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You are here: BAILII >> Databases >> European Court of Human Rights >> MIAILHE v. FRANCE (No. 2) - 18978/91 [1996] ECHR 42 (26 September 1996)
URL: http://www.bailii.org/eu/cases/ECHR/1996/42.html
Cite as: (1997) 23 EHRR 491, [1996] ECHR 42
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In the case of Miailhe v. France (no. 2) (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. Bernhardt, President,
Mr L.-E. Pettiti,
Mr C. Russo,
Mr N. Valticos,
Mrs E. Palm,
Mr R. Pekkanen,
Mr A.N. Loizou,
Mr P. Jambrek,
Mr P. Kuris,
and also of Mr H. Petzold, Registrar, and Mr P.J. Mahoney, Deputy
Registrar,
Having deliberated in private on 28 March and 27 August 1996,
Delivers the following judgment, which was adopted on the
last-mentioned date:
_______________
Notes by the Registrar
1. The case is numbered 47/1995/553/639. 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) (1 October 1994) 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 29 May 1995, within the
three-month period laid down by Article 32 para. 1 and Article 47 of
the Convention (art. 32-1, art. 47). It originated in an application
(no. 18978/91) against the French Republic lodged with the Commission
under Article 25 (art. 25) by a French national, Mr William Miailhe,
who also has Philippine nationality, on 16 September 1991.
The Commission's request referred to Articles 44 and 48
(art. 44, art. 48) and to the declaration whereby France 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 6 para. 1 of the Convention (art. 6-1).
2. In response to the enquiry made in accordance with
Rule 33 para. 3 (d) of Rules of Court A, the applicant stated that he
wished to take part in the proceedings and designated the lawyers who
would represent him (Rule 30).
3. The Chamber to be constituted included ex officio
Mr L.-E. Pettiti, the elected judge of French nationality (Article 43
of the Convention) (art. 43), and Mr R. Bernhardt, the Vice-President
of the Court (Rule 21 para. 4 (b)). On 8 June 1995, in the presence
of the Registrar, the President of the Court, Mr R. Ryssdal, drew by
lot the names of the other seven members, namely Mr B. Walsh,
Mr C. Russo, Mr N. Valticos, Mrs E. Palm, Mr A.N. Loizou, Mr P. Jambrek
and Mr P. Kuris (Article 43 in fine of the Convention and Rule 21
para. 5) (art. 43). Subsequently Mr R. Pekkanen, substitute judge,
replaced Mr Walsh, 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. 6), Mr Bernhardt,
acting through the Registrar, consulted the Agent of the
French Government ("the Government"), the applicant's lawyer 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's and the Government's memorials
on 20 and 28 November 1995 respectively. On 1 February 1996 the
Secretary to the Commission informed the Registrar that the Delegate
did not wish to reply in writing.
On 13 December 1995 and 22 January 1996 the Commission produced
the documents of the proceedings before it, as requested by the
Registrar on the President's instructions.
5. In accordance with the President's decision, the hearing took
place in public in the Human Rights Building, Strasbourg, on
26 March 1996. The Court had held a preparatory meeting beforehand.
There appeared before the Court:
(a) for the Government
Mr M. Perrin de Brichambaut, Director of Legal Affairs,
Ministry of Foreign Affairs, Agent,
Mr B. Nedelec, magistrat, on secondment to the Legal
Affairs Department, Ministry of Foreign Affairs,
Mr E. Bourgoin, Director of Taxes, Legal Department,
Ministry of the Budget,
Mr B. Hacquin, département Director of Taxes, on
secondment to the Ministry of Justice, Counsel;
(b) for the Commission
Mr J.-C. Soyer, Delegate;
(c) for the applicant
Mr D. Baudin, of the Conseil d'Etat and
Court of Cassation Bar,
Mr F. Goguel, of the Paris Court of Appeal Bar, Counsel.
The Court heard Mr Soyer, Mr Baudin, Mr Goguel and
Mr Perrin de Brichambaut.
AS TO THE FACTS
I. Circumstances of the case
6. Mr Miailhe has dual French and Philippine nationality. He was
honorary consul of the Philippines in Bordeaux from 1960 to May 1983
and also looked after that country's consulate in Toulouse.
A. The origins of the case - the customs prosecution
7. On 5 and 6 January 1983 customs officers seized nearly
15,000 documents at the applicant's Bordeaux residence, on premises
housing the head offices of companies he managed and the consulate of
the Republic of the Philippines. This operation was part of an
investigation to determine, among other things, whether the applicant
and his mother were to be regarded as being resident in France.
The judicial investigation that had been commenced on a
complaint lodged by the director of customs investigations alleging
unlawful accumulation and holding of assets abroad ended in a judgment
of the Criminal Court of 2 December 1992 in which the court ruled that
the public prosecution and the proceedings for imposition of customs
penalties in respect of Mr and Mrs Miailhe were barred as a result of
changes in the criminal law and ordered the return of the seized
documents. These were returned in January 1993.
8. Mr Miailhe challenged before the Strasbourg institutions the
lawfulness of the customs seizures made pursuant to Articles 64 and 454
of the Customs Code. Those proceedings led to two judgments of the
European Court of Human Rights. In the first of these it was held that
there had been a breach of Article 8 of the Convention (art. 8), on the
ground that the house searches and seizures made by customs officers
without a judicial warrant had interfered with the private life of the
applicant, his mother and his wife; and in the second, France was
ordered to pay Mr Miailhe 50,000 French francs (FRF) in respect of
non-pecuniary damage and FRF 60,000 for costs and expenses (see the
Miailhe v. France (no. 1) judgments of 25 February 1993, Series A
no. 256-C, and 29 November 1993, Series A no. 277-C).
B. The administrative tax-inspection proceedings
9. On 4 March 1983 the National Head Office for Tax Investigations
sent the applicant notice of a full audit of his overall tax position
in respect of his income for the years 1979, 1980, 1981 and 1982.
Since Mr Miailhe regarded himself as being resident for
tax purposes in the Philippines, and accordingly not under an
obligation to pay tax to the French State, the Revenue asked him to
produce copies of his tax assessment notices in the Philippines and
documents giving details of all bank accounts in his name both in
France and abroad.
On 20 April 1983 Mr Miailhe replied that it was impossible for
him to forward some of the documents that had been kept by the customs
and which he had asked to have returned to him.
10. During May 1983 the tax inspector exercised the right of
inspection provided in Articles L.81 et seq. of the
Code of Tax Procedure and Article 64A of the Customs Code.
At the offices of his customs colleagues he examined the
9,478 documents that had been kept and classified by the customs
authorities and made copies of 1,200 to 1,300 of them.
11. On 9 February 1984 the tax inspector asked the Philippine
authorities for administrative assistance as provided for in Article 26
of the Franco-Philippine Tax Convention of 9 January 1976 "for the
avoidance of double taxation and prevention of fiscal evasion in
relation to income tax" (see paragraph 27 below).
On 21 March 1985 he inspected 41 sheets concerning returns and
annexes of the applicant and his mother for the years 1980 and 1982,
27 sheets concerning returns, appended financial statements and
certificates from the accountant of the AMIBU company managed by the
applicant in respect of the years 1979, 1980 and 1981, and three sheets
relating to a provisional accounting statement and a bank
reconciliation as at 15 September 1982.
These documents reached the Revenue's administrative
headquarters in Paris on 8 November 1984.
12. At the end of the tax audit four supplementary assessments were
served on Mr Miailhe: on 22 December 1983 for the year 1979, on
4 December 1984 for the year 1980, on 19 February 1985 for the
year 1981 and on 12 March 1985 for the year 1982. The Revenue
subsequently amended the notices in respect of the years 1979, 1980 and
1981, once on 16 July 1985, in the light of comments by the applicant,
and again on 8 November 1985, to correct erroneous reasons.
13. The relevant documents to be studied for each category of
proceedings - administrative, tax and criminal - were not all the same,
since different tax years and bases of assessment were involved, as
were failures to make returns and real-property and agricultural taxes
distinct from the general income tax to which the dispute over tax
residence related more particularly.
C. Appeals against the assessments to the administrative courts
14. Mr Miailhe challenged the supplementary tax assessments for the
years 1979-82 in the administrative courts, which have jurisdiction in
tax matters, by lodging an appeal founded partly on the non-adversarial
nature of the Revenue's preparation of the case against him.
In a judgment of 12 December 1991 the Bordeaux Administrative
Court held that the applicant had not proved that he had expressly
asked the Revenue to produce the documents on which it had allegedly
based the assessments for the years 1980, 1981 and 1982 and ordered
further inquiries on this point. As to the assessment raised for the
year 1979, on the other hand, the court found that the Revenue had
failed to accede to an application for production made by the
applicant's lawyer and accordingly remitted the additional tax sought
from the applicant in the category of income from movable assets and
in respect of income from undetermined sources for that year. An
appeal by the Minister for the Budget regarding the remission of tax
granted for the single year 1979 was dismissed by the
Bordeaux Administrative Court of Appeal.
An appeal on points of law against the Administrative Court's
judgment is pending before the Conseil d'Etat. The
Administrative Court has not yet ruled on the merits as regards the
supplementary tax assessments for the years 1980, 1981 and 1982.
15. In other proceedings brought against the Revenue by the
AMIBU company, managed by the applicant, the Bordeaux Administrative
Court of Appeal found that the tax assessment challenged by the company
was based in part on documents seized by the customs in circumstances
that had been held to be contrary to Article 8 of the Convention
(art. 8). In a judgment of 15 June 1995 it allowed the company's
application for remission of tax as follows:
"While the unlawfulness of the seizure, in proceedings brought
under different legislation, of documents on the basis of
which the Revenue, exercising its right of inspection,
assessed the taxes has no effect on the lawfulness of the
tax proceedings, it is such as to deprive those documents of
any probative value, including inasmuch as they revealed to
the Revenue that the taxpayer was in a position to have his
tax assessed by the Revenue of its own motion. Where an
international judicial body set up by an international treaty
or agreement that has been lawfully ratified or approved has
ruled that the seizure of documents did not comply with the
said treaty or agreement, the court having jurisdiction in
tax matters must regard the seized documents as having no
probative value ..."
D. The criminal proceedings for tax evasion
16. On 15 April 1986 the Tax Offences Board ("the CIF") gave
approval for a complaint to be lodged seeking the imposition of
criminal tax penalties, pursuant to Article L.228 of the
Code of Tax Procedure (see paragraph 29 below).
In consequence, the Department of Revenue lodged a complaint,
together with an application to join the proceedings as a civil party,
against the applicant for tax evasion in respect of the years 1981 and
1982. It accused him of not having made any general tax return for
1981 and of having understated his agricultural income for 1982.
17. The Revenue annexed to its complaint some of the documents
given to it by the customs authorities. It did not at that juncture
append any of the documents forwarded by the Philippine authorities,
although the tax inspector's summary report that had been placed in the
file of the judicial investigation mentioned the correspondence between
the French and the Philippine authorities.
The investigating judge raised this point with the
tax inspector, who referred back to his central authorities and
subsequently told the judge that his authorities had hesitated to
produce in criminal proceedings documents which the
ordinary judicial authorities could not have procured for themselves.
At the judge's request, the inspector added to the file the documents
from the Philippines provided by his authorities, that is to say the
only documents concerning Mr Miailhe in respect of the offences
charged. The documents not placed in the file related either to
Mrs Miailhe and the AMIBU company - and neither of these was implicated
- or, in respect of the defendant, to the years 1980 and 1982, which
the proceedings for failure to make a tax return were not concerned
with.
18. On 6 May 1988 the investigating judge committed the applicant
for trial at the Bordeaux Criminal Court on a charge of having
fraudulently evaded, in part, assessment and payment of income tax for
the years 1981 and 1982 "by having failed to make certain
category-specific returns (in respect of income from movable assets,
'RCM', and industrial and commercial profits, 'BIC', Article 92 of the
General Tax Code) within the prescribed time-limits (in respect of
1981) and by having omitted from his returns (for 1981 and 1982) part
of his income from farming and real property, thus deliberately
concealing in his overall returns part of the sums liable to tax".
1. In the Bordeaux Criminal Court
19. Before any defence on the merits Mr Miailhe filed submissions
in which he sought to have the Revenue's complaint and the judicial
investigation proceedings declared null and void. He argued that the
customs seizures were null and void, that the adversarial principle had
not been respected by the Revenue and that the latter, in particular
during the judicial investigation, had withheld documents from the
judicial authorities and made false statements.
He himself filed certain documents that he had been able to
obtain from the Philippine authorities: the French tax authorities'
request to their Philippine opposite numbers, the Philippine
authorities' reply indicating that Mr and Mrs Miailhe had been resident
for tax purposes in the Philippines for 1980 and 1982, information
concerning the AMIBU company, untranslated bank documents, a
certificate by a registered accountant to the effect that Mr Miailhe's
tax return for 1982 had been made in good faith, a statement of his
income and expenditure for 1982, an amortisation table for 1981, a
statement of his income for 1981, the tax return he made in the
Philippines for 1981 and a tax return for 1982.
20. On 11 January 1989 the Criminal Court gave its judgment.
It began by dismissing all Mr Miailhe's preliminary objections.
As regards the first of those, it pointed out that on an appeal
by the applicant concerning the lawfulness of the seizures, the
Court of Cassation had upheld a judgment of the Paris Court of Appeal
in which that court had said that "the customs officials did not exceed
their powers and that there was no manifest, deliberate violation of
a personal freedom"; the customs seizures were covered by paragraph 2
of Article 8 of the Convention (art. 8-2) and the seized documents had
been lawfully made available to the Revenue.
It dealt with the second objection as follows:
"... on account of the principle that tax and
criminal proceedings are independent, the [criminal] courts
cannot rule on the nullity of tax proceedings. The only
exception to this principle is provided in Article L.47 of the
Code of Tax Procedure ... This Article provides that
proceedings shall be null and void where a notice of audit
does not mention that the taxpayer has the right to be
assisted by an adviser of his own choosing. As the defendant
does not dispute that this information was given to him, he
cannot rely on any other argument in order to obtain from the
criminal courts a declaration that the tax proceedings are
null and void."
As to the last objection, the court found, in the light of the
documents produced by the applicant at the hearing, that the letters
and documents exchanged by the French and Philippine authorities were
not in the file and it held:
"... The failure to place in the file some documents of
importance to the accused's defence, which had been sought in
their entirety by the investigating judge, amounts to a breach
of his rights.
That breach of the rights of the defence cannot, however, have
the consequence that the earlier proceedings were a nullity.
By producing these documents at the hearing, the accused was
able to explain their content and have them submitted to
adversarial argument. The breach of his rights did not
therefore have the effect of prejudicing his interests."
21. Ruling on the question whether Mr Miailhe was under an
obligation to make a return in France of his category-specific income
and whether he had with fraudulent intent evaded paying that tax for
the year 1981, the court held that the applicant was resident for
tax purposes in France at the time, both under French law and under the
Franco-Philippine Convention. In order to determine whether there had
been fraudulent intent, it relied among other things on a manuscript
document written by Mr Miailhe that was reproduced in the
tax-audit report and on the applicant's conduct in producing only at
the hearing his full return for 1981, which had been submitted to the
tax inspector with the figures whited out.
As to the undeclared income from farming and real property for
the years 1981 and 1982, the court found that the applicant had lent
money to himself through the bank accounts of his companies and
subsequently deducted from his agricultural income the interest charges
and exchange losses. He thus realised a tax loss for those years and
legally exported his capital by means of the repayments.
The court concluded that Mr Miailhe had personally put in place
fraudulent arrangements designed to evade liability to and payment of
tax in France. It sentenced him to three years' imprisonment, of which
six months were to be served immediately, and a fine of FRF 150,000.
Extracts from the judgment were ordered to be published in the
French Official Gazette and in the daily newspapers Le Monde, Le Figaro
and Sud-Ouest.
2. In the Bordeaux Court of Appeal
22. The defendant appealed and in the Bordeaux Court of Appeal
reiterated the three objections of nullity already raised, stating as
to the last of them that:
"... although he ha[d] been able to obtain a number of
withheld documents by seeking them from the
Philippine authorities, he ha[d] been unable to inspect most
of the documents attached to the correspondence, he still
[did] not know what they contained and ha[d] been unable to
give explanations concerning them; in particular, he ha[d] not
been able to refer to the withheld documents before the
Tax Offences Board; ..."
23. The Court of Appeal gave judgment on 7 June 1989.
It joined the objections to the merits and dismissed them,
referring "in the case of the first two applications for a declaration
of nullity that were reiterated but not strongly argued" to the
reasoning of the Criminal Court. The last objection, concerning the
withholding of documents and the false statements, it dismissed as
follows:
"These documents should have been handed over but provide no
information that could have any bearing on the decision of the
court below or of this court: for the most part they did not
concern Miailhe or the period in question, 1981; ... the
documents not filed were of no relevance to the case and, at
all events, were produced at the hearing in the court below
and examined adversarially on that occasion; the same
reasoning, except for the adversarial examination of the
documents, applies to the Tax Offences Board; moreover, at
first instance no application was made for a declaration that
the proceedings before the Board were null and void.
As regards the very large number of other documents handed
over but not placed in the file, their existence, alleged by
[the applicant], has not been proved and they cannot be taken
into account in any way."
24. On the merits the court held, as to the first offence of
failure to declare income for 1981, that the applicant was a
French resident for tax purposes under French law alone, as the
Franco-Philippine Convention did not operate in the instant case since
there was no conflict between the two sets of national legislation.
The court pointed out that the Revenue's calculations had been based
on documents signed in France by Mr Miailhe, which it listed. The
court held that he had had fraudulent intent from a scrutiny of notes
by him that had been seized and were in the file and documents that he
had placed in it himself, which showed that notwithstanding his alleged
status as Philippine resident and citizen, he had not discharged his
obligation to declare his world income in the Philippines either.
The Court of Appeal, which upheld the Criminal Court's judgment
in its entirety, sentenced the defendant to three years' imprisonment,
of which ten months were to be served immediately, and a fine of
FRF 250,000.
3. In the Court of Cassation
25. Mr Miailhe lodged an appeal on points of law, which was
dismissed by the Court of Cassation (Criminal Division) on
18 March 1991.
The judgment read as follows:
"As to the second ground of appeal, based on the breach of
Article 8 (art. 8) of the ... Convention ...
...
The ground must therefore fail;
As to the third ground of appeal, based on a breach of ...
Article 6 (art. 6) of the ... Convention ...
...
Firstly, the accused merely raised, in the court of trial
before any defence on the merits, an objection of nullity
going to the lawfulness of the supplementary tax assessment
proceedings, which, as they are purely administrative, are
irrelevant to the criminal proceedings.
That being so, the first limb of the ground of appeal, which
raises for the first time before the Court of Cassation the
objection based on the alleged nullity of the proceedings
before the Tax Offences Board gave its opinion, is
inadmissible under Article 385 of the
Code of Criminal Procedure.
Secondly, as a ground for refusing to allow the objection that
the ordinary criminal proceedings were a nullity on account of
the Revenue's withholding of documents useful to the defence,
the Court of Appeal noted that under the
Franco-Philippine Tax Convention of 9 January 1976, the
French authorities sought administrative assistance from the
Philippine authorities. The accused maintained that
71 documents were sent to the French authorities in this way.
The accused, who had been able to obtain some of these
documents, produced them at the hearing in the Criminal Court.
After studying these documents, the Court of Appeal found that
they were of no relevance to the case, most of them not
concerning [William] Miailhe or the period referred to in the
charge. At all events, they were produced at the hearing in
the Criminal Court and examined adversarially on that
occasion. The Court of Appeal added that the existence of the
other documents allegedly sent and not placed in the file had
not been proved.
In ruling as it did, the Court of Appeal, which based its
judgment only on the documents produced at the hearing,
provided a legal basis for its decision.
The second limb of the ground of appeal must likewise fail."
26. The applicant was committed to prison on 18 March 1991 and was
released on licence on 21 July of the same year. He was placed under
judicial supervision until 8 November 1991.
II. Relevant international and domestic law
A. The Franco-Philippine Convention of 9 January 1976
27. At Kingston on 9 January 1976 the French and
Philippine Governments signed a convention "for the avoidance of double
taxation and prevention of fiscal evasion in relation to income tax".
Article 26 ("Exchange of information") provides:
"1. The competent authorities of the Contracting States shall
exchange such information (being information which is at their
disposal under their respective tax administrative practices
and those which may be procured by special inquiry) as is
necessary for the carrying out of this Convention and of the
domestic laws of the Contracting States concerning taxes
covered by this Convention, in particular, for the prevention
of fraud or evasion of such taxes. Any information so
exchanged shall be treated as secret and shall not be
disclosed to any persons or authorities other than those
(including a court or administrative body) concerned with the
assessment, collection, or enforcement in respect of taxes
which are the subject of the Convention or with the
prosecution, claims and appeals relating thereto.
2. In no case shall the provisions of paragraph 1 be
construed so as to impose on one of the Contracting States the
obligation:
(a) to carry out administrative measures at variance with the
laws or the administrative practices of that or of the other
Contracting State;
(b) to supply particulars which are not obtainable under the
laws or in the normal course of the administration of that or
of the other Contracting State;
(c) ..."
B. The Code of Tax Procedure
28. Administrative tax-inspection proceedings are governed by the
Code of Tax Procedure. By Article L.47 of that code,
"A full audit of the overall tax position of a natural person
in regard to income tax or an audit of accounts cannot be
undertaken unless the taxpayer has been informed of it by the
sending or handing over of a notice of audit.
Such a notice must specify the years in respect of which the
audit is to be made and expressly mention, failing which the
proceedings will be null and void, that the taxpayer has the
right to be assisted by an adviser of his own choosing.
In the event of an unannounced inspection for the purpose of
identifying physical features of the business or establishing
the existence and state of the books, the notice of an audit
of the accounts shall be handed over at the beginning of the
search operation. A thorough scrutiny of the books may only
begin after the taxpayer has been given a reasonable time to
seek the assistance of an adviser."
The courts with jurisdiction in tax matters, which in the case
of direct taxes are the administrative courts, are competent in
principle to deal with irregularities in administrative tax-inspection
proceedings. They ensure that the safeguards afforded to taxpayers are
complied with. Thus "a final decision by a criminal court cannot
prevent a taxpayer from arguing before a court with jurisdiction in
tax matters that the audit which gave rise to the impugned
tax assessments was irregular" (Conseil d'Etat, 9 April 1986,
no. 22691, Revue de jurisprudence fiscale, June 1986, no. 625).
29. Article L.228 of the Code of Tax Procedure provides:
"To be admissible, complaints seeking the imposition of
criminal penalties in respect of direct taxes, value-added tax
and other turnover taxes, registration fees, land registry
fees and stamp duty must be lodged by the administrative
authorities after approval from the Tax Offences Board.
The Board shall consider the cases submitted to it by the
Minister of Finance. The taxpayer shall be given notice of
the application to the Board, which shall invite him to send
it, within thirty days, any information it considers
necessary.
The Minister shall be bound by the Board's opinions."
The Revenue is not required by any provision of statute or of
regulations to institute criminal proceedings in respect of the
offences referred to in Article 1741 of the General Tax Code
(Conseil d'Etat, 5 November 1980, Droit fiscal 1981, p. 365).
The CIF was set up under the Act of 29 December 1977 in order
to afford taxpayers fresh safeguards and it is made up of
six senior members of the Conseil d'Etat (judges of the
administrative courts) and six senior members of the Court of Audit
(judges of the financial courts). Parliament absolutely excluded the
possibility of the CIF being a court of first instance. It refused to
allow the CIF's opinions to contain reasons, in order to avoid
influencing the ordinary courts. As long as there is no breach of due
process, a taxpayer accused of tax evasion may not challenge in the
criminal courts the lawfulness of the administrative proceedings which
took place prior to the CIF's favourable opinion; the criminal court
must only establish the existence and date of that opinion
(Court of Cassation, Criminal Division, 2 December 1985,
Recueil Dalloz Sirey ("DS") 1986, p. 489).
The only function of the criminal courts that hear tax-evasion
cases is to punish the offence. The Court of Cassation has held:
"... Criminal proceedings instituted under Article 1741 of the
General Tax Code and the administrative proceedings for
establishing the tax base and the scope of tax are in their
nature and purpose different and independent from each other
... the function of courts which try criminal cases under
Article 1741 is limited to determining whether the defendant
evaded or attempted to evade tax by reprehensible subterfuges
in respect of sums exceeding the statutory allowance."
(Criminal Division, 9 April 1970, DS 1970, p. 755)
Article L.47 provides that any breach of its provisions shall
entail a nullity of the proceedings "without any distinction being made
between administrative proceedings and criminal proceedings ... Since
the latter proceedings may be based on findings made by the inspectors
in the books and documents held by a taxpayer, compliance with the
requirements of [Article L.47] is an essential safeguard of the rights
of the defence, which it is for the criminal courts to ensure are
respected" (Court of Cassation, Criminal Division, 4 December 1978,
Venutolo, DS 1979, p. 90). However, "it is not within the jurisdiction
of the criminal courts to assess the lawfulness of the
tax proceedings ... The criminal courts' response to failure to comply
with the provisions of Article L.47, in that it departs from the
general principle of the separation of administrative and ordinary
courts, must be based on a strict construction and accordingly cannot
be extended beyond the cases to which the statute expressly meant to
limit it" (Court of Cassation, Criminal Division, 9 May 1983, DS 1983,
p. 621).
PROCEEDINGS BEFORE THE COMMISSION
30. Mr Miailhe applied to the Commission on 16 September 1991.
Relying on Article 6 of the Convention (art. 6), he complained firstly
of a breach of the principle of equality of arms during the
administrative phase of the proceedings, before the CIF gave its
opinion, and secondly of a breach of the rights of the defence during
the trial.
31. The Commission declared the application (no. 18978/91)
admissible on 6 April 1994. In its report of 11 April 1995
(Article 31) (art. 31), it expressed the opinion by eleven votes to two
that there had been a breach of Article 6 para. 1 (art. 6-1). The full
text of the Commission's opinion and of the dissenting opinion
contained in the report is reproduced as an annex to this judgment (1).
_______________
Note by the Registrar
1. For practical reasons this annex will appear only with the printed
version of the judgment (in Reports of Judgments and
Decisions 1996-IV), but a copy of the Commission's report is obtainable
from the registry.
_______________
FINAL SUBMISSIONS TO THE COURT BY THE GOVERNMENT
32. In their memorial the Government asked the Court to "dismiss
all the applicant's complaints".
AS TO THE LAW
ALLEGED VIOLATION OF ARTICLE 6 PARA. 1 OF THE CONVENTION (art. 6-1)
33. Mr Miailhe complained that he had not had access to all the
documents held by the Revenue and that this had contravened the
principle of equality of arms during the administrative stage before
the Tax Offences Board (CIF) gave its opinion and had infringed the
rights of the defence during the criminal trial. He relied on
Article 6 para. 1 of the Convention (art. 6-1), which provides:
"In the determination of ... any criminal charge against him,
everyone is entitled to a ... hearing ... by an independent
and impartial tribunal ..."
A. The Government's preliminary objections
34. Before the Court the Government reiterated the three objections
they had already raised before the Commission. The first of these was
that the application was incompatible ratione materiae with the
Convention inasmuch as it related to the supplementary tax assessment
proceedings; the second, that domestic remedies had not been exhausted
in respect of the supplementary tax assessment proceedings and the
procedure of consulting the CIF; and the third, that the applicant was
not a victim in respect of the complaint that the documents seized by
the customs had not been produced.
They maintained, firstly, that the application contained
two separate complaints. The Court could not entertain the first of
these since it concerned the administrative supplementary tax
assessment stage and the Revenue's refusal to hand over documents
seized by the customs, a refusal which had allegedly made it impossible
for Mr Miailhe to meet the requests for proof or to respond to the
supplementary tax assessment notices. The Commission had, the
Government continued, unjustly dealt with the different sets of
proceedings together notwithstanding that they were independent of each
other. The administrative tax-inspection proceedings, disputes over
which came within the jurisdiction of the administrative courts that
were currently dealing with another identical complaint of Mr Miailhe's
concerning failure to produce documents during the supplementary tax
assessment proceedings, were not covered by Article 6 of the Convention
(art. 6); they were unconnected with the administrative proceedings
before the CIF, whose opinion, though certainly a mandatory
prerequisite for lodging a criminal complaint of tax evasion, was not
binding on the authorities and still less on the courts.
Furthermore, as the Court of Cassation had declared
inadmissible the ground of appeal relating to the procedure of
consulting the CIF, the Commission should have dismissed that part of
the application.
Lastly, the applicant had never sought to obtain any of the
documents seized by the customs relating to the years concerned in the
present case; he could not therefore complain of a refusal by the
authorities.
In short, the Court had to deal solely with the criminal
proceedings that ended with the Court of Cassation's judgment of
18 March 1991 whereby Mr Miailhe's conviction for tax evasion became
final.
35. According to the Delegate of the Commission, the CIF's
favourable opinion, without which no application could be made to the
criminal courts, had had a decisive bearing on the outcome of the
criminal trial, and Mr Miailhe had properly exhausted domestic remedies
by alleging in the national courts that all the proceedings that had
taken place before the CIF's opinion was given were null and void. The
proceedings before the CIF ought, under the Court's case-law in the
Imbrioscia v. Switzerland case (judgment of 24 November 1993, Series A
no. 275), to afford the safeguards required by Article 6 of the
Convention (art. 6).
36. The applicant stated that his complaint of failure to respect
the adversarial principle referred only to the procedure of consulting
the CIF, which was decisive for the subsequent criminal trial. He was
not for the time being attacking the proceedings relating solely to
tax, which had not yet been concluded in the administrative courts.
He added that he had continually asked for the seized documents.
37. The Court notes at the outset that the administrative
supplementary tax assessment proceedings are currently pending before
the Conseil d'Etat as the court which hears appeals on points of law
(see paragraph 14 above). To that extent, the objection of
incompatibility ratione materiae and, in so far as it relates to those
proceedings, the objection that domestic remedies have not been
exhausted are devoid of purpose.
The second objection, that domestic remedies have not been
exhausted as regards the procedure of consulting the CIF, has already
been considered by the Commission, which decided to dismiss it. The
Court sees no reason to depart from the Commission's analysis and
dismisses it likewise.
The third objection, that the applicant was not a victim, goes
to the merits of the case, and the Court therefore joins it to them.
B. The merits of the complaint
38. In Mr Miailhe's view, Article 6 (art. 6) had the consequence
that the Revenue could base its prosecutions only on information that
had been obtained fairly. Yet all the documents used against him to
determine his place of principal residence - which was at the heart of
the case - had been found among documents that had been seized
unlawfully and related to his or his family's private life. He had not
had access to them to defend himself during the administrative
proceedings, up to and including the CIF's decision.
Essentially, the applicant said he was the victim of the
consequences of the original breach of Article 8 of the Convention
(art. 8) found by the Court in the Miailhe (no. 1) judgment; the
prosecuting authorities had rendered his criminal conviction unfair,
based as it was almost exclusively on the documents seized by the
customs in circumstances held to have been contrary to the Convention.
Moreover, it was only at the stage of the judicial
investigation in the criminal proceedings, on an order from the
investigating judge, that the Revenue had placed in the file the
documents it had obtained from the Philippine authorities, and then
only some of them. Mr Miailhe had made an oral request to the judge
to obtain all these documents. While he had himself been able to
procure some of them from the Philippine authorities, he did not have
a key document, the letter in which the Philippine authorities
recognised his status as a Philippine resident.
By producing only the documents that supported its submissions
to the trial court, the Revenue had therefore deprived him of the means
of proving that he was resident for tax purposes in the Philippines and
infringed the rights of the defence. The trial court had, moreover,
acknowledged that documents had indeed been withheld.
39. The Commission accepted Mr Miailhe's submissions in substance.
It pointed out that he had not been in a position to make useful
submissions to the CIF on account of the refusal to hand over to him
prosecution documents obtained by the customs in circumstances
condemned by the European Court. Furthermore, the failure to produce
all the documents supplied by the Philippine authorities had deprived
the applicant of a fair trial.
40. In the Government's submission, the seized documents were
passed on by the customs to the Revenue in accordance with
national statutory provisions, and there was nothing at the time to
warrant regarding those documents as having been seized unlawfully
under French law. Moreover, in its judgment of 6 December 1995 in a
leading case the Conseil d'Etat by implication invalidated the approach
adopted in the applicant's favour by the
Bordeaux Administrative Court of Appeal (see paragraph 15 above), as
there was no "contamination by procedural defects" in respect of
documents lawfully made available to the Revenue by the
judicial authorities where the documents had subsequently been declared
null and void by the criminal courts. Furthermore, Mr Miailhe, the
Government said, had never sought production of the documents seized
in respect of the relevant proceedings and supplementary tax assessment
years. He had asked only for the documents from the
Philippine assistance file.
Contrary to the Commission's findings on the consultation
procedure prior to the lodging of a complaint for tax evasion, the
Government continued to maintain that the CIF was a non-judicial body.
It had been established to afford taxpayers new procedural safeguards
and limited the discretion previously enjoyed by the Minister, who was
now bound where an opinion was to the effect that a complaint should
not be lodged. It ruled on the advisability of prosecution, and its
opinion, which was purely advisory, could not in any circumstances be
regarded as tantamount to a judgment at first instance in regard to the
taxpayer.
As to the Philippine documents, the Government submitted that
their existence had never been concealed and that the only ones
relevant to the case had eventually been placed in the case file. The
courts, which had considered the reasons put forward by the authorities
to explain why they had not been produced, had based their judgments
on grounds of fact and of law.
The applicant had been able to present argument on the whole
of the file, which also contained other documents, and as he had
enjoyed equality of arms at the trial, he had not found himself at a
disadvantage.
41. The Court notes, firstly, that the documents seized by the
customs were passed on by them to the Revenue in May 1983
(see paragraph 10 above). Three years later the Revenue lodged a
complaint alleging tax evasion against Mr Miailhe, whom it accused of
having fraudulently omitted to declare his general income for 1981 and
of having understated his agricultural income for 1982
(see paragraph 16 above). It had already served
supplementary tax assessments on him, on 19 February 1985 in respect
of the year 1981 and on 12 March 1985 in respect of the year 1982 (see
paragraph 12 above).
The applicant now complained that he had not been given the
documents seized by the customs in breach of Article 8 of the
Convention (art. 8) so that he could contest the fraud charges by
proving that he was resident for tax purposes in the Philippines, both
during the criminal proceedings and during the preceding stage before
the CIF.
The Court points out that the Miailhe (no. 1) judgment on the
merits was given on 25 February 1993, that is to say after the customs
had passed documents on to the Revenue.
Of the private letters and personal documents referred to in
the judgment, those which were used for the judicial investigation in
the criminal proceedings had been annexed to the
summary tax-audit report filed by the Revenue in support of its
complaint (see paragraph 17 above). At the investigating judge's
request, the Revenue added documents from the Philippines
(see paragraph 17 above). All those documents were in the criminal
case file, to which the applicant had access.
42. Admittedly, that file did not contain all of the documents
provided by the Philippine authorities (see paragraphs 11 and 17
above). However, the documents relevant to the criminal case were
added to the file during the judicial investigation, at the request of
the investigating judge alone.
On this point the Criminal Court held (see paragraph 20 above):
"... The failure to place in the file some documents of
importance to the accused's defence, which had been sought in
their entirety by the investigating judge, amounts to a breach
of his rights.
[It] cannot, however, have the consequence that the earlier
proceedings were a nullity. By producing these documents at
the hearing, the accused was able to explain their content and
have them submitted to adversarial argument. The breach of
his rights did not therefore have the effect of prejudicing
his interests."
The Court of Appeal held (see paragraph 23 above):
"These documents should have been handed over but provide no
information that could have any bearing on the decision of the
court below or of this Court: for the most part they did not
concern Miailhe or the period in question, 1981; ... the
documents not filed were of no relevance to the case and, at
all events, were produced at the hearing in the court below
and examined adversarially on that occasion; the same
reasoning, except for the adversarial examination of the
documents, applies to the Tax Offences Board; ...
As regards the very large number of other documents handed
over but not placed in the file, their existence, alleged by
[the applicant], has not been proved and they cannot be taken
into account in any way."
By himself filing some of the documents from the Philippines
(see paragraph 19 above), Mr Miailhe had the possibility of
establishing the genuineness of his links with the Philippines. Such
evidence, however, was relevant only to the first offence of failure
to declare his general income for the year 1981, as the second offence
concerned agricultural and land income that he had declared in France.
43. It is not for the Court to substitute its view for that of the
national courts which are primarily competent to determine the
admissibility of evidence (see, among other authorities, the Schenk
v. Switzerland judgment of 12 July 1988, Series A no. 140, p. 29,
para. 46). It must nevertheless satisfy itself that the proceedings
as a whole were fair, having regard to any possible irregularities
before the case was brought before the courts of trial and appeal and
checking that those courts had been able to remedy them if there were
any (see the Imbrioscia judgment previously cited, p. 14, para. 38).
44. The Court points out that in the instant case the ordinary
courts did, within the limits of their jurisdiction, consider the
objections of nullity raised by Mr Miailhe and dismissed them.
Furthermore, it appears clearly from their decisions that they
based their rulings - among other things as to residence for tax
purposes - solely on the documents in the case file, on which the
parties had presented argument at hearings before them, thereby
ensuring that the applicant had a fair trial. The failure to produce
certain documents during the procedure of consulting the CIF or in the
criminal proceedings therefore did not infringe Mr Miailhe's defence
rights or the principle of equality of arms (see, among other
authorities, the Bendenoun v. France judgment of 24 February 1994,
Series A no. 284, p. 22, para. 53).
45. The Court notes, besides, that before the CIF the taxpayer may,
within thirty days of the application to it, communicate any
information he deems necessary.
When it is consulted on the advisability of lodging a complaint
for the offences referred to in Article 1741 of the General Tax Code,
the CIF gives an opinion which is binding on the Minister
(Article L.228 of the Code of Tax Procedure - see paragraph 29 above).
The criminal courts - the Criminal Court and the Court of
Appeal - have unfettered discretion to assess the facts of an alleged
fraud and may acquit.
The fact that there are no adversarial proceedings before the
CIF gives its opinion may in some cases give rise to a fear that the
taxpayer will find himself in a more difficult position. Nevertheless,
only the preliminary intervention of an advisory body is concerned.
In the instant case there was a judicial investigation and no direct
summons.
Furthermore, the criminal proceedings that were set in motion
following the Revenue's complaint were conducted at two levels of
jurisdiction - first instance and appeal - and this enabled Mr Miailhe,
to whom it was further open to lodge an appeal on points of law, to
present argument on the prosecution evidence and the charges against
him.
46. In conclusion, the proceedings in issue, taken as a whole, were
fair. There has therefore been no breach of Article 6 para. 1
(art. 6-1).
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Holds that the objection of incompatibility ratione materiae
with the Convention and the objection that domestic remedies
have not been exhausted, in so far as the latter relates to
the administrative supplementary tax assessment proceedings,
are devoid of purpose;
2. Dismisses the objection that domestic remedies have not been
exhausted as to the procedure of consulting the Tax Offences
Board;
3. Joins to the merits the objection that the applicant is not a
victim and dismisses it;
4. Holds that there has been no breach of Article 6 para. 1 of
the Convention (art. 6-1).
Done in English and in French, and delivered at a public
hearing in the Human Rights Building, Strasbourg, on 26 September 1996.
Signed: Rudolf BERNHARDT
President
Signed: Herbert PETZOLD
Registrar