FOURTH SECTION

Application no. 71148/10 Tassos PHILIPPOU against Cyprus lodged on 16 November 2010

STATEMENT OF FACTS

The applicant, Mr Tassos Philippou , is a Cypriot national, who was born in 1949 and lives in Nicosia . He is represented before the Court by Mr A. Demetriades and Mr G. Seraphim, lawyers practising in Nicosia .

A. The circumstances of the case

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

The applicant was employed as an assistant officer in the Department of Lands and Surveys.

On 18 January 2005 the applicant received concurrent sentences of two and five years ’ imprisonment on a plea of guilty following a plea bargain, to twenty-four charges concerning a number of offences, which included obtaining the amount of 150,000 Cyprus pounds (CYP) by false pretences, forging cheques and abuse of power. Part of the arrangement was that he would repay the amount in question, which he did. In imposing the sentences the court took into consideration another eight such cases.

As a consequence of his conviction, the Public Service Commission (“PSC”) instituted disciplinary proceedings against the applicant.

On 13 June 2005 the PSC decided to dismiss the applicant. The disciplinary sentence of dismissal also resulted in the forfeiture of the applicant ’ s pension in accordance with section 79(7) of the Public Service Law of 1990 (Law no.1/1990; hereinafter “Public Service Law”).

Up to the date of his dismissal the applicant had worked for thirty-three years in the public service.

1. The first instance proceedings

On 26 August 2005 the applicant brought a recourse before the Supreme Court ( revisional jurisdiction) under Article 146 of the Constitution seeking the annulment of the PSC ’ s decision to dismiss him from the Public Service and the consequent forfeiture of his pension rights (recourse no. 994/2005).

The thrust of his lawyer ’ s argument was that the forfeiture of his retirement benefits was in breach of Article 23 of the Constitution and Article 1 of Protocol No. 1 to the Convention. The recourse was considered only in respect of that submission. In this respect the applicant claimed that his pension rights constituted a “possession” and that their automatic forfeiture consequent to his dismissal was disproportionate.

On 7 May 2007 the Supreme Court dismissed the recourse but did not award costs in view of the nature of the legal issues raised.

The Supreme Court first noted that the PSC, considering the case to be one of the most serious in its history, had observed that the conception and planning of the case showed “a well set up fraud which had dealt a blow to the prestige and credibility of the procedures of the Department of Lands and Surveys and also to the image of the Public Service in general”. The PSC had also emphasised the magnitude of the activity of the applicant who did not live up to his responsibilities, exploited his position and developed his criminal activities “with unprecedented effrontery and recklessness”. The PSC had taken into account the fact that the applicant had returned the money to a great extent and was trying to return the rest. Nevertheless, the PSC had decided to impose the extreme penalty of dismissal. As a consequence, the PSC noted, section 79(7) of the Public Service Law applied.

After having ruled that the retirement benefits of a public servant in Cyprus constituted a possession under Article 1 of Protocol No. 1, the Supreme Court went on to examine whether or not there had been a violation of the applicant ’ s rights under this provision. Drawing guidance from the Court ’ s case-law, and in particular the judgments in the case of Azinas v. Cyprus (no. 56679/00, 20 June 2002 and [GC], no. 56679/00, ECHR 2004 ‑ III) and the decision in the case of Banfield v. the United Kingdom (( dec .), no. 6223/04 , ECHR 2005 ‑ XI), the Supreme Court first pointed to those factors which justified the deprivation of the right to property in this case. One such main factor in the court ’ s view was the gravity of the offences committed. It considered in this respect that the characterisation of the case by the PSC as one of the most serious in its history did not appear to be an exaggeration. The impression given by the offences was such that not only did they entail a well-organised fraud but also, most importantly, as the PSC ascertained, had dealt a blow to the trustworthiness of the administration. The court considered that sentencing the applicant to five years ’ imprisonment, as well as his dismissal, did not necessarily exhaust the limits of the discretion of the State to put things right. Besides, as in Azinas , the non-deprivation of pension benefits in the case of a pension plan to which the employee did not make contributions, would amount to rewarding the applicant.

At the same time the serious consequences of the punishment of the applicant by a sentence of five years ’ imprisonment and dismissal had also to be considered, particularly, the financial difficulties arising from the deprivation of the said rights as an additional “punishment” for the applicant and his family. The court observed that this was an important factor to be taken into account according to the circumstances of each case. If the deprivation had not been automatic but discretionary within the framework of enacted procedures, as in England , it would have been possible to examine whether there should be deprivation and to what extent. The court noted in this respect that it would indeed be good for the State to consider seriously the prospect of an amendment to the law so as to make the system more flexible and fairer in each case. Moreover, there was also the fact that the applicant had to a great extent returned the money he had embezzled, a fact which, although the PSC had said that it had taken it into account, did not appear to have affected its decision since the punishment imposed on the applicant was, of the ten forms provided for, the extreme one of dismissal instead of choosing the second most serious form of punishment, that of compulsory retirement, which would not have entailed the loss of pension rights.

In the end, however, the Supreme Court considered that the fact that the case in question arose and was being heard on the basis of a different statutory regime from that in Azinas as regards the consequences of dismissal entailing the loss of pension rights, tilted the scales, albeit slightly, in favour of the Republic. The proviso in section 79(7) that the applicant ’ s pension from the day of his dismissal would be paid to his wife and dependent children as if he had died on that date, reduced for the family the hardship resulting from the dismissal. Despite this, the court observed that it was likely that there would be cases with even more dire consequences for the dismissed employee, such as when there was no wife or dependent children or their relationship was such that the dismissed employee could not reasonably expect to benefit through them. Nothing, however, had been said to include the present case among those cases, except for the theoretical possibility that his wife could die before the applicant. The court stated that, if matters were otherwise, it was likely that it would have ruled differently.

Finally, the Supreme Court stressed that the competent bodies should seriously study the possibility of amending the statutory framework on the basis of the law in force in England, so that the deprivation of pension rights was not automatic but could be looked at with the help of enacted procedures and with the exercise of discretion in order that the PSC might determine, by means of a reasoned decision, the extent to which it was just to forfeit, if at all, in any particular case, according to the individual ’ s special circumstances and needs. The Supreme Court considered that both the rule of law and the modern conception of individual justice demanded this.

2. Appeal proceedings

On 5 June 2007 the applicant lodged an appeal with the Supreme Court (appellate revisional jurisdiction; appeal no. 78/2007). He first challenged the first instance finding concerning section 79(7). He submitted that section 79(7) of the Public Service Law was contrary to Article 23 of the Cyprus Constitution and Article 1 of Protocol No. 1 to the Convention as the forfeiture of his pension had been automatic without the exercise of any discretionary power. In this respect, he argued that the first instance court had applied the proportionality principle incorrectly during the examination of the penalty imposed by the PSC and therefore had wrongly decided that the measure had been proportionate and in line with the Convention. Secondly, the applicant claimed that the finding of the first instance court that the consequences of this were reduced because he was married and thus his wife and dependent children would receive his pension, was discriminatory on the ground of marital status and thus in violation of Article 28 of the Constitution.

On 12 June 2007 the respondent Government also filed an appeal (appeal no. 81/2007) challenging the first instance findings (a) that in the present case the retirement benefits could be considered a “possession”; (b) that in the disciplinary dismissal of a public servant there was no enacted framework providing for the exercise of discretion as to whether the retirement benefits will be granted ; and (c ) that the payment of the pension to the applicant ’ s wife was the only essential factor which tilted the scales in favour of the Republic.

On 18 May 2010 the Supreme Court dismissed both appeals without awarding costs in view of the importance of the matter raised. It agreed with the first instance court ’ s finding that the right to a pension and its conditions constituted a possession of the employee. This right was created by the appointment of the employee. The fact that a pension was given to the wife and dependent children suggested that pension benefits were considered as “property” which may be transferred. In this respect the court referred to its judgment in the case of Pavlou v. the Republic ( Revisional appeal no. 161/2006, (2009) 3 CLR 1402; see below) and the Court ’ s judgment in the case of Apostolakis v. Greece (39574/07 , 22 October 2009).

The court went on to find, however, that the deprivation of the right to a pension had been justified. In this respect, the court noted that the PSC had chosen the penalty of dismissal under section 79(7) of the Public Service Law, after exercising its discretion and after having considered the consequences and the fact that such a penalty was in the public interest. The first instance court had examined whether the imposition of the penalty of dismissal, which brought about the automatic forfeiture of retirement benefits, was disproportionate. It had examined whether the PSC, when exercising its discretion, had applied the principle of proportionality in deciding on the penalty of dismissal which resulted in the automatic deprivation of retirement rights. In this respect it held that the PSC had exercised its discretion when deciding to impose the penalty of dismissal. The PSC had a variety of available penalties at its disposal, such as compulsory retirement, which did not bring about the forfeiture of the pension. It decided, however, in view of the offences committed by the applicant, that such deprivation was justified.

The Supreme Court pointed out that the Strasbourg Court had acknowledged that the administration had a wide discretion in deciding on such matters.

It went on to agree with the first instance court that the deprivation of the applicant ’ s retirement rights was justified in view of the seriousness of the offences, which had dealt a blow to the trustworthiness and credibility of the administration . The relevant domestic law provision was aimed at discouraging public servants from committing serious offences and at protecting the smooth running of the administration. Section 79(7) of the Public Service Law was not contrary to Article 1 of Protocol No. 1 since the deprivation of pension benefits was not a punishment on its own, but a consequence of the imposition of the penalty of dismissal.

The court went on to differentiate the applicant ’ s case from that of Apostolakis in which the forfeiture had been automatic following a criminal conviction and entailed deprivation of both pension and social security rights and therefore of all means of subsidence. In the present case, although the applicant was deprived of his retirement benefits as a public servant, he was entitled to receive benefits from the social security fund which were calculated on the basis of contributions of the employer and the employee. Referring to the Court ’ s judgment in the case of Wieczorek v. Poland (no. 18176/05 , 8 December 2009) it found that the applicant had not been deprived of all means of subsistence.

As to the question of discrimination due to marital status, raised by the applicant, the Supreme Court held that nothing of what the first instance court had said could be considered discriminatory. The comments in question had been made on a hypothetical basis and did not apply to the present case.

Lastly, the Supreme Court, dealt with the remaining grounds of appeal put forward by the Government. It observed that the first instance decision was to the effect that in the case of a sentence of dismissal the law did not provide for a procedure concerning the exercise of discretion for forfeiting retirement rights but it did not say that it was not possible to exercise a discretion on the matter since it recognised that there was a choice between dismissal entailing the forfeiture of rights and compulsory retirement which did not. Finally, it pointed out that the first instance court had set out in its decision all the facts which it had taken into account in deciding on the proportionality of the forfeiture and rightly concluded that the payment of the pension to the wife meant that the deprivation was not disproportionate.

B. Relevant domestic law and practice

Sections 79 (1) and (7) of the Public Service Law (Law no. 1/1990) read as follows:

“1. In accordance with the present Law, the following disciplinary penalties may be imposed:

(a) reprimand

(b) severe reprimand

(c) disciplinary transfer

(d) interruption of annual salary increase

(e) suspension of annual salary increase

(f) pecuniary penalty which cannot exceed three months ’ salary

(g) reduction in salary scales

(h) reduction in rank

( i ) compulsory retirement

(j) dismissal.

...

7. Dismissal entails the loss of all retirement benefits.

Provided that a pension is paid to the wife or dependent children, if any, of a public servant who was dismissed as though he had died on the date of his dismissal and it shall be calculated on the basis of his actual years of service.”

The relevant parts of Article 23 provide as follows:

“1. Every person, alone or jointly with others, has the right to acquire, own, possess, enjoy or dispose of any movable or immovable property and has the right to respect for such right. The right of the Republic to underground water, mineral and antiquities is reserved.

2. No deprivation or restriction or limitation of any such right shall be made except as provided in this Article.

3. Restrictions or limitations which are absolutely necessary in the interest of the public safety or the public health or the public morals or the town and county planning or the development and utilisation of any property to the promotion of the public benefit or for the protection of the rights of others may be imposed by law on the exercise of such right.”

The Supreme Court in the case of Pavlou v. the Republic ( Revisional appeal no. 161/2006, (2009) 3 CLR 1402), which concerned the reduction of the State pension upon the receipt of an old-age pension from the Social Insurance Fund, held that a pension constituted property and was consequently an individual right that required legal protection.

COMPLAINTS

1. The applicant complains that the forfeiture of his pension rights pursuant to section 79(7) of the Public Service Law (Law no. 1/1990) violated Article 1 of Protocol No. 1 to the Convention.

2. The applicant also complains that he was unable to contest the legality of the decision of the Public Service Commission, that the decision had become unassailable and that he was deprived of effective access to a court in breach of Article 13 of the Convention.

3. Lastly, the applicant complains that the deprivation of his pension on the ground that his wife and dependents would still benefit from the pension was discriminatory as to his marital status, and therefore contrary to Article 14 of the Convention taken together with Article 1 of Protocol No. 1 and, also, Article 1 of Protocol No. 12.

QUESTIONs TO THE PARTIES

1 . Was the forfeiture of the whole or any part of the applicant ’ s pension compatible with Article 1 of Protocol No. 1 to the Convention?

2 . Has the app licant suffered discrimination in the enjoyment of his Convention rights on the ground of his marital status contrary t o (a) Article 14 of the Convention read in conjunction with Article 1 of Protocol No. 1 and (b) Article 1 of Protocol No. 12?

The Government are requested to provide the Court with detailed information as to the public service pension scheme and to submit all relevant domestic legal provisions with translations.