ITEMID: 001-60487
LANGUAGEISOCODE: ENG
RESPONDENT: GBR
BRANCH: GRANDCHAMBER
DATE: 2002
DOCNAME: CASE OF KINGSLEY v. THE UNITED KINGDOM
IMPORTANCE: 1
CONCLUSION: Violation of Art. 6-1;Non-pecuniary damage - finding of violation sufficient;Costs and expenses partial award - domestic proceedings
JUDGES: Gaukur Jörundsson;Luzius Wildhaber;Nicolas Bratza
TEXT: 11. Between 1984 and 1992 the applicant was the sole managing director of London Clubs Limited (“LCL”), a company which owned and controlled six of the twenty casinos licensed to operate in London. LCL was a subsidiary company of London Clubs International PLC (“LCI”) of which the applicant was also managing director. Both companies will hereafter be collectively referred to as London Clubs.
12. In June 1991 a raid took place at the various premises of LCL. The raid was carried out by the police in the presence of officials of the Gaming Board for Great Britain (“the Gaming Board”), a statutory body which regulates and monitors the gaming industry. A large quantity of documents was seized. In March 1992 the Gaming Board lodged objections with the clerk to the Licensing Magistrates with regard to LCL's annual application for renewal of the licences it held in respect of each of its casinos. The Gaming Board also made cancellation applications in respect of the existing licences held by LCL.
A meeting was held between the Gaming Board and the non-executive directors of LCL and their legal advisers on 26 March 1992. As a result of that meeting, the applicant and the other executive directors (with the exception of the finance director) resigned with effect from 30 April 1992, on the understanding that such resignation was involuntary and constituted dismissal by London Clubs.
Subsequently an agreement was reached between the Gaming Board and London Clubs, whereby LCL would apply for new licences for the casinos via reconstituted operating companies, to which applications the Gaming Board would not object. If the applications were successful and new licences were granted by the Licensing Magistrates, LCL would undertake to surrender its existing licences, thereby avoiding the necessity for the applications for cancellation or renewal to be heard.
The Gaming Board issued LCL with certificates of consent, which LCL was statutorily obliged to obtain from the Gaming Board as a prerequisite to making an application to the Licensing Magistrates for new licences. Objections to the issuing of new licences were made by a rival casino owner. However, these objections were rejected and new licences were granted in October 1992, after a three day hearing before the Licensing Magistrates. The Gaming Board was represented at the hearing and expressed to the Licensing Magistrates its support for the application of LCL, explaining the grounds on which the Gaming Board itself had granted LCL certificates of consent in the following terms:
“In determining that it should issue certificates of consent the Board took into consideration, amongst other relevant factors, the degree to which LCI had addressed the Board's grave concerns at the matters of complaint referred to above, and in particular had in mind the following:
Those executive directors of LCI and of [LCL] who in the Board's view carried the principal responsibility for the matters of complaint ... [the applicant was named along with nine others] have left the company and relinquished their management shares.
...
The Board and Police viewed the matters raised in their cancellation applications extremely seriously. However they are satisfied that the practices that were unacceptable have now been eradicated and that those individuals responsible for encouraging or tolerating them have been removed.”
13. In November 1992 the Chairman of the Gaming Board, Lady Littler, addressed the British Casino Association at its annual luncheon. Her speech referred to London Clubs and commented:
“We [the Gaming Board] satisfied ourselves that the practices we and the Police had regarded as unacceptable had ceased, that persons regarded by the Board and Police as not fit and proper had been removed ...”
14. As a result of this speech, the applicant's legal advisers entered into correspondence with the Gaming Board's solicitors, on the basis that the speech was defamatory. The Gaming Board alleged that the “persons” referred to were minority shareholders and no reference to the applicant was intended. The applicant did not accept this explanation, but did not institute defamation proceedings.
15. By a letter of 22 December 1992, the applicant's legal advisers received written notice that the Gaming Board was considering whether the applicant was a fit and proper person to hold the Board's certificate of approval, as required by section 19 of the Gaming Act 1968 (“the 1968 Act”) in order to hold a management position in the gaming industry. By a letter dated 23 April 1993, the Gaming Board informed the applicant formally that it was “minded to revoke” the applicant's section 19 certificates and that the applicant would be given the opportunity to state his case against revocation either in writing or orally at an interview before the Gaming Board (“a section 19 hearing”).
The letter detailed the matters which the Gaming Board wished to discuss with the applicant and also referred to the particulars of the Gaming Board's complaints in the application for cancellation of LCL's licences (the hearing of which had, in fact, never taken place). In these complaints, numbered B1 to B9, it was claimed, inter alia, that there had been breaches of section 16 of the 1968 Act, in that cheques had been accepted without any expectation that they would be met promptly (B1); that the applicant had been involved in granting cheque-cashing facilities to members without proper investigation of their creditworthiness (B2); that cheques had been accepted which exceeded the authors' cheque-cashing facility (B3); that third-party cheques had been accepted in a way which would permit circumvention of the 1984 Guidelines of the British Casino Association (B4); that Japanese players had been assisted in breaching Japanese exchange-control regulations (B5); that gifts or hospitality had been made to substantial players in breach of further 1984 guidelines (B7); and that the method for computing the “cash drop” in casinos produced inaccuracies, and was open to abuse (B9). Examples were given.
16. The applicant's legal advisers objected to the Gaming Board presiding the section 19 hearing, suggesting that an independent tribunal be set up as an alternative. The applicant's principal objection was based on the fact that the Gaming Board had already publicly expressed the view (at the hearing before the Licensing Magistrates) that the applicant was not a fit and proper person to remain an executive director of London Clubs. As such, the applicant contended, the Gaming Board could not be considered an impartial tribunal appropriate to consider the issue of whether the applicant's section 19 certificates should be revoked.
17. The Gaming Board rejected the request for an independent tribunal and the section 19 hearing opened on 11 April 1994 before a panel of three, all members of the Gaming Board (“the Panel”). The hearing was conducted in private and lasted for seven and a half days. The applicant was represented by senior counsel. The Gaming Board's solicitors, a senior Gaming Board official and a representative of the Gaming Board's accountants also attended the hearing.
By a letter dated 28 May 1994, the applicant was informed that the Gaming Board did not consider the applicant to be a fit and proper person to continue to hold the Board's certificates of approval and that, accordingly, the Board would revoke his section 19 certificates within twenty-one days of receipt of the letter. This letter detailed the matters which had been of concern to the Gaming Board and the complaints that it deemed established against the applicant.
18. The effect of the revocation of the section 19 certificates was that the applicant was unable to obtain employment in any sector of the gaming industry in the United Kingdom or in any jurisdiction which had a relationship with the United Kingdom gaming authorities.
19. By an application dated 23 August 1994, the applicant sought leave to apply for judicial review of the decision of the Gaming Board to revoke his section 19 certificates. The decision was challenged on the grounds that the Panel was biased, or had the appearance of bias, and that its findings were vitiated by errors of law and were irrational.
20. In the course of the judicial review proceedings, a document entitled “Confidential Annex to Minutes of the 281st Board Meeting of the Gaming Board for Great Britain”, dated 21 January 1993, was produced, attached to an affidavit sworn by the Chairman of the Gaming Board. This document recorded that the Gaming Board had decided at its meeting on 21 January 1993 that it had
“sufficient evidence before it to conclude that [the applicant] ... was not a fit and proper person to be a director of a casino company”.
21. All the members of the Panel before which the section 19 hearing took place had been present at the Board meeting and were parties to this decision, which had been taken prior to the hearing itself.
22. The application for judicial review was dismissed on 11 January 1996 by Mr Justice Jowitt after a hearing lasting over sixteen days. He delivered three separate judgments in respect of the applicant's appeal. The first judgment dealt with the scope of the phrase “a fit and proper person” in Schedule 5 of the 1968 Act. The second judgment considered the applicant's claim that he had a “legitimate expectation” that the Gaming Board would be precluded from taking account of any breaches of its guidelines unless the breaches were unlawful. The third judgment, which dealt with “Wednesbury” challenges and allegations of bias, ran to 165 pages. Mr Justice Jowitt stated that the scope of the judicial review was such that he was not concerned to review findings of fact, as for an appeal, but rather to assess whether the findings of the Panel disclosed illegality, irrationality (“Wednesbury unreasonableness”) or procedural impropriety.
23. On pages 28 to 93 of the third judgment, Mr Justice Jowitt dealt with the applicant's “Wednesbury” challenges to the findings in respect of the various complaints made of him.
24. By way of example, it was accepted that cheques drawn by one player, a Mr S., on a Spanish and a Swiss bank were not cleared within twenty-one days after payment into a British bank, as would be the normal course of events. Rather, the average time for clearance was 179 days. The Board found that this practice breached section 16 of the 1968 Act, which prohibits credit betting save when a cheque is exchanged for tokens. The applicant alleged that the cheques he accepted were not shams, as none of the Spanish cheques was ever dishonoured. The judge found that the Board's conclusion – that what took place amounted to an agreement between Mr S. and LCL, such that section 16 was breached – was a conclusion it was entitled to reach.
25. Fifty-seven pages of the third judgment were devoted to the issue of bias. Mr Justice Jowitt described the test of bias under English law in the following terms (pp. 93-96 of the judgment):
“[Counsel for the applicant] submits that the decision to revoke the applicant's section 19 certificates of approval should be quashed because the Panel was biased. The grounds on which leave to move for judicial review were granted asserted firstly that the Board could not and did not approach its decision with objectivity and impartiality. Secondly, it was asserted that whether or not there was actual bias the applicant reasonably believed there was and that the Board should have had regard to the appearance of bias which had been created by its actions ...
There was no disagreement between the parties as to the approach the court should adopt when bias is alleged. It is a two-stage test. The applicant has first to show from the evidence that there is an appearance of bias (R. v. Inner West London Coroner, ex parte Dallaglio [1994] 4 All England Law Reports 139). [Counsel for the Gaming Board] properly and realistically accepts that in the light of the available evidence the applicant has surmounted this hurdle. Having done so, he has to go on to show that on a proper examination by the court of the evidence before it there is demonstrated a real danger of injustice having occurred as a result of bias ... [The analysis in that case of] the decision of the House of Lords in R. v. Gough [1993] Appeal Cases 646 ... illuminates my task in relation to this second stage.
'(1) Any court seised of a challenge on the ground of apparent bias must ascertain the relevant circumstances and consider all the evidence for itself so as to reach its own conclusion on the facts.
...
(3) In reaching its conclusion the court “personifies the reasonable man”.
(4) The question on which the court must reach its own factual conclusion is this: is there a real danger of injustice having occurred as a result of bias? By “real” is meant not without substance. A real danger clearly involves more than a minimal risk, less than a probability. One could, I think, as well speak of a real risk or a real possibility.
(5) Injustice will have occurred as a result of bias if “the decision-maker unfairly regarded with disfavour the case of a party to the issue under consideration by him”. I take “unfairly regarded with disfavour” to mean “was pre-disposed or prejudiced against one party's case for reasons unconnected with the merits of the issue”.
(6) A decision-maker may have unfairly regarded with disfavour one party's case either consciously or unconsciously. Where, as here, the applicants expressly disavow any suggestion of actual bias, it seems to me that the court must necessarily be asking itself whether there is a real danger that the decision-maker was unconsciously biased.
(7) ... the court is [not] concerned strictly with the appearance of bias but rather with establishing the possibility that there was actual although unconscious bias.
...
(9) It is not necessary for the applicant to demonstrate a real possibility that the ... decision would have been different but for the bias; what must be established is the real danger of bias having affected the decision in the sense of having caused the decision-maker, albeit unconsciously, to weigh the competing contentions, and so decide the merits, unfairly.' ”
26. Mr Justice Jowitt then applied the test of bias which he had set out to the facts of the case, and concluded that, on the evidence before him, he could not say that the applicant had established that there was a real danger of injustice having occurred as a result of bias. He concluded that there was no unconscious bias on the part of any of the Panel members.
27. Mr Justice Jowitt stated further that if, contrary to his finding, there was unconscious bias on the part of the Panel, the “doctrine of necessity” fell to be considered. He said:
“When a body is charged by statute with the power or duty, which cannot be delegated, to make a decision in circumstances in which a question of bias arises because:
(i) in pursuance of that statutory power or duty an initial view has been formed upon a matter affecting the interests of someone in respect of whom the body in the exercise of its statutory power or duty has thereafter to make a decision, or final decision, after receiving and considering representations which he is entitled to make or
(ii) in the exercise of a statutory power or duty to make a decision a conflict arises between the interests of another or others which have to be taken into account and the body's own interests:
the decision will not be liable to be impugned on account of bias provided that:
(i) if only some of those charged with the power or duty to decide are potentially affected by bias such of them as can lawfully withdraw from the decision-making do so, and
(ii) those of the decision-makers who are potentially affected by bias but cannot lawfully withdraw use their best endeavours to avoid the effect of bias and, consistently with the purpose for which its decision has to be made, the body takes what reasonable steps are open to it to minimise the risk of bias affecting them ...”
Mr Justice Jowitt indicated that if, contrary to his finding, there was unconscious bias on the part of the Panel, the doctrine of necessity would apply, and the decision of the Panel would stand. Counsel for the applicant submitted before Mr Justice Jowitt that the Board had failed to take the reasonable step of appointing an independent body to hear evidence and report to the Panel. Mr Justice Jowitt rejected the submission, on the grounds that no useful reference could have been made to an independent tribunal which did not involve an impermissible delegation.
28. In respect of all other allegations brought by the applicant, Mr Justice Jowitt concluded that the applicant had failed to establish that the Panel's decision was irrational or unreasonable or to make out any sufficient ground for judicial review. Mr Justice Jowitt noted that, by trying to frame his allegations in terms of “Wednesbury unreasonableness”, the applicant was in fact making an impermissible attempt to re-argue the case as though on appeal in order to have the factual merits of the case re-examined.
29. The Court of Appeal, after an oral hearing on 4 July 1996, refused an application for leave to appeal from Mr Justice Jowitt's decision. Lord Justice Morritt (with whom Lord Justice Hobhouse agreed) held, on the “doctrine of necessity,” as follows:
“I am prepared to assume in favour of [the applicant] that he would have an arguable case sufficient to justify leave to appeal, that there was a real risk that the decision of the tribunal had been actuated by bias even though they were not in fact biased against him. That would leave the question of how the doctrine of necessity would be applied to the facts of the case.
[Counsel for the applicant] did not seek to suggest that the propositions of law which [Mr Justice Jowitt] enunciated, and which I have quoted, were not accurately formulated by him, but he sought to challenge the final conclusion, to which I have just referred, that there could have been [no] useful reference to an independent tribunal which did not involve an impermissible delegation. The question of bias, therefore, depends on the very limited point of whether it is arguable that [Mr Justice Jowitt] was wrong in that respect. I am bound to say that, on that limited point, I think he was manifestly right. The decision for the Board was, at the end of the day, whether or not Mr Kingsley was a fit and proper person. That could not be delegated to an independent panel and if they were actuated by bias, apparent or real, then the decision would still have to be made by them. Therefore, on the doctrine of necessity, which is accepted, there could have been no meaningful independent panel and the decision would stand because the decision has to be made by the Board and could not be delegated to the independent tribunal. It seems to me that there is no arguable point, susceptible on this part of the case, which would justify giving leave to appeal.”
30. The Gaming Board for Great Britain (“the Gaming Board”) is a statutory body, established under section 10 of the Gaming Act 1968 (“the 1968 Act”) to regulate and monitor the gaming industry. In order for any company to obtain the requisite gaming licence for premises, a certificate must first be issued by the Gaming Board consenting to the company applying for such a licence (Schedule 2, paragraph 3(1), of the 1968 Act).
31. Under section 19 of the 1968 Act the Gaming Board issues certificates to individuals in order that they be permitted to hold certain positions in the gaming industry. A certificate, once issued, continues to be in force unless and until it is revoked. The Gaming Board may revoke the certificate at any time if it appears to the Board that the person to whom it relates is not a fit and proper person to perform the specified function or act in the specified capacity (Schedule 5, paragraph 6, of the 1968 Act). Twenty-one days' written notice of the revocation must be given to the certificate holder. The Gaming Board has developed a procedure whereby an individual is sent a letter in which the Board states that it is minded to revoke his certificate. This is followed by the submission of written representations and/or an oral hearing.
VIOLATED_ARTICLES: 6
VIOLATED_PARAGRAPHS: 6-1


ITEMID: 001-87116
LANGUAGEISOCODE: ENG
RESPONDENT: RUS
BRANCH: CHAMBER
DATE: 2008
DOCNAME: CASE OF ISAKOV v. RUSSIA
IMPORTANCE: 4
CONCLUSION: Violation of Article 6 - Right to a fair trial;Violation of Article 13 - Right to an effective remedy
JUDGES: Anatoly Kovler;Christos Rozakis;Dean Spielmann;Elisabeth Steiner;George Nicolaou;Giorgio Malinverni;Sverre Erik Jebens
TEXT: 4. The applicant was born in 1939 and lives in Kosta Khetagurova, a village in Karachay-Cherkessia.
5. The facts of the case, as submitted by the parties, may be summarised as follows.
6. In 1990 the applicant subscribed to a State savings scheme for buying a car. The State failed to provide the car, and the applicant had to apply to a court.
7. On 19 December 2002 the Mirninskiy District Court of Yakutia awarded the applicant 138,967 Russian roubles against the Ministry of Finance. On 5 February 2003 the judgment became binding, but was not enforced.
8. On 15 July 2004 the Presidium of the Supreme Court of Yakutia allowed the Ministry’s supervisory-review complaint, and quashed the judgment on the ground that the district court had misinterpreted material law.
9. Under section 9 of the Federal Law on Enforcement Proceedings of 21 July 1997, a judgment must be enforced in two months.
VIOLATED_ARTICLES: 13
6


ITEMID: 001-103566
LANGUAGEISOCODE: ENG
RESPONDENT: BGR
BRANCH: ADMISSIBILITY
DATE: 2011
DOCNAME: NAZAREV AND OTHERS v. BULGARIA
IMPORTANCE: 4
CONCLUSION: Inadmissible
JUDGES: Angelika Nußberger;Ganna Yudkivska;Karel Jungwiert;Mark Villiger;Mirjana Lazarova Trajkovska;Peer Lorenzen;Zdravka Kalaydjieva
TEXT: The applicant in application no. 26553/05 (“the first application”), Mr Stefan Mihailov Nazarev, is a Bulgarian national who was born in 1931 and lives in Plovdiv. At the relevant time he was a sole trader, registered under the name ET EKIP-3-STEFAN NAZAREV. Under Bulgarian law, sole traders do not have a distinct legal personality separate from the natural persons in whose name they are registered. The applicant was represented before the Court by Mr M. Ekimdjiev and Ms K. Boncheva, lawyers practising in Plovdiv.
The applicants in application no. 25912/09 (“the second application”) are N.D.E. EOOD, a Bulgarian sole-ownership limited liability company established in 2000 with its registered office in Sofia, and Mr Adel Abdo Sarkis, a Bulgarian national who was born in 1957 and lives in Sofia. Mr Sarkis complains both in a private capacity and as managing director and sole owner of the capital of the applicant company, which under Bulgarian law has a distinct legal personality.
The applicant in application no. 40107/09 (“the third application”), Ms Petya Borisova Hasardzhieva, is a Bulgarian national who was born in 1965 and lives in Plovdiv. At the relevant time she was a sole trader, registered under the name ET ELITKOMPLEKS-PETYA BORISOVA. She was represented before the Court by Mr M. Ekimdjiev and Ms K. Boncheva, lawyers practising in Plovdiv.
The applicant in application no. 12509/10 (“the fourth application”) is TGroup Bulgaria EOOD, a Bulgarian sole-ownership limited liability company established in 2005 and with its registered office in Plovdiv. It is represented before the Court by Advokatsko Druzhestvo Balkanski & Partners, a law firm with its registered office in Plovdiv.
s, may be summarised as follows.
On 30 March 1994 the applicant obtained a value-added tax (“VAT”) registration.
In 1997 the Iztok Tax Office of the Plovdiv Territorial Tax Directorate conducted a VAT audit of the applicant for the period from 1 January to 31 December 1997. The audit ended on 29 January 1998 with a Findings of Fact, which identified a number of irregularities in the VAT compliance of the applicant and proposed that a tax assessment be issued to him. A tax assessment was, however, never issued.
On 12 June 1998 the applicant's accounting records for the 1996 and 1997 fiscal years were stolen. On 15 June 1998 he notified the police and the Iztok Tax Office of the Plovdiv Territorial Tax Directorate of the theft.
In 2001 the Plovdiv Territorial Tax Directorate conducted another VAT audit of the applicant in respect of the period from 1 January 1997 to 30 June 2000.
On 22 June 2001 the Plovdiv Territorial Tax Directorate issued the applicant with a tax assessment (“the 2001 tax assessment”) whereby it refused him the right to deduct the VAT he had paid to a number of suppliers (“the input VAT”) in 1997, 1998 and 1999. The input VAT whose deduction was refused totalled 51,245.60 new Bulgarian levs (BGN, 26,212 euros (EUR)), on which interest for late payment was also charged in the amount of BGN 58,585 (EUR 29,966).
On 8 August 2001 the applicant appealed against the 2001 tax assessment.
On 21 September 2001 the Plovdiv Regional Tax Directorate upheld the 2001 tax assessment in its entirety. It also noted that in so far as the 1997 VAT audit had not ended with a tax assessment, there was no formal restriction on conducting a second audit in respect of the same period.
On 14 September 2001 the applicant appealed to the courts. In the course of the proceedings the tax authorities failed to present the trial court with the original of the Findings of Fact of 29 January 1998, because they could not find it in their archives. An uncertified copy of the said document was nevertheless presented to the trial court.
In a judgment of 15 June 2004 the Plovdiv Regional Court found partly in favour of the applicant, quashed the 2001 tax assessment in respect of the deductibility of input VAT in the amount of BGN 49,516.97 (EUR 25,392) and upheld the remainder.
On an unspecified date, the Plovdiv Regional Tax Directorate filed a cassation appeal against the judgment of the Plovdiv Regional Court to partly quash the 2001 tax assessment in respect of the deductibility of input VAT in the amount of BGN 49,516.97 (EUR 25,392). In respect of the remainder, the judgment of the Plovdiv Regional Court became final.
In a final judgment of 15 March 2005 the Supreme Administrative Court reversed the judgment of the Plovdiv Regional Court, upheld the part of the 2001 tax assessment that had been quashed by the Plovdiv Regional Court and dismissed the applicant's appeal.
After the theft in 1998 the applicant did not reconstitute his accounting records for the affected years by contacting and obtaining from his suppliers copies of the stolen invoices and receipts. As a result, when the Plovdiv Territorial Tax Directorate conducted the second VAT audit in 2001 they applied Article 109 § 2 (1) to (10) of the Tax Procedure Code to assess the tax position of the applicant (see Relevant domestic law and practice below). In the course of the said tax audit the authorities examined the records that the applicant did present and also performed cross-checks of most of the suppliers from which he claimed to have received supplies.
In the 2001 tax assessment the Plovdiv Territorial Tax Directorate refused the applicant the right to deduct input VAT on the grounds that (a) some of his suppliers did not have a valid VAT registration or (b) he had failed to present them with VAT invoices or copies thereof, evidencing that he had received VAT chargeable supplies.
In finding partly in favour of the applicant, the Plovdiv Regional Court in its judgment of 15 June 2004 considered that the tax authorities had correctly applied the procedure for assessing the applicant's tax position in view of the missing accounting records. However, it considered that the information contained in the Findings of Fact of 29 January 1998 should be considered as evidence of the applicant's VAT compliance status for the 1997 fiscal year in respect of those suppliers that the tax authorities had not cross-checked. The Plovdiv Regional Court therefore quashed the 2001 tax assessment as it related to such suppliers and in respect of the supplies that the applicant had received from two suppliers which it considered had valid VAT registrations.
In its final judgment of 15 March 2005 the Supreme Administrative Court found that the Findings of Fact of 29 January 1998 cannot be considered as evidence of the applicant's VAT compliance status for the 1997 fiscal year, and also found that the tax authorities had correctly applied the procedure for assessing the applicant's tax position in view of the missing accounting records, which the latter had failed to reconstitute. It therefore upheld the part of the 2001 tax assessment that had been quashed by the Plovdiv Regional Court and dismissed the applicant's appeal.
On 8 July 2004 the applicant company executed a notary deed with another company (“the seller”) for the purchase of land and an unfinished three-storey building situated on it. The purchase price was BGN 650,000 (EUR 332,480) of which BGN 50,000 (EUR 25,575) was for the land and BGN 600,000 (EUR 306,905) for the unfinished building. The applicant company paid the price of the land on the day of the notary deed and agreed to pay the remainder before 31 December 2004.
On 8 September 2004 the applicant company executed a notary deed with a third party for the sale of a quarter share of part of the unfinished three-storey building – a café situated on the ground floor – together with the corresponding share of the land on which the building was situated.
On 28 October 2004 the applicant company obtained a VAT registration.
On 11 and 22 November 2004 the seller issued two VAT invoices to the applicant company for the unfinished three-storey building for a total of BGN 600,000 (EUR 332,480), plus VAT in the amount of BGN 100,000 (EUR 51,282). The seller and the applicant company reported the transfer of the unfinished three-storey building in the November 2004 VAT reporting period and the latter claimed a deduction of the input VAT of BGN 100,000 (EUR 51,282) it had paid on the transaction.
On 21 December 2005 the Vitosha Tax Office of Sofia Territorial Tax Directorate issued the applicant company with a tax assessment (“the 2005 tax assessment”) whereby it refused the right to deduct the input VAT of BGN 100,000 (EUR 51,282) that the applicant company had paid under the two invoices from 11 and 22 November 2004 for the purchase of the unfinished three-storey building.
On 21 December 2005 the applicant company appealed against the 2005 tax assessment.
On 20 March 2006 the National Revenue Agency upheld the 2005 tax assessment.
On 11 April 2006 the applicant company appealed to the courts.
In a judgment of 6 March 2008 the Sofia City Court dismissed the appeal of the applicant company and upheld the 2005 tax assessment.
On an unspecified date the applicant company lodged a cassation appeal against the judgment of the Sofia City Court.
In a final judgment of 4 November 2008 the Supreme Administrative Court dismissed the applicant company's appeal, but on slightly different grounds from those relied on by the Sofia City Court (see following section).
In its decision of 20 March 2006 the National Revenue Agency considered that the VAT-chargeable supply for the transfer of the unfinished three-storey building had been effected, for the purposes of VAT taxation, on 8 July 2004 when the transaction had been registered with a notary. Thus, the VAT invoice in respect of the transaction had had to be issued within five days of that event and the VAT had had to be charged, reported and paid to the State budget in respect of the July 2004 VAT reporting period. In so far as that had been done belatedly in the November 2004 VAT reporting period, it found that no right to deduct the input VAT arose for the applicant company.
In its appeal of 11 April 2006 the applicant company argued that although the notary deed had been executed on 8 July 2004 it included two separate transactions – one for the purchase of the land and one for the unfinished three-storey building. While the first had been fully settled on the day of the notary deed, the second had only been concluded when the purchase price of the unfinished three-storey building had been paid in November. In so far as the sale of land did not amount to a VAT chargeable supply, no VAT invoices had been issued nor reported in the July 2004 VAT reporting period. As the parties had contracted that payment of the price of the unfinished three-storey building would be made on a later date, the seller had issued VAT invoices in respect of it on 11 and 22 November 2004 which the applicant company had duly paid. Thus, the applicant company considered that the VAT chargeable supply in respect of the unfinished three-storey building had not arisen on 8 July 2004, but on 11 and 22 November 2004 when the seller had issued the VAT invoices.
In its judgment of 6 March 2008 the Sofia City Court concluded that the execution of the notary deed on 8 July 2004 amounted to a VAT chargeable supply in respect of the unfinished three-storey building, that VAT invoices in respect of it should have been issued within five days and that the transaction should have been reported in the July 2004 VAT reporting period. The Sofia City Court relied on section 25 (1) of the VAT Act, which stated that a VAT-chargeable event arises on the earlier date of the (a) the date on which a property right is transferred or (b) the date on which full or partial payment is made. It therefore concluded that in so far as the property rights to the unfinished three-storey building had been transferred on 8 July 2004 the parties' undertaking to pay the purchase price at a later date did not postpone the date of the VAT-chargeable event, and the transaction should have been reported in the July 2004 VAT reporting period rather than in the November 2004 reporting period. Accordingly, as the transaction had been erroneously reported by both the seller and the applicant company, no right to deduct the input VAT arose for the latter.
In its final judgment of 4 November 2008 the Supreme Administrative Court dismissed the applicant company's cassation appeal on slightly different grounds from those relied on by the Sofia City Court. It also found that the VAT-chargeable event was the transfer of the property rights to the unfinished three-storey building on 8 July 2004, but noted that the applicant company did not have a VAT registration at the time so, in any event, it would not have had the right to deduct the input VAT in that reporting period. However, at the time of its VAT registration in October 2004 the applicant company could have requested that the tax authorities recognise its right to deduct the input VAT on the transaction under a special procedure applicable to VAT transactions effected prior to obtaining a VAT registration. In so far as the applicant company had failed to make such a request, no right to deduct the input VAT on the supply in question prior to its VAT registration arose.
On 21 February 2006 the Plovdiv Territorial Tax Directorate issued the applicant with a tax assessment (“the 2006 tax assessment”). It refused the applicant's right to deduct input VAT she had paid on, inter alia, five supplies dating from 2003 which totalled BGN 8,680 (EUR 4,439), on which interest for late payment was also charged in the amount of BGN 3,071.74 (EUR 1,571).
On 28 March 2006 the applicant appealed against the 2006 tax assessment.
On 18 May 2006 the Plovdiv section of the National Revenue Agency upheld the 2006 tax assessment in its entirety.
On 20 October 2006 the applicant appealed to the courts.
In a judgment of 4 March 2008 the Plovdiv Regional Court dismissed the appeal and upheld the 2006 tax assessment.
On 24 April 2008 the applicant lodged a cassation appeal against the judgment of the Plovdiv Regional Court.
In a final judgment of 22 December 2008 the Supreme Administrative Court dismissed the applicant's appeal. It found that the applicant had failed to show, both during the audit conducted by the tax authorities and during the court proceedings, that the supplies in question had ever actually been received by her, which was sufficient ground for refusing the right to deduct the VAT paid under the issued invoices, irrespective of whether they had been properly accounted for by her suppliers.
In the course of the audit conducted by the tax authorities, the Plovdiv Territorial Tax Directorate noted that the supplies in question had been provided for marketing, advertising, agency and intermediary services. They examined the accounting records of the applicant, performed cross-checks of the suppliers in question, and obtained further clarifications and submissions from the parties. As three of the suppliers were not found at their registered tax addresses, the authorities instead examined and relied on their tax dossiers, which are held by the tax authorities. Notably, these three suppliers were registered at the same address.
In the 2006 tax assessment the Plovdiv Territorial Tax Directorate refused the right to deduct the input VAT on the five supplies from 2003 because the applicant's suppliers had failed to present the requisite proof for assessment of their tax liabilities, including evidence that they had actually carried out the supplies in question. In particular, the tax authorities found that the suppliers lacked the necessary know-how as well as the technological and human resources to provide the contracted services, while the applicant could not remember what specific services she had received from each of them. In addition, the applicant failed to provide copies of all the contracts underlying the transactions in question, the marketing reports and the results of the agency and intermediary services allegedly received.
In her appeal to the courts the applicant argued that the cross-checks conducted on her suppliers were not carried out in conformity with the applicable procedure, which allegedly predetermined their lack of success, and that the tax authorities had come to the wrong conclusions on the basis of the records and documents in their possession.
In its judgment of 4 March 2008 the Plovdiv Regional Court found certain procedural deficiencies in the cross-checks performed by the tax authorities and in some of their assessments concerning the availability of technological and human resources by some of the suppliers, but did not consider them significant enough to negate the overall conclusions that it had not been shown by the parties that the services had in fact been provided. In particular, it noted that irrespective of whether the suppliers had properly recorded and reported the supplies in question, the applicant had failed to provide the requisite proof that the transactions in questions had ever been affected, that all the underlying contracts for the services existed, and that the invoiced services had ever been received by, for example, presenting marketing reports, brochures or advertising materials produced as a result of these transactions. Finally, the court noted that the three missing traders were all located at the same address and all purported to provide the same type of advertising and marketing services, proof of which the applicant had failed to present to the tax authorities.
In its final judgment of 22 December 2008 the Supreme Administrative Court also found that the applicant had failed to show, both during the audit conducted by the tax authorities and during the court proceedings, that the supplies in question had actually ever been received by her and that there had, therefore, been VAT-chargeable supplies within the meaning of the VAT Act of 1999. It noted that this was sufficient ground to refuse the right to deduct the input VAT paid under the issued invoices, irrespective of whether they had been properly accounted for by her suppliers.
On 28 January 2008 the Sofia City Territorial Tax Directorate issued the applicant company with a tax assessment (“the 2008 tax assessment”). It refused, inter alia, the applicant company's right to deduct the input VAT it had paid to three suppliers of services in 2007 in the amount of BGN 1,526,810 (EUR 780,976), on which interest for late payment was also charged. The supplies in question were for construction works undertaken by the suppliers to complete seven buildings that the applicant company was constructing.
On an unspecified date the applicant company appealed against the 2008 tax assessment.
On 5 June 2007 the Sofia Office of the National Revenue Agency upheld the 2008 tax assessment in respect of the refusal to authorise deduction of the input VAT.
On an unspecified date the applicant company appealed to the courts, claiming that the tax authorities had applied the relevant tax legislation erroneously and had committed various procedural violations.
In the course of the court proceedings the Sofia City Administrative Court commissioned, at the request of the applicant company, at least two expert reports to assess the findings of the 2008 tax assessment.
By a judgment of 29 December 2008 the Sofia City Administrative Court upheld the 2008 tax assessment in respect of the deductibility of the input VAT.
On an unspecified date the applicant company lodged a cassation appeal against the judgment of the Sofia City Administrative Court. It claimed that the first-instance court judgment was wrong and that there had been various procedural violations.
By a final judgment of 3 August 2009 the Supreme Administrative Court upheld the judgment of the Sofia City Administrative Court in its entirety.
Under the 2008 tax assessment, as upheld by the National Revenue Agency and the courts, the applicant company was refused deduction of the input VAT it had paid to the three suppliers of services in 2007, because there was no VAT-chargeable supply within the meaning of the VAT Act of 2007.
In the course of the audit carried out of the applicant company, the authorities visited the construction sites to evaluate the type of construction works performed and their level of completion. They also carried out cross-checks on the suppliers. Although initially they were not found at their registered addresses, after further searches and notifications by the authorities representatives of the suppliers came forward and produced some of the records and documentation that had been requested of them. The authorities then evaluated the construction equipment and materials available at the suppliers, their know-how to perform such services and the human resource capabilities at their disposal. In addition, they performed cross-checks of companies from whom construction equipment had allegedly been rented and of individuals who had allegedly carried out the work. A detailed evaluation of the various construction works carried out was also undertaken and an assessment made of whether they could have been carried out by the three suppliers. As a result, the authorities concluded that the three suppliers lacked the material, technological and human resources capability to provide the services on the dates on which they were allegedly received by the applicant company. In particular, they were found to lack the necessary construction equipment, machines, tools, materials and facilities to deliver the services in question and also lacked qualified workers who could have done the work. Separately, the tax authorities found that the suppliers had invoiced for services which were outside the scope of the construction works allegedly received by the applicant company. In respect of some of the construction works, the tax authorities also established that they had been invoiced months after the work had been done. Lastly, the authorities acknowledged that construction services had been received by the applicant company in the course of the completion of its sites, but considered that it had not been proven that they had been carried out by the suppliers in question and that these transactions amounted to VAT-chargeable supplies which gave the applicant company the right to deduct the input VAT.
On the basis of the above findings, the commissioned expert reports and the submissions of the parties, the courts carried out a similar detailed analysis of the services provided and the capabilities of the suppliers to provide them. They reached identical conclusions to those of the tax authorities and found that the three suppliers lacked the material, technological and human resources capacity to do the work.
The general principles in the VAT Act 1993 regarding the chargeability and reporting of VAT as well as the right to deduct input VAT are similar to those of the VAT Act 1999, as summarised in the Bulves AD v. Bulgaria judgment (no. 3991/03, §§ 20-28, 22 January 2009).
Under the VAT Act of 1993, the input VAT, known as “the tax credit” under domestic legislation, was the amount of VAT which a taxable person had been charged on goods or services received under a chargeable transaction or from import of goods or services (section 24 (1)).
In addition, section 24 of the VAT Act 1993 provided, as relevant, the following:
“(2) The right to [deduct input VAT] arises when the following conditions are met:
1. the [taxable] person to whom tax is charged is registered under the Act on the date the tax invoice ... is issued;
2. the tax on the chargeable transaction is charged by a [taxable] person registered under the Act on the date it is performed...;
3. the transaction on which the tax is charged is chargeable on the date it is performed...;
...
5. the imported goods or the goods or services received under a chargeable transaction were used, are being used or will be used for performing chargeable transactions...;
6. the recipient has a tax invoice ... which has been recorded in his accounting records.”
Section 25 of the VAT Act 1993 further provided, as relevant, the following:
“(1) The right to [deduct input VAT] arises in respect of the tax period during which the tax invoice ... is received, which [has] to have been recorded in the [taxable] person's accounting records, but is exercised after the expiry of that tax period by including it in the [said period's tax] return.
(2) The right to [deduct input VAT] does not arise if the tax invoice ... was issued before the date of registration under the Act.”
The relevant part of section 68 of the Regulation for Implementing the VAT Act 1993, as in force up to 1999, provided the following:
“In the event of loss of the original tax invoice the [taxable] person may exercise its right to [deduct the input VAT] if, instead of the invoice,, it presents the following documents:
1. a photocopy of the issuer's copy of the [original invoice], certified by [the latter] with a date and seal;
2. a certificate from the tax office where the issuer of the lost document is registered, stating that the tax indicated therein has been charged ...”
In 1999 the Regulation for Implementing the VAT Act 1993 was replaced by a new Regulation for Implementing the VAT Act 1999.
The relevant provisions and the background to the VAT Act 1999 have been summarised in the judgment of Bulves AD, cited above, §§ 20-28).
The VAT Act 1999 also provided the following in respect of the date of the chargeable event and the chargeability of VAT:
“(1) The chargeable event within the meaning of the Act shall occur on the earlier of the following two dates:
1. the date of transfer of the right of ownership or other real property right to the goods...;
2. the date of payment (full or partial advance payment). ...
(3) the date of occurrence of the chargeable event:
1. The tax under the Act shall become due for chargeable transactions and the [taxable] person shall be obliged to charge it;
2. The right not to charge tax on exempt transactions shall arise.”
“In the following cases, the date of the chargeable event shall be assumed to have occurred:
1. in cases where goods are provided under a contract for transfer of ownership with a deferring condition or term, if there is no preliminary (full or partial) payment – the date of fulfilment of the condition or expiry of the term upon which in normal circumstances the right of ownership would be transferred; ...”
The relevant part of section 88 of the Regulation for Implementing the VAT Act 1999, as in force from 2001 to 2006, provided the following:
“(4) In the event of loss, destruction or theft of the original tax document the [taxable] person may exercise its right to [deduct the input VAT] by informing the regional directorate of the National Revenue Agency where it is registered and by obtaining a photocopy of the issuer's copy of the [original invoice], certified by [the latter] with a date and seal, which it must preserve in its accounting records.”
The relevant part of Article 109 of the Tax Procedure Code 2000 provides as follows:
“(1) The tax authority applies the rate of tax, as stipulated in the applicable law, to the taxable base as determined by the said authority [in the instances] where at least one of the following circumstances exists:
1. a [tax] return has not been filed prior to commencing the audit, in the cases where the tax liability is determined according to a [tax] return;
2. the audit authority establishes facts or circumstances concerning concealed revenue or income;
3. accounts are not kept in accordance with the Accountancy Act, or the accounts kept do not make it possible to ascertain or determine the base for taxation, as well as where the documents have been destroyed other than in accordance with the applicable procedure;
4. counterfeit documents or documents containing false statements have been used in the accounts;
5. documents have been lost, stolen or damaged to an extent that renders them unusable;
6. the taxable person has not been found at the address registered with the tax authorities after a thorough and well-documented search by the tax authorities;
7. during the tax audit the taxable person did not present evidence relevant to the determination of its tax liabilities within the deadline set by the audit authority;
8. the existence of transfer pricing or tax fraud has been established;
(2) The tax authority determines the taxable base for levying direct and indirect taxes in the instances under sub-section (1) after taking into consideration each circumstance of relevance to the taxable person concerned:
1. the type and nature of the activity actually performed;
2. the amounts paid in taxes, customs duties, contributions and other public receivables;
3. bank account transactions and balances;
4. official documents containing accurate data;
5. rental costs for the real estate where the activity is performed, in whole or in part, in rented properties;
6. the commercial significance of the place where the activity is performed;
7. capital and the market price of acquired properties at the time of acquisition;
8. gross revenue/income (turnover);
9. the number of people employed to perform the activity, the size of the workforce;
10. contracts concluded by the taxable person in connection with the activity;
11. the difference between the raw and other materials supplied and those used in production;
12. aggregated data on the profit obtained or, respectively, the revenue or income of other persons performing the same or a similar activity under the same or similar conditions;
13. pricing and other conditions of the transactions concluded for the purposes of tax evasion, including data about such transactions between parties related ... to the [audited] taxable person;
14. the usual cost of living, maintenance, education and medical treatment, as well as travel, per diem and accommodation expenses for travel within the country or abroad;
15. supplies received and provided, as well as the exercised right to [deduct input VAT];
16. other evidence which may serve to determine the tax base.
(3) The circumstances under paragraphs (1) and (2)(1-16) shall be indicated in the tax assessment.
(4) In cases under paragraph (1) the tax authority shall determine the taxable base for the relevant tax period for which the circumstances have been established, while in the case of paragraph (1)(6) they shall do so for the period determined in the order for the tax audit to be initiated.
(5) Other than in instances under paragraph (1), if the assets and the financial state of the taxable person for the appropriate tax period do not correspond to the declared and/or received revenue, income, the sources of forming the proprietary capital or the free financing for the commercial activity, the tax authority, after an analysis under paragraph (2), levies [tax on] the undeclared profits and income in accordance with the applicable law.
(6) When the tax authority discovers that there are circumstances under paragraphs (1) or (5), it informs the taxable person that it will determine the taxable base in accordance with this section and provides it with a time-limit within which it can present documents or submit an opinion.
(7) The situation outlined in a tax assessment prepared under this section shall be considered true until proven otherwise in the course of appeal proceedings.
(8) [In the process of] assessing the circumstances under paragraphs (1) or (5), taxable persons are obliged to declare their assets and all their sources of income, including their participation in bodies having a management or supervisory role in respect of juridical persons ...
(9) [In the process of] assessing the circumstances under paragraphs (1) or (5) the tax authority shall take precautionary measures to secure all claims at the time it makes the notification under paragraph (6). The imposed security measures are subject to appeal under the same procedure as for tax assessments.
(10) Disposing of attached or distrained property or receivables can be made with the permission of the tax authority which imposed the measure.
On 1 January 2006 the Tax Procedure Code was replaced by the Tax and Social Security Procedure Code.
On 1 January 2007 the VAT Act 1999 was replaced by an Act of the same name, which transposed into national legislation the then current EU legislation in the sphere of VAT. Similar to its predecessors, its sections 68 to 81 contain detailed provisions outlining the conditions and procedures for deductibility of input VAT, which, as they relate to the circumstances of the present case, are not materially different from the preceding VAT Acts summarised above.
Articles 105 to 134 of the Code provide for a detailed procedure for assessment of the tax and social security contributions due from a taxpayer and envisage, in certain circumstances, the possibility of reassessing the tax position of a taxpayer. In particular, it provides the following:
“(1) The revenue authority applies the rate of tax, as stipulated in the applicable law, to the taxable base as determined by the said authority according to the procedure established by Paragraph (2) where at least one of the following circumstances exists:
1. a [tax] return has not been filed prior to commencing the audit, in the cases where the tax liability is determined according to a [tax] return;
2. there is reason to believe that revenue or income has been concealed;
3. fake documents or documents containing false statements have been used in the accounts;
4. accounts are not kept or are not presented according to the Accountancy Act, or the accounts kept do not make it possible to determine the basis for taxation, as well as where the documents necessary for determination of the basis for levying of taxes or for determination of the compulsory social insurance contributions have been destroyed according to a procedure other than the applicable one;
5. the documents necessary for determination of the basis for levying of taxes are missing or are damaged to an extent that renders them unusable;
6. the data and information necessary for determination of the basis for the levy of taxes cannot be obtained because the auditee has not been found at the registered address referred to in Article 28;
7. the revenue, income, the sources of proprietary capital or free financing for the commercial activity of the auditee as declared and/or received do not correspond to the property and financial status of the auditee for the audit period.
(2) To determine the base for the levy of taxes, the revenue authority shall take into consideration each circumstance of relevance to the person concerned:
1. the type and nature of the activity actually performed;
2. taxes, customs duties, contributions and other public receivables paid;
3. bank transactions and balances on bank accounts;
4. official documents and the documents containing accurate data;
5. the rental costs for the real estate where the activity is performed in whole or in part;
6. the commercial significance of the place where the activity is performed;
7. the capital and the market price of acquired properties at the time of acquisition;
8. the gross revenue/income (turnover);
9. the number of persons employed to perform the activity;
10. the contracts concluded by the taxable person in connection with performing the activity;
11. the difference between the raw and other materials supplied and those used in production;
12. the aggregated data on the profit obtained or, respectively, the revenue or income by other persons performing the same or a similar activity under the same or similar conditions;
13. the pricing and the other conditions of the transactions concluded for the purposes of tax evasion, including data about such transactions between parties related to the auditee;
14. the usual cost of living, maintenance, education and medical treatment, as well as travel, per diem and accommodation expenses for travel within the country or abroad;
15. the supplies received or effected, as well as the right to credit for input tax exercised;
16. other evidence which may serve upon determination of the base.
(3) The circumstances covered under Paragraphs 1 and 2 shall be used to justify the audit report.
(4) In the cases under Paragraph 1 the revenue authority shall determine the base for levying of taxes applicable for the relevant period for which the circumstances have been established.”
“(1) In cases under Article 122 § 1 herein, upon determination of the base according to the procedure established by Article 122 § 2 herein, a taxable profit or income shall be presumed to exist until otherwise proven where:
1. the value of the property of the person manifestly substantially exceeds the amount of declared revenue, income, sources of owners' proprietary capital or of free financing, as received thereby;
2. the expenses incurred by the person and by the parties related thereto under Item 3 (a) of § 1 of the Supplementary Provisions herein manifestly and substantially exceed the declared received resources.
(2) The property of other persons shall be considered part of the property referred to in Paragraph 1 if an effective judicial act has established that the said property has been acquired with the funds of the person in respect of whom the circumstances under Paragraph 1 have been established.”
Articles 144-161 of the Code provide in detail for the procedure for appeal against findings of the tax authorities in a tax assessment issued to a taxpayer. The appeal is lodged first with the superior revenue authority, whose decision is in turn subject to judicial appeal before the courts. Moreover, at the request of the taxpayer, the enforcement of a decision taken on the basis of a tax assessment can be suspended pending the appeal proceedings (Article 153).


ITEMID: 001-58114
LANGUAGEISOCODE: ENG
RESPONDENT: AUT
BRANCH: CHAMBER
DATE: 1997
DOCNAME: CASE OF WERNER v. AUSTRIA
IMPORTANCE: 3
CONCLUSION: Preliminary objection joined to merits (non-exhaustion of domestic remedies);Preliminary objection rejected (non-exhaustion of domestic remedies);Violation of Art. 6-1;Pecuniary damage - claim dismissed;Costs and expenses partial award - domestic proceedings;Costs and expenses partial award - Convention proceedings;Non-pecuniary damage - finding of violation sufficient
JUDGES: Feyyaz Gölcüklü;N. Valticos
TEXT: 6. Mr Johannes Werner, an Austrian national born in 1963, lives in Vienna.
7. On 15 May 1991 the police arrested a Mr and Mrs Hauser (see paragraph 25 below), who were suspected of fraudulently using a credit card which did not belong to them when making purchases in various shops in Vienna to the value of about 200,000 Austrian schillings (ATS). On 17 May they were detained pending trial.
8. On 1 July 1991 the police also arrested the applicant, who was suspected of having aided and abetted Mr and Mrs Hauser by forging the signature on the credit card. On 3 July he was detained pending trial.
9. On 8 July 1991 Mr and Mrs Hauser were released, and on 19 July the applicant was released.
10. On 24 February 1992 the investigating judge at the Vienna Regional Court (Landesgericht) decided to discontinue the proceedings in the light of a graphologist’s finding that it was unlikely that the signatures on the payment slips for the purchases made with the stolen credit card were in Mr Werner’s hand and of the fact that the witnesses called by the public prosecutor did not have sufficiently clear memories.
11. In the meantime, on 4 February 1992, the public prosecutor’s office (Staatsanwaltschaft) had asked the Regional Court to declare that the applicant and Mr and Mrs Hauser were not entitled to compensation for their detention under section 2 (1) (b) of the Compensation (Criminal Proceedings) Act 1969 (Strafrechtliches Entschädigungsgesetz, “the 1969 Act” – see paragraph 19 below), on the ground that the suspicion concerning them had not been dispelled.
12. On 21 April 1992 the investigating judge interviewed the applicant and Mr and Mrs Hauser and told them of the application made by the public prosecutor’s office.
13. The applicant and Mr and Mrs Hauser sought compensation from the State for the pecuniary damage sustained on account of their detention.
14. On 3 June 1992 the Review Division (Ratskammer) of the Vienna Regional Court, sitting in private, refused their compensation claims on the ground that, contrary to the requirements of section 2 (1) (b) of the 1969 Act, the suspicion concerning them had not been dispelled. No representative of the public prosecutor’s office attended the deliberations.
15. On 15 June 1992 Mr Werner and Mr and Mrs Hauser appealed against that decision to the Vienna Court of Appeal (Oberlandesgericht). They asked the Court of Appeal to take further evidence and, in particular, to hear witnesses.
16. On 2 September 1992 the principal public prosecutor’s office (Oberstaatsanwaltschaft) submitted written observations. It asked the Court of Appeal to dismiss the appeal and not to take further evidence as the witnesses’ statements were not capable of exculpating the appellants. These observations were not communicated to the applicant or to Mr and Mrs Hauser.
17. On 29 October 1992 the Vienna Court of Appeal, sitting in private, dismissed the appeal.
It ruled as follows:
“In the first place, the appellants’ argument that suspicion does not have to be wholly dispelled for compensation to be payable under section 2 (1) (b) of the Compensation (Criminal Proceedings) Act is contradicted by the settled case-law of the Austrian courts. It has been consistently held that suspicion must be dispelled sufficiently to establish that the detained person is not punishable, and cannot be prosecuted, on account of the conduct in respect of which his detention was ordered. Where that remains only doubtful, suspicion is not dispelled within the meaning of section 2 (1) (b) of the Act. The appellants’ assertion that this case-law reverses the burden of proof is incorrect, since cogent evidence must be adduced before it can be accepted that suspicion has been dispelled.
In this connection, there is no justification for giving the appellants, as they demanded, the opportunity to prove their innocence by taking further evidence, since the evidence they propose to adduce cannot be considered likely to lead to such a result. Seeing that the suspicion concerning the appellants is based mainly on the witness statements of 16 March 1991 and that, in addition, it is not possible to determine when the other offences were committed, conclusive results cannot be expected if fresh evidence is taken in the form of the appellant Johannes Werner’s time-sheets and itineraries for 18 and 19 March, together with his tachograph discs, because the offences could have been committed during the rest stops on those journeys, or before or after them, especially as there are gaps in the time-sheets submitted by Mr Werner. The witnesses it was proposed to call have already been interviewed by the police and have already been confronted with the appellants. The main reason why the prosecution was abandoned was that with the passing of time those witnesses’ memories had begun to falter. However, if their memories were so defective that they could no longer be considered adequate to establish guilt, neither can they in the present proceedings form an adequate basis for awarding compensation.
The appellants did not dispute that the police inquiries had given rise to real suspicion concerning them. That suspicion was not subsequently dispelled, but on account of some remaining doubt was simply not sufficient to support a finding of guilt. The conditions which must be met under section 2 (1) (b) of the Compensation (Criminal Proceedings) Act in order to be able to claim compensation have accordingly not been satisfied and the appellants’ claims must therefore fail.”
No representative of the principal public prosecutor’s office attended the deliberations.
18. Article 90 § 1 of the Federal Constitution provides:
“Hearings by trial courts in civil and criminal cases shall be oral and public. Exceptions may be prescribed by law.”
19. The relevant provisions of the 1969 Act read as follows:
“(1) A right to compensation arises:
(a) …
(b) where the injured party has been placed in detention or remanded in custody by a domestic court on suspicion of having committed an offence making him liable to criminal prosecution in Austria … and is subsequently acquitted of the alleged offence or otherwise freed from prosecution and the suspicion that he committed the offence has been dispelled or prosecution is excluded on other grounds, in so far as these grounds existed when he was arrested;
...”
“(1) ...
(2) A court which acquits a person or otherwise frees him from prosecution … (section 2 (1) (b) or (c)) must decide either of its own motion or at the request of the individual in question or the public prosecutor’s office whether the conditions of compensation under section 2 (1) (b) or (c), (2) and (3) have been satisfied or whether there is a ground for refusal under section 3 ... If the investigating judge decides to discontinue the proceedings, the Review Division concerned shall rule.
(3) Before ruling, the court shall hear the detained or convicted person and gather the evidence necessary for its decision where this has not already been adduced in the criminal proceedings ...
(4) Once the judgment rendered in the criminal proceedings has become final, the decision, which need not be made public, must, as part of the proceedings provided for in paragraph 2, be served on the detained or convicted person personally and on the public prosecutor ...
(5) The detained or convicted person and the public prosecutor may appeal against the decision to a higher court within two weeks.
(6) The court with jurisdiction to rule on the appeal shall order the criminal court of first instance to carry out further investigations if that is necessary for a decision. If the court which has to rule is the court of first instance, the investigations shall be carried out by the investigating judge.
(7) Once the decision has become final, it is binding on the courts in subsequent proceedings.”
20. If the courts consider that the conditions in sections 2 and 3 have been satisfied, the applicant must apply to the Auditor-General’s Department (Finanzprokuratur) for his claim to be allowed. If no decision has been taken on his claim within six months or if it has been refused in whole or in part, the claimant may bring a civil action against the Republic of Austria (sections 7 and 8 of the Act).
21. As a general rule, there is no public hearing before the Review Division of the Regional Court or in the Court of Appeal in appeal proceedings (Beschwerden) against a decision of the Review Division. The two courts rule after sitting in private and after hearing the representative of the public prosecutor’s office and the principal public prosecutor’s office respectively (Articles 32 § 1 and 35 § 2 of the Code of Criminal Procedure – Strafprozeßordnung).
22. At the material time Article 35 § 2 of the Code of Criminal Procedure provided:
“[Public prosecutors] may attend the deliberations of the court, provided that these do not concern a decision to be delivered at the trial [Hauptverhandlung], or on the sitting day [Gerichtstag] appointed for ruling on an ordinary appeal or an appeal on points of law; they shall not, however, be entitled to be present during the vote and the taking of the decision [Beschlußfassung].”
Since 1 January 1994 that Article has been worded as follows:
“Where the public prosecutor at an appellate court makes observations concerning an appeal on points of law or an ordinary appeal against a judgment or any other judicial decision, the appellate court must communicate those observations to the accused (person concerned) and indicate to him that he is entitled to comment on them within a specified period that must be reasonable. Such communication is not necessary where the prosecutor does no more than submit, without argument, that the appeal should be dismissed or merely submits that it should be allowed or if the appellate court allows the accused’s appeal.”
23. Article 82 of the Code of Criminal Procedure provides:
“The courts shall have discretion to decide whether a party or his duly appointed representative may, in cases other than those expressly provided for in the Code of Criminal Procedure, be given leave to inspect documents in the file or whether copies may be given to them, provided that the persons concerned can convincingly show that they need such copies in order to be able to claim compensation or to support an application for a retrial or for some other reason.”
24. It is the practice of the registries of the Austrian Constitutional Court and Administrative Court to make their respective court’s judgments available on request. The courts also publish a selection of their decisions each year. Since an amendment to the Supreme Court Act in 1991, the judgments of the Supreme Court (Oberster Gerichtshof) have likewise been available to the public on request. The Supreme Court also publishes a selection of its judgments each year.
VIOLATED_ARTICLES: 6
VIOLATED_PARAGRAPHS: 6-1


ITEMID: 001-4944
LANGUAGEISOCODE: ENG
RESPONDENT: AUT
BRANCH: ADMISSIBILITY
DATE: 1999
DOCNAME: FIDLER v. AUSTRIA
IMPORTANCE: 4
CONCLUSION: Inadmissible
JUDGES: Nicolas Bratza
TEXT: The applicant, born in 1956, is an Austrian national residing in Vienna. In the proceedings before the Court he is represented by Mr. Bruckschwaiger, a lawyer practising in Vienna.
The facts of the case, as submitted by the parties, may be summarised as follows.
The applicant is the father of two children, who were born out of wedlock in 1986 and 1988, respectively.
On 27 January 1992 the Office for Youth and Family (Amt für Jugend und Familie), acting on behalf of the applicant’s children, filed a request with the Favoriten District Court (Bezirksgericht) that the monthly amount of maintenance to be paid by the applicant be raised from Austrian schillings (ATS) 2,500 to ATS 3,300 per child as of 1 January 1992. The applicant made a number of submissions opposing this request.
On 19 October 1992 the applicant requested that the monthly amount of maintenance be reduced to ATS 1,000 per child as of 1 November 1992. He also requested legal aid. Subsequently, he requested that the amount be reduced to ATS 700 per child. On 8 March 1993 the applicant requested that he be released from his maintenance obligations for January to March 1993.
According to the Government the applicant was heard in an informal manner on 5 February 1993. According to the applicant no such informal questioning took place. He submits that on that date he only handed in documents relating to his legal aid request.
On 26 April 1993 the Favoriten District Court decided that the applicant had to pay ATS 3,300 in monthly maintenance per child for 1992. It reserved its decision as regards 1993, noting that further examination was necessary.
On 11 May 1993 the applicant filed an appeal. He submitted that the District Court had disregarded his submissions and had failed to hear him. In particular, it had failed to take into account that, following his separation from the mother of his children, he had moved to an apartment which he had to renovate. The costs for this renovation had to be deducted from his income when calculating his maintenance obligations. Further, transport costs for reaching his work place, a newspaper publisher, which could during night shifts only be reached by taxi, also had to be deducted.
On 29 June 1993 the Vienna Regional Civil Court (Landesgericht für Zivil-rechtssachen) quashed the District Court’s decision and referred the case back to it.
The Regional Court noted that, according to constant case-law, necessary costs for acquiring and furnishing an apartment had to be taken into account in calculating maintenance obligations, if one parent, upon separation, had left the common apartment and its furniture to the other parent and the children. It appeared from the file that the applicant and the mother of his children had lived together until February 1991. The applicant’s submissions that, subsequently, he had moved to another apartment which he had to renovate, thus, needed to be examined. In this respect the Regional Court ordered the District Court to hear the applicant in person and to request him to submit documentary evidence in support of his submissions. Further, it ordered the District Court to establish whether the applicant was unable to reach his workplace by public transport and, if so, what extra costs he incurred.
On 30 August 1993 the District Court ordered the applicant to submit the said evidence.
On 1 October 1993 the applicant handed in documents including, inter alia, the tenancy agreement relating to the apartment at issue. According to the Government he was informally questioned by a court clerk (Rechtspfleger) on that occasion. The applicant submits that no such questioning took place.
On 18 November 1993 the District Court heard the mother of the children and the applicant’s father as witnesses. According to the Government the latter was heard at the applicant’s request. The applicant submits that his father was heard at the request of the children’s mother.
On 19 November 1993 the District Court appointed Mr. H. as expert and ordered him to file an opinion as regards the monthly income the applicant could have achieved as of 1 January 1993.
On 28 January 1994 the expert submitted his opinion, whereupon the District Court on 1 February 1994 requested to applicant to make comments, which he submitted on 10 March 1994.
On 8 March and again on 29 March 1994 the Vienna Regional Civil Court dismissed the applicant’s applications for a time-limit to be set for the District Court’s decision (Fristsetzungsanträge). It noted that, according to the file, the District Court had not yet heard the applicant on the question whether he had to acquire and to furnish an apartment following his separation from the mother of the children concerned and as to the costs incurred. The Regional Court also noted the applicant’s submissions that he had on 1 October 1993 handed in the required documents and had been heard by a court clerk. However, there were no minutes in the file. In any case, such an informal hearing could not serve as a basis for establishing the relevant facts and could, therefore, not substitute a formal hearing. The applicant should in fact have applied for a time-limit to be set for his being summoned to a hearing. As this hearing was necessary for the examination of the case, the matter was not yet ready for decision. Thus, his requests for a time-limit to be set for the taking of a decision could not be granted. In any case, the Regional Court noted that, in view of the duration of the proceedings, the District Court was called upon to summon the applicant speedily to a hearing and to give a decision without further delay.
On 13 October 1994 the District Court issued a new decision. It upheld its decision of 26 April 1993 as regards the applicant’s maintenance obligations for 1992 and further ordered him to pay varying amounts of maintenance for 1993 and the first trimester of 1994 as well as from 1 April 1994 onwards. All these amounts exceeded the monthly amount of ATS 2,500 per child which the applicant had had to pay previously.
The District Court noted that it based its findings relating to the applicant’s actual or potential income on the file, the submissions of the parties and the expert opinion. The children’s maintenance claims had to be calculated as a certain percentage of the applicant’s income. It dismissed the applicant’s submissions that the costs for renovating his apartment had to be deducted from his income. In this respect the Court relied on the statements of the witnesses heard, namely the children’s mother and the applicant’s father, whom it considered to be credible. It noted that, according to them, the apartment in which the applicant was now living, had been transferred to the applicant’s mother upon her divorce from his father. It had been fully equipped and had not necessitated renovation. Moreover, the applicant had already used this apartment since 1988. As regards his income for 1992, when he had worked at a newspaper publisher, the District Court accepted that an amount of ATS 1,000 per month had to be deducted as extraordinary transport costs for reaching his workplace.

Finally, the District Court, referring to the Regional Court’s decision of 29 June 1993, which had ordered it to hear the applicant and to request further documentary evidence, noted that the applicant had presented himself in court and had, after discussion of the factual and legal issues of the case, handed in the required documents.
On 31 October 1994 the applicant filed an appeal. He complained in particular that the District Court had failed to summon or hear him. Further, he contested, in general terms, the credibility of the witnesses heard by the Court. He claimed he had lived with the mother of his children until February 1991. Following their separation he had moved to his present apartment, which had been in an extremely bad state, not even having the necessary sanitary equipment, and he was thus bound to carry out considerable renovation works.
On 20 December 1994 the Vienna Regional Civil Court, sitting in camera in the absence of the applicant, partly upheld his appeal. It confirmed the applicant’s maintenance obligations for 1992, but reduced his maintenance obligations for 1993 and the first trimester of 1994 on the ground that he had been either on sick leave or unemployed during this period and had taken up new employment within a reasonable time. His maintenance obligations, thus, could not be based on the potential income established by the expert, but had to be based on the amount of the social security benefits he actually received. Further, the Court confirmed the applicant’s maintenance obligations for April to July 1994, but quashed the decision as regards maintenance from 1 August 1994 onwards and referred the case back to the District Court as the applicant had again become unemployed in July 1994.
The Regional Court dismissed the remainder of the applicant’s appeal. It recalled that costs for acquiring and furnishing an apartment had to be taken into account in calculating maintenance obligations, if one parent, upon separation, had left the common apartment and its furniture to the other parent and the children. The Regional Court found in particular that, according to the results of the second set of proceedings, the applicant had not acquired his present apartment following his separation from the mother of his children. His father had rented the apartment in 1964, had transferred it to the applicant’s mother in 1970 in the course of divorce proceedings and the latter had assigned her rights to the applicant who had the apartment at his disposal at least as of 1988. Costs for the renovation of an apartment which became periodically necessary were, according to the case-law, not deductible from income for the purpose of calculating maintenance obligations. In the present case, the costs for the renovation of the apartment had not been caused exclusively by the applicant’s separation from the mother of his children and by his leaving the common household. As the applicant no longer claimed that he had only acquired the apartment subsequently to this separation, it was not necessary to hear him as regards the costs of renovating the apartment at issue. Moreover, he had presented himself at the District Court and had submitted documentary evidence. In connection with the other results of the proceedings, this evidence formed a sufficient basis for the decision.
On 7 February 1995 the applicant filed an appeal on points of law. He complained in particular that the District Court had, despite explicit orders of the Regional Court, failed to summon or hear him and that the Regional Court had arbitrarily ignored its earlier decisions when dismissing his appeal.
On 27 February 1995 the Supreme Court (Oberster Gerichtshof) rejected the applicant’s appeal on points of law, finding that it did not raise any important legal issue within the meaning of S. 14 § 1 of the Non-Contentious Proceedings Act (Ausserstreitgesetz).
In further proceedings, the applicant requested on 2 July 1996 that his maintenance obligations be reduced retroactively as of 1 July 1993 to ATS 700 monthly per child. Later, he requested further reductions. He invoked again the costs of renovating his apartment, as well as a change in his financial situation. In a first decision of 3 March 1997 the Favoriten District Court fixed the applicant’s maintenance obligations as of 1 November 1996. On 3 November 1997 the Favoriten District Court changed its decision and reduced the applicant’s maintenance obligations as fixed by the decisions of 20 December 1994 and 3 March 1997 for July 1993 onwards. The amounts fixed for the different periods varied according to the applicant’s financial situation. Further, without giving any specific reasons, the court found that an amount of ATS 2,200 per month for renovating the applicant’s apartment had to be deducted from his income when calculating his maintenance obligations. It does not appear from the file whether these proceedings are still pending.


ITEMID: 001-75390
LANGUAGEISOCODE: ENG
RESPONDENT: FIN
BRANCH: ADMISSIBILITY
DATE: 2006
DOCNAME: LEVANEN AND OTHERS v. FINLAND
IMPORTANCE: 3
CONCLUSION: Inadmissible
JUDGES: Nicolas Bratza
TEXT: The applicants, Mr Timo Levänen and Mr Ahti Toivanen are Finnish nationals and live in the municipality of Riihimäki. They are owners of two private driving schools. The third applicant, Riihimäen Liikenneopisto Oy, is a driving school company in Riihimäki. They are represented before the Court by Mr Timo Hakanen, a lawyer practising in Jyväskylä. The Finnish Government (“the Government”) are represented by their Agent, Mr Arto Kosonen, Director in the Ministry for Foreign Affairs.
The facts of the case, as submitted by the parties, may be summarised as follows.
On 17 April 2000 the Provincial State Office (lääninhallitus, länssyrelsen) of Southern Finland granted the Joint Municipal Board of the Vocational Institute of Riihimäki (Riihimäen ammattioppilaitoksen kuntayhtymä, yrkesinstitutens samkommunen) a driving school licence to teach their students to drive. The licence was valid from 1 August 2000 until 31 July 2005, with the name “Autokoulu RAOL”. Mr T.S. was approved as its director.
The applicants appealed against the decision to the Administrative Court (hallinto-oikeus, förvaltningsdomstolen) of Hämeenlinna, claiming that the decision be annulled as, inter alia, T.S. did not meet the criteria for a director as required in the Decree on Driving Licences (ajokorttiasetus, körkortsförordningen; 845/1990, amend. 167/1994). They further alleged that operating a driving school did not belong to the functions of a municipality or a federation of municipalities. In any case, the name of the licence-holder, “Autokoulu RAOL” should have been deleted and the number of training vehicles limited to two motor vans and two passenger cars. They contended that the establishment of a new driving school affected their rights as it would reduce their incomes and thus they had a right to appeal pursuant to section 6 of the Administrative Judicial Procedure Act (hallintolainkäyttölaki, förvaltningsprocesslagen; 586/1996).
On 21 November 2000 the Administrative Court (hallinto-oikeus, förvaltningsdomstolen) of Hämeenlinna held an oral hearing, in which it heard the Provincial State Office, the Joint Municipal Board and the applicants. It further obtained written opinions from the parties.
On 19 February 2001 the Administrative Court annulled the decision of the Provincial State Office on the ground that T.S. was not competent to act as a director, and thus the Provincial State Office should not have granted a driving school licence to the Joint Municipal Board.
The Joint Municipal Board appealed to the Supreme Administrative Court (korkein hallinto-oikeus, högsta förvaltningsdomstolen), reiterating that T.S. fulfilled the criteria. The Provincial State Office, the Ministry of Transport and Communications (liikenneministeriö, kommunikations- ministeriet) and the applicants submitted opinions to the court and the Joint Municipal Board gave its observations.
On 13 August 2003 the Supreme Administrative Court annulled the decision of the Administrative Court and declared the applicants’ application to the Administrative Court inadmissible without considering its merits. It held that the issue was whether the applicants had a right of appeal against the decision of the Provincial State Office. It emphasised that pursuant to the Road Traffic Act (tieliikennelaki, vägtrafiklagen; 267/1981, amend. 103/1994) and the Decree on Driving Licences the licence for a driving school had to be granted if the applicant fulfilled certain criteria. The appropriateness of a new licence was not relevant to the decision-making. Therefore, when deciding on the new licence it was irrelevant whether the new licence affected the status of already existing driving schools. The court concluded that the owners of other driving schools were not directly affected by the decision and had no right to appeal under the Administrative Judicial Procedure Act. The decision became a precedent (KHO:2003:46).
Section 21 of the Constitution of Finland (perustuslaki, grundlagen; 731/1999) provides that everyone has the right to have his or her case dealt with appropriately and without undue delay by a legally competent court of law or other authority, as well as to have a decision pertaining to his or her rights or obligations reviewed by a court of law or other independent organ for the administration of justice.
Section 6, subsection 1 of the Administrative Judicial Procedure Act provides that any person to whom a decision is addressed or whose right, obligation or interest is directly affected by a decision may appeal against a decision.
Section 66 of the Road Traffic Act (267/1981, as in force until 1994) provided that a driving school licence was required for operating a driving school. The State Provincial Office might grant a licence, if the applicant was deemed to fulfil the criteria for operating a driving school and the establishment of the school was considered necessary and appropriate in accordance with the general instructions issued by the then Ministry of Transport.
According to the said section, as amended by Act on 1 March 1994 (103/1994), a licence to operate a driving school is granted by the relevant State Provincial Office. A driving school licence shall be granted if, having regarded his or her skills, reliability, solvency and other qualifications, the applicant is deemed suitable for operating a driving school. If the applicant is a legal person, the director responsible for the teaching at the driving school must, in light of his or her skills, reliability, solvency and other qualifications, be suitable to operate a driving school.
Section 66, subsection 3 of the said Act provides that a licence shall be granted for a certain period of time. It may also include preconditions and restrictions. According to subsection 4, a licence is not required if teaching takes place in drivers’ vocational training, which is supervised by the National Board of Education, or in an institute training driving instructors.
Chapter 8, section 39 of the Decree on Driving Licences sets the criteria for the licence of driving schools. A licence shall be granted if the applicant, or, where the applicant is a legal person, its director responsible for the teaching, has, inter alia, a driving instruction permit and has during the past ten years worked for at least four years as a full-time teacher in a driving school or in a vocational institution giving class C driver instruction.
In its precedent (KHO 1987-A-75) the Supreme Administrative Court found that a decision of the Ministry of Transport to suspend a charter transport licence for a determined period of time did not affect the rights of a competing charter transport carrier within the meaning of section 26, subsection 5, of the Decree on Professional Motor Traffic. Thus the competing carrier had no right to appeal against the Ministry’s decision.
According to the Supreme Administrative Court’s precedent (KHO 1995-A-1), in a case where the Government had decided at the same time several applications for compensation to be paid with discretionary funds included in the state budget, a person had a right to appeal against the Government’s decision only to the extent the decision concerned his/her own application.
In 1995 the Supreme Administrative Court issued a precedent (KHO 1995-A-51) concerning a driving school licence. In that case the Provincial State Office had granted A a right to establish a driving school and allowed him to take responsibility for the teaching even though he had at the same time the same responsibility in another driving school. The Supreme Administrative Court annulled the decision of the Ministry of Transportation, by which it had declared inadmissible an application lodged by four other driving school owners, and found that the Provincial State Office’s decision concerned rights of the applicants, who had the right to appeal.
In its decision no. 63 of 8 January 1996 the Supreme Administrative Court ruled that the housing corporation located in the neighbourhood of a restaurant did not have a right to appeal against a decision by which a restaurant was granted a licence to serve alcohol both indoors and in the outdoor area of the restaurant.
The Supreme Administrative Court further found in its decision no. 795 of 8 April 1997 that a person operating a pharmacy in the neighbouring municipality did not have a right to appeal against a decision of the National Agency for Medicines by which it issued a licence for the storing of medicines, as the applicant in question had not applied for the licence and as the granting of a licence to him (being a pharmacist in another municipality) did not affect his rights and obligations within the meaning of section 4 of the Administrative Appeals Act.