FIRST SECTION
DECISION
Application no. 70286/12
Daria Wanda FALKOWSKA
against Poland
The European Court of Human Rights (First Section), sitting on 25 May 2021 as a Committee composed of:
Erik Wennerström, President,
Krzysztof Wojtyczek,
Lorraine Schembri Orland, judges,
and Attila Teplán, Acting Deputy Section Registrar,
Having regard to the above application lodged on 17 October 2012,
Having deliberated, decides as follows:
THE FACTS
1. The applicant, Ms Daria Wanda Falkowska, is a Polish national who was born in 1962 and lives in Bytom. She was represented before the Court by Mr R. Broll, a lawyer practising in Chorzów.
2. The Polish Government (“the Government”) were represented by their Agents, Ms J. Chrzanowska and, ultimately, Mr J. Sobczak, of the Ministry of Foreign Affairs.The circumstances of the case
3. The facts of the case, as submitted by the parties, may be summarised as follows.The applicant’s real-estate transactions
4. The applicant is a pensioner. She lived for many years as a tenant in a flat measuring 142 square metres, which was owned by the Bytom Municipality (Gmina).
5. In March 2008 the applicant bought the flat with the statutory 95% discount, paying 5,535 Polish zlotys (PLN) (approximately 1,330 euros (EUR)). The sale contract contained a clause stating that in the event that the flat was sold and the funds from the sale were not used for housing purposes within the meaning of section 68 of the Law of 21 August 1997 on Land Administration (Ustawa o gospodarce nieruchomościami, “the 1997 Law”), the applicant would have to repay the amount of the discount with adjustments.
6. In July 2008 the applicant sold the flat for PLN 200,000 (EUR 47,960), thus making a gross profit of PLN 194,465 (200,000 – 5,535 = 194,465).
7. In January 2009 she bought a smaller flat (measuring 34 square metres), for which she paid PLN 90,000 (EUR 21,580), using part of the funds earned from the sale of her discounted flat. Her gross profit at that point was therefore of PLN 104,465 (194,465 – 90,000 = 104,465).
8. Prior to the transactions described above, the applicant asked the Bytom Municipality Office (Urząd Miejski) whether the official interpretation of the 1997 Law required that all or only part of the funds obtained from the sale of a discounted flat should be used for housing purposes in order to avoid the repayment obligation.
9. In their reply, sent on 9 January 2008, the authorities reproduced the wording of section 68 of the 1997 Law, without elaborating on the question raised by the applicant.Proceedings for reimbursement of the discount
10. On 2 April 2009 the mayor of Bytom (Prezydent) ordered the applicant to repay PLN 108,578 (EUR 24,730), which corresponded to the amount of the 95% discount with some adjustments. The payment was to be made by 8 May 2009. The mayor observed that the applicable law was clear in its requirement that the entire amount obtained through the sale of a discounted flat should be used for housing purposes or else the repayment obligation arose. The applicant did not comply with the order; and later that year, the Municipality sued her for payment of PLN 110,995 (EUR 28,000).
11. On 22 April 2010 the Gliwice Regional Court (Sąd Okręgowy) found in the applicant’s favour and dismissed the Municipality’s action.
12. On 10 November 2010 the Katowice Court of Appeal (Sąd Apelacyjny) reversed the first-instance judgment and ordered the applicant to pay back the amount of the 95% discount, calculated at PLN 105,180 (EUR 23,960), with interest payable as from 8 May 2009. The appellate court held that the applicable law should be interpreted as making the discount dependent on using all the funds obtained from the sale of a discounted flat for housing purposes. Consequently, because the applicant had only used a portion of the funds for such purposes, she was under a statutory obligation to repay the discount in full. Keeping the money would constitute unjust enrichment on the applicant’s part.
13. On 14 December 2011 the Supreme Court refused to entertain a cassation appeal by the applicant. It observed that the appellate court had exhaustively analysed the issue of the interpretation of section 68 of the 1997 Law. It also noted that the applicant’s case did not warrant examination at the level of the Supreme Court because she had not sustained any losses and, in fact made a profit of PLN 110,000 (EUR 25,580). The decision was served on the applicant on 8 May 2012.Enforcement of the debt
14. The applicant failed to repay the money to the Municipality. Consequently, her debt was officially registered and a procedure for enforcement of the debt by a court bailiff was started against her. The applicant submitted, without producing any supporting documents, that the sum of PLN 10,154.18 (EUR 2,540) had been recovered by the bailiff.
15. Documents submitted by the Government indicate that, as a result of friendly-settlement negotiations which began in August 2013, on 20 July 2015 the applicant repaid PLN 57,849 (EUR 14,500), which corresponded to 55% of her original debt. She also paid court expenses in the amount of PLN 4,864 (EUR 1,200). On 21 July 2015 the mayor of Bytom confirmed the friendly settlement and waived the remainder of the applicant’s debt.
16. The applicant stated, without producing any supporting documents, that she had paid the Bytom Municipality a total of PLN 72,867.82 (EUR 18,220).
17. The Court gave notice of the application to the Government on 31 August 2017.Relevant domestic law and practice
18. Under section 68 of the 1997 Law, as amended on 24 August 2007 and applicable at the material time, if the buyer of a discounted flat sold the property within five years, then the funds obtained had to be spent within twelve months for housing purposes, otherwise he or she had to repay the amount of the discount.
19. On 26 May 2011 the Warsaw Court of Appeal ruled in a case in which the plaintiff, in similar circumstances to the applicant, had sold a flat she had bought at a discount from the Bytom Municipality in January 2008. The plaintiff had used a portion of the funds to buy a new, smaller flat. The appellate court held that section 68 of the 1997 Law was not concerned with the actual value of the transaction entered into by the owner of a discounted flat. Consequently, the obligation to repay the discount did not arise if at least some of the funds were used to buy a new flat. As a result, the domestic court ruled in the plaintiff’s favour and did not order her to repay the discount she had obtained.
20. On 26 January 2012 the Supreme Court delivered a judgment (case no. III CZP 87/11) in which it held that a person who sold a discounted flat had to repay the discount in proportion to the sum not used for housing purposes. That position was confirmed in another Supreme Court judgment, delivered on 16 March 2012 (case no. IV CSK 356/11).
21. On 12 June 2015 the 1997 Law was amended (effective 29 August 2015) to the effect that section 68 provided explicitly that if only part of the funds obtained from the sale of a discounted property were spent on the purchase of another real property, the obligation to repay the discount was limited to the amount which was not used in the transaction.
COMPLAINT
22. The applicant complained under Article 1 of Protocol No. 1 that the obligation to repay the adjusted discount constituted a disproportionate financial sanction and was based on an ambiguous law and its erroneous interpretation by the domestic courts.
THE LAW
23. The applicant submitted that the obligation for her to repay the discount amounted to a violation of Article 1 of Protocol No. 1, which, in so far as relevant, 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 ...”
24. The Government raised two preliminary objections: firstly, that there had been the abuse of the right of individual petition, and secondly, that the applicant had lost her victim status.
25. They argued that the applicant had deliberately withheld information about the friendly-settlement negotiations with the Municipality which she and her lawyer had embarked on in August 2013 and which had been successfully concluded in July 2015, that is, before the Court had given notice of the present application. As a result of that friendly settlement, the applicant had ended up paying only 55% of her original debt. Moreover, the Government submitted that during the negotiations leading up to the friendly settlement in question, the applicant had agreed to waive any outstanding claims against the Bytom Municipality which might arise from the facts of the case. The Government concluded that the facts omitted by the applicant and her lawyer were fundamental for the case at hand and that concealing them had been aimed at misleading the Court.
26. The Government also stressed that the above-mentioned friendly settlement had been reached on conditions proposed and fully adhered to by the applicant. That fact deprived the applicant of victim status within the meaning of Article 34 of the Convention.
27. In the alternative, the Government also argued that the application was manifestly ill-founded. They essentially submitted that the interference with the applicant’s property rights had been lawful and proportionate within the meaning of Article 1 of Protocol No. 1.
28. The applicant submitted in response that the friendly settlement which she had concluded with the Bytom Municipality did not concern the substance of her application. She reiterated that her complaint under Article 1 of Protocol No. 1 related to the fact that a sanction in the amount of PLN 105,180 had been imposed on her and not to how that sanction had ultimately been enforced. In her view, the friendly settlement could merely affect the amount to which she might be entitled by way of just satisfaction. The applicant stated that she had never intended to mislead the Court. The friendly-settlement procedure had started after she had lodged her application with the Court.
29. The applicant also argued that she had not had any other choice but to make an offer to settle her case, as the procedure for enforcement of her debt by a court bailiff had already been started and her flat had been at risk of being auctioned. Overall, she was still a victim because she had sustained a material loss in the amount of PLN 72,867.82.
30. Lastly, the applicant argued that a violation should be found because the interference with her possessions had been unlawful. The relevant legal provision had been ambiguous and that at the material time there had been divergence in the domestic courts’ practice. In the applicant’s view, imposing sanctions only on buyers of cheaper and more modest housing but not on the buyers of more expensive or more luxurious property was completely incomprehensible, unjust and irrational.
31. The Court does not find it necessary to examine the Government’s preliminary objections on the abuse of the right of individual petition or the loss of victim status because this complaint is in any event inadmissible for the following reasons.
32. The Court reiterates, firstly, that Article 1 of Protocol No. 1, which guarantees the right to the protection of one’s possessions, contains three distinct rules: “The first rule, set out in the first sentence of the first paragraph, is of a general nature and enunciates the principle of the peaceful enjoyment of property; the second rule, contained in the second sentence of the first paragraph, covers deprivation of possessions and subjects it to certain conditions; the third rule, stated in the second paragraph, recognises that the Contracting States are entitled, amongst other things, to control the use of property in accordance with the general interest ...” (see, among many other authorities, Anheuser-Busch Inc. v. Portugal [GC], no. 73049/01, §62, ECHR 2007-I).
33. Any interference with a right of property can only be justified if it serves a legitimate public (or general) interest. The Court reiterates that, because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to decide what is “in the public interest”. Under the system of protection established by the Convention, it is thus for the national authorities to make the initial assessment as to the existence of a problem of public concern warranting measures interfering with the peaceful enjoyment of possessions (see Bugajny v. Poland, no. 22541/05, § 62, 6 November 2007, with further references).
34. Another condition for an interference to be deemed compatible with Article 1 of Protocol No. 1 is that it should be lawful. The rule of law, one of the fundamental principles of a democratic society, is inherent in all the Articles of the Convention. However, the principle of lawfulness also presupposes that the applicable provisions of domestic law be sufficiently accessible, precise and foreseeable in their application. It is in the first place for the domestic authorities, notably the courts, to interpret and apply domestic law (ibid., §§ 64-65, with further references).
35. The Court has already held that divergences in case-law are an inherent consequence of any judicial system which is based on a network of trial and appeal courts with authority over the area of their territorial jurisdiction, and that the role of a supreme court is precisely to resolve conflicts between decisions of the courts below (see Zielinski and Pradal and Gonzalez and Others v. France [GC], nos. 24846/94 and 9 others, § 59, ECHR 1999-VII, and Plechanow v. Poland, no. 22279/04, § 107, 7 July 2009).
36. Lastly, the Court must examine whether the interference with the applicant’s right to the peaceful enjoyment of his or her possessions struck the requisite fair balance between the demands of the general interest of the public and the requirements of the protection of the individual’s fundamental rights, or whether it imposed a disproportionate and excessive burden on him or her (see Bugajny, cited above, § 67, with further references). Finding it natural that the margin of appreciation available to the legislature in implementing social and economic policies should be a wide one, the Court has on many occasions declared that it will respect the legislature’s judgment as to what is in the “public” or “general” interest unless that judgment is manifestly without reasonable foundation (see Immobiliare Saffi v. Italy [GC], no. 22774/93, § 49, ECHR 1999-V, and, mutatis mutandis, Broniowski v. Poland [GC], no. 31443/96, § 149, ECHR 2004‑V).
37. Turning to the present case, the Court observes that at the material time, the applicable law was divergently interpreted by domestic courts in circumstances, such as those in the present case, where the owner of a discounted flat sold it and used only part of the funds from the sale to buy a cheaper flat. Some courts ruled that the obligation to repay the discount did not arise if at least some of the funds had been used to buy a new flat. Others required repayment of the discount unless all the funds had been used for the purchase of a new flat.
38. The judgments delivered in the applicant’s case, ordering her to repay the discount, were in line with the latter strand of that divergent case‑law.
39. In 2012, as a result of the Supreme Court’s rulings of 26 January and 16 March 2012, a third approach became a uniform judicial practice: if a cheaper flat had been purchased, the discount recipient had to repay the discount but only in the amount that had not been used in the transaction (see paragraph 20 above). Subsequently, more precision as to such proportionate adjustment of the discount to be repaid was provided by the 2015 amendment to the 1997 Law (see paragraph 21 above).
40. The Court finds that, because at the time when the applicant’s case was examined by the domestic courts, no uniform practice existed among lower courts to interpret the provision in question in the manner which was more favourable to owners in the applicant’s position, the deprivation of the applicant’s possession must be perceived as having been in accordance with the law.
41. As to the proportionality of that interference, the Court notes that the legitimate aim of section 68 of the 1997 Law was to improve the material living conditions of city tenants while not allowing them to make an immediate profit at the expense of the State budget.
42. Due consideration must be given to the fact that, under the law, the conditions pertaining to the keeping of the discount applied only temporarily. Five years after the initial transaction, an owner was able to sell the discounted property and make free use of any profit so acquired.
43. In the present case, the applicant sold the discounted property and purchased a smaller property prior to the expiry of the statutory five year‑period (see paragraphs 6-7 above), as a result of which the domestic court ordered the applicant to repay the sum of PLN 105,180 to the Municipality. This amount represented the 95% discount originally granted to the applicant. Incidentally, the amount in question also, almost perfectly, corresponded to the difference between the gross profit that the applicant had made from the sale of her discounted flat (PLN 194,465, see paragraph 6 in fine above) and the price she paid for her new, smaller flat (PLN 90,000, see paragraph 7 in fine above). It follows that, in the circumstances of the case, the original 95% discount claimed back from the applicant was, in fact, proportionate to the value of the applicant’s housing investment.
44. After it had given notice of the present application to the Government, the Court was informed that a friendly settlement had ultimately been concluded between the parties. As a result, the applicant had repaid to the Municipality a total of PLN 62,713 (see paragraph 15 above). According to the applicant, the bailiff had recovered a further sum of PLN 10,154 (see paragraphs 14 and 16 above). The remainder of the applicant’s debt had been waived.
45. It follows that the applicant was ultimately left with her new flat, which was worth PLN 90,000. She also retained a certain amount that corresponded to the difference between the profit she had made from the sale of her discounted flat and the refund that she had ultimately had to pay. According to the Government’s submission, the applicant was to retain PLN 41,752. In light of the applicant’s version, she was left with PLN 31,598 (see paragraphs, 15, 16 and 44 above). Whether the amount in question had, actually, been saved by the applicant is beside the point. The fact of the matter remains that she has not sustained any material loss.
46. The Court reiterates that, as the law stood at the material time, the applicant could not legitimately claim that, despite the wording of section 68, the obligation to repay the discount did not arise if at least some of the funds were used to buy a new flat (see paragraph 40 above). The fact that the applicant sought advice from the Municipality Office prior to the real‑estate transactions in question (see paragraph 8 above) is indicative of her doubts in that regard. Having received an unsatisfactory reply (see paragraph 9 above), the applicant nevertheless took the risk of going through with the transactions in question. Her decision had no support in the domestic courts’ case-law. The practice of the lower courts in this respect was incidental, given that no authoritative case-law of the Supreme Court existed until 2012. Indeed, the approach eventually taken by the Supreme Court went in the opposite direction, since it held that a person who sold a discounted flat had to repay the discount in proportion to the sum not used for housing purposes.
47. In the present case, the discount which was claimed back by the Municipality did, in fact, correspond to the sum not used by the applicant for housing purposes, and the amount she actually repaid (whether PLN 62,713 or PLN 72,867.82) was a portion of that sum.
48. The Court has already recognised that housing plays a central role in the welfare and economic policies of modern societies and that a State enjoys a wide discretion in this sphere (see Immobiliare Saffi, cited above, § 49). In the Court’s view, in the present case, the State did not commit a manifest error of judgment in regulating the transition from the socialist system of protected tenancies to private ownership of flats.
49. In view of these considerations, the Court finds that the domestic authorities struck a fair balance between the general interest of the community and the applicant’s individual interest, without placing an excessive burden on her.
50. Accordingly, the application is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Done in English and notified in writing on 17 June 2021.
{signature_p_2}
Attila TeplánErik Wennerström
Acting Deputy RegistrarPresident
Full & Egal Universal Law Academy