Communicated on 26 January 2017
FOURTH SECTION
Application no. 59542/14
Ernestina ROŽMAN and Alojz ROŽMAN
against Slovenia
lodged on 25 August 2014
STATEMENT OF FACTS
1. The applicants, Ms Ernestina Rožman (“the first applicant”) and Mr Alojz Rožman (“the second applicant”), are Slovenian nationals who were born in 1951 and 1945 respectively and live in Artiče. They are represented before the Court by Mr D. Medved, a lawyer practising in Krško.
A. The circumstances of the case
2. The facts of the case, as submitted by the applicants, may be summarised as follows.
3. The applicants are a married couple who lived together in their house until it was sold at auction. They owned the house jointly, each having a 50% share in it.
1. Enforcement proceedings
4. On an unspecified date S.Le. and S.Li. instituted enforcement proceedings against the applicants before the Brežice Local Court, owing to their alleged failure to pay them 2,945,092.50 Slovenian tolars (SIT – 12,289.65 euros (EUR)). The debt stemmed from a loan contract the applicants had signed in the presence of a notary. The loan was secured by means of a mortgage on the applicants’ house.
5. On 25 February 1998 the Brežice Local Court issued a writ of execution against the applicants and granted enforcement in respect of their immovable property, which consisted of their house (see paragraph 3 above) and the surrounding land.
6. On 30 October 2002 the first public auction of the applicants’ immovable property took place. This auction was organised to cover the above-mentioned debt, as well as a number of other debts incurred by the first applicant which were the subject of other enforcement proceedings. The auction was not successful and the property was thus not sold.
7. On 19 December 2002 the applicants lodged an objection after the deadline (ugovor po izteku roka) against the writ of execution (see paragraph 5 above), in accordance with section 56 of the Enforcement Act (see paragraph 45 below). They argued that the debt which was the subject of those enforcement proceedings had been repaid in 1998 when the creditors had taken the first applicant’s car by force, sold it, and kept the proceeds of sale. The applicants also made an application for the court to stay the enforcement proceedings, owing to the risk of irreparable damage.
8. On 8 April 2005 the Brežice Local Court rejected the applicants’ objection as inadmissible, holding that they could have submitted their arguments at an earlier stage in a regular objection against the writ of execution. However, it granted their application to stay the enforcement proceedings until the decision concerning their objection became final.
9. On 26 April 2005 the applicants appealed. On 21 September 2005 the Ljubljana Higher Court granted their appeal, holding that they had not been too late with the objection after the deadline. It remitted the case to the first-instance court.
10. On 5 December 2008 the Brežice Local Court issued a decision, discontinuing the enforcement proceedings in part, namely in respect of the EUR 1,585 (3,100 Deutschmarks (DEM)) repaid by the applicants on 9 January 1998 and the EUR 514.67 (SIT 95,000) repaid on 23 January 1998. However, it found that the creditors had disputed that the rest of the debt had been paid. The court therefore rejected the applicants’ objection and instructed them to institute contentious proceedings (see paragraph 33 below).
11. On 16 December 2008 the applicants lodged an appeal, arguing that they had submitted sufficient proof that the entire debt had been paid through the forced sale of the car. On 10 June 2009 the Ljubljana Higher Court dismissed the appeal, upholding the first-instance court’s decision, which thereby became final.
12. On 1 September 2009 the Brežice Local Court scheduled a second auction for 5 October 2009, to enforce the debt claim in those proceedings as well as in a number of other enforcement proceedings against the first applicant.
13. On 18 September 2009 the applicants made an application for the court to stay the enforcement proceedings and cancel the second public auction. They informed the court that they had initiated proceedings to determine the invalidity of the enforcement (tožba zaradi ugotovitve nedopustnosti izvršbe, see paragraphs 33 to 37 and 46 below), and claimed that continuing the enforcement proceedings would cause irreparable damage to them.
14. On 29 September 2009 the Brežice Local Court dismissed the applicants’ application, holding that the enforcement proceedings had previously been stayed at their request and that the legislation did not allow for another stay of the proceedings at a debtor’s request. It further held that the sale of the applicants’ only home in which they had lived all their life could not be considered irreparable damage for the purposes of staying the proceedings. The court also held that the applicants had not proved when they had initiated the proceedings to determine the invalidity of the enforcement, because there was no indication on the copy of the action submitted that it had actually been filed.
15. On 1 October 2009 the applicants again made an application for the court to cancel the second public auction. They also submitted confirmation from the Krsko District Court that the action to prove the invalidity of the enforcement had actually been lodged on 17 September 2009.
16. On 5 October 2009 the applicants also lodged an appeal against the decision of the Brežice Local Court issued on 29 September 2009 (see paragraph 14 above).
17. On the same day the Brežice Local Court held the second public auction. The auction records indicate that the following creditors were seeking to have their claims against the applicants in respect of debts paid from the judicial sale:
S.Le. and S.Li, with a claim of EUR 12,289.65 against both applicants
A.-A., with a claim of EUR 29,553.12 against the first applicant
S.K.B., with a claim of EUR 22,126.58 against the first applicant
A., with a claim of EUR 701.72 against the first applicant
The property was sold to F.B., who had bought the debt from the original creditor A.-A. It was sold for EUR 26,561.85 – EUR 2,000 more than 50% of its estimated market value. F.B. was not required to pay any deposit, since he was considered a creditor.
18. On 6 January 2010 the Ljubljana Higher Court dismissed the applicants’ appeal of 5 October 2009 (see paragraph 16 above), endorsing the reasons given by the first-instance court (see paragraph 14 above).
19. On 13 October 2010 the Brežice Local Court issued a decision awarding the property to F.B. (sklep o domiku).
20. On 21 October 2010 the applicants lodged an appeal against the decision awarding the property to F.B. They complained, inter alia, that the Brežice Local Court had failed to decide on their application to cancel the second public auction, lodged on 1 October 2009 (see paragraph 15 above).
21. On 21 April 2011 the Ljubljana Higher Court dismissed the applicants’ appeal.
22. On 8 June 2011 the Brežice Local Court decided to transfer to F.B. the property sold at the public auction, and ordered a change of ownership in the Land Register. It further ordered the applicants to vacate the property within thirty days of that decision becoming final.
23. On 17 June 2011 the applicants lodged an appeal which was dismissed on 15 February 2012 by the Ljubljana Higher Court.
24. In the meantime, on 11 January 2012, in the proceedings concerning the invalidity of the enforcement, the Krsko District Court had decided that the enforcement had been invalid (see paragraph 34 below).
25. On 3 April 2012 the applicants made an application to the Brežice Local Court for the enforcement proceedings to be stayed until the decision in the civil proceedings to determine the invalidity of the enforcement became final (most likely after the appeal).
26. On 14 September 2012 the Brežice Local Court decided to stay the enforcement proceedings until the final decision in the civil proceedings to determine the invalidity of the enforcement was issued. It would appear that at this stage this only entailed an adjournment of the distribution hearing at which the proceeds of the sale by auction were to be distributed.
27. In the proceedings concerning the applicants’ action to prove that the enforcement measure was invalid, the Ljubljana Higher Court, on 17 July 2013, upheld the lower court’s decision in the most part and found that the enforcement proceedings were valid only in respect of EUR 172.87 (see paragraphs 35 and 37 below).
28. On 20 August 2013 the applicants lodged an objection after the deadline against the writ of execution, informing the Brežice Local Court about the final decision in the proceedings concerning the invalidity of the enforcement (see paragraphs 35 and 37 below). They also submitted that the costs of proceedings which the creditors had been due to pay them were higher than the remaining debt, and therefore the creditors had no outstanding claim. The applicants made an application to the court for the enforcement proceedings to be discontinued and for all the enforcement actions lodged in the enforcement proceedings to be annulled.
29. On 2 December 2013 the Brežice Local Court allowed the applicants’ objection lodged on 20 August 2013 and discontinued the enforcement, noting that the debt which was being enforced amounted to EUR 172.87. It also noted that the proceedings were at the stage where the proceeds of the sale of the property were to be distributed, and that the successful objection to the validity of the enforcement proceedings had an effect on such distribution. The court found that the applicants’ debt, together with interest, amounted to EUR 434.25, and that the creditors owed them EUR 1,572.84 in respect of the costs of the proceedings which they had been ordered to pay. Offsetting the claims, the court found that the applicants no longer owed anything to the creditors S.Le. and S.Li, and therefore the enforcement proceedings requested by them had to be discontinued. It further held that the writ of execution could not be annulled and that the sale of the property could also not be voided, as that would interfere with the acquired rights of others. The court made an award in respect of the costs of proceedings in the amount of EUR 109.95, to be paid by the creditors.
30. On 12 December 2013 the applicants lodged an appeal against the decision of the Brežice Local Court issued on 2 December 2013, arguing, inter alia, that the court should have annulled all the enforcement actions which were ongoing up to that point, as the majority of the debt had already been repaid in 1998. They also complained regarding the decision on the costs of the proceedings. The creditors also appealed.
31. On 19 February 2014 the Ljubljana Higher Court granted in part the applicants’ appeal with regard to the costs of proceedings, increasing the award in respect of costs to EUR 361.27. However, it upheld the decision of the first-instance court with regard to the remainder of the appeal. It added that, in any event, the annulment of the writ of execution could not have had an impact on the final decision transferring the property sold in enforcement proceedings to the buyer.
32. On 7 May 2014 the Brežice Local Court distributed the proceeds of the sale. The proceeds of the sale of the first applicant’s share in the property went towards paying the costs of the enforcement proceedings of a number of creditors, the real estate transfer tax, and a debt to creditor S.K.B. The second applicant received EUR 13,020.51, half of the purchase money minus EUR 260.42 (the real estate transfer tax).
2. Proceedings to determine the invalidity of the enforcement
33. On 16 September 2009 the applicants initiated civil contentious proceedings before the Krsko District Court to determine the invalidity of the enforcement, claiming that S.Le. and S.Li. had sold the first applicant’s car and retained the purchase money which, together with some other payments the applicants had made to them previously, exceeded the debt which the applicants owed. S.Le. and S.Li. denied that the debt had been repaid.
34. On 11 January 2012 the Krsko District Court issued a judgment, holding that the applicants had proved that the first applicant’s car had been sold and that the creditors had received the proceeds of sale. It considered that the value of the car on the day of the sale had been SIT 2,770,000, as estimated by a court-appointed expert. Taking into account the two other payments towards the debt which the applicants had paid to the creditors, the court calculated that the applicants had already paid SIT 3,157,595.55 towards the debt, which exceeded the debt itself by SIT 103,208.85. It consequently concluded that the enforcement was invalid.
35. On 12 December 2012 the Ljubljana Higher Court quashed the judgment and ordered the lower court to explain more clearly the reasons leading it to allow the applicants’ claim.
36. On 6 February 2013 the Krsko District Court again held that the enforcement was invalid. The reasons listed for the decision were, in substance, the same as in its judgment on 11 January 2012.
37. On 17 July 2013 the Ljubljana Higher Court confirmed the first-instance court’s view that the applicants had proved the fact that the first applicant’s car had been sold and the proceeds of sale had been received by the creditors. However, it considered that not the estimated value but the purchase price, that is SIT 2,400,500, should be considered the amount of the debt repaid. It calculated that that equalled EUR 10,071.11. Consequently, it held that enforcement was valid in respect of the applicants’ remaining debt in the amount of EUR 172.87.
38. On 11 September 2013 the applicants lodged an application for leave to appeal before the Supreme Court, complaining that the Ljubljana Higher Court had used a wrong method of conversion, which had led to a certain amount of debt appearing to be still unpaid, which had sufficed for the enforcement action against their house to be continued. They also complained regarding the way in which the case had been handled, alleging that this had resulted in the sale of their house despite the debt having been repaid in 1998, as established by the lower courts in those proceedings.
39. On 7 November 2013 the Supreme Court rejected the applicants’ application for leave to appeal on points of law. It held that, as their claim had only been dismissed in respect of the part concerning the amount of EUR 172.87, leave to appeal on points of law could not be granted, as this amount did not reach the minimum amount in dispute necessary to grant leave to appeal on points of law.
40. On 22 January 2014 the applicants lodged a constitutional complaint with the Constitutional Court. They complained regarding the errors made by the Ljubljana Higher Court in calculating the amount of debt repaid. They also complained regarding a breach of the right of access to the Supreme Court, as a result of its rejection of their application for leave to appeal on points of law, and repeated their complaints regarding the domestic court’s failure to grant their application to stay the enforcement and the consequent sale of their house.
41. On 21 February 2014 the Constitutional Court rejected the applicants’ constitutional complaint.
B. Relevant domestic law and practice
1. Applications for stays and applications to discontinue enforcement proceedings
42. The Enforcement and Securing of Civil Claims Act, in force at the relevant time (Official Gazette no. 3/07 with the relevant amendments – “the Enforcement Act”), provides for rules on enforcement proceedings. Sections 71, 72, 74, 75 and 76 of the Enforcement Act concern the stay and discontinuation of enforcement proceedings. Section 71 provides that the court can stay enforcement proceedings, either completely or in part, if a debtor makes an application for a stay. The debtor must demonstrate that, as a result of the enforcement, he or she would sustain damage greater than any damage sustained by the creditor as a result of the stay. The circumstances in which a stay can be requested are further specified in section 71, and include an ongoing objection to an enforcement decision or proceedings aimed at establishing the invalidity of the enforcement. They also include undefined particular circumstances justifying a stay, but in such situations enforcement proceedings can only be stayed once and for a maximum of three months.
2. Auctions and the award of property to the buyer
43. Under section 181 of the the Enforcement Act, immovable property can be sold after the enforcement decision and the decision setting out the estimated value of the property become final. As regards conducting the sale, the following provisions of the Enforcement Act are also of relevance to the present case:
Section 189
“...
Upon the conclusion of the public auction, the court shall determine the bidder offering the highest price and declare that the property is awarded to him.
...
The court issues an award decision, which is published on the court’s notice board and served on all the parties who were served with the decision about the sale and all those who participated in the auction.
...”
Section 191
“The buyer must pay the purchase price within the time-limit set out in the decision ordering the sale.
...”
Section 192
“Following the final award decision and the payment of the purchase price, the court shall issue a decision on transfer of the property to the buyer. After the decision becomes final, transfer of ownership shall be entered in the Land Register...”
Section 193
“Once the decision on transfer of the property to the buyer has become final, an annulment or modification of the writ of execution has no impact on the rights acquired by the buyer under section 192 of this Act.”
44. In its decisions no. Up-35/98 and Up-77/04 of 2 April 1998 and 11 October 2006 respectively, the Constitutional Court examined constitutional complaints concerning the issue of revoking award decisions following the discontinuation of enforcement proceedings. Decision no. Up-35/98 concerned a debtor’s complaint against the Higher Court’s decision to dismiss her appeal against an award decision. The complainant argued that the award decision should not have been upheld, because the creditors had withdrawn their application for enforcement before the award decision had become final. The Constitutional Court explained that the award decision was one of the legal facts leading to ownership of the immovable property bought at public auction. It held that an award decision must be followed by a decision transferring title, the transfer itself, and the entry of ownership in the Land Register, which is a measure of a declaratory nature. While the Constitutional Court found that the final decision transferring title represented acquisition of a property right, the award decision created a protected expectation on the part of the buyer to acquire such a right. Therefore, the acquisition of property could only be halted if it was found that the auction had been unlawful or the buyer had failed to pay the purchase price. It could not be stopped by any other circumstances arising subsequently, such as the discontinuation of the enforcement proceedings. Decision no. Up‑77/04 concerned a complaint from an individual who had bought an immovable property at public auction, paid the purchase price, and already been issued with an award decision as well as a transfer of title. After the withdrawal of the enforcement application, the local court had revoked all the decisions issued in favour of the buyer. Referring to the Court’s case-law concerning “legitimate expectation”, the Constitutional Court found that the award decision had given rise to a legitimate expectation on the part of the buyer that, once the award decision had become final, the only condition he had to meet was paying the purchase price.
3. Objections and actions to establish the invalidity of enforcement orders
45. Under the provisions of the Enforcement Act, a debtor can object to a court decision granting an enforcement application, and if his or her objection is dismissed he or she can appeal (to the second-instance court) against such a decision. The deadline for lodging an objection or appeal is eight days from the service of the impugned decision. Section 55 sets out grounds for objecting, which relate, inter alia, to questions of the enforceability of a claim in respect of a debt, including the possibility that the debt ceased to exist after the claim became enforceable. Section 56 provides that an objection can also be lodged after the above-mentioned deadline, that is after the enforcement decision has become final and before the conclusion of the enforcement proceedings, provided that it is based on facts concerning the debt which occurred after the claim became enforceable, and on the condition that it could not have been included in a regular objection to the enforcement decision.
46. Section 65 concerns the circumstances in which an action for establishing the invalidity of an enforcement order can be lodged. The relevant part of it reads:
“...
If the creditor, within a given time-limit, declares that he disagrees with the objection, the court dismisses the objection.
The person who lodged the objection can, within thirty days of the order described in the above-mentioned paragraph becoming final, institute an action to establish that enforcement in respect of that object is not valid.
...
If the court establishes by a final judgment that an enforcement action which has not yet become final or which has been adjourned is not valid in respect of a certain object, the court stays the enforcement proceedings in respect of that object and annuls the writ of execution.”
COMPLAINTS
47. The applicants complain under Articles 6 and 13 of the Convention regarding the rejection of their objection in the enforcement proceedings, and the fact that those proceedings were not stayed despite their being instructed to prove the substance of their objection in separate contentious proceedings. In particular, they argue that the application to stay the enforcement proceedings was the only way they could stop the sale, but this was entirely ineffective. The appeal on points of law was likewise ineffective, as the Supreme Court took the position that the disputed amount was too low and ignored the fact that the applicants’ house was at stake.
48. The applicants further complain under Article 1 of Protocol No.1 to the Convention regarding the fact that the enforcement court went on with the sale of their house despite their valid objection that the debt had already been paid, and despite their applications to stay the proceedings and adjourn the auction.
QUESTIONS TO THE PARTIES
1. Have the applicants exhausted all effective domestic remedies, as required by Article 35 § 1 of the Convention?
In particular, would the constitutional complaint against the Ljubljana Higher Court’s decision of 21 April 2011 have been an effective remedy within the meaning of this provision?
2. Was the sale of the applicants’ house a necessary measure to control the use of property in accordance with the general interest, within the meaning of Article 1 of Protocol No. 1 to the Convention?
In particular, were the applicants afforded sufficient procedural protection in the ambit of the enforcement proceedings (see Zehentner v. Austria, no. 20082/02, § 73, 16 July 2009; Rousk v. Sweden, no. 27183/04, 25 July 2013; and Mindek v. Croatia, no. 6169/13, 30 August 2016 )?
3. Did the applicants have a fair hearing in the determination of their civil rights and obligations, in accordance with Article 6 § 1 of the Convention?
4. Did the applicants have at their disposal an effective domestic remedy for their Convention complaints, as required by Article 13 of the Convention?
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