GAICH v. BULGARIA

Communicated on 28 February 2019

FIFTH SECTION

Application no. 11340/12
Zhivka Dimitrova GAICH and Zoritsa Mirolyubova GAICH
against Bulgaria
lodged on 16 February 2012

STATEMENT OF FACTS

The applicants, Ms Zhivka Dimitrova Gaich and Ms Zoritsa Mirolyubova Gaich, are Bulgarian nationals who were born in 1968 and 1992 respectively and live in Dobrich.

A. The circumstances of the case

The facts of the case, as submitted by the applicants, may be summarised as follows.

1. The first applicant’s conviction

In a judgment of the Kavarna District Court of 20 January 2005, upheld by the Dobrich Regional Court on 10 November 2006, the first applicant was convicted of having appropriated a sum of money equalling about 20,000 euros (EUR) owned by the company she had been managing – an offence under Article 202 § 2 of the Criminal Code. The offence had been committed in January 2003. The applicant received a suspended one-year prison sentence.

2. Forfeiture proceedings

(a) Forfeiture application

Since the offence the first applicant had been convicted of fell within the scope of the Forfeiture of Proceeds of Crime Act 2005 (hereinafter “the 2005 Act”, see “Relevant domestic law and practice” below), in 2008 the Commission for Uncovering Proceeds of Crime (hereinafter “the Commission”) filed an application with the Dobrich Regional Court seeking the forfeiture of assets of the first applicant, her husband (who passed away in 2014) and their daughter – the second applicant.

The assets at issue were: a plot of land with a house on it in Kavarna bought by the first applicant and her husband in 1994; another plot of land in Kavarna bought in 1995; a flat and a garage in Dobrich acquired in 1994 and 1996 respectively; a car bought in 1993; sums of money received by the first applicant and her husband from the sale of other properties, initially acquired between 1992 and 1999; sums of money placed on bank accounts, including accounts owned by the second applicant. According to the Commission, the value of these assets totalled 2,138,805 Bulgarian levs (BGN), the equivalent of approximately EUR 1,094,000. Some of the immovable properties were the subject of injunctions, since third parties also had claims against the first applicant and her husband.

The forfeiture application was the result of checks and verifications by the Commissions on the income and expenses of the first applicant and her husband for the period between 1986 (when the first applicant had turned 18) and 2007.

(b) Judgment of the Dobrich Regional Court

In a judgment of 13 October 2009 the Dobrich Regional Court allowed the Commission’s application, ordering the forfeiture of all assets described above.

On the basis of the documents presented to it the domestic court established that the legal income of the first applicant and her husband during the period under examination had been the equivalent of 341.47 minimum monthly salaries. It refused to accept as such an income the sum of 200,000 German marks (DEM), which the first applicant’s husband, a Serbian national, claimed to have brought with him upon his arrival in Bulgaria in 1990, as this claim had not been supported by any written evidence (such as a customs declaration) and witness evidence was impermissible to prove such facts.

At the same time, during the period under examination the first applicant and her husband had acquired property for more than BGN 3,146,300 (approximately EUR 1,610,000). That amount was reached after the Dobrich Regional Court took into account the market values of the properties acquired by the defendants, and not the values indicated on the sale documents. The defendants’ expenses during the period under examination totalled thus the equivalent of 4,545.73 minimum monthly salaries.

Since no legal source of income had been shown to exist for the assets in respect of which forfeiture was being sought, they had to be considered proceeds of crime. In view of the presumption contained in section 4(1) of the 2005 Act, it was not necessary to establish a causal link between those assets and the offence the first applicant had been convicted of.

(c) Judgment of the Varna Court of Appeal and decision of the Supreme Court of Cassation

Upon appeal by the applicants and the first applicant’s husband, on 9 June 2010 the Varna Court of Appeal upheld the lower court’s judgment, affirming its conclusions.

Responding to an argument raised by the appellants that among the properties to be forfeited was the family’s home (the flat in Dobrich), the Varna Court of Appeal pointed out that the 2005 Act did not bar such forfeiture, in as much as it had been shown that the property at issue was the proceeds of crime.

The applicants and the first applicant’s husband lodged an appeal on points of law, which the Supreme Court of Cassation refused to admit for cassation review in a final decision of 16 August 2011.

(d) Subsequent developments

In September 2014 the applicants were moved out of the Dobrich flat where they lived and the property was put up for public sale.

B. Relevant domestic law and practice

1. The 2005 Act

The Forfeiture of Proceeds of Crime Act 2005 (Закон за отнемане в полза на държавата на имущество придобито от престъпна дейност, “the 2005 Act”) was enacted by Parliament in February 2005. In 2012 it was superseded by other legislation, with the proviso that all pending proceedings would continue to be governed by it.

Proceedings under the 2005 Act could be opened when it was established that a person charged with a relevant criminal offence had acquired assets of “considerable value” in respect of which a reasonable assumption could be made that they were the proceeds of crime (section 3(1)). “Considerable value” was defined as more than BGN 60,000 (approximately EUR 30,700). In practice, for the purpose of cross-time comparisons, that amount was also presented as the equivalent of 400 minimum monthly salaries. According to the Supreme Court of Cassation, that had to be the aggregate value of the assets, determined on the basis of their fair market value at the time of their acquisition (Решение № 89 от 29 януари 2010 г. по гр. д. № 717/2009 г., ВКС, III г. о.).

The offences that could trigger the opening of proceedings under the 2005 Act were enumerated in section 3(1).

Assets that could be forfeited under the 2005 Act were those that had been acquired by persons convicted of a criminal offence and in respect of which it could reasonably be assumed that they were the proceeds of crime, in as much as no legal source had been established (section 4(1)).

According to the constant practice of the domestic courts, even assets which were not subject to sequestration in ordinary enforcement proceedings, such as a person’s only dwelling, could be forfeited under the 2005 Act (Решение № 87 от 29.01.2010 г. на ВКС по гр. д. № 369/2009 г., III г. о., ГК; Определение № 919 от 15.07.2014 г. на ВКС по гр. д. № 851/2014 г., IV г. о., ГК; Решение № 15 от 12.02.2010 г. на ВтАС по в. гр. д. № 703/2009 г.).

The State’s right to forfeit an asset expired twenty-five years after it had been acquired (section 11).

The authority in charge of initiating and pursuing proceedings under the 2005 Act was the Commission for Uncovering Proceeds of Crime (“the Commission”). The forfeiture itself was to be ordered by the courts.

The remaining relevant provisions of the 2005 Act have been summarised in Nedyalkov and Others v. Bulgaria (dec.), no. 663/11, §§ 33‑61, 10 September 2013).

2. Case law of the domestic courts and Interpretative Decision No. 7 of 30 June 2014

Until 2014 the national courts were taking diverging views on the necessity under the 2005 Act to establish a causal link between the specific criminal activity for which the target had been convicted and the assets to be forfeited. Thus, in some cases the courts held that no causal link had to be proven, in as much as section 4(1) the 2005 Act established a presumption that all assets for which no legal source had been shown represented proceeds of crime (Решение № 671 от 9.11.2010 г. на ВКС по гр. д. № 875/2010 г., IV г. о.; Решение № 156 от 29.05.2013 г. на ВКС по гр. д. № 890/2012 г., IV г. о.). In other cases the courts required the establishment of a causal link, considering that, even where no lawful source of income had been shown to exist, this did not automatically mean that the assets at issue had been proceeds of crime (Решение № 607 от 29.10.2010 г. на ВКС по гр. д. № 1116/2009 г., IV г. о.; Решение № 209 от 26.07.2011 г. на ВКС по гр. д. № 1462/2010 г., III г. о.).

The matter was settled in a binding Interpretative Decision No. 7, given by the Supreme Court of Cassation on 30 June 2014 (Тълкувателно решение № 7/2014 г. на ВКС по т. д. № 7/2013 г., ОСГК), which endorsed the latter view. The Supreme Court of Cassation stated that the acquirement of assets by a person having committed an offence among those enumerated in section 3(1) of the 2005 Act could be directly or indirectly linked to proceeds of crime,

“but in all cases that link has to be established, or its existence must be presumable.”

The presumption at issue had to be “logically justified” and “based on the facts and circumstances”. The Supreme Court of Cassation held further that

“[t]he failure to establish a lawful source for an asset does not replace the justified presumption that it is linked to criminal activity, but merely absolves the Commission from the burden to prove such a link beyond doubt.”

Lastly, the Supreme Court of Cassation was of the view that the forfeiture of assets unlinked to proven criminal activity would amount to the imposition of a “penalty” without a conviction.

Subsequently, relying on this Interpretative Decision, the national courts dismissed forfeiture applications under the 2005 Act lodged by the Commission, holding that no causal link had been established between the assets for which forfeiture had been sought and the target’s criminal activity, notwithstanding the fact that no lawful source had been shown to exist for some of the latter’s revenues (Решение № 256 от 14.10.2014 г. на ОС Ловеч по гр. д. № 603/2011 г.; Решение № 79 от 22.05.2015 г. на АС Варна по в. гр. д. № 154/2015 г.; Решение № 194 от 5.11.2015 г. на АС Пловдив по в. гр. д. № 442/2015 г.).

C. Relevant international and European Union law

The relevant international and European Union law has been summarised in G.I.E.M. S.R.L. and Others v. Italy (merits) ([GC], nos. 1828/06 and 2 others, §§ 139-53, 28 June 2018).

COMPLAINTS

The applicants complain, relying on Article 6 § 1 of the Convention and Article 1 of Protocol No. 1, of the forfeiture of their property and the fairness of the proceedings which resulted in it. They point out in particular that: they lost properties of significant value; no causal link was shown to exist between the offence the first applicant had been convicted of, committed in 2003, and the forfeited assets, acquired mostly in 1992-95; they were required to prove income received many years earlier, which was very difficult in practice, and the national courts did not accept their claim to have received additional legal income, in particular the DEM 200,000 allegedly brought to Bulgaria by the first applicant’s husband; the burden to prove that their assets had been acquired with legal income was on them; property of the second applicant (a sum of money placed on a bank account) was forfeited, even though she had not committed any offence; the family lost their home.

QUESTIONS TO THE PARTIES

1. Was the forfeiture of the applicants’ assets, in proceedings under the Forfeiture of Proceeds of Crime Act 2005, in compliance with the requirements of Article 1 of Protocol No. 1? In particular, has it been sufficiently established that the assets at issue had been the proceeds of crime?

In that regard, the parties are invited to comment on the manners in which the domestic authorities calculated the respective persons’ revenues and expenses, having regard to the lengthy periods of time to be verified and the resulting risk of imprecision and uncertainty (see, for example, Dimitrovi v. Bulgaria, no. 12655/09, §§ 47‑49, 3 March 2015.

2. Could the forfeiture proceedings be considered fair for the purposes of Article 6 § 1 of the Convention?

3. Has there been a violation of the applicants’ right to respect for their home, contrary to Article 8 of the Convention? In particular, has the respondent State complied with its procedural obligations under that provision (see, for example, Ivanova and Cherkezov v. Bulgaria, no. 46577/15, §§ 53-56, 21 April 2016)?

The parties are requested to provide copies of the judgments of the Kavarna District Court of 20 January 2005 and the Dobrich Regional Court of 10 November 2006, convicting the first applicant of a criminal offence.

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