CASE OF BURDEN and BURDEN v. THE UNITED KINGDOM
(Application no. 13378/05)
12 December 2006
This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of Burden and Burden v. the United Kingdom,
The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of:
Mr J. Casadevall,
Sir Nicolas Bratza,
Mr G. Bonello,
Mr K. Traja,
Mr S. Pavlovschi,
Mr L. Garlicki,
Ms L. Mijović, judges,
and Mr T.L. Early, Section Registrar,
Having deliberated in private on 12 September and 21 November 2006,
Delivers the following judgment, which was adopted on the last-mentioned date:
There appeared before the Court:
(a) for the Government
Ms K. McCLEERY, Agent,
Mr J. CROW Counsel,
Mr J. COUCHMAN, Adviser,
Ms S. TARIQUE, Adviser,
Mr R. LINHAM, Adviser,
(b) for the applicant
Mr S. GRODZINSKI, Counsel,
Ms E. STRADLING Solicitor,
The Court heard addresses by Mr Crow and Mr Grodzinski, as well as their answers to questions put by Judge Bratza.
I. THE CIRCUMSTANCES OF THE CASE
II. RELEVANT DOMESTIC LAW
A. Inheritance tax
B. The Civil Partnership Act 2004 (“2004 Act”)
“I have great sympathy with the noble Baroness, Lady O’Caithlin [the Conservative Peer who proposed the amendment], when she talks about siblings who share a home or a carer who looks after a disabled relative. Indeed, she will readily acknowledge that I have put the case several times—at Second Reading and in Grand Committee—and I have pushed the Government very hard to look at this issue. There is an injustice here and it needs to be dealt with, but this is not the Bill in which to do it. This Bill is about same-sex couples whose relationships are completely different from those of siblings.”
During the same debate, Lord Goodhart, Liberal Democrat Peer, stated:
“There is a strongly arguable case for some kind of relief from inheritance tax for family members who have been carers to enable them to continue living in the house where they have carried out their caring duties. But that is a different argument and this is not the place or the time for that argument. This Bill is inappropriate for dealing with that issue.”
During the course of the debate in the Standing Committee of the House of Commons, Jacqui Smith MP, Deputy Minister for Women and Equality, stated:
“As I suggested on Second Reading, we received a clear endorsement of the purpose of the Bill—granting legal recognition to same-sex couples, ensuring that the many thousands of couples living together in long-term committed relationships will be able to ensure that those relationships are no longer invisible in the eyes of the law, with all the difficulties that that invisibility brings.
We heard a widespread agreement from Members across almost all parties that the Civil Partnership Bill is not the place to deal with the concerns of relatives, not because those concerns are not important, but because the Bill is not the appropriate legislative base on which to deal with them.”
C. The Human Rights Act 1998 (“the 1998 Act”)
“So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights.”
Section 4 of the 1998 Act provides (so far as relevant):
“(1) Subsection (2) applies in any proceedings in which a court determines whether a provision of primary legislation is compatible with a Convention right.
(2) If the court is satisfied that the provision is incompatible with a Convention right, it may make a declaration of that incompatibility. ...
(6) A declaration under this section ... -
(a) does not affect the validity, continuing operation or enforcement of the provision in respect of which it was given; and
(b) is not binding on the parties to the proceedings in which it is made.”
Section 6 of the 1998 Act provides:
“(1) It is unlawful for a public authority to act in a way which is incompatible with a Convention right.
(2) Subsection (1) does not apply to an act if -
(a) as a result of one or more provisions of primary legislation, the authority could not have acted any differently; or
(b) in the case of one or more provisions of ... primary legislation which cannot be read or given effect in a way which is compatible with the Convention rights, the authority was acting so as to give effect to or enforce those provisions. ...”
Section 10 of the 1998 Act provides:
“(1) This section applies if –
(a) a provision of legislation has been declared under section 4 to be incompatible with a Convention right and, if an appeal lies –
(i) all persons who may appeal have stated in writing that they do not intend to do so; or
(ii) the time for bringing an appeal has expired and no appeal has been brought within that time; or
(iii) an appeal brought within that time has been determined or abandoned; or
(b) it appears to a Minister of the Crown or Her Majesty in Council that, having regard to a finding of the European Court of Human Rights made after the coming into force of this section in proceedings against the United Kingdom, a provision of legislation is incompatible with an obligation of the United Kingdom arising from the Convention.
(2) If a Minister of the Crown considers that there are compelling reasons for proceeding under this section, he may by order make such amendments to the legislation as he considers necessary to remove the incompatibility.”
“we expect that the government and Parliament will in all cases almost certainly be prompted to change the law following a declaration of incompatibility.”
One of the Ministers with responsibility for the 1998 Act explained to the House of Commons on 21 October 1998 that:
“Our proposals [for remedial orders] safeguard parliamentary procedures and sovereignty, ensure proper supervision of our laws and ensure that we can begin to get the ability both to enforce human rights law and to create a human rights culture. They also ensure that we can do it in the context of not having to worry that if something is decided by the Strasbourg court or by our courts that creates an incompatibility, we do not have a mechanism to deal with it in the quick and efficient way that may be necessary.”
The most recent report of the Joint Committee on Human Rights, published on 4 August 2006, showed that declarations of incompatibility had been made in twenty cases between December 2000 and December 2004. In seven of these cases the declaration had been overturned on appeal, or the judgment on appeal was pending. In ten cases the offending legislation had been amended or repealed (in one case by a remedial order), and in the remaining three cases, amendments to the offending legislation were pending or under consideration.
“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.”
Article 14 of the Convention provides:
“The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”
I. ADMISSIBILITY OF THE APPLICATION
“The Court may receive applications from any person ... claiming to be the victim of a violation by one of the High Contracting Parties of the rights set forth in the Convention or the Protocols thereto. ... ”
Article 35 § 1 states:
“The Court may only deal with the matter after all domestic remedies have been exhausted, according to the generally recognised rules of international law, and within a period of six months from the date on which the final decision was taken.”
A. The applicants’ victim status
The present case was on that ground distinguishable from Marckx v. Belgium, judgment of 13 June 1979, Series A no. 31, where the applicants had been complaining about certain provisions of Belgian law that applied automatically to the illegitimate child and her mother, and Inze v. Austria, judgment of 28 October 1987, Series A no. 126, where the complaint concerned rights of inheritance where the parent had already died. In contrast, the requirement to pay inheritance tax did not apply automatically. The applicants were not so affected by the risk of a future liability to tax as to bring them into a comparable position to the applicants in Campbell and Cosans v. the United Kingdom, judgment of 25 February 1982, Series A no. 48, where the Court found that a threat of inhuman and degrading punishment could in itself breach Article 3 of the Convention, or Norris v. Ireland, judgment of 26 October 1988, Series A no. 142, where the existence of criminal sanctions for homosexual acts must necessarily have affected the applicant’s daily conduct and private life.
B. Domestic remedies
It therefore rejects the Government’s second objection to admissibility.
D. The Court’s conclusion on admissibility
II. ALLEGED VIOLATION OF ARTICLE 14 OF THE CONVENTION IN CONJUNCTION WITH ARTICLE 1 OF PROTOCOL NO. 1
A. The parties’ submissions
1. The Government
First, the applicants could not claim to be in an analogous situation to a couple created by marriage or civil partnership (“a couple”). The very essence of their relationship was different, because a couple chose to become connected, whereas for sisters it was an accident of birth. In choosing to become a couple by entering into a formal relationship recognised by law, the partners also made a financial commitment to each other, and agreed to give the courts powers to divide their property and to order one partner to provide for the other on separation. The special legal status of parties to a marriage had been recognised by the Commission in Lindsay v. the United Kingdom, no. 11098/84, Commission decision of 11 November 1986, Decisions and Reports 49, p. 181 and by the Court in Shackell v. the United Kingdom (dec.), no. 45851/99, 27 April 2000. No such financial commitment arose by virtue of the relationship between siblings.
The policy underlying the inheritance tax concession given to married couples was to provide the survivor with a measure of financial security, and thus promote marriage. The purpose of the 2004 Act was to provide same-sex couples with a formal mechanism for recognising and giving legal effect to their relationships, and the inheritance tax concession for civil partners served the same legitimate aim as it did in relation to married couples. Given the development of society’s attitudes, the same arguments justified the promotion of stable, committed same-sex relationships. That objective would not be served by extending similar benefits to unmarried members of an existing family, such as siblings, whose relationship was already established by their consanguinity, and recognised by law. The difference in treatment thus pursued a legitimate aim.
2. The applicants
B. The Court’s assessment
FOR THESE REASONS, THE COURT
Done in English, and notified in writing on 12 December 2006, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
T.L. Early Josep Casadevall
In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the following dissenting opinions are annexed to this judgment:
(a) The joint dissenting opinion of Mr Bonello and Mr Garlicki;
(b) The dissenting opinion of Mr Pavlovschi.
JOINT DISSENTING OPINION OF
JUDGES BONELLO AND GARLICKI
1. We decided to dissent because we are convinced that the prospective imposition of “full” inheritance tax on the surviving sister violates Article 14 of the Convention taken in conjunction with Article 1 of Protocol No. 1. In particular, we are not persuaded by the manner in which the “margin of appreciation” doctrine has been applied to this case.
We do agree that there must be a wide margin of appreciation offered to the national authorities in tax matters. We further agree that any system of taxation, to be workable, has to use broad categorisations to distinguish between different groups of taxpayers. We would also be prepared to agree that, with regard to tax matters, there may be some kind of presumption that the solutions adopted by the national legislature remain within this margin of appreciation. Such presumption would mean that it is, in principle, the applicant who must demonstrate that the application of the tax legislation in his or her case exceeded the State’s margin of appreciation and led to unreasonable und unjustified effects.
However, this “burden of proof” is not unlimited. In our opinion, once an applicant is able to demonstrate that the way in which the tax legislation was applied created a situation of apparent hardship or injustice, the onus shifts towards the Government, who must then show that there were good reasons for their actions. Furthermore, if our Court decides to accept that such a situation of apparent hardship or injustice remains compatible with the Convention standards, it must give a full explanation as to how it applied the “margin of appreciation” concept.
2. The majority seems to agree that there has been a marginal situation or an individual case “of apparent hardship or injustice” (paragraph 60) in respect of the applicants. What seems to us, however, to be missing in the majority’s position is a full explanation as to why and how such injustice can be justified. A mere reference to the margin of appreciation is not enough. It should also be recalled that, in the absence of such explanation, a problem of discriminatory treatment may arise, even outside the traditional arena of the Convention rights (see, mutatis mutandis, Stec and Others v. the United Kingdom (dec.) [GC], cited in paragraph 54 of the majority’s judgment, §§ 54-55).
The national legislature is, generally speaking, free to adopt any reasonable policy of inheritance tax exemptions. As long as the United Kingdom confined the exemptions to married couples, such categorisation might have been justified under Article 12 of the Convention. However, once the UK legislature decided to extend the exemption to permanently cohabiting same-sex couples, the problem left the specific sphere of Article 12. Thus, any further categorisation in the area of inheritance tax exemptions has to satisfy general standards of reasonableness and non arbitrariness resulting from Article 14. Of course, we do not want to cast doubt upon the reasonableness of extending exemptions to those same sex couples choosing to form a civil partnership and denying such exemption to mixed-sex couples preferring not to enter into any form of official union. But once the legislature decides that a permanent union of two persons could or should enjoy tax privileges, it must be able to justify why such a possibility has been offered to some unions while continuing to be denied to others. The problem of siblings living together permanently did not escape the attention of the UK legislators and an appropriate amendment was proposed by the House of Lords. It was, however, rejected in the House of Commons on the basis of widespread agreement that the Civil Partnership Bill “is not the appropriate legislative base on which to deal with [the problem]” (see paragraph 19 of the judgment). Such an approach may have been correct from the perspective of parliamentary technique, but it could not absolve the legislature from providing an equitable solution to the problem at a later stage.
3. The situation of permanently cohabiting siblings is in many respects emotional as well as economical – not entirely different from the situation of other unions, particularly as regards old or very old people. The bonds of mutual affection form the ethical basis for such unions and the bonds of mutual dependency form the social basis for them. It is very important to protect such unions, like any other union of two persons, from financial disaster resulting from the death of one of the partners.
The national legislature may establish a very high threshold for such unions to be recognised under tax exemption laws; it may also provide for particular requirements to avoid fraud and abuse. But unless some compelling reasons can be shown, the legislature cannot simply ignore that such unions also exist.
The situation of permanently cohabiting siblings under the UK legislation has also been negatively affected by the fact that – being within the prohibited degrees of relationship – they cannot form a civil partnership. In other words, they have been deprived of the possibility of choice offered to other couples. That is why the present case cannot be determined by reference to the Shackell v. the United Kingdom decision (see paragraph 46 of the judgment), since the latter was based on the fact that the persons affected were generally free to choose whether or not to enter into a formal union.
4. The injustice generally inherent in the UK approach appears particularly striking in the circumstances of this case. Both sisters have already attained a rather advanced age; they have been together for several decades and neither of them has children. It is obvious that the State will be
able to collect its tax in full upon the death of the surviving applicant. But the State wants to do it twice: first upon the death of the first sister and later by imposing a new inheritance tax on what still remains of the estate. As we see it, this is scarcely compatible with Article 14 taken in conjunction with Article 1 of Protocol No. 1. It may also raise problems under Article 8 if the extent of her tax obligations compels the surviving sister to leave her house or otherwise sacrifice the lifestyle to which she has been accustomed.
DISSENTING OPINION OFJUDGE PAVLOVSCHI
This case confirms, yet again, the truth of the words uttered by Benjamin Franklin many, many years ago, to the effect that “nothing in this world is certain but death and taxes”. Practice shows that this statement is still valid, even in our 21st century.
There is a well-known opinion that all judicial decisions can, in theory, be split into four categories: (a) legal and fair; (b) illegal, but fair; (c) illegal and unfair; and (d) legal, but unfair.
In my view, the decision reached by the majority in this case may be placed in the fourth category. I am firmly convinced that a judicial decision, which represents, by its very nature, the highest expression of justice, cannot be unfair. Yet I have genuine difficulty in accepting the fairness of the judgment delivered in the case of Burden and Burden v. the United Kingdom.
Unfortunately, in reaching their conclusion that
“... the United Kingdom cannot be said to have exceeded the margin of appreciation afforded to it and that the difference of treatment for the purposes of the grant of inheritance tax exceptions was reasonable and objectively justified...” (see paragraph 61),
the majority failed to adduce any reason or argument for doing so. This circumstance prevents me from expressing my opinion concerning the legal aspects of the above conclusion.
Therefore, I will focus only on the issue of the general unfairness of this judgment.
In particular, this unfairness leads me to disagree with the judgment and prevents me from sharing the majority’s opinion that there has been “no violation” in the instant case.
In my opinion, the decisive element in the case before us is the nature of the property belonging to the applicants, and their personal attitude to it.
Had assets purchased by the applicants during their co-habitation been at stake, I would have had no difficulty in accepting the majority’s approach and, moreover, I would have readily agreed that part of such shared assets, inherited by a surviving sibling, could and should be considered as taxable property. In the case before us, however, we are faced with a qualitatively different situation. The case concerns the applicants’ family house, in which they have spent all their lives and which they built on land inherited from their late parents. This house is not simply a piece of property - this house is something with which they have a special emotional bond, this house is their home.
It strikes me as absolutely awful that, once one of the two sisters dies, the surviving sister’s sufferings on account of her closest relative’s death should be multiplied by the risk of losing her family home because she cannot afford to pay inheritance tax in respect of the deceased sister’s share of it.
I find such a situation fundamentally unfair and unjust. It is impossible for me to agree with the majority that, as a matter of principle, such treatment can be considered reasonable and objectively justified. I am firmly convinced that in modern society there is no “pressing need” to cause people all this additional suffering.