Lexploria

AS TO THE ADMISSIBILITY OF

Application No. 31717/96

by Frans KEVELING and Margaretha Th. A. LEGERSTEE

against the Netherlands

The European Commission of Human Rights (Second Chamber) sitting

in private on 10 September 1997, the following members being present:

Mrs. G.H. THUNE, President

MM. J.-C. GEUS

A. GÖZÜBÜYÜK

J.-C. SOYER

H. DANELIUS

F. MARTINEZ

M.A. NOWICKI

I. CABRAL BARRETO

J. MUCHA

D. SVÁBY

P. LORENZEN

E. BIELIUNAS

E.A. ALKEMA

A. ARABADJIEV

Ms. M.-T. SCHOEPFER, Secretary to the Chamber

Having regard to Article 25 of the Convention for the Protection

of Human Rights and Fundamental Freedoms;

Having regard to the application introduced on 15 December 1995

by Frans KEVELING and Margaretha Th. A. LEGERSTEE against the

Netherlands and registered on 4 June 1996 under file No. 31717/96;

Having regard to the report provided for in Rule 47 of the Rules

of Procedure of the Commission;

Having deliberated;

Decides as follows:

THE FACTS

The applicants are two Dutch citizens, born in 1959 and 1962

respectively. They are an unmarried cohabiting couple residing in The

Hague. Before the Commission they are represented by Mr. M. Zegers, a

lawyer, practising in Volendam, the Netherlands.

The facts of the case, as submitted by the applicants, may be

summarised as follows:

a. Particular circumstances of the present case

On 16 March 1994 the first applicant, who was running a shop

selling comics as a sole trader (eenmanszaak), requested the President

of the Bankruptcy Chamber (Faillissementskamer) of the Regional Court

(Arrondissementsrechtbank) of The Hague to grant him a moratorium

(surséance van betaling).

On 18 March 1994 the Regional Court granted a moratorium. It

appointed Judge H. as investigating judge (rechter-commissaris) and

Mr J. as administrator (bewindvoerder).

On 6 May 1994, after an analysis of the first applicant's

financial situation, the investigating judge H. requested the Regional

Court to withdraw the moratorium for lack of prospects.

On 25 May 1994 the Regional Court of The Hague, i.e. Judge P.

sitting as a single judge, withdrew the moratorium and declared the

first applicant bankrupt and appointed Judge H. as investigating judge

(rechter-commissaris) and J. as receiver in bankruptcy (curator).

On 23 January 1995, both applicants requested the investigating

judge, pursuant to Section 69 of the Bankruptcy Act (Faillissements-

wet), to close the bankruptcy proceedings (opheffing faillissement).

They further requested, inter alia, that pending the preparation of

this closure no actions would be undertaken as regards the selling of

their home or goods falling in the bankrupt estate (boedelgoederen).

On 27 January the investigating judge H. partially rejected the

requests. As regards the selling of the house which the applicants

jointly own and in which they and their child live, he held that the

first applicant's ownership part in this house should, in principle,

be sold. Given the value of the real estate as stated by the applicants

and the outstanding mortgage, H. considered the selling of the first

applicant's part of the house to be worth while. A number of other

requests were granted.

On 31 January 1995 the applicants filed an appeal against the

decision of 27 January 1995.

In its decision of 2 March 1995, the full bench of the Regional

Court of The Hague, presided over by Judge P., declared the second

applicant's appeal inadmissible, holding that she could not be

considered as a creditor in the bankruptcy proceedings in that she had

not filed any claim with the receiver. It further rejected the first

applicant's appeal, partly for being inadmissible and partly for being

ill-founded.

As regards the request to close the bankruptcy proceedings, the

Regional Court held:

"Pursuant to Article 16 of the Bankruptcy Act, the Regional Court

may, upon a proposal of the investigating judge, decide to

pronounce the closure of the bankruptcy, where the situation of

the estate would give rise to such a decision. As indicated by

the investigating judge in his decision of 27 January 1995, this

is not possible as long as there are assets of the debtor in the

estate. These assets need to be sold for the benefit of the joint

creditors. At the hearing, the bankrupt has in fact acknowledged

that there are net assets (netto-actief), as the indicated value

amounts to NLG. 100.000 whereas the pro resto

mortgage debt amounts to about NLG. 60.000. It is thus

established that the net assets amount to about NLG. 40.000, half

of which fall in the estate. The Court finds that, given such

assets, it cannot be held that, if these are sold, the interests

of the bankrupt are harmed disproportionately, even taking into

account the housing situation in The Hague."

On 9 March 1995, the applicants filed an appeal in cassation with

the Supreme Court (Hoge Raad).

On 16 June 1995, the Supreme Court rejected the appeal in

cassation. Insofar as the applicants complained under Article 6 para. 1

of the Convention that Judge P. could not be regarded as objectively

impartial, as he decided both on the bankruptcy and the appeal against

the decision of the investigating judge, the Supreme Court held that

the questions which Judge P. had to determine in the present

proceedings were completely different from those dealt with in his

previous decision to declare the first applicant in state of

bankruptcy.

As regards the applicants' complaint that the compulsory sale of

the first applicant's ownership part of the house at issue is contrary

to the second applicant's rights under Article 8 of the Convention, the

Supreme Court accepted the Regional Court's balancing of the interests

involved and found that in this balancing the Regional Court had

included the interests of the estate's creditors. Consequently, the

Supreme Court upheld the Regional Court's decision.

b. Relevant domestic law

Pursuant to the Bankruptcy Act, the Regional Court may declare

a person in a state of bankruptcy where there are facts and

circumstances from which it appears prima facie that this person has

ceased to pay his or her creditors. When it declares a person in a

state of bankruptcy, the Regional Court shall appoint an investigating

judge, responsible for the administration and winding up of the estate,

and one or more receivers, who as representatives of both the bankrupt

and the joint creditors, are also responsible for the administration

and winding up of the estate.

As consequence of a bankruptcy, all assets a bankrupt holds on

the day of the pronouncement of bankruptcy are frozen and henceforth

administered by the investigating judge assisted by the receiver. This

is a safeguard against fraudulent conversion, concealment of assets and

other similar manoeuvres so long as the bankruptcy continues. A

declaration of bankruptcy further entails that measures taken by

creditors in order to recover their debts, such as for instance

conservatory seizures, are lifted. A bankruptcy is published and all

creditors are invited to deposit their claims with the receiver for

verification and acceptance. The receiver shall draw up a final list

of all assets and debts, shall liquidate the assets and divide the

proceeds thereof, if any, amongst the accepted creditors.

A receiver acts under the responsibility of the appointed

investigating judge. Pursuant to Article 67 para. 1 of the Bankruptcy

Act an appeal against decisions taken by the investigating judge lies

with the Regional Court.

In a situation where a receiver has found that a bankrupt's debts

exceed the assets and has reported this finding to the investigating

judge, the Regional Court, upon a proposal by the investigating judge,

may decide to close the bankruptcy proceedings for lack of prospects

(opheffing bij gebrek aan baten).

It is further possible that the Regional Court decides to close

the bankruptcy proceedings after the proceeds of liquidated assets have

been distributed amongst the creditors on the basis of a final

distribution list (slotuitdelingslijst).

Following the closure of bankruptcy proceedings, the right of

accepted creditors to recover their unpaid debts, in principle, revives

in full, although in practice this has little significance given the

financial position of a person whose bankruptcy has been closed.

COMPLAINTS

1. The applicants invoke Article 6 para. 1 of the Convention. They

submit that their civil rights and obligations have not been determined

by an impartial judge.

2. The applicants further complain that a declaration of bankruptcy

in itself already constitutes an unjustified interference with their

rights under Article 8 of the Convention and that to maintain the

bankruptcy constitutes a further violation of their rights under this

provision, in particular the compulsory sale of their house.

3. Finally, the applicants invoke Article 1 of Protocol No. 1. They

submit that a declaration of bankruptcy in itself already constitutes

a serious interference with their rights under Article 1 of Protocol

No. 1 and that to maintain the bankruptcy constitutes a further

violation of their rights under this provision.

THE LAW

1. The applicants complain that their case was not heard by an

impartial tribunal within the meaning of Article 6 para. 1 (Art. 6-1)

of the Convention, which, in so far as relevant, provides:

"In the determination of his civil rights and obligations ...

everyone is entitled to a ... hearing ... by an ... impartial

tribunal..."

Insofar as the proceedings at issue could be regarded as

constituting a determination of the applicants' civil rights and

obligations within the meaning of Article 6 para. 1 (Art. 6-1) of the

Convention (cf. No. 8988/80, Dec. 10.3.81, D.R. 24, p. 198), the

Commission recalls that the existence of impartiality for the purposes

of Article 6 para. 1 (Art. 6-1) of the Convention must be determined

according to a subjective test, that is on the basis of the personal

conviction and behaviour of a particular judge in a given case, and

also according to an objective test, that is ascertaining whether the

judge offered guarantees sufficient to exclude any legitimate doubt in

this respect. Under the objective test, it must be determined whether,

quite apart from the judge's personal conduct, there are ascertainable

facts which may raise doubts as to a judge's impartiality. In this

respect even appearances may be of a certain importance. What is at

stake is the confidence which the courts in a democratic society must

inspire in the public. The standpoint of the complaining party is

important but not decisive. What is decisive is whether the fear that

a particular judge lacks impartiality can be held objectively justified

(cf. Eur. Court HR, De Cubber v. Belgium judgment of 26 October 1984,

Series A no. 86, pp. 13-14, paras. 24-26; Ferrantelli and Santangelo

v. Italy judgment of 7 August 1996, Reports 1996-III, No. 12, paras.

56-58; and No. 17722/91, Dec. 8.4.91, D.R. 69, p. 345).

As to the subjective test, the personal impartiality of a judge

must be presumed until there is a proof to the contrary. The applicants

have not shown that the judge concerned acted with personal bias.

As to the objective test, the Commission observes that the fear

of lack of impartiality in the present case is based on the fact that

the President of the Regional Court, which determined the applicants'

appeal against the investigating judge's refusal to close the

bankruptcy, had previously decided to declare the first applicant

bankrupt.

The Commission notes that Judge P., when declaring the first

applicant bankrupt, had to determine whether there were facts and

circumstances from which it appeared prima facie that the first

applicant had ceased to pay his creditors. As Judge P. found the answer

to this question to be affirmative, the first applicant was declared

bankrupt.

The question which Judge P., as President of the Regional Court,

and two other judges had to answer in the appeal lodged by the

applicants was a different one, namely whether or not the bankruptcy

proceedings could be closed without liquidating all assets held by the

first applicant. In view of the stated value of these assets, the

Regional Court replied to this question negatively and, consequently,

rejected the applicants' appeal.

Noting that the rejection of the applicants' appeal ocurred in

the course of one set of bankruptcy proceedings pending before the

Regional Court, whose task was to decide when to open and close such

proceedings and determine any interim issues which might arise in such

proceedings, the Commission cannot find that, in these circumstances,

the applicants' fear as regards the impartiality of Judge P. can

reasonably be regarded as objectively justified.

It follows that this part of the application is manifestly ill-

founded within the meaning of Article 27 para. 2 (Art. 27-2) of the

Convention.

2. The applicants invoke a violation of Article 8 (Art. 8) of the

Convention. They submit that a declaration of bankruptcy in itself

already constitutes a serious interference with their rights under

Article 8 (Art. 8) and that to maintain the bankruptcy constitutes a

further violation of their rights under this provision. They complain

about the obligation to sell the first applicant's part in their

jointly owned house where they live together with their child.

Article 8 (Art. 8) of the Convention provides, insofar as

relevant, as follows:

"1. Everyone has the right to respect for his private and

family life, his home and his correspondence.

2. There shall be no interference by a public authority with

the exercise of this right except such as is in accordance with

the law and is necessary in a democratic society in the interests

of ... the economic well-being of the country ... or for the

protection of the rights and freedoms of others."

Insofar as the applicants complain that the continuation of the

bankruptcy proceedings violated their rights under Article 8 (Art. 8)

of the Convention, the Commission is of the opinion that, insofar as

the continuation of these proceedings can be considered as constituting

an interference with the applicants' rights under Article 8 para. 1

(Art. 8-1) of the Convention, this interference pursuant to the

Bankruptcy Act can reasonably be regarded as justified under paragraph

2 of Article 8 (Art. 8) as necessary in a democratic society in the

interest of the economic well-being of the country and the protection

of the rights and freedoms of others.

Insofar as the applicants complain under Article 8 (Art. 8) of

the Convention of the compulsory sale of the first applicant's

ownership part in the house in which both applicants live, the

Commission accepts that this constitutes an interference with the

applicants' right to respect for their home within the meaning of this

provision, in that it cannot be excluded that, when their house would

be sold to a third party, the applicants could be required to vacate

their home. It should, therefore, be examined whether this interference

can be regarded as justified under Article 8 para. 2 (Art. 8-2) of the

Convention.

The Commission notes that the compulsory selling of the

applicants' house forms a part of the realisation of the first

applicant's assets in order to pay his creditors in bankruptcy

proceedings pursuant to the Bankruptcy Act. The Commission further

notes that it has not been alleged nor appeared that the second

applicant was prohibited from acquiring the first applicant's ownership

part in the house at issue.

The Commission cannot find the balance struck by the domestic

courts between the interests of the applicants on the one hand and the

interests of the first applicant's creditors on the other to be

unreasonable or arbitrary. In these circumstances the Commission finds

that the interference in question can reasonably be regarded as

justified under the terms of Article 8 para. 2 (Art. 8-2) of the

Convention as being necessary in a democratic society in the interest

of the economic well-being of the country and the protection of the

rights of others.

It follows that this part of the application must be rejected as

being manifestly ill-founded within the meaning of Article 27 para. 2

(Art. 27-2) of the Convention.

3. Finally, the applicants invoke Article 1 of Protocol No. 1

(P1-1). They submit that a declaration of bankruptcy in itself already

constitutes a serious interference with their rights under Article 1

of Protocol No. 1 (P1-1) and that to maintain the bankruptcy

constitutes a further violation of their rights under this provision.

Article 1 of Protocol No. 1 (P1-1) 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."

The Commission notes that, as from the moment the Regional Court

declares a person in a state of bankruptcy, that person is no longer

allowed to administer his or her assets and that this function is

entrusted to an investigating judge assisted by a receiver. This is a

safeguard against fraudulent conversion, concealment of assets and

other similar manoeuvres so long as the bankruptcy continues. At this

point in the proceedings, a bankrupt is not deprived of his or her

possessions, but only temporarily, of the right to administer them in

person.

Subsequently, insofar as possible, the assets held by a bankrupt

are liquidated in order to pay, insofar as the proceeds thereof allow,

those creditors whose claims have been accepted in the bankruptcy

proceedings.

The Commission considers that the consequences of bankruptcy

proceedings under the Netherlands Bankruptcy Act, which entail both a

control of the use of property and, subsequently, a deprivation of

realisable property, can reasonably be regarded as being in accordance

with the public or general interest within the meaning of Article 1 of

Protocol No. 1 (P1-1). The Commission cannot find that the judicial

decisions taken in the proceedings at issue struck an unfair balance

between the applicants' interests on the one hand and the public or

general interest on the other.

It follows that this part of the application must also be

rejected as being manifestly ill-founded within the meaning of

Article 27 para. 2 (Art. 27-2) of the Convention.

For these reasons, the Commission, unanimously,

DECLARES THE APPLICATION INADMISSIBLE.

M.-T. SCHOEPFER G.H. THUNE

Secretary President

to the Second Chamber of the Second Chamber

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KEVELING AND LEGERSTEE v. THE NETHERLANDS

KEVELING AND LEGERSTEE v. THE NETHERLANDS

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