FIFTH SECTION

CASE OF STEFANOVI v. BULGARIA

(Application no. 65688/12)

JUDGMENT

STRASBOURG

30 March 2017

This judgment is final but it may be subject to editorial revision.

In the case of Stefanovi v. Bulgaria,
The European Court of Human Rights (Fifth Section), sitting as a Committee composed of:
	Erik Møse, President,
	Yonko Grozev,
	Lәtif Hüseynov, judges,
and Anne-Marie Dougin, Acting Deputy Section Registrar,
Having deliberated in private on 7 March 2017,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1.  The case originated in an application (no. 65688/12) 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 three Bulgarian nationals, Mr Vasil Georgiev Stefanov, Ms Minka Aleksandrova Stefanova and Mr Aleksandar Vasilev Stefanov (“the applicants”), on 4 October 2012.
2.  The applicants were represented by Mr S. Darov, a lawyer practising in Sofia. The Bulgarian Government (“the Government”) were represented by their Agent, Ms M. Kotseva, of the Ministry of Justice.
3.  On 16 March 2015 the application was communicated to the Government.
THE FACTS
Article I.	I.  THE CIRCUMSTANCES OF THE CASE
4.  The applicants were born in 1938, 1940 and 1961 respectively. The first two applicants live in Dolni Dabnik and the third applicant lives in Sofia. The first two applicants are the third applicant’s parents.
5.  In 1990 the three applicants bought from the State a flat in Sofia measuring 144 square metres, which had become property of the State by virtue of the nationalisations carried out by the communist regime after 1945.
6.  In 1992 the heir of the pre-nationalisation owner of the flat brought an action against the applicants under section 7 of the Restitution Law, seeking to establish that their title was null and void. She also brought a rei vindicatio claim against them.
7.  The proceedings ended with a final judgment of the Supreme Court of Cassation on 22 June 2004. The domestic courts dealing with the proceedings allowed both actions against the applicants. In relation to the action under section 7 of the Restitution Law, the courts found the applicants’ title null and void, since they had bought their flat in breach of the law: the area where the flat was located had been earmarked for the construction of buildings of more than three storeys, and the applicants’ building was of two storeys; and the legislation at the time prohibited the sale of flats in such buildings.
8.  It appears that on an unspecified date after that the applicants applied for compensation bonds; however, the parties have not informed the Court of the outcome of the procedure.
9.  In 2005 the applicants brought a tort action against the Sofia municipality (which was the legal successor of the State with regard to residential property). On 20 January 2010 the Sofia City Court allowed their claim. That judgment was quashed on 4 November 2010 by the Sofia Court of Appeal, which dismissed the claim in its entirety. In a final judgment of 4 April 2012 the Supreme Court of Cassation, finding that the applicants were only entitled to receive the price they had paid for the flat in 1990, which had devalued enormously over the years, awarded them the equivalent of about 12 euros (EUR).
Article II.	II.  RELEVANT DOMESTIC LAW AND PRACTICE
10.  The relevant background facts, domestic law and practice in relation to the restitution of urban properties, and in particular the application of section 7 of the Restitution Law, have been summarised in the Court’s judgment in the case of 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, §§ 110‑41, 15 March 2007).
THE LAW
Article III.	I.  The Government’s request to strike out the application under Article 37 § 1 of the Convention
11.  On 12 October 2016 the Government submitted a unilateral declaration with a view to resolving the issues raised by the application. They requested that the Court strike out the application in accordance with Article 37 of the Convention, acknowledging a violation of Article 1 of Protocol No. 1 and proposing to pay the applicants EUR 42,000, a sum which was to cover all pecuniary and non-pecuniary damage as well as costs and expenses.
12.  The applicants disagreed with the declaration, stating that the award proposed by the Government was too low.
13.  Article 37 of the Convention provides that the Court may, at any stage of the proceedings, decide to strike an application out of its list of cases where the circumstances lead to one of the conclusions specified under (a), (b) or (c) of paragraph 1 of that Article. In particular, Article 37 § 1 (c) enables the Court to strike a case out of its list if:
“for any other reason established by the Court, it is no longer justified to continue the examination of the application.”
14.  The Court will examine the Government’s declaration in the present case in the light of the principles emerging from its case-law, in particular the Tahsin Acar judgment (see Tahsin Acar v. Turkey [GC], no. 26307/95, §§ 75-77, ECHR 2003-VI). It thus notes that the Government expressly acknowledged the breach of the applicants’ right of property, but is not satisfied that they have offered adequate redress. In particular, the sum proposed in the unilateral declaration in respect of pecuniary and non-pecuniary damage and costs and expenses, namely EUR 42,000, does not bear a reasonable relationship of proportionality to the amounts which the Court would award.
15.  For these reasons, the Court finds that respect for human rights as defined in the Convention and its Protocols requires it to continue its examination of the case (see, for example, Krawczak v. Poland (no. 2), no. 40387/06, §§ 15-24, 8 April 2008, and Topčić-Rosenberg v. Croatia, no. 19391/11, §§ 27-31, 14 November 2013).
16.  That being so, the Court rejects the Government’s request to strike the application out of its list of cases under Article 37 of the Convention.
Article IV.	II.  ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1
17.  The applicants complained under Article 1 of Protocol No. 1 that they had been deprived of their property unfairly, through no fault of their own, and had not received adequate compensation.
18.  Article 1 of Protocol No. 1 reads:
“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.”
19.  The Government did not comment on the admissibility and merits of the application.
20.  The Court observes that the present case is of the type it examined in the leading case of Velikovi and Others (cited above) and a number of follow-up cases (see, for example, Dimitar and Anka Dimitrovi v. Bulgaria, no. 56753/00, 12 February 2009; Panayotova v. Bulgaria, no. 27636/04, 2 July 2009; and Madzharov v. Bulgaria, no. 40149/05, 2 September 2010).
Section 4.01	A.  Admissibility
21.  The applicants lost their flat in 2004, but did not lodge their application within six months of the final judgment in the proceedings under section 7 of the Restitution Law (see paragraphs 1 and 7 above).
22.  However, in several cases in the Velikovi group the Court held that, in relation to the deprivation of property and the award of any compensation, relevant events should be viewed as a continuing situation, and the six-month time-limit under Article 35 § 1 of the Convention started running when all issues related to compensation were settled (see, for example, Shoilekovi and Others v. Bulgaria (dec.), nos. 61330/00, 66840/01 and 69155/01, 18 September 2007, and Georgievi v. Bulgaria, no. 10913/04, § 26, 7 January 2010). In the present case, after losing their flat, the applicants brought tort proceedings against the Sofia municipality (see paragraph 9 above), and even though they eventually obtained a very small award, it could not be said that those proceedings were clearly incapable of leading to the award of adequate compensation – for instance, such compensation was awarded by the first-instance court (see paragraph 9 above). Accordingly, the relevant six-month time-limit started running on the date of the final judgment in the tort proceedings, 4 April 2012, which means that the application was lodged in time (for a similar situation, see Vladimirova and Others v. Bulgaria, no. 42617/02, §§ 28-30, 26 February 2009).
23.  The Court next notes that the application is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
Section 4.02	B.  Merits
24.  The applicants were deprived of their property as a consequence of the enactment by Parliament and the application by the national courts of the Restitution Law, in particular its section 7. This undoubtedly constituted State interference with their property rights (see Velikovi and Others, cited above, § 159).
25.  This interference was based on the relevant domestic legislation. In addition, as the action against the applicants was brought within the initial one-year time-limit following the enactment of the Restitution Law, it could be said to have been part of the measures associated with the period of legal and economic transition in Bulgaria after decades of totalitarian rule. As in earlier similar cases, this means that the case fell within the scope of legitimate aims pursued by the Restitution Law, such as the restoration of justice and respect for the rule of law (see Velikovi and Others, cited above, § 172).
26.  The Court next observes that the applicants were deprived of their property owing to a minor defect of the sale contract under which they had acquired it in 1990: the contract had been concluded in breach of the prohibition on selling flats in two-storey buildings in areas earmarked for the construction of buildings of more than three storeys. The Court has already found that the responsibility for such an error lay with the authorities and that the applicants bore no fault in this respect (see Georgieva and Mukareva v. Bulgaria, no. 3413/05, § 31, 2 September 2010).
27.  In the absence of other relevant circumstances, in such a case the fair balance required under Article 1 of Protocol No. 1 could not be achieved without adequate compensation.
28.  In the first place, the applicants had the possibility to seek compensation bonds, and the Court has not been informed of the outcome of their application for such bonds (see paragraph 8 above). However, in many similar cases the Court has found that the bonds scheme operating at the relevant time did not secure adequate compensation with any degree of certainty (see, for example, Madzharov, § 27, and Panayotova, § 24, both cited above). Therefore, even though the availability of that scheme to the applicants will be taken into consideration under Article 41 of the Convention, it cannot be decisive for the outcome of their Article 1 of Protocol No. 1 complaint.
29.  Nor were the applicants able to obtain any adequate compensation when they resorted to a tort action against the Sofia municipality, as they were only awarded a token amount (see paragraph 9 above).
30.  In these circumstances, the Court finds that no adequate compensation was available to the applicants. It follows that the fair balance between the public interest and the need to protect their rights defined in paragraph 27 above has not been achieved.
31.  Accordingly, there has been a breach of Article 1 of Protocol No. 1.
Article V.	III.  APPLICATION OF ARTICLE 41 OF THE CONVENTION
32.  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.”
Section 5.01	A.  Damage
33.  The applicants claimed 282,000 Bulgarian levs (BGN), the equivalent of approximately 144,000 euros (EUR), in respect of pecuniary damage. They submitted a valuation of the flat they had lost, prepared by a licenced expert, who considered this to be the flat’s market value, on the basis of information about sale offers concerning other similar flats in Sofia and the possible revenue from rent.
34.  The applicants did not make any claims in respect of non-pecuniary damage.
35.  The Government did not comment.
36.  The Court applies to the instant case the approach set out in the earlier similar cases (in particular the judgment on just satisfaction in the cases examined in Velikovi and Others, where the Court found violations of Article 1 of Protocol no. 1, see Todorova and Others v. Bulgaria (just satisfaction), nos. 48380/99, 51362/99, 60036/00 and 73465/01, 24 April 2008). Furthermore, as already discussed, it takes into account the availability to the applicants of compensation through bonds (see paragraph 28 above and also Todorova and Others, cited above, §§ 44-46).
37.  Having regard to the considerations above and all the circumstances of the case, the Court awards jointly to the three applicants EUR 75,000 for pecuniary damage.
Section 5.02	B.  Costs and expenses
38.  The applicants did not make a claim in respect of costs and expenses. Accordingly, the Court considers that there is no call to award them any sum under this head.
Section 5.03	C.  Default interest
39.  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.  Declares the application admissible;

2.  Holds that there has been a violation of Article 1 of Protocol No. 1;

3.  Holds
(a)  that the respondent State is to pay jointly to the three applicants, within three months, EUR 75,000 (seventy-five thousand euros) in respect of pecuniary damage, plus any tax that may be chargeable, to be converted into Bulgarian levs at the rate applicable at the date of settlement;
(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 30 March 2017, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
	Anne-Marie Dougin	Erik Møse
	Acting Deputy Registrar	President