Communicated on 26 August 2019

THIRD SECTION

Application no. 48431/18 Antonio a.k.a Anthony a.k.a Tony BUSUTTIL against Malta lodged on 11 October 2018

STATEMENT OF FACTS

The applicant, Mr Antonio a.k.a Anthony a.k.a Tony Busuttil , is a Maltese national, who was born in 1947 and lives in Sliema . He is represented before the Court by Dr E. Borg Costanzi and Dr P. Borg Costanzi, lawyers practising in Valletta.

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

Prior to his resignation, the applicant was, from 2001 ‑ 2006, a co ‑ director (owning 25% of the shares) of company M. following an invitation from the two other directors. During the period 2003-2006, company M. failed to submit to the authorities the relevant tax forms and payments (provisional tax and national insurance contributions on behalf of their employees).

The applicant claimed that he was unaware of such a situation as he only dealt with sales (which was his job since 1996 when he was employed by the company). Indeed, since in practice he knew nothing about administration, he had insisted with the other directors that they should employ a financial controller as in fact they had eventually done. After his departure, under the management of the two other directors, the company went bankrupt.

In 2011 the tax authorities requested the applicant to pay approximately 323,500 euro (EUR) in outstanding tax.

The applicant having failed to pay, in March 2011 criminal proceedings were instituted against him for failing to submit the relevant tax forms in pursuance of Articles 23 (1) and (2) of Chapter 372 of the laws of Malta.

By a judgment of 23 March 2012 the Court of Magistrates found the applicant guilty of the charges against him and fined him EUR 400 given that he no longer represented company M.

The applicant and the Attorney General appealed. The latter requested the court to apply an additional daily fine and the former claimed that his charge sheet had not related to failed payment but solely to failed submission of form returns; that he had been unaware of the situation and had always acted in good faith and with diligence, and that the charge against him was time barred, since he had left the company in 2006 and could no longer act on its behalf. Moreover, he argued that the law was badly worded in so far as it seemed that such an action could not be time barred, until it no longer subsisted i.e. when payment was made.

By a judgment of 6 December 2012 the Court of Appeal confirmed the first-instance judgment and fined the applicant EUR 400 plus a daily fine of EUR 4, until the sum of EUR 323,500 was paid.

It found that the offence at issue was a permanent one and prescription would only run in respect of the offender ( irrespective of whether or not he remained director of the company) once the payment was made. It could not uphold his defence of impossibility to fulfil the obligation requested of him, once he was no longer a director, since in his case this was a self ‑ inflicted impossibility – the applicant having chosen to leave the company of his own free will before such dues were paid. It would have been otherwise had he been dismissed or had he fallen sick. Moreover, in the Court of Appeal ’ s view the Interpretation Act (see below) did not apply in the applicant ’ s case, given that it arose from a special law covering fiscal measures issued by the Government. It followed that a director of a company had the duty to fulfil the obligations arising from that law in favour of the Tax commissioner, and it could not be argued that another person has been employed to take care of the company ’ s administration and documentation.

The applicant instituted constitutional redress proceedings complaining that the Court of Appeal had failed to reply to the plea that his charge had not been correct, and that he had suffered a breach of a fair hearing (reasonable time, presumption of innocence, and the lack of equality of arms; defence of impossibility), as well as of a breach of Article 1 of Protocol No.1.

(a) First-instance

By a judgment of 26 April 2017 his claims were dismissed.

The Civil Court (First Hall) in its constitutional competence found that according to the jurisprudence of the European Court of Human Rights a court was not obliged to give detailed answers for every argument – while no specific answer had been given by the Court of Appeal to his plea, it was clear from its judgment that it was satisfied that no payment or forms had been submitted and that he had been duly charged in relation to both.

Further, the Court ’ s jurisprudence, under Article 6 § 2, allowed for presumptions to come to play as long as these could be rebutted in fair proceedings. However, Article 23 of Chapter 372 of the Laws of Malta created no such presumption. In this case the law provided that a director would be responsible for the failings of the company and the prosecution had proved such failings. The fact that the law imposed certain legal obligations on directors of companies did not breach the right to be presumed innocent.

There was no issue of reasonable time since Article 6 started to apply only when a person was notified of the criminal investigation, and not earlier. Once Article 6 became applicable to the applicant ’ s case, proceedings only took sixteen months over two instances and where therefore decided within a reasonable time.

The court noted that the applicant had not claimed in what way there had been a breach of the equality of arms principle. It also held that the fact that a prescriptive period started to run only when the dues were paid did not entail any legal uncertainty. In the court ’ s view the applicant was only seeking to reopen the merits of his criminal case. However, according to the court, having reviewed the acts of the proceedings, the applicant had had a fair trial.

Lastly, as to Article 1 of Protocol No.1, the court considered that the applicant had not yet paid his tax dues, which were in any event allowed by the Convention, thus no violation of that provision occurred.

(b) Appeal

The applicant appealed, in particular, about a delay by the tax authorities to inform him and then institute proceedings to collect the taxes due ‑ which delay, he claimed, also affected his defence (equality of arms) in so far as the company had since then become bankrupt and he had no access to relevant documents; the presumption of innocence, as he had acted in good faith and was unaware of the debts due at the time, it followed that Chapter 372 of the Laws of Malta and Legal Notice 88 of 1988 in so far as they related to the responsibility of a director once he ceased his functions had breached his right to be presumed innocent; as well as in relation to Article 1 of Protocol No. 1 in so far as he considered that the amount of tax requested and the fine imposed had been excessive.

By a judgment of 13 April 2018 his claims were dismissed.

The Constitutional Court found that the applicant could not claim that he was unaware of the failings of the company. Even if that were the case directors could not be released from their responsibility, be it for that reason, or because they were not competent or they relied on advisors. According to domestic case-law a director, including a non ‑ executive director, or one with a minority shareholding, had the same responsibility as other directors and had the obligation to know and comply with the duties imposed on him or her by law; once a person accepts a directorship he or she must comply with its obligation and must take an interest in all the aspects of the company including the financial ones for which he remains responsible in the eyes of the law. Furthermore, the Constitutional Court considered that the applicant had been aware of the documents showing the debt given that witness testimony had shown that all directors had obtained copies of the relevant documents and that the applicant had been present in the meetings where the lack of liquidity of the company and failed payments of tax and contributions had been discussed. Thus, the applicant ’ s claim was not acceptable both because he had a duty to remain informed and because he had been so informed. By law, as a director, he was equally responsible with the other directors. In the Constitutional Court ’ s view this was in any event not a complaint of a constitutional nature.

Further, the Constitutional Court held that the principle of the presumption of innocence did not mean that no reversal of the burden of proof was permitted. Moreover, examining the relevant provisions, namely Article 23 (7) and (13) of Chapter 372 of the laws of Malta, the Constitutional Court considered that in the present case it had been for the prosecution to proof the facts (sub ‑ paragraph 13) namely that the accused failed to fulfil the duties imposed by Article 23, which it did, and the reverse presumption under sub ‑ paragraph 7 applied only on the quantification of the amounts due, in the sense that they would be taken as correct unless they have been challenged and proved wrong. In the present case the applicant had not even contested the fact that the tax forms had not been sent, and that the relevant tax had not been paid, the only matter he contested was his criminal responsibility. That said , the Constitutional Court also considered that any other laws cited by the applicant in his application to the constitutional jurisdictions could also not be considered to have breached his right to be presumed innocent.

As to the delay in instituting the criminal proceedings, the Constitutional Court considered that this played in his favour in so far as he could have regularised the situation (of which, it had been shown, he was aware) prior to the proceedings, or to his retirement, but he had failed to do so. This delay did not affect his right to have equality of arms in the proceedings as he could still put forward his defence or pay the dues to avoid prosecution.

Lastly, as to Article 1 of Protocol No. 1, the Constitutional Court held that the applicant was only being asked to pay the outstanding income tax and the sums which company M. had collected from its employees but which it had not paid to the tax authorities. Thus, the issue of proportionality did not even arise as this was not a sanction, and he could turn to the co-directors to pay their relevant share. As to sanction imposed, this was minimal and was proportionate in view of the huge amount due in taxes.

Article 23 sub ‑ articles (1) (2) (7) and (13) of the Income Tax Management Act, Chapter 372 of the Laws of Malta, at the relevant time read as follows:

“(1) Where any person pays income chargeable under article 4(1 )( a), (b) or (d) of the Income Tax Act, or any other income as may be prescribed, he shall, at the time of payment deduct tax therefrom at such amount and in such manner as may be prescribed under this sub-article or under any other provision of the Income Tax Acts.

(2) Any tax deducted as required under sub-article (1) shall be remitted to the Commissioner in such manner and within such period as may be prescribed.

...

(7) Where a person has not contested the default notice referred to in sub-article (5) hereof or where his contestation has been refused, the Commissioner may, where the payment of the amount due has not already been made, serve a demand notice on such person showing the tax which should have been deducted or remitted and any additional tax imposed upon him; and, unless the contrary is proved, the said notice shall be sufficient evidence that the amount shown therein is the amount due to be paid to the Commissioner by the said person:

Provided that a person on whom a demand notice has been served in consequence of a refusal by the Commissioner in accordance with this sub-article may appeal such decision in a court of law within fifteen days from the date of service of such notice.

...

(13) Any person who contravenes or fails to comply with the provisions of this article or of any rules referred to in sub-article (1) shall be liable, on conviction, to a fine ( multa ) of not less than one hundred and sixteen euro (116) and not exceeding one thousand and one hundred and sixty euro (1,060) or imprisonment for a term not exceeding six months or to both such fine and imprisonment, and to a further fine ( multa ) of not less than four euro (4) but not exceeding twenty-three euro (23) for every day during which the offence continues after conviction:

Provided that the Commissioner may compound any offence under this sub ‑ article and may before judgment stay or compound any proceedings thereunder:

Provided further that the offence under this sub-article shall continue to subsist until the offender shall have conformed and complied with the provisions of this article or of any rules referred to therein.”

Article 13 of the Interpretation Act (1975), Chapter 249 of the laws of Malta reads as follows:

“Where any offence under or against any provision contained in any Act, whether passed before or after this Act, is committed by a body or other association of persons, be it corporate or unincorporate , every person who, at the time of the commission of the offence, was a director, manager, secretary or other similar officer of such body or association, or was purporting to act in any such capacity, shall be guilty of that offence unless he proves that the offence was committed without his knowledge and that he exercised all due diligence to prevent the commission of the offence:

Provided that, except in respect of offences under or against a provision contained in an Act in which a provision similar to that of this article occurs, the provisions of this article shall apply only to offences committed after the commencement of this Act.”

COMPLAINT

The applicant complains under Article 6 § 2 of the Convention that a presumption of guilt was applied against him on the basis that he was the director of company M., despite the fact that the situation had been hidden from him.

QUESTIONS TO THE PARTIES

1. Was the presumption of innocence, guaranteed by Article 6 § 2 of the Convention, respected in the present case?

2. In particular, did the applicable law create presumptions against the applicant in the present case, and if so where they confined to reasonable limits which took into account the importance of what was at stake for the applicant? The parties are requested to refer to and submit the texts (as applicable at the time of the present case) of all the relevant laws at issue in relation to this complaint, as well as to any relevant case-law.