FIRST SECTION

DECISION

Application no. 42505/12 J ó zef ORŁOWSKI against Poland

The European Court of Human Rights (First Section), sitting on 16 February 2021 as a Committee composed of:

Linos-Alexandre Sicilianos, President, Krzysztof Wojtyczek, Erik Wennerström, judges,

and Attila Teplan , Acting Deputy Section Registrar ,

Having regard to the above application lodged on 9 July 2012,

Having deliberated, decides as follows:

PROCEDURE

1 . The applicant, Mr Józef Orłowski, is a Polish national, who was born in 1955 and lives in Dębowa Góra. He was represented before the Court by Mr M. Pietrzak, a lawyer practising in Warsaw.

2 . The Polish Government (“the Government”) were represented by their Agents, Ms J. Chrzanowska and subsequently, by Mr J. Sobczak of the Ministry of Foreign Affairs.

3 . On 15 February 2017 the notice of the complaint about the on-going sale of the applicant ’ s assets and related insolvency execution proceedings, made under Articles 6 and 13 of the Convention, and Article 1 of Protocol No. 1 to the Convention, was given to the Government. On the same date the applicant ’ s additional complaint, namely that he had not been able to settle his debts with creditors, was declared inadmissible by the President of the Section, sitting in a single-judge formation and was rejected in accordance with Articles 34 and 35 of the Convention.

THE FACTS

4 . On 17 December 2007 the Łódź District Court ( Sąd Rejonowy ) declared the applicant ’ s transport production and trade company “TEKSPOD” insolvent and ordered the liquidation of the applicant ’ s assets. The domestic court assessed the value of the applicant ’ s assets at 20,000,000 Polish zlotys (PLN - approximately 5,000,000 euros (EUR)) and his debt, at PLN 6,000,000 (approximately EUR 1,500,000).

5 . The applicant lodged an interlocutory appeal, asking for a possibility of settling the debt with creditors, instead of the decision on the liquidation of all his assets which also comprised his orchard in Halinów and other estates and assets related to his parallel agricultural activity.

6 . On 26 March 2008 the Łódź Regional Court ( Sąd Okręgowy ) dismissed the applicant ’ s interlocutory appeal.

7 . On 15 April 2008 an expert (J.Z.) issued a report, estimating the value of the applicant ’ s assets. One of those assets was the estate with an orchard in Halinów which was assessed at PLN 10,445,500 (approximately EUR 2,611,375).

8 . On 10 June 2010 another expert (J.M. or W.M.) estimated that the estate in question was worth PLN 18,646,450 (approximately EUR 4,661,612). This estimation was prepared for the purposes of securing some bank claims.

9 . A number of attempts were made to sell the applicant ’ s estates by means of public auctions and other sales at successively lower prices.

10 . On 2 April 2012 the insolvency trustee ( syndyk masy upadłościowej ) asked the insolvency judge ( sędzia-komisarz ) to authorise the sale of the estate in Halinów at the minimum price of PLN 1,700,000 (approximately EUR 425,000) and of other related assets. That value of the estate in question had been estimated by an expert (J.Z.) in view of the neglected state of the orchard and the financial crisis, resulting in a 30% drop of market prices. That estimation had not been communicated to the applicant.

11 . On 10 April 2012 the insolvency judge, sitting in camera , authorised the auction sale as sought by the trustee. The auction sale was open until 30 April 2012 but no buyers came forward.

12 . On 28 May 2012 the Łódź District Court rejected the applicant ’ s appeal against that decision as inadmissible in law.

13 . On 20 June 2012 the insolvency judge, sitting in camera , authorised new auction sale of the applicant ’ s assets for the same minimum price. The applicant ’ s interlocutory appeal against this decision was rejected on an unspecified date as inadmissible in law. The auction was open until 31 July 2012 but, again, there was no interest from the buyers.

14 . The Government submitted that the applicant had filed several applications to be authorised to settle his debts with creditors. On 21 June 2012 a court did not grant the applicant ’ s requests, considering that any settlement was very unlikely.

15 . On 3 July 2012 the Łódź District Court decided to change the insolvency judge.

16 . On 14 March 2013 Łódź District Court discontinued the proceedings for the sale of the applicant ’ s property. The court observed firstly, that the value of the applicant ’ s assets would not cover the costs of the sale proceedings if they were to be continued. Secondly, the court expressed doubt that any buyer would come forward. As the applicant did not appeal, on 10 April 2013 the decision became final and binding.

17 . As a result of the discontinuation of the above proceedings, the applicant was restored in his full rights as the property ’ s owner, including the right to administer his assets.

18 . On 16 July 2012 the applicant lodged a constitutional complaint with the Constitutional Court ( Trybunał Konstytucyjny ), asking that Section 222 of the Law of 28 February 2003 on Insolvency and Restructuring ( Prawo upadłościowe i naprawcze ) be declared unconstitutional in so far as it prohibited a debtor to challenge the decision of an insolvency judge authorising a single-source sale (auction) at a price which was significantly below the real market value of the assets. The applicant also applied for an interim measure.

19 . On 10 October 2013 the Constitutional Court decided to leave the complaint without examination on the grounds that the court ’ s decision that was at the core of the applicant ’ s complaint did not affect the applicant ’ s constitutional rights (no. Ts 165/12). To that end the Constitutional Court observed that once the applicant ’ s insolvency had been declared, the right to control, use and manage the property was transferred from the debtor (the applicant) to an insolvency trustee who acted under the supervision of an insolvency judge. As a result, even though the debtor was still the property ’ s owner, insolvency restricted his exercise of the ownership rights including the right to seek judicial protection of his property. It was therefore, the insolvency trustee who exercised the rights over the debtor ’ s property. In the Constitutional Court ’ s view, the disposal of the debtor ’ s property for the purposes of debt repayment did not concern the rights of the debtor as those had been taken away from him by the court ’ s decision declaring insolvency. Consequently, the court ’ s decision of 10 April 2012 on the property ’ auction did not affect the applicant ’ s constitutional rights.

20 . The applicant appealed, arguing that the final court decision which infringed on his property right was the decision on 28 May 2012 by which the Łódź District Court rejected his interlocutory appeal against the decision of 10 April 2012.

21 . On 15 April 2014 the Constitutional Court rejected the applicant ’ s interlocutory appeal. The court held that the decision of 28 May 2012, just like that of 10 April 2012, did not affect the applicant ’ s constitutional rights as it merely concerned the modalities of debt repayment.

THE LAW

22 . In its observations on the application, the Government raised a preliminary objection that the application was incompatible ratione personae because the applicant ’ s property in Halinów was ultimately not sold and its auction was definitely discontinued on 14 March 2013. As a result, the applicant regained his right to administer the property in question. In light of this, the Government argued that the applicant had never been directly affected by the insolvency proceedings and could not claim to be a victim within the meaning of Article 34 of the Convention.

23 . The applicant, in his observations, submitted that at the moment of lodging his application with the Court, his property rights had been restricted in that he was not entitled to administer his property in view of the insolvency proceedings which had started in 2007 and which were well on going until 2013. The applicant was therefore not free to manage his property or to dispose of it. He was also facing a risk that the property in question might be sold at any moment. The latter put the applicant in a state of financial uncertainty as a real threat existed that his assets might be sold for 10% of their market value. In this sense, the applicant considered himself to have been a potential victim. Lastly, the applicant argued that his situation was aggravated by the fact that he had no remedy to challenge the decision concerning the fate of his property.

24 . Moreover, the applicant argued that he had not lost his victim status on account of the developments which had occurred in his case after its communication by the Court. In particular, the decision to discontinue the impugned bankruptcy proceedings merely put an end to the risk of the applicant ’ s property being sold, but it did not constitute the acknowledgment of the violation of the applicant ’ s property rights or offer him any redress for it. The applicant pointed out that he had regained his full property rights, not as a result of the operation of legal safeguards, but thanks to completely external and accidental factors, such as market conditions in a given moment.

25 . The Court observes that the fact that in 2013 the execution phase of the insolvency proceedings was discontinued and that the applicant was consequently reinstated in his right to have full control over his property, without running any risk of his property being auctioned, must be examined in light of A rticle 37 § 1 of the Convention.

26 . Pursuant to this provision, the Court may “... at any stage of the proceedings decide to strike an application out of its list of cases where the circumstances lead to the conclusion that ... the matter has been resolved ...” In order to ascertain whether that provision applies to the present case, the Court must answer two questions: first, whether the circumstances complained of directly by the applicant still obtain, and secondly whether the effects of a possible violation of the Convention have been redressed (see, Pisano v. Italy (striking out) [GC], no. 36732/97, § 42, 24 October 2002 ).

27 . The Court notes that an applicant ’ s consent to withdraw an application is not a prerequisite for the application of subparagraph (b) of Article 37 § 1 of the Convention (see Pisano, cited above, § 41).

28 . The Court must therefore ascertain whether the new facts brought to its attention may lead it to conclude that the matter has now been resolved or that, for any other reason, it is no longer justified to continue the examination of the application, and that the application may consequently be struck out of its list of cases.

29 . Turning to the present case, the Court observes that the applicant complained that the State had breached his rights guaranteed by Article 1 of Protocol No. 1 to the Convention, as well as by Articles 6 and 13 of the Convention by a combination of two factors: first, exposing the applicant during five years to a real risk of deprivation of his property by means of its sale for a tenth of its real value; and second, not providing the applicant with a legal remedy to challenge that situation.

30 . The Court would clarify that the application does not concern the substantive decision on the liquidation of the applicant ’ s assets that was delivered, in the last court instance, on 26 March 2008. It also does not concern this decision ’ s direct consequences.

31 . Firstly, the applicant, in his original application to the Court, did not complain about the control of use of his possessions. Secondly, in so far as, in his observations after the communication of the case, the applicant seems to have argued that while the execution proceedings had been on-going, he had not been free to manage his property or to dispose of it (see paragraph 23 above), the said measures of control of use of the applicant ’ s property, being the direct result of the above-mentioned insolvency decision, would have to be declared inadmissible as introduced out of time. To this end, the Court reiterates that the applicant ’ s related complaint that he had not been able to settle his debts with creditors – which had been presented in his original application –, was declared inadmissible by the President of the Section, sitting in a single-judge formation on 15 February 2017 and was rejected in accordance with Articles 34 and 35 of the Convention (see paragraph 3 above).

32 . As far as the applicant considered himself to have been a potential victim, exposed to a real risk that his assets might be sold for a fracture of their market value and not having any legal remedy to challenge the situation, the Court reiterates that it has consistently struck out applications concerning a potential violation of the Convention once the threat of the violation was removed (see, Khan v. Germany (striking out) [GC], no. 38030/12, § 33, 21 September 2016 – Article 3, risk of expulsion ceased once assurances were given that the expulsion decision would not be enforced; and Leblon v. Belgium (striking out) no. 34046/96, 1 June 1999 ‑ Article 6, risk enforcement of a judicial decision ceased once the decision was revoked). Moreover, the Court has also struck out applications that were lodged under Article 1 of Protocol no. 1 to the Convention – for example, a case concerning protracted inability to acquire ownership of a house that the applicant had bought, because the ownership was ultimately recorded after the communication of the application (see Ogden v. Croatia (striking out), no. 27567/13, §§ 30-33, 10 February 2015), or a case in which a property title was ultimately restored to the applicants (see Shavadze and Others v. Georgia (striking out), no. 31315/12, § 10, 13 October 2020).

33 . In the circumstances of the present case, it is clear that the risk of the applicant ’ s property being sold no longer persists, and thus, the situation complained of no longer exists (see, mutatis mutandis , Nogolica v. Croatia (striking out), no. 1375/14, § 27, 2 July 2019).

34 . Likewise, the effects of a possible violation of the Convention have been redressed, as the execution of the insolvency proceedings have been discontinued and the applicant regained full control of his possessions (see paragraphs 16 and 17 above). At no point did the applicant argue that he had been evicted from the plot of land concerned or prevented - as a consequence of the impugned execution proceedings -, from using his property (see Ogden v. Croatia , cited above, § 32; Shavadze and Others v. Georgia , cited above, § 10; contrast with Strekalev v. Russia , no. 21363/09, § 48, 11 April 2017).

35 . In the light of the above, the Court considers that the matter under Article 1 of Protocol No. 1 to the Convention, as well as Articles 6 and 13 of the Convention, has been resolved within the meaning of Article 37 § 1 (b) of the Convention and that respect for human rights as defined in the Convention and its Protocols does not require it to continue the examination of the application under Article 37 § 1 in fine . Accordingly, the case should be struck out of the list.

36 . In view of this conclusion, the Court does not find it necessary to examine any of the Government ’ s objections on grounds of inadmissibility (see Ogden , cited above, § 35).

37 . Pursuant to Rule 43 § 4 of the Rules of the Court, the Court has discretion to award costs if a case is struck out of the list (see Pastukhov v. Poland (striking out), no. 34508/17, §§ 22-27, 4 February 2020).

38 . The applicant asked the Court for reimbursement of costs and expenses incurred in the proceedings before the Court and before domestic courts, which included the costs of legal representation in the sum of PLN 20,860.80 (EUR 4,882.69) for 42 hours of legal services. The applicant supported his claim with a pro forma invoice from his lawyer. The document bears a number and is dated 17 August 2017. That date is also indicated as the date of sale. The lawyer ’ s name is typed out on the bottom of the invoice. The document is not stamped or signed.

39 . The Government commented that the applicant ’ s claim for costs was unjustified because the invoice produced by him was only an unsigned pro forma document which did not constitute a valid proof of a financial transaction between the applicant and his lawyer. In any event, they were also exorbitant as to their amount.

40 . 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 were reasonable as to quantum.

41 . The Court observes that the costs of the applicant ’ s legal representation before the Polish courts costs and before this Court which were claimed by the applicant, were sufficiently documented. Contrary to what was argued by the Government, the Court considers that the pro forma invoice is a valid confirmation of the transaction between the applicant and his lawyer. The Court does not require a proof of the actual payment and may instead be satisfied with a proof that the applicant in under the obligation of payment. Moreover, although the proceedings before the Court resulted in a decision to strike the case out of its list, the applicant ’ s representative had submitted his observations on the admissibility and merits of the case as well as other pleadings, and was engaged in the applicant ’ s domestic proceedings. The Court thus accepts that the costs claimed by the applicant were actually and necessarily incurred (see mutatis mutandis , Ahmed v United Kingdom (striking out), no. 31668/05, 14 October 2008; and Meriakri v. Moldova (striking out), no. 53487/99, § 33, 1 March 2005). Regard being had to the information in its possession and the above criteria, the Court considers it reasonable to award the applicants the sum of EUR 4,882 covering the costs of the proceedings before the domestic courts and before this Court.

42 . The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.

For these reasons, the Court, unanimously

Holds that the respondent State is to pay the applicant, within three months, EUR 4,882 (four thousand eight hundred and eighty-two euros) in respect of costs and expenses, plus any tax that may be chargeable to the applicant, to be converted into Polish zlotys at the rate applicable at the date of settlement;

Holds that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;

Decides to strike the application out of its list of cases.

Done in English and notified in writing on 18 March 2021 .

Attila Teplan Linos-Alexandre Sicilianos Acting Deputy Registrar President