THIRD SECTION

DECISION

Application no . 61907/11 Miroslav BALÁŽ against Slovakia

The European Court of Human Rights ( Third Section ), sitting on 23 September 2014 as a Chamber composed of:

Josep Casadevall , President,

Alvina Gyulumyan ,

Ján Šikuta ,

Dragoljub Popović ,

Johannes Silvis ,

Valeriu Griţco ,

Iulia Antoanella Motoc , judges,

and Marialena Tsirli, Deputy Section Registrar ,

Having regard to the above application lodged on 30 September 2011 ,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,

Having deliberated, decides as follows:

THE FACTS

1 . The applicant, Mr Miroslav Baláž , is a Slovak national, who was born in 1960 and lives in Trenčianske Teplice . He was represented before the Court by Mr D. Chlapík , a lawyer practising in Žilina . The Government of the Slovak Republic (“the Government”) were represented by their Agent, M s M. Piro šíková .

The circumstances of the case

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

1 . Background

3 . The applicant , who is a lawyer, ran a property business and became involved in a dispute with the tax authorities over his tax liability in the preced ing year s . That amount depended on the amount of deductible expenses in the re levant preceding year s , these two types of amount being determined by separate decisions in separate sets of proceedings.

4 . On 19 July 1997 the Trenčín t ax o ffice ordered him to pay the equivalent o f some 112,500 euros (EUR) in outstanding tax for the year 1993.

5 . On 1 December 1997 and 5 February 1998 respectively, the t ax o ffice ordered that the above amount be increased by 100% by way of a penalty and determined that the applicant ’ s overall tax liability w as the equivalent of some EUR 225,000.

6 . On 6 February 1998 the t ax o ffice decided to secure payment of the applicant ’ s outstanding tax by prohibiting him from selling or otherwise disposing of any of his real property.

The decision became enforceable on 12 February 1998, despite the applicant lodging an appeal, which was dismissed on 21 July 1998 . The decision was ultimately confirmed by the Central Tax Directorate on 8 February 1999.

7 . The security established by the t ax o ffice had the legal form of a statutory lien and as such was registered in the Land Register. According to the applicant, the value of the encumbered property was the equivalent of some EUR 5,486,000.

8 . The applicant also appealed against the tax order of 19 July 1997 . S everal tax audits followed . O n 12 August 1998 a decision concerning the deductible expenses for the year 1992 was quashed by the Supreme Court ( Najvyšší súd ), which on 14 December 2000 dismissed a subsequent complaint regarding a fresh decision on the same matter.

9 . The applicant ’ s tax liability for the year 1993 was recalculated and reduced several times. Eventually, on 18 March 2002, by a decision which became final on 13 September 2002, the t ax o ffice established that it was actually no more than the equivalent of some EUR 3,000.

10 . On 7 May 2004 the t ax o ffice amended its decision of 6 February 1998 securing payment of the applicant ’ s outstanding tax and prohibited him from dealing with only one property.

11 . On 2 June 2004 the applicant paid the outstanding tax owed .

12 . Consequently, on 8 June 2004, the t ax o ffice cancelled the decision of 6 February 1998 in its entirety.

2. Claim for damages

13 . On 18 March 2005 the applicant, assisted by a lawyer then and throughout the subsequent proceedings, brought a claim for damages against the State, in the person of the Ministry of Finance.

He relied on the 1969 State Liability Act (Law no. 58/1969 Coll. – “the SL Act”) and pointed out that by its decision of 6 February 1998, the t ax o ffice had encumbered his real property , which was worth twenty times more than his tax liability under the decision of 5 February 1998 . Not only that , the decision had then turned out to be based on a completely inaccurate calculation.

He claimed that because of the impugned lien , all of his real property had been encumbered for more than six years, which had actually prevented him from carrying out his business activities , causing him to lose profit equivalent to some EUR 330,000, an amount that he later increased to the equivalent of some EUR 5,544,000.

The applicant also argued that the decision of 5 February 1998 had in fact been quashed by the decision of 8 June 2004 , and that the entire calculation of his tax liability had been erroneous because it had been based on amounts of tax-deductible expenses that had been contested and had later turned out to be wrong.

As to the damage allegedly caused , he calculated it as the interest he could have obtained from a bank for deposit ing the monetary value of the encumbered property, that value having been established by an expert.

14 . The claim was examined and dismissed at first instance by the Trenčín District Court ( Okresný súd ) on 15 October 2008 and following an appeal ( odvolanie ) by the applicant, by the Trenčín Regional Court ( Krajský súd ) on 21 October 2009.

15 . Both courts interpreted the applicant ’ s claim as being aimed at recovering damages in respect of a wrongful official decision ( sections 1 et seq. of the SL Act) as opposed to wrongful official action (sections 18 et seq. of the SL Act). However, under the applicable statute (section 4 of the SL Act), the first prerequisite for that type of claim to be available was that the alleged damage had to have resulted from an enforceable official decision that had been quashed or amended for being unlawful (section 4 of the SL Act).

The Regional Court explained that prerequisite in further detail, holding that the unlawfulness of the contested decision could not be examined as a preliminary issue in the proceedings in the claim for damages, and had to have been established by the body that had quashed th e decision precisely on account of its unlawfulness.

The courts noted that the damage asserted by the applicant had allegedly been sustained as a result of the t ax o ffice ’ s decision of 6 February 1998 , and found that that decision had never been quashed or amended for being unlawful. It had been cancelled on 8 June 2004 for a different reason, namely because the applicant ’ s tax liability had been paid in full .

16 . Both courts concluded that in the circumstances, the principal statutory requirement for the claim to be available had not been met. In addition, the District Court found the claim unfounded on several other grounds. These were , however , found by the Regional Court to be superfluous in view of the earlier finding.

3. Appeal on points of law and constitutional complaint

17 . An appeal on points of law ( dovolanie ) brought by the applicant made in reliance on alleged procedural irregularities was declared inadmissible by the Supreme Court on 30 November 2010 .

18 . He also brought a constitutional complaint alleging a violation of his rights under Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 in the above proceedings, which was declared inadmissible on 13 April 2011.

The Constitutional Court held that there was nothing to show that the ordinary courts had dealt with the case unfair ly, or that their decisions had been arbitrary. As to the alleged breach of the applicant ’ s right to peaceful enjoyment of his possessions, it considered that it would only be entitled to examine that complaint if the ordinary courts had breached his rights under Article 6 § 1 of the Convention or its constitutional equivalent.

COMPLAINT

19. Relying on Article 1 of Protocol No. 1, t he applicant complained that he had sustained considerable pecuniary damage as a result of the statutory lien imposed on all his immoveable property for six year s , which had been proven to be unlawful and was in his view disproportionate.

THE LAW

20. The applicant complained t hat he had sustained pecuniary damage as a result of unlawful and disproportionate measures taken against him in tax proceedings , contrary to his rights under Article 1 of Protocol No. 1 to the Convention, which provides 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.”

A . The p arties ’ arguments

21. In reply, the Government admitted that the imposition of a tax liability on the applicant and securing its payment by way of the decision of 6 February 1998 had amounted to an interference with his possessions. However, in their view, any complaint in that regard had been lodged out of time , because th e order had become enforceable as early as February 1998 . A ccording to them, the applicant ’ s subsequent claim for damages against the State had not restarted the running of the six-month time-limit.

22. As to the dismissal of th at claim, the Government pointed out that the success of such a claim depended on the impugned decision ’ s having been quashed as unlawful. In the applicant ’ s case, the decision of 6 February 1998 had never been quashed for being unlawful. I t had only been cancelled in 8 June 2004 because the applicant had paid his tax liability in full and not on account of any unlawfulness. Thus, in the Government ’ s opinion, he had actually been asserting a right he had not had. Such a claim did not therefore amount to “ possession s” within the meaning of Article 1 of Protocol No. 1 and accordingly, the dismissal of that claim could not be said to have amounted to an interference with his rights under that provision.

23. Moreover, and in any event, the Government held the view that the lawfulness of the lien established over the applicant ’ s possessions by the decision of 6 February 1998 was beyond reproach, as was its legitimacy and proportionality.

24. In answer to the Government , the applicant submitted that until his tax liability for the year 1993 had been determined with final effect, any claim for damages in relation to the decision of 6 February 1998, which was based on the amount established in the decision on his tax liability, had been practically im possible. His claim could not therefore have been statute ‑ barred. Moreover, he emphasised that as soon as his tax liability had actually been determined, he had paid it without delay.

25. The applicant pointed out that the decision concerning the deductible expenses for the year 1992 had been quashed by the Supreme Court on 12 August 1998 , and that any decision dependent on it had thereby lost its basis. It had therefore been arbitrary of the authorities to maintain their lien over his real property to its original extent. In that connection , he also emphasised that given the actual value of his tax liability, encumbering his entire property portfolio by a statutory lien had been vastly disproportionate and even capable of eliminat ing him from the marketplace .

26. T he applicant contended that the reasons for the cancellation of the decision of 6 February 1998 on 8 June 2004 had to be seen in their complexity, which included not only the payment of his tax liability, but also the fact that he had paid it in its adjusted amount , and that its original calculation had been plainly wrong.

27. In his view, therefore, the dismissal of his claim for damages had been an interference with his possessions and in addition, had amounted to a violation of his right of access to a court.

B . The Court ’ s assessment

28. The Court notes, in order accurately to appreciate the nature of the applicant ’ s complaint in Convention terms, that the application was aimed specifically at the damage sustained by the applicant because of the statutory lien imposed on his real property. From that perspective, the Court notes with some degree of surprise that neither the decisions concerning his tax liability nor those concerning the lien have as such been submitted to it for review.

29. The Court observes that those decisions were subject to administrative and judicial remedies available directly in the tax proceedings, some of which, as the information available indicates, have also partly been resorted to. Nevertheless, as no evidentiary material has been submitted in that regard, the Court is not in a position to examine the relevant part of the application for compliance with the rule of exhaustion of domestic remedies under Article 35 § 1 of the Convention.

30. However, even assuming that domestic remedies were properly exhausted, the decision of 6 February 1998 and the other related decisions in the tax proceedings were taken long before the expiry of the six-month time-limit within the meaning of Article 35 § 1 of the Convention.

For a similar reason to that last-mentioned, the Court would not be in a position to deal with a separate complaint of lack of access to a court , as the applicant may be understood to have wanted to submit in his observations (see paragraph 27 above) in reply to those of the Government in respect of this application.

31. The only decisions open to the Court ’ s review are thus those concerning the applicant ’ s claim for damages.

32. In relation to that claim, a question arises as to whether the claim made by the applicant amounted to “possessions” within the meaning of Article 1 of Protocol No. 1 (for a recapitulation of the relevant principles see, for example, Kopecký v. Slovakia [GC], no. 44912/98, §§ 35 and 45-52 , ECHR 2004 ‑ IX ). The answer to this question is in turn relevant for the assessment as to whether the dismissal of the applicant ’ s claim constituted an interference with his rights protected under that provision.

33. The Court considers, however, that it is not called upon to resolve these questions separately because, even assuming that the applicant ’ s claim fell within the purview of that provision ratione materiae and its dismissal amounted to an interference with his rights under Article 1 of Protocol No. 1, the application is in any event inadmissible on the following grounds.

34. In that regard, t he Court observes that the decisive factor for the dismissal of the applicant ’ s claim for damages at the domestic level was that he had failed to show that the decision at the origin of the impugned lien, namely that of 6 February 1998, had been quashed for being unlawful, as required by section 4 of the SL Act.

The applicant now complains before the Court that the position taken by the domestic courts was unlawful and arbitrary.

However, in addition to other limiting factors (see Beyeler v. Italy [GC], no. 33202/96, § 108, ECHR 2000-I) , the Court ’ s capacity to review the substance of the domestic courts ’ decisions is in the present case further reduced by the fact that, as mentioned above, none of the relevant tax decisions have been made available to the Court.

35 . That said, the Court observes that the applicant, himself a lawyer, has throughout the domestic proceedings and before the Court been represented by a lawyer. His claim was examined at three levels of ordinary jurisdiction, the outcome of the proceedings was also ultimately reviewed by the Constitutional Court, the courts held a hearing , and he was provided with ample opportunity to state his arguments, challenge the submissions made by the defendant and submit any evidence he considered relevant to the outcome. Moreover, the Court considers that the reasons provided by the domestic courts in support of their decisions do not appear manifestly arbitrary, irregular or otherwise wrong.

36. The Court also reiterates that the Convention does not guarantee any right to compensation for damage the initial cause of which does not constitute a violation of the Convention (see Prince Hans-Adam II of Liechtenstein v. Germany [GC], no. 42527/98, § 93 , ECHR 2001 ‑ VIII , with a further reference).

37. I n the light of all the material in its possession, and in so far as the matters complained of are within its competence, the Court finds that they do not disclose any appearance of a violation of the applicant ’ s rights under the provision invoked.

It follows that th e application as a whole is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

For these reasons, the Court, unanimously,

Declares the application inadmissible.

Marialena Tsirli Josep Casadevall Deputy Registrar President