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European Court of Human Rights
You are here: BAILII >> Databases >> European Court of Human Rights >> GASUS DOSIER- UND FÖRDERTECHNIK GmbH v. THE NETHERLANDS - 15375/89 [1995] ECHR 7 (23 February 1995)
URL: http://www.bailii.org/eu/cases/ECHR/1995/7.html
Cite as: 20 EHRR 403, [1995] ECHR 7, (1995) 20 EHRR 403
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In the case of Gasus Dosier- und Fördertechnik GmbH v.
the Netherlands (1),
The European Court of Human Rights, sitting, in
accordance with Article 43 (art. 43) of the Convention for the
Protection of Human Rights and Fundamental Freedoms ("the
Convention") and the relevant provisions of Rules of
Court A (2), as a Chamber composed of the following judges:
Mr R. Ryssdal, President,
Mr F. Gölcüklü,
Mr R. Macdonald,
Mr C. Russo,
Mr S.K. Martens,
Mr I. Foighel,
Mr G. Mifsud Bonnici,
Mr P. Jambrek,
Mr K. Jungwiert,
and also of Mr H. Petzold, Registrar,
Having deliberated in private on 22 September 1994 and
24 January 1995,
Delivers the following judgment, which was adopted on the
last-mentioned date:
_______________
Notes by the Registrar
1. The case is numbered 43/1993/438/517. The first number is
the case's position on the list of cases referred to the Court
in the relevant year (second number). The last two numbers
indicate the case's position on the list of cases referred to
the Court since its creation and on the list of the
corresponding originating applications to the Commission.
2. Rules A apply to all cases referred to the Court before
the entry into force of Protocol No. 9 (P9) and thereafter
only to cases concerning States not bound by that Protocol
(P9). They correspond to the Rules that came into force on
1 January 1983, as amended several times subsequently.
_______________
PROCEDURE
1. The case was referred to the Court by the European
Commission of Human Rights ("the Commission") on
9 December 1993, within the three-month period laid down by
Article 32 para. 1 and Article 47 (art. 32-1, art. 47) of the
Convention. It originated in an application (no. 15375/89)
against the Kingdom of the Netherlands lodged with the
Commission under Article 25 (art. 25) on 6 July 1989 by a
limited liability company possessing legal personality under
German law (Gesellschaft mit beschränkter Haftung), Gasus
Dosier- und Fördertechnik GmbH.
The Commission's request referred to Articles 44 and 48
(art. 44, art. 48) and to the declaration whereby the
Netherlands recognised the compulsory jurisdiction of the
Court (Article 46) (art. 46). The object of the request was
to obtain a decision as to whether the facts of the case
disclosed a breach by the respondent State of its obligations
under Article 1 of Protocol No. 1 (P1-1).
2. In response to the enquiry made in accordance with
Rule 33 para. 3 (d) of Rules of Court A, the applicant company
indicated that they wished to take part in the proceedings and
designated the lawyer who would represent them (Rule 30) but
declined to appear at the Court's hearing. The German
Government, having been informed by the Registrar of their
right to intervene (Article 48 (b) of the Convention and
Rule 33 para. 3 (b)) (art. 48-b), indicated by a letter of
27 December 1993 that they did not intend to do so.
3. The Chamber to be constituted included ex officio
Mr S.K. Martens, the elected judge of Netherlands nationality
(Article 43 of the Convention) (art. 43), and Mr R. Ryssdal,
the President of the Court (Rule 21 para. 3 (b)). On
24 January 1994, in the presence of the Registrar, the
President drew by lot the names of the other seven members,
namely Mr R. Macdonald, Mr C. Russo, Mr N. Valticos,
Mr I. Foighel, Mr G. Mifsud Bonnici, Mr P. Jambrek and
Mr K. Jungwiert (Article 43 in fine of the Convention and Rule
21 para. 4) (art. 43). Subsequently Mr F. Gölcüklü,
substitute judge, replaced Mr Valticos, who was unable to take
part in the further consideration of the case (Rules 22
para. 1 and 24 para. 1).
4. As President of the Chamber (Rule 21 para. 5),
Mr Ryssdal, acting through the Registrar, consulted the Agent
of the Netherlands Government ("the Government") and the
Delegate of the Commission on the organisation of the
proceedings (Rules 37 para. 1 and 38). Pursuant to the order
made in consequence, the Registrar received the applicant
company's memorial on 16 May 1994 and the Government's
memorial on 15 June 1994. Additional documents were received
from the applicant company on 19 August 1994 and from the
Government on 24 August. The Delegate did not submit any
observations in writing.
5. In accordance with the President's decision, the hearing
took place in public in the Human Rights Building, Strasbourg,
on 19 September 1994. The Court had held a preparatory
meeting beforehand.
There appeared before the Court:
(a) for the Government
Mr K. de Vey Mestdagh, Ministry of Foreign Affairs, Agent,
Mr H.D.O. Blauw, Rijksadvocaat, Counsel,
Mr A. van Vliet, Ministry of Finance,
Mr A. van Eijsden, Ministry of Finance, Advisers;
(b) for the Commission
Mrs G.H. Thune, Delegate.
The Court heard addresses by Mrs Thune and Mr Blauw, and
also replies to questions put by the Court and by several of
its members.
AS TO THE FACTS
I. Particular circumstances of the case
6. The applicant company, Gasus Dosier- und Fördertechnik
GmbH (hereinafter "Gasus"), are a limited liability company
under German law with their registered office in Würzburg,
Germany.
A. Background to the case
7. On 17 June 1980 Gasus's agent in the Netherlands received
an order from a Netherlands company, Atlas Junior Beton B.V.
(hereinafter "Atlas") of Leiderdorp, for a concrete-mixer and
ancillary equipment. The order was confirmed in writing by
Gasus themselves on 18 June 1980. Gasus appended to their
letter their general conditions of sale, which contained the
following passages:
"We retain ownership of the goods delivered until all
amounts due, both present and future, including ancillary
claims arising from business with the customer, have been
settled in full."
and
"In the case of foreign business (Auslandsgeschäfte),
only the law of the German Federal Republic shall apply."
Gasus subsequently received an order for additional
ancillary equipment and confirmed it in writing on
21 July 1980, again appending their general conditions of
sale.
It was understood, inter alia, that Atlas would provide
lifting equipment and some of the manpower needed for
assembling the machine, the main part of which weighed five
tonnes.
Between 25 July and 28 August 1980 Gasus sent Atlas
invoices totalling 125,401.24 German marks (DEM), to which
Atlas did not object. Gasus received only DEM 21,672 in
payment before the events complained of.
B. Seizure of the concrete-mixer and bankruptcy of Atlas
8. The machine was installed on Atlas's premises by Gasus;
the work took from 28 July until 2 August 1980.
9. On 31 July 1980 the Tax Bailiff (belastingdeurwaarder)
seized all the movable assets on Atlas's premises for forced
sale in pursuance of three writs of execution (dwangbevelen)
issued by the Collector of Direct Taxes (Ontvanger der directe
belastingen - the "Tax Collector") totalling 67,741.59
Netherlands guilders (NLG). The official record
(proces-verbaal) contains a mention of the concrete-mixer.
Notice of the seizure was served on Atlas but not on Gasus.
10. Being unable to meet their financial obligations, Atlas
sought a moratorium (surséance van betaling) which was granted
by the Hague Regional Court (arrondissementsrechtbank) on
16 October 1980.
11. The receiver (bewindvoerder), a lawyer appointed by the
Regional Court, saw that it was not possible for Atlas to
continue their activities independently and managed to
interest another company, Van Baarsen Wandplaten B.V.
("Van Baarsen"), in taking them over.
Under pressure from Atlas's clients, who insisted that a
satisfactory arrangement for continuing production should be
reached by 23 October 1980, Atlas, the receiver and
Van Baarsen reached an agreement on that date for a takeover
by Van Baarsen. This agreement was only able to come about
with the co-operation of Atlas's mortgagees - two banks who
had financed Atlas and had stipulated that the ownership of
certain of its movable assets should be fiduciarily
transferred as a security - and the Tax Collector, who had
seized all the movable assets present on Atlas's premises.
The agreement was subject to the condition that no third
parties could assert a better right to the goods covered by
it.
Van Baarsen would pay a lump sum of NLG 500,000 for
taking over Atlas's machines and inventory goods. Half that
sum would be paid to the tax authorities and the other half to
a bank, NIB, which was the fiduciary owner of certain goods
not subject to seizure by the tax authorities.
Van Baarsen continued Atlas's activities on the latter's
premises from 27 October, using what had been Atlas's
workforce and machines.
12. On 21 October 1980 Gasus sent a letter to Atlas's
receiver, which reached him on 24 October. In it they stated
that of the moneys due to them from Atlas they had received
only DEM 21,672 and they requested payment of the remainder.
They also gave notice that the concrete-mixer would be taken
back on 30 October if sufficient guarantees for payment were
not provided by 28 October.
No payment was made but it does not appear that Gasus
took any action.
13. Atlas were declared bankrupt on 30 October 1980, at the
request of their receiver and with the agreement of their
management, and the receiver was reappointed as trustee in
bankruptcy (curator).
The bankruptcy proceedings were terminated on
20 June 1990 for lack of any further assets to distribute.
None of Atlas's unsecured creditors recovered any part of
their claims.
14. On 4 March 1981 the Commissioner of Direct Taxes
(directeur der directe belastingen) received a letter from
Gasus in which they, being by then aware of the fact that the
machine had been seized, filed an administrative objection
(bezwaarschrift) to the seizure. By a letter of 15 May 1981
the Commissioner declared the administrative objection
inadmissible because it had not been filed within seven days
of the seizure as required by section 16 (1) of the 1845 Tax
Collection Act (Invorderingswet 1845, "the 1845 Act" - see
paragraph 29 below), adding that in any case he saw no reason
to rescind the seizure order and that in deciding not to do
so, he had not been influenced by the fact that the
administrative objection was out of time.
C. Proceedings before the Utrecht Regional Court
15. On 22 May 1981 Gasus brought proceedings against Atlas's
trustee in bankruptcy and Van Baarsen before the Utrecht
Regional Court to obtain an order for the concrete-mixer to be
returned. In the proceedings before the Commission Gasus
stated that both the trustee and Van Baarsen had acknowledged
Gasus's ownership but had refused to give up the machine as it
was still being held by the tax authorities. These
proceedings appear not to have been pursued to a conclusion.
16. On 17 September 1981 Gasus sued the Tax Collector, the
trustee in bankruptcy and Van Baarsen in the Hague Regional
Court, objecting to the seizure and seeking an order to the
Tax Collector to release the concrete-mixer from seizure and
another order to the trustee and Van Baarsen not to hinder the
exercise of Gasus's rights.
Gasus's position may be summarised as follows. Their
objection to the seizure (verzet) was based on the argument
that the concrete-mixer had not been operational on
31 July 1980, so that it could not have been part of the
"furnishings of a house or farmstead" within the meaning of
section 16 (3) of the 1845 Act (see paragraph 29 below). In
the alternative, the seizure was, on various grounds, wrongful
in civil law (onrechtmatig). Finally, the fact that
section 16 (3) prevented third parties from challenging a
seizure affecting their own goods amounted to a denial of
"access to court" as guaranteed by Article 6 para. 1
(art. 6-1) of the Convention.
17. The Tax Collector filed lengthy pleadings in reply. The
trustee and Van Baarsen did not themselves make any
submissions on the merits but requested that the Tax
Collector's statements in defence (conclusie van antwoord) and
subsequent rejoinder (conclusie van dupliek) be treated as
their own.
18. The Regional Court delivered its judgment on
21 December 1983. Taking the same view as the Tax Collector,
it held that the fact that the concrete-mixer had not been
operational at the time of the seizure did not invalidate the
seizure itself. Since the proceedings concerned an objection
to seizure under section 16 (3) of the 1845 Act, the court
could not entertain Gasus's complaint that the seizure was
unlawful; the only permissible purpose of such proceedings was
to examine whether the requirements of section 16 (3) were
met. Furthermore, Article 6 para. 1 (art. 6-1) of the
Convention did not apply - and had therefore not been violated
- because section 16 related to the imposition and collection
of taxes, empowering State authorities to make decisions in
the normal discharge of their duties under public law, and
thus did not concern "civil rights and obligations".
D. Proceedings before the Hague Court of Appeal
19. Gasus appealed to the Hague Court of Appeal, summoning
Atlas's trustee in bankruptcy on 19 March 1984 and the Tax
Collector and Van Baarsen on 20 March.
Gasus's first ground of appeal (grief) was that the
Regional Court had erred in holding that the seizure was valid
even though the concrete-mixer had not been operational at the
time. The second and third grounds of appeal were founded on
the Regional Court's refusal to deal with Gasus's allegations
of unlawfulness and to accept their arguments based on
Article 6 para. 1 (art. 6-1) of the Convention.
The Tax Collector replied that Gasus's complaints
concerning section 16 (3) of the 1845 Act amounted to an
allegation of deprivation of their possessions in violation of
Article 1 of Protocol No. 1 (P1-1). He denied, however, that
there had in fact been such violation.
20. Following the exchange of pleadings by the parties to the
proceedings, a hearing was held on 16 September 1986.
At this hearing counsel for Gasus continued to rely on
Article 6 para. 1 (art. 6-1) of the Convention. In his view,
what was decisive for that provision (art. 6-1) to be
applicable was whether the plaintiff sought protection of a
right that was to be classed as "civil" within the meaning of
the provision (art. 6-1). Since Gasus sought to be protected
against infringement by the Tax Collector of their ownership
of the concrete-mixer, undoubtedly a "civil" right within the
meaning of the provision (art. 6-1), Article 6 para. 1
(art. 6-1) applied; it had, moreover, been violated since
section 16 (3) of the 1845 Act amounted to a limitation of
access to court with respect to assets of the kind mentioned
in it.
While agreeing that Gasus had been deprived of one of
their possessions and had suffered damage as a result, Gasus's
counsel expressly declined to rely on Article 1 of
Protocol No. 1 (P1-1). Contrary to what the Tax Collector had
suggested both at first instance and on appeal, section 16 (3)
had nothing to do with deprivation of property but barred
access to court for those who sought to be protected from the
seizure and sale of their property. That was clear from its
wording. That also followed, incidentally, from Article 14 of
the Constitution, which prohibited expropriation without
compensation: if section 16 (3) were a provision concerning
deprivation of property, it would contravene Article 14 of the
Constitution. On the principle that a provision of
Netherlands legislation could not be construed so as to be
incompatible with the Constitution, section 16 (3) therefore
had to be construed as merely barring access to court. The
questions raised by section 16 (3) were thus of a
"procedural", not a "substantive" nature, and therefore the
more appropriate Convention provision was Article 6 para. 1
(art. 6-1) and not Article 1 of Protocol No. 1 (P1-1).
Since section 16 (3) obviously violated Article 6 para. 1
(art. 6-1), it should - pursuant to Article 94 of the
Constitution - not be applied. This meant that section 456
and the following sections of the Code of Civil Procedure
applied without restriction, and this in turn meant that Gasus
could rely on their right of ownership of the concrete-mixer,
which was therefore not subject to seizure.
21. The Court of Appeal gave judgment on 3 December 1986.
Like the Regional Court, it held that the seizure was not
vitiated by the fact that the concrete-mixer had not been
fully operational at the time; the concrete-mixer's intended
use had already been established and all efforts had been
directed towards making it operational and ensuring that it
would serve Atlas on a lasting basis. The concrete-mixer thus
qualified as "furnishings" of Atlas's factory building. The
first ground of appeal therefore failed.
The second and third grounds of appeal were also
dismissed.
After establishing that the right claimed by Gasus was a
"civil right" for the purposes of Article 6 para. 1
(art. 6-1), the Court of Appeal went on to hold:
"The question is therefore whether in the present case
access to a tribunal and due process were sufficiently
secured to Gasus. To answer this, it is necessary to
ascertain what provisions, in so far as relevant to the
present case, govern ownership and the procedure
connected with it.
In the Articles of ... section I [of the Convention]
apart from the aforementioned Article 6 (art. 6), a
number of fundamental rights are laid down and - where
necessary - defined. The right of ownership is not one
of them. This is provided for in Protocol No. 1 (P1) to
the Convention ...
[Article 1 of Protocol No. 1 (P1-1)] does therefore
authorise national legislatures to pass laws restricting
the enjoyment of possessions or even entirely depriving
the individual of that enjoyment for specific purposes
relating to the general interest; however, when it comes
to the question of whether such a law has been properly
applied in a specific case, the owner concerned remains
entitled, as provided in Article 6 (art. 6) of the
Convention, to access to a tribunal and to due process in
order to have the application of the law assessed.
One such provision of domestic law which is authorised by
Article 1 of Protocol No. 1 (P1-1) is section 16 (3) of
the 1845 Act. The rule laid down therein implies that
seizure levied by the tax authorities in order to collect
a tax debt in fact deprives a third party of his
ownership of an item of movable property provided that
when the seizure was effected the item of property was on
the tax debtor's premises and served as 'furnishing' of
them. Whether, when judged by this condition, the
seizure of his property was rightly effected is a matter
which any affected third party can have reviewed by the
ordinary civil courts in proper legal proceedings. In
assessing the lawfulness of the seizure, the court may
not take into account whether or not the relevant
property is owned by the tax debtor, because precisely
this point is not relevant - save for certain exceptions
which are of no consequence here - in view of the scope
of the subsection. This also reveals the meaning of the
provision that third parties may 'never bring an action
to challenge seizures for tax purposes'. It means not
that they may not bring an action before the courts but
rather that, having brought an action in the courts, they
may not successfully submit, as a basis for their action,
that the seizure is unlawful because the goods seized
belong to them and not to the tax debtor. Consequently,
the provisions of section 456 (1) of the Code of Civil
Procedure are of no avail to them in this respect because
section 16 (3) of the 1845 Act derogates from them as a
lex specialis.
It follows from the above that there has been no
violation of Article 6 (art. 6) of the Convention and
that the Regional Court was correct in not dealing with
the allegation that the Collector acted unlawfully by
seizing the concrete-mixer belonging to Gasus ..."
E. Proceedings before the Supreme Court
22. Gasus entered an appeal on points of law (beroep in
cassatie) with the Supreme Court (Hoge Raad) on 3 March 1987.
They filed grounds (middelen van cassatie) that were each
subdivided into a large number of parts. The Advocate-General
(advocaat-generaal) noted that several grounds and many of
their component parts were merely variations on a single
theme.
The Court of Appeal had erred in considering the matter
under Article 1 of Protocol No. 1 (P1-1). Section 16 (3) of
the 1845 Act was a "procedural" provision, not a "substantive"
one, and should therefore have been examined only in the light
of Article 6 (art. 6); the fact that lack of access to a
tribunal could lead to loss of property indicated only that
the interests protected by Article 6 (art. 6) were very real.
Gasus went on to submit that section 16 (3) violated
Article 6 (art. 6) as it only allowed third parties to
challenge seizure of their goods on the premises of another by
the tax authorities on the ground that those goods were not
"fruit", or "furnishings", or intended for the "cultivation or
use of land". If the goods concerned fell into one of those
categories, there was no other ground on which to base an
action. Section 16 (3) had been inspired by the need to
prevent tax evasion, but had been rendered obsolete by
developments in business practice and commercial law,
retention of title now being a generally accepted and quite
legal form of security. The Tax Collector had acted
unlawfully in seizing the concrete-mixer since Gasus had not
actually been conniving at tax evasion.
In any event, even if Article 1 of Protocol No. 1 (P1-1)
applied (which Gasus submitted it did not), it only allowed
States to interfere with the tax debtor's peaceful enjoyment
of his possessions to secure payment of the taxes he owed. It
did not allow them to deprive third parties of their
possessions.
It was not to be assumed that Article 1 of Protocol No. 1
(P1-1) legitimised greater interferences with citizens' rights
than did Article 14 of the Constitution, which forbade
expropriation without compensation. If section 16 (3) of the
1845 Act were seen as a "substantive" provision, it clearly
amounted to a provision making deprivation of property by the
State possible in the public interest.
Finally, the Tax Collector had not at any time informed
Gasus of the seizure as he should have done.
23. Following the advisory opinion (conclusie) of its
Procurator-General (procureur-generaal), the Supreme Court
rejected the appeal on 13 January 1989. Its reasoning was as
follows:
"3.1. The purport of grounds of appeal I-III is to argue
that the provisions of section 16 (3) of the 1845 Act of
22 May 1845 ... are incompatible with Article 6 (art. 6)
of the Convention and/or Article 1 of Protocol No. 1
(P1-1). In the assessment of this argument, the
following is of importance:
(a) Section 16 of the 1845 Act, in particular the third
paragraph thereof, implies that the Tax Collector has a
right of recovery against third parties' goods listed in
that paragraph and `situated on the premises of the tax
debtor at the time of the seizure'.
(b) The objection which third parties may make before the
civil courts to the seizure of their goods is in
principle limited to the question whether the conditions
for its applicability described in section 16 (3) have
been satisfied; in other respects, third parties may file
an administrative objection to the Commissioner of Direct
Taxes by means of the complaint procedure referred to in
subsection 1 of that section ...
(c) It follows from the provisions of chapter V of the
General State Taxes Act (Algemene wet inzake
rijksbelastingen) and section 5, opening words and
subsection (m), of the Administrative Decisions Appeals
Act (Wet administratieve rechtspraak
overheidsbeschikkingen) that no appeal lies to an
administrative tribunal against the Commissioner's
decision on the administrative objection. Consequently,
the third party may bring an action against such a
decision in the civil courts, possibly in summary
proceedings (kort geding), on the basis that there has
been an unlawful act. In so doing, the third party may
also base his claim of unlawfulness on the allegation
that the Commissioner has acted in breach of a general
principle of good governance (algemeen beginsel van
behoorlijk bestuur).
(d) The provisions of the 1961 Tax Collection Guidelines
(Leidraad invordering - Resolution of 8 December 1961,
no. B 1/18516), in particular paragraph 30, are also of
importance in this connection. Although the
1961 Guidelines do not contain rules of law, principles
of good governance imply that the Commissioner may not
deviate to the disadvantage of a third party from the
rules laid down in the Guidelines, as the court considers
they should be interpreted. If he does depart from them,
he is in principle acting unlawfully vis-à-vis the third
party.
(e) As regards the content of paragraph 30 of the
Guidelines, the following features of the provisions
contained in sub-paragraph 9 should be mentioned briefly.
It is in keeping with the Commissioner's policy that the
third party's title will in principle be respected in
cases of `real ownership'. But recovery against the
goods of a third party is generally justified if `the
circumstance that the goods legally belong to another
person has mainly been brought about to exclude the
possibility of recovery against such goods for debts of
the taxpayer or to ensure that the third party has a
priority right to recover against such goods'. One of
the examples quoted here is where a supplier of goods
reserves the ownership of them. It has been established
that Gasus did this as supplier of the goods which are
the subject of the litigation.
(f) It is also provided in paragraph 30, sub-paragraph 8,
of the 1961 Guidelines that an administrative objection
made by a third party shall be dealt with even if it is
not filed in time, i.e. within the said period of seven
days from the date of seizure as referred to in
section 16 (1) of the 1845 Act. It follows that a third
party who files an administrative objection out of time
is entitled to have it dealt with. As the third party
need not be aware that the seizure has occurred and thus
that time has started to run - neither the law nor the
Collection Guidelines require service on, or any other
form of warning to, a third party - it must be assumed -
partly in the light of Article 6 (art. 6) of the European
Convention - that the third party may have recourse to
the civil courts in this case in the manner described
above under (c) and (d).
3.2. Against this background, the arguments advanced in
grounds of appeal I-III cannot be accepted as correct.
A third party whose goods have been seized has
opportunities for redress against the acts of the Tax
Collector or the Commissioner as the case may be, before
an independent and impartial tribunal established by law
such that the requirements of Article 6 para. 1
(art. 6-1) of the Convention are met.
Nor can it be said that the recovery, on the basis of
section 16 (3) of the 1845 Act, of goods belonging to a
third party such as Gasus - who as supplier of the goods
has reserved title to them - is not compatible with
Article 1 of Protocol No. 1 (P1-1). That is because
section 16 (3) is to be regarded as a statutory provision
which the State regards as necessary in order to secure
the payment of taxes in such a manner as to ensure that
this payment is not frustrated by reservation of title by
a third-party supplier.
Grounds of appeal I-III fail in view of the above,
irrespective of the validity of the arguments set out by
the Court of Appeal, which these grounds attack.
3.3. As, according to the explanation given of it,
ground of appeal IV builds on the previous grounds, it
must fail likewise. In so far as it is suggested that
section 16 (3) should not be applied as it has been
`rendered obsolete by developments in business practice
and commercial law', the ground is unfounded.
3.4. Ground of appeal V takes issue with the Court of
Appeal's opinion that the Tax Collector does not have a
duty to give notice, in the sense that he should have
given notice to Gasus after the seizure of the goods that
they had been seized. The ground fails.
As already indicated at 3.1. (f) above, neither the
1845 Act nor the Tax Collection Guidelines contain any
such obligation to provide a warning. Although such an
obligation may in special circumstances be inferred from
unwritten law, no such special circumstances have been
alleged by Gasus in this connection.
3.5. Since none of the grounds of appeal justifies
overturning the judgment appealed against, the appeal
must be dismissed."
The above judgment of the Supreme Court was published in
the Rechtspraak van de Week, (Weekly Law Reports - RvdW) 1989,
28; in the Vakstudie Nieuws (Professional Studies News) 1989,
p. 363; in the Nederlandse Jurisprudentie (Netherlands Law
Reports - NJ) 1990, 211, and in the Beslissingen in
Belastingzaken (Reports of Decisions in Taxation Cases - BNB)
1989/129. It was welcomed by commentators as providing
clarity as to the scope of judicial protection available
against use by the tax authorities of section 16 (3)
(commentaries on the Supreme Court's judgment in the present
case, by E.A. Alkema in NJ 1990, 211, and by H.J. Hofstra in
BNB 1989/129; commentary by W.H. Heemskerk of the Supreme
Court's judgment of 26 May 1989, NJ 1990, 131).
II. Relevant domestic law and practice
A. Relevant provisions of the Netherlands Constitution
24. The 1983 Constitution does not, in terms, guarantee a
right to property. Article 14 reads:
"1. Expropriation may only be ordered in the general
interest and against compensation determined in advance,
in accordance to rules laid down by statute or delegated
legislation.
2. ...
3. In the cases indicated by statute or delegated
legislation there is a right to compensation or partial
compensation for damage if property is destroyed or
rendered unusable in the general interest by the
competent authorities or if the exercise of the right of
ownership is curtailed."
Article 104 reads:
"The Kingdom's taxes shall be levied pursuant to statute.
Other charges levied by the Kingdom shall be governed by
statute."
Under Netherlands constitutional law, courts may not
examine statutes for compliance with the Constitution.
Article 120 reads:
"The courts shall not judge the constitutionality
(grondwettigheid) of statutes and treaties."
B. Relevant provisions of the Civil Code (Burgerlijk
Wetboek), the Commercial Code (Wetboek van Koophandel)
and the Code of Civil Procedure (Wetboek van Burgerlijke
Rechtsvordering)
25. At the material time the 1838 Civil Code was still in
force. In so far as it concerned property law it was
succeeded in 1992 by a new Civil Code; a number of provisions
of the Commercial Code and the Code of Civil Procedure were
changed or repealed at the same time. The following relates
to the law as it stood at the time of the events complained
of.
26. According to section 1177 of the Civil Code, debts could
in principle be recovered against all goods belonging to the
debtor, whether movable or immovable. Statutory provisions
elsewhere allowed of certain limited exceptions not relevant
to the present case.
Section 1178 added the principle of paritas creditorum:
all creditors were entitled to recover debts against the
property of the debtor in proportion to the size of their
claims, unless any one of them could claim a right to
preferential payment. Such a right derived, inter alia, from
specific legal provisions granting a priority right
(privilege). These priority rights were based on the nature
of the debt (section 1180) and their order of precedence was
laid down by law. Most priority rights were to be found in
the Civil Code, but not those of the tax authorities, for
which the Civil Code referred to specialist legislation
(section 1183 (1)).
A priority right might concern a particular asset or all
goods belonging to the debtor; in general, priority rights of
the former type took precedence over priority rights of the
latter (section 1184).
Section 1185 enumerated debts covered by a priority right
to certain assets belonging to the debtor. These included,
inter alia, rent owed under a tenancy agreement and the price
owed to a vendor of movable property.
Section 1186 read as follows:
"1. The landlord may exercise his priority right [by
recovery against] fruit still attached to the trees by
branches, or to the ground by roots, as well as fruit,
whether harvested or not, present on the premises (die
zich op den bodem bevinden), and all things present on
the premises serving either as furnishings of the rented
property or farm or for cultivation of the land, such as
cattle, agricultural implements and the like, regardless
of whether or not the above-mentioned objects belong to
the tenant.
2. However, if the tenant has goods in his possession
under a hire-purchase agreement, the landlord shall not
be entitled to exercise his priority right against the
vendor if the hire-purchase agreement relates to seeds or
implements or if it is proved that the landlord knew of
the hire-purchase agreement.
3. ..."
Section 1190 read as follows:
"The vendor of movable goods which have not yet been paid
for may exercise his priority right against the sale
price of those goods if they are still in the debtor's
possession, irrespective of whether a time has been
specified for the sale."
Section 1191 read as follows:
"1. If no time has been specified for the sale, the
vendor shall even be entitled to reclaim the goods as
long as these are in the possession of the purchaser, and
to prevent the resale thereof, provided that they are
reclaimed within thirty days of delivery.
2. Sections 231, 233, 234, 236 and 237 of the Commercial
Code shall apply by analogy."
It should be noted that section 1191 did not concern a
priority right but granted the vendor the right to rescind the
sale by means of a statement made to the purchaser and to
recover the ownership of the goods previously sold and
delivered. The vendor might then reclaim his goods, even -
within certain limits - from third parties. Sections 231 et
seq. of the Commercial Code regulated the use of a similar
right in case of bankruptcy of the debtor (see paragraph 35
below).
27. Sections 439 and following of the Code of Civil Procedure
laid down rules for recovery against a debtor's movable
property. As a rule, such recovery started with seizure,
which usually required a court judgment (although the law
provided for exceptions, for example in tax cases, see
paragraph 28 below). Section 456, which was referred to in
section 16 of the 1845 Act, is of relevance:
"1. He who claims to be the owner, in whole or in part,
of the seized goods, may file an objection to the sale
thereof by means of a summons containing the grounds of
the objection addressed to the party for whom the seizure
has been effected (arrestant) and the person against whom
it is directed, and served on the custodian: all on pain
of nullity.
2. ...
3. ..."
C. Seizure by the tax authorities of goods belonging to
third parties and present on the premises of the tax
debtor (bodembeslag)
28. At the material time, pursuant to section 12 of the
1845 Act, tax debts took priority over all other debts with
the exception of the court costs and other costs involved in
forced sale of goods and debts secured by a mortgage. Goods
belonging to third parties seized pursuant to section 16 (3)
(see paragraph 29 below) were also subject to this priority
(judgment of the Supreme Court of 5 October 1979, NJ 1980,
280).
Section 14 of the 1845 Act entitled the tax authorities
to seize a tax debtor's movable and immovable assets and sell
them to recover the debt. A prior judgment establishing the
debt and ordering the debtor to pay was not required. Seizure
pursuant to this provision was based on a writ of execution
made out by the Tax Collector. Such a writ was served on the
debtor and seizure and forced sale of his goods followed in
the event of failure to pay. Section 14 explicitly stipulated
that such a writ had the same legal effects as a judgment.
Accordingly, section 14 (2) laid down that the Tax Collector's
writ of execution would be executed under the provisions of
the Code of Civil Procedure governing the execution of
judgments (see paragraph 27 above).
Section 15 gave the tax debtor the right to file an
objection in the civil courts against a writ of execution,
although the grounds on which such an objection might be based
were limited. It also specified that such an objection had no
suspensive effect, although it was possible to seek an order
for the suspension of execution in summary proceedings (kort
geding).
29. Complementing the right to oppose the writ of execution
granted the debtor by section 15, section 16 granted a similar
right to third parties claiming ownership of movables seized
on the debtor's premises. Section 16 should be read in light
of section 14, which stated that the relevant provisions of
the Code of Civil Procedure are applicable. Its purpose was
to limit the rights of third parties under section 456 (see
paragraph 27 above). Section 16 read:
"1. Third parties claiming to be fully or partially
entitled to movable goods which have been seized in
connection with a tax debt can address an administrative
objection to the Commissioner of Direct Taxes, provided
that the administrative objection be submitted before the
sale and no later than seven days from the day of the
seizure. The administrative objection shall be submitted
to the Tax Collector, who shall acknowledge receipt. The
Commissioner shall decide as soon as possible. The sale
shall not take place within eight days of the service of
this decision to the objector and to the person against
whom the seizure is directed, [the service] again
indicating a day for the sale.
2. The interested party shall not forfeit his right to
submit his objection to the ordinary courts by filing an
administrative objection in accordance with the preceding
paragraph.
3. However, apart from the right to reclaim their
property granted them by ... section 230 and following of
the Commercial Code, third parties may never bring an
action to challenge seizure in connection with taxes,
with the exception of land tax, if the fruit, whether
harvested or not, or movable goods serving either as
furnishings of a house or farmstead or for the
cultivation or use of land are located on the premises of
the tax debtor concerned at the time of the seizure."
"Premises" was interpreted as meaning a plot of land or
part of a plot of land which is in actual use by the tax
debtor and which he has at his disposal independently of
others (see, inter alia, judgment of the Supreme Court of
18 October 1991, NJ 1992, 298; see also paragraph 30,
sub-paragraph 4, of the 1961 Guidelines).
"Furnishings" were all objects destined to make possible
such use of the premises as was in conformity with the purpose
for which the tax debtor actually intended to use them. They
were held to include movable machines (see, inter alia, the
judgment of the Haarlem Regional Court of 18 February 1964,
NJ 1965, 402, and the judgment of the Amsterdam Court of
Appeal of 7 December 1979, quoted in the judgment of the
Supreme Court of 9 January 1981, NJ 1981, 656; see also
paragraph 30, sub-paragraph 4, of the 1961 Guidelines) but not
stocks of raw materials, finished products or vehicles
(judgment of the Supreme Court of 11 March 1927, NJ 1927,
p. 494; 1961 Guidelines, ibid.).
The right of the tax authorities to seize all movables
found on the premises of the tax debtor, including goods
belonging to third parties, implied the right of recovery on
the latter goods (paragraph 30, sub-paragraph 1, of the 1961
Guidelines and the Supreme Court's judgment in the present
case - see paragraph 23 above).
Recovery was normally by public auction of the goods
(section 14 (2) of the 1845 Act read in conjunction with
section 463 of the Code of Civil Procedure). It was
nonetheless considered permissible, if the tax debtor was
bankrupt, for the Tax Collector to agree to allow the trustee
to sell them privately (judgment of the Supreme Court of
26 May 1989, NJ 1990, 131).
30. To promote the uniform application of the law, the
Minister of Finance established, by decision of
8 December 1961, the 1961 Guidelines. These were official
instructions to the tax authorities, who were subordinate to
him, indicating the way in which the law should be interpreted
and applied. The 1961 Guidelines were published; individuals
were entitled to rely on them in legal proceedings against the
tax authorities because they were binding on the latter
pursuant to general principles of good governance. The
Supreme Court, in its judgment of 28 March 1990 (NJ 1991,
118), later confirmed this by ruling that guidelines such as
these were to be applied in relation to interested parties as
rules of law.
Paragraph 30 of the 1961 Guidelines concerned the
interpretation and application of section 16. Sub-paragraph 9
gave further instructions relating to the way in which
administrative objections under section 16 (1) and (2) (see
paragraph 29 above) were to be dealt with. Sub-paragraph 9
read:
"The decision of the Commissioner should not only be
governed by legal considerations. Once sufficient
clarity has been obtained in respect of the legal
relations at issue, considerations of fairness
(billijkheid) and the requirements of proper policy
should be given great importance. It is in accordance
with such a policy that the property rights of a third
party are spared where a personal tax or social-security
contribution debt is to be collected and also where
genuine property (reële eigendom) of a third party is
involved, provided, however, that the following is taken
into account.
...
The above does not alter the fact that there can be no
grounds for any reticent policy in clear cases of
connivance between the tax debtor and the third party to
create a sham property situation in an attempt to prevent
recovery on goods.
From the point of view of fairness and good policy
recovery on goods of a third party is generally justified
in cases of recovery of commercial tax and
social-security contribution debts and when the economic
relationship between the tax debtor and the goods
provides reason to consider these goods as his and the
circumstance that legally the goods belong to someone
else has been created mainly to exclude recovery at the
expense of the tax debtor or to enable the third party to
obtain a preferential right of recovery on these goods.
Examples of this are cases of goods delivered under a
hire-purchase agreement or under various forms of leasing
or other forms in which the supplier of the goods retains
the ownership thereof.
In addition, one might consider in this connection those
cases in which ownership of the goods has been
transferred to a third party as a security.
..."
31. In its judgment of 9 January 1981 (NJ 1981, 656), the
Supreme Court rejected the proposition that section 16 (3)
applied only to goods on the tax debtor's premises the
ownership of which had been transferred to a third party in
order to prevent the tax authorities from recovering tax debts
by the forced sale of those goods. Although it did appear
from the drafting history of that provision that it had been
prompted at the time (1845) by the desire to counter certain
abuses, this did not mean that the occurrence of an abuse had
been made a requirement for the provision's applicability,
section 16 being derived from the landlord's priority right as
defined in section 1186 of the Civil Code (see paragraph 26
above). Section 16 had afterwards several times been the
subject of debate between the Government and Parliament and
this debate supported the idea that the purport of section 16
was, in the words of the Supreme Court, "to afford the tax
authorities the possibility of recovery against the goods
seized, notwithstanding any third-party rights, as if they
belonged to the tax debtor".
32. It was not possible for suppliers of goods to obtain
information from the tax authorities as to whether their
clients had any outstanding tax debts and whether there was
accordingly any risk of seizure. According to section 67 (1)
of the General Act on State Taxes (Algemene wet inzake
rijksbelastingen) tax officials were, and are, under an
obligation to keep such information secret.
33. A right similar to that of the Tax Collector under
section 16 of the 1845 Act was enjoyed by the customs
authorities. They were empowered by section 151 of the
General Customs and Excise Act (Algemene wet inzake de douane
en de accijnzen) to recover import duties and excise against
the goods for which these were due, along with any
administrative fines or interest, irrespective of who could
claim rights to the goods concerned.
D. Consequences of bankruptcy of the purchaser
34. When a natural or legal person was declared bankrupt, all
seizures affecting his property lapsed (section 33 (2) of the
Bankruptcy Act (Faillissementswet)). This included the
seizure of his property by the tax authorities, but not the
seizure pursuant to section 16 (3) of the 1845 Act of the
goods of third parties.
35. In cases in which movable goods had been sold and
delivered but not paid for in full, section 230 of the
Commercial Code allowed the vendor to reclaim the goods if the
purchaser went bankrupt, provided that the goods could still
be identified (section 231) and that the vendor exercised his
right within thirty days of delivery to the purchaser
(section 232). The vendor had then to refund any payment he
might already have received as well as certain expenses that
might in the meantime have been incurred (sections 233 and
235). The purchase agreement was then considered rescinded
and ownership of the goods was deemed always to have remained
with the vendor (judgment of the Supreme Court of
12 June 1970, NJ 1971, 203).
The vendor's rights under sections 230 and following of
the Commercial Code had to be respected by the tax authorities
(section 16 (3) of the 1845 Act - see paragraph 29 above).
E. Procedural provisions
36. As followed from section 16 (1) of the 1845 Act, third
parties claiming a title to goods seized on the premises of
the tax debtor could submit an administrative objection to the
Tax Collector, who forwarded it to the Commissioner of Direct
Taxes. Although section 16 (1) contained a seven-day
time-limit, administrative objections submitted after its
expiry nevertheless were dealt with and the Tax Collector was
required to suspend the forced sale of the seized goods if
that was still possible (paragraph 30, sub-paragraph 8, of the
1961 Guidelines).
There were no restrictions as to the grounds on which an
administrative objection to the tax authorities might be
based.
37. After obtaining a decision from the Commissioner or - if
preferred - without first obtaining such a decision, a third
party could bring an action before the Regional Court under
section 456 of the Code of Civil Procedure (see paragraph 27
above).
However, section 16 (3) of the 1845 Act limited the
grounds for such an action to the question whether the seized
goods were in fact "fruit, whether harvested or not, or
movable goods serving either as furnishings of a house or
farmstead or for the cultivation or use of land" (judgment of
the Supreme Court of 9 January 1981, NJ 1981, 656, and the
judgment of the Supreme Court in the present case - see
paragraph 23 above).
38. The possibilities of redress by the civil courts were
clarified by the Supreme Court's judgment in the present case
(see paragraph 23 above). That judgment made it clear that in
bringing a case before the civil courts a third party did not
have to confine himself to the questions outlined in
paragraph 37 above but could also base his action on a
wrongful act in civil law (section 1401 of the Civil Code)
committed by the Tax Collector, thus enabling the courts to
review compliance with the 1961 Guidelines by the Tax
Collector in authorising the seizure and by the Commissioner
of Direct Taxes in rejecting the third party's objections.
F. Retention of title
39. Section 455 of the German Civil Code (Bürgerliches
Gesetzbuch) reads as follows:
"If the vendor of a movable good has retained ownership
until the price has been paid, it should be assumed in
case of doubt that the transfer of ownership takes place
subject to a suspensive clause of full payment of the
price and that the vendor is entitled to rescind the
contract if the purchaser comes to be in default of
payment."
According to section 346 of the German Civil Code, in the
event of rescission each party had to return to the other
everything already received under the contract.
At the time of the events complained of, there was no
statutory provision in Netherlands law similar to section 455
of the German Civil Code but retention of title was frequently
resorted to and upheld by the courts in disputes between
private parties.
G. Developments with regard to the right of the tax
authorities to seize goods belonging to third parties
and present on the premises of the tax debtor
40. In 1974 a report was published by a government committee
(the "Houwing Committee") set up to review the law on priority
rights (see paragraph 26 above). With regard to the right
granted the tax authorities by section 16 (3) of the 1845 Act
the report expressed the opinion that this right should be
limited to cases in which other creditors besides the tax
authorities had stipulated rights wholly or essentially
amounting to security for debts; this would broadly correspond
to the policy followed by the tax authorities themselves as
laid down in the 1961 Guidelines (see paragraph 30 above). It
also suggested extending the right of seizure to all movable
goods intended for permanent professional use by the
enterprise concerned.
41. The right of the tax authorities pursuant to
section 16 (3) came under increasing criticism. For this
reason, the Government, when introducing legislation aimed at
modernising the law on the collection of tax debts, did not -
for the time being - propose any significant changes to the
priority right of the tax authorities or the right of seizure.
They stated, when introducing the relevant Bill, that that
required further study, for which an Interdepartmental Working
Party was to be set up. This position was criticised in
Parliament, particularly by those parties which considered the
wide powers of seizure enjoyed by the tax authorities
unjustified, but the Government maintained their position.
Nevertheless, the submission to Parliament of the new Bill led
once more to critical debate both within Parliament and
outside it.
42. The Bill referred to in the previous paragraph became the
new Tax Collection Act, which entered into force on
1 June 1990 (Invorderingswet 1990 - "the 1990 Act").
For all practical purposes, it retains intact the
arrangement of the 1845 Act as regards the priority of tax
debts, even extending the time-limit involved. It also
contains a provision (section 22) which is in practice almost
identical to section 16 of the 1845 Act (see paragraph 29
above), the only real difference being that in the third
paragraph an exhaustive list is given of the taxes concerned.
According to section 70 of the 1990 Act section 22 would
cease to operate on 1 January 1993, unless by that date a Bill
had been introduced for its replacement or for prolonging its
validity for up to one year; in fact, a Bill (no. 22,942)
meeting these requirements was submitted to the Lower House of
Parliament on 30 November 1992.
43. The Interdepartmental Working Party (see paragraph 41
above) published its report in 1990. Bill no. 22,942 - which
is based on, and closely follows, the report of the
above-mentioned Interdepartmental Working Party - proposes to
amend the Civil Code and the 1990 Act in such a way as to
grant the tax authorities a right of recovery against all
goods not belonging to the tax debtor but intended for his
permanent use in the exercise of his profession. Third
parties would not be able to oppose to the Tax Collector any
negotiated right which served essentially as a security. The
Tax Collector would, however, be required to enquire of the
tax debtor whether any of the seized goods belonged to third
parties.
PROCEEDINGS BEFORE THE COMMISSION
44. Gasus applied to the Commission on 6 July 1989. They
alleged that they had not had access to an independent and
impartial tribunal, in violation of Article 6 para. 1
(art. 6-1), and that they had been deprived of their
possessions in violation of Article 1 of Protocol No. 1
(P1-1).
45. On 21 October 1992 the Commission declared the
application (no. 15375/89) admissible as regards the
complaints under Article 1 of Protocol No. 1 (P1-1) and
inadmissible as to the remainder. In its report of
21 October 1993 (Article 31) (art. 31), the Commission
expressed the opinion, by six votes to six with the casting
vote of its President, that there had been no violation of
Article 1 of Protocol No. 1 (P1-1). The full text of the
Commission's opinion and of the four separate opinions
contained in the report is reproduced as an annex to this
judgment (1).
_______________
1. Note by the Registrar: for practical reasons this annex
will appear only with the printed version of the judgment
(volume 306-B of Series A of the Publications of the Court),
but a copy of the Commission's report is obtainable from the
registry.
_______________
FINAL SUBMISSIONS TO THE COURT BY THE GOVERNMENT
46. The Government concluded their memorial by stating the
opinion that Gasus's application based on a violation of
Article 1 of Protocol No. 1 (P1-1) should be declared
inadmissible since domestic remedies had not been exhausted
(Article 26 of the Convention) (art. 26), and that the
application was in any event unfounded.
AS TO THE LAW
I. THE GOVERNMENT'S PRELIMINARY OBJECTION
47. The applicant company essentially complained of a
violation of Article 1 of Protocol No. 1 (P1-1). According to
the Government, however, the applicant company had not, or not
sufficiently, raised this complaint in the national courts.
The Government relied on Article 26 (art. 26) of the
Convention, which provides:
"The Commission may only deal with the matter after all
domestic remedies have been exhausted, according to the
generally recognised rules of international law ..."
They pointed to the fact that in the domestic proceedings
the applicant company had based their arguments, in so far as
they related to the Convention, on Article 6 (art. 6) only.
Before the Court of Appeal and the Supreme Court Gasus had
actually denied that Article 1 of Protocol No. 1 (P1-1) was
applicable.
In the opinion of the Commission, the entire proceedings
at national level had concerned the question whether or not
the applicant company had been unlawfully deprived of its
possessions. Besides, both the Court of Appeal and the
Supreme Court had examined this question under Article 1 of
Protocol No. 1 (P1-1).
48. The Court reiterates that the purpose of the requirement
that domestic remedies must be exhausted is to afford the
Contracting States the opportunity of preventing or putting
right - normally through the courts - the violations alleged
against them before those allegations are submitted to the
Convention institutions (see, as the most recent authority,
the Hentrich v. France judgment of 22 September 1994, Series A
no. 296-A, p. 18, para. 33). This means that the complaint
which it is intended to bring before the Commission must first
be raised, at least in substance and in compliance with the
relevant requirements of domestic law, before the appropriate
national courts (see, inter alia, the Saïdi v. France judgment
of 20 September 1993, Series A no. 261-C, p. 54, para. 38).
49. It is true that Article 1 of Protocol No. 1 (P1-1) was
referred to for the first time by the Tax Collector; it is
also the case that the applicant company consistently denied
its applicability and argued it before the Supreme Court only
in an alternative submission. Nevertheless, in the event both
the Court of Appeal and the Supreme Court were able to deal
with the allegation of a violation of that provision (P1-1)
and in fact did so.
Accordingly, the applicant company did provide the
Netherlands courts, and more particularly the Netherlands
Supreme Court (see paragraph 23 above), with the opportunity
of preventing or putting right the alleged violation of
Article 1 of Protocol No. 1 (P1-1). The preliminary objection
therefore fails.
II. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 (P1-1)
50. The applicant company complained about the seizure by the
tax authorities and subsequent sale with their connivance of
the concrete-mixer. They relied on Article 1 of
Protocol No. 1 (P1-1), which 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."
The Government maintained that there had been no
violation of that provision (P1-1). In its report the
Commission came to the same conclusion.
A. Whether there was an interference with the applicant
company's "peaceful enjoyment of [their] possessions"
51. The applicant company pointed out that they had sold the
concrete-mixer to Atlas subject to retention of title until
the full price had been paid. Since at the time of the
seizure the full price had not been paid, the ownership of the
concrete-mixer still remained with Gasus. This, in their
contention, meant that the seizure and subsequent selling of
that machine by the Netherlands tax authorities had interfered
with their right of ownership.
The Commission also considered that there had been an
interference with Gasus's "peaceful enjoyment of [their]
possessions".
52. The Government argued that retention of title was more in
the nature of a security right in rem than of "true" ownership
and that the "enjoyment" of it was limited to security for
payment of the purchase price. "True" or "economic" ownership
was vested in the purchaser, who stood to lose by damage to or
loss of the goods purchased and stood to gain by their use or
resale. At the time of the events complained of, the
concrete-mixer was thus no longer a "possession" whose
"peaceful enjoyment" was guaranteed to Gasus by Article 1 of
Protocol No. 1 (P1-1).
53. The Court recalls that the notion "possessions" (in
French: biens) in Article 1 of Protocol No. 1 (P1-1) has an
autonomous meaning which is certainly not limited to ownership
of physical goods: certain other rights and interests
constituting assets can also be regarded as "property rights",
and thus as "possessions", for the purposes of this provision
(P1-1). In the present context it is therefore immaterial
whether Gasus's right to the concrete-mixer is to be
considered as a right of ownership or as a security right in
rem. In any event, the seizure and sale of the concrete-mixer
constituted an "interference" with the applicant company's
right "to the peaceful enjoyment" of a "possession" within the
meaning of Article 1 of Protocol No. 1 (P1-1).
B. The applicable rule
54. The Court will usually confine its attention, as far as
possible, to the issues raised by the specific case before it.
In the present case, however, it must examine section 16 (3)
of the 1845 Act since the interference complained of resulted
from the application of that provision.
55. As the Court has often held, Article 1 (P1-1) guarantees
in substance the right of property. It comprises three
distinct rules. The first, which is expressed in the first
sentence of the first paragraph and is of a general nature,
lays down the principle of peaceful enjoyment of property.
The second, in the second sentence of the same paragraph,
covers deprivation of possessions and makes it subject to
certain conditions. The third, contained in the second
paragraph, recognises that the Contracting States are entitled
to control the use of property in accordance with the general
interest or to secure the payment of taxes or other
contributions or penalties.
However, the three rules are not "distinct" in the sense
of being unconnected: the second and third rules are concerned
with particular instances of interference with the right to
peaceful enjoyment of property and should therefore be
construed in the light of the general principle enunciated in
the first rule (see, among many other authorities, the AGOSI
v. the United Kingdom judgment of 24 October 1986, Series A
no. 108, p. 17, para. 48).
56. The applicant company based their entire argument on the
premise that they had been deprived of their possessions.
57. In the Commission's opinion, sale under retention of
title created a "special legal situation" in which the
respective rights of the vendor and the purchaser depended on
the domestic legal rules applicable to the transaction.
Normally, the vendor and the purchaser would both be holders
of a limited property right protected by Article 1 of
Protocol No. 1 (P1-1), but the exact scope of the right
enjoyed by each party might be different according to the
legal system involved. In particular, it depended on domestic
law to what extent retention of title protected the vendor's
property against claims by other creditors. If these other
creditors were entitled to have the property seized and sold
in settlement of their claims, the result was that the vendor
was deprived of his property right. This, in the Commission's
view, was what had happened to the applicant company in the
present case. The applicable rule was therefore the one
contained in the second sentence of the first paragraph.
58. The Government denied that the applicant company had been
deprived of their possessions. Firstly, what the tax
authorities had done was to seize the concrete-mixer, not to
confiscate it; the seizure had left Gasus's property rights
intact. Secondly, although the concrete-mixer had eventually
been sold and although the sale had been made possible by the
seizure, it had been effected under a private contract entered
into by Atlas and Van Baarsen. Thirdly, they argued that the
expression "deprivation" implied that the natural or legal
person concerned was left empty-handed; in fact, Gasus had
retained their claim against Atlas for payment of the balance
of the purchase price, and the Government were not to be
blamed if recovery turned out to be impossible as a result of
Atlas's subsequent bankruptcy.
59. The Court considers that the interference complained of
in this case was in fact the result of the tax authorities'
exercise of their powers under section 16 (3) of the 1845 Act.
The purpose of that Act was to regulate the collection of
direct taxes within the Netherlands, and section 16 (3) formed
part of the provisions concerning the enforcement of unpaid
tax debts. Like all other creditors, the tax authorities
could recover unpaid tax debts against all the tax debtor's
seizable assets; under section 16 (3) they were, moreover,
empowered to seize and recover against all movable property
found on the tax debtor's premises which qualified as
"furnishings", irrespective of whether or not these goods
belonged to the tax debtor (see paragraphs 29 to 31 above).
It was in the exercise of this power that the tax authorities
seized the concrete-mixer to which Gasus claimed title, in
partial enforcement of Atlas's unpaid tax debts.
Against this background, the most natural approach, in
the Court's opinion, is to examine Gasus's complaints under
the head of "securing the payment of taxes", which comes under
the rule in the second paragraph of Article 1 (P1-1). That
paragraph explicitly reserves the right of Contracting States
to pass such laws as they may deem necessary to secure the
payment of taxes. The importance which the drafters of the
Convention attached to this aspect of the second paragraph of
Article 1 (P1-1) may be gauged from the fact that at a stage
when the proposed text did not contain such explicit reference
to taxes, it was already understood to reserve the States'
power to pass whatever fiscal laws they considered desirable,
provided always that measures in this field did not amount to
arbitrary confiscation (see Sir David Maxwell-Fyfe, Rapporteur
of the Committee on Legal and Administrative Questions, Second
Session of the Consultative Assembly, Sixteenth Sitting
(25 August 1950), Collected Edition of the Travaux
préparatoires, vol. VI, p. 140, commenting on the text of the
proposed Article 10A, ibid., p. 68).
The fact that current tax legislation makes it possible
for the tax authorities, on certain conditions, to recover tax
debts against a third party's assets does not warrant any
different conclusion as to the applicable rule. Neither does
it suffice in itself to describe section 16 (3) of the
1845 Act as granting powers of arbitrary confiscation.
Conferring upon a particular creditor the power to
recover against goods which, although in fact in the debtor's
possession, are legally owned by third parties is, in several
legal systems, an accepted method of strengthening that
creditor's position in enforcement proceedings. Under
Netherlands law as it stood at the material time, landlords
had a comparable power with respect to unpaid rent, as they
did also under French and Belgian law; the Government have
also cited several provisions in the tax laws of other member
States that give similar powers to the tax authorities in
special cases. Consequently, the fact that the Netherlands
legislature has seen fit to strengthen the tax authorities'
position in enforcement proceedings against tax debtors does
not justify the conclusion that the 1845 Act, or
section 16 (3) of it, is not aimed at "securing the payment of
taxes", or that using the power conferred by that section
constitutes a "confiscation", whether "arbitrary" or not,
rather than a method of recovering a tax debt.
C. Compliance with the conditions laid down in the second
paragraph
60. As follows from the previous paragraph, the present case
concerns the right of States to enact such laws as they deem
necessary for the purpose of "securing the payment of taxes".
In the present case the Court is not called upon to
ascertain whether this right, as the wording of the provision
may suggest, is limited to procedural tax laws (that is to
say: laws which regulate the formalities of taxation,
including the enforcement of tax debts) or whether it also
covers substantive tax laws (that is to say: laws which lay
down the circumstances under which tax is due and the amounts
payable); the 1845 Act, which is at issue in the present case,
was plainly a procedural tax law.
In passing such laws the legislature must be allowed a
wide margin of appreciation, especially with regard to the
question whether - and if so, to what extent - the tax
authorities should be put in a better position to enforce tax
debts than ordinary creditors are in to enforce commercial
debts. The Court will respect the legislature's assessment in
such matters unless it is devoid of reasonable foundation.
61. Section 16 (3) of the 1845 Act gave the tax authorities
the power to recover tax debts against certain goods which,
although in fact in the possession of their debtor - since
they were on his premises and served as "furnishings" - were
owned, as a matter of law, by a third party. It thus
dispensed the tax authorities from having to consider whether
these goods were actually the property of the tax debtor. The
purpose of the provision was obviously to facilitate the
enforcement of tax debts, which in itself is clearly in the
general interest.
It is true that the 1961 Guidelines curtailed the tax
authorities' powers under section 16 (3). As restricted by
those guidelines, section 16 (3) empowered the tax authorities
to recover only certain tax debts - including those such as
the ones owed by Atlas - against "furnishings" owned by third
parties where third-party ownership was intended solely to
frustrate recovery against the tax debtor or to afford the
third party a preferential right of recovery over the goods
concerned (see paragraph 30 above). This, however, did not
affect the essential aim of section 16 (3), which remained, as
was stressed by the Government, to secure tax revenue in the
general interest.
62. According to the Court's well-established case-law, the
second paragraph of Article 1 of Protocol No. 1 (P1-1) must be
construed in the light of the principle laid down in the
Article's (P1-1) first sentence (see, among many other
authorities, the above-mentioned AGOSI judgment, ibid.).
Consequently, an interference must achieve a "fair balance"
between the demands of the general interest of the community
and the requirements of the protection of the individual's
fundamental rights. The concern to achieve this balance is
reflected in the structure of Article 1 (P1-1) as a whole,
including the second paragraph: there must therefore be a
reasonable relationship of proportionality between the means
employed and the aim pursued.
63. Gasus stressed that they had been deprived of their
property in payment of a tax debt owed by a third party, the
Netherlands company Atlas.
They pointed out that they were in no way responsible for
causing the tax debt. Moreover, they could not possibly have
been aware of it, since in the Netherlands the tax authorities
were not allowed to give such information to anyone but the
actual debtor.
Finally, the fact that the fiduciary title - to goods not
considered "furnishings" - of one of Atlas's bankers, NIB, had
been respected, whereas Gasus's retention of title had not,
demonstrated that the interference with Gasus's rights had
been arbitrary. In their submission, retention of title was
closer to "true" ownership than fiduciary title was. The
latter involved transfer of ownership from a borrower, who
remained entitled to use and often even to sell the goods, to
a lender who had never had any interest of his own in the
goods. Retention of title, on the other hand, was the
continuation of the ownership of the former owner until the
purchaser had fulfilled his obligations.
64. In the opinion of the Commission, the measure in issue
had been taken in accordance with specific rules of
Netherlands law. Consequently, the applicant company could
have taken these rules into account, if need be with
appropriate legal advice; they could have decided not to sell
the concrete-mixer at all, or they could have limited their
risk by negotiating "specific security" in addition to the
retention of their title or by taking out insurance.
65. The Government preferred to view the case as one
concerning the conflicting interests of creditors faced with a
common debtor whose assets were insufficient to satisfy them
all. Although Netherlands law theoretically recognised the
principle of paritas creditorum, it had, like other legal
systems, created priority rights favouring certain creditors
over others and had ranked the rights of the tax authorities
very high.
According to the report of the Interdepartmental Working
Party (see paragraph 43 above), which the Government submitted
to the Court, both the high rank of the tax authorities'
priority right and their extensive rights of seizure were
justified by, inter alia, the following differences between
the tax authorities and private creditors: the tax authorities
did not choose their debtors; they were expected to show
greater leniency than other creditors and were enabled by
their priority right (which ensured that tax debts would be
paid in any case) to be flexible as regards both the timing of
assessments and the collection of the amount due; they were
obliged to grant credit; and they were not able to make
allowance for the risk that the parties they dealt with might
prove insolvent. In addition commercial creditors could in
many cases obtain a higher preference by entering into
agreements like fiduciary transfer of ownership and retention
of title, and the right to seize goods nominally belonging to
third parties served to correct the imbalance thereby created.
Contrary to what Gasus had suggested, their position and
that of NIB were not comparable. While it was true that NIB's
merely fiduciary ownership had been respected whereas the
applicant company's retention of title had not, the reason for
this was precisely that the goods to which NIB's ownership
related were not "furnishings" for the purpose of
section 16 (3) of the 1845 Act and therefore not subject to
seizure. There was therefore no arbitrary distinction in this
respect.
In any event, according to the 1961 Guidelines, "true"
ownership (i.e. ownership not merely negotiated as a security
right in rem) had to be respected by the tax authorities. In
the Government's view, Netherlands law was free to define its
understanding of the concept of ownership and could therefore
restrict certain forms in the general interest. Other
Contracting States limited the protection afforded by
retention of title even further than did the Netherlands.
Finally, the Government recalled that Gasus had retained
their claim against Atlas for payment of the purchase price.
This meant that Gasus had not been left empty-handed.
Although Atlas's bankruptcy had deprived the claim of its
value, that was not a state of affairs for which the
Government could be held responsible.
66. The Court notes at the outset that the grant to the tax
authorities of a power to recover tax debts against goods
owned by certain third parties - such as a seller of goods who
retains his title - does not in itself prompt the conclusion
that a fair balance between the general interest and the
protection of the individual's fundamental rights has not been
achieved. The power of recovery against goods which are in
fact in a debtor's possession although nominally owned by a
third party is a not uncommon device to strengthen a
creditor's position in enforcement proceedings; it cannot be
held incompatible per se with the requirements of Article 1 of
Protocol No. 1 (P1-1). Consequently, a legislature may in
principle resort to that device to ensure, in the general
interest, that taxation yields as much as possible and that
tax debts are recovered as expeditiously as possible.
Nonetheless, it cannot be overlooked that, quite apart from
the dangers of abuse, the character of legislation by which
the State creates such powers for itself is not the same as
that of legislation granting similar powers to narrowly
defined categories of private creditors. Consequently,
further examination of the issue of proportionality is
necessary in this case.
67. In this connection, the Court also notes that in
assessing the proportionality of the powers under
section 16 (3) and their use in the present case it is
immaterial that Gasus were a limited company with legal
personality under German law and had their registered office
in Germany. Gasus had sold and delivered their concrete-mixer
to a purchaser based in the Netherlands and installed it on
his premises. Gasus could therefore not have expected
otherwise than that the effectiveness of their retention of
title in the face of seizure depended on Netherlands law. It
consequently makes no difference whether a seller who retains
title and who finds himself a victim of use by the tax
authorities of their power under section 16 (3) has his
domicile or registered office in the Netherlands or elsewhere.
In either case the essential question must be whether as a
consequence of the tax authorities' actions against the goods
to which title has been retained the vendor has had to bear
"an individual and excessive burden" (see particularly the
James and Others v. the United Kingdom judgment of
21 February 1986, Series A no. 98, p. 34, para. 50).
68. Whatever the nature of retention of title compared with
"true" or "ordinary" property rights - a question on which the
Court discerns no common ground among the Contracting States -
it is apparent that whoever sells goods subject to retention
of title is not interested so much in maintaining the link of
ownership with the goods themselves as in receiving the
purchase price. A State may therefore legitimately, within
its margin of appreciation, differentiate between retention of
title and other forms of ownership.
It matters little whether such differentiation takes the
form of substantive limitations of the right of ownership or
is expressed in terms of procedural law; as the Court pointed
out in its Fayed v. the United Kingdom judgment of
21 September 1994, such a distinction may be no more than a
question of legislative technique (Series A no. 294-B, p. 50,
para. 67).
69. It cannot be ignored that in general the cases in which
the tax authorities will make use of their high-ranking
priority rights and their powers under section 16 (3) of the
1845 Act are precisely those where the tax debtor is unable to
satisfy all his creditors. This necessarily implies that in
these cases commercial creditors will not be fully paid if
they receive any payment at all.
The Court therefore does not agree with the Government
that the fact that the applicant company's claim against Atlas
was rendered worthless is not a consequence of the action
taken by the tax authorities.
70. It is nonetheless true, as observed by the Commission,
that the applicant company were engaged in a commercial
venture which, by its very nature, involved an element of risk
(see, mutatis mutandis, the Pine Valley Developments Ltd and
Others v. Ireland judgment of 29 November 1991, Series A
no. 222, p. 26, para. 59). The facts of the case show that
Gasus were in fact sufficiently aware of their risk to take
steps to limit it.
Having allowed Atlas to pay the purchase price of the
concrete-mixer in instalments, and being aware of the danger
that Atlas might default on its payments, Gasus reserved their
title to the concrete-mixer until the full price had been
paid. This, under Netherlands law, provided them with a
considerable degree of security, as their claims to the
concrete-mixer thus took priority over those of all other
creditors except the tax authorities, who were entitled under
section 16 (3) of the 1845 Act to seize it and take the
proceeds for the State.
Like the Commission, the Court considers that Gasus could
have eliminated their risk altogether by declining to extend
credit to Atlas: they could have stipulated payment of the
entire purchase price in advance or else refused to sell the
concrete-mixer in the first place. It also accepts that the
applicant company might have obtained additional security, for
example in the form of insurance or a banker's guarantee,
which pass the risk on to another party.
It is therefore unnecessary for the Court to establish
whether the applicant company could have ascertained the
existence and extent of Atlas's tax debts, this point being in
dispute. Nor is it material that the applicant company bore
no responsibility for the tax debt.
In the present context it is not without relevance that
the owners of goods subject to seizure under section 16 (3) of
the 1845 Act had knowingly allowed them to serve as
"furnishings" of the tax debtor's premises. They might
therefore well be held responsible to some extent for enabling
the tax debtor to present a semblance of creditworthiness.
71. Furthermore, whether or not the tax authorities are under
any legal or other obligation to be more flexible in respect
of tax debtors in temporary financial difficulties, they do
not have the same means at their disposal as commercial
creditors for protecting themselves against the consequences
of their debtors' financial problems. Nor have they any other
means of protecting themselves against their debtors' attempts
to solve such problems by vesting the title to their
"furnishings" in another party as a device for borrowing
against a security.
72. The Court accepts the Government's argument that the fact
that the concrete-mixer to which Gasus had reserved title was
seized while goods subject to NIB's fiduciary ownership rights
were spared does not suffice to demonstrate that the seizure
of the concrete-mixer was arbitrary. Whereas the
concrete-mixer supplied by Gasus qualified as "furnishings",
this was not the case with the goods over which NIB could
claim rights. This distinction was based on the law, as
elucidated by a long-established body of case-law, and
accorded with the stated policy of the Minister of Finance.
73. Finally, in the Court's opinion, it should be taken into
account that, as was made clear by the Supreme Court in its
judgment in this case, under Netherlands law third parties
whose goods are seized under section 16 (3) of the 1845 Act
may have the use that has been made of the powers conferred by
that section adequately reviewed by a tribunal under a
procedure which meets the requirements of Article 6 para. 1
(art. 6-1) of the Convention.
74. In view of the above, the Court comes to the conclusion
that the requirement of proportionality has been satisfied.
Accordingly, there has been no violation of Article 1 of
Protocol No. 1 (P1-1).
FOR THESE REASONS, THE COURT
1. Dismisses unanimously the Government's preliminary
objection;
2. Holds by six votes to three that there has been no
violation of Article 1 of Protocol No. 1 (P1-1).
Done in English and in French, and delivered at a public
hearing in the Human Rights Building, Strasbourg, on
23 February 1995.
Signed: Rolv RYSSDAL
President
Signed: Herbert PETZOLD
Registrar
In accordance with Article 51 para. 2 (art. 51-2) of the
Convention and Rule 53 para. 2 of Rules of Court A, the
dissenting opinion of Mr Foighel, joined by Mr Russo and
Mr Jungwiert, is annexed to this judgment.
Initialled: R. R.
Initialled: H. P.
DISSENTING OPINION OF JUDGE FOIGHEL,
JOINED BY JUDGES RUSSO AND JUNGWIERT
I agree with the majority that the present case comes
under the rule contained in the second paragraph of Article 1
of Protocol No. 1 (P1-1). I also agree that this rule must be
construed in the light of the principle laid down in the first
sentence of that Article (P1-1), i.e. that an interference
must achieve a "fair balance" between the demands of the
general interest of the community and the requirements of the
protection of the individual's fundamental rights and that
there must be a reasonable relationship of proportionality
between the means used and the aim pursued (see paragraph 62
of the judgment).
I regret, however, that I cannot share the majority's
opinion that the requirements of a "fair balance" and of
proportionality have in the instant case been satisfied.
The reasons for my dissent are the following:
1. The right of the tax authorities under section 16 (3) of
the 1845 Act (the bodemrecht), which gives them the power to
recover tax debts against certain goods which - as a matter of
law - are owned by a third party, is a specific right enjoyed
by the tax authorities only. This cannot be compared with the
situation in which a group of competing creditors divide the
assets of a debtor who has not enough to satisfy them all and
it is generally accepted that some privileged creditors may
invoke a priority right. In this latter situation the assets
in question are all owned by the debtor and not - as in this
case - by a third party.
2. The bodemrecht must be evaluated in the light of the fact
that according to Netherlands commercial law "retention of
title" in sales on credit must be respected by all other
creditors; it is a recognised means of protecting the property
interests of the vendor, who retains ownership of the goods
until they have been fully paid for.
3. The present case therefore concerns a genuine conflict
between the tax authorities and a third party who has nothing
to do with the amount of tax due to the State by the buyer of
the goods. Furthermore, there is not the slightest evidence
that "retention of title" was anything other than a normal
condition of trade negotiated by the third party, nor that the
arrangement was made to defraud the tax authorities or that
the third party otherwise acted in bad faith.
4. Even if one accepts that States enjoy a wide margin of
appreciation in collecting taxes, in checking statements, in
acting on presumptions and in requiring convincing proof if a
tax debtor claims that property on his premises belongs not to
him but to a third party, there is a limit to what a
government may do in this regard.
There is certainly a need to define this limit in cases
such as the present, where the tax authorities seize goods
which unquestionably belong to third party to recover a tax
debt owed by another person.
The limit is to be found above all in the test of
proportionality, which is an important element of Article 1
(P1-1). In my opinion, the bodemrecht as applied in this case
is not indispensable to the tax authorities and therefore does
not meet this test.
5. In the first place, the sum recovered annually by the tax
authorities by setting aside the property rights of third
parties is negligible. As appears from the documents
submitted by the Government themselves, the sums recovered in
this way by the forced sale of goods sold under "retention of
title" total no more than 1 million Netherlands guilders,
compared to a total budget for 1995 of 233 billion.
Furthermore, the more general issue of verification is of
no relevance to the present case as there is undisputed
contractual evidence that the concrete-mixer was sold under
"retention of title" and therefore - according to provisions
of commercial law applying also in the Netherlands - belonged
to a third party.
Finally, I do not accept that a third party, if he is a
private person, should bear the risk that the person with whom
he enters into an agreement has not paid all his taxes.
Normally the third party will know nothing about his business
counterpart's tax status as it is in most countries a
punishable act for persons in government employ to disclose
information of this nature to any private party, bank or
credit information service.
6. In weighing up the conflicting interests of the tax
authorities in collecting taxes and the business community in
upholding the validity of "retention of title", I come to the
conclusion that in this case there has been a violation of
Article 1 of Protocol No. 1 (P1-1).