2007/03/22 - III. ÚS 516/06: Real Estate Appeal

22 March 2007

HEADNOTES

The petitioner was given an obligation to hand over property under Act

no. 87/1991 Coll., whose § 5 par. 5 allows so-called “overlooked”

entitled persons to exercise their claims against those entitled persons

to whom a thing was handed over.

The Constitutional Court considers it appropriate to point out that

until the time when Constitutional Court judgment of 4 December 1996,

no. 2/1997 Coll., was issued, inequality existed in the de facto

opportunity of entitled persons to exercise restitution claims under Act

no. 87/1991 Coll., because the same claims of entitled persons were

satisfied in different ways.

As stated in the reasoning of Constitutional Court judgment no. 2/1997

Coll., Act no. 87/1991 Coll., in § 5 par. 5, assumed a possible conflict

of the interests of several entitled persons, because it assumed that

the claims of some persons entitled under the Act would be satisfied,

while the claims of others would not be. The Constitutional Court

respected the will of the legislature expressed in that Act, and

emphasized that the Act offered a solution for the resulting conflict of

interests or claims of entitled persons by expressly establishing the

right of unsatisfied entitled persons to exercise their claims against

satisfied entitled persons in court, though by a one-year preclusive

deadline.

The fact that the legislature exposed satisfied entitled persons to

that risk is, in the Constitutional Court’s opinion, quite appropriate,

because it is done fully in accordance with the purpose of the statute,

which pursues the mitigation of the consequences of property and other

crimes from the period 1948-1989, and the trend to give priority to the

constitutional principle of equality and allow all entitled persons to

satisfy their claims in the scope granted them by law, regardless of the

fact that a thing was already issued to some of them. The purpose and

trend of Act no. 87/1991 Coll. are such important dominant features,

that in light of them exercising one’s acquire rights or the principles

of retroactivity, including in view of the already cited positions of

expectation on the part of satisfied entitled persons, exposed by law to

the disadvantageous risk of conflict with the interests of unsatisfied

entitled persons, appears inappropriate.

 


CZECH REPUBLIC

CONSTITUTIONAL COURT

JUDGMENT


IN THE NAME OF THE CZECH REPUBLIC


A

Panel of the Constitutional Court, consisting of the Chairman Vladimíra

Kůrka and judges Jiří Mucha and Jan Musil, decided, on 22 March 2007,

without a hearing, without the presence of the parties, in the matter of

a constitutional complaint from the petitioner Ing. M. H., represented

by JUDr. L. Ch., attorney, against a decision of the Municipal Court in

Prague of 28 June 2005 ref. no. 25 Co 126/2005-317, and against a

decision of the Supreme Court of the CR of 31 May 2006 ref. no. 28 Cdo

3042/2005-336, with the participation of 1) the Municipal Court in

Prague and 2) the Supreme Court of the CR, as parties to the

proceedings, as follows:
 

The constitutional complaint is denied.
 


REASONING


I.
 

In

the constitutional complaint, which was delivered to the Constitutional

Court on 7 July 2006, the petitioner seeks the annulment of a judgment

of the Municipal Court in Prague, of 28 June 2005 ref. no. 25 Co

126/2005-317, as well as a decision of the Supreme Court of the CR, of

31 May 2006 ref. no. 28 Cdo 3042/2005-336, due to violation of Art. 11

and Art. 36 par. 1 of the Charter of Fundamental Rights and Freedoms

(the “Charter”), and Art. 6 par. 1 of the Convention for the Protection

of Human Rights and Fundamental Freedoms (the “Convention”) and Art. 1

of Protocol no. 1 to the Convention.
 

The

Constitutional Court states that the timely filed constitutional

complaint meets all the statutory formal requirements, and therefore

nothing prevents it from reviewing and deciding the matter on the

merits.
 

To review the

justification of the petition, the Constitutional Court requested the

file kept at the Municipal Court of Prague 5 as file no. 7 C 151/2003.
 

From

the file, the Constitutional Court determined that in a complaint filed

with the District Court for Prague 5, the plaintiff, MUDr. Milada

Marková, in her final proposedjudgment, sought from the defendant, Ing.

Miloš Havlas (the “petitioner” in the proceeding before the

Constitutional Court) payment of CZK 2,429,666.60 with late payment

interest of 26% from 22 December 1997 until payment; the plaintiff also

asked the court to order the defendant to hand over to her 3/16 of

building reg. no. 1064 with land parcel no. 87, of 633 m2, recorded on

title deed no. 2235 for Prague 5, land registration zone Smíchov, at the

Land Registry Office Prague-City. The matter was successively decided

by courts of all three levels.
 

The

Municipal Court for Prague 5, bound by the legal opinion of the Supreme

Court of the CR stated in the judgment of the Supreme Court of the CR

of 28 January 2003 ref. no. 28 Cdo 258/2002-195, and the judgment of 12

January 2005 ref. no. 7 C 151/2003-293, ruled to stop the proceedings in

the part wherein the plaintiff sought from the defendant 1/48 of

building no. 1064 with land parcel no. 87, measuring 633 m2, registered

on title deed no. 2235 pro for the municipality of Prague 5,

registration area Smíchov, at the Land Registry Office Prague-City. The

judgment also separated out for separate treatment the part of the

complaint in which the plaintiff sought from the defendant payment of

CZK 2,429,666.60. At the same time, the court of the first level granted

the complaint by ordering the defendant to hand over to the plaintiff

9/48 of building no. 1064, built on land parcel no. 87 and 9/48 of land

parcel no. 87, measuring 633 m2 – built-up area and courtyard,

registered on deed no. 2235 in the municipality Prague 5, registration

area Smíchov, at the Land Registry Office Prague-City. The court also

decided that the plaintiff was required to pay the defendant CZK 46,475

in compensation of court costs, and the defendant was required to pay

the Czech Republic court fees of CZK 1,000.
 

The

contested judgment of the Municipal Court in Prague of 28 June 2005

ref. no. 25 Co 126/2005-317 confirmed the judgment of the first-level

court in the verdict granting the matter on the merits and in the

verdict on court fees. The first-level court’s verdict concerning court

costs was changed, to not grant the plaintiff compensation of court

costs. The appellate court’s judgment also decided that the plaintiff

would not be granted costs of the appeal proceedings.
 

The

defendant filed an appeal on a point of law against the appellate

court’s judgment, which was denied by decision of the Supreme Court of

the CR of 31 May 2006 ref. no. 28 Cdo 3042/2005-336; it was also decided

that neither of the parties was entitled to compensation of court costs

for the appeal.
 


II.
 

In

the constitutional complaint the petitioner objects that the contested

decision of the Supreme Court of the CR, inconsistently with the right

to a fair trial and the principle of parties being equal in proceedings,

prevented him from exercising his right to file an appeal on a point of

law [in Czech “dovolání” – also referred to in the translation as a

“second appeal”] in the statutory scope specified in § 237 par. 1 let.

b) of the Civil Procedure Code (the “CPC”), i.e. on the grounds that the

decision was based on factual findings that, according to the file,

have no substantial support in the evidence presented, only with

reference to the previous judgment of the Supreme Court of the CR issued

in the same matter, which, however, was issued on the basis of the

plaintiff’s appeal on a point of law, where the second appellate court

was bound by the scope of the grounds stated for that second appeal.
 

The

petitioner states that in his appeal on a point of law against the

judgment of the second-level court he expressly stated that an appeal on

a point of law is permissible under § 237 par. 1 let. b) CPC, because

the judgment of the second-level court confirmed the decision of the

first-level court, in which that court decided the matter on the merits

differently than it had in an earlier (not the foregoing) judgment,

because it was bound by the legal opinion of the second appellate court

that had annulled the earlier decision. In addition, the petitioner

applied the grounds for an appeal on a point of law under § 237 par. 1

let. c) in connection with § 237 par. 3 CPC, because the contested

judgment of the appellate court is of fundamental legal importance to

the merits of the matter, in particular because it resolves a legal

issue inconsistently with substantive law, and a legal issue that had

not yet been resolved in the decision-making of the second appellate

court, or had been resolved differently by the second appellate court

for the appeal on a point of law and the appellate court for the

ordinary appeal. The petitioner also states that in his appeal on a

point of law against the judgment of the appellate court he expressly

stated, as grounds for the appeal on a point of law, that the

proceedings are afflicted by a defect that could result in an incorrect

decision on the merits under § 241and par. 2 let. a) CPC, that the

judgment of the appellate court rests on an incorrect legal assessment

of the matter under § 241a par. 2 let. b) CPC, as well as the fact that

the judgment of the appellate court is based on factual findings that,

according to the file, do not have substantial support in the presented

evidence, under § 241a par. 3 CPC
 

The

petitioner believes that the decision of the Supreme Court of the CR

contains an incorrect legal opinion regarding the permissibility and

scope of grounds for an appeal on a point of law and is inconsistent

with § 237 and § 241a of the CPC. The second appellate court allegedly

did not evaluate the petitioner’s grounds for the appeal on a point of

law in their full scope and only repeated the conclusions of the first

appellate court, without giving an opinion on them. The petitioner

believes that if the second appellate court, inconsistently with § 237

par. 1 let. b) CPC in connection with § 241a par. 3 of the CPC evaluated

his appeal on a point of law as regards permissibility and as regards

the scope of the grounds to the detriment of the appellant, it violated

his right to a fair trial under Art. 36 par. 1 of the Charter.
 

According

to the petitioner, the first appellate court’s judgment is

non-reviewable under § 157 par. 2 of the CPC, and incomplete in the

factual findings that are decisive for the result of adjudication on the

merits, because it lacks a factual finding on the date when a call was

delivered to the particular addressee, although the claim was not

undisputed. In addition, according to the petitioner, the first

appellate court’s judgment is extremely inconsistent with substantive

law, and rests on an incorrect legal evaluation of the matter also

regarding the issue of the plaintiff’s failure to exercise a claim under

§ 5 par. 5 of Act no. 87/1991 Coll., on Extra-Judicial Rehabilitation,

as amended by later regulations (Act no. 87/1991 Coll.).
 

The

petitioner states that the plaintiff did not call on the defendant to

hand over things under § 5 par. 5 of Act no. 87/1991 Coll. in the

preclusive period beginning with the issuance of the original judgment

denying her claim to have a thing handed over, or the date of legal

effect of that judgment, i.e. from 16 August 1996 to 15 July 1997,

whereby her claim to have a thing handed over expired. Because the

plaintiff did not claim, either in the complaint or in the supplement to

it (as the factual findings of the judgments of the first- and

second-level courts indicate), that she did not file, or did not

deliver, after issuance of the legally effective judgment of the

District Court for Prague 5 of 16 August 1996 ref. no. 16 C 228/95-24,

of after the judgment went into legal effect, i.e. 4 November 1996, the

defendant a new call to hand over things, that those that were the

subject matter of the original proceeding, according to the petitioner

this is a matter res judicata, which can not be newly adjudicated under §

159a par. 4 a par. 5 of the CPC.
 

Finally,

the petitioner objects that the first appellate court’s judgment is

extremely inconsistent with the simple law and the presented evidence as

regards the issue of whether the plaintiff is an heir under a will,

which contains an exclusive list of things to be handed over, to the

benefit of the defendant, and which could not be submitted by an

entitled party under § 3 par. 4 let. a) of Act no. 87/1991 Coll., or

under § 3 par. 4 let. b) second sentence after the semi-colon of the

Act, due to the probate matter being stopped due to insufficient assets

under § 32 of the Notarial Code, as amended.
 

According

to the petitioner the appellate court’s judgment is inconsistent with

Art. 11 of the Charter and with Art. 1 of the Protocol to the

Convention, because it orders the petitioner, after the Convention went

into effect, and with the coming into effect of a new legal framework as

of 15 January 1997, to hand over a thing without compensation to

another person, a thing that was issued to his ownership, and which was

bequeathed to the petitioner as the sole owner by the true will of the

original owner, even though the probate proceedings concerning the

original owner’s will did not take place, as a result of the property to

be handed over being taken away.
 


III.
 

The

Constitutional Court points out that its role is the protection of

constitutionality (Art. 83 of the Constitution of the CR). The

Constitutional Court is not part of the system of general courts, and

does not have the right to oversee the decision-making activities of the

general courts. It does not examine possible violation of ordinary

rights protected by simple law, unless that violation is simultaneously a

violation of a constitutionally guaranteed fundamental right or

freedom. The Constitutional Court is entitled to intervene in the

decision-making activity of the general courts only if a legally

effective decision by these bodies violated constitutionally guaranteed

fundamental rights or freedoms.
 

Thus,

the Constitutional Court reviewed the contested decisions, as well as

the proceedings that came before them, from the point of view of the

objections raised by the petitioner in the constitutional complaint, and

taking into account the fact that it could review only

constitutionality, it concluded that the constitutional complaint is

unjustified.
 

As regards the

petitioner’s objections and his claim of violation of his fundamental

rights and freedoms under Art. 11, Art. 36 par. 1 of the Charter, as

well as Art. 1 of Protocol no. 1 to the Convention, the Constitutional

Court considers it appropriate to point out again that until the time

when Constitutional Court judgment of 4 December 1996, no. 2/1997 Coll.,

was issued, inequality existed in the de facto opportunity of entitled

persons to exercise restitution claims under Act no. 87/1991 Coll.,

because the same claims of entitled persons were satisfied in different

ways. In other words, in view of the deadline specified in § 5 par. 5 of

Act no. 87/1991 Coll. (the version in effect from 1 April 1991 to 15

January 1997), the cited provision was an “obstacle” to the equal rights

of persons who were granted the status of entitled persons by

Constitutional Court judgment of 12 July 1994, no. 164/1994 Coll.
 

As

stated in the reasoning of Constitutional Court judgment no. 2/1997

Coll., Act no. 87/1991 Coll., in § 5 par. 5, assumed a possible conflict

of the interests of several entitled persons, because it assumed that

the claims of some persons entitled under the Act would be satisfied,

while the claims of others would not be. The Constitutional Court

respected the will of the legislature expressed in that Act, and

emphasized that the Act offered a solution for the resulting conflict of

interests or claims of entitled persons by expressly establishing the

right of unsatisfied entitled persons to exercise their claims against

satisfied entitled persons in court, though by a one-year preclusive

deadline. Thus, if the legislature quite intentionally exposed satisfied

entitled persons to the risk that their satisfied claims would

subsequently be reduced by the claims of as yet unsatisfied entitled

persons, the Constitutional Court emphasized, it did so with the

knowledge that this was taking place in accordance with the purpose and

essence of Act no. 87/1991 Coll., i.e. to allow not only a theoretical,

but also an actual opportunity for all entitled persons to satisfy their

restitution claims, in the scope recognized by statute, because it took

as its starting point the fact that property can be returned only to

its rightful owners.
 

The

fact that the legislature exposed satisfied entitled persons to that

risk is, in the Constitutional Court’s opinion, quite appropriate,

because it is done fully in accordance with the purpose of the statute,

which pursues the mitigation of the consequences of property and other

crimes from the period 1948-1989, and the trend to give priority to the

constitutional principle of equality and allow all entitled persons to

satisfy their claims in the scope granted them by law, regardless of the

fact that a thing was already issued to some of them. The purpose and

trend of Act no. 87/1991 Coll. are such important dominant features,

that in light of them exercising one’s acquire rights or the principles

of retroactivity, including in view of the already cited positions of

expectation on the part of satisfied entitled persons, exposed by law to

the disadvantageous risk of conflict with the interests of unsatisfied

entitled persons, appears inappropriate. In this context, if it were

even possible to consider so-called “acquired” rights, because

conceptually these are more newly-constituted rights, newly because it

takes place primarily on the basis of other substantive law regulations,

then evidently there is an appropriate argument that even at the time

they were constituted the rights of these entitled persons, in view of

the possibility of the statutorily foreseen conflict with the interests

of other entitled persons, a “risk” subtext; in other words, these

entitled person necessarily had to expect the consequences specified in §

5 par. 5 of the Act. Therefore, analogously, the objection of

retroactivity will also not stand, because the claims of satisfied

entitled persons, given the existence of § 5 par. 5 of the Act, were

recognized on the condition that the extent of satisfaction of these

claims will be reduced if they conflict with the claims of unsatisfied

entitled persons (see Constitutional Court judgment no. 2/1997 Coll.,

Constitutional Court decision file no. III. US 131/04, and

Constitutional Court decision file no. I. US 60/2000).
 

As

regards the petitioner’s claim that Article 1 of Protocol no. 1 to the

Convention was violated, we must point out that Article 1 of Protocol

no. 1 to the Convention primarily requires that intervention by the

state authorities into the exercise of a right to protect property be

lawful. The second sentence of the first paragraphs allows the

possibility of deprivation of possessions only “subject to the

conditions provided for by law,” and the second paragraph recognizes the

state’s right to control the use of property through “laws.” Moreover,

the principle of a law-based state, as one of the foundations of every

democratic society, permeates all the articles of the Convention [see,

e.g. the decision of the European Court of Human Rights (the “European

Court” in the matter Pincová and Pinc v. the Czech Republic, 2002, par.

45 et seq.].
 

As regards the

restitution laws of the Czech Republic being in accordance with the

Convention, the European Court of Human Rights takes the position that

the Convention does not impose any restrictions on states’ liberty as

regards regulating the scope of legal regulations that they may enact

concerning property restitution and setting conditions under which they

will permit the return of ownership rights to persons who have been

deprived of them.
 

The

petitioner was given an obligation to hand over property under Act no.

87/1991 Coll., whose § 5 par. 5 allows so-called “overlooked” entitled

persons to exercise their claims against those entitled persons to whom a

thing was handed over. We must conclude form this that the condition of

lawfulness was met. However, in this regard the Constitutional Court

states that evaluation of whether individual conditions set by law were

met in a particular case is exclusively in the jurisdiction of the

general courts. The Constitutional Court has already considered the

legality of this legal framework in the abovementioned judgment no.

2/1997 Coll.
 

Another issue

to evaluate is whether this deprivation of property had a legitimate

aim, whether there were grounds of “the general interest” under the

second paragraph of Art. 1 of Protocol no. 1 to the Convention.

Concerning the term “general interest,” and concerning the freedom of

the parties to the Convention when deciding on their own economic and

social policy, see the abovementioned judgment of the European Court in

the matter Pincová and Pinc (par. 47 et seq.). According to the European

Court, a legitimate aim of restitution is to correct the previous

illegality of a transfer or other interference in property rights by

returning a thing to its original legal state, with consequences ex

tunc. Thus, restitution does not become forced expropriation of

property, but an obligation to establish the original legal situation.

At the same time, however, the European Court stated the opinion (see

par. 58 et seq. of the cited judgment), that the legitimate aim of

restitution laws must be implemented so that the mitigation of previous

wrongs not cause new disproportionate wrongs. In its opinion, for that

purpose the legal framework should make it possible to take into account

the circumstances of every individual case so that persons who acquired

their property in good faith would not be forced to bear the burden of

the responsibility of the state that previously confiscated the

property. In that sense, it is necessary to further review whether the

petitioner, by handing over the real estate in question, was forced to

bear a special and excessive burden, which disrupted the just balance

that should exist between the requirements of the general interest on

one side and the preservation of the right to protection of property on

the other. Of course, the constitutional complaint contains no arguments

in that regard. In the Constitutional Court’s opinion, in the present

case it is significant that both of the entitled persons, i.e. the

petitioner and Milada Marková, were children of the original owner, and

thus had the same family relationship to him. In a situation where the

Constitutional Court annulled the condition of permanent residence in

the Czech Republic (judgment no. 16/1994 Coll.), it can then be

considered fair for neither of the entitled persons to be disadvantaged

in the circumstances of the case, as regards their share of the

restituted property (see also Constitutional Court decision file no. IV.

US 157/05).
 

The

Constitutional Court concludes from the foregoing that the petitioner

was not forced, as a result of the decisions contested in the

constitutional complaint, to bear a special and excessive burden that

would disturb the just balance between the requirements of the general

interest on one side and the preservation of the right to protection of

property on the other. Thus, there was no violation of Art. 11 of the

Charter or Art. 1 of Protocol no. 1 to the Convention.
 

As

regards the contested decision of the Supreme Court of the CR, we can

not agree with the petitioner that it deprived him of his right to file

an appeal on a point of law in the scope of review defined in § 237 par.

1 let. b) of the CPC. In that decision the Supreme Court of the CR

clarified in detail for the petitioner the reasons why it could not

agree to the scope of review requested by the petitioner.
 

As

regards the petitioner’s other objections [non-reviewability of the

judgment of the appellate court, the lack of factual findings about the

date of delivery of the call, the objection of incorrect legal

evaluation of the matter, the objection of the obstacle of a suspended

matter or res judicata, the objection concerning meeting the

requirements specified in § 3 par. 4 let. a), b) of Act no. 87/1991

Coll. on the part of the petitioner], we can summarize that the

petitioner repeats in the constitutional complaint the same objections

that he already raised in the previous proceedings before the general

courts. The Municipal Court in Prague considered these objections, and

explained in detail in its decision why it did not agree with them. As

the Municipal Court dealt exhaustively with the petitioner’s specific

objections, the Constitutional Court does not consider it necessary to

repeat the arguments already presented, and refers to the reasoning of

that court’s decision.
 

In

view of the foregoing, the Constitutional Court states that in this

matter the general courts met the requirement of transparency and

persuasiveness of the reasoning in their decisions. The Constitutional

Court found that the legal conclusions on which the general courts based

their decisions were not the result of application and interpretation

of legal regulations that went outside the bounds of constitutionality.

Obviously, the legal conclusions of the general courts are likewise not

extremely inconsistent with the factual determinations made, nor can one

conclude that the factual findings were extremely inconsistent with the

evidence presented.
 

The

Constitutional Court considers the arguments of the general courts, as

presented in the decisions issued in the matter, to be constitutional

and understandable, and the Constitutional Court did not find their

deliberations to be in any way disproportionate or extreme, which would

be the only thing that could justify it in intervening.
 

Thus,

we can not agree with the petitioner that his right to a fair trial was

not respected. His complaint was considered by an independent and

impartial court that followed procedural regulations that reflect the

principles contained in the Convention and in Part Five of the Charter.

It is necessary to realize that the scope of the right to a fair trial,

per Art. 36 of the Charter, can not be interpreted as a guarantee of

success in proceedings. The right to a fair trial means ensuring the

right to fair judicial proceedings, in which all the principles of

correct decision-making under the law, in accordance with constitutional

principles, are applied.

 

Based

on these facts, the Constitutional Court denied the complaint as an

evidently unjustified petition, without a hearing and without the

presence of the parties, under § 43 par. 2 let. a) of Act no. 182/1993

Coll., on the Constitutional Court, as amended by later regulations.

Instruction: Decisions of the Constitutional Court can not be appealed.
 

Brno, 22 March 2007