CASE OF STAMOVA v. BULGARIA
(Application no. 8725/07)
19 January 2017
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 Stamova v. Bulgaria,
The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of:
Angelika Nußberger, President,
Carlo Ranzoni, judges,
and Milan Blaško, Deputy Section Registrar,
Having deliberated in private on 13 December 2016,
Delivers the following judgment, which was adopted on that date:
1. The case originated in an application (no. 8725/07) against the Republic of Bulgaria lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 2 February 2007 by a Bulgarian national, Ms Elka Dimitrova Stamova (“the applicant”), who was born in 1958 and lives in Burgas. The applicant complained both in her personal capacity and as a sole trader, “Ella Prim - Elka Stamova” (the “sole trader”).
2. The applicant was represented by Mr M. Ekimdzhiev and Ms G. Chernicherska, lawyers practising in Plovdiv. The Bulgarian Government (“the Government”) were represented by their Agent, Ms M. Dimova, of the Ministry of Justice.
3. The applicant alleged, in particular, that the failure of the municipal authorities to sell to her a municipally-owned shop, as ordered in three final judgments in her favour, had breached her right to peaceful enjoyment of possessions under Article 1 of Protocol No. 1. She also submitted that she did not have an effective remedy in this connection.
4. On 6 May 2013 the application was communicated to the Government.
I. THE CIRCUMSTANCES OF THE CASE
A. The applicant’s privatisation request and ensuing judicial proceedings
5. On 28 April 1993 the applicant rented a municipally-owned shop in the town of Primorsko. The shop consisted of a metal structure built on a concrete foundation on a municipally-owned plot of land.
1. First set of judicial proceedings
6. On 18 September 1995 the applicant asked Tsarevo Municipal Council to be allowed to purchase the shop under the preferential privatisation procedure for tenants of State and municipally-owned property, as provided for in section 35(1) of the Transformation and Privatisation of State and Municipally-Owned Enterprises Act (Закон за преобразуване и приватизация на държавни и общински предприятия - hereinafter “the Privatisation Act”). She also expressed the wish to buy the plot of land on which the shop was built. As the municipal council did not reply, the applicant applied for judicial review of the municipality’s tacit refusal to sell the shop to her. The first-instance court rejected that application on 31 March 2003.
7. In a final judgment of 4 November 2003, rectified for errors in October 2004, the Supreme Administrative Court quashed the lower court’s judgment, finding that it had not dealt with all the evidence submitted by the applicant. The last-instance court then observed that the parties were in agreement that, at the time of her privatisation request, the applicant had had a valid rent contract for the shop with the municipal authorities. It further found, on the basis of the submitted evidence, that the shop constituted a separate property unit measuring 140 square metres and that all statutory conditions for privatising the shop under the preferential privatisation procedure had been present. As to the land on which the shop was built, the court observed that it was not part of the rental contract and thus its inclusion in the privatisation of the shop was a matter of discretion for the municipal authorities. The court referred the case back to Tsarevo Municipal Council with instructions for it to open a privatisation procedure by offering to sell the shop to the applicant.
2. Second set of judicial proceedings
8. In 2004 the applicant again asked Tsarevo Municipal Council to examine her privatisation proposal. As she did not receive a reply, she applied for judicial review of its tacit refusal to sell the shop to her.
9. In a final judgment of 28 November 2005, the Supreme Administrative Court held that the applicant met the conditions for the privatisation of the shop. The court specified that, following changes to the country’s administrative map, the privatisation decision had to be taken by Primorsko Municipal Council and it referred the case back to it.
3. Third set of judicial proceedings
10. On 25 November 2005 and later again on 30 October 2006, Primorsko Municipal Council explicitly refused to sell the shop to the applicant. She brought judicial review proceedings in respect of those refusals.
11. In a final judgment of 31 March 2008 the Supreme Administrative Court revoked the refusals as null and void, finding that the municipal council had been obliged to sell the shop to the applicant. The court briefly noted that, whatever the circumstances, no proof had been presented to it by the municipal council in support of its objection that the shop no longer physically existed.
B. The attempted eviction of the applicant and demolition of the shop
12. In the meantime, in March and April 1996, the municipal company managing the shop informed the applicant that she had no lease contract for 1996 and invited her to vacate the premises. On an unknown date in 1997, that company lodged a rei vindicatio claim against the applicant. In a final judgment of 3 July 2002, the Supreme Court of Cassation dismissed the company’s claim, holding that the applicant’s lease contract could not be terminated pending the privatisation procedure pursued by her.
13. On 16 February 1999 the mayor of Primorsko (hereinafter “the mayor”) ordered the municipal company to demolish the shop. Following a complaint lodged by the applicant with the Governor of the Burgas Region, the latter revoked the mayor’s order on 18 April 2000, finding that the mayor had not been competent to dispose of municipal property without a prior decision of the municipal council to that effect. The Governor further stated that, pending the privatisation procedure, the lease contract with the applicant could not be terminated.
14. On an unknown date in 1999, the municipal company sold the shop to a private company. On 12 May 1999 the buyer, assisted by municipal employees, prevented the applicant from entering the shop. Following a complaint lodged by the applicant with the prosecutor, on 27 May 1999 the latter established that the buyer had acted in an abusive manner and ordered the police to assist the applicant in regaining possession of the shop. According to the applicant, after she had re-entered the property she discovered that the electricity supply had been cut off. It appears that she ran the shop without electricity until an unspecified date in 2001, when the electricity supply was restored.
15. In 2000 the buyer brought a rei vindicatio claim in court against the applicant. In a final judgment of 14 October 2003, the Supreme Court of Cassation dismissed that claim, confirming the reasoning in the lower court’s judgment. The last-instance court found in particular that the buyer had not acquired ownership of the shop and that, in any event, the applicant was protected by the Privatisation Act in that she could not be evicted from the shop pending the examination of her privatisation proposal.
16. Primorsko Municipal Council considered that the shop was dilapidated and unsafe on account of the corrosion of its metal structure and ordered its sale for demolition. At some point in 2005 the municipal council sold the shop to an individual and on 14 February 2006 the mayor ordered the new buyer to demolish the shop. Even though on the following day, 15 February 2006, the mayor revoked his own order, the buyer dismantled the shop on 18 February 2006 with the assistance of the police. The applicant was informed of the demolition by an acquaintance who happened to pass by the shop on the day it was pulled down. She had not known about the sale of the shop before it was demolished.
17. The parties dispute what happened to the applicant’s goods and belongings. According to the Government, they were listed and taken for safekeeping. According to the applicant, they were destroyed together with the shop.
C. Complaints to the prosecutor
18. In 2006 the applicant requested that criminal proceedings be opened against the mayor and the chairperson of Primorsko Municipal Council for breach of duties and obstruction of the enforcement of a final court judgment. In a decision of February 2007 the prosecutor refused her request. He found that it was impossible to open criminal proceedings as the refusals to privatise the shop had been issued by the municipal council, a collective body, whereas criminal responsibility was personal.
D. Further developments of relevance
19. On 18 October 2006 and 22 May 2008 respectively the applicant again requested Primorsko Municipal Council to examine her privatisation proposal. In a letter of 10 September 2008 the council informed her that her case was factually and legally complex, and that an ad hoc commission would be formed to propose a solution. On 20 January 2009 the ad hoc commission proposed that an enquiry be made with the Privatisation Agency (the State body in charge of the privatisation of State-owned property). In two letters dated 5 March 2009, sent respectively to the applicant and the municipality, the Privatisation Agency observed that the question about the demolition of the shop had not been raised in the proceedings before the courts. The Agency nonetheless held that the municipality was obliged to comply with court judgments.
E. Claims for damages
20. In February 2011, the applicant lodged a claim with the Burgas Administrative Court for damages against the Primorsko municipal authorities for their failure to implement the final judgments in her favour. The claim was lodged under the State and Municipalities Responsibility for Damage Act 1988 (“the SMRDA”). The court split the claim to be examined into two separate sets of proceedings - the first one against the municipality (община) and the second one against the municipal council (общински съвет).
1. Proceedings against the municipality
21. In the first set of proceedings, in which she challenged the mayor’s order of 14 February 2006 that the shop be demolished (see paragraph 16 above), the applicant sought damages for loss of opportunity (пропуснати ползи). The Burgas Administrative Court found that the applicant had no standing to pursue this claim because she had not been the addressee of the mayor’s order. Although the shop had been demolished shortly after the order had been issued, that had been irrelevant in respect of the legal proceedings brought by the applicant, given that she had sought compensation for damage specifically stemming from the mayor’s order. The court dismissed the applicant’s claim and terminated the proceedings. That ruling was upheld by the Supreme Administrative Court in a final decision of 17 October 2011.
2. Proceedings against the municipal council
22. In the second set of proceedings the applicant sought both pecuniary and non-pecuniary damages stemming from the failure of the municipal council to decide on her privatisation request by implementing the final court judgments ordering it to offer to sell the shop to her.
23. She specified that she sought pecuniary damages in respect of: the rent she had had to pay between January 1998, when her request to privatise the shop should have been granted, and February 2006, when the shop had been demolished; those of her belongings that had been destroyed together with the shop; the loss of income resulting from the impossibility of collecting rent from a company with which she had concluded a contract on 17 January 2006 in respect of part of the shop; and the impossibility of increasing her investment by buying the plot on which the shop stood and by building upon it.
24. In addition, the applicant sought non-pecuniary damages in respect of the intense stress and emotional suffering that had led her to fall into a lasting and severe depression, which had been the result of the shop’s demolition and of the failure of the municipal council to sell it to her, despite the final judgments. She provided medical records in respect of her failing health and the related hospital treatment she had undergone.
(a) At first instance
25. Examining the applicant’s claim, the Burgas Administrative Court considered that she was complaining of the municipal council’s tacit refusal to reply to her request of 23 May 2008 to buy the shop. On 3 January 2014 the court found that both claims, for pecuniary and non-pecuniary damages, were admissible.
26. As to the merits, the court held that the claim for pecuniary damages was unjustified and also that there was no causal link between the municipal council’s refusal to privatise the shop and the applicant’s claims for loss of financial opportunity as a result of the impossibility of buying the land and building on it.
27. As regards the applicant’s claim for non-pecuniary damages, the court accepted it as justified on the basis of the evidence submitted during the proceedings (see paragraph 24 above). In particular it found that it had been demonstrated that the applicant had suffered significantly as a result of the municipal council’s refusal to open a privatisation procedure vis-ŕ-vis her. The court held that the applicant’s suffering had been caused by the municipal council’s tacit refusal to act upon the final court judgment of 2008. The applicant had succumbed to depression, which had manifested itself in acute feelings of hopelessness and a perception that any future efforts would be futile, as well as in feelings of helplessness, insomnia, a disturbance of memory functions, and attention disorder. Those conditions had further led to a serious deterioration in the applicant’s family environment, given that she had directed all her frustration and negative emotions towards her young daughter. The court awarded the applicant the entirety of her claim, namely about 20,000 euros (EUR), plus interest, as well about EUR 6,500 for costs and expenses. It further declared null and void the municipality’s tacit refusal to act upon her request of 23 May 2008, and returned the case to it for it to take the appropriate action.
(b) At last instance
28. After an appeal lodged by the municipal council, the Supreme Administrative Court found that the lower court had wrongly concluded that the municipal council’s silence amounted to a new tacit refusal to privatise the shop. The applicant was seeking damages stemming from the absence of a privatisation procedure launched by the municipality in respect of the shop. The administrative procedure concerning the privatisation of the shop had begun with the applicant’s initial request of 18 September 1995 (see paragraph 6 above) and had not been completed. The applicant’s subsequent requests to the same effect had not created a new obligation on the part of the municipality concerning the privatisation of the same shop.
29. The last-instance court further held that, as regards the first final court decision in the applicant’s favour (that of 4 November 2003) it had not created obligations on the part of Primorsko Municipal Council, given that the respondent party required to act under that decision had been the Tsarevo municipality (see paragraph 7 above). Primorsko Municipal Council had only been expected to act in respect of the second final judgment on that question (see paragraph 9 above).
30. As regards the municipal authorities’ explicit written refusal of 25 November 2005 to open a privatisation procedure (see paragraph 10 above), the court noted that that refusal had been declared null and void in 2008 by another of its benches for being contrary to the first final court decision of 2003 (see paragraph 11 above).
31. The last-instance court conceded that, objectively, the declaration of the municipal council’s refusal as null and void corresponded to one of the statutory prerequisites for the pecuniary liability of the council. However, the remaining conditions for the council being held so liable had not been met. In particular, the court held - without elaborating further - that the applicant had failed to prove both the existence of actual damage and the causal link of any such damage to the municipal council’s refusal to privatise the shop by offering to sell it to her.
32. Furthermore, the applicant’s claim in respect of the council’s refusal of 25 November 2005 had been inadmissible on account of the expiry of the five-year limitation period, as calculated as of the date of that refusal. Moreover, the council tacit refusal to act upon the 31 March 2008 court decision was of no consequence, given that the shop had no longer physically existed at that time.
33. Importantly, the obligation on the municipal authorities to privatise property under the Privatisation Act existed only vis-ŕ-vis individuals who met the conditions stipulated under that Act. The applicant, however, was not among those persons. The reason was that she had not had a valid contract with the municipality at any of the times when she had requested the latter to sell the shop to her, because the contract concluded in 1993 had expired prior to those times.
34. Moreover, as a matter of principle, the liability of a municipality, or of the State for that matter, under the SMRDA did not include loss of opportunity but only already incurred losses. Consequently, the applicant could not claim loss of opportunity in these proceedings.
35. In respect of the applicant’s claim for non-pecuniary damages, the court emphasised that these could only be incurred by an individual and not by an enterprise. It was true that in legal terms the sole trader was a physical, as opposed to a legal, person; however, the damage suffered by the applicant stemmed specifically from the economic activity carried out by her in her capacity as a sole trader. Consequently, the applicant as an individual was not entitled to compensation for damage that could have been sustained in the context of the economic activity of the trader. In view of the above, the lower court had wrongly granted the applicant’s claim for non-pecuniary damages.
36. On the basis of the above, the Supreme Administrative Court quashed the lower court’s judgment and dismissed the applicant’s claims in a final judgment on 3 December 2014. It also held that the applicant had to pay to the municipal council about EUR 4,000 for legal costs and expenses.
F. The applicant’s challenge to the costs and expenses she was ordered to pay
37. On 5 January 2015 the applicant asked the Supreme Administrative Court to rectify its judgment of 3 December 2014 in the part in which it had ordered her to pay the legal costs claimed by the other party (the municipal council). She pointed out that the municipal council had not presented proof that it had indeed incurred those expenses and that, in any event, the council should not be allowed to benefit from its unlawful failure to implement the judgments in her favour. The applicant sought, alternatively, a reduction in those costs.
38. The Supreme Administrative Court found her request admissible but rejected it as unjustified (неоснователна) in a final decision of 2 June 2015. On 25 November 2015 the bailiff invited the applicant to voluntarily comply with the final judgment of 3 December 2014, indicating that failure to pay the sum due would result in the forced sale of items of the applicant’s personal movable and immovable property.
II. RELEVANT LAW AND PRACTICE
A. Domestic law and practice
39. The relevant provisions governing the preferential privatisation procedure under the Privatisation Act are summarised in the case of Basarba OOD v. Bulgaria, no. 77660/01, §§ 18-22, 7 January 2010.
2. Sole traders
40. Under section 56 of the Commerce Act every physical person who is not incapacitated and has residence in Bulgaria can register as a sole trader. The courts have confirmed that sole traders are physical, as opposed to legal, persons (see, for example, реш. № 202 от 19.03.2007 г. на ВКС по гр. д. № 3154/2005 г., IV г. о.). In particular, in a 2009 decision concerning a claim for unjust enrichment against a sole trader (реш. № 205 от 8.09.2009 г. на ВКС по гр. д. № 1003/2007 г., I г. о., ГК) the Supreme Court of Cassation held that it was wrong to reject such a claim on the ground that it had been brought against the individual, and the contract had been concluded by that same individual in his capacity as a sole trader. The court emphasised that sole traders were physical persons and the fact of their registration as sole traders did not result in the constitution of new legal subjects economically independent of the physical persons in question.
3. Enforcement of final administrative court judgments
41. The relevant provisions governing the enforcement of final administrative court judgments under the Code of Administrative Procedure 2006 (“the 2006 Code”) have been summarised in Dimitar Yanakiev v. Bulgaria (no. 2), no. 50346/07, §§ 30-35, 31 March 2016; and Stoyanov and Tabakov v. Bulgaria, no. 34130/04, §§ 53-57, 26 November 2013. The relevant provisions governing the enforcement of such judgments before the adoption of the 2006 Code have been summarised in Yagnina v. Bulgaria, no. 18238/06, §§ 19-20, 27 January 2015.
4. State and municipal responsibility for damages
42. The relevant provisions governing State responsibility for unlawful acts and omissions under the State and Municipality Responsibility for Damage Act 1988 (“the SMRDA”) have been summarised in Dimitar Yanakiev, cited above, §§ 36-37. In particular, a claim for damages can be made after the administrative decision allegedly causing the damage has been quashed in prior judicial review proceedings (Article 204 § 1 of the Code). As to administrative measures or failure of the administration to act, their lawfulness can be reviewed by the court in the same proceedings in which it hears the claim for damages (Article 204 § 4 of the 2006 Code).
5. Loss of opportunity as a head in claims for damages
43. The Supreme Administrative Court has examined numerous claims for damages under the SMRDA which included sums claimed for loss of earnings or loss of financial opportunity. In all those cases it found that the claims for loss of opportunity were admissible (see in particular decisions adopted before the final judgment of 3 December 2014 in the instant case, namely реш. № 15992 от 28.12.2010 г. на ВАС по адм. д. 7489/2010 г., III о.; реш. № 14127 от 23.11.2010 г. на ВАС по адм. д. 3077/2010 г., III о.; реш. № 15245 от 21.11.2011 г. на ВАС по адм. д. 15714/2010 г., III о.; реш. № 15020 от 17.11.2011 г. на ВАС по адм. д. 9443/2011 г., III о.; реш. № 15927 от 13.12.2012 г. на ВАС по адм. д. 3724/2012 г., III о.; реш. № 14818 от 26.11.2012 г. на ВАС по адм. д. 6337/2012 г., III о.; реш. № 13862 от 06.11.2012 г. на ВАС по адм. д. 942/2012 г., III о.; реш. № 17059 от 18.12.2013 г. на ВАС по адм. д. 3614/2013 г., III о.; реш. № 16097 от 04.12.2013 г. на ВАС по адм. д. 1071/2013 г., III о.), even though it ultimately rejected many of them as unproven by the evidence adduced.
B. European Union law
Loss of opportunity as a head in claims for damages
44. In a case examining the extent and type of States’ liability for breaches of European Community law by their institutions, the Court of Justice of the European Union held that a rule excluding loss of profit claims was not compatible with Community law (see the judgment of 3 March 1996 in the case of Brasserie du Pęcheur SA v. Federal Republic of Germany, С-46/93 and С-48/93, EU:C:1996:79). The Court of Justice found specifically that “total exclusion of loss of profit as a head of damage for which reparation may be awarded in the case of a breach of Community law cannot be accepted. Especially in the context of economic or commercial litigation, such a total exclusion of loss of profit would be such as to make reparation of damage practically impossible.”
I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION
45. The applicant complained that the municipal authorities’ failure to implement the final judgments ordering them to open a privatisation procedure breached her right to peaceful enjoyment of her possessions under Article 1 of Protocol No. 1, which reads as follows:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
46. The Government contested this argument.
1. The Government
47. The Government made several objections as to the admissibility of the application. In the first place, they contended that the applicant had failed to exhaust domestic remedies, given that she had not brought enforcement proceedings under Chapters IV and VI of the main Section V of the 2006 Code seeking to prevent the alleged violation. Secondly, her claim for damages stemming from the non-enforcement of the final judgment in her favour had been lodged domestically only after the present application had been made before the Court; consequently, the application had to be dismissed for failure to exhaust domestic remedies. Thirdly, the applicant had failed to bring proceedings seeking the imposition of interim measures (обезпечителни мерки) in respect of the property in order to safeguard it against demolition.
2. The applicant
48. The applicant contested the above arguments.
3. The Court’s assessment
49. The Court will examine separately below the different objections of the Government.
(a) The preventive remedy under the 2006 Code
50. As regards the applicant’s failure to bring enforcement proceedings under the 2006 Code, the Court observes that by the time that Code entered into force on 1 March 2007 over three years had gone by, during which time the final judgment in the applicant’s favour of 4 November 2003 had remained unenforced. The Court considers that this period alone, of over three years, is sufficiently long as to be considered problematic under the Convention (see, similarly, in respect of the period of non-enforcement, Sokur v. Ukraine, no. 29439/02, § 36, 26 April 2005, where the Court held that a by delaying for nearly three years the enforcement of a final judgment the authorities deprived the provisions of Article 6 § 1 of the Convention of much of their useful effect).
51. Notwithstanding the above, the Court observes that it held in the case of Yanakiev, cited above, §§ 8-61, that the remedy for enforcement available under Chapters IV and VI of the main Section V of the 2006 Code could only be considered effective as of mid-2012 and that applicants who had applied to the Court before that point in time would not be expected to have attempted this remedy. The applicant falls into this latter category, as she applied to the Court in 2007.
52. In view of the above, the Court does not consider that the applicant in the present case should have attempted this remedy before turning to it.
(b) The compensatory remedy under the SMRDA
53. The Court observes that it is not in dispute between the parties that the proceedings for damages which the applicant brought in Bulgaria have now been completed (see paragraph 36 above). In other words, the Bulgarian State has been afforded the opportunity of preventing the violation alleged against it (see Šneersone and Kampanella v. Italy, no. 14737/09, § 66, 12 July 2011, and Selmouni v. France [GC], no. 25803/94, § 74, ECHR 1999-V). The Court has previously held that in principle, applicants are obliged to make a diligent effort to exhaust the domestic remedies available to them before submitting an application to the Court. However, exhaustion has been deemed to have been complied with where the final stage of the exhaustion of the domestic remedies takes place after the application has been submitted but before the Court decides on its admissibility (see, for example, Yakup Köse v. Turkey (dec.), no. 50177/99, 2 May 2006, and Šneersone and Kampanella, cited above, § 66).
54. In the present case the final stages of the proceedings for damages brought by the applicant had been completed before the Court dealt with the admissibility and merits of her case. Consequently, the applicant’s complaint should not be dismissed for failure to exhaust the remedy under the SMRDA.
(c) The remaining objection to admissibility
55. The Court finds that, given that the applicant did not know that the demolition was imminent, or intended at all (see paragraph 16 above) she cannot be reproached for not having sought a court order for interim measures in respect of the property in order to protect it against demolition. Furthermore, at the time that the order was issued by the mayor (see paragraph 16 above), there had been two final judgments ordering the municipality to open a privatisation procedure in her favour in respect of the property. An additional protection measure, therefore, does not appear to have been required.
(d) Conclusion on admissibility
56. The Court notes that the application is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
57. The applicant asserted that the authorities had been at fault for failing to enforce the final judgments in her favour and that this had breached her right to peacefully enjoy her possessions.
58. The Government emphasised that the obligation for them to open a privatisation procedure was not tantamount to completing such a procedure. Completion had depended on the applicant’s acceptance of the offer to buy the shop and on her actually paying the price within the defined time-limit. Furthermore, the applicant had been informed that the land on which the shop had been built had been returned to the previous owners and that in 2005 the shop had been sold to them for demolition. The applicant had been also indubitably aware that the shop had not been a solid construction but rather a temporary shed which had been unstable and unsafe, and that, as such, its demolition had been inevitable sooner or later. In view of the above, the Government considered that the applicant could not claim to have had a legitimate expectation of buying the shop in question.
59. The Court notes that the general principles in respect of non-enforcement or delayed enforcement of final judgments have been laid down in the Court’s judgments in a number of cases (see Burdov v. Russia (no. 2), no. 33509/04, §§ 65-70, ECHR 2009; Yuriy Nikolayevich Ivanov v. Ukraine, no. 40450/04, §§ 51-53, 15 October 2009; and, Stoyanov and Tabakov, cited above, §§ 77-78). The essence of these principles is that execution of a judgment given by any court must be regarded as an integral part of the “trial” for the purposes of Article 6 and that a failure to enforce a binding judgment may therefore breach this Convention provision. The Court further reiterates that a “claim” can constitute a “possession” within the meaning of Article 1 of Protocol No. 1 if it is sufficiently established to be enforceable (see Stran Greek Refineries and Stratis Andreadis v. Greece, judgment of 9 December 1994, Series A no. 301-B, p. 84, § 59; Burdov v. Russia, no. 59498/00, § 40, ECHR 2002-III).
60. In the present case, the Court finds that the applicant had a legitimate expectation consisting of the right to be offered to purchase the shop at issue under the preferential conditions of section 35(1) of the Privatisation Act (see, similarly, Basarba OOD, cited above, § 44; see also paragraphs 7, 9, 11 and 19 above). Accordingly, the applicant had a “possession” within the meaning of Article 1 of Protocol No. 1. The Court next observes that the authorities never enforced the final judgments in the applicant’s favour. This was despite the fact that - before the shop was demolished in February 2006 - two final judgments had been delivered in the applicant’s favour (see paragraphs 7 and 9 above). Both judgments had ordered the municipal authorities to open a privatisation procedure in respect of the property, and the first judgment in particular had remained unenforced for over two years before the demolition. Even after the shop had been pulled apart, a third final judgment was delivered in the applicant’s favour, confirming that the municipal authorities had to open a privatisation procedure in favour of the applicant. Furthermore, the Privatisation Agency, which had been approached by the municipality with a request for advice on how to proceed, also held that the municipality had been obliged to comply with the court judgments (see paragraph 19 above). Despite all these decisions, no action by the municipal authorities followed in respect of the implementation of the said judgments. The Government’s contention in their submissions on the merits before the Court - namely that, because the shop had been erected on land restituted to private parties and its construction had not been solid, the applicant should have reasonably expected that the shop would be demolished sooner or later and that she could not have therefore entertained a legitimate expectation of being able to buy it (see paragraph 58 above) - does not sit well with the findings in the final judgments in the applicant’s favour.
61. The Court accepts that complying with the judgments in the present case required the authorities to carry out actions which were more complex and time-consuming than enforcing a simple obligation to pay a sum of money. The degree of that complexity increased following the demolition of the shop in question, given the physical absence of the object of enforcement. However, the Court observes that, without prejudice to the steps which the municipal authorities could have taken before or after the demolition, the obligation for them to open a privatisation procedure remained unaltered (see paragraphs 7, 9, 11 and 19). They should have therefore complied with the essence of the three final judgments; however, the judgments in the applicant’s favour remained unenforced and the applicant’s claim for damages was rejected.
62. The foregoing considerations are sufficient to enable the Court to conclude that there has been a violation of Article 1 of Protocol No. 1.
II. ALLEGED VIOLATION OF ARTICLE 13 IN CONJUNCTION WITH ARTICLE 1 OF PROTOCOL No. 1
63. The applicant complained about the absence of an effective domestic remedy in connection with her complaint. She relied on Article 13 of the Convention, which reads as follows:
“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority ...”
64. Bearing in mind that the violation found above stemmed from the lack of enforcement of the final judgments in the applicant’s favour, the Court considers that the applicant has an arguable claim for the purposes of Article 13 of the Convention. The Court notes that this complaint is linked to the one examined above and must therefore likewise be declared admissible.
65. The Government contended that the applicant had had an effective remedy at her disposal, namely a claim for damages under the SMRDA, and a possibility to bring enforcement proceedings under the 2006 Code. The applicant claimed that both of those remedies were ineffective.
1. General Principles
66. The Court observes that the general principles applicable to such complaints have been laid down in the case of Burdov (no. 2), cited above, §§ 96-98.
67. As regards in particular the criteria for judging the effectiveness of compensatory remedies in cases involving the non-enforcement of domestic judgments, the Court has outlined some key requirements in paragraphs 99-100 of the Burdov (no. 2) pilot judgment, cited above. It considers useful to reiterate those requirements, namely:
“99. States can also choose to introduce only a compensatory remedy, without that remedy being regarded as ineffective. Where such a compensatory remedy is available in the domestic legal system, the Court must leave a wider margin of appreciation to the State to allow it to organise the remedy in a manner consistent with its own legal system and traditions and consonant with the standard of living in the country concerned. The Court is nonetheless required to verify whether the way in which the domestic law is interpreted and applied produces consequences that are consistent with the Convention principles, as interpreted in the light of the Court’s case-law (see Scordino, cited above, §§ 187-91). The Court has set key criteria for verification of the effectiveness of a compensatory remedy in respect of the excessive length of judicial proceedings. These criteria, which also apply to non-enforcement cases (see Wasserman, cited above, §§ 49 and 51), are as follows:
- an action for compensation must be heard within a reasonable time (see Scordino, cited above, § 195 in fine);
- the compensation must be paid promptly and generally no later than six months from the date on which the decision awarding compensation becomes enforceable (ibid., § 198);
- the procedural rules governing an action for compensation must conform to the principle of fairness guaranteed by Article 6 of the Convention (ibid., § 200);
- the rules regarding legal costs must not place an excessive burden on litigants where their action is justified (ibid., § 201);
- the level of compensation must not be unreasonable in comparison with the awards made by the Court in similar cases (ibid., §§ 202-06 and 213).
100. On this last criterion, the Court indicated that, with regard to pecuniary damage, the domestic courts are clearly in a better position to determine the existence and quantum. The situation is, however, different with regard to non-pecuniary damage. There exists a strong but rebuttable presumption that excessively long proceedings will occasion non-pecuniary damage (see Scordino, cited above, §§ 203-04, and Wasserman, cited above, § 50). The Court considers this presumption to be particularly strong in the event of excessive delay in enforcement by the State of a judgment delivered against it, given the inevitable frustration arising from the State’s disregard for its obligation to honour its debt and the fact that the applicant has already gone through judicial proceedings and obtained success.”
2. Application of these principles in the present case
(a) Claims for damages
68. The Court will first examine the effectiveness of the remedy for seeking damages from the State and municipalities which the applicant attempted (see paragraphs 20-36 above).
69. The Court notes that, following the separation of the applicant’s claim for damages into two different sets of proceedings, the claim against the mayor for ordering the demolition of the shop was terminated on a formal ground, without ever being examined on the merits (see paragraph 21 above). The remaining part of the claim, the one against the municipal council for its failure to offer the shop for privatisation by the applicant, was examined at two levels of jurisdiction. The first-instance court found that claim well founded, in particular because the failure of the municipal council to start a privatisation procedure was unlawful and the applicant had suffered anxiety, acute stress and depression as a result of the non-enforcement of the final judgments in her favour. The court awarded her non-pecuniary damages (see paragraph 27 above). This decision was quashed on cassation for several reasons (see paragraphs 28-36 above) which the Court will examine below.
70. Firstly, in its final decision on damages of 3 December 2014, the Supreme Administrative Court carried out a fresh examination on the merits of the applicant’s request to buy the shop under the preferential conditions stipulated by the Privatisation Act, reaching the conclusion that the applicant did not have such a right as she did not have a valid rent contract (see paragraph 33 above). The Court observes that the question as to whether the applicant had a valid rent contract and a right to buy the shop had been decided earlier in three separate final judgments, which had consistently found that the applicant had had a valid contract at the time of her lodging her requests for privatisation (see paragraphs 7, 9 and 11 above) and that the municipal authorities had been bound to make her a privatisation offer. By re-examining an issue that has already been decided by a final judicial decision in proceedings between the same parties, the Supreme Administrative Court did not act in conformity with the principle of legal certainty (see Brumărescu v. Romania [GC], no. 28342/95, §§ 61-62, ECHR 1999-VII; and, Kehaya and Others v. Bulgaria, nos. 47797/99 and 68698/01, § 76, 12 January 2006).
71. A further argument of the Supreme Administrative Court for rejecting the applicant’s claim was its conclusion that the limitation period of five years for bringing claims for damages had expired, as it found that the claim related to the municipality’s refusal on 25 November 2005 to open a privatisation procedure (see paragraphs 10 and 32 above). However, nothing in the domestic law suggests that the obligation to enforce the judicial decision recognising the applicant’s right to buy the shop was extinguished with the refusal of the municipality of 25 November 2005 to enforce that decision. On the contrary, that right clearly continued to exist and the refusal to enforce the judgments recognising the applicant’s right was an ongoing situation. The Court notes that the applicant’s claim for damages concerned precisely the lack of enforcement of the final judgments in her favour and covered the whole period after the first final judgment in her favour of 4 November 2003 and until at least February 2006, when the shop was demolished and possibly even beyond that date (see paragraph 23 above). Consequently, it finds that the breaking of the applicant’s claim into separate sub-periods and the refusal to examine it as it had been made, namely as a claim based on an unlawful continuing refusal to enforce a final judicial decision, was unjustified and equated to a refusal to hear the applicant’s claim.
72. Furthermore, not taking into account a whole body of its own earlier case-law under the SMRDA which had systematically found admissible claims for damages regarding loss of financial opportunity (see paragraph 43 above), the last-instance court dismissed the applicant’s related claim by stating - without elaborating further - that such damages were not among the possible claims under the SMRDA (see paragraph 34 above). The Court finds this conclusion difficult to reconcile with established domestic jurisprudence (see paragraph 43 above). Neither can it be said that the last-instance court carried out a thorough examination of the applicant’s claim for pecuniary damages by considering the elements of evidence adduced by her. The court did not consider whether the applicant had provided tangible proof of her claimed loss of economic opportunity, or of her actual material or commercial losses, in order to properly assess her claim for pecuniary damages.
73. It cannot be said either that the Supreme Administrative Court assessed the applicant’s claim for non-pecuniary damages on the basis of the evidence adduced by her (see paragraph 24 above). Instead, it dismissed that claim altogether by drawing a distinction between the sole trader who had been engaged in business operations and the individual applicant, and concluding that the applicant could not claim damages for the personal suffering that she had sustained as a result of the activity she had pursued in her capacity as a businesswoman (see paragraph 35 above). In reaching this decision, the Supreme Administrative Court did not provide reasons for deviating from well-established domestic case-law (see paragraph 40 above).
74. Lastly, the Court notes that the Supreme Administrative Court ordered the applicant to pay around EUR 4,000 for costs and expenses at the end of the proceedings for damages she had brought against the municipal council (see paragraph 36 above). Consequently, despite having pursued the compensatory remedy provided for under the SMRDA, the applicant was not able to obtain compensation for the lack of implementation of the judgments in her favour. Not only did she not obtain the enforcement due to her, but as a result of having attempted to seek damages she was obliged to pay a significant amount of money in costs and expenses to the municipality, which had blatantly refused to enforce final judgments in her favour. The Court finds that, instead of providing the applicant with appropriate compensation for the enforcement failure, this pecuniary obligation added considerably to the burden she had to endure on account of the lack of implementation of the judgments in her favour by the municipal authorities.
75. In view of all of the above, the Court finds that the remedy under section 1 of the SMRDA did not provide the applicant with redress in connection with her complaint under Article 1 of Protocol No. 1, given how it was applied by the domestic court deciding on her claim for damages.
(b) Acceleratory remedy under the 2006 Code
76. As regards the possibility of bringing enforcement proceedings in accordance with the preventive remedy under the 2006 Code, in addition to the fact that this remedy by definition could not result in an award of damages to the applicant, the Court has already established earlier (see paragraphs 50-52 above) that, at the time of the relevant facts in the instant case, this remedy was not effective.
(c) Conclusion on available effective remedies
77. In view of the above, the Court finds that there was no effective remedy available to the applicant in connection with her complaint before the Court.
78. There has accordingly been a violation of Article 13 in conjunction with Article 1 of Protocol No. 1.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
79. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
80. The applicant claimed 30,668 euros (EUR) in respect of non-pecuniary damage and EUR 227,981 in respect of pecuniary damage.
81. In support of her claim for non-pecuniary damage the applicant submitted a psychological evaluation carried out in January 2014 by two experts who established that the authorities’ failure to comply with the judgments in her favour had had devastating effects on her mental well-being. In particular, as a result of the prolonged dispute with the authorities which had continued over two decades the applicant had exhausted her inner resources for coping and had succumbed to lasting depression and emotional instability, marked by persisting feelings of hopelessness and desperation.
82. As regards her claim for pecuniary damage the applicant stated that it comprised the following three elements: (1) compensation for the rent she had paid between 1 January 1998 and 18 February 2006 which represented undue enrichment of the municipality; (2) compensation for the impossibility for her to construct a two-storey building on the plot of land where the shop stood; and (3) compensation for depriving her altogether of the possibility to acquire the shop at preferential conditions. She estimated these elements of the claim to add up to a total of EUR 227,981. This amount corresponded more specifically to (1) EUR 83,355 for the rent she had paid for the period indicated above; (2) EUR 112,064 (BGN 224,128) which represented the difference between the market value of a building which she had intended to construct on the plot, namely 586,620 BGN, and the cost which such a construction would have entailed, namely 362,492 BGN; and, (3) to EUR 32,562 (63,685 BGN), which represented the difference between the price she would have had to pay for the shop in 2003 when the first final judgment in the applicant’s favour was delivered, namely 38,059 BGN, and the market value of the shop in 2013 when the expertise was drawn up, namely 101,744 BGN, which sums accounted for the remaining life-span of the shop. The applicant provided a copy of the contract she had signed with the municipal authorities in respect of the rent, as well as an expert report in respect of the remaining two elements above.
83. The Government submitted that the claim in respect of non-pecuniary damage was exorbitant, unproven and unfounded. They also contested the claim in respect of pecuniary damage in its entirety as irrelevant, speculative and unfounded, without providing any concrete elements to explain their position.
84. The Court considers that in the circumstances of the present case the reparation should aim at putting the applicant in the position in which she would have been had the violation not occurred (see Zlínsat, spol. s. r.o. v. Bulgaria (just satisfaction), no. 57785/00, § 39, 10 January 2008). The Court’s case-law has established that there must be a clear causal connection between the damage claimed by the applicant and the violation of the Convention and that this may, in the appropriate case, include compensation in respect of loss of earnings (see, amongst others, Stretch v. the United Kingdom, no. 44277/98, § 47, 24 June 2003). A precise calculation of the sums necessary to make complete reparation in respect of the pecuniary losses suffered by applicants may be prevented by the inherently uncertain character of the damage flowing from the violation. An award may still be made notwithstanding the large number of imponderables involved in the assessment of future losses, though the greater the lapse of time involved the more uncertain the link becomes between the breach and the damage. The question to be decided in such cases is the level of just satisfaction, in respect of both past and future pecuniary loss, which it is necessary to award, the matter to be determined by the Court at its discretion, having regard to what is equitable (see ibid., § 48, and Lustig-Prean and Beckett v. the United Kingdom (just satisfaction), nos. 31417/96 and 32377/96, §§ 22-23, 25 July 2000).
85. In the case at hand the Court found a violation of Article 1 of Protocol No. 1, and of Article 13 in conjunction with it, as the applicant had had a legitimate expectation of being offered to buy the shop at preferential conditions, had unlawfully been deprived of that expectation and had had no effective remedy in that connection (see paragraphs 62 and 78 above). Thus, the present case does not concern deprivation of existing property or an unconditional obligation on the part of the authorities to transfer property (see Stretch, cited above, § 50, and Basarba OOD v. Bulgaria (just satisfaction), no. 77660/01, § 22, 20 January 2011; and Kirilova and Others v. Bulgaria (just satisfaction), nos. 42908/98, 44038/98, 44816/98 and 7319/02, §§ 26-27, 14 June 2007).
86. The Court considers that what the applicant was deprived of was an opportunity to buy the shop under preferential conditions and eventually develop a commercial activity in it; the respondent State must therefore make good that loss of opportunity. As regards the different elements in the applicant’s claim for pecuniary damages, the Court finds as follows. In respect of the amount claimed for rent she had paid between January 1998 and February 2006, the Court does not find a connection between the violation it has found, namely a failure to enforce final judgments in the applicant’s favour starting in November 2003, and the period referred to in the claim for damages for which no explanation has been provided. As regards the claim in relation to the construction she had intended to build on the plot, the Court finds it speculative, especially in view of the fact that the land on which the shop stood at the time did not form part of the property which the courts had ruled had to be offered to the applicant to buy under preferential conditions (see paragraph 7 above). Finally, as regards the amount claimed to represent the difference in the prices of the shop at the time of the first final judgment and at the time of the preparation of the expert report, the Court observes that this amount is based on an expert report presented solely by the applicant and that the estimated value of the shop indicated therein depended on an assessment of its life-span.
87. In view of all of the above, the Court considers that the lapse of time, the large number of imponderables involved and the impossibility of quantifying the applicant company’s loss in exact terms, given in particular that the present case concerns commercial activities, which implies the taking of risks and a degree of uncertainty as to the use and the profitability of the property acquired, the Court considers that it must rule in equity (see Basarba OOD, cited above, § 26). Accordingly, it takes into account all the circumstances which have become known to it concerning the applicant and the economic situation in Bulgaria, and awards the applicant EUR 25,000 in respect of pecuniary damage, plus any tax that may be chargeable on that amount.
88. As regards non-pecuniary damage, the Court finds that the failure to comply with the said judgment must have caused the applicant significant emotional distress. Consequently, deciding in equity, it awards the applicant EUR 5,000 in respect of non-pecuniary damage.
B. Costs and expenses
89. The applicant also claimed EUR 3,336 in respect of costs and expenses incurred in connection with the domestic proceedings and EUR 4,768 in respect of costs in connection with the proceedings before the Court.
90. The Government considered these amounts excessive.
91. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum.
92. In the present case, as regards the costs and expenses incurred in the domestic enforcement proceedings, the Court reiterates that it will uphold such claims only in so far as they relate to the violations it has found (see Avdić and Others v. Bosnia and Herzegovina, nos. 28357/11, 31549/11 and 39295/11, § 51, 19 November 2013; Duraliyski v. Bulgaria, no. 45519/06, § 45, 4 March 2014; and Penchevi v. Bulgaria, no. 77818/12, § 88, 10 February 2015). It thus awards the applicant EUR 3,336 incurred in connection with the proceedings for damages before the domestic authorities in which the applicant sought redress for the violation of the Convention found in the present case.
93. As regards the costs and expenses incurred before the Court, regard being had to the documents in its possession and the above criteria, the Court considers it reasonable to award the sum of EUR 4,500.
94. Accordingly, the Court awards the sum of EUR 7,836 as a global award under this head.
C. Default interest
95. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1. Declares the application admissible;
2. Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention;
3. Holds that there has been a violation of Article 13 in conjunction with Article 1 of Protocol No. 1;
(a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts, to be converted into Bulgarian levs at the rate applicable at the date of settlement:
(i) EUR 25,000 (twenty-five thousand euros), plus any tax that may be chargeable, in respect of pecuniary damage;
(ii) EUR 5,000 (five thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;
(iii) EUR 7,836 (seven thousand eight hundred thirty-six euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses, of which EUR 3,000 (three thousand euros) to be paid directly into the bank account of the applicant’s representatives;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period, plus three percentage points;
5. Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 19 January 2017, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Milan Blaško Angelika
Deputy Registrar President