Communicated on 8 October 2015

SECOND SECTION

Application no. 43326/13 Đurđica GROZDANIĆ and Vedrana GRSKOVIC GROZDANIC against Croatia lodged on 17 June 2013

STATEMENT OF FACTS

The applicants, Ms Đurđica Grozdanić and Ms Vedrana Gršković Grozdanić , are Croatian nationals, who were born in 1949 and 1982 respectively and live in Pula. They are represented before the Court by Mr B. Kopf, an advocate practising in Osijek.

A. The circumstances of the case

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

On 8 February 1984 the first applicant ’ s husband (and the second applicant ’ s father), M.G., was awarded a specially protected tenancy of a flat in Osijek with a surface area of 90.47 square metres. Pursuant to the relevant legislation, the first applicant as his wife automatically became a co-holder of the specially protected tenancy of the flat in question.

On 19 June 1991 the Specially Protected Tenancies (Sale to Occupier) Act entered into force. It entitled a holder of a specially protected tenancy of a flat in social ownership to purchase it from the provider under favourable conditions.

On 19 January 1992 the first applicant and her husband made a request to purchase their flat, in accordance with the said Act.

On 26 November 2002 the Osijek Township ( Grad Osijek , hereafter “the local authorities”), as the provider of the flat, concluded a contract of sale with the first applicant and her husband whereby it sold them the flat in question. On 4 November 2003 the first applicant and her husband were recorded as the owners of the flat in the land register.

On 21 November 2003 the Osijek Municipal State Attorney ’ s Office ( Općinsko državno odvjetništvo u Osijeku ) brought a civil action against the first applicant and her husband and the local authorities before the Osijek Municipal Court ( Općinski sud u Osijeku ), seeking to have the above-mentioned sale contract declared null and void.

By a judgment of 25 April 2006 the Osijek Municipal Court ruled for the plaintiff. It established that the first applicant and her husband had left the flat in February and their two children (including the second applicant) had left in September 1992. In February 1996 both the first applicant and her husband had obtained permanent jobs in Pula. The court therefore held that their specially protected tenancy had been terminated ex lege on the basis of section 99 of the Housing Act (which was in force between 25 December 1985 and 4 November 1996) , since they had not used the flat for a period exceeding six months without a justified reason. Once the court had resolved this preliminary issue, it went on to conclude that, at the time when the first applicant and her husband had bought the flat, they had not satisfied the most important statutory requirement for doing so, as they had no longer been the tenants. To conclude the sale contract had therefore been contrary to the mandatory rules ( jus cogens ) of the Sale to Occupier Act which meant that the contract was null and void.

Following an appeal by the first applicant and her husband, on 16 November 2006 the Osijek County Court ( Županijski sud u Osijeku ) quashed the first-instance judgment and remitted the case. The court held that the first-instance court had misapplied the substantive law because pursuant to section 99 of the Housing Act a specially protected tenancy could not be terminated ex lege but only on the basis of a court judgment.

In fresh proceedings, by a judgment of 8 February 2008 the Municipal Court again ruled for the plaintiff and declared the sale contract null and void. In so doing it repeated, in substance, the reasons adduced in its earlier judgment.

On 5 June 2008 the Osijek County Court dismissed an appeal lodged by the first applicant and her husband and upheld the first-instance judgment, which thereby became final. This time, the second-instance court accepted the interpretation of section 99 of the Housing Act given by the first-instance court. This corresponded to the approach which the Supreme Court had adopted in 1999, reversing its constant practice while the Housing Act was in force .

The first applicant and her husband then lodged, concurrently, an appeal on points of law ( revizija ) and a constitutional complaint on 14 and 16 August 2008, respectively. In their constitutional complaint they alleged, inter alia , violations of their constitutional right to fair procedure and right of ownership.

Meanwhile, by a decision of 20 December 2006 the Constitutional Court ( Ustavni sud Republike Hrvatske ), in abstract constitutional review proceedings, had invalidated as unconstitutional section 382 of the Civil Procedure Act, which stipulated that an appeal on points of law could not be lodged in cases where the value of the subject matter of the dispute was less than 100,000 Croatian kunas (HRK). The court held that the threshold had been set too high, which had distorted the constitutional roles of the Supreme Court and the Constitutional Court. The Constitutional Court, however, deferred the effects of its decision by giving the Croatian Parliament until 15 July 2008 to amend the unconstitutional provision.

On 2 July 2008 Parliament amended the Civil Procedure Act, including the provision invalidated by the Constitutional Court. The statutory threshold for an appeal on points of law was again set at HRK 100,000. However, its detrimental (unconstitutional) effects were offset by more lenient procedural requirements for lodging a so-called extraordinary appeal on points of law, which did not depend on the value of the subject matter of the dispute. The amendments stipulated that they would enter into force on 1 October 2008.

By a decision of 9 July 2008 the Constitutional Court further deferred the effects of its decision of 20 December 2006 until 1 October 2008. That second deferral decision was published in the Official Gazette on 21 August 2008.

As already noted above, the first applicant and her husband lodged their appeal on points of law on 14 August 2008, that is, in the period between the adoption of the second deferral decision by the Constitutional Court on 9 July 2008 and its publication on 21 August 2008.

On 20 December 2009 the first applicant ’ s husband died.

On 30 March 2010 the Supreme Court ( Vrhovni sud Republike Hrvatske ) declared the appeal on points of law lodged by the first applicant and her husband inadmissible ratione valoris . It found that the value of the subject matter of the dispute in their case was HRK 79,064.11, and thus lower than HRK 100,000. The Supreme Court took note of the Constitutional Court ’ s decision to invalidate section 382 of the Civil Procedure Act, but noted that the effects of that decision had been eventually deferred until 1 October 2008.

On 15 July 2010 the applicants amended the constitutional complaint lodged earlier by the first applicant and her husband so as to include the Supreme Court ’ s decision among the decisions contested by that constitutional complaint.

On 4 April 2013 the Constitutional Court dismissed the applicants ’ constitutional complaint. In so doing, it examined the case only from the perspective of their constitutional right to a fair procedure.

B. Relevant domestic law and practice

1. The Housing Act

(a) Relevant provisions

1. The Housing Act ( Zakon o stambenim odnosima , Official Gazette of the Socialist Republic of Croatia nos. 51/1985 and 42/1986, and Official Gazette of the Republic of Croatia nos. 22/1992 and 70/1993), which was in force between 25 December 1985 and 4 November 1996, provided as follows:

Section 99

“1. A specially protected tenancy may be terminated if the tenant and the members of his household ... cease to use the flat for an uninterrupted period exceeding six months.

2. A specially protected tenancy shall not be terminated under the provisions of paragraph 1 of this section in respect of a person who does not use the flat on account of undergoing medical treatment, performance of military service or other justified reasons.”

Section 105(1)

“The provider of the flat shall terminate a specially protected tenancy by bringing an action before the competent court.”

(b) The Supreme Court ’ s practice

2. In decision no. Rev-616/1988 of 11 October 1988 the Supreme Court interpreted section 99 of the Housing Act in the following way:

“ A specially protected tenancy is not lost ex lege by the mere fact of non-use of the flat for a period exceeding six months. Rather, that is a ground for termination of a specially protected tenancy that can be terminated only by the provider of the flat. ”

3. A specially protected tenancy was terminated as soon as the court ’ s judgment upholding the claim of the provider of the flat to that end became res judicata (see, inter alia , the Supreme Court ’ s decision no. Rev-1009/1993-2 of 15 June 1994).

4. In its decisions nos. Rev-777/1995-2 of 21 December 1999 and Rev-391/02-2 of 18 February 2003 the Supreme Court took the view that, even in the absence of a judgment terminating a specially protected tenancy, the courts were entitled to examine whether the grounds for its termination had been present in cases where the existence of such a tenancy was a precondition for a tenant acquiring and exercising the right to purchase the flat under the Specially Protected Tenancies (Sale to Occupier) Act.

5. The relevant part of decision no. Rev-777/1995-2 of 21 December 1999 reads as follows:

“In [the Supreme Court ’ s] view a contract of sale of a flat is null and void if it has been concluded with a person whose specially protected tenancy ended by means of termination after the conclusion of [that] contract, or in respect of whom it was established that a ground for termination [of the specially protected tenancy] had existed at the time of the conclusion of [such a contract]. ...

It was therefore necessary to examine whether at the time of the conclusion of the impugned contract any grounds for termination of the specially protected tenancy existed ...”

6. The relevant part of decision no. Rev-391/02-2 of 18 February 2003 reads as follows:

“The [view] of the first-instance court, which was also accepted by the second-instance court, that the existence of a judicial decision on termination of the specially protected tenancy is decisive for [resolving] the question whether the plaintiff ’ s specially protected tenancy of the flat at issue has ended, is incorrect. In [the Supreme Court ’ s] view, if grounds for termination of the specially protected tenancy existed on the side of the plaintiff at the time of the conclusion of the contract of sale of the flat ... or at the time [he] made a request for purchase of the flat – on which issue the court should have in the instant case decided upon the defendant ’ s counterclaim (otherwise it could have decided it as a preliminary issue) – ... the plaintiff [would have no right] to demand that a contract of sale of the flat be concluded.”

(c) The Constitutional Court ’ s practice

7. In its decision no. U-III/4949/2005 of 3 December 2007 (published in Official Gazette no. 1/2008 of 2 January 2008) the Constitutional Court dismissed a constitutional complaint lodged by the defendants in a civil case against a second-instance judgment of the Zadar County Court upholding a first-instance judgment of the Zadar Municipal Court. The Zadar Municipal Court, ruling for the State as the plaintiff, adopted a declaratory judgment, finding that the defendants had not acquired the status of protected lessees under the Lease of Flats Act because grounds for termination of their specially protected tenancy had existed before the entry into force of that Act. The Municipal Court held so despite the fact that the defendants ’ specially protected tenancy had never been terminated by a court judgment. The Constitutional Court agreed with that interpretation and held as follows:

“ ... [The] complainants argue that after the entry into force of the Lease of Flats Act it is no longer possible to examine in judicial proceedings any facts or circumstances in relation to a specially protected tenancy because specially protected tenancies ceased to exist ex lege pursuant to section 30(1) of the Lease of Flats Act. Therefore, they consider that in the civil proceedings in question ... [the court] was not allowed to decide on ‘ a non-existent specially protected tenancy ’ .

...

In the civil proceedings [in question] it was necessary to determine whether the complainants had retained the specially protected tenancy until the entry into force of the Lease of Flats Act, that is to say, whether they had acquired the status of protected lessees in respect of the flat [in question].

... [The] first-instance court found that the complainants had been absent from the flat for more than six months and that their specially protected tenancy had thus ended pursuant to section 99(1) of the Housing Act. Having regard to the fact that the complainants ’ specially protected tenancy had ended before the entry into force of the Lease of Flats Act ... the first-instance court found that [they] had never acquired the status of [protected] lessees. ...

When dismissing the complainants ’ appeal against the first-instance judgment, the second-instance court noted in the contested judgment that the status of a protected lessee was acquired by a person who could demonstrate that he or she was a holder of a specially protected tenancy at the time of the entry into force of the Lease of Flats Act (5 November 1996). In accepting the findings of the first-instance court that the complainants ’ specially protected tenancy had ended before the entry into force of the Lease of Flats Act (where the existence of a judicial decision on termination of the specially protected tenancy is not decisive; rather, what is decisive is whether on 5 November 1996 grounds for termination within the meaning of the Housing Act existed, that is, unjustified absence from the flat for a period exceeding six months), the second-instance court held that the complainants had never acquired the status of protected lessees.

...

The legal views expressed in the contested judgment of the County Court are based on a correct application of the relevant substantive law and on a constitutionally acceptable interpretation of that law. ...

[The Constitutional Court] considers the complainants ’ argument that after the entry into force of the Lease of Flats Act it was no longer possible to examine in the judicial proceedings at issue (or in any other judicial proceedings) any facts or circumstances in relation to ‘ a non-existent specially protected tenancy ’ unfounded. Namely, in situations which so require (for example, in proceedings for determination of the status of protected lessee, in proceedings for conclusion of a lease of flat contract, or in proceedings for declaring a contract of sale of a flat null and void, and similar), the civil court not only can, but must, determine whether the specially protected tenancy ... was terminated or whether a ground for [its] termination existed (for example, non-use of the flat exceeding six months).”

2. Civil Procedure Act

The relevant provision of the Civil Procedure Act ( Zakon o parničnom postupku , Official Gazette of the Socialist Federal Republic of Yugoslavia no. 4/1977 with subsequent amendments, and Official Gazette of the Republic of Croatia no. 53/1991, with subsequent amendments), before the entry into force of the 2008 Amendments on 1 October 2008, read as follows:

1. Appeal on points of law

Section 382

“(1) Parties may lodge an appeal on points of law ( revizija ) against a second-instance judgment:

- if the value of the subject matter of the dispute of the contested part of the judgment exceeds HRK 100,000,

- [in certain employment disputes],

(2) In cases where parties are not entitled to lodge an appeal on points of law in accordance with paragraph 1 of this section, they may [nevertheless] do so if the second-instance court allowed it in the operative part of its judgment. The second-instance court may do so if it finds that the decision in the case depends on the resolution of a substantive or procedural legal issue important for ensuring the uniform application of the law and equality of citizens. In the reasoning of its judgment the second-instance court shall specify the legal issue for which it allowed an appeal on points of law and give reasons as to why it found that issue important for ensuring the uniform application of the law and equality of citizens.

(3) Paragraph 1 subparagraph 1 and paragraph 2 of this section shall not apply in those cases where, pursuant to this Act or special legislation, [the possibility of lodging] an appeal on points of law is expressly excluded.

(4) An appeal on points of law must be lodged within thirty days of the service of the second-instance judgment.”

After the entry into force of the 2008 Amendments, that provision read as follows:

1. Appeal on points of law

Section 382

“(1) Parties may lodge an appeal on points of law ( revizija ) against a second-instance judgment:

- if the value of the subject matter of the dispute of the contested part of the judgment exceeds HRK 100,000,

- [in certain employment disputes],

- [if the second-instance court assessed the evidence and/or established the facts differently from the first-instance court or held a hearing].

(2) In cases where the parties are not entitled to lodge an appeal on points of law in accordance with paragraph 1 of this section, they may [nevertheless] do so if a decision in the case depends on the resolution of a substantive or procedural legal issue important for ensuring the uniform application of the law and equality of citizens, for example:

- if the Supreme Court has not yet ruled on such issue ...in respect of which there is divergent case-law of second-instance courts,

- if the Supreme Court has not yet ruled on such issue in respect of which the second-instance court may develop divergent case-law, for example, because of possible different interpretations of certain statutory provisions,

- if the Supreme Court has already ruled on such issue but the decision of the second-instance court is not in conformity with that ruling,

- if the Supreme Court has already ruled on such issue and the decision of the second-instance court is in conformity with that ruling but ... the case-law should be revisited in view of the changes in the legal system occasioned by new legislation, international treaties or decisions of the Constitutional Court or the European Court of Human Rights.

(3) In an [extraordinary] appeal on points of law referred to in paragraph 2 of this section, the appellants must specify the legal issue in respect of which they are lodging the appeal and give reasons as to why they find that issue important for ensuring the uniform application of the law and equality of citizens.

(4) An appeal on points of law must be lodged within thirty days of the service of the second-instance judgment.”

COMPLAINTS

1. The applicants complain under Article 6 § 1 of the Convention that by declaring the first applicant ’ s and her husband ’ s appeal on points of law inadmissible ratione valoris , the Supreme Court violated the applicants ’ right of access to court because at the time of lodging it, there was no statutory threshold for that remedy.

2. The applicants also complained under Article 1 of Protocol No. 1 to the Convention that the domestic courts ’ judgments declaring the contract of sale of 26 November 2002 null and void had violated their right to peaceful enjoyment of their possessions.

QUESTIONS TO THE PARTIES

1. Having regard to the interval between the adoption of the Constitutional Court ’ s decision of 9 July 2008 and its publication in the Official Gazette on 21 August 2008, were the statutory conditions for lodging an appeal on points of law foreseeable at the time the first applicant and her husband resorted to that remedy on 14 August 2008? In the negative, was the Supreme Court ’ s decision to declare their appeal on points of law inadmissible in breach of the applicants ’ right of access to court?

2. Were the applicants deprived of their possessions in accordance with the conditions provided for by law, within the meaning of Article 1 of Protocol No. 1 to the Convention? In particular,

(a) Was the deprivation foreseeable given the interpretation of section 99 of the Housing Act adopted in the applicants ’ case, which resulted from the development of the Supreme Court ’ s case-law when that Act was no longer in force?

(b) If so, was the deprivation in the public interest and did it impose an excessive individual burden on the applicants?