AS TO THE ADMISSIBILITY OF
Application No. 19117/91
by K.S. and K.S. AG
against Switzerland
The European Commission of Human Rights (First Chamber) sitting in
private on 12 January 1994, the following members being present:
MM. A. WEITZEL, President
S. TRECHSEL
C.L. ROZAKIS
F. ERMACORA
E. BUSUTTIL
A.S. GÖZÜBÜYÜK
Mrs. J. LIDDY
MM. M.P. PELLONPÄÄ
B. MARXER
G.B. REFFI
B. CONFORTI
N. BRATZA
I. BÉKÉS
E. KONSTANTINOV
Mrs. M.F. BUQUICCHIO, 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 31 October 1991 by
K.S. and K.S. AG against Switzerland and registered on 21 November 1991
under file No. 19117/91;
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 applicant, a Swiss citizen born in 1930, resides at Kloten
in Switzerland. He is chairman and principal shareholder of the second
applicant, a company selling painters' equipment. Before the Commission
the applicants are represented by Mr. E. David, a lawyer practising in
St. Gallen.
Particular circumstances of the case
I.
In 1982 a tax auditor, when controlling the second applicant's
accounts, found an undeclared bank account through which 2,500,000 SFr
had flowed between 1975 and 1982. As from 1983 criminal proceedings were
instituted against the book-keeper W. and the first applicant. These
proceedings, concerning inter alia tax fraud and conducted by the Zürich
District Attorney's Office (Bezirksanwaltschaft), have meanwhile been
terminated.
II.
In 1987 the Zürich tax authorities instituted proceedings against
the applicants for backpayment of taxes. The applicants were informed
that criminal proceedings on account of tax evasion might be instituted
against them; they were given the opportunity to comment thereupon,
various witnesses were heard, and the tax authorities consulted the case-
file at the District Attorney's Office (see above, I.).
On 26 September 1989 the Finance Department (Finanzdirektion) of the
Canton of Zürich imposed on the first applicant backpayments of taxes of
51,525.60 SFr and a fine of the same amount; and on the second applicant
taxes of 37,255.60 Sfr and a fine of 74,511.20 SFr. The Department relied
inter alia on the auditor's report (above I.).
The applicants filed an appeal (Rekurs) against these decisions
which the Administrative Court (Verwaltungsgericht) of the Canton of
Zürich dismissed on 7 December 1989.
The applicants each filed a public law appeal (staatsrechtliche
Beschwerde) with the Federal Court (Bundesgericht), complaining inter
alia of the unfairness of the proceedings before the Zürich
Administrative Court. The appeals were dismissed in two decisions of
6 February 1991, served on 1 May 1991.
The Court first dealt with the applicants' complaints under Article
6 of the Convention that they had not had an oral hearing; that neither
the first applicant nor organs of the second applicant had been heard;
that they had not been able to participate in the evidence proceedings;
and that they had not been informed of the charges brought against them.
With reference to Section 108 para. 1 (c) of the Zürich Tax Act
(Steuergesetz; see below, Relevant domestic law) and to its own
previously published case-law the Court confirmed that a request for
reopening the proceedings according to this provision constituted an
effective remedy to complain about their unfairness. As the applicants
had failed to employ this remedy, the Court declared these complaints
inadmissible for non-exhaustion of cantonal remedies.
The Federal Court then dealt with both applicants' complaints under
Article 6 para. 2 of a breach of their presumption of innocence.
The Court found that it fell to the tax authorities to prove that
the applicants' turnover had not been declared to the tax office;
however, it did not fall to the tax authorities further to prove that
there had been circumstances leading to a reduction of taxes for the
first applicant (dass kein steuermindernder oder aufhebender Tatbestand
vorliegt); such proof was not only extremely difficult, it also
discriminated between tax delinquents and honest tax payers. In the
present case, the Court found that the first applicant had failed to show
that he had transferred certain amounts to W.; thus, it did not breach
the presumption of innocence if it was assumed that the moneys had in
fact stayed with him.
In respect of the second applicant the Federal Court found that it
did not breach the presumption of innocence within the meaning of Article
6 para. 2 of the Convention if, in order to establish culpability of a
company, at least one of its agents had acted culpably. In the present
case it sufficed if the first applicant, as agent of the second
applicant, had committed tax evasion.
On the other hand, the Federal Court declared inadmissible the
second applicant's complaints that contrary to Article 6 para. 2 of the
Convention, that applicant had as a company been charged with a criminal
offence, and that it breached the principle "ne bis in idem" to punish
both applicants for the same offence. The Court found, inter alia, that
these complaints had not previously been raised before the Administrative
Court.
Relevant domestic law
Section 108 para. 1 (c) of the Zürich Tax Act (Steuergesetz)
envisages the reopening of proceedings if "the competent authority
disregarded relevant facts or evidence of which it knew or should have
known, or otherwise breached important procedural principles" ("wenn die
entscheidende Behörde erhebliche Tatsachen oder Beweismittel, die ihr
bekannt waren oder hätten bekannt sein müssen, ausser acht gelassen oder
in anderer Weise wesentliche Verfahrensgrundsätze verletzt hat").
COMPLAINTS
1. The applicants complain that in the proceedings before the Zürich
Administrative Court they did not have an oral hearing. Moreover, they
were not given the opportunity to question the book-keeper W., and the
first applicant himself should have been questioned. The applicants
further complain that they were not able to put forward certain evidence
and were not properly informed of the charges brought against them.
In respect of these complaints the applicants rely on Article 6
para. 1 and subparas. 3 (a), (b) and (d) of the Convention.
2. Under Article 6 para. 2 of the Convention the second applicant
complains of a breach of the presumption of innocence in that it had been
charged as a company with a criminal offence. Moreover, it had fallen
to the first applicant to prove that he had not used certain moneys for
private purposes.
3. Apparently under Article 4 of Protocol No. 7 the second applicant
complains of a breach of the principle "ne bis in idem" in that both the
first and the second applicant were punished for the same offence.
4. The applicants further complain that the Federal Court declared
various complaints inadmissible. In particular, they contest the Federal
Court's conclusion that in respect of certain complaints they should have
requested the reopening of the proceedings; reference is made to the
Commission's case-law according to which such requests do not constitute
an effective remedy within the meaning of Article 26 of the Convention.
THE LAW
1. The applicants complain under Article 6 para. 1 and subparas. 3 (a),
(b), and (d) (Art. 6-1, 6-3-a, 6-3-b, 6-3-d) of the Convention of the
proceedings before the Administrative Court. Thus, they did not have an
oral hearing; they could not question W.; the first applicant was not
questioned; the applicants were not able to put forward evidence; and
they were not properly informed of the charges brought against them.
The second applicant further complains under Article 6 para. 2
(Art. 6-2) of the Convention that it had been charged as a company with
a criminal offence; and under Article 4 of Protocol No. 7 (P7-4) of a
breach of the principle "ne bis in idem".
Under Article 26 (Art. 26) of the Convention the Commission may only
deal with a matter after all domestic remedies have been exhausted
according to the generally recognised rules of international law.
The Commission notes that the Federal Court in its decisions of
6 February 1991 declared these complaints inadmissible as the applicants
had not complied with the requirement of the exhaustion of cantonal
remedies. On the one hand, the second applicant had failed to raise
these complaints under Article 6 para. 2 (Art. 6-2) of the Convention and
Article 4 of Protocol No. 7 (P7-4) in the proceedings before the Zürich
Administrative Court. On the other hand, both applicants had failed to
raise the complaints concerning the unfairness of the proceedings before
the Administrative Court in a request for the reopening of the
proceedings according to Section 108 para. 1 (c) of the Zürich Tax Act.
According to Article 26 (Art. 26) of the Convention, there is no
exhaustion where a domestic appeal is not admitted because of a
procedural mistake (see No. 6878/75, dec. 6.10.76, D.R. 6 p. 79).
The applicants have referred to the Commission's case-law according
to which requests for the reopening of proceedings do not as a rule
constitute an effective remedy within the meaning of Article 26 (Art. 26)
of the Convention (see No. 8850/80, dec. 7.10.80, D.R. 22 p. 232).
In the Commission's opinion, the situation is different if it is
established under domestic law that a request for the reopening of
proceedings in fact constitutes an effective remedy. In the present
case, the Federal Court indeed found that such a request according to
Section 108 para. 1 (c) of the Zürich Tax Act constituted an effective
remedy to complain about the unfairness of proceedings. The Court
thereby referred to its published case-law on the matter. The applicants
have not demonstrated that, contrary to the Federal Court's conclusions,
the remedy at issue was not in fact effective.
It follows that the applicants have not complied with the condition
as to the exhaustion of domestic remedies, and their application must in
this respect be rejected under Article 27 para. 3 (Art. 27-3) of the
Convention.
2. Under Article 6 para. 2 (Art. 6-2) of the Convention the first
applicant complains of a breach of the presumption of innocence in that
he had to prove that he had not used certain moneys for private purposes.
According to the Convention organs' case-law, Article 6 para. 2
(Art. 6-2) of the Convention does not prohibit presumptions of fact or
of law in principle. Rather, it requires States to confine presumptions
within reasonable limits which take into account the importance of what
is at stake and maintain the rights of the defence (see Eur. Court H.R.,
Salabiaku judgment of 7 October 1988, Series A no. 141, p. 16 para. 29).
In the present case, the Federal Court found in its decisions of
6 February 1991 that it fell to the tax authorities to prove that the
applicants' income had not been declared to the tax office. However, it
did not fall to the tax authorities further to prove that there had been
no circumstances leading to a reduction of taxes for the first applicant.
The Court noted that such proof was difficult and also discriminated
between tax delinquents and honest tax payers. The Federal Court
concluded that the first applicant had failed to show that he had
transferred certain amounts to the book-keeper; it did not breach the
presumption of innocence if it was assumed that he had actually kept the
amounts at issue.
Thus, the Federal Court in fact found that it fell to the tax
authorities to establish the applicants' guilt. However, the Federal
Court also considered that it was up to the applicant, who wished to
claim a reduction of taxes, to demonstrate that he had not used certain
moneys for personal purposes. In the Commission's opinion, the Federal
Court thus duly took into account the presumption of innocence in
criminal proceedings, while fully maintaining the applicants' rights of
defence.
This part of the application is therefore manifestly ill-founded
within the meaning of Article 27 para. 2 (Art. 27-2) of the Convention.
3. The applicants complain inter alia that the Federal Court, which
declared various complaints of their public law appeals inadmissible,
deprived them of their right under Article 6 para. 1 (Art. 6-1) of the
Convention of access to court. The Commission has examined the remainder
of the applicants' complaints as they have been submitted by them.
However, after considering the case as a whole, the Commission finds that
it does not generally disclose any appearance of a violation of the
rights and freedoms set out in the Convention. It follows that the
remainder of the application is also manifestly ill-founded within the
meaning of Article 27 para. 2 (Art. 27-2) of the Convention.
For these reasons, the Commission unanimously
DECLARES THE APPLICATION INADMISSIBLE.
Secretary to the First Chamber President of the First Chamber
(M.F. BUQUICCHIO) (A. WEITZEL)
Full & Egal Universal Law Academy