CASE OF MINDEK v. CROATIA

1. The case originated in an application (no. 6169/13) against the Republic of Croatia lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Croatian national, Mr Anton Mindek (“the applicant”), on 27 December 2012.
2. The applicant was represented by Mr T. Čamovski, an advocate practising in Varaždin. The Croatian Government (“the Government”) were represented by their Agent, Ms Š. Stažnik.
3. The applicant alleged, in particular, that the sale in enforcement proceedings of his share in the house where he lived and the surrounding land he owned with his wife had violated his right to peaceful enjoyment of his possessions, as he had already paid the creditor ’ s debt in full.
4. On 15 March 2013 the application was communicated to the Government.
I. THE CIRCUMSTANCES OF THE CASE
5. The applicant was born in 1932 and lives in Domitrovec.
6. On 12 February and 29 August 2003 the daily newspaper Večernji list published two articles in which the applicant accused his neighbour, a certain Mr I.M., of “stealing” his house and orchard.
7. In the ensuing two sets of criminal proceedings instituted by I.M. by way of private prosecution, the applicant was found guilty of two counts of defamation ( kleveta ). By a judgment of 17 December 2004 the Varaždin Municipal Court ( Općinski sud u Varaždinu – hereinafter “the Municipal Court” ) fined the applicant 3,475 Croatian kunas (HRK) [1] and ordered him to pay I.M. HRK 2,660 [2] for the costs of the proceedings. By a judgment of 12 January 2005, amended by the Varaždin County Court ( Županijski sud u Varaždinu – hereinafter “the County Court” ) on 15 November 2005, the Municipal Court judicially admonished ( sudska opomena ) the applicant and ordered him to pay I.M. HRK 2,208 [3] in costs.
8. In subsequent civil defamation proceedings which I.M. instituted against the applicant, the civil courts also found in favour of the plaintiff and awarded him damages. By a judgment of 31 May 2006, amended by the County Court on 4 September 2007, the Municipal Court ordered the applicant to pay I.M. HRK 20,000 [4] as compensation for non-pecuniary damage, together with statutory default interest and HRK 6,942 [5] in costs.
9. Meanwhile, another set of civil proceedings between the same parties had also ended unfavourably for the applicant. By a judgment of 2 May 2005 the Municipal Court dismissed the applicant ’ s action to declare an in-court settlement between him and I.M. of 15 January 1997 null and void, and ordered him to pay the defendant HRK 2,318 [6] in costs.
10. Since the applicant did not pay the sums stipulated above ( hereinafter “the debt” ) on time, on 7 September and 31 October 2007 I.M. instituted two sets of enforcement proceedings in the Municipal Court, seeking enforcement against the applicant ’ s immovable property, specifically his share in the house and surrounding land he owned with his wife. The property in question consisted of the house, a yard and arable land (fields ) measuring 150, 500 and 204 square meters respectively (hereinafter “the property”).
11. On 5 November 2007 and 4 January 2008 respectively the court issued two writs of execution ( rješenja o ovrsi ) ordering the seizure and sale of the applicant ’ s share in the property.
12. On 10 March 2008 and 2 June 2009 the Varaždin County Court dismissed appeals lodged by the applicant and upheld the writs.
13. By a decision of 18 March 2010 the Municipal Court joined the two sets of enforcement proceedings.
14. At a hearing on 8 April 2010 the court, on the basis of information provided by the tax authorities, determined that the value of the applicant ’ s share in the property was HRK 131,200 [7]. The applicant did not attend the hearing even though he had been duly notified.
15. By a ruling of 27 July 2010 the court ordered the sale of the applicant ’ s share in the property ( zaključak o prodaji, see paragraph 48 below) and scheduled a public auction for 14 October 2010 at which, in accordance with the law, the property (or share of it) could not be sold for less than two-thirds of its value (see paragraph 50 below).
16. The auction was not attended by any interested buyers. The applicant, however, submitted a certificate confirming that on 8 September 2010 he had paid HRK 14,400 [8] of the debt, and promised to pay the rest by New Year.
17. Since he did not do so, on 12 January 2011 I.M. asked the court to schedule a second public auction.
18. On 17 January 2011 the applicant submitted another certificate confirming that on 14 January 2011 he had paid HRK 7,340 [9] of the debt, and asked the court not to schedule a second auction because he would gradually pay the rest of the debt.
19. On 1 February 2011 I.M. reiterated his request for a second auction and stated that, by repeatedly promising to gradually pay the debt within self-imposed deadlines he did not observe, the applicant was merely protracting the enforcement proceedings which had thus far lasted three and a half years.
20. By a decision of 3 February 2011 the court scheduled the second public auction for 17 March 2011 at which, in accordance with the law, the property (or share of it) could not be sold for less than one-third of its value (see paragraph 50 below).
21. At the second auction only I.M. offered to buy the applicant ’ s share in the property, for HRK 43,734 [10]. This was the minimum price allowed by law and corresponded to one-third of its value. The applicant ’ s representative asked the court to postpone the auction and promised that the applicant would pay the rest of the debt within three months. The court refused this request and issued a decision declaring that I.M. had “satisfied the conditions to be awarded [the share in] the property”. It also specified that the decision actually awarding him the share in the property ( rješenje o dosudi, see paragraphs 25 and 50 below) would be delivered at a later date.
22. On 21 March 2011 the applicant paid HRK 21,450 [11] of the debt.
23. On 2 May 2011 he informed the court that earlier that day he had paid a further HRK 15,225.75 [12], and had thereby settled the debt of HRK 58 ,415.75 [13] in full (consisting of the principal amount of HRK 34,128.43 and HRK 24,287.32 of statutory default interest). What remained to be paid were the costs of the enforcement proceedings. He therefore asked the court to discontinue the enforcement and issue a decision specifying those costs, which he promised to pay immediately.
24. At a hearing on 26 October 2011 I.M. confirmed that on 2 May 2011 the applicant had paid the debt in full, but had not covered the costs of the enforcement proceedings. He thus asked the court to issue a decision on costs, and the award decision.
25. On 18 November 2011 the court delivered its award decision ( rješenje o dosudi, see paragraph 21 above and paragraph 50 below). It specified that the property would be surrendered ( transferred ) to I.M. after he deposited the purchase price, within three months of the decision becoming final. The court found the fact that the applicant had paid the debt in full on 2 May 2011 irrelevant, since the decision on the sale of the applicant ’ s share in the property to I.M. had been adopted earlier, on 17 March 2011 (see paragraph 21 above). It noted however that the fact that the applicant had paid off the debt would be taken into account when distributing the proceeds of sale (see paragraph 32 below). In particular, the court held as follows:
“Given that the property was sold on 17 March 2011 at the second public auction when it was established that the bidder I.M. had made the best bid and had offered [to pay] HRK 43,734, and thereby met the conditions to be awarded the property, the court adopted [the present] award decision ... regardless of the fact that the enforcement debtor on 2 May 2011 settled the debt in respect of the principal amount and the interest. When settling the enforcement creditor ’ s claim, the court will deliver a distribution decision whereby it will take into account the fact that the enforcement debtor had settled the debt in respect of the principal amount and the interest.”
26. On 5 December 2011 the applicant appealed against that decision. He argued that he had settled the debt in full several months before the court had issued the contested award decision. In that sense I.M. “had got it both ways ” as he had both been paid the debt and acquired the share in the property. There had been no reason to sell his share in the property to pay the same debt. He further stated that he would also have covered the costs of the enforcement proceedings that remained due if the court had issued a decision specifying the amount, which it had not done.
27. On 16 January 2012 the County Court dismissed the applicant ’ s appeal and upheld the contested decision, which thereby became final. It held that the necessary conditions for selling the applicant ’ s share in the property to I.M. had already been met on 17 March 2011. The fact that he had later paid off the debt had no bearing on the validity of the sale. In particular, that court held as follows:
“ Having regard to the fact that on 17 March 2011 the second public auction was held at which the enforcement creditor appeared as a bidder and made the best ( the only) bid, and given that after the auction the court established that the enforcement creditor had offered the highest price and had met the conditions to be awarded the property in accordance with section 98(3) of the Enforcement Act, the first-instance court was, pursuant to section 98(4) of [that ] Act, entitled (and obliged to) adopt the contested [award] decision ...
The fact that the enforcement debtor after the [second public] auction, on 2 May 2011 settled the creditor ’ s claim in full is of no relevance for the validity of the contested decision, regardless of the unjustified (time) gap between the auction and the adoption of the impugned decision. [That is because] at the auction of 17 March 2011, which was held in line with the [relevant] provisions of the Enforcement Act, it was established that the enforcement creditor offered the highest price and that he met the conditions to be awarded the property. [Therefore] the events that occurred subsequently cannot call into question the award of the property, nor can the said event constitute grounds for discontinuation of enforcement under the Enforcement Act.”
28. On 27 February 2012 the applicant lodged a constitutional complaint against the County Court ’ s decision, alleging a violation of his constitutional right to fair procedure.
29. On 7 March 2012 I.M. informed the court that he had deposited the purchase price, and submitted proof thereof.
30. By a ruling of 24 April 2012 ( zaključak o predaji, see paragraph 51 below ) the Municipal Court surrendered (transferred) the applicant ’ s share in the property to I.M. On 29 June 2012 the court ’ s land registry department recorded him in the land register as co-owner of the property instead of the applicant.
31. By a decision of 24 May 2012 the Constitutional Court ( Ustavni sud Republike Hrvatske ) declared the applicant ’ s constitutional complaint of 27 February 2012 inadmissible (see paragraph 28 above). It held that the contested decision was not open to constitutional review.
32. On 17 September 2012 the Municipal Court issued a distribution decision ( rješenje o namirenju, see paragraph 54 below ), distributing the HRK 43,734 [14] deposited with the court by I.M. for the applicant ’ s share in the property. The court specified the costs of the enforcement proceedings, which were incumbent on the applicant, as HRK 10,703.12 [15], and returned that amount to I.M. The remaining HRK 33,030.88 [16] was paid to the applicant.
33. On 14 December 2012 the County Court dismissed an appeal by the applicant against that decision. On 27 February 2013 lodged a constitutional complaint against the decision of the County Court.
34. By a decision of 25 April 2013 the Constitutional Court declared that constitutional complaint inadmissible, holding that the contested decision was not open to constitutional review.
35. By a decision of 20 January 2013 the Municipal Court declared the enforcement completed. An appeal by the applicant against that decision was dismissed by the County Court on 26 March 2013.
36. On 23 May 2013 I.M. instituted non-contentious proceedings in the Municipal Court against the applicant ’ s wife by lodging a petition for partition of co-ownership. Since the property could not be physically divided, he sought a partition by sale, whereby the proceeds would be distributed to the co-owners.
37. As the applicant ’ s wife opposed the partition, by a decision of 2 July 2013 the court discontinued the non-contentious proceedings and instructed I.M. to institute separate civil proceedings against her to that end.
38. On 17 July 2013 I.M. brought a civil action against the applicant ’ s wife as instructed, in the same municipal court. He sought a partition of co-ownership in the same way as in his petition of 23 May 2013.
39. By a judgment of 6 November 2014 the Municipal Court ruled for the plaintiff and ordered a partition by sale and distribution of the proceeds to the co-owners. It also ordered the applicant ’ s wife to pay the plaintiff HRK 4,050 [17] in costs.
40. She appealed and the proceedings are currently pending before the second-instance court.
41. Meanwhile, on 3 July 2013 I.M., had also instituted another set of civil proceedings before the Municipal Court against the applicant, seeking payment of rent for the use of the property. He explained that the applicant had remained living in the house even after he acquired the applicant ’ s share. As a co-owner he was thus entitled to seek from the applicant half of the rent under which the house could be rented out. These proceedings are still pending before the first-instance court.
II. RELEVANT DOMESTIC LAW AND PRACTICE
42. The Enforcement Act of 1996 (Official Gazette no. 57/96 with subsequent amendments) was in force between 11 August 1996 and 14 October 2012.
43. Section 49 provided for the possibility of an “ extraordinary appeal ” against a writ of execution, which could be lodged at any time until the conclusion of enforcement proceedings. One of the potential grounds for appeal was that the claim sought to be enforced had been extinguished (section 49 read in conjunction with section 46(1) subparagraph 9 ), it being understood that this could happen by the debt being settled. If the existence of the facts that would render such an appeal well- founded was undisputed, notorious or could be proved by public or publicly- certified documents, the enforcement court had to allow the appeal, invalidate the actions undertaken thus far and discontinue the enforcement (sections 50(3) and 51(2)). Otherwise, the court had to instruct the enforcement debtor to institute separate civil proceedings to have the enforcement declared inadmissible (section 51(1)).
44. Section 58 regulated counter-enforcement, a remedy enabling the debtor to retrieve from the creditor in the same enforcement proceedings what the latter had unjustifiably received in the enforcement. The debtor could apply to court for the remedy unless restitution was (factually or legally) impracticable. Grounds included that during the enforcement proceedings, the debtor had settled the creditor ’ s claim out of court, resulting in the debt being paid twice. The debtor could seek compensation for any further damage by instituting separate civil proceedings. The debtor could apply for counter-enforcement within three months of the date he or she learned of the grounds for it and, at the latest, within a year following the conclusion of the enforcement proceedings. After the expiry of that time-limit, the debtor could pursue the same claim by bringing a civil action for unjust enrichment (see paragraph 55 below).
45. Section 67 of the Enforcement Act stated the grounds on which the enforcement court could discontinue an enforcement of its own motion. The relevant part reads as follows:
“ (1) Unless this Act provides otherwise, the court shall of its own motion discontinue enforcement proceedings if the enforcement title has been finally quashed, reversed, annulled, repealed or otherwise deprived of its effect, or if the certificate of enforceability has been set aside.
(5) A decision to discontinue enforcement shall invalidate all actions undertaken provided this does not prejudice the rights acquired by third parties.”
46. Sections 74 to 125 regulated enforcements against immovable property (real estate). Section 75 specified that they were carried out by making the relevant entry in the land register (annotation of enforcement), determining the value of the property, selling it, and satisfying the enforcement creditors ’ claims from the proceeds of sale.
47. Section 87 provided that the value of the property had to be determined by a ruling of the enforcement court after holding a hearing at which parties were given a chance to present their arguments in that regard and submit relevant documentary evidence. The provision also stipulated that the enforcement court could, if necessary, ask the tax authorities to provide information on the current state of the real estate market.
48. Section 90 stated that, after determining the value of the property, the enforcement court had to issue a ruling on the sale ( zaključak o prodaji ) specifying that value as well as the terms and conditions, time and place of the sale. Section 92 provided that the sale had to take place by public auction.
49. Section 96 prescribed that the enforcement debtor, judge or anyone else officially involved in the enforcement proceedings, or otherwise prohibited by law from acquiring ownership of the property, could not appear as buyers.
50. Section 97 stipulated that at the first public auction, the property could be sold for no less than two-thirds of its value, and at the second public auction for no less than one- third of its value. Section 98 provided that the enforcement court had to issue a decision awarding the property to the highest bidder ( rješenje o dosudi ), which was open to appeal (section 99a). In particular, section 98(3) and (4) provided as follows:
Auction hearing and the award [of property]
“(3) After the auction the judge [hearing the case] shall establish who was the highest bidder and that he or she met the conditions to be awarded the property.
(4) The court shall issue a decision awarding the property (the award decision) in writing, which shall be published on the court ’ s noticeboard.”
51. Pursuant to section 100, the buyer had to deposit the purchase price within the time-limit set forth in the ruling on the sale. If the buyer did not do so within that time-limit, the enforcement court had to invalidate the sale and order a new one. Section 101 stated that in the award decision the enforcement court had to indicate that, after the decision had become final and the buyer had deposited the purchase price, the buyer was to be recorded in the land register as an owner of the property. After those conditions had been met, the court had to issue a ruling surrendering ( zaključak o predaji ) the property to the buyer.
52. Under the case-law of the Croatian courts, the buyer became owner of the property only after the award decision had become final and the buyer had paid the purchase price (see, for example, Supreme Court judgment nos. Rev 228/08-2 of 9 October 2008, Rev 575/06-2 of 23 November 2006, and Rev 747/09-2 of 31 August 2011; and Pula County Court judgment no. Gž-1213/09-2 of 6 June 2011).
53. Section 102 provided that quashing or reversing the writ of execution after the award decision had become final had no effect on the buyer ’ s ownership of the property acquired by that decision. In the decision no. U-III-3729/2011 of 11 December 2014 the Constitutional Court held that this rule did not apply to the enforcement creditor as the buyer in the situation where, after the award decision had become final, the claim he sought to enforce had been extinguished (in that case the claim was extinguished because the contract on which it had been based had been declared null and void ).
54. Sections 117-118 prescribed that once the award decision became final, the enforcement court had to schedule a hearing to distribute the proceeds of sale and issue a distribution decision ( rješenje o namirenju ), which was open to appeal. The proceeds had to be distributed so as to satisfy the claims of all enforcement creditors, with the remaining amount (if any) being paid to the enforcement debtor.
55. The Obligations Act of 2006 ( Official Gazette, nos. 35/05, 41/08 and 125/11 ), which entered into force on 1 January of that year, is the legislation governing contract and tort. Section 1111 regulates unjust enrichment and reads as follows:
ENRICHMENT WITHOUT CAUSEGeneral ruleSection 1111
“(1) When part of the property of one person passes, by any means, into the property of another, and that transfer has no basis in a legal transaction, decision by the court or other relevant authority or in legislation [it is without cause], the person who received it [ beneficiary ] shall return it. If restitution is not possible, he or she shall provide compensation for the value of the benefit obtained.
(3) The obligation to return property or provide compensation for the value thereof shall arise even where something has been received on account of a ground which did not materialise or which was subsequently extinguished. ”
I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION
56. The applicant complained under Article 6 § 1 of the Convention that in the enforcement proceedings the domestic courts had sold his share in the property to settle the debt he had already paid.
57. The Government contested that argument.
58. The Court, being master of the characterisation to be given in law to the facts of the case, considers that this complaint falls to be examined exclusively under Article 1 of Protocol No. 1 to the Convention, which reads as follows:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
59. The Government disputed the admissibility of this complaint, arguing that the applicant had failed to exhaust domestic remedies and had abused the right of application.
1. Non-exhaustion of domestic remedies
60. The Government noted that the applicant had complained that in the enforcement proceedings the domestic courts had sold his share in the property to settle the debt he had already paid, meaning he had in fact complained that the debt to I.M. had been settled twice. However, the domestic law provided remedies designed precisely to address such situations. For example, in the same enforcement proceedings the applicant, relying on section 58 of the Enforcement Act, could have applied for counter- enforcement to retrieve the excess amount paid. He could also have brought a civil action seeking compensation for any further damage (see paragraph 4 4 above). However, he had not resorted to either of those remedies, appealing only against certain decisions delivered in the course of the proceedings, which by their nature were not decisions on the merits (the award decision, distribution decision and decision declaring the enforcement completed ), appeals which, even if successful, could not have remedied the situation complained of.
61. The applicant did not comment on this issue.
62. In the Court ’ s view, the applicant ’ s principal argument that he paid the debt twice ( see paragraph 56 above) is clearly incorrect. While it is true that the applicant paid the principal amount and statutory default interest by 2 May 2011 (see paragraphs 16, 18 and 22-23 above), the debt was not paid again from the proceeds of the sale of his share in the property. Rather, they were used only to cover the costs of the enforcement proceedings, with the remaining sum being paid to the applicant (see paragraph 3 2 above). Since the applicant ’ s argument is not supported by the facts of the case, the Government ’ s inadmissibility objection resting on that argument cannot be sustained either.
63. It follows that the Government ’ s objection in this regard must be rejected.
2. Abuse of the right of application
64. The Government considered certain expressions used in the applicant ’ s observations offensive. In particular, his legal representative had first described I.M. ’ s actions as criminal, and then concluded that the manner in which the applicant had lost his property ( presumably to I.M.) was “ typical of the respondent State, where the courts decide under the influence of those in power and not in accordance with the law and justice”. In the Government ’ s view, those statements taken together imply that it is common practice for the respondent State to endorse criminal activity and provide those responsible with impunity. They could not find reasonable justification for the statements, especially as they had come from a professional legal representative (an advocate). They thus considered them contrary to Article 35 § 3 (a) of the Convention, as interpreted in the Court ’ s case-law.
65. The applicant could not reply to this inadmissibility objection by the Government because it was raised for the first time on 1 October 2013 in the Government ’ s comments to his observations of 13 August 2013.
66. The Court reiterates that, whilst the use of offensive language in proceedings before it is undoubtedly inappropriate, an application may only be rejected as abusive in exceptional circumstances (see Felbab v. Serbia, no. 14011/07, 14 April 2009, § 56). Having regard to its case-law (see, a fortiori, ibid ., and the cases cited therein ), the Court considers that although the impugned statements made by the applicant ’ s representative were strongly worded, they do not reach the level that would justify a decision to declare the application inadmissible as an abuse of the right of application.
67. It follows that the Government ’ s objection in this regard must also be rejected.
3. Conclusion as to admissibility
68. The Court further notes that the application is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It also notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
69. The applicant submitted that once he had paid the debt in full, the enforcement court had to discontinue the enforcement proceedings of its own motion pursuant to section 67(1) of the Enforcement Act (see paragraph 45 above). He contested, in particular, the Government ’ s submission that he had already lost his share in the property on 17 March 2011 when the second public auction had been held (see paragraphs 21 above and 75 below ). He explained that under the Enforcement Act, an award decision had to become final before ownership could pass to the buyer (see paragraphs 50-52 above). In his case, however, on 17 March 2011 the enforcement court had not even issued such a decision. Nothing had therefore prevented that court from discontinuing the proceedings and ordering restitution. Consequently, the interference with his right to peaceful enjoyment of his possessions had not been provided for by law.
70. As regards proportionality, the applicant first stated that he could not have paid the debt any earlier because of his indigence. For the same reason he had, in agreement with I.M., rescheduled the debt and paid it gradually by 2 May 2011 (see paragraphs 16, 18 and 22-23 above). Despite that, and more than six months later, the enforcement court had nevertheless issued a decision awarding his share in the property to I.M., as if the debt had not been paid (see paragraph 25 above). The domestic courts ’ view that even in those circumstances his share in the property had to be awarded to I.M. (see paragraphs 25 and 27 above) was grossly unfair and contrary to the purpose of enforcement proceedings, the aim of which was to satisfy the creditor ’ s claim, not deprive the debtor of his property. He also found it important to emphasise that his share in the property had not been bought by a third party, but by the enforcement creditor himself, who had acted in bad faith by insisting on the enforcement and sale continuing even after he had paid the debt. He also stressed that the property in question was his only real estate, which included the house he had been born in and had inherited from his father, where he had been living with his wife since retirement. He added that if the partition of ownership occurred in the manner sought by I.M. (see paragraphs 36-40 above), that is by a judicial sale and distribution of the proceeds between the co-owners, he and his wife would be left homeless as they would not have enough money to buy out I.M. ’ s share in the house.
71. The Government highlighted that the present case concerned the enforcement of I.M. ’ s judicially established claims against the applicant, that is, the collection of a debt he had not settled of his own motion within the prescribed time-limit from the proceeds of judicial sale of his share in the property he owned with his wife.
72. The Government first considered it important to emphasise that the applicant had erroneously interpreted the facts of the case by claiming that he had overpaid the debt and that the courts had continued with the enforcement and given his property to I.M. even after he had paid the debt in full. The enforcement court had decided to proceed with the enforcement and sale of the applicant ’ s share in the property because, despite the fact that he had paid the principal amount of the debt and statutory default interest, the costs of the enforcement proceedings had remained unpaid (see paragraphs 16, 18 and 22-23 above). Furthermore, I.M. had not been “given” the applicant ’ s share in the property but had bought it at a public auction (see paragraph 21 above). Lastly, from the decision distributing the proceeds of that sale it was evident that the enforcement court had taken into account all the applicant ’ s payments thus far and had only awarded I.M. the amount corresponding to the costs of the enforcement proceedings, with the remainder having been paid to the applicant ( see paragraph 32 above).
73. In this connection, the Government argued that the fact that I.M., being the enforcement creditor, had bought the applicant ’ s share in the property was irrelevant for the regularity of the proceedings. That was because I.M. had played a different procedural role when acting as a buyer, it being understood that any other person could have done so. The applicant could have found himself a buyer who would offer a higher price, and in that way reduced the loss he had eventually suffered by the sale for less than the market value. He had not done so.
74. The Government went on to argue that the domestic courts ’ decisions in the present case were fully in accordance with the law, as they had both been in line with the relevant provisions of the Enforcement Act and had met the Convention standards of lawfulness in terms of foreseeability, precision and accessibility. They rejected the applicant ’ s argument that after 2 May 2011, when he had made the last payment, the enforcement court should have discontinued the enforcement proceedings ( see paragraph 69 above ). In their view, the court could not have done so because the applicant ’ s share in the property had already been sold before that date, on 17 March 2011 when the second public auction had been held (see paragraph 21 above). It was then that the applicant had lost his share in the property and the enforcement had essentially been completed. The decisions rendered later had only represented implementation or “technical” rulings, aimed at formally ending the proceedings. The applicant, who had been represented by an advocate throughout the enforcement proceedings, must have been aware of that. In fact, according to the Government, he himself did not contest that his share in the property had already been sold at the second auction, but tried to argue why the enforcement court should have nevertheless, after he had paid the debt in full, discontinued the proceedings and ordered restitution.
75. The Government further argued that the decision to sell the applicant ’ s share in the property had not been disproportionate given the circumstances, having particular regard to the rights of the enforcement creditor I.M. and related positive obligations the State owed him on the one hand, and the applicant ’ s conduct during the enforcement proceedings on the other. In this connection, they first highlighted that I.M. ’ s claims against the applicant stemmed from final judicial decisions (see paragraphs 7-9 above) and as such represented possessions within the meaning of Article 1 of Protocol No. 1 to the Convention. It was the State ’ s obligation under the Convention to make use of all available legal means at its disposal in order to enforce those decisions. In discharging that positive obligation, the State had been faced with disruptive conduct on the part of the applicant, who had done everything to avoid, or at least delay paying the debt as long as possible. That was evident from the fact that he had only commenced settling the debt after the first public auction had been scheduled, that is, three years after the enforcement proceedings had been instituted (see paragraphs 10 and 15-16 above). The Government found it implausible that during those three years the applicant had not had enough means to settle the debt and then, when the enforcement had reached its final stages, and when it had become certain that his share in the property would be sold, he had suddenly paid a large portion of the debt within a few months. Even when he had started settling the debt, the applicant had not respected the self-imposed time - limits, but had spread out the payments so that they had occurred after the enforcement court had already undertaken the next step in the proceedings, closer to the full satisfaction of the creditor ’ s claim. The crucial proof of this bad faith was that only after his share in the property had been sold had the applicant paid off the debt in full, save for the costs of the proceedings (see paragraphs 21-23 above).
76. Having regard to the foregoing, and in particular the fact that the applicant could have foreseen the course of the enforcement proceedings and the risk of losing his share in the property if he persisted with his obstructive and dilatory conduct, the possibilities at his disposal to avoid the judicial sale and influence the purchase price of the property, as well as the fairness of those proceedings (he had been able to present his case and advance all his arguments ), the Government argued that there had been no violation of Article 1 of Protocol No. 1 to the Convention in the instant case.
77. The Court notes at the outset that the enforcement proceedings in the present case concern a civil-law dispute between private parties. In this connection, the following general principles emerge from the Court ’ s case ‑ law (see, for example, Zagrebačka banka d.d. v. Croatia, no. 39544/05, § § 250-251, 12 December 2013 ):
“ 250. The Court notes at the outset that ... civil-law dispute[s] between private parties ... do not themselves engage the responsibility of the State under Article 1 of Protocol No. 1 to the Convention (see, mutatis mutandis, Ruiz Mateos v. the United Kingdom, no. 13021/87, Commission decision of 8 September 1988, Decisions and Reports (DR) 57, pp. 268 and 275; Skowronski v. Poland (dec.), no. 52595/99, 28 June 2001; Kranz v. Poland (dec.), no. 6214/02, 10 September 2002; Eskelinen v. Finland (dec.), no. 7274/02, 3 February 2004; and Tormala v. Finland (dec.), no. 41258/98, 16 March 2004). In particular, the mere fact that the State, through its judicial system, provided a forum for the determination of such a private-law dispute does not give rise to an interference by the State with property rights under Article 1 of Protocol No. 1 (see, for example, Kuchař and Štis v. the Czech Republic (dec.), no. 37527/97, 21 October 1998). The State may be held responsible for losses caused by such determinations if court decisions are not given in accordance with domestic law or if they are flawed by arbitrariness or manifest unreasonableness contrary to Article 1 of Protocol No. 1 (see, for example, Vulakh and Others v. Russia, no. 33468/03, § 44, 10 January 2012 ). However, the Court ’ s jurisdiction to verify that domestic law has been correctly interpreted and applied is limited and it is not its function to take the place of the national courts. Rather, its role is to ensure that the decisions of those courts are not arbitrary or otherwise manifestly unreasonable (see, for example, Anheuser-Busch Inc. v. Portugal [GC ], no. 73049/01, [ § 83 ], ECHR 2007 ‑ I).
251. The Court further reiterates that in all States Parties to the Convention the legislation governing private-law relations between individuals, including legal persons, includes rules which determine the effects of these legal relations with respect to property and, in some cases, compel a person to surrender a possession to another. Examples include, in particular, the seizure of property in the course of execution of a judgment. This type of rule cannot in principle be considered contrary to Article 1 of Protocol No. 1 unless a person is arbitrarily and unjustly deprived of property in favour of another (see Bramelid and Malmström v. Sweden, no. 8588/79 and 8589/79, Commission decision of 12 October 1982, DR 9, pp. 64 and 82, and Dabić v. the former Yugoslav Republic of Macedonia (dec.), no. 59995/00, 3 October 2001). ”
78. As its case-law bears out, the Court ’ s task in the present case is therefore to assess whether the domestic courts ’ decisions to proceed with the sale of the applicant ’ s share in the property after he had settled the debt in full, that is, to do so only to recover the costs of the enforcement proceedings, were given in accordance with domestic law and whether they were arbitrary or manifestly unreasonable.
79. The Court first notes that the applicant paid his debt in full on 2 May 2011 (see paragraph 23 above) and that under the Enforcement Act one of the grounds for discontinuation of enforcement was that the claim sought to be enforced had been extinguished (see paragraph 43 above). The Court further notes that under the case-law of the domestic courts the buyer became the owner of the property only after the award decision had become final and the buyer had paid the purchase price (see paragraph 5 2 above). In the applicant ’ s case both of these conditions were met on 7 March 2012, long after the second auction (see paragraphs 25, 27 and 29 above). It is therefore unclear in terms of the domestic law why the domestic courts considered the date of the second public auction as the point after which the enforcement proceedings could no longer be discontinued (see paragraphs 25 and 27 above).
80. However, the Court reiterates that its jurisdiction to verify that domestic law has been correctly interpreted and applied is limited and that it is not its function to take the place of the national courts. It will therefore confine itself to examining whether the decisions of the domestic courts were arbitrary or manifestly unreasonable (see Anheuser-Busch Inc., cited above, § 83). It will, however, do so with the above considerations in mind (see paragraph 79 above and paragraph 85 below).
81. The Court attaches particular importance to the fact that on 2 May 2011 when the applicant paid the debt in full, he also expressed his readiness to cover the costs of the enforcement proceedings as well, but could not do so because the enforcement court had not specified them at that time. He thus invited the court to issue a decision in that respect (see paragraph 23 above). Instead, the court proceeded with the sale of his share in the property and only specified the costs a year and four months later, in its decision distributing the proceeds of sale (see paragraph 25 above).
82. The Court understands that the domestic courts might have considered that to continue with the sale of the applicant ’ s share in the property after 2 May 2011 was the appropriate course of action in the circumstances, given his previous conduct in the enforcement proceedings, which could have been seen as delaying tactics. In particular, those courts might have considered it unlikely that the applicant, for whom it took more than three and a half years to settle the debt of HRK 58 ,415.75 [18] (see paragraph 23 above), would pay an additional HRK 10,703.12 [19] in costs (see paragraph 32 above) without further delay. However, even if such justification is to be accepted, and although the Court attaches great importance to securing enforcement of judgments without undue delay (see, for example, Zagrebačka banka d.d., cited above, § 201 ), it does not see why the enforcement court did not at least specify the costs when the applicant asked it to do so (see paragraph 23 above). In that way it would have given him a chance to pay those costs without having to postpone the enforcement proceedings, which subsequently in any event lasted a year and four months before the creditor received the said costs (see the preceding paragraph).
83. Even if these domestic courts ’ decisions are not to be regarded as arbitrary, they are manifestly unreasonable for the reasons set out below.
84. In the Court ’ s view, the purpose of the sale at a public auction effected in the context of enforcement is to satisfy the creditor ’ s claim from the proceeds of the sale. In the instant case there was no third party whose interests could have been affected if the enforcement had been discontinued and the sale invalidated. Moreover, the Court notes that the enforcement creditor as the buyer made no financial investment by the time the debt was settled (see paragraphs 21, 23 and 29 above and compare with Rousk v. Sweden, no. 27183/04, § 141, 25 July 2013).
85. That being so, the Court finds it evident that from the moment the applicant paid his debt in full on 2 May 2011 (see paragraph 23 above) the need to protect the interest of his creditor (to recover the costs of enforcement proceedings) cannot justify the serious detrimental effects the decision to continue with the sale of his share in the property had on him. The fact remains that, as a result of that decision, the applicant ’ s share in his only real estate, which was also his home, worth HRK 131,200 [20], was sold to his creditor for one-third of the market value and only to cover the costs of enforcement proceedings amounting to HRK 10,703.12 [21], that is, for some 8% of the price (see paragraphs 14, 21, 25 and 32 above). What is more, as a further consequence thereof, the applicant and his wife are now facing eviction from their home in the proceedings for partition of co ‑ ownership (see paragraphs 36-40 above).
86. The foregoing considerations are sufficient to enable the Court to conclude that even if the domestic courts ’ decisions to proceed with the sale of the applicant ’ s share in his only real estate, after he had already settled the principal debt are not to be regarded arbitrary, they were manifestly unreasonable in the specific circumstances of the present case.
87. There has, accordingly, been a violation of Article 1 of Protocol No. 1 to the Convention.
II. APPLICATION OF ARTICLE 41 OF THE CONVENTION
88. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
89. The applicant invited the Court to award him just satisfaction and expressed his readiness to provide additional information as regards the level of that satisfaction upon request. He went on to argue that the only just satisfaction would be restitution. He contended that the enforcement proceedings had to be returned to the status quo ante, namely the stage they had been at on 2 May 2011 when he had paid the debt in full, whereupon all actions undertaken in the course of the enforcement had to be invalidated, the proceedings discontinued and his share in the property transferred back to him.
90. The Government noted that the applicant had not submitted a claim for payment of compensation in respect of pecuniary or non-pecuniary damage. They therefore invited the Court not to award him any. The Government further averred that restitution was not appropriate, arguing that if the Court were to order such a measure, the applicant would have to pay back to I.M. the sum he had paid for the applicant ’ s share in the property (which the applicant could not pay as he himself had admitted that he and his wife had not had enough means to buy out I.M. in the context of the proceedings for partition of ownership, see paragraph 70 above). Restitution would also entail an interference with I.M. ’ s property rights and, potentially, with the rights of third parties who had maybe in the meantime acquired some proprietary interest in the property in question. Lastly, restitution would likely give rise to new enforcement proceedings against the applicant for payment of the costs of the earlier enforcement proceedings.
91. The Court reiterates that a judgment in which it finds a breach imposes on the respondent State a legal obligation to put an end to the breach and make reparation for its consequences. If national law does not allow – or allows only partial – reparation to be made, Article 41 empowers the Court to afford the injured party such satisfaction as appears to be appropriate (see Iatridis v. Greece (just satisfaction) [GC], no. 31107/96, §§ 32-33, ECHR 2000-XI).
92. In this connection, it is to be noted that the applicant, relying on the Court ’ s finding of a violation of Article 1 of Protocol No. 1 to the Convention in the present case, may bring an action for unjust enrichment under section 1111 of the Obligations Act (see paragraph 55 above). The Court therefore considers that there is no call to award the applicant any sum in respect of pecuniary damage.
93. Given that the applicant did not submit claim for non-pecuniary damage, the Court considers that there is no call to award him any sum under that head either.
94. The applicant also claimed HRK 17,750 [22] for costs and expenses incurred before the domestic courts, in particular those incurred in the enforcement proceedings after 2 May 2011. He also claimed an unspecified sum for the costs and expenses incurred before the Court.
95. The Government contested these claims.
96. According to the Court ’ s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. In the present case, regard being had to the documents in its possession and the above criteria, the Court considers it reasonable to award the sum of EUR 200 for costs and expenses in the domestic proceedings, and EUR 850 for the proceedings before the Court.
97. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
1. Declares, unanimously, the application admissible;