SECOND SECTION
PARTIAL DECISION
AS TO THE ADMISSIBILITY OF
Application no. 36619/03
by Lars WASSDAHL
against Sweden
The European Court of Human Rights (Second Section), sitting on 29 November 2005 as a Chamber composed of:
MrJ.-P. Costa, President,
MrI. Cabral Barreto,
MrV. Butkevych,
MrsA. Mularoni,
MrsE. Fura-Sandström,
MsD. Jočienė,
MrD. Popović, judges,
and Mrs S. Dollé, Section Registrar,
Having regard to the above application lodged on 8 November 2003,
Having regard to the decision to apply Article 29 § 3 of the Convention and examine the admissibility and merits of the case together.
Having deliberated, decides as follows:
THE FACTS
The applicant, Mr Lars Wassdahl, is a Swedish national who was born in 1947 and lives in Orsa.
The facts of the case, as submitted by the applicant, may be summarised as follows.
1. The administrative proceedings
On 28 May 1996 the Tax Authority (skattemyndigheten) of the County of Kopparberg sent a preliminary consideration (övervägande) to the applicant informing him that it was considering disallowing the deduction he had made for the interest he had paid on debts in the amount of SEK 2,000,000 (approximately EUR 215,000), as well as his declared capital gains for the sale of stocks in the amount of SEK 775,000 (around EUR 83,300), that he had made in his tax return for 1995. Further, it was considering imposing tax surcharges (skattetillägg) amounting to SEK 147,000 (approximately EUR 15,800), i.e. 40% of the increased tax liability on the sum of SEK 1,225,000.
The preliminary consideration was based on information provided by the Tax Authority of the County of Örebro, which had carried out an investigation of the company N. A. Fintling & Co Kommission AB (hereinafter referred to as “Fintling”). According to that authority, Fintling had made business with a substantial number of private persons, including the applicant, selling and then buying stocks back from them, as well as lending them the money to buy the stocks to begin with (a loan on which each individual paid interest to Fintling when repaying the loan). As concerned the applicant, it appeared that he had borrowed SEK 40,000,000 (around EUR 4,300,000) from Fintling and commissioned Fintling to buy stocks for the same amount on his behalf. The applicant then sold the stocks back to Fintling at a fixed date, upon which he had made a capital gain. At the same time, he repaid the loan together with interest to Fintling. As the capital gain corresponded to the interest, they were set off against each other.
The Tax Authority considered that the transactions had in reality never taken place and that the applicant had simply received two statements of account and a promissory note in order to use them to obtain tax advantages.
The applicant was requested to submit any comments he might have to the Tax Authority by 22 July 1996, which he did. He claimed that the transactions had taken place and that his tax return should be approved.
On 27 September 1996 the Tax Authority decided to follow its preliminary consideration. With regard to the imposition of tax surcharges, it found that the applicant had submitted incorrect information about the purported transactions.
On 3 January 1997 the applicant appealed against the decision, disputing the Tax Authority’s findings. He maintained that there were no grounds for disallowing the deductions or imposing tax surcharges on him. He claimed that the transactions had taken place and had involved a substantial business risk for him. Moreover, since he had declared the transactions in his tax return, he had not submitted incorrect information and it was therefore unreasonable to impose tax surcharges on him.
On 30 April 1997 the Tax Authority made its obligatory re-assessment of its decision of 27 September 1996 but upheld it. It then forwarded the appeal to the County Administrative Court (länsrätten) of the County of Dalarna.
In a telephone conversation on 9 May 1997 with the Tax Authority, the applicant asked it to send him the investigation report concerning Fintling. On 12 May 1997, the Tax Authority replied in writing that the investigation material relating to Fintling concerned a large number of individuals and was therefore confidential; however, all those parts of the investigation material which concerned him had been set out in the preliminary consideration of 28 May 1996 and the decision of 29 September 1996.
In a letter which arrived at the Country Administrative Court on 16 May 1997, the applicant requested that the Tax Authority be ordered to give him access to the entire investigation report concerning Fintling. He also requested that the court hold an oral hearing in his case.
On 29 May 2000 the County Administrative Court rejected the applicant’s appeal after having held an oral hearing. It first noted that the parts of the investigation material of Fintling which concerned the applicant had been conveyed to him and that the case could thus be decided on the relevant material available. It then agreed with the Tax Authority’s conclusion that no transactions had in reality taken place between the applicant and Fintling, for which reason they could not be included in his tax return. With regard to the tax surcharges, the court found that the applicant had submitted incorrect information to the Tax Authority and that there were no grounds on which to remit them.
On 30 June 2000 the applicant appealed to the Administrative Court of Appeal (kammarrätten) in Sundsvall, maintaining his claims and requesting that an oral hearing be held. On 30 January 2002 he made further submissions to the court, stating inter alia that his rights under Article 6 of the Convention had been violated as he had not had access to the same material as the Tax Authority and the tax surcharges had been imposed as a punishment even though he had not committed any crime. Moreover, he withdrew his request for an oral hearing which had already been scheduled for 7 February 2002.
By judgment of 15 April 2002 the Administrative Court of Appeal upheld the lower court’s judgment in full, without giving any new reasons of its own.
On 27 May 2003 the applicant appealed to the Supreme Administrative Court (Regeringsrätten), relying on the same grounds as before the lower courts and expanding them further. On 11 September 2003 the Supreme Administrative Court refused leave to appeal.
2. The criminal investigation and the civil proceedings
In the meantime, on 16 April 1997 the applicant was questioned by the police on suspicion of having committed aggravated tax fraud or tax fraud using falsified documents (grovt skattebedrägeri alternativt skattebedrägeri medelst brukande av osann urkund). Apparently, the Tax Authority had reported him to the Prosecutor’s Office because of the transactions declared in his 1995 tax return. However, the preliminary investigation was annulled by the prosecutor as he found that it could not be shown that the applicant had committed any crime.
On 25 November 2003 the applicant sued the Swedish State, through the Chancellor of Justice, before the District Court (tingsrätten) in Stockholm. He sought SEK 6,850,000 (approximately EUR 736,000) in damages on the grounds that the Tax Authority and the administrative courts had not offered him a fair procedure, having withheld from him the investigation report concerning Fintling and given the excessive length of proceedings. He invoked national legislation as well as the Convention and its case-law.
The State contested the suit, claiming that it had not caused the applicant any injury, either by fault or neglect, for which he could claim damages.
The parties developed their respective claims and the reasons therefore, and the court held a preparatory hearing in March 2004, following which they submitted further information to the court. In June 2004 the court requested that the parties clarify certain aspects of the case, which they did during the autumn of 2004.
In a judgment of 21 December 2004 the District Court rejected the applicant’s claims. It found that he had been given access to all the material which concerned his case in the tax proceedings and that the Tax Authority and the administrative courts had based their decisions and judgments solely on that material. Moreover, the County Administrative Court had held an oral hearing in the case. Thus, there was no indication that the Tax Authority or the administrative courts had committed any fault or neglect in the handling of the applicant’s case. As concerned the length of the proceedings, the District Court considered that its examination of the case had not taken so long as to incur the State’s liability for damages.
On 27 December 2004 the applicant appealed to the Svea Court of Appeal (hovrätten), maintaining his claims and arguments, and adding that he considered that there were serious grounds on which to suspect that the State had manipulated the information it had submitted to the District Court concerning the Fintling investigation. He insisted that it was relevant for his case to have access to the entire investigation report in order to defend himself adequately. On 1 February 2005 he clarified his stance on certain points in his appeal.
The case is currently pending before the Court of Appeal.
COMPLAINTS
The applicant complains that his rights under Article 6 of the Convention have been violated in that the length of the tax proceedings, which lasted about seven years and three months, was excessive. Moreover, he alleges that both Articles 6 and 13 of the Convention have been violated in that he was refused access to the entire Fintling investigation report even though it had been relied on by the Tax Authority in the tax proceedings against him, and he had been convicted on the basis of it. Moreover, the proceedings before the administrative courts had not been fair and the District Court had made various errors in its handling of the case. Furthermore, he claims that the administrative courts’ judgments did not have a legal basis, in contravention of Article 7 of the Convention, as they did not follow relevant Swedish and international law. Lastly, invoking Article 4 of Protocol No. 7 to the Convention, he states that he has been sentenced to pay tax surcharges even though he was freed from the criminal suspicions against him.
THE LAW
1. The applicant complains that the tax proceedings were not finalised within a reasonable time, as they lasted more than seven years and three months, in contravention of Article 6 § 1 of the Convention which, in relevant parts, reads as follows:
“In the determination of his civil rights and obligations ..., everyone is entitled to a everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. ....”
The Court considers that it cannot, on the basis of the case file, determine the admissibility of this complaint and that it is therefore necessary, in accordance with Rule 54 § 2 (b) of the Rules of Court, to give notice of this part of the application to the respondent Government.
2. The applicant makes various other complaints under the above-cited Article 6 of the Convention, as well as Article 13 which, in relevant parts, provides as follows:
Article 13
“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”
a) The applicant claims that he lost the tax proceedings and was sentenced to pay tax surcharges based on the Fintling investigation report to which he had been refused access, first by the Tax Authority and then by the administrative courts. Thus, they had made it impossible for him to defend himself properly.
The Court notes that, although the applicant did not get access to the entire Fintling investigation report, the Tax Authority communicated to him all the details in that report relevant to his case in its preliminary consideration of 28 May 1996 (on which the applicant was invited to comment) and in its decision of 27 September 1996. Furthermore, when in May 1997 the applicant requested the Tax Authority to send him the entire Fintling report, he was informed that it concerned a large number of private persons and was therefore confidential, except as regards those parts which concerned him and of which he was notified. Moreover, the administrative courts reached their decisions solely on the basis of that communicated material.
In these circumstances, the Court considers that the applicant was not hindered in or deprived of the opportunity to protect his interests or contest the Tax Authority’s views. The Court thus finds no appearance of any violation of Articles 6 or 13 of the Convention as regards this aspect of the case.
It follows that this complaint must be rejected as being manifestly ill-found, pursuant to Article 35 §§ 3 and 4 of the Convention.
b) The applicant next complains that the proceedings before the administrative courts were unfair as they did not take into account all his evidence but simply followed the Tax Authority’s decision.
The Court reiterates that it is not its function to deal with an application alleging that errors of law or fact have been committed by national courts unless and in so far as they may have infringed rights and freedoms protected by the Convention. Moreover, while Article 6 of the Convention guarantees the right to a fair hearing, it does not lay down any rules on the admissibility of evidence or the way it should be assessed, which are therefore primarily matters for regulation by national law and the national courts (see, among other authorities, García Ruiz v. Spain [GC], no. 30544/96, § 28, ECHR 1999-I).
Noting that the present complaint concerns the administrative courts’ evaluation of facts and evidence, the Court finds that the applicant’s submissions do not disclose any appearance of a violation of the Convention.
It follows that this complaint is also manifestly ill-founded within the meaning the Article 35 § 3 of the Convention and must be rejected pursuant to Article 35 § 4.
c) The applicant alleges that the District Court did not handle his case correctly, making several errors during the proceedings.
The Court observes that the civil proceedings are still pending in Sweden before the Court of Appeal, for which reason the complaint is premature. It follows that this part of the application is inadmissible for non-exhaustion of domestic remedies within the meaning of Article 35 § 1 of the Convention, and must be rejected pursuant to Article 35 § 4.
3. The applicant further claims that the judgments of the administrative courts had no legal basis. He invokes Article 7 of the Convention which, in relevant parts, reads:
“No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. ....”
The Court recalls that the imposition of the tax surcharges of the present kind falls within the scope of Article 7 of the Convention (see primarily, Janosevic v. Sweden, no. 34619/97, 23 July 2002, §§ 68-71, ECHR 2002-VII, and Västberga Taxi Aktiebolag and Vulic v. Sweden, no. 36985/97, 23 July 2002, §§ 79-82). However, the Court finds that the tax surcharges were imposed on the applicant by the Tax Authority and the administrative courts with clear reference to the applicable provisions of the Taxation Act in force at the relevant time, and their decisions and judgments were in accordance with these provisions. Thus, the Court is satisfied that the domestic judgments had an adequate legal basis for the purposes of Article 7 of the Convention.
It follows that this complaint is manifestly-ill founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.
4. Lastly, the applicant complains that his rights under Article 4 § 1 of Protocol No. 7 to the Convention have been violated in that he was sentenced to pay the tax surcharges even though the criminal investigation against him was discontinued. This provision reads:
“No one shall be liable to be tried or punished again in criminal proceedings under the jurisdiction of the same State for an offence for which he has already been finally acquitted or convicted in accordance with the law and penal procedure of that State.”
The Court observes that the preliminary investigation against the applicant on suspicion of aggravated tax fraud or tax fraud using falsified documents was discontinued by the prosecutor as he found that it could not be shown that the applicant had committed any crime. Thus, it cannot be said that the applicant has been finally acquitted as no court of law has ruled on the matter and the investigation, theoretically, could be re-opened. Consequently, the applicant cannot claim to have been punished twice and the principle of ne bis in idem has therefore not been breached.
It follows that this complaint must also be rejected as being manifestly ill-founded within the meaning of Article 35 §§ 3 and 4 of the Convention.
For these reasons, the Court unanimously
Decides to adjourn the examination of the applicant’s complaint concerning the length of the administrative proceedings;
Declares the remainder of the application inadmissible.
S. DolléJ.-P. Costa
RegistrarPresident
Full & Egal Universal Law Academy