AS TO THE ADMISSIBILITY OF
Application No. 19087/91
by Olav Ómar KRISTJÁNSSON
Gudmundur THÓRDARSON and
THYSK-ÍSLENSKA hf.
against Iceland
The European Commission of Human Rights (Second Chamber) sitting
in private on 1 September 1993, the following members being present:
MM. S. TRECHSEL, President
H. DANELIUS
G. JÖRUNDSSON
J.-C. SOYER
Mrs. G.H. THUNE
MM. F. MARTINEZ
L. LOUCAIDES
J.-C. GEUS
M.A. NOWICKI
I. CABRAL BARRETO
Mr. K. ROGGE, Secretary to the Chamber
Having regard to Article 25 of the Convention for the Protection
of Human Rights and Fundamental Freedoms;
Having regard to the application introduced on 25 October 1991
by Olav Ómar Kristjánsson, Gudmundur Thórdarson and Thysk-Íslenska hf.
against Iceland and registered on 18 November 1991 under file No.
19087/91;
Having regard to the report provided for in Rule 47 of the Rules
of Procedure of the Commission;
Having deliberated;
Decides as follows:
THE FACTS
The facts of the case, as submitted by the applicants, may be
summarised as follows.
The first and second applicants are Icelandic citizens, born in
1948 and 1945 respectively. They reside at Reykjavík. The first
applicant is the director of, and major shareholder in, the third
applicant which is a limited company with is headquarters in Reykjavík.
The second applicant was the company's comptroller until 1986. Before
the Commission the applicants are represented by Mr. Jón Steinar
Gunnlaugsson, a lawyer practising in Reykjavík.
In November 1985 the tax authorities commenced an investigation
relating to the tax declarations submitted by the third applicant. A
certified accountant was asked to examine the matter and submitted his
reports in January 1986. It appears that certain negotiations commenced
between the tax authorities and the applicants concerning the reports.
It does not appear, however, that these negotiations solved the problem
for which reason the Directorate of Internal Revenue (Ríkisskattstjóri)
proceeded with its investigations and, on 22 April 1986, decided that
the third applicant should pay a total of 6,451,503 ISK in reassessed
additional sales tax for the years 1981-1984. On 29 April 1986 the
Directorate furthermore decided that the third applicant's income tax
for the tax year 1985 should be reassessed from 6,007,433 ISK to
50,577,954 ISK and its net value tax from 502,353 ISK to 1,538,723 ISK.
The third applicant appealed against these decisions to the
Director of the Internal Revenue who, however, upheld them by two
decisions dated 30 October 1987.
The third applicant lodged a further appeal with the Internal
Revenue Board (Ríkisskattanefnd) which is the highest administrative
authority empowered to decide in matters of taxation.
In two decisions dated 17 April 1989 the Internal Revenue Board
dismissed both cases. In the case concerning taxes for the tax year
1985 the Board stated inter alia :
(translation)
"It has been established, and is actually recognised by the
applicant, that the original tax return for the year 1985 as well
as the returns for the preceding years were incomplete in that
the attached annual accounts lacked sufficient accounting
support. Thus, assessment of taxes for the year 1985, and for the
previous assessment years for which the applicant requests
relief, was unsupported by adequate tax return documents. In the
opinion of the Board the applicant has not remedied these defects
or has remedied them in such a way as to make it possible, on
appeal, to deal with the requests on their merits.
It is clear that the Director of Internal Revenue reassessed the
applicant's taxes for 1985 in accordance with the authorisation
in Section 101, subsection 3, of Act no. 75/1981 concerning Tax
on Income and Property, solely on the basis of the applicant's
new tax return for 1985 as there is no indication that the
Director possessed other evidence in the case at that time. The
Director should properly have requested an investigation by the
Director of Tax Investigation of the applicant's new return for
1985 before proceeding to reassess the taxes, ... or called for
a report on the investigation performed by the department of
investigations .... This was especially important in view of the
fact that the applicant's accounts had not been audited by a
certified accountant and of the statement in a letter from the
applicant's board of directors to the effect that the accounts
for the operating year 1984 and previous operating years were
incomplete. Also, the new return and annual accounts obviously
lacked the necessary foundation for acceptability.
With regard to the above, neither the requests of the applicant
nor those of the Director of Internal Revenue can be granted. The
case must be dismissed on account of inadequate preparation."
In the case concerning the additional sales tax for the years
1981-1984 the Board stated :
(translation)
"An appeal is made against a reassessment made by the
Director of Internal Revenue of sales tax relating to the
operating years 1981, 1982, 1983 and 1984.
With reference to the (above) decision of the Internal
Revenue Board ... the appeal is dismissed."
The parties disagreed on how to interpret the above decisions and
as the tax authorities considered that they did not affect the validity
of their previous decisions from 1986 and 1987, they now resumed their
efforts to collect the taxes due. On 14 September 1989 the Reykjavík
Magistrate's Court (Fógetaréttur Reykjavíkur) granted the authorities'
request for distress to be levied on the third applicant's goods for
the non-payment of taxes. This decision was subsequently upheld by the
Supreme Court (Hæstírettur) on 21 June 1991.
In the meantime the above tax irregularities had been brought to
the attention of the State Criminal Investigation Police. Following the
investigations made the public prosecutor served an indictment of
29 December 1989 on the first and second applicants for having made
wrongful tax declarations, thereby evading taxes on the third
applicant's income and net value on a large scale.
The indictment, which was the object of dispute between the
parties, read as follows :
(translation)
"I. Violations of the Act concerning Tax on Income and Property
By a tax return for Thysk-Íslenska Ltd., signed on the company's
behalf by the defendants Ómar Kristjánsson and Gudmundur
Thórdarson and received by the Director of Internal Revenue on
2 July 1985, they made declarations for taxation purposes for the
income year 1984. The return was accompanied by an annual
financial statement for the said year and various other documents
commonly accompanying tax returns. Taxes were assessed on the
unchanged tax bases as declared in the return. In November 1985
the department of investigation of the Directorate of Internal
Revenue commenced an investigation of the company's tax
declarations and accounts, which brought to light large scale
evasion in respect of the declaration of revenues and assets in
the tax return of 2 July 1985, as well as accounting
irregularities. The investigation subsequently continued with the
assistance of a certified auditor who, on 6 January 1986,
delivered a statement of the company's revenues and expenses in
1984 and its assets and liabilities at the end of that year. The
statement showed evasion on a vast scale. This statement was
delivered to the defendants immediately when it became available.
The matter having progressed this far, taxes were to be
reassessed. In these circumstances the board of Thysk-Íslenska
Ltd. retained a certified auditor to review or audit the
available books and records and prepare a new annual financial
statement, which the board subsequently, on 12 April 1986,
delivered to the Directorate of Internal Revenue with a tax
return, requesting that taxes be reassessed on the basis of these
documents. This reassessment of the company's income and net
value taxes led to an increase amounting to 45,606,891 ISK.
According to the profit and loss accounts, profit before income
tax and net value tax amounted to 63,569,386 ISK but the
corresponding revenues according to the earlier return amounted
to 19,632,135 ISK and the balance, i.e. understated income, to
43,937,251 ISK. In addition to this the statement showed an
'unexplained increase in assets', 45,502,296 ISK, and
construction costs at Lynghals 10 entered as expense, 2,231,917
ISK, all as further explained later. After municipal business
expense tax had been corrected the difference between the profit
and loss accounts is described as follows :
A. Sales tax understated ISK (135,967)
Commissions understated - 641,118
Cost of goods overstated - 47,214,556
Payroll overstated - 47,809
Other operating expenses understated - (447,380)
Municipal business expense tax overstated - 611,580
Depreciation understated - (117,770)
Interest revenues overstated - (27,191)
Interest expenses, indexation et al. overstated - 292,070
Reduction of inventory understated - (3,402,020)
Reduction of accounts receivable understated - (745,394)
--------------------
Undeclared according to profit and loss accountsISK43,931,411
--------------------
B. Cost of construction of Lynghals 10 entered as
expense, - undeclared income ISK 2,231,917
--------------------
C. 'Unexplained increase in assets' is indicated by
the following according to the balance sheet at
31 December 1984 accompanying return dated 12 April
1986 (item 20)
1. Drafts receivable understated ISK 8,702,404
2. Accounts receivable understated - 6,910,183
3. Drafts payable overstated - 8,239,312
4. Debts unpaid at the end of year owing to goods
purchases, overstated - 23,296,139
5. Cash and bank accounts understated - 1,488,070
6. The tax collection office, savings coupons, etc.
understated - 117,669
7. Share ownership understated - 105,000
--------------------
ISK 48,858,777
--------------------
The following is subtracted :
8. Loan from the National Bank of Iceland,
Hypothecation Department, understated ISK (207,000)
9. Balance on time deposit account, understated -(187,751)
10. Sales in 1984, understated - (1,188,143)
11. Debt due the Cooperative Bank Ltd., understated -(468,449)
12. Debt due the same, understated - (1,083,498)
13. Debt due the Fisheries Bank, understated - (166,579)
14. Debt due the City of Reykjavík, understated - (37,061)
--------------------
'Unexplained increase in assets', correctionsISK 45,502,296
--------------------
Undeclared income according to above (A - C)ISK 91,665,624
--------------------
D. The following is subtracted :
Sales tax in accordance with decision of 22 April
1986, with additions to 31 December 1984 ISK (4,475,353)
--------------------
Undeclared income ISK 87,190,271
Reserve contribution increased to 25% - (18,852,749)
Increase of income tax base ISK 68,337,522
Tax rate 51%
--------------------
Income tax evaded ISK 34,852,137
--------------------
E. Evaded net value tax at end of 1984 1.2% of
ISK 84,958,354 (87,190,271 - 2,231,917) ISK 1,019,499
--------------------
Evaded income tax and net value tax ISK 35,871,636
--------------------
F. The computed difference in income and net value
taxes if the undeclared income, ISK 87,190,271
is distributed over the years 1981-1984 to
conform closely to each year's operating revenues,
with price level adjustment under Section 53 of the
Income Tax Act, no. 75/1981, cf. Act no. 8/1984,
reserve contributions, municipal business expense
tax and taxes due at end of each year taken into
account ISK 2,788,300
--------------------
Evaded income tax and value tax ISK 33,083,336
--------------------
The above evasion of income and net value taxes is considered
to violate Section 107, subsections 1 and 6, of Act no. 75/1981
concerning Tax on Income and Property.
II. Accounting Offences
The defendants are furthermore charged with having
misrepresented the following for purposes of deception in the
annual financial statement for 1984 and for neglect and disorder
in respect of the fundamental aspects of the keeping of accounts
for that year, and called to responsibility for the records and
the preparation of the financial statement in general falling
far short of meeting the requirements of the generally accepted
standards for keeping of business records and for end-of period
accounting procedures.
1. For having wrongfully, under the heading 'Long Term
Liabilities' in the annual statement, listed a debt to the
Cooperative Bank of Iceland Ltd. in the amount of 15,000,000
ISK, whereas no debt to the bank corresponding to this term in
fact existed.
2. For having wrongfully, in the same manner as described
under (1) above, listed a debt to the National Bank in the
amount of 22,922,100 ISK.
3. For having wrongfully stated the assets item 'Accounts
Receivable' in the balance sheet too low by an amount of up to
8,510,184 ISK.
4. For having wrongfully stated the assets item 'Drafts
Receivable' in the balance sheet too low by an amount of up to
6,397,684 ISK.
5. For having wrongfully, under the heading 'Various
Operating Expenses Unpaid' in the balance sheet, stated unpaid
goods purchases in the amount of 7,758,691 ISK, whereas no such
liability item in fact existed. The above offences are
considered to violate Section 158 of the General Penal Code no.
19/1940.
6. For having neglected to take stock at the end of 1983 and
at the end of 1984 in the manner prescribed by Section 14 of Act
no. 51/1968 concerning Business Records, or to preserve a
registration of inventory which may have been prepared in
accordance with Section 16 of that Act.
7. For having neglected to have Customers' Account (a) under
the special sales, inventory and customer accounting system
compared with and balanced to the corresponding compound
accounts (nos. 12000 and 12100) ever since accounting by
computer was adopted at the beginning of 1983, thus causing a
great difference to be formed between the accounts; this being
in contravention of the provisions of Section 4, subsection 1,
of Act no. 51/1968, and Section 1(4) of Regulation no. 417/1982.
8. For having neglected to balance the debit and credit
entries of the financial accounts, causing a difference of
10,328,549.54 ISK according to a transcript dated 21 February
1985, and of 5,616,625.13 ISK according to a transcript dated
29 November 1985, this being in contravention of Section 3,
subsection 1, of Act no. 51/1968 concerning Business Records.
9. For having neglected, when the annual financial statement
was prepared, to correct the relevant accounts (journal
accounts) and to check their conformity with the annual
statement, and for having parted with documents (work notes)
supporting these final and transfer entries. Thereby the
provisions of Section 11, subsections 2 and 3, and Sections 15
and 16 of Act no. 51/1968 covering Business Records, were
violated.
10. For having neglected to record goods sold on credit in
voucher books or on separate voucher forms consecutively
numbered in advance as provided for in Section 13, subsection
2, of Act no. 51/1968 concerning Business Records and Section
7 of Regulation no. 417/1982.
The above offences under nos. 6-10 incl. are considered to be
in violation of Section 262 of the General Penal Code, no.
19/1940, cf. Section 25 of Act no. 51/1962 concerning Business
records."
The case was filed with the Reykjavík Criminal Court. The
applicants immediately requested that the case be dismissed arguing
that the above indictment lacked the clarity prescribed by law, was
seriously faulty and based on an inadequate investigation.
On 5 March 1990 the Criminal Court rejected the request for
dismissal, a decision which was upheld by the Supreme Court on 16 March
1990. In its decision the Supreme Court stated inter alia :
(translation)
"The part played by each defendant in the acts concerned, and
their connections to Thysk-Íslenska Ltd., could have been
described in better detail in the indictment. But the charges
are explained, and the indictment is based on the defendants'
joint liability for those acts.
In describing the alleged criminal acts the indictment refers
to tax investigations and tax returns. This may be difficult to
avoid in a case of this nature, and is not to be criticised.
It is clear that the charges in the indictment are based on an
investigation performed by the department of investigations of
the Directorate of Internal Revenue and the State Criminal
Investigation Police, and the scale of the evasion of income and
net value taxes is based on a comparison between two tax returns
of Thysk-Íslenska Ltd. and two annual financial statements for
the year 1984 which accompanied them. The defence counsel have
various observations to make with regard to the substance of
this evidence.
Given the status of this case at the time the indictment was
issued the public prosecutor was, under Section 115 of Act no.
74/1974, in his right to do so. It is not to be decided here how
the procedure in the Criminal Court is to be conducted, but it
is clear that in the course of that procedure the defence
counsel can bring forth all the observations they have to make
in criticism of the material aspects of the evidence.
In accordance with the above and in other respects concerning
the reasons for the decision under appeal, the conclusion of the
Criminal Court shall stand."
Accordingly, the case continued in the Criminal Court where a
hearing was held on 5 December 1990. The first and second applicants
were there, both represented by counsel, and they had the opportunity
to address the court and to submit what in their opinion was of
relevance to the outcome of the case. The applicants stressed in
particular that proof was lacking in respect of the alleged tax evasion
related to the income year 1984. They maintained that if tax evasion
had taken place, this related to the previous years. However, no
investigations had been conducted of the tax returns of the previous
years and therefore no evidence was offered as to what related to the
income year 1984, the year which in their opinion was the subject of
the indictment.
The Court heard twelve witnesses and in addition documentary
evidence was submitted. On the basis of an evaluation of this evidence
the Criminal Court found the applicants guilty inter alia of tax
evasion in respect of which the Court in its 120-page judgment
concluded :
(translation)
"The court concludes, following an evaluation of the above
reassessed annual accounts for the years 1981 to 1984, both
years included, that Thysk-Íslenska Ltd. with its tax return as
prepared by the company, including its earlier annual accounts
for 1984, did evade payment of income tax in an amount not lower
than 24,223,128 ISK and of net value tax and extra net value tax
in an amount not lower than 1,829,253 ISK or a total of
26,161,381 ISK.
...
As described it has been established that the taxes evaded by
Thysk-Íslenska Ltd. on account of the operating year 1984
amounted to a minimum of 26,161,381 ISK. It is clear that this
figure is also due to accumulated revenue during 1981 - 1984,
both years included, which, as explained above, had not been
declared previously.
...
At the time to which this case relates the defendant Ómar
Kristjánsson was chairman of the board of Thysk-Íslenska Ltd.,
its managing director and principal owner. During the same
period the defendant Gudmundur Thórdarson was a member of the
board, and responsible for the company's accounts and financial
statements. Both defendants had powers of procuration on behalf
of the company. The defendant Ómar Kristjánsson has furthermore
stated that he ran the company almost as if it were his own
property.
By reference to the above it has been established that the
defendants, by virtue of their position within Thysk-Íslenska
Ltd., carried the responsibility for the above actions, as they
must have been aware that the tax return and annual accounts
signed by them and received by the director of taxes on 2 July
1985 were incorrect in important respects. Thus, the defendants
are guilty of the conduct for which charges are brought in
Chapter I of the indictment. The conduct of both defendants was
in violation of Section 107, subsection 1, of Act no. 74/1981,
and as their violation was of a serious nature they have also
committed a violation of subsection 6 of the same section."
The first applicant was sentenced to 15 months' imprisonment and
to a fine of 40,000,000 ISK. The second applicant was sentenced to 5
months' imprisonment and to a fine of 1,000,000 ISK.
Both the public prosecutor and the first and second applicants
appealed against the judgment to the Supreme Court. The applicants
especially protested against being found guilty of tax evasion in
connection with the operations of the third applicant company on
account of years other than the income year 1984, as the indictment in
the case was, in their opinion, exclusively based on reassessed tax
return statements relating to the company's operations during that
year. They further emphasised that the dismissal of the tax case by the
Internal Revenue Board ought to be interpreted as invalidating the
reassessment of the tax involved and that, consequently, there was no
foundation for sentencing them in accordance with Section 107 of the
Act concerning Tax on Income and Property.
The case was heard during public hearings in the Supreme Court
from 13 to 16 May 1991. Both applicants were represented in court by
counsel. The first applicant was also present whereas the second
applicant, for reasons unknown, had decided not to appear. The
applicants had under Icelandic law the possibility to address the Court
but the first applicant chose not to avail himself thereof. The Supreme
Court had at its disposal the complete case-file, including all
transcripts of the lower court as well as the judgment of the Criminal
Court. Certain further documentary evidence was submitted by the
parties. The public prosecutor presented the case of the prosecution
and the two defence counsels presented the case of the applicants. The
representatives were allowed to take the floor twice and to submit what
in their opinion would be of relevance to the outcome of the case. The
Court did not hear any witnesses and the parties did not request the
hearing of witnesses either, a possibility open to them under Section
46 of the Supreme Court Act which reads as follows :
(translation)
"The Supreme Court may in special cases permit that
witnesses be heard in court and also permit the
examination of the parties to the case as well as expert
witnesses."
By judgment of 21 June 1991 the Supreme Court upheld the
Criminal Court judgment. In respect of the applicants' objection to the
indictment the Court stated :
(translation)
"The evidence shows that the concealing of the income of Thysk-
Íslenska Ltd. which appeared in its revised annual financial
statement and its new tax return for 1985 on account of its
operations in 1984, did not take place during that year, but
rather had its origins in the operations of earlier years. The
certified auditor who prepared the new documents for the
Directorate of Internal Revenue explained in his statement in
court, as described in the Criminal Court judgment, that in his
opinion it could hardly be doubted that the income had
accumulated over some years. This was also the opinion of the
leaders of Thysk-Íslenska Ltd., who requested the tax
authorities to distribute the non-declared income over the years
when the taxes were to be redetermined. This was not done;
instead taxes were assessed anew on the basis of the revised tax
return documents as if the entire non-declared income belonged
to the operating year 1984.
The indictment in this case is based on the documentation which
the leaders of Thysk-Íslenska Ltd. delivered to the tax
authorities as a basis for reassessment of taxes. However,
calculations on which part F of chapter I of the indictment is
based are made with a distribution of undeclared income over the
years 1981-1984 in view. When viewing the substance of the
indictment in relation to its premises and its foundation it
must clearly be interpreted as bringing charges on account of
all established non-declaration of the income of Thysk-
Íslenska ltd., and not solely on account of the part which is
to be considered as relating only to the operating year 1984.
The defendants' counsel have had every opportunity to conduct
their defence before this court in accordance with this.
Furthermore, it must be held, with the facts of the case in
view, that distributing the undeclared income over more years
than 1984 in the Criminal Court judgment, in the manner done,
was due and proper, since the evidence in the case made this
possible and it was also to the benefit of the defendants and
in full conformity with the principle expressed in Section 60,
subsection 2, of the Act concerning Tax on Income and Property."
As regards the applicants' allegations as to the effect of the
dismissal of the tax case by the Internal Revenue Board, the Supreme
Court stated :
(translation)
"When the (tax authorities) sent the case to the State Criminal
Investigation Police for an investigation there, which led to
the issuing of an indictment and the institution of judicial
proceedings, the case was in every respect subject to judicial
authority, cf. Section 108, subsection 1-3 of Act no. 75/1981
and the principles underlying Sections 75-110 of the Code of
Criminal Procedure, no. 74/1974, and this includes the
evaluation of the amount of undeclared income and evaded taxes
and consequently the basis for determination of a fine according
to Section 107, subsection 1 of Act no. 75/1981. ... The
decision of dismissal in question by the Internal Revenue Board,
therefore, has no bearing on this case."
Furthermore the Supreme Court stated :
"The Criminal Court of Reykjavík, with two certified auditors
on the bench, reached the conclusion that the annual financial
statement of Thysk-Íslenska Ltd. had been deficient in various
respects, and that it was certain that a large amount of net
income had not been declared. The minimum amount not declared
during the years 1981 - 1984, both years included, was
furthermore considered well-nigh certain. On the other hand the
distribution of this income over the years in question was
considered unclear, and in the judgment all doubt in this
respect is stated to be viewed in favour of the defendants. The
Court examined and reassessed the company's annual accounts for
all the years. After evaluating the reassessed annual accounts
the Court held that an evasion by Thysk-Íslenska Ltd. of income
tax amounting to not less than 24,332,128 ISK and net value tax
and extra net value tax amounting to not less than 1,829,253
ISK, or of taxes totalling 26,161,381 ISK, was proven.
When viewing the evidence and the reasoning of the Criminal
Court, the amount of the evaded taxes cannot be deemed lower
than stated above. The Criminal Court rightly convicted the
defendants of this conduct and related it to the correct
criminal provisions.
The defendants' accounting and forgery offences are deemed to
be in violation of the provisions of the laws and regulations
stated in the Criminal Court judgment. The provisions of the
judgment relating thereto shall stand."
The Supreme Court reduced the sentences imposed. The first
applicant was sentenced to 12 months' imprisonment, of which 9 were
suspended, and to a fine of 20,000,000 ISK. The second applicant
received a suspended sentence of 3 months' imprisonment and furthermore
had to pay a fine of 1,000,000 ISK.
COMPLAINTS
As regards the proceedings concerning the payment of taxes the
applicants complain that the third applicant was denied the right under
Icelandic law to have a disputed tax problem determined by the highest
Icelandic administrative authority in the field of taxation, i.e. the
Internal Revenue Board. They consider this to be in violation of
Article 6 para. 1 and Article 13 of the Convention.
The applicants furthermore consider that the judge in the
Magistrates' Court was not an impartial judge when he decided to grant
the tax authorities' request for distress to be levied on the third
applicant's goods for the non-payment of taxes. They invoke Article 6
para. 1 of the Convention in this respect.
Moreover, the applicants complain that the Supreme Court in the
tax collection case rendered judgment on claims quite different from
those adjudicated in the Magistrates' Court. They also invoke Article
6 para. 1 of the Convention as regards this issue.
As regards the criminal case the applicants complain that the
Supreme Court found them guilty of offences for which they had not been
indicted. This refers to the fact that they were found guilty of tax
evasion relating to the years 1981-1984, whereas they had only been
indicted for having submitted an incorrect tax return in 1985, relating
to the income year 1984. They maintain that no lawful evidence was
offered of the alleged non-declaration of taxes relating to the years
1981- 1983, and that instead the conviction was based on a calculation
model which the Criminal Court of Reykjavík had invented. The
applicants consider this to be contrary to Article 6 paras. 1, 2 and
3 of the Convention.
The applicants furthermore complain that the judicial
determination of the criminal charges by the Supreme Court, involving
questions of fact, was done without evidence being submitted directly
in court, i.e. without an examination in court of the parties and
witnesses. They consider this to be inconsistent with the requirements
of the Convention relating to a fair and public hearing. The applicants
invoke Article 6 para. 1 of the Convention. They accept that a
possibility exists for the hearing of witnesses under Section 46 of the
Supreme Court Act, but they maintain that in the history of the Supreme
Court this section has never been used.
Finally, in respect of the criminal case the applicants
complain, in their letter of 9 March 1992, of the length of the
proceedings.
THE LAW
1. All three applicants complain of a violation of Articles 6 and
13 (Art. 6, 13) of the Convention in respect of different sets of
proceedings concerning the reassessment and payment of taxes and
concerning criminal charges respectively.
It is clear from Article 25 para. 1 (Art. 25-1) of the
Convention that the Commission can receive an application from a
person, non-governmental organisation or group of individuals only if
such person, non-governmental organisation or group of individuals can
claim to be a victim of a violation by one of the High Contracting
Parties of the rights set forth in the Convention. Moreover, the
Commission is competent to examine the compatibility of domestic
legislation with the Convention only with respect to its application
in a concrete case, while it is not competent to examine in abstracto
its compatibility with the Convention (cf. for example No. 11045/84,
Dec. 8.3.85, D.R. 42 p. 247).
As regards the proceedings which concerned the reassessment of
taxes and the courts' decisions as to the payment thereof, the
Commission finds that it is not necessary to determine whether all
three applicants may claim to be victims within the meaning of Article
25 (Art. 25) of the Convention as this part of the application is in
any event inadmissible for the following reasons.
The applicants complain, under Article 6 (Art. 6) of the
Convention, that the judge in the Magistrates' Court was not impartial
and furthermore they complain that the Supreme Court rendered judgment
on claims quite different from those adjudicated in the Magistrates'
Court. However, the Commission has constantly held that Article 6
(Art. 6) is not applicable to proceedings relating to tax assessments
(cf. No. 8903/80, Dec. 8.7.80, D.R. 21 p. 246, No. 9908/82, Dec.
4.5.83, D.R. 32 p. 266 and No. 13013/87, Dec. 14.12.88, D.R. 58 p.
163). The Commission considers that the same applies to the proceedings
in the present case during which the Icelandic courts examined the
request for distress to be levied on the third applicant's goods for
the non-payment of the tax assessed. It follows that this part of the
application is incompatible ratione materiae with Article 6 (Art. 6)
within the meaning of Article 27 para. 2 (Art. 27-2) of the Convention.
2. The applicants also complain, under Article 13 (Art. 13) of the
Convention, that they were denied the right under Icelandic law to have
the disputed tax problems determined by the Internal Revenue Board.
The Commission recalls in this respect that the applicants had
the question of taxation decided upon by the Directorate of Internal
Revenue. They could, and did, complain of the decisions taken to the
Director of Internal Revenue and they further could, and did, lodge a
complaint against these decisions with the Internal Revenue Board. The
Commission considers that such a procedure fulfils the requirements of
Article 13 (Art. 13) of the Convention for which reason it can be left
open whether the issue raised by the applicants falls under the
Convention as required by Article 13 (Art. 13) of the Convention.
It follows that this part of the application is manifestly ill-
founded within the meaning of Article 27 para. 2 (Art. 27-2) of the
Convention.
3. All three applicants complain that Article 6 (Art. 6) of the
Convention was violated in various ways in the proceedings concerning
the criminal charges.
a) The Commission recalls that these charges were brought against
the first and second applicant who may therefore claim to be victims
within the meaning of Article 25 (Art. 25) of the Convention. The third
applicant was not, however, involved in these proceedings. Thus this
applicant is not entitled to claim to be a victim for the purposes of
Article 25 (Art. 25) of the Convention and it follows that this part
of the application, in so far as brought by the third applicant, is
incompatible with the Convention ratione personae and therefore
inadmissible under Article 27 para. 2 (Art. 27-2) of the Convention.
b) The first and second applicants (hereinafter the applicants)
complain that the Supreme Court found them guilty of offences for which
they had not been indicted, alleging that they were found guilty of tax
evasion relating to the years 1981-1984 whereas, in their opinion, they
had only been indicted for having submitted an incorrect tax return in
1985, relating to the income year 1984. They maintain that no evidence
was offered of the alleged tax evasion relating to the years 1981-1983
and that instead the conviction was based on a calculation model which
the Criminal Court of Reykjavík had invented. They consider this to be
contrary to Article 6 paras. 1, 2 and 3 (Art. 6-1, 6-2, 6-3) of the
Convention.
With regard to the judicial decision of which the applicants
complain, the Commission recalls that, in accordance with Article 19
(Art. 19) of the Convention, its only task is to ensure the observance
of the obligations undertaken by the Parties in the Convention. In
particular, it is not competent to deal with an application alleging
that errors of law or fact have been committed by domestic courts,
except where it considers that such errors might have involved a
possible violation of any of the rights and freedoms set out in the
Convention. The Commission refers, on this point, to its established
case-law (see e.g. No. 458/59, Dec. 29.3.60, Yearbook 3 pp. 222, 236;
No. 5258/71, Dec. 8.2.73, Collection 43 pp. 71, 77; No. 7987/77, Dec.
13.12.79, D.R. 18 pp. 31, 45).
It is true that the applicants complain that they were found
guilty of offences for which they had not been indicted. The Commission
has examined this complaint under Article 6 paras. 1 and 3 (a) and (b)
(Art. 6-1, 6-3-a, 6-3-b) of the Convention which read in so far as
relevant :
"1. In the determination of ... any criminal charge against him,
everyone is entitled to a fair and public hearing ... .
...
3. Everyone charged with a criminal offence has the following
minimum rights:
a. to be informed ... of the nature and cause of the accusation
against him;
b. to have adequate time and facilities for the preparation of
his defence."
It is clear from these provisions that as part of the right to
a fair trial the accused is entitled to be informed of the cause of the
accusation, i.e. the material facts alleged against him which are the
basis of the accusation, and of the nature of the accusation, i.e. the
legal qualification of these material facts (cf. No. 7628/76, Dec.
9.5.77, D.R. 9 p. 169). This right goes hand in hand with the right to
have adequate time to prepare a defence against the accusation (cf.
Chichlian and Ekindjian v. France, Comm. Report 1.3.89, Eur. Court
H.R., Series A no. 162-B).
In the present case the Commission recalls the text of the
indictment which contained indications of the nature of the accusations
and their legal qualifications. In particular the Commission notes that
the indictment contained a reference not only to the income year 1984
but also to allegedly undeclared income distributed over the years
1981-1984. The applicants challenged the indictment in court well in
advance of the main hearings in the case but both the Criminal Court
and the Supreme Court rejected the applicants' complaints concerning
the formulations in the indictment. The Commission also recalls that
the applicants were convicted for having violated those sections of the
relevant legislation which were also indicated in the indictment and
accordingly no reclassification of the offences took place. Having
regard to these circumstances the Commission is satisfied that the
applicants were sufficiently informed of the accusations laid against
them.
As already indicated above the applicants raised the issues
concerning the indictment well in advance of the main hearings in the
case. Actually the Supreme Court decided on 16 March 1990 on the
indictment issues whereas the main hearing in the Criminal Court did
not take place until 5 December 1990. In these circumstances the
Commission is also satisfied that the applicants had sufficient time
to prepare their defence. Accordingly, the Commission finds that this
part of the application does not disclose any appearance of a violation
of Article 6 paras. 1 and 3 (a) and (b) (Art. 6-1, 6-3-a, 6-3-b) of the
Convention.
It follows that these complaints are manifestly ill-founded
within the meaning of Article 27 para. 2 (Art. 27-2) of the Convention.
c) As regards the criminal case the applicants also complain, under
Article 6 para. 1 (art. 6-1) of the Convention, of the fact that the
Supreme Court determined the charges brought against them both in
respect of the facts and the law without hearing them in court and
without hearing witnesses. They consider that this is inconsistent with
the requirements relating to a fair and public hearing.
The Commission recalls that when examining the question of
fairness its task is to ascertain whether the proceedings considered
as a whole, including the way in which evidence was taken, were fair
(cf. for example Eur. Court H.R., Kostovski judgment of 20 November
1989, Series A no. 166 p. 19, para. 39).
The applicants' case was heard in the Criminal Court of
Reykjavík on 5 December 1990. The Commission finds no indication that
these proceedings were not in accordance with Article 6 (Art. 6) of the
Convention. In particular the hearing was held in public, the
applicants were heard and all witnesses were heard and cross-examined
in court. It follows that the applicants at this stage were given an
adequate and proper opportunity to question and, if necessary,
challenge the witnesses heard in the case.
The applicants having appealed against the Criminal Court's
judgment to the Supreme Court, public hearings were held in that court
from 13 to 16 May 1991 during which the applicants could be present
and could address the Court. Their allegations that they did not get
a public hearing or were not heard accordingly lack any substantiation.
It is true that the Supreme Court did not hear the witnesses in the
case again but, where necessary, relied on their statements as these
appeared from the Criminal Court's transcripts. However, the use of
such statements is not in itself inconsistent with Article 6 (Art. 6)
of the Convention. Although in principle the evidence must be produced
in the presence of an accused the Commission and the European Court of
Human Rights have consistently held that the use of statements obtained
even at a pre-trial stage may be accepted, provided the rights of the
defence have been respected (cf. for example Eur. Court H.R., Delta
judgment of 19 December 1990, Series A no. 191). These rights require
that the accused had the opportunity, either at the time the witness
made the statement or at some later stage of the proceedings, to
challenge and question the witness. As mentioned above it is clear that
the applicants had such an opportunity.
Nevertheless, the Commission cannot exclude that situations may
occur where the appeal proceedings before a court with jurisdiction as
to both the facts and the law require that an accused's guilt or
innocence could only, as a matter of fair trial, be properly determined
with a direct assessment of the evidence given by a witness, namely
where the crucial question concerns the credibility of the person
involved (cf. Eur. Court H.R., Ekbatani judgment of 26 May 1988, Series
A no. 134). The present case, as submitted by the applicants, does not,
however, give the Commission any reason to conclude that the case, as
it stood before the Supreme Court, raised questions of fact which could
not be adequately resolved on the basis of the available material. In
this respect the Commission has also noted that the applicants did not
avail themselves of the possibility under Icelandic law to request the
Supreme Court, in special circumstances, to hear witnesses.
Thus, having regard to the above, and considering the
proceedings as a whole, the Commission is of the opinion that the
applicants' trial was fair, and it does not find that the fact that the
Supreme Court did not examine witnesses could, in the circumstances of
the present case, lead to the conclusion that the applicants did not
get a fair trial within the meaning of Article 6 (Art. 6) of the
Convention.
It follows that this part of the application is also manifestly
ill-founded within the meaning of Article 27 para. 2 (Art. 27-2) of the
Convention.
4. By letter of 9 March 1992 the applicants finally complained that
the proceedings concerning the criminal case, ending with the Supreme
Court judgment of 21 June 1991, exceeded the reasonable time
requirement secured by Article 6 para. 1 (Art. 6-1) of the Convention.
However, the Commission is not required to decide whether or not
the facts alleged by the applicants in respect of the length of the
proceedings disclose any appearance of a violation of this provision,
as Article 26 (Art. 26) of the Convention provides that the Commission
"may only deal with the matter ... within a period of six months from
the date on which the final decision was taken".
In the present case the decision of the Supreme Court, which was
the final decision regarding the subject of this particular complaint,
was given on 21 June 1991, whereas this part of the application was
submitted to the Commission on 9 March 1992, that is, more than six
months after the date of the decision. Furthermore, an examination of
the case does not disclose the existence of any special circumstances
which might have interrupted or suspended the running of that period.
It follows that this part of the application has been introduced
out of time and must be rejected under Article 27 para. 3 (Art. 27-3)
of the Convention.
For these reasons, the Commission unanimously
DECLARES THE APPLICATION INADMISSIBLE.
Secretary to the Second Chamber President of the Second Chamber
(K. ROGGE) (S. TRECHSEL)
Full & Egal Universal Law Academy