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THIRD SECTION

 

 

 

 

 

 

 

 

CASE OF KOŠŤÁL AND OTHERS v. SLOVAKIA

 

(Applications nos. 2294/17and 48691/17)

 

 

 

 

 

 

 

 

 

 

JUDGMENT

 

 

STRASBOURG

 

5 March 2019

 

 

 

 

This judgment is final but it may be subject to editorial revision.

 

In the case of Košťál and Others v. Slovakia,

The European Court of Human Rights (Third Section), sitting as a Committee composed of:

Dmitry Dedov, President,
Alena Poláčková,
Jolien Schukking, judges,
and Stephen Phillips, Section Registrar,

Having deliberated in private on 5 February 2019,

Delivers the following judgment, which was adopted on that date:

PROCEDURE

1. The case originated in two applications (nos. 2294/17and 48691/17) against the Slovak Republic lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms ("the Convention") by forty-seven natural and legal persons on 28 December 2016 and 29 June 2017, respectively. The particulars of the applicants appear in Appendices 1 - 2.

2. The applicants were represented by Mr J. Brichta a lawyer practising in Bratislava. The Government of the Slovak Republic ("the Government") were represented by their Agent, Ms M. Pirošíková.

3. The applicants complained under Article 1 of Protocol No. 1, both alone and in conjunction with Article 14 of the Convention, about restrictions which the rules governing rent control imposed on their right to peacefully enjoy their possessions.

4. The applications were communicated to the Government on 16 January 2018.

THE FACTS

I. THE CIRCUMSTANCES OF THE CASE

5. The applicants are owners of residential buildings or apartments which were subject to the rent-control scheme. Under the relevant legislation they were obliged to let their flats to tenants while charging no more than the maximum amount of rent fixed by the State. The legislation precluded them from unilaterally terminating the leases or selling the flats in question to anyone other than the respective tenants. The particulars of the flats affected by the rent control and its duration are set out in Appendices 3 and 4 (columns A - F).

6. The situation of the applicants is structurally and contextually the same as that of the applicants in Bittó and Others v. Slovakia (no. 30255/09, 28 January 2014 (merits) and 7 July 2015 (just satisfaction)), and subsequently decided cases concerning the rent-control scheme in Slovakia (see Krahulec v. Slovakia , no. 19294/07; Bukovčanová and Others v. Slovakia , no. 23785/07; Rudolfer v. Slovakia , no. 38082/07, 5 July 2016; Riedel and Others v. Slovakia , nos. 44218/07, 54831/07, 33176/08, 47150/08; and Mečiar and Others v. Slovakia , no. 62864/09, 10 January 2017; Matuschka and Others v. Slovakia [Committee], nos. 33076/10, 14383/11, Balan and Others v. Slovakia [Committee], nos. 51414/11, 46098/12, and Bajzík and Others v. Slovakia [Committee], nos. 46609/13, 9892/14, 27 June 2017, Drahoš and Others v. Slovakia [Committee], nos. 47922/14and 7 others, 9 January 2018).

II. RELEVANT DOMESTIC LAW AND PRACTICE

7. The relevant domestic law and practice governing the rent-control scheme in Slovakia and its historical background are set out in the Court's judgment in the case of Bittó and Others , ((merits), cited above, §§ 7-16 and 32-72).

8 . On 15 September 2011, the Termination and Settlement of Tenancy (Certain Apartments) Act (Law no. 260/2011) came into force; this legislation was enacted with a view to ending the rent-control scheme by 31 December 2016. The owners of apartments whose rent had been regulated were entitled to give notice by 31 March 2012 of the termination of a tenancy contract. Such termination of tenancy took effect after a twelve-month notice period. However, if a tenant was exposed to material hardship and applied for a substitute flat with the municipality, he or she would be able to continue to use the apartment while still paying a regulated rent, even after the expiry of the notice period, until a new tenancy contract with a municipality had been set up. Municipalities were obliged to provide a person exposed to material hardship with a municipal apartment at a regulated rent. If a municipality did not comply with that obligation by 31 December 2016, the landlord could claim from the municipality the difference between the free-market rent and the regulated rent.

THE LAW

I. JOINDER OF THE APPLICATIONS

9. The Court considers that given their common factual and legal background the two applications should be joined, in accordance with Rule 42 § 1 of the Rules of Court.

II. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1

10. The applicants complained that their right to the peaceful enjoyment of their possessions had been breached as a result of the implementation of rules governing rent control that applied to their property. They relied on Article 1 of Protocol No. 1 to the Convention, which reads 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. Admissibility

1. Locus standi of the wife of the deceased applicant

11. The Court has been informed that the applicant, Mr M. Mego had died on 26 July 2017 and that his wife Ms O. Silnická had expressed her wish to pursue the application in his stead.

12. The Government expressed no opinion on this matter.

13. The Court notes that the present application concerns a property right which is in principle transferable to the next of kin of the deceased person, and that the applicant had died after having lodged the application. It has in similar context accepted standing of the relatives of the deceased applicants who expressed the wish to pursue the applicant (see Bittó and Others v. Slovakia (merits), no. 30255/09, § 74, 28 January 2014).

It therefore considers that Ms O. Silnická has standing to continue the present proceedings in her late husband's stead.

2. Compliance with the six-months' time-limit

(a) The applicants Mr J. Badal and Ms M. Stracová

14 . The Government objected that the following applicants ceased to be the owners of some of the flats included in their application more than six months prior to its lodging on 29 June 2017 and that, therefore, the application lodged in relation to these flats is to be rejected as belated:

- Mr J. Badal in respect of the flats nos. 1, 15 and 17 at 102 Šancová St. in Bratislava,

- Ms M. Stracová in respect of the flats nos. 2 and 3 at 21 Grösslingová St. in Bratislava.

15. The applicants explained that on 13 November 2013 and 1 January 2014 respectively, the apartment buildings in question had undergone a transformation of the ownership structure. Hence, Mr Badal who had previously owned one third of the apartment building at 102 Šancová St. became an exclusive owner of the flats nos. 7 and 21 in that building, and Ms Stracová, previously an owner of one half of the apartment building at 21 Grösslingová St., became an exclusive owner of the flats nos. 5, 6 and 12 in that building. They argued that in these particular circumstances, the six months' time limit should be considered respected also with regard to the flats that they had no longer owned at the time of lodging their application.

16. The Court reiterates that under Article 35 § 1 of the Convention, it may only deal with a matter "within a period of six months from the date on which the final decision was taken". Where the alleged violation constitutes a continuing situation in respect of which no domestic remedy is available, such as the application of the rent-control scheme in the present case, the six-month period starts to run from the end of the situation concerned (see Bittó and Others (merits), cited above, § 75). The Court held in the previous rent-control cases that the situation complained of ended for the applicants at the moment when the rent control had ceased to apply to their property or the applicants had transferred the property to another person (see Mečiar and Others v. Slovakia , no. 62864/09, §§ 15-16, 10 January 2017). Applying these principles, the Court considers that the transformation of the ownership structure of the relevant apartment buildings had constituted the end of the situation complained of in respect of the flats which the applicants had ceased to own at that moment. It further observes that nothing had prevented the applicants to lodge their application with the Court within six months after the transformation of the ownership structure. The Court therefore rejects the part of the application no. 48691/17concerning flats nos. 1, 15 and 17 at 102 Šancová St. (Mr Badal) and flats nos. 2 and 3 at 21 Grösslingová St. (Ms Stracová), both located in Bratislava, as introduced out of time.

(b) The applicant Mr I. Bielek

17. The Government further objected that at the time of lodging the application on 28 December 2016, the applicant Mr I. Bielek had no longer owned flats nos. 5, 9, 14 and 20-C at 17 Trenčianska St. in Bratislava and that, therefore, the application in respect of these flats was lodged out of the six months' time limit. They also pointed out that the rent control scheme has not applied to flats nos. 1 and 5 (45.58 sq. m.) located in the same building because they were non-residential premises and that flat no. 17 at 1 Heydukova St. in Bratislava was not registered at the relevant ownership deed.

18. The applicant replied by limiting the scope of his just satisfaction claims to the flats nos. 3, 4, and 5 (43.25 sq. m.) at 17 Trenčianska St. and flat no. 17 at 1 Heydukova St. He explained that on 1 July 2011 a tenant residing in flat no. 5 (43.25 sq. m.) at 17 Trenčianska St. had moved to flat no. 17 at 1 Heydukova St. due to unsatisfactory technical conditions of the former flat and that he claimed pecuniary damage in respect of the former flat only until that moment. He further clarified that following a renumbering of the flats in the relevant apartment building the latter flat has been assigned a new no. 13.

19. The Court observes that in reaction to the Government's objection the applicant narrowed the scope of his application to the rent control applied in respect of flats nos. 3, 4, and 5 (43.25 sq. m.) at 17 Trenčianska St. (the last mentioned flat until 30 June 2011) and flat no. 17 (currently no. 13) at 1 Heydukova St. As the Government's objection concerned the flats that are no longer within the scope of the application, the Court finds it unnecessary to make a separate ruling on this point.

20. Furthermore, there seem to be no dispute between the parties that the situation when the tenant had moved from one flat to another constituted a continuing situation for the purposes of the calculation of the six-month time-limit which is in line with the previous case-law (see Bajzík and Others v. Slovakia , [Committee] nos. 46609/13and 9892/14, § 25, 27 June 2017). The Court is further satisfied with the applicant's explanation concerning the renumbering of the flat 17 to flat no. 13 at 1 Heydukova St. There are therefore no outstanding issues regarding this applicant and the Government's objection should be dismissed.

3. The remaining Government's objections

21. The Government raised two further objections as to the admissibility of the present applications. Firstly, they objected that certain flats in the apartment buildings were not separately entered in the ownership deeds and it cannot be verified whether these flats exist. Secondly, they argued that the applicants had failed to submit documents proving that the rent control applied to their flats during the relevant period and the actual rent paid to them by the tenants. They reiterated that the Government maintain no list of flats subjected to rent control.

22. The applicants submitted detailed expert reports and the documents that prove that the flats owned by the applicants were subjected to rent control and its duration. They further submitted declarations signed by each individual applicant that all data submitted to the Court correspond to reality. As to the actual amount of regulated rent collected from tenants, the applicants stated that the experts calculated the pecuniary damage on the basis of the maximum regulated rent permissible under the relevant legislation regardless of the amounts they had actually received from tenants.

23. The Court considers, as in the previous rent control cases and in the absence of an official register of the flats subjected to rent control, that the documents submitted by the applicants, in particular the detailed expert reports, sufficiently substantiate that their flats were subjected to rent control and the duration thereof. It is also satisfied with taking into consideration the maximum rent permissible under the rent-control scheme instead of the actual rent collected by the applicants which, by definition, may have been only lower (see Bittó and Others (merits) , cited above, § 111). The Court therefore considers that the application and the evidence submitted by the applicants contain sufficient information for the purposes of Article 34 of the Convention. It follows that the Government's objections in this regard should be dismissed.

24. The Court further notes that the remainder of the applications is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.

B. Merits

25. The applicants argued that the restrictions applied to the use of their property under the rent-control scheme had imposed a disproportionate burden on their ownership rights.

The Government, for their part, referred to the conclusions reached by the Court in Bittó and Others ((merits), cited above) and subsequent rent control cases.

26. The Court reminds that in Bittó and Others ((merits), cited above, §§ 101-119) and subsequent rent control cases, it found (i) that the rent-control scheme had amounted to an interference with the applicants' property, (ii) that that interference had constituted a means of State control of the use of their property to be examined under the second paragraph of Article 1 of Protocol No. 1, (iii) that it had been "lawful" within the meaning of that Article, (iv) that it had pursued a legitimate social-policy aim, and (v) that it had been "in accordance with the general interest", as required by the second paragraph of that Article. As to the requirement of proportionality, it concluded that in implementing the rent-control scheme the authorities had failed to strike the requisite fair balance between the general interests of the community and the protection of the applicants' property rights, as a result of which there had been a violation of their rights under Article 1 of Protocol No. 1.

27. The present cases follow the pattern of Bittó and Others and subsequent rent control cases and the Government have not put forward any fact or argument capable of persuading the Court to reach a different conclusion in the present cases. Having regard to its well-established case-law on the subject, the Court considers that there has been a violation of Article 1 of Protocol No. 1.

III. ALLEGED VIOLATION OF ARTICLE 14 OF THE CONVENTION, TAKEN TOGETHER WITH ARTICLE 1 OF PROTOCOL No. 1

28. The applicants maintained that the restrictions imposed by the rent-control scheme amounted to discriminatory treatment in violation of Article 14 in conjunction with Article 1 of Protocol No. 1. Article 14 reads as follows:

"The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status."

29. As in Bittó and Others ((merits), cited above, §§ 120-25) and subsequent rent control cases, the Court concludes that in view of its conclusion that there had been a breach of the applicants' rights under Article 1 of Protocol No. 1, no separate issue arises under Article 14.

IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION

30. Article 41 of the Convention provides:

"If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party."

A. Damage

31. The applicants claimed compensation for the pecuniary damage which they had suffered as a result of the rent-control scheme. They submitted expert opinions determining the claimed amounts as the difference between the market rent applicable to similar dwellings and the maximum amount of regulated rent which they could charge under the relevant legislation. Those sums were then increased by the default interest applicable under Slovakian law. The applicants further asserted that the level of award should reflect that in Bittó and Others and objected that the Court's awards in the post Bittó judgments had been lower. The applicant's specific individual claims in respect of pecuniary damage are set out in Appendices 3 - 4 (column G). In addition, the applicants claimed 50,000 euros (EUR) each in respect of non-pecuniary damage.

32. The Government objected to the applicants' claims in respect of pecuniary and non-pecuniary damage as being excessive and referred to the awards in the previous rent-control cases. They contested the method by which the applicants had determined the alleged pecuniary damage.

33. The applicable case-law principles are summarised in Bittó and Others ((just satisfaction), cited above, §§ 20-29). In line with its findings in that case, the Court acknowledges that the applicants must have sustained damage for which they are to be compensated with an aggregate sum covering all heads of damage. The Court reminds that any compensation may only be befitting in respect of the part of the application that, having previously been declared admissible, has given rise to a finding of a violation of the applicants' Convention rights.

34. As regards the scope of the award, the Court refers to the criteria further developed in Bukovčanová and Others (no. 23785/07, § 51, 5 July 2016), where it took into account all the circumstances, including (i) the purpose and the context of the rent control and the level of the awards in Bittó and Others , (ii) the size of the property in question, (iii) the duration of the application of the rent-control scheme in relation to each individual part of the property, (iv) its location, and (v) the ownership shares of the respective applicants in the property. These criteria have been applied in subsequent rent control cases against Slovakia and the Court finds no reasons to depart from the approach taken in those cases.

35. As to the temporal scope of the applicants' claims, the Court observes that under the Termination and Settlement of Tenancy (Certain Apartments) Act the owners of property which remained subjected to rent control after 31 December 2016 are entitled to claim from the municipality in question the difference between the free-market rent and the regulated rent for that property (see paragraph 8 above). The Court finds that, in such circumstances and in the absence of arguments from the parties to the contrary, there is no scope for just-satisfaction awards for the period subsequent to 31 December 2016.

36. In the light of the above, the Court finds it appropriate to award aggregate sums covering all heads of damage specified in respect of each individual applicant in Appendices 3 - 4 (column H) in a total amount of EUR 2,673,500, plus any tax that may be chargeable in respect of these amounts.

B. Costs and expenses

37. In application no. 2294/17the applicants claimed EUR 660 in translation costs, EUR 134,300.34 in legal costs for their representation before the Court and EUR 216,572.31 EUR for preparation of the expert opinions submitted to the Court.

In application no. 48691/17the applicants claimed EUR 20,495.52 in legal costs incurred before the Court and EUR 36,906.89 for the expert opinions.

38. The Government challenged the costs claimed by the applicants as being excessive. They also found the elaboration of the expert reports redundant considering the Court's previous case-law according to which the Court is not bound to follow the domestic calculations.

39 . Regard being had to the documents in its possession and to its case-law (see Bittó and Others (just satisfaction), cited above, § 35; Mečiar and Others , cited above, § 45), the Court considers it reasonable to award the following sums:

- EUR 1,000 to each applicant in respect of legal costs for the representation in the proceedings before the Court - namely EUR 39,000 jointly to the applicants in application no. 2294/17, and EUR 8,000 jointly to the applicants in application no. 48691/17;

- 25% of the total sums claimed in respect of the expert opinions on the rental value of individual flats - namely, EUR 54,143 jointly to the applicants in application no. 2294/17, and EUR 9,227 jointly to the applicants in application no. 48691/17. These amounts are to be apportioned pro rata among the applicants according to the respective costs of the individual expert opinions that they submitted;

- EUR 660 jointly to the applicants in application no. 2294/17in respect of translation costs.

C. Default interest

40. The Court considers it appropriate that the default interest rate 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,

1. Decides to join the applications;

 

2. Holds that Ms O. Silnická has standing to continue the present proceedings in Mr M. Mego's stead;

 

3. Declares the part of application no. 48691/17concerning the flats nos. 1, 15 and 17 at 102 Šancová St. in Bratislava and flats nos. 2 and 3 at 21 Grösslingová St. in Bratislava inadmissible as introduced out of time;

 

4. Declares the remainder of the applications admissible;

 

5. Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention;

 

6. Holds that it is not necessary to examine the merits of applicants' complaint under Article 14 of the Convention, taken in conjunction with Article 1 of Protocol No. 1;

 

7. Holds

(a) that the respondent State is to pay jointly to the applicants, within three months the following amounts:

(i) EUR 2,673,500 (two million six hundred and seventy-three thousand five hundred euros), plus any tax that may be chargeable, in respect of pecuniary and non-pecuniary damage (to be distributed among the applicants according to Appendices 3 - 4, column H);

(ii) EUR 111,030 (one hundred and eleven thousands and thirty euros), plus any tax that may be chargeable to the applicants, in respect of costs and expenses (to be distributed among the applicants in line with paragraph 39);

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

 

8. Dismisses the remainder of the applicants' claim for just satisfaction.

Done in English, and notified in writing on 5 March 2019, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

              Stephen Phillips Dmitry Dedov
Registrar President

 

APPENDIX 1

Application no. 2294/17 - List of applicants

 

 

APPENDIX 2

Application no. 48691/17 - List of applicants

 

APPENDIX 3

Application no. 2294/17

 

 

* joint marital ownership

** The applicant moved from one flat to another while the rent control still applied.

APPENDIX 4

Application no. 48691/17