FOURTH SECTION
CASE OF GRAFOV v. UKRAINE
(Application no. 4809/10)
JUDGMENT
STRASBOURG
18 December 2018
This judgment is final but it may be subject to editorial revision.
In the case of Grafov v. Ukraine,
The European Court of Human Rights (Fourth Section), sitting as a Committee composed of:
Faris Vehabović, President,
Carlo Ranzoni,
Péter Paczolay, judges,
and Andrea Tamietti, Deputy Section Registrar,
Having deliberated in private on 27 November 2018,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 4809/10) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Ukrainian national, Mr Mykhaylo Yevgenovych Grafov (“the applicant”), on 12 January 2010.
2. The applicant was represented by Mr I.B. Baytsar, a lawyer practising in Chernivtsi, Ukraine. The Ukrainian Government (“the Government”) were represented by their Agent, Mr I. Lishchyna from the Ministry of Justice.
3. The applicant complained under Article 1 of Protocol No. 1 to the Convention that following a mistake of the State bailiffs he was deprived of his property and was not compensated for it.
4. On 30 March 2015 the application was communicated to the Government.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
5. The applicant was born in 1977 and lives in Chernivtsi.
6. In October 2002 the Zalishchytskyy Local Court of Ternopil Region issued a writ of enforcement in a case against a private company, U. The parties did not provide any documents related to the proceedings against company U.
7. Under that writ in March 2005 the State Bailiffs’ Service seized, among other property items which belonged to company U., an industrial construction (a 2,000 sq. meters metallic shed) of a declared worth of 98,000 Ukrainian hryvnas (UAH) equivalent at the material time to around 13,950 euros (EUR).
8. In December 2005 the State Bailiffs’ Service concluded an agreement with a private company M. to hold an auction in order to sell the seized shed.
9. On 3 April 2006 the applicant participated in this auction and bought the above construction for UAH 26,000 (at the material time around EUR 4,200). The applicant submitted copies of the bills according to which he had paid the above amount in full.
10. On 10 August 2006 the applicant sold the shed to a private person T. for UAH 50,000.
11. On an unidentified date, a third person S. lodged an administrative claim against the bailiffs and the applicant seeking to declare the bailiff’s seizure and sale of the shed unlawful as in fact it belonged to him. In view of this claim, in October 2006 the sales contract between the applicant and T. was annulled by the parties and the applicant returned the money to T. On 23 November 2006 the Zalishchytskyy Local Court of Ternopil Region found that the shed belonged to S. and thus the bailiffs had unlawfully seized and sold it. There is no information as to whether there was an appeal against this decision.
12. In parallel, criminal proceedings for abuse of office were initiated against bailiff D. in charge of the respective enforcement proceedings. On 16 March 2007 the applicant was given victim status in these proceedings. In the relevant resolution it was noted that the applicant sustained pecuniary damage and had not been reimbursed the money he had paid at the auction. The amount of the damage aggravated the charges against the bailiff.
13. On 2 August 2007 the Zalishchytskyy Local Court convicted the bailiff as charged. In the text of the sentence the applicant is referred to as a witness. Apparently, no civil claim was submitted by the applicant in the course of these criminal proceedings. There is no information whether there was an appeal against this sentence.
14. In May 2008 the applicant instituted civil proceedings against the Bailiffs’ Service and the local department of the State Treasury claiming compensation for pecuniary and non-pecuniary damage. The applicant referred to provisions on compensation of damage of the Civil Code of Ukraine, in particular Article 1174, and to Article 11 of the Law of Ukraine “On the State Bailiffs’ Service” according to which damage caused to an individual by actions or omissions of a state official, in particular, by a bailiff during enforcement proceedings, had to be compensated by the State (see paragraphs 19 and 21 below).
15. On 1 December 2008 the Sadgirskyy District Court of Chernivtsi found for the applicant based on the above legislative provisions. It awarded the applicant UAH 60,262 (equivalent to around EUR 6,884) which comprised: i) cost of the shed (UAH 26,000); ii) bank commission (UAH 262); iii) lost income (UAH 24,000) and iv) non-pecuniary damages (UAH 10,000).
16. Following the defendant’s appeal, on 12 March 2009 the Chernivtsi Regional Court of Appeal quashed this decision and rejected the applicant’s claims as unsubstantiated. The court held that since the applicant was not a party to the enforcement proceedings in the case against company U. he could not claim damages from the bailiffs under Article 11 of the Law of Ukraine “On the State Bailiffs’ Service” (see paragraph 21 below). The court of appeal did not examine the applicability of the Civil Code provisions, relied upon by the applicant and the local court. The court further noted that the applicant failed to demonstrate that the shed had been in fact seized from him without any compensation, or that the sales contract with company M. in charge of the auction had been dissolved.
17. The applicant appealed in cassation stating that he no longer owned or used the shed as its seizure and sale were found unlawful by the court decision of 23 November 2006 (see paragraph 11 above) and it had been returned to S. He noted that the money he paid at the auction had not been reimbursed. He thus sustained damages. To support his claim the applicant reiterated again the Civil Code provisions.
18. On 23 July 2009 the Supreme Court of Ukraine refused to open cassation proceedings finding the cassation appeal ill-founded.
II. RELEVANT DOMESTIC LAW
19. The relevant provisions of the Civil Code as to compensation of damage in force at the material time read as follows:
Article 1166. General grounds of liability for damage to property
“1. Pecuniary damage caused by unlawful decisions, actions or omission to personal non-pecuniary rights of an individual or a legal entity, as well as damage caused to property of an individual or a legal entity, shall be fully compensated by the person who caused it. ...”
Article 1174. Compensation of damage caused by an official of a state authority, an authority of the Autonomous Republic of Crimea or a local self-government body
“1. Damage caused to an individual or a legal entity by unlawful decisions, actions or omission of an official of a state authority, an authority of the Autonomous Republic of Crimea or a local self-government body in the exercise of its powers shall be compensated by the State, the Autonomous Republic of Crimea or a local self‑government body irrespective of the guilt of the official. ...”
20. Under Article 28 of the Criminal Procedural Code of Ukraine, a person who has sustained damage as a result of a criminal offence can lodge a civil claim against an accused or persons liable for the actions of the accused at any stage of criminal proceedings before the beginning of the consideration of the case on the merits by a court. If no civil claim has been submitted within criminal proceedings or if it has been left without consideration, a person can lodge a claim in civil proceedings.
21. The relevant provisions of the Law of Ukraine “On the State Bailiffs’ Service” in force at the material time provide as follows:
Article 4 Bailiffs
“...
Bailiffs are representatives of State power and conduct enforcement of court decisions rendered in the name of Ukraine, and of decisions of other bodies (State officials) the enforcement of which is entrusted to the bailiffs’ service, in the manner established by law. ...”
Article 11 Liability of bailiffs
“Damage caused by a bailiff to individuals or legal persons during the enforcement of a judgment shall be compensated in the manner established by law at the expense of the State. ...”
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION
22. The applicant complained under Article 1 of Protocol No. 1 to the Convention that he was deprived of his property due to the fault of the State agents and was not compensated for it. The above provision 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.”
A. Admissibility
1. Arguments of the parties
23. The Government alleged that the applicant had not exhausted domestic remedies in respect of the above complaint. They noted, in particular, that as he had not been a party to the enforcement proceedings in the framework of which the auction took place, Article 11 of the Law of Ukraine “On the State Bailiffs’ Service” (see paragraph 21 above) was clearly not applicable to him and thus his claims under this provision had no prospect of success. They suggested, on the other hand, that in line with Article 28 of the Criminal Procedural Code of Ukraine (see paragraph 20 above) the applicant should have filed a civil claim against bailiff D. either in the course of the criminal investigation and trial against him or after the end of these proceedings as a separate civil claim.
24. The applicant disagreed. He stated that the Government erred in the interpretation of the domestic law. He noted that Article 11 of the Law of Ukraine “On the State Bailiffs’ Service” was worded in such a manner that it did not permit to clearly exclude its applicability to his situation. Therefore, it had not been obvious from the start that his efforts would be doomed to fail. He also pointed out that the damage was caused not by a private individual, but by a State agent and thus such damage should have in any case been compensated by the State.
2. The Court’s assessment
25. The Court points out that the purpose of the rule of exhaustion of domestic remedies under Article 35 is to afford the Contracting States the opportunity of preventing or putting right the violations alleged against them before those allegations are submitted to the Convention institutions (see, for example, Selmouni v. France [GC], no. 25803/94, § 74, ECHR 1999 V). At the same time, this rule must be applied with some degree of flexibility and without excessive formalism. The Court has already held on a number of occasions that this rule is neither absolute nor applied automatically; for the purposes of reviewing whether it has been observed, it is essential to take into account the circumstances of the individual case (see Akdivar and Others v. Turkey [GC], 16 September 1996, § 69, Reports of Judgments and Decisions 1996 IV, and Aksoy v. Turkey, 18 December 1996, §§ 53-54, Reports 1996-VI). In particular, the Court looks into whether the applicant did everything that could reasonably be expected in order to exhaust available domestic remedies (see Merit v. Ukraine, no. 66561/01, § 58, 30 March 2004).
26. The Court further notes that if domestic law provides for several parallel remedies in different fields of law, an applicant who has sought to obtain redress for an alleged breach of the Convention through one of these remedies is not necessarily required to use others which have essentially the same objective (see Jasinskis v. Latvia, no. 45744/08, § 50, 21 December 2010). The Court reiterates that it is incumbent on the Government claiming non-exhaustion to satisfy the Court that the remedy was an effective one available, in theory and in practice, at the relevant time (see Akdivar, cited above, § 68). Once this burden of proof has been satisfied it falls to the applicant to establish that the remedy advanced by the Government was in fact exhausted or was for some reason inadequate and ineffective in the particular circumstances of the case (see Akdivar, cited above, § 68, and Kryvenkyy v. Ukraine, no. 43768/07, § 32, 16 February 2017).
27. The Court notes that the applicant did use one of the remedies available to him but his claims were rejected on 12 March 2009 by the court which interpreted Article 11 of the Law of Ukraine “On the State Bailiffs’ Service” so that to exclude its applicability to the applicant’s situation (see paragraph 16 above). While it is for the domestic courts to interpret domestic law, the Court notes that this provision was worded in general terms (see paragraph 21 above) and the Government failed to provide any examples of domestic case-law confirming that there was a well-established practice of its interpretation. Thus, it cannot be said that the remedy chosen by the applicant was a priori futile (see and compare Aktoploikes Grammes Thiras v. Ukraine (dec.), no. 21200/04, 20 January 2015). All the more so, that to support his claims, the applicant advanced other legislative provisions, namely the provisions of the Civil Code regarding the compensation of damage (see paragraph 14 above), disregarded by the court of appeal.
28. In the light of the above, the Court considers that the Government’s objections regarding the non-exhaustion of domestic remedies should be dismissed.
29. The Court further notes that the present complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It considers that it is not inadmissible on any other grounds. It must therefore be declared admissible.
B. Merits
30. The Government did not provide any observations on the merits of the applicant’s complaints.
31. The Court notes at the outset that after the auction the applicant paid the full cost of the shed (see paragraph 9 above). He was also considered an owner by the State when a claim was brought against him by the initial owner (see paragraph 11 above). The damage he sustained was also a factor in the criminal proceedings against the bailiff in which the applicant was recognised as a victim (see paragraphs 12 and 13 above). Accordingly, the Court considers that the applicant had a “possession” within the meaning of Article 1 of Protocol No. 1 to the Convention.
32. The Court further considers that the impugned measures resulting in the deprivation of the applicant of his possessions and a failure to award him compensation (see paragraphs 22 above and 34 below) constituted an interference which falls to be examined in the light of the general rule contained in the first sentence of the first paragraph of Article 1 of Protocol No. 1, according to which “Every natural or legal person is entitled to the peaceful enjoyment of his possessions” (see, for a similar approach, Beyeler v. Italy [GC], no. 33202/96, § 106, ECHR 2000-I, and Gladysheva v. Russia, no. 7097/10, § 71, 6 December 2011).
33. The Court reiterates that in order to comply with Article 1 of Protocol No. 1 to the Convention, it must be shown that the measure constituting the interference was lawful, that it was “in accordance with the general interest”, and that there existed a reasonable relationship of proportionality between the means employed and the aim sought to be achieved (see, for example, Beyeler, cited above, §§ 108-14). The Court further reiterates that the requisite balance will not be found if the person concerned has had to bear an individual and excessive burden (see, among other authorities, Sporrong and Lönnroth v. Sweden, 23 September 1982, §§ 69 and 73, Series A no. 52).
34. On the question of lawfulness, the Court notes that in the present case the applicant lost control over the property based on the court decision of 23 November 2006 (see paragraph 11 above). While it is unclear whether this decision was appealed against at the domestic level, applicant did not challenge it before this Court. The core of the applicant’s complaints lies rather in the fact that he was not compensated the money he paid for the shed, than in that he was unlawfully deprived of it.
35. The Court further considers that the impugned measure pursued the legitimate aim of protecting the rights of the initial owner. All the more so, that according to the Court’s case-law, as a general principle, public authorities should not be prevented from correcting their mistakes, even those resulting from their own negligence; holding otherwise would be contrary to the doctrine of unjust enrichment (see, mutatis mutandis, Moskal v. Poland, no. 10373/05, § 73, 15 September 2009).
36. At the same time, the above general principle cannot prevail in a situation where the individual concerned is required to bear an excessive burden. In the present case the applicant requested compensation for his loss of property rights but his claims were refused by the courts. Thus it remains to be seen whether such a refusal struck a fair balance without subjecting the applicant to an excessive burden.
37. The Court reiterates that the need to correct an old “wrong” should not disproportionately interfere with a new right which has been acquired by an individual relying on the legitimacy of the public authority’s action in good faith (see, mutatis mutandis, Pincová and Pinc v. the Czech Republic, no. 36548/97, § 58, ECHR 2002‑VIII). The risk of any mistake made by the State authority must be borne by the State itself and the errors must not be remedied at the expense of the individuals concerned (see, mutatis mutandis, Pincová and Pinc, cited above, § 58; Gashi v. Croatia, no. 32457/05, § 40, 13 December 2007; and Trgo v. Croatia, no. 35298/04, § 67, 11 June 2009). In the context of revoking ownership of a property transferred erroneously, the good governance principle may not only impose on the authorities an obligation to act promptly in correcting their mistake (see, for example, Moskal, cited above, § 69), but may also necessitate the payment of adequate compensation or another type of appropriate reparation to its former bona fide holder (see Pincová and Pinc, cited above, § 53; Gladysheva, cited above, § 80 and Maksymenko and Gerasymenko v. Ukraine, no. 49317/07, § 64, 16 May 2013).
38. Turning to the present case the Court observes that while the first‑instance court examined the applicant’s claims for compensation under both Article 11 of the Law of Ukraine “On the State Bailiffs’ Service” and the Civil Code provisions (see paragraphs 14 and 15 above), the court of appeal confined itself to the consideration of the applicant’s complaints solely under Article 11 of the Law “On the State Bailiffs’ Service” and found it inapplicable to the applicant’s situation. The appellate court never examined the applicant’s case under other provisions of domestic law, invoked by him, namely those of the Civil Code. The court found instead, without any further explanations, that the applicant had not provided enough evidence that he had sustained damages or, indeed, had been deprived of the property. The court eventually advised the applicant to sue company M. which organised the auction (see paragraph 16 above).
39. In this regard the Court reiterates that when a public entity is liable for damages, the State’s positive obligation to facilitate identification of the correct defendant is all the more important (see Plechanow v. Poland, no. 22279/04, § 109, 7 July 2009). The Court notes that the role of company M. was limited to the organisation and holding of the public auction. It was clearly not the sole and certainly not the primary body involved. The key role belonged to the Bailiffs’ Service and the bailiff who was in charge of the respective enforcement proceedings and contracted company M. to hold the auction (see paragraph 8 above). According to Article 4 of the Law of Ukraine “On the State Bailiffs’ Service”, the bailiffs are civil servants and represent the State power (see paragraph 21 below); therefore, bailiff D. did not act in a personal capacity but represented the State authority. Furthermore, his actions were found unlawful in the ensuing criminal proceedings and the gravity of the sanction applicable to him was directly linked, inter alia, to the cost of the shed (see paragraphs 12 and 13 above). With this in mind, the Court considers that the domestic authorities themselves acknowledged the bailiffs’ primary responsibility for the damages caused and, accordingly, the State’s liability was clearly implicated.
40. The Court notes that the applicant has been stripped of ownership acquired in good faith, and that he received no compensation (see, mutatis mutandis, Valle Pierimpiè Società Agricola S.p.a. v. Italy (merits), no. 46154/11, § 75, 23 September 2014). The court of appeal failed to examine the applicant’s case in the light of the Civil Code provisions – clearly and consistently referred to by the applicant throughout the proceedings – and thereby also failed to examine the proportionality of the interference with the applicant’s property rights and to strike the requisite fair balance.
41. The foregoing considerations are sufficient to enable the Court to conclude that the conditions under which the applicant was stripped of his possessions imposed a disproportionate burden on him. It follows that there has been a violation of Article 1 of Protocol No. 1 to the Convention.
II. APPLICATION OF ARTICLE 41 OF THE CONVENTION
42. 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.”
A. Damage
43. The applicant claimed 4,257.43 euros (EUR) which is an equivalent of 26,000 Ukrainian hryvnas (UAH) he paid for the shed at the exchange rate applicable at the date of events (April 2006 – see paragraph 9 above). He also claimed compensation for the lost profit of UAH 24,000 or EUR 3,929.94 (the difference between the payment he had received from T. (UAH 50,000 – see paragraph 10 above) and the cost of the shed). The applicant further claimed the real income he could have received from the use of property during the nine and a half years that passed since the date of events. He stated that he could put the money he paid for the shed on a deposit account and, relying on the rate of 11 % per year (without any further explanations), he could have received EUR 8,555.80.
44. The applicant also claimed EUR 10,000 in respect of non-pecuniary damage.
45. Reiterating their position on the inadmissibility of the applicant’s claims the Government stated that these claims were to be rejected as unsubstantiated.
46. The Court reiterates that a judgment in which it finds a breach imposes on the respondent State a legal obligation to put an end to the breach and make reparation for its consequences in such a way as to restore as far as possible the situation existing before the breach (see Iatridis v. Greece [GC] (just satisfaction), no. 31107/96, § 32, ECHR 2000-XI). However, there must be a clear causal connection between the pecuniary damage claimed by the applicant and the violation of the Convention (see, for instance, Kurić and Others v. Slovenia (just satisfaction) [GC], no. 26828/06, § 81, ECHR 2014 and the cases cited therein).
47. In the light of the conclusion of violation of Article 1 of Protocol No. 1, found in respect of lack of compensation for the property the applicant had bought, the Court awards the applicant EUR 4,257 representing the value of the shed.
48. As to the remainder of the applicant’s claims the Court rejects them as having no causal connection with the violation found and being rather speculative.
49. Deciding on an equitable basis, the Court awards the applicant EUR 900 in respect of non-pecuniary damage.
B. Costs and expenses
50. The applicant claimed UAH 13,495.24 or its equivalent of EUR 2,209.81 at the date of events as costs and expenses incurred during domestic proceedings, comprising his lawyer’s fees (UAH 9,000) and court fees. He provided a one-page certificate signed by his lawyer stating the sums incurred.
51. The Government contested that claim noting that the applicant had failed to provide sufficiently detailed documents to substantiate his claims.
52. 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, with regard to the applicant’s failure to provide a sufficiently detailed description of costs and expenses incurred as well as fiscal documents in support of his claim, the Court dismisses it in full (see, mutatis mutandis, Merabishvili v. Georgia [GC], no. 72508/13, § 372, 28 November 2017).
C. Default interest
53. 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, the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement:
(i) EUR 4,257 (four thousand two hundred and fifty seven euros), plus any tax that may be chargeable, in respect of pecuniary damage;
(ii) EUR 900 (nine hundred euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;
(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 December 2018, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Andrea TamiettiFaris Vehabović
Deputy RegistrarPresident
Full & Egal Universal Law Academy