Communicated on 29 January 2015
FIFTH SECTION
Application no. 29007/08
Primož BRITOVŠEK against Slovenia
lodged on 12 June 2008
STATEMENT OF FACTS
The applicant, Mr Primož Britovšek, is a Slovenian national, who was born in 1970 and lives in Selnica Ob Dravi. He is represented before the Court by Mr A. Kac, a lawyer practising in Maribor.
A. The circumstances of the case
The facts of the case, as submitted by the applicant, may be summarised as follows.
On 17 March 1995 the applicant was involved in a traffic accident in which another driver hit his car from behind, forcing it into a ditch where its front end hit a tree.
Since the other driver was responsible for the accident, the applicant requested compensation for damages directly from his insurance company T. However, as they were unable to reach an agreement, the applicant lodged an action for damages against insurance company T., claiming pecuniary damages for the value of his car in the amount of 4,000,000 Slovenian tolars (SIT) (16,691.7 euros (EUR)), together with statutory default interest from the date of the damage occurrence until the date of the payment. Moreover, he claimed non-pecuniary damages in the amount of SIT 750,000 (EUR 3,129.69) for personal injury he had sustained in the accident and mental distress suffered due to the reduction of life activities and fear.
Meanwhile, the insurance company engaged an expert to evaluate the cause and amount of damage to the car. On 4 June 1995 appraiser J.K. delivered his opinion, stating that the applicant’s car had sustained complete damage (90% of the car’s total value), meaning that it was no longer in useable condition and had to be replaced. Having regard to the vehicle’s age and kilometres travelled, the damage it had sustained prior to the accident and the value of the undamaged parts of the vehicle, J.K. assessed the damage to the applicant’s car at SIT 3,149,799.80 (EUR 13,143.88). As to the cause of the damage, J.K. was of the view that the applicant had hit the tree himself and was only later hit by the other car from behind.
Based on this opinion, the insurance company contested the applicant’s claims before the Celje District Court, placing the fault for the accident on him and arguing that the value of his car had been substantially lower than the assessment made by J.K. Moreover, the insurance company contested the non-pecuniary damage claim in its entirety. Finally, they argued that the applicant lacked legal standing to bring the action on the ground that he was not the owner of the car.
Also the applicant initially contested the assessment of the car’s value, but subsequently agreed to the amount of pecuniary damage as established by J.K.
During the proceedings, the Celje District Court appointed another expert, S.V., to establish the course of events that led to the accident. Having assessed the damage sustained by both the applicant’s and the other driver’s cars, the expert confirmed the version of events given by both drivers, namely that the other driver had hit the applicant’s car from behind with such force that its front had hit the tree.
On 14 February 2003 the Celje District Court granted the applicant’s claim for compensation of pecuniary damage, awarding him SIT 3,149,799.80, together with statutory default interest from 18 March 1995 until the date of the payment. The court further awarded the applicant SIT 300,000 for non-pecuniary damage and ordered the insurance company to pay his costs and expenses.
Insurance company T. appealed against the judgment before the Celje Higher Court, arguing, inter alia, that the district court had wrongly awarded the applicant statutory default interest on the compensation for pecuniary damage from the date of the damage and that it had failed to provide any justification therefor. Since the applicant had only sought compensation at a later date and since the merits of his claim as well as the amount of pecuniary damage had been determined no sooner than at the conclusion of the trial, the insurance company was of the view that the applicant could only be awarded statutory default interest from the date of the first-instance judgment. They relied on Article 189 § 2 of the Obligations Act (applicable at the time of the accident) and Article 168 of the Obligations Code (applicable since 1 January 2002) which provided that the compensation for damage was to be determined according to the prices applicable at the time of the court’s ruling, unless otherwise provided by law.
On 20 October 2004 the Celje Higher Court dismissed most of the insurance company’s complaints, including the one regarding the award of statutory default interest from the date of the damage. The higher court considered that since the applicant had claimed pecuniary damage in relation to the situation such as had existed at the time when the damage had occurred, it was not possible to use the statutory provisions according to which the compensation would be determined only later, at the time of the court’s ruling. The higher court explained that the purpose of statutory default interest was to restore the situation as it had existed before the damage occurred, and that, consequently, Article 186 of the Obligations Act (Article 165 of the Obligations Code) had to be applied, according to which the obligation to compensate for damage was deemed to have fallen due at the moment when the damage occurred. Thus, in the higher court’s opinion, the first-instance court had correctly awarded statutory default interest from the occurrence of the damage which had given rise to the applicant’s claim.
Insurance company T. lodged an appeal on points of law before the Supreme Court in which they again complained, inter alia, that since the applicant’s car could not be repaired, the damage should have been evaluated in relation to the prices applicable at the time of the court’s ruling. Consequently, also statutory default interest should have been awarded from the date of the first-instance judgment.
On 21 September 2006 the Supreme Court rendered a judgment in which it granted the insurance company’s appeal in part regarding the award of statutory default interest. The court emphasised that Article 189 § 2 of the Obligations Act provided that the compensation for damage had to be determined in relation to the prices applicable at the time of the court’s ruling, unless otherwise provided by law. No other provisions could be applied in the applicant’s case, since the applicant’s claim could not be regarded as a “pure monetary claim”, but a “claim arising from unrepaired pecuniary damage”, the fact which was not disputed by the parties. The value of such a claim had to be determined in accordance with the prices applicable at the time of the court’s ruling. The Supreme Court pointed out that the award of statutory default interest from the occurrence of the damage would entitle the applicant to damages in the total amount of over SIT 18,000,000 (approximately EUR 75,000), which would greatly exceed the amount necessary to restore his previous situation. The Supreme Court further explained that in the past decades, when the purpose of the statutory default interest was to compensate for the effects of high inflation and, accordingly, its rate was increased to cover the revaluation of the claims, the amount of compensation in cases such as the applicant’s had to be determined according to the prices applicable at the time of the trial or the court’s ruling which adequately reflected the real value of the compensation. However, the new legislation which came into force on 1 January 2002 (the new Obligations Code in conjunction with the Act Amending the Statutory Default Interest Rate and Base Interest Rate Act) made an express difference between the “true” default interest and the revaluation accruing at a so-called “base interest rate”. Only the former was awarded in judicial proceedings. Accordingly, since that date the statutory default interest was awarded from the date of the debtor’s delay.
The Supreme Court reminded that on 26 June 2002 it had adopted a principled opinion on the compensation for non-pecuniary and unrepaired pecuniary damage which had to be taken into consideration and which bound the lower courts. Having regard to this opinion, it awarded the applicant statutory default interest from 1 January 2002 until the date of the payment of the compensation.
The applicant lodged a constitutional complaint against the Supreme Court’s judgment.
On 11 February 2008 the Constitutional Court, relying on a decision adopted a month earlier, rejected his complaint on the ground that constitutional complaints by which solely an award of statutory default interest was challenged were not admissible.
B. Relevant domestic law and practice
1. Relevant domestic law
The Obligations Act in force at the material time provided that the person who had caused damage to another was obliged to restore the situation such as existed before the occurrence of the damage (Article 185 § 1). If that was not possible or if the competent court was of the opinion that it was not necessary to restore the injured party to his or her previous situation, the liable person was ordered to pay appropriate compensation to the injured party (Article 185 § 3). As regards the time when the obligation to compensate should be discharged, the Act provided that it was deemed to have fallen due at the moment when the damage occurred. The injured party was entitled to the reimbursement of ordinary damage as well as of lost profit (Article 189 § 1). Moreover, the Act provided that the compensation for damage was to be determined according to the prices applicable at the time of the court’s ruling, unless otherwise provided by law (Article 189 § 2). In determining the amount of compensation, the courts were obliged also to consider the circumstances which arose after the occurrence of damage and to award the injured party compensation in the amount necessary to restore his or her financial situation to what it would have been, had the damage not occurred (Article 190).
On 1 January 2002 the Obligations Act was replaced by the Obligations Code; however, the provisions relevant to the present case have not changed in substance.
2. Relevant practice
a) The principled opinion of the Supreme Court of 26 June 2002 on statutory default interest
Having regard to the amendments to the legislation regulating statutory default interest (the Obligations Code in conjunction with the Act Amending the Statutory Default Interest Rate and Base Interest Rate Act), which made a distinction between the statutory default interest and the revaluation (base) interest, the Supreme Court decided that statutory default interest on the compensation for non-pecuniary damage and pecuniary damage determined in relation to the prices applicable at the time of the court’s ruling should start accruing from the day of the debtor’s delay.
The Supreme Court pointed out that according to the then existing case-law, in such cases the statutory default interest did not start accruing until the date of the court’s ruling, since the interest rate was comprised of “default” and “revaluation” interest. In the opinion of the national courts, the real value of the compensation for the above types of damage which was determined at the trial could be adequately maintained if an award was made in relation to the prices applicable at the time of the court’s ruling. However, the new legislation which separated the statutory default interest and the revaluation interest rates enabled the courts to change its practice and start awarding statutory default interest from the day of the debtor’s delay. As the revaluation interest rate could be deduced from the default interest rate, it became possible to only award “true” statutory default interest.
b) Decisions of the domestic courts
In judgment no. II Ips 638/2004 of 29 June 2006, the Supreme Court decided on an appeal on points of law lodged by a claimant whose car had sustained complete damage in an accident for which the other driver insured by the respondent party had been responsible. The damage to the claimant’s car had been assessed according to the prices applicable at the time of the accident (1992). Accordingly, the claimant sought compensation for pecuniary damage together with statutory default interest from the date of his claim to the insurance company. However, the lower courts awarded him statutory default interest only from 1 January 2002 until the payment.
The Supreme Court reiterated that the main principle of the obligation to compensate for damage was to restore the situation as it had existed before the damage occurred. While it was true that Article 189 § 2 of the Obligations Act provided that the compensation for damage was to be determined according to the prices applicable at the time of the court’s ruling, it also stipulated that the rule applied “unless otherwise provided by law”. Moreover, in order to provide the injured party full compensation, the courts were required also to consider the circumstances which arose after the damage had occurred. Thus, it was imperative that the claimants were not at a disadvantage due to a possible reduction in the value of money between the time when the obligation to compensate fell due and the time of the court’s ruling. According to the Supreme Court, in cases involving the so-called pure monetary claims, the statutory default interest was awarded from the time when the claim was made. Moreover, the national courts had adopted the same position with regard to those cases in which the compensation was determined on the basis of an expert valuation. The claims based on such a valuation were considered as a type of pure monetary claims; accordingly, the statutory default interest was awarded from the time that the valuation was made.
The Supreme Court observed that, since the car had sustained complete damage and could not be repaired, the restoration of the original situation was not possible. However, the valuation of damage had been made even before the claimant had lodged an action for compensation. Thus, the Supreme Court awarded the claimant statutory default interest from the day when he had lodged his action before the first-instance court.
In judgment no. II Ips 434/2002 of 5 June 2003, the Supreme Court dismissed an appeal on points of law lodged by an insurance company which had been ordered to pay compensation for pecuniary damage (lost profit) caused to the claimant due to a car accident in 1992. The insurance company alleged, inter alia, that the statutory default interest should have only been awarded from the time of the first-instance court’s ruling. However, the Supreme Court pointed out that the expert valuation of the damage according to the prices applicable in 1992 justified the award of interest from the time of the valuation until the payment. Moreover, in the first-instance proceedings, the insurance company had not objected to the manner in which the damage had been determined.
Moreover, in decision no. II Ips 88/2002 of 27 November 2002, the Supreme Court emphasised that in so far as the compensation for pecuniary damage was determined with consideration of the circumstances such as had existed at a certain time before the (first-instance) court’s ruling, the statutory default interest were to be awarded from the day of the debtor’s delay, and not from the date of the court’s ruling. The Supreme Court stated that in cases involving pure monetary claims the statutory default interest was to be awarded from the time when the claim was made; the same rule applied in those cases where the compensation was determined on the basis of an expert valuation in which consideration was given to the past circumstances.
The same position was adopted by the Ljubljana Higher Court in its judgment no. II Cp 2163/2004 of 9 February 2005.
COMPLAINTS
The applicant complains under Article 6 of the Convention that the proceedings concerning his claim for compensation of damage were unfair, as the Supreme Court departed from the established case-law regarding the time from which statutory default interest should accrue in cases of compensation for pecuniary damage and awarded him a substantially lower amount of interest. Moreover, the Supreme Court failed to provide any reasoning therefor.
Invoking Article 13 of the Convention, the applicant complains that he did not have at his disposal any effective remedy to challenge the departure from the established case-law, as the Constitutional Court refused to consider the merits of his complaint on the ground that the questions regarding the issue of statutory default interest could not interfere with his constitutional rights.
Finally, the applicant complains that the case-law on the accrual of statutory default interest in cases such as his own was clear and well-established; hence the Supreme Court’s changed position to his disadvantage amounted to discrimination prohibited by Article 14 of the Convention.
QUESTION TO THE PARTIES
Having regard to the applicant’s submission that, in so far as his claim for compensation of pecuniary damage concerned the time from which the statutory default interest accrued, it was solved differently than a number of similar claims in cases comparable to his own, for which no reasons were given by the Supreme Court, did the applicant have a fair hearing in accordance with Article 6 § 1 of the Convention? In particular, was the principle of legal certainty implicit in this provision complied with by the domestic courts and did the national law offer an effective mechanism to ensure the consistency of case-law in disputes regarding the issue of statutory default interest (see, for example, Beian v. Romania (no. 1), no. 30658/05, §§ 36-39, ECHR 2007‑V (extracts), and Vusić v. Croatia, no. 48101/07, § 44, 1 July 2010)?
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