EUROPEAN COMMISSION OF HUMAN RIGHTS

SECOND CHAMBER

DECISION

AS TO THE ADMISSIBILITY OF

Application No. 19534/92

by Josef SCHNIDRIG and

                         SCHNIDRIG HOCH- u. TIEFBAU AG

against Switzerland

The European Commission of Human Rights (Second Chamber) sitting in private on 24 February 1995, the following members being present:

Mr. H. DANELIUS, President

Mrs. G.H. THUNE

MM. G. JÖRUNDSSON

S. TRECHSEL

J.-C. SOYER

F. MARTINEZ

L. LOUCAIDES

J.-C. GEUS

M.A. NOWICKI

I. CABRAL BARRETO

J. MUCHA

D. ŠVÁBY

Mr. K. ROGGE, 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 10 December 1991 by Josef SCHNIDRIG and SCHNIDRIG HOCH- u. TIEFBAU AG against Switzerland and registered on 21 February 1992 under file No. 19534/92;

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 first applicant, a Swiss citizen born in 1924, resides in Visp .  He is the president and principal shareholder of the second applicant, which is a limited company with registered office in Zermatt , Switzerland.  Before the Commission the applicants are represented by Dr. Richard Steiner , a lawyer and notary practising in Brig- Glis .

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

I. Tax assessment proceedings.

In 1981 the Canton of Wallis Tax Authority ( Steuerverwaltung ) inspected the second applicant's accounts.  The inspectors discovered a bank account which they believed to be an undeclared account belonging to the second applicant.  In the subsequent tax proceedings the credit items including the interests from that account were imputed to the first applicant and considered as concealed takings of profit.

The applicants affirmed that the bank account had been opened in the name of the first applicant and served his private financial operations.  They alleged that for unknown reasons the Swiss Bank Corporation had replaced the original number of the account by another, containing the second applicant's root number.

In 1985 the cantonal Tax Authority rejected the applicants' complaints about the decision to ascribe the account to the second applicant and the subsequent tax assessment readjustment.  On 24 March 1988 the Canton of Wallis Commission on Tax Appeals ( Steuerrekurskommission ) rejected the applicants' complaints concerning that decision.

On 15 December 1988 and 26 January 1989 the Canton of Wallis Administrative Court ( Verwaltungsgericht ) dismissed the applicants' complaints about the assessment of their cantonal taxes.  The applicants introduced a public law appeal with the Federal Court ( Bundesgericht ) against this decision.  In addition, the applicants filed with the Federal Court an administrative law appeal in respect of the assessment of their federal taxes.  On 10 November 1989 the Federal Court dismissed both appeals inasmuch as it could accept them for determination of their merits.

II. Tax evasion proceedings.

In letters of 24 June 1985 and 7 March 1986 respectively the Canton of Wallis Tax Authority informed the applicants that by failing to declare the aforesaid bank account they had committed tax evasion.  They were further informed that tax evasion proceedings were being instituted against them under Articles 203 et seq. of the Tax Act 1976 ( Steuergesetz ).  The applicants replied  that it was evident from their submission to the competent authorities, before which tax assessment proceedings were still pending, that the contested sums were not their income.  They therefore considered the institution of the tax evasion proceedings inappropriate.

On 30 March 1989 the Canton of Wallis Department of Finance ( Finanzdepartement ) informed the applicants that in application of Article 203 et seq. of the Tax Act they were fined for attempted tax evasion.  As to the first applicant, the fine equalled the sum of the attempted tax evasion, i.e. 59,626 SFr. as to the Canton of Wallis and 43,683 SFr. as to the Visp municipality.  As regards the second applicant, the fine amounted to half of the allegedly attempted tax evasion, i.e. 14,905 SFr. as to each of the Canton of Wallis and the municipality of Zermatt .  

On 26 April 1989 the applicants challenged this decision before the Canton of Wallis Government ( Staatsrat ).  On 23 June 1989 the Department of Finance presented written submissions ( Vernehmlassung ) on the applicants' complaints.  The appeal proceedings were taken over by the Visp single judge ( Instruktionsrichter II des Bezirkes Visp ) and suspended upon the applicants' demand until the Federal Court's judgments of 10 November 1989 were available.  On 4 October 1990 the Visp single judge dismissed the first applicant's appeal and confirmed the fine determined by the Department of Finance.  In regard to the second applicant, the single judge found that the Department of Finance had committed an error in calculation.  The fine was determined at half of the adjusted amount of the attempted tax evasion, i.e. 8,751.25 SFr. as to each of the Canton of Wallis and the municipality of Zermatt .

On 21 December 1990 the applicants introduced public law appeals with the Federal Court.  Under Article 4 of the Federal Constitution (prohibition of arbitrariness) they complained ( i ) that the tax evasion proceedings had unlawfully been brought by the cantonal administration of taxes since the law provided for their introduction by the Department of Finance; and (ii) that since the Department of Finance was not represented in the proceedings before the Visp single judge they had been deprived of the possibility of replying to charges brought against them.  They considered that the procedural rules under Section 136 of the Code of Criminal Procedure had been violated.  Under Article 6 para . 2 of the Convention the applicants alleged a violation of the presumption of innocence because ( i ) the fine orders were issued before the Federal Court decided about the public and administrative law appeals concerning their tax assessments; and (ii) the Visp single judge had based his decision on the Federal Court's finding of the applicants' administrative liability contained in the judgments of 10 November 1989 without himself establishing the extent of their criminal liability.

On 11 June 1991 the Federal Court dismissed the public law appeals inasmuch as they could be accepted for determination of their merits.  The court rejected as groundless the applicants' complaints about the unlawfulness of the institution of the tax evasion proceedings.  It found that in accordance with established practice the cantonal Tax Authority had acted in this case as a branch office ( Dienstabteilung ) of the Department of Finance and that this was not contrary to the law.

As to the complaints about the impossibility of replying to charges brought against them in the proceedings before the Visp single judge the Federal Court found that no procedural rights of the applicants had been infringed and that they therefore lacked a legal interest to invoke the aforesaid provision.  The court noted, inter alia , that the applicants had the possibility of presenting their arguments both before and during the proceedings and of replying to the Department of Finance's written submissions.  As the latter did not react to the arguments invoked by the applicants and did not introduce any new elements, the Federal Court considered that there was no need for the applicants to have an additional opportunity to reply.

The Federal Court further found no violation of the presumption of innocence by imposition of the fines prior to the Federal Court's judgments concerning the applicants' tax assessments.  The court held that it was not contrary to Article 6 para . 2 of the Convention if a competent authority decided on liability within proceedings prescribed by law.  Nor did the Federal Court consider as a violation of the presumption of innocence the fact that the Visp single judge had substantiated the applicants' liability by reference to the 1989 conclusions of the Federal Court.  The Federal Court considered that, since proof of liability was a matter of domestic law, the applicants could have invoked arbitrariness in their public law appeals with respect to this decision.

As to the complaint that the Visp single judge had failed to examine the extent of the applicants' liability, the court noted that in substance it was aimed at insufficient specification of the elements which had been decisive for the determination of the amount of the penalty.  The court concluded that the alleged shortcomings in this respect could have been invoked within a complaint about arbitrariness.  The court held that under the circumstances it was not necessary to examine whether Article 6 of the Convention applied to the applicants' cases.

COMPLAINTS

The applicants allege a violation of their right to a fair trial.  They consider that the absence of a representative of the Department of Finance in the proceedings before the Visp single judge deprived them of the opportunity of defending themselves and infringed the equality of arms guaranteed by Article 6 para . 1 of the Convention.

The applicants also allege that the tax evasion proceedings were unlawful and are therefore statute-barred as they were brought by the cantonal Tax Authority and not by the Department of Finance as domestic law provided for.  They invoke Article 6 paras . 1 and 3 (a) of the Convention.

Under Article 6 para . 2 of the Convention the applicants allege a violation of the presumption of innocence ( i ) by the Department of Finance which issued the fine orders prior to the Federal Court's decision on the appeals concerning their tax assessments; and (ii) by the Visp single judge who allegedly based his decision upon the Department of Finance's findings without himself establishing their liability.  In addition, they complain that the Department of Finance did not substantiate the criteria according to which the fines were determined and the single judge did not examine whether the sums were appropriate.

Finally, the applicants allege a violation of their right to be informed in detail of the accusation against them guaranteed by Article 6 para . 3 (a) of the Convention.  They affirm that they were

not informed why the authorities considered them guilty and how the fines were determined, and that the proceedings were instituted unlawfully.

THE LAW

1. The applicants complain about violations of their rights guaranteed by Article 6 of the Convention.  They allege that their right to a fair trial, and in particular, the principle of equality of arms, was violated by the fact that the Department of Finance was not represented in the proceedings before the Visp single judge.  Article 6 of the Convention, so far as relevant, provides:

"1. In the determination of ... any criminal charge against him, everyone is entitled to a fair ... hearing ... by a tribunal established by law.

2. Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law.

3. Everyone charged with a criminal offence has the following minimum rights:

a. to be informed promptly,...and in detail, of the nature and cause of the accusation against him."

The Commission notes that the tax fines were not intended as a pecuniary compensation for damage, but essentially as a penalty for a breach of the law.  They were imposed under the Canton of Wallis Tax Act which applies to all citizens and legal persons in their capacity as tax payers.  The fine was very substantial in respect to the first applicant (103,309 SFr., i.e. 100% surcharge) and substantial in regard to the second applicant (17,502.50 SFr., i.e. 50% surcharge).  The Commission recalls that fiscal proceedings concerning tax assessments including a surcharge of a punitive character, as in the present case, fall within the scope of Article 6 para . 1 of the Convention (cf. Eur .  Court H.R., Bendenoun judgment of 24 February 1994, series A no.  284, para .  47).  Article 6 of the Convention is, therefore, applicable to the tax evasion proceedings at issue.

The Commission recalls that in criminal proceedings, even in the absence of a prosecuting party, a trial would not be fair if it took place in such conditions as to put the accused unfairly at a disadvantage (cf. Eur . Court  H.R., Delcourt judgment, Series A no. 11, pp. 15 and 18, paras . 28 and 34).

In the present case, the applicants allege that they were deprived of the opportunity of challenging the accusation brought against them by the Department of Finance.  The Commission notes, however, that the Department of Finance explained their position concerning the applicants' appeal against the fine orders, which was in substance the same as in the preceding tax assessment proceedings, in written submissions of 23 June 1989.  The applicants do not complain that they were not informed about the contents thereof.  Moreover, before the Visp single judge the applicants had ample opportunity to present their position through their lawyer.

The Commission finds, therefore, that the applicants were not prejudiced by the absence of the prosecuting party in the proceedings before the Visp single judge and that there was no breach of Article 6 para . 1 in this respect.

It follows that this part of the application is manifestly ill-founded within the meaning of Article 27 para . 2 of the Convention.

2. The applicants further allege that the proceedings were introduced by the wrong authority and were, therefore, unlawful and contrary to the provisions of Article 6 paras . 1 and 3 (a) of the Convention.

The Commission notes that the proceedings were brought in accordance with a domestic practice of the cantonal Tax Authority which acted as a branch office of the Department of Finance, and that, according to the Federal Court, this practice was lawful.  The Commission considers that the bringing of proceedings by an authority which is  subordinate to the authority mentioned in the relevant legislation did not affect the applicants' right to a fair trial or their right to be informed of the nature and cause of the accusation against them within the meaning of Article 6 paras . l and 3 (a) of the Convention.

It follows that this part of the application is again manifestly ill-founded within the meaning of Article 27 para . 2 of the Convention.

3. The applicants also allege a violation of the presumption of innocence, in that the Department of Finance issued the fine orders prior to the Federal Courts' decisions about the applicants' public and administrative law appeals concerning their tax assessments.

The Commission recalls that the fine orders were issued on 30 March 1989, i.e. after the Administrative Court's decisions of 15 December 1988 and 26 January 1989, by which their tax assessment proceedings were concluded in a legally binding manner.  The facts established by those proceedings were qualified by the Department of Finance in application of relevant domestic law as tax evasion.  The Commission further notes that by the public law appeals, which did not represent an ordinary remedy, new proceedings were brought in which the Federal Court disposed only of limited jurisdiction.  Nor did the public law appeals have a suspensive effect.

Under these circumstances the Commission finds that the imposition of fines before the decisions of the Federal Court were taken did not violate the presumption of innocence.

It follows that this part of the application is also manifestly ill-founded within the meaning of Article 27 para . 2 of the Convention.

4. The applicants further submit that the presumption of innocence was violated ( i ) in that the Visp single judge relied on the Department of Finance's findings without himself establishing their liability, and (ii) in that the Department of Finance did not substantiate the criteria according to which the fines were determined and in that the single judge did not examine whether the sums were appropriate.

The Commission observes that the applicants failed to raise these issues before the Federal Court under Article 4 of the Federal Constitution.  They have not, therefore, complied with the requirement of exhausting domestic remedies laid down in Article 26 of the Convention.

It follows that this part of the application must be rejected under Article 27 para . 3 of the Convention.

5. Finally, the applicants complain under Article 6 para . 3 (a) of the Convention that they were not informed about the accusations against them and of the criteria for the determination of the fines.

The Commission observes, however, that by letters of 24 June 1985 and 7 March 1986 respectively the cantonal Tax Administration  informed the applicants of both the acts which they were suspected to have committed and of the legal classification of the acts in question.  Furthermore, the latter acts were subject to subsequent appeal proceedings in the course of which the applicants had ample opportunity to prepare their defence .

The applicants' complaints concerning the criteria pursuant to which the fines were determined correspond to a large extent to those formulated under Article 6 para .  2 of the Convention and this complaint has already been examined above.  The Commission therefore finds no ground for departing from the conclusion which it has reached in considering the complaint under the aforesaid head.

It follows that this part of the application is manifestly ill-founded within the meaning of Article 27 para . 2 of the Convention.

For these reasons, the Commission unanimously

DECLARES THE APPLICATION INADMISSIBLE.

Secretary to the Second Chamber     President of the Second Chamber

  (K. ROGGE)    (H. DANELIUS)