FOURTH SECTION
Application no. 12655/09
Angelina Nedyalkova DIMITROVA and Konstantin Konstantinov DIMITROV
against Bulgaria
lodged on 23 January 2009
STATEMENT OF FACTS
The applicants, Ms Angelina Nedyalkova Dimitrova and Mr Konstantin Konstantinov Dimitrov, are Bulgarian nationals, who were born in 1973 and 2004 respectively and live in Sofia. They are represented before the Court by Mr Y. Grozev, a lawyer practising in Sofia.
A. The circumstances of the case
The facts of the case, as submitted by the applicants, may be summarised as follows.
The applicants are the widow and the son of Mr Konstantin Dimitrov Dimitrov, who died in December 2003.
1. First proceedings under the CPA
In 2001 the Sofia regional public prosecutor’s office opened proceedings against the first applicant and her husband under Chapter Three of the Citizens’ Property Act (“the CPA”, see “Relevant domestic law and practice” below). In a decision of 23 August 2002 a prosecutor from that office discontinued the proceedings, finding, first, that for the period from 1990 to 1992 Mr Dimitrov’s expenses had exceeded his income, but that in 2002 he had paid in the difference to the State budget. Accordingly, there was no ground to pursue the proceedings for that period (section 45 of the CPA). The prosecutor analysed the income and the expenses of the first applicant and Mr Dimitrov for the period between 1993 and 1997, but did not make an express finding on whether she considered them lawful within the meaning of the CPA. Lastly, analysing the couple’s income and expenses for the period from 1997 to 2001, the prosecutor concluded that they were equivalent and that there were no grounds for bringing forfeiture proceedings under the CPA.
2. Second proceedings under the CPA
On an unspecified date the Sofia regional public prosecutor’s office opened new proceedings under Chapter Three of the CPA. In 2004 it introduced with the Sofia Regional Court an action against the two applicants, seeking the forfeiture of two flats, one in Varna and one in Sofia, a share in a plot of land in Sofia, a holiday house in the Borovets resort and a Toyota Land Cruiser car, acquired by the first applicant and her late husband with income received from 1990 to 1999, which was allegedly “non-work related” and thus “unlawful” within the meaning of section 34 of the CPA.
The Sofia Regional Court gave a judgment on 28 November 2006. It analysed in detail the income received by the first applicant and her husband for the period at issue, including from land farming (the first applicant and her family had developed a large-scale potato farming business), and the couple’s expenses. Due to the difficulties in making an assessment because of the high inflation in the period at issue, the court relied on expert conclusions, calculating all amounts discussed in United States dollars (USD). On the basis of these calculations, it concluded that the couple’s expenses exceeded their proved income by approximately USD 40,000, which, on the force of section 34 of the CPA, represented an “unlawful” income. Accordingly, allowing partially the action brought before it, the Sofia Regional Court ordered the forfeiture of property for that value, namely the flat in Varna, the share in a plot of land in Sofia and approximately one quarter share of the flat in Sofia.
Both parties lodged appeals.
On 17 March 2008 the second-instance Sofia Court of Appeal gave a judgment. It found that the applicants had not established all income considered proven and lawful by the Regional Court, in particular as concerns the family’s land farming business. In that respect the lower court had relied on witness testimony and an expert report calculating the possible profit. However, according to the Court of Appeal it was unacceptable to prove such income on the basis of similar evidence, in the absence of any documents such as invoices or land rent contracts. It considered unproven other income alleged by the applicants as well. Accordingly, it calculated that the expenses of the first applicant and her husband for the period at issue had exceeded their income by approximately USD 286,000. The Court of Appeal considered further that the properties for which the prosecution authorities sought forfeiture had been acquired with this “unlawful” income and accordingly ordered the forfeiture of the flats in Sofia and Varna and the share in a plot of land in Sofia. As to the remaining properties at issue, namely a holiday house in Borovets and a car, given that they had in the meantime been transferred to third parties, the Court of Appeal ordered the applicants to pay to the State their monetary value.
The applicants lodged a cassation appeal. However, in a decision of 28 July 2008 the Supreme Court of Cassation found the appeal inadmissible, considering that the case did not concern conflicting decisions of the national courts or an important question related to the development or the application of the national law, which were the admissibility grounds relied on by the applicants.
3. Other developments
In 2004, following the death of her husband, the relevant tax authorities carried out a probe into the first applicant’s income for the period from 1997 to 2002, with a view to calculating the income tax due. They found, in particular, that in 1997 the first applicant had realised income from land farming in the amount of 550,000 Bulgarian levs.
B. Relevant domestic law and practice
The Citizens’ Property Act (“the CPA”, Закон за собствеността на гражданите) was adopted in 1973. Many of its provisions were repealed in the beginning of the 1990s, but its Chapter Three, entitled “Forfeiture of non-work related income received by citizens”, remained in force until 2005.
The provisions of Chapter Three were not applicable to proceeds of crime, as sections 31(2) and 42(4) of the CPA provided that such assets were to be treated under the Criminal Code and the Code of Criminal Procedure.
By section 34 of the CPA, until proven otherwise, it was presumed that “unlawful” or “non-work related” income had been received where 1) the value of a person’s property manifestly exceeded the income lawfully received by him and the members of his household, or 2) the expenses incurred by a person and his household manifestly exceeded their lawful income. Any “unlawful” or “non-work related” income within the meaning above, or property acquired by means thereof, was to be forfeited, and the State’s claims in that regard could not lapse through prescription.
The “unlawful” or “non-work related” income within the meaning of the CPA was, in principle, to be established by a special regional commission, which was to submit its conclusions to the respective prosecution office. Where satisfied that the relevant conditions were fulfilled, the competent prosecutor was then to bring an action seeking forfeiture (sections 38, 41 and 42(1) of the CPA). Where a prosecutor was aware of the fact that a person had received “unlawful” or “non-work related” income, he could directly bring an action for forfeiture, without a proposal to that effect by a commission (section 42(3)).
Any preliminary inquiries under the CPA were to be discontinued where the person voluntarily declared to the authorities any “unlawful” or “non‑work related” income and paid it in, or the value of the properties acquired by means thereof, to the State budget (section 45).
After 1989 the courts have examined very few actions under Chapter Three of the CPA (see, for example, judgment of the Sofia Court of Appeal no. 103 of 20 January 2010, case no. 352/2006).
COMPLAINTS
The applicants complain under Articles 6 § 1 and 13 of the Convention and Article 1 of Protocol No. 1 that their properties were forfeited unfairly, on the basis of dated legislation, which had been adopted with a view to controlling private initiative during the Communist period and was no longer serving any legitimate aim after the transition to democracy and market economy. In addition, the applicants complain of the indefinite possibility under the CPA to seek forfeiture of “unlawful” or “non-work related” income and the unfettered discretion of the prosecution authorities to bring such proceedings and target individuals. They consider that the CPA’s provisions were unclear as to the conditions permitting forfeiture and the means of establishing “lawful” income, which had led to the courts making conflicting and ill-founded conclusions on the income received by the first applicant and her husband, most notably the one related to their farming activity.
QUESTIONS TO THE PARTIES
1. Was the forfeiture of the applicants’ property in the present case “lawful” for the purposes of Article 1 of Protocol No. 1? In particular, did the applicable legislation provide for guarantees against abuse and was it sufficiently precise on the conditions for forfeiture. In addition, was the forfeiture of the applicants’ property in the public interest and what were the legitimate aims pursued by the applicable legislation? Was the forfeiture of the applicants’ property otherwise in compliance with Article 1 of Protocol No. 1?
2. Did the applicants have at their disposal an effective domestic remedy for their complaints under Article 1 of Protocol No. 1, as required by Article 13 of the Convention?
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