § 69,
Series A no. 52, and Scordino v. Italy (no. 1) [GC], no. 36813/97, § 93, ECHR
2006-V).
The Court has recognised that the Contracting
States have a wide margin of appreciation when passing laws in the context of a
change of political and economic regime and, in particular, in the context of a
transition from a totalitarian state to a democratic society (see
Credit Bank and Others v. Bulgaria (dec.), no. 40064/98, 30 April
2002; Jahn and Others v. Germany [GC], nos. 46720/99, 72203/01 and
72552/01, § 113, ECHR 2005-VI; Velikovi and Others v. Bulgaria,
nos. 43278/98, 45437/99, 48014/99, 48380/99, 51362/99, 53367/99, 60036/00, 73465/01
and 194/02, § 172, 15 March 2007; and Suljagić v. Bosnia and Herzegovina,
no. 27912/02, § 42 in fine, 3 November 2009). In the present case, the
general character of the 1992 Act and the subsequent legislative and case-law developments
show a continuing effort on the part of the authorities to take into account
the relevant interests involved, private and public, and to achieve a better
balance between them (see, mutatis mutandis, Velikovi and Others,
cited above, § 179).
In its judgment of 12 December 2007 the Supreme
Court of Cassation essentially ruled with final effect that the municipality
had erred in law by recognising the applicants’ title to the property. In that
connection, the Court observes that as a general principle the authorities
should not be prevented from correcting their mistakes, even those resulting
from their own negligence. Holding otherwise may lead to a situation which runs
contrary to the public interest (see Bilozir and Rizova, and, mutatis
mutandis, Moskal, §§ 72-73, both cited above). The Court is therefore
unable to find that the ruling of 12 December 2007 was in itself a
disproportionate measure.
That said, the Court cannot lose sight of the
fact that it took the authorities almost ten years to realise that a mistake
had been made. The first steps in that respect were taken as late as 2001, when
the regional governor suspended the municipality’s intended purchase of the
school on the ground that it had always belonged to the municipality (see
paragraph 14 above). The time taken by the authorities to intervene is a factor
to be taken into consideration in assessing the proportionality of an
interference with possessions (see Jahn and Others, cited above, § 116,
and Althoff and Others v. Germany, no. 5631/05, § 70, 8 December
2011). The passage of time is especially relevant in the present case as the 1997
Act, which provided for compensation in cases where property could not be
restituted because it belonged to the public domain, laid down a time-limit, expiring
one year after the Act’s coming into force, for submitting applications for
compensation (see paragraph 36 above). In this connection, the Court observes that
compensation terms under the relevant legislation are likewise material to the
assessment whether the contested measure respects the requisite fair balance
and imposes a disproportionate burden on the applicants (see Jahn and Others,
§ 94, and Althoff and Others, § 63, both cited above).
At the time of the adoption of the 1997 Act the
municipality had been recognising the applicants’ title for a number of years
and continued to do so, with the result that the applicants had a justified
assumption that the plot of land and the two accessory buildings had been returned
to them. Despite the somewhat unclear tenor of the relevant provisions of the 1992
Act and the already existing concept of property belonging to the public domain,
in the absence of any judicial decision interpreting and applying the relevant provisions
to the applicants’ case it was not unreasonable for them to rely on the
municipality’s recognition and not apply for compensation in lieu of
restitution on time (contrast Velikin and Others, cited above, § 79).
. It
does not appear that the applicants had any other means of obtaining such compensation.
In particular, the Government’s assertion that the applicants could have
brought a claim for damages under section 1 of the 1988 Act is completely
unsubstantiated by reference to relevant case-law, and the Act’s wording and
the domestic courts’ case-law suggest the opposite (see paragraph 40 above).
. In
view of that, and bearing in mind that a considerable period of time passed
between the striking of the property out of the State properties register and
the dispute over the applicants’ title, the complete lack of any compensation appears
disproportionate (see Althoff and Others, cited above, §§ 72-73).
Having regard to the particular circumstances of
the case and in spite of the wide margin of appreciation afforded to the State
in the exceptional transitional context, the Court finds that the impossibility
for the applicants to apply for compensation for reasons imputable to the
authorities upset the fair balance that needed to be struck between the
protection of their rights and the demands of the general interest.
In conclusion, the Court dismisses the
Government’s objection of non-exhaustion of domestic remedies and finds that
there has been a violation of Article 1 of Protocol No. 1.
II. 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
In respect of pecuniary damage, the applicants
stated that they should be given back their property or, failing such, should
be given equivalent property or paid a sum of money reflecting its value,
namely BGN 470,000 (240,307.18 euros (EUR)). In support of their claim they
presented a valuation report drawn up in 2008 for the main building, the plot
of land and the two accessory buildings. According to that report, the value of
the plot of land was BGN 246,030.80 (EUR 125,793.55), and the value of the two
accessory buildings was BGN 50,234 (EUR 25,684.24).
The applicants further claimed EUR 20,000 each, or
EUR 60,000 in total, in respect of non-pecuniary damage.
The Government contested the claims as
exorbitant.
The Court notes at the outset that the breach of
Article 1 of Protocol No. 1 essentially concerned the lost possibility for
the applicants to obtain compensation for the plot of land and the two
accessory buildings. It reiterates in this respect that a judgment in
which the Court finds a breach of the Convention or its Protocols imposes on
the respondent State a legal obligation to put an end to that breach and make
reparation for its consequences in such a way as to restore as far as possible
the situation existing before the breach (see, as a recent authority, Kozacıoğlu
v. Turkey [GC], no. 2334/03, § 80, 19 February 2009).
At the same time, the Court notes that where the
basis of the violation found is a failure to strike a fair balance between the
public interest and the individual’s rights rather than illegality, just
satisfaction need not necessarily reflect the idea of wiping all the
consequences of the interference in question, and compensation need not always
equal the full value of the property. Legitimate objectives of public interest,
such as measures of economic reform, may call for less than reimbursement of
the full market value (see Todorova and Others v. Bulgaria (just
satisfaction), nos.
48380/99, 51362/99, 60036/00 and 73465/01, § 8, 24 April 2008).
In the light of the above considerations, the
fact that the Court cannot speculate as to the amount of compensation that the
applicants may have obtained if they had applied for it in good time, and the
impossibility to quantify exactly the applicants’ loss, the Court considers
that it must fix a lump sum in respect of the pecuniary and non-pecuniary
damage suffered by them. Ruling on an equitable basis, it awards jointly to all
three applicants the sum of EUR 20,000, plus any tax that may be chargeable.
B. Costs and expenses
The applicants claimed EUR 5,398 in legal fees
for the proceedings before the Court, of which EUR 4,000 was for the
preparation of the initial application and EUR 1,300 for the subsequent legal
work done by Ms S. Margaritova-Vuchkova. They also requested that the
amount of EUR 1,300 be paid directly into Ms S. Margaritova-Vuchkova’s
bank account. In support of their claim the applicants presented a contract for
legal representation with Ms S. Margaritova-Vuchkova and a time-sheet for 22½
hours of work at an hourly rate of EUR 60. For the remainder of the requested
amount, namely EUR 4,098, the applicants did not present any documents showing that
they had undertaken to pay this amount or had actually paid it.
The applicants also claimed BGN 2,700 (EUR 1380.49)
for costs and expenses incurred in the domestic proceedings. In support of
their claim they presented contracts for legal representation in the proceedings
against the regional governor’s refusal to pay them compensation under the 1997 Act
(see paragraph 22 above), in another set of proceedings against the
municipality, and in the pending proceedings for the payment of rent (see paragraph
21 above).
The applicants further claimed BGN 280 (EUR
143.16) for translation costs, BGN 450 (EUR 230.08) for the cost of the
valuation report and BGN 8.9 (EUR 4.55) for postal expenses. In support of these
claims they presented the relevant receipts.
The Government contested the claims as
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. With regard to the claim for legal fees for the Strasbourg proceedings, the Court considers that the claim has been substantiated only for
the amount of EUR 1,300. The Court makes no award in respect of the costs and
expenses incurred in the domestic proceedings. The attempt to obtain judicial
review of the governor’s decision (see paragraph 22 above) was bound to fail and therefore does not appear to have been an effective remedy that the applicants
had to exhaust. As for the proceedings for the payment of rent, they are still
pending (see paragraph 21 above). It is therefore unclear whether the
applicants will have to bear the costs and expenses incurred for them. With
regard to the remainder of the claim, the Court considers it reasonable to
award the whole sum claimed, namely EUR 377.79. In conclusion, the Court
awards jointly to the applicants EUR 1,677.79, of which EUR 1,300 are to
be paid directly into the bank account of the applicants’ representative, Ms S.
Margaritova-Vuchkova.
C. Default interest
The Court considers it appropriate that the
default interest rate 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. Joins to
the merits the Government’s objection on the issue of non-exhaustion of
domestic remedies and declares the remainder of the application
admissible;
2. Holds that there has been a violation of
Article 1 of Protocol No. 1 and dismisses in consequence the Government’s
objection on the issue of non-exhaustion of domestic remedies;
3. Holds
(a) that the respondent State is to pay jointly to the
three applicants, within three months from the date on which the judgment
becomes final in accordance with Article 44 § 2 of the Convention, the
following amounts, to be converted into Bulgarian levs at the rate applicable
at the date of settlement:
(i) EUR 20,000 (twenty thousand euros), plus any
tax that may be chargeable, in respect of pecuniary and non-pecuniary damage;
(ii) EUR 1,677.79 (one thousand six hundred and
seventy-seven euros and seventy-nine cents), plus any tax that may be
chargeable to the applicants, in respect of costs and expenses; EUR 1,300 (one
thousand three hundred euros) of that amount is to be paid directly to Ms S.
Margaritova-Vuchkova;
(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;
4. Dismisses the remainder of the applicants’
claim for just satisfaction.
Done in English, and notified in writing on 6 November 2012,
pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Fatoş
Aracı Lech Garlicki
Deputy Registrar President
