FOURTH SECTION

CASE OF LENGYEL v. HUNGARY

(Application no. 8271/15)

JUDGMENT

STRASBOURG

18 July 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 Lengyel v. Hungary,
The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of:
	Ganna Yudkivska, President,
	Vincent A. De Gaetano,
	Faris Vehabović,
	Carlo Ranzoni,
	Georges Ravarani,
	Marko Bošnjak,
	Péter Paczolay, judges,
and Marialena Tsirli, Section Registrar,
Having deliberated in private on 27 June 2017,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1.  The case originated in an application (no. 8271/15) against Hungary lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Hungarian national, Ms András Jánosné Lengyel (“the applicant”), on 12 March 2013.
2.  The applicant was represented by Ms E. Kadlót, a lawyer practising in Budapest. The Hungarian Government (“the Government”) were represented by Mr Z. Tallódi, Agent, Ministry of Justice.
3.  The applicant complained, in particular, of a significant decrease in the benefit she had received on account of her reduced capacity to work. She relied on Article 1 of Protocol No. 1, as well as on Articles 6, 8, 13 and 14 of the Convention.
4.  On 21 April 2015 the application was communicated to the Government.
THE FACTS
Article I.	I.  THE CIRCUMSTANCES OF THE CASE
5.  The applicant was born in 1960 and lives in Budapest.
6.  The applicant was placed in retirement on grounds of disability and received a disability pension as of 1 November 2006, the amount of which was 91,363 Hungarian forints (HUF) (approximately 305 euros (EUR)) per month. The entitlement was based on a final decision of the Supreme Court. At the material time the medical board rated her state of health at 46 per cent.
7.  The methodology for disability assessment changed as of 1 January 2008.
8.  Act no. CXCI of 2011 on the Benefits Granted to Persons with Reduced Work Capacity was enacted on 29 December 2011 and entered into force as of 1 January 2012. It introduced a new system of allowances and beneficiaries of the old scheme were invited to re-apply under the new rules.
9.  The applicant lodged a fresh application for disability allowance under the new law.
Pending approval of her new application, she continued to receive a monthly disability allowance in the amount of HUF 89,925 (approximately EUR 300) on the strength of the fact that on the day the new law entered into force, she had been in receipt of a disability benefit.
10.  On 29 June 2012 the National Rehabilitation and Social Authority assessed the applicant’s state of health at 59 per cent. She was categorised as a person suitable for rehabilitation on the basis of that assessment. However, owing to the applicant’s other circumstances, her rehabilitation was not recommended.
11.  In application of the relevant rules, the applicant’s rehabilitation allowance was established at 45 per cent of the minimum wage, that is, in the amount of HUF 41,850 (approximately EUR 140), by a decision of the Budapest Governmental Office (Directorate of Pension Insurance) given on 19 September 2012 and effective as of 1 December 2012.
12.  The applicant appealed.
13.  A medical assessment carried out in the course of the second-instance administrative proceedings resulted in the finding that the applicant’s state of health was at 58 per cent. It was reaffirmed that her rehabilitation was not recommended. Since the minor difference in the scores did not alter the calculation of the allowance, the National Rehabilitation and Social Authority upheld the first-instance decision on 17 January 2013.
14.  The applicant sought a judicial review.
15.  On 23 February 2016 the Budapest Administrative and Labour Court dismissed her action. Having obtained fresh medical assessments and the opinion of the national forensic body, the court was satisfied that the applicant’s state of health was at 54 per cent (her locomotor, digestive and endocrinological conditions were calculated cumulatively as per the method prescribed in Annex 1 to Decree no. 7/2012 (II. 14.) NEFMI).
Again, the minor difference in the scores had no bearing on the calculation of the allowance. The court upheld the administrative decisions.
16.  On 12 September 2016 the Kúria dismissed the applicant’s petition for review. It observed in particular that the lower courts had found that the applicant’s state of health (for the purposes of the application of rules of disability benefits) had improved and that the applicant had challenged that finding. It pointed out that such an improvement did not necessarily correspond to actual healing from a condition, but could also result from a change in, or stricter application of, the relevant rules of medical assessment.
17.  The applicant submitted that, as of August 2015, she no longer received any benefits. The legal or factual circumstances underlying this state of affairs are not known.
THE LAW
Article II.	I.  ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION
18.  The applicant complained that the drastic decrease in her monthly disability allowance prevailing since 1 December 2012 amounted to an unjustified deprivation of possessions in view of the fact that her underlying medical condition had not changed. She relied on Article 1 of Protocol No. 1 to the Convention and Articles 6, 8, 13 and 14 of the Convention.
19.  The Court considers that the complaint falls to be examined under Article 1 of Protocol No. 1 alone, 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.”
Section 2.01	A.  Admissibility
20.  The Government initially argued that the application was premature in that the court proceedings brought by the applicant – an effective remedy in the circumstances – were still pending. Subsequently, however, the applicant submitted the Kúria’s final review decision in the case. In these circumstances, the Court is satisfied that the application cannot be rejected for non-exhaustion of domestic remedies. It further notes that the application is not inadmissible on any other grounds. It must therefore be declared admissible.
Section 2.02	B.  Merits
(a)	1.  Applicability of Article 1 of Protocol No. 1
21.  The Government observed that when the new legislation had entered into force on 1 January 2012, the applicant had been in receipt of a disability benefit of indefinite duration. They therefore conceded that she had a legitimate expectation to continue to receive that benefit and that the decrease sustained represented an interference with her rights under Article 1 of Protocol No. 1.
The applicant agreed.
22.  The Court has summarised its position on the applicability of Article 1 of Protocol No. 1 in cases similar to the present one in paragraphs 72 to 110 of the Béláné Nagy judgment (Béláné Nagy v. Hungary [GC], no. 53080/13, ECHR 2016). It sees no reason to depart from those considerations. Since this point is not in dispute between the parties, it is satisfied that Article 1 of Protocol No. 1 is applicable on account of an interference with the applicant’s rights under that provision.
(b)	2.  Compliance with Article 1 of Protocol No. 1
(i)	(a)  The parties’ submissions
23.  The applicant was of the view that the interference she had suffered was disproportionate in that about half of her benefit had been eliminated as of 1 December 2012. Despite the different scores she had received following the various assessments over the years, her state of health had never improved, as demonstrated by the fact that there had never been an attempt to rehabilitate her. Indeed, the application of the new law had placed her in a situation of vulnerability and defencelessness. Under the new legislation, the rights she had acquired as a contributor to the social security scheme had been dissolved in a system based purely on solidarity – hardly short of being government charity – offering a very low level of protection for those who could not be rehabilitated and returned to the labour market. Indeed, as of August 2015 she had no longer received any benefit.
24.  The Government submitted that the measures applied in the applicant’s case flowed directly from the relevant rules of the domestic law as amended and pursued the general interest of rationalising the system of disability benefits. They stressed that the change in the amount of the benefit received by the applicant had resulted from a real change in her state of health, rather than from the change in the methodology and the restructuring of the disability benefit system. They pointed out that with her current state of health, she would no longer have been entitled to any benefit had the new system not been put in place. The benefit she was currently receiving should be compared with that scenario, rather than with the amount received under the old regime of benefits.
(ii)	(b)  The Court’s assessment
25.  A synopsis of the Court’s position on compliance with Article 1 of Protocol No. 1 in this field can be found in paragraphs 112 to 118 of the Béláné Nagy judgment (cited above). Those considerations are also valid in the present case.
26.  The Court notes at the outset that the measure complained of had undisputedly a clear basis in national law. It accepts that it corresponded to the general interest attached to the rationalisation of the social-security system. In any event, these points are not in dispute between the parties.
27.  At this juncture, the Court recalls having noted that “the fact that a person has entered into and forms part of a State social-security system (even if a compulsory one, as in the instant case) does not necessarily mean that that system cannot be changed, either as to the conditions of eligibility of payment or as to the quantum of the benefit or pension (see, mutatis mutandis, Carson and Others v. the United Kingdom [GC], no. 42184/05, §§ 85-89, ECHR 2010, and Richardson v. the United Kingdom (dec.), no. 26252/08, § 17, 10 April 2012). Indeed, the Court has accepted the possibility of amendments to social-security legislation which may be adopted in response to societal changes and evolving views on the categories of persons who need social assistance, and also to the evolution of individual situations (see Wieczorek v. Poland, no. 18176/05, § 67, 8 December 2009)” (see Béláné Nagy, cited above, § 88). The Court would stress that, in present-day conditions, these considerations play a primordial role in assessing complaints concerning the impairment of social welfare rights; and they undoubtedly provide the State with a wide margin of appreciation in rationalising their social-security systems.
Nevertheless, the examination of the proportionality of such measures cannot be dispensed with.
28.  In addressing the proportionality of the measure, that is, in considering whether the interference imposed an excessive individual burden on the applicant, the Court will have regard to the particular context in which the issue arose, namely that of a social-security scheme. Such schemes are an expression of a society’s solidarity with its vulnerable members (see Béláné Nagy, cited above, § 116). An important consideration is whether the applicant’s right to derive benefits from the social-insurance scheme in question has been infringed in a manner resulting in the impairment of the essence of her pension rights (see Béláné Nagy, cited above, § 118).
For the Court, a reduction by half, as in the present case, undoubtedly falls into this latter category.
29.  The Court notes that although the applicant – unlike Mrs Nagy – was not completely deprived of all entitlements, her income was nevertheless abruptly reduced to EUR 140 per month. This element is aggravated by the fact that the applicant apparently had no other significant income on which to subsist and that she belonged to a vulnerable group of disabled persons (see Béláné Nagy, cited above, § 123).
30.  The Court notes the Government’s arguments revolving around the allegation that the grievance is in fact a consequence of a net improvement in the applicant’s state of health, which was consecutively assessed at 46, 59, 58 and 54 per cent. At the same time, the Court notes the Kúria’s observation that such a variation in the scores could have resulted from a change in, or the stricter application of, the relevant rules of medical assessment – without an actual recovery from an ailment. Moreover, it is significant that the authorities never endeavoured to rehabilitate the applicant. For the Court, this element, together with the fact that the scores differed only slightly, suggests that the applicant’s level of disability remained fairly stable.
31.  The Court thus considers that in the present case the application of the impugned legislation resulted in a situation in which a fair balance was not struck between the interests at stake – even if that legislation was aimed at protecting the public purse by rationalising the disability benefits scheme, a matter of legitimate general interest in pursuit of which the State enjoys a wide margin of appreciation. Once again, it must be stressed that the applicant suffered the removal of half of her benefit, whereas there was no indication that she had failed to act in good faith at all times, to co-operate with the authorities or to make any relevant claims or representations (see Béláné Nagy, cited above, §§ 121, 125 and 126).
32.  Therefore, there was no reasonable relation of proportionality between the aim pursued and the restrictions applied to the applicant’s allowance in the period after 1 December 2012. The Court therefore finds that, notwithstanding the State’s wide margin of appreciation in this field, the applicant had to bear an excessive individual burden.
33.  It follows that there has been a violation of the applicant’s rights under Article 1 of Protocol No. 1.
Article III.	II.  APPLICATION OF ARTICLE 41 OF THE CONVENTION
34.  Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
Section 3.01	A.  Damage
35.  The applicant claimed a total of 44,524 euros (EUR) in respect of pecuniary and non-pecuniary damage combined, consisting of an estimate of the accumulated lost benefits, plus compensation for the hardship suffered.
36.  The Government contested this claim.
37.  The Court cannot speculate on the amount of disability benefit which would have been disbursed to the applicant had the violation not occurred. It therefore awards her a lump sum of EUR 5,000 in respect of the pecuniary damage sustained (see Béláné Nagy, cited above, § 131). Moreover, it considers that she must have suffered some non-pecuniary damage on account of the distress suffered and awards her, on the basis of equity, EUR 5,000 under this head.
Section 3.02	B.  Costs and expenses
38.  The applicant also claimed EUR 2,000 for the costs and expenses incurred before the Court, including legal fees and clerical expenditure.
39.  The Government contested this claim.
40.  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. In the present case, regard being had to the documents in its possession and the above criteria, the Court considers it reasonable to award the full sum claimed.
Section 3.03	C.  Default interest
41.  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
(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 the currency of the respondent State at the rate applicable at the date of settlement:
(i)  EUR 5,000 (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 2,000 (two thousand euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses;
(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;

4.  Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 18 July 2017, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
	Marialena Tsirli	Ganna Yudkivska
	Registrar	President