CASE OF GYARFAS AND HUNAUDIT KFT. v. HUNGARY

SECOND SECTION

CASE OF GYÁRFÁS AND HUNAUDIT KFT. v. HUNGARY

(Application no. 15258/06)

JUDGMENT

STRASBOURG

27 July 2010

This judgment is final but it may be subject to editorial revision.

In the case of Gyárfás and Hunaudit Kft. v. Hungary,

The European Court of Human Rights (Second Section), sitting as a Committee composed of:

Dragoljub Popović, President,
András Sajó,
Kristina Pardalos, judges,
and Françoise Elens-Passos, Deputy Section Registrar,

Having deliberated in private on 6 July 2010,

Delivers the following judgment, which was adopted on that date:

PROCEDURE

1. The case originated in an application (no. 15258/06) against the Republic of 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, Mr Péter Gyárfás (“the first applicant”) and a Hungarian limited liability company, Hunaudit Kft, (“the second applicant”), on 29 December 2003.

2. Before the Court, the second applicant was represented by the first one. The Hungarian Government (“the Government”) were represented by Mr L. Höltzl, Agent, Ministry of Justice and Public Administration.

3. On 19 November 2009 the President of the Second Section decided to give notice of the application to the Government. In accordance with Protocol No. 14, the application was assigned to a committee of three Judges. It was also decided to rule on the admissibility and merits of the application at the same time (Article 29 § 1).

THE FACTS

THE CIRCUMSTANCES OF THE CASE

4. The applicant was born in 1956 and lives in Budapest.

5. On 28 December 1994 the predecessor of the second applicant, represented by the first applicant, filed an action for damages against a company before the Budapest Regional Court. On 17 October 1995 the Regional Court ordered intermission of the proceedings for six months at the joint request of the parties. On 11 April 1996 the plaintiff requested continuation of the proceedings and extended its action to involve another respondent.

6. On 6 March 1997 the Regional Court delivered a judgment dismissing the action.

7. On appeal, on 17 November 1997 the Supreme Court's appellate bench quashed the first instance judgment and remitted the case to the Regional Court.

8. On 31 August 1998 the plaintiff extended the action to include a claim of invalidity of a contract. On 10 November 1998 the plaintiff stated its intention to extend the action to involve further respondents including a company based in Japan. It was therefore instructed to advance the costs of translation but complied with this order only on 4 November 1999.

9. On 20 April 2000 the Regional Court held a hearing and delivered a judgment dismissing the action. The plaintiff appealed on 5 June 2000.

10. On 27 September 2000 the plaintiff was struck out of the register of companies and ceased to exist as a legal entity. Its successor was the second applicant. However, neither itself nor its attorney, the first applicant, informed the courts or the parties of this fact.

11. On 24 September 2001 the Supreme Court quashed the first instance judgment for deficient facts and remitted the case.

12. In the resumed proceedings, a respondent notified the Regional Court on 22 May 2002 that the plaintiff had been struck out of the register of companies. On 23 May 2002 the first applicant, representing the second one, declared that he could not make a statement on the legal succession of his client. He was ordered to do so within 15 days. On 17 July 2002 he informed the court that, by way of a deed of cession, the successor of the plaintiff was his own mother, a pensioner eligible for exemption from court fees.

13. At the hearing of 26 September 2002 the first applicant produced a contract of 2 January 1996 by which part of the claims of the original plaintiff had been ceded to himself. He also submitted another document of 31 October 1998 by which he had further ceded some of those claims to his mother. He stated that he wished to enter the proceedings as party.

14. On 15 October 2002 the Head of the Economic College of the Budapest Regional Court informed the President of the Budapest Bar Association of the first applicant's conduct, deemed profoundly unethical. The applicant was subsequently reprimanded.

15. On 9 September 2003 the parties were heard as to the first applicant's claim to become a plaintiff. On 7 October 2003 the first applicant was granted leave to become a plaintiff in the proceedings. However, on the respondents' appeal against the leave, the Budapest Court of Appeal quashed the order on 1 June 2004.

16. On 13 July 2004 the Budapest Regional Court declared interruption of the proceedings on the ground that the plaintiff had ceased to exist. On
30 May 2005 the court quashed this order finding that the second applicant was the legal successor. On 28 June 2005 the first applicant stated that he did not wish to become a party to the proceedings. However, on
23 February 2006 he stated that he nevertheless joined the proceedings.

17. On the same date the Budapest Regional Court delivered a judgment dismissing the applicants' action. On appeal, the Court of Appeal held a hearing on 5 December 2006 and delivered a judgment on
13 December 2006 upholding in essence the first-instance.

18. On 12 November 2007 the Supreme Court delivered a judgment dismissing the applicants' petition for review and upholding the judgment of the Budapest Court of Appeal.

THE LAW

19. The applicants complained that the length of the proceedings had been incompatible with the “reasonable time” requirement of Article 6 § 1 of the Convention.

20. The Government contested that argument. In regard to the first applicant, they noted that he had been party to the proceedings only between 23 February 2006 and 12 November 2007. Even if the period between
26 September 2002 and 28 June 2005 – that is, the period during which his status as plaintiff was disputed or undecided – was added, the proceedings in regard to him had not lasted longer than four years and five months. In any event, his reproachable conduct in that he had concealed the fact that he had acquired part of the claims in question as early as in 1996 rendered his application an abuse of the right of individual petition.

21. In respect of the second applicant, the Government submitted in particular that – while the case had initially not been particularly complex – the repeated extensions of the action as well as the uncertainty as to the issues of successions had made the legal questions arising in the case quite complicated. The second applicant's conduct had significantly contributed to the protraction of the proceedings: they had been intermitted between 17 October 1995 and 11 April 1996 at the joint request of the parties, causing a delay of six months. It had caused a further delay of one year between 10 November 1998 and 4 November 1999 by refusing timely to comply with the court's order to advance certain costs of translation. Moreover, a further two-year delay was caused by the concealment of the facts concerning the original plaintiff's succession from 27 September 2000 until at least 26 September 2002.

22. Concerning the first applicant, the Court considers that it is not necessary to examine whether or not his application amounted to an abuse of the right of individual petition since it is in any event inadmissible for the following reasons. The period to be taken into consideration in his context began at the earliest on 26 September 2002 – the date on which he stated his intention to enter the proceedings – and ended on 12 November 2007. It thus lasted less than five years and two months for three levels of jurisdiction. In the absence of any particular period of inactivity imputable to the authorities, the overall length of the proceedings in respect of the first applicant did not exceed a reasonable time for the purposes of Article 6 § 1 of the Convention. It follows that this part of the application is manifestly ill-founded within the meaning of Article 35 § 3 and must be rejected, pursuant to Articled 35 § 4 of the Convention.

23. In regard to the second applicant, the period to be taken into consideration began on 28 December 1994 and ended on 12 November 2007. The litigation thus lasted some twelve years and ten months. Of this time, altogether three years and six months – corresponding to the intermission of the proceedings, the belated advancing of translation costs and the succession dispute (see paragraphs 5, 8 and 10 to 13 above) – must be deducted as delay caused by the second applicant. However, the remaining period still exceeds nine years and four months for three levels of jurisdiction. In view of such lengthy proceedings, this complaint must be declared admissible.

24. The Court has frequently found violations of Article 6 § 1 of the Convention in cases raising issues similar to the one in the present application (see, among many other authorities, Frydlender v. France [GC], no. 30979/96, § 43, ECHR 2000-VII). Having examined all the material submitted to it, the Court considers that the Government have not put forward any fact or convincing argument capable of persuading it to reach a different conclusion in the present circumstances. Having regard to its case-law on the subject, the Court considers that the length of the proceedings was excessive and failed to meet the “reasonable time” requirement. There has accordingly been a breach of Article 6 § 1 in regard to the second applicant.

25. The second applicant further complained that the length of the proceedings complained of had infringed its right to the peaceful enjoyment of its possessions, as guaranteed by Article 1 of Protocol No. 1. The Court notes that this complaint is linked to the one examined above and must therefore likewise be declared admissible. Having regard to its finding under Article 6 § 1 (see paragraph 24 above), the Court considers that it is not necessary to examine whether, in this case, there has been a violation of Article 1 of Protocol No. 1 (see Zanghì v. Italy, judgment of 19 February 1991, Series A no. 194-C, p. 47, § 23).

26. The applicants also complained that the decisions given amounted to a violation of Articles 8 and 13 of the Convention and Article 1 of Protocol No. 1. The Court considers that the application concerns a civil-law dispute between private parties which was adjudicated by the courts in proceedings devoid of any appearance of arbitrariness. In these circumstances, it cannot be argued that there has been a deprivation of property by the State bringing Article 1 of Protocol No. 1 into play. Moreover, the applicant's submissions do not disclose any indication of a violation of the applicants' rights under Articles 8 or 13 of the Convention. It follows that this part of the application is manifestly ill-founded within the meaning of Article 35 § 3 and must be rejected, pursuant to Articled 35 § 4 of the Convention.

27. Relying on Article 41 of the Convention, the second applicant claimed 100,000 euros (EUR) in respect of non-pecuniary damage. The Government contested the claim. The Court considers that the second applicant must have sustained some non-pecuniary damage. Ruling on an equitable basis, it awards EUR 4,800 to the second applicant.

28. The second applicant also claimed EUR 5,000 for the costs and expenses incurred before the domestic courts the Court. The Government contested the claim. Regard being had to the documents in its possession and in the light of its case-law, the Court rejects the claim for costs and expenses in the domestic proceedings.

29. The Court considers it appropriate that the default interest 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 complaints concerning the excessive length of the proceedings in respect of the second applicant and the peaceful enjoyment of its possessions admissible and the remainder of the application inadmissible;

2. Holds that there has been a violation of Article 6 § 1 of the Convention in respect of the second applicant;

3. Holds that it is not necessary to examine the second applicant's complaint under Article 1 of Protocol No. 1;

4. Holds

(a) that the respondent State is to pay the second applicant, within three months, EUR 4,800 (four thousand eight hundred euros), plus any tax that may be chargeable, in respect of non-pecuniary damage, to be converted into Hungarian forints at the rate applicable at the date of settlement;

(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount 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 second applicant's claim for just satisfaction.

Done in English, and notified in writing on 27 July 2010, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

              Françoise Elens-PassosDragoljub Popović
Deputy RegistrarPresident

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