Last Updated on June 17, 2019 by LawEuro
Communicated on 28 February 2019
FIFTH SECTION
Application no.17238/16
Kiril Hristov KATSAROV
against Bulgaria
lodged on 23 March 2016
STATEMENT OF FACTS
The applicant, Mr KirilHristovKatsarov, is a Bulgarian national, who was born in 1972 and lives in Kostenets. He is represented before the Court by Mr M. Ekimdzhiev and Ms S. Stefanova, lawyers practising in Plovdiv.
A. The circumstances of the case
The facts of the case, as submitted by the applicant, may be summarised as follows.
1. Offences committed by the applicant
On an unspecified date the applicant was charged with the illegal possession of drugs, found in cars owned by him and in his flat on 25 August 2000 and 18 August 2001. The total value of the drugs found on the two occasions had been about 600 Bulgarian levs (BGN) – the equivalent of about 307 euros (EUR).
In 2007 the applicant entered into a plea agreement with the prosecution authorities, admitting to have committed two offences of illegal possession of drugs, including with the aim to sell them, as defined under Article 354a §§ 1 and 3 of the Criminal Code. He accepted a term of imprisonment and to pay a fine. The plea agreement was approved on 15 January 2008 by the Burgas Regional Court.
2. Forfeiture proceedings
(a) Forfeiture application
Since the offences the applicant had been convicted of fell within the scope of the Forfeiture of Proceeds of Crime Act 2005 (hereinafter “the 2005 Act”, see “Relevant domestic law and practice” below), in the beginning of 2010 the Commission for Uncovering Proceeds of Crime (hereinafter “the Commission”) filed an application with the Sofia City Court seeking the forfeiture of the following properties: a flat in Sofia; two cars; the sums received by the applicant from the sale of two other cars; a sum equivalent to 20,000 United States dollars (USD) which the applicant had paid in 2002 upon the conclusion of a preliminary contract for the purchase of property.
The forfeiture application was the result of checks and verifications by the Commissions on the applicant’s income and expenses for the period from 20 October 1990 (when he had turned 18) to 31 December 2008.
(b) Judgment of the Sofia City Court
The forfeiture claims were allowed in their entirety by the Sofia City Court in a judgment given on 12 March 2014.
The domestic court found that during the period under examination the applicant had had rather small income from legal sources, and had received salaries only between 2005 and 2008. His income equalled 222.58 minimum monthly salaries, whereas his expenses had been equivalent to 3,262.63 such salaries. The Sofia City Court did not accept the applicant’s claim that his parents had provided for him, noting that their own revenues had been rather low. As to the expenses, it took into account the market values of the flat and the cars acquired by the applicants, and not the values indicated in the respective sale documents.
The Sofia City Court pointed out further that it did not have to establish a causal link between the assets for which forfeiture was being sought and the specific offences the applicant had been convicted of, but a link between these assets and his “criminal activity”. Such activity had been proven, since the applicant had been found guilty on two counts of illegal possession of drugs, including with the aim to sell them, and seeing that this was an activity “permitting the realisation of significant financial gains”. The causal link at issue was evident from the fact that during the period at issue the applicant had received very small declared income.
(c) Judgment of the Sofia Court of Appeal
Upon appeal by the applicant, the Sofia Court of Appeal gave a judgment on 30 January 2015. It upheld the lower court’s judgment in part, dismissing the forfeiture claim in relation to the USD 20,000 paid by the applicant in 2002, on the ground that this had in fact been the price of the forfeited flat. It thus accepted the applicant’s claim that this had been the real price of that flat, and dismissed the Commission’s argument that what had to be taken into account in the calculation of his expenses was the property’s market value.
The Sofia Court of Appeal confirmed the lower court’s conclusion that it had not been shown that the applicant had received money from his parents. They had not had income permitting them to provide for him, and even if they had, it had not been proven that they had done so. The witnesses brought by the applicant (his mother and sister), in addition to having an interest in the outcome of the case, had made contradictory statements. Nor had it been proven that the applicant had received, as additionally claimed by him, other revenues, notably from working as a taxi driver and in his parents’ vegetable garden.
The Sofia Court of Appeal noted that for the period between 1990 and 2004 the applicant had had no income from a legal source, apart from the money received from the sale of two cars, and had only received a salary from 2005 to 2009. During the latter period he had also received money from the sale of land owned by the family. His income for the whole period under examination amounted thus to the equivalent of 222.58 minimum monthly salaries, whereas his expenses, recalculated to take into account the price of the flat as established by the Court of Appeal, amounted to the equivalent of 2,971.94 minimum monthly salaries.
As to the existence of a causal link between the applicant’s criminal activity and the assets for which forfeiture was being sought, the Sofia Court of Appeal pointed out that the criminal activity at issue was capable of generating revenue. It was significant in that regard that the applicant had admitted to having possessed drugs with the aim to sell them. It was also to be noted that he had paid for his flat in 2002, namely about the same time he had committed the offences he had been convicted of. Thus, as he had had no legal income to acquire the assets to be forfeited, they had to be considered the proceeds of crime.
(d) Decision of the Supreme Court of Cassation
The applicant lodged an appeal on points of law, which the Supreme Court of Cassation, in a decision of 23 September 2015, refused to accept for cassation review. Referring to its Interpretative Decision of 30 June 2014 (see “Relevant domestic law and practice” below), it pointed out that the Sofia Court of Appeal had fully complied with the standard set therein.
B. Relevant domestic law and practice
1. The 2005 Act
The Forfeiture of Proceeds of Crime Act 2005 (Законзаотнемане в ползанадържаватанаимуществопридобитоотпрестъпнадейност, “the 2005 Act”) was enacted by Parliament in February 2005. In 2012 it was superseded by other legislation, with the proviso that all pending proceedings would continue to be governed by it.
Proceedings under the 2005 Act could be opened when it was established that a person charged with a relevant criminal offence had acquired assets of “considerable value” in respect of which a reasonable assumption could be made that they were the proceeds of crime (section 3(1)). “Considerable value” was defined as more than BGN 60,000 (approximately EUR 30,700). In practice, for the purpose of cross-time comparisons, that amount was also presented as the equivalent of 400 minimum monthly salaries. According to the Supreme Court of Cassation, that had to be the aggregate value of the assets, determined on the basis of their fair market value at the time of their acquisition (see реш. № 89 от 29 януари 2010 г. по гр. д. № 717/2009 г., ВКС, III г. о.).
The offences that could trigger the opening of proceedings under the 2005 Act were enumerated in section 3(1).
Assets that could be forfeited under the 2005 Act were those that had been acquired by persons convicted of a criminal offence and in respect of which it could reasonably be assumed that they were the proceeds of crime, in as much as no legal source had been established (section 4(1)).
The State’s right to forfeit an asset expired twenty-five years after it had been acquired (section 11).
The authority in charge of initiating and pursuing proceedings under the 2005 Act was the Commission for Uncovering Proceeds of Crime (“the Commission”). The forfeiture itself was to be ordered by the courts.
The remaining relevant provisions of the 2005 Act have been summarised in Nedyalkov and Others v. Bulgaria (dec.), no. 663/11, §§ 33‑61, 10 September 2013).
2. Case law of the domestic courts and Interpretative Decision No. 7 of 30 June 2014
Until 2014 the national courts were taking diverging views on the necessity under the 2005 Act to establish a causal link between the specific criminal activity for which the target had been convicted and the assets to be forfeited. Thus, in some cases the courts held that no causal link had to be proven, in as much as section 4(1) the 2005 Act established a presumption that all assets for which no legal source had been shown represented proceeds of crime (Решение № 671 от 9.11.2010 г.на ВКС по гр. д. № 875/2010 г., IV г. о.; Решение № 156 от 29.05.2013 г. на ВКС по гр. д. № 890/2012 г., IV г. о.). In other cases the courts required the establishment of a causal link, considering that, even where no lawful source of income had been shown to exist, this did not automatically mean that the assets at issue had been proceeds of crime (Решение № 607 от 29.10.2010 г. на ВКС по гр. д. № 1116/2009 г., IV г. о.;Решение № 209 от 26.07.2011 г. на ВКС по гр. д. № 1462/2010 г., III г. о.).
The matter was settled in a binding Interpretative Decision No. 7, given by the Supreme Court of Cassation on 30 June 2014 (Тълкувателно решение № 7/2014 г. на ВКС по т. д. № 7/2013 г., ОСГК), which endorsed the latter view. The Supreme Court of Cassation stated that the acquirement of assets by a person having committed an offence among those enumerated in section 3(1) of the 2005 Act could be directly or indirectly linked to proceeds of crime,
“but in all cases that link has to be established, or its existence must be presumable.”
The presumption at issue had to be “logically justified” and “based on the facts and circumstances”. The Supreme Court of Cassation held further that
“[t]he failure to establish a lawful source for an asset does not replace the justified presumption that it is linked to criminal activity, but merely absolves the Commission from the burden to prove such a link beyond doubt.”
Lastly, the Supreme Court of Cassation was of the view that the forfeiture of assets unlinked to proven criminal activity would amount to the imposition of a “penalty” without a conviction.
C. Relevant international and European Union law
The relevant international and European Union law has been summarised in G.I.E.M. S.R.L. and Others v. Italy (merits) ([GC],nos.1828/06 and 2 others, §§ 139-53, 28 June 2018).
COMPLAINTS
The applicant complains under Article 6 §§ 1 and 2 and Article 13 of the Convention and Article 1 of Protocol No. 1 of the forfeiture of his property and the fairness of the proceedings which resulted in it. He points out in particular that: it was not shown that the forfeited assets had been the proceeds of crime; his claims that he had received additional legal income were dismissed, while it remained difficult for him to prove such income, seeing the lengthy period of time under examination; the forfeiture of his property was a disproportionate measure.
The applicant also complains, relying on Article 4 of Protocol No. 7, that the forfeiture of his property, on the basis of legislation applied retroactively, amounted to additional punishment for his offences, which was not provided for in the Criminal Code.
QUESTIONS TO THE PARTIES
1. Was the forfeiture of the applicant’s property, in proceedings under the Forfeiture of Proceeds of Crime Act 2005, in compliance with the requirements of Article 1 of Protocol No. 1? In particular, has it been established that the assets at issue had been the proceeds of crime?
In that regard, the parties are invited to comment on the manners in which the domestic authorities calculated the respective persons’ revenues and expenses, having regard to the lengthy periods of time to be verified and the resulting risk of imprecision and uncertainty (see, for example, Dimitrovi v. Bulgaria, no. 12655/09, §§ 47‑49, 3 March 2015.
2. Could the forfeiture proceedings be considered fair for the purposes of Article 6 § 1 of the Convention? In addition, was the applicant’s right to be presumed innocent under Article 6 § 2 of the Convention breached, having in particular regard to the assumption made in the forfeiture proceedings that he had been involved in criminal activity other than the offences he had been convicted of?
3. Was a heavier penalty imposed on the applicant than the one which was applicable at the time of the commission of offences by him, as proscribed by Article 7 of the Convention?
4. Did the applicant have at his disposal an effective domestic remedy for his complaint under Article 1 of Protocol No. 1, as required under Article 13 of the Convention?
Leave a Reply