Information Note on the Court’s case-law No. 163May 2013Maksymenko and Gerasymenko v. Ukraine - 49317/07Judgment 16.5.2013 [Section V]Article 1 of Protocol No. 1Article 1 para. 1 of Protocol No. 1Deprivation of propertyInvalidation ten years after the event of privatisation of hostel and all subsequent transfers of property without compensation: violation Facts – In 2004 the applicants purchased a hostel that had been privatised in 1995 from S., a private company in liquidation. However, in 2006 the domestic courts invalidated the original 1995 decision to privatise the hostel and all subsequent transfers of property and ruled that ownership of the hostel was to be transferred to the town council. The applicants were awarded compensation to be paid by S, but this was never paid. In 2007 the regional court of appeal found in a separate case that the privatisation of another hostel in 1995 had been lawful, since hostels did not form part of State housing stock. Subsequently, the town council sold to their occupants twelve of the fourteen apartments at the hostel that had been purchased by the applicants.Law – Article 1 of Protocol No. 1: There had been a deprivation of property which amounted to interference with the applicants’ right to the peaceful enjoyment of their possessions. The decision of 2006 invalidating the 1995 decision to privatise was based on a provision of national law which appeared unclear as there was no single approach at national-court level on whether “hostels” were caught by the prohibition on privatising “housing stock”. The State authorities had, with a view to protecting the housing rights of others, corrected what they considered to be an erroneous interpretation of the law in force more than ten years earlier. In this context, the principle of good governance had particular importance and in addition to imposing an obligation on the authorities to act promptly to correct a mistake, could also require the payment of adequate compensation or another type of appropriate reparation. Before taking the decision to sell the hostel to the applicants, the board of creditors had informed the State authorities of possible complications but in January 2004 the town mayor had explicitly refused to take over ownership of the hostels. A year later the prosecutor had instituted court proceedings seeking to invalidate the contract of sale of the hostel on the grounds that the hostel should not have been privatised in the first place. However, a year after the decision satisfying the prosecutor’s claim was upheld by a higher court, 85% of the hostel apartments had been sold on to their occupants. This confirmed that the State did not intend to keep the hostel for use as social housing. Lastly, the applicants had not received any compensation for the property. Although the domestic courts had ordered S. to pay compensation, they must have been aware by then that the company was already insolvent. In such circumstances, the Court was not convinced that the applicants were required to institute further proceedings to claim damages from the State and so dismissed the Government’s objection in that regard. Accordingly, even assuming the interference in question was based on clear and foreseeable provisions of the national law and was aimed at protecting the housing rights of others, the fact that the applicants, who were bona fide purchasers, were unable to obtain compensation for their losses, which had been inflicted on them by the inconsistent and erroneous decisions of the State authorities, constituted a disproportionate burden.Conclusion: violation (unanimously).Article 41: EUR 3,000 in respect of non-pecuniary damage; EUR 6,127 in respect of pecuniary damage. © Council of Europe/European Court of Human RightsThis summary by the Registry does not bind the Court.Click here for the Case-Law Information Notes