CASE OF ZADOROZHNYY AND OTHERS v. RUSSIA (European Court of Human Rights) Applications nos. 55025/18 and 12185/19

INTRODUCTION. The applications belong to a series of cases concerning a Russia‑specific issue: a possibility by the State to reclaim real property from a bona fide purchaser.

THIRD SECTION
CASE OF ZADOROZHNYY AND OTHERS v. RUSSIA
(Applications nos. 55025/18 and 12185/19)
JUDGMENT
STRASBOURG
6 April 2021

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

In the case of Zadorozhnyyand Others v. Russia,

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

Darian Pavli, President,
Dmitry Dedov,
Peeter Roosma, judges,
and Olga Chernishova, Deputy Section Registrar,

Having regard to:

the applications (nos. 55025/18 and 12185/19) against the Russian Federation lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by eight Russian nationals (“the applicants”), on the various dates indicated in the appended table;

the decision to give notice to the Russian Government (“the Government”) of the complaints concerning the annulment of Mr Zadorozhnyy’s and Ms T. Bystrova’s respective titles to real property and the applicants’ eviction and to declare inadmissible the remainder of the applications;

the parties’ observations;

Having deliberated in private on 16 March 2021,

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

INTRODUCTION

1. The applications belong to a series of cases concerning a Russia‑specific issue: a possibility by the State to reclaim real property from a bona fide purchaser.

THE FACTS

2. The applicants are Russian nationals. They were represented by Mr I. Vakhitov, a lawyer practising in the Moscow Region. The details pertaining to each of the applicants appear in Appendix I below.

3. The Government were represented by Mr M. Galperin, Representative of the Russian Federation to the European Court of Human Rights.

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

I. Transactions in respect of the flats later purchased by the applicants

5. The Ministry of Defence was the original owner of several flats located at Bulvar Nesterova, Mkr. Aviatorov in Balashikha, Moscow Region.

6. On an unspecified date S., Kul. and several other persons forged a set of documents, according to which the flats, later purchased by Mr Zadorzhnyy and Ms T. Bystrova, were assigned to the V. and K. as social housing and later registered as their property. The details pertaining to the transactions in respect of the flats are provided in Appendix II below.

II. Termination of the applicants’ title to the flat

7. On 16 February 2016 the Balashikha Town Court found S., Kul. and several other persons guilty of the fraudulent misappropriation of the flats.

8. On an unspecified date the Ministry of Defence successfully brought civil claims against the applicants and previous owners of the flats seeking the restitution of the title to the flats and the applicants’ eviction. The Town Court found the applicants’ argument that they had bought the flats in good faith of no relevance given that the Ministry of Defence had not had an intent of disposing of the real property in question and had had a right to reclaim the property even from a bona fide purchaser. It further noted that the frequency with which the flats had changed hands and the below the market price they had paid for the flats should have been a red flag for the applicants. The details pertaining to each set of the proceedings are provided in Appendix II below.

9. It appears that the eviction proceedings in respect of the applicants have been suspended to date. The applicants continue to reside in their respective flats.

THE LAW

I. JOINDER OF THE APPLICATIONS

10. Having regard to the similar subject matter of the applications, the Court finds it appropriate to examine them jointly in a single judgment.

II. ALLEGED VIOLATION OF ARTICLE 1 OF protocol no. 1 to THE CONVENTION

11. Mr Zadorozhnyy and Ms T. Bystrova complained that they had been deprived of their property in violation of Article 1 of Protocol No. 1 to the Convention, which provides, in so far as relevant, 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

12. The Court notes that this complaint is neither manifestly ill-founded nor inadmissible on any other grounds listed in Article 35 of the Convention. It must therefore be declared admissible.

B. Merits

1. The parties’ submissions

13. The applicants maintained their complaints. They submitted that the State had lost its property as a result of fraudulent transactions committed by a group of perpetrators who had been identified and subsequently convicted. However, instead of recovering damages from those persons, the State had chosen to remedy the situation at the expense of the applicants who had bought the flats in good faith. The applicants had not received any compensation for the loss of their property. As a result, the domestic courts’ decision to annul the applicants’ titles to the flats had amounted to an excessive individual burden imposed on them in contravention of Article 1 of Protocol No. 1 to the Convention.

14. The Government conceded that the recovery of the real property from the applicants by the authorities had amounted to an interference with their possessions within the meaning of Article 1 of Protocol No. 1 to the Convention. However, they considered that such interference had been in accordance with law, had pursued a legitimate aim and had been necessary in a democratic society. The State had lost its property as a result of fraudulent actions of a criminal group. It remained open to the applicants to sue those persons for damages resulting from the annulment of their titles to the flats. Lastly, the Government refused to accept that the applicants had bought the flats in good faith. In their view, the frequency of the transactions and a relatively low price of the real property should have alerted them, as to the legitimacy of the proposed sale of the flats.

2. The Court’s assessment

15. The Court has, on a number of previous occasions, examined cases in which the Russian State or municipal authorities, being the original owners of housing, have been successful in reclaiming it from bona fide owners once it had been established that one of the prior transactions in respect of such property had been fraudulent (see, for example, Gladysheva v. Russia, no. 7097/10, §§ 77-83, 6 December 2011; Pchelintseva and Others v. Russia, nos. 47724/07 and 4 others, §§ 90-101, 17 November 2016; Titova and Others v. Russia [Committee], no. 4919/16 and 2 others, §§ 33-37, 15 May 2018; and Olkhovskiy v. Russia [Committee], no. 53716/17 and 2 others, §§ 27-30, 9 July 2019). Having examined the specific conditions and procedures governing the transaction with real property, the Court noted that they were within the State’s exclusive competence and held that the defects in those procedures resulting in the loss by the State of its real property should not have been remedied at the expense of bona fide owners. The Court further reasoned that such restitution of property to the State or municipality, in the absence of any compensation paid to the bona fide owner, imposed an individual and excessive burden on the latter and failed to strike a fair balance between the demands of the public interest on the one hand and the applicants’ right to the peaceful enjoyment of their possessions on the other.

16. Turning to the circumstances of the present case, the Court sees no reason to hold otherwise. The Court notes that the flats left the State’s “possession” as a result of the alleged fraud committed by a criminal group. The Court further notes that there were safeguards in place to ensure that the flats changed hands in accordance with the domestic law. The lawfulness of each transaction and title in respect of the flats were subject to control by State registration authorities. The Government, however, did not proffer any explanation, as to why those safeguards had not been effective in detecting the fraud and protecting the State’s interests. In particular, neither the domestic judicial authorities nor the Government clarified why it had been possible for the registration authorities to approve the transfer of title to the flats to new owners while the flats should have remained the State’s property and the State had not been a party to the relevant transactions. The Government did not proffer any explanation, as to why the State registration authorities had failed to detect the fraud, had accepted the forged documents as authentic and had approved the transactions with the flats. The Court notes that the State registration authorities systematically approved forged documents submitted by the perpetrators in respect of the real property later purchased by Mr Zadorozhnyy and Ms T. Bystrova. First, they condoned the registration of the Ministry’s property as social housing. After that they approved the privatisation of those flats and their subsequent sale. In such circumstances, the Court concludes that it was the faulty registration procedure that led to the loss of property titles by the State in respect of the flats. The State, represented by its registration authorities, failed to detect the fraud and protect its own interests. The Court is unable to accept that the consequences of the authorities’ negligent behaviour should be borne by the applicants.

17. The Court also rejects the Government’s argument that the applicants did not buy the flats in good faith. In the Court’s view, the frequency of the transactions with the flats and their allegedly low purchase price referred to by the Government are not sufficient to justify such assertion (see, for similar reasoning, Titova and Others, no. 4919/16 and 2 others, cited above § 35). In any event, those facts cited by the Government were known to the State registration authorities. Nevertheless, the latter proceeded with approving all the transactions with the real property in question resulting in the loss of property by the Ministry of the Defence. In such circumstances, the Court cannot accept the Government’s reasoning that the applicants were better placed to detect the fraud, as claimed by the Government, than the specialised state bodies and/or that the applicants’ failure to do so amount to the lack of good faith on their part.

18. Lastly, the Court accepts that, as suggested by the Government, it was open to the applicants to recover their losses by bringing an action for damages against the sellers of the flats or the perpetrators who had fraudulently acquired the title to the flats. As to the action for damages against the sellers of the flats, the Government essentially suggest that the applicants pass their burden on to another bona fide owner, and it is hard for the Court to see how that would improve the balance between the public interest and the need to protect individuals’ rights. As to the action for damages against the perpetrators, the Court is not convinced that the Government have demonstrated that such an action would have any prospect of success. In this respect, the Court notes that the State chose not to sue the perpetrators to recover its own losses. In any event, the Court reiterates that any compensation the applicants might receive would be relevant for the evaluation of their losses, potentially for the purposes of Article 41 of the Convention (see, Gladysheva, cited above, § 81).

19. Regard being had to the above, the Court considers that it was not for the applicants to assume the risk of the titles to the flats being revoked on account of the omissions on the part of the authorities in procedures specially designed to prevent fraud in real-property transactions. The Court reiterates that mistakes or errors on the part of State authorities should serve to benefit the persons affected. In other words, the consequences of any mistake made by a State authority must be borne by the State and errors must not be remedied at the expense of the individual concerned (see Stolyarova v. Russia, no. 15711/13, § 49, 29 January 2015). It concludes that the forfeiture of the title to the flats by Mr Zadorozhnyy and Ms T. Bystrova and the transfer of the ownership of the flats to the City of Moscow, in the circumstances of the case, placed a disproportionate and excessive burden on them. There has therefore been a violation of Article 1 of Protocol No. 1 to the Convention.

III. ALLEGED VIOLATION OF ARTICLE 8 OF THE CONVENTION

20. The applicants complained that the domestic courts’ decision to evict them had constituted a violation of their right set out in Article 8 of the Convention, which, in so far as relevant, reads as follows:

“1. Everyone has the right to respect for … his home … .

2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.”

21. The Government discerned no violation of the applicants’ rights. They submitted that the domestic courts had suspended the enforcement of the judgment ordering the applicants’ eviction.

22. The applicants maintained their complaints.

23. The Court notes that the applicants’ complaint about their eviction is linked to the one examined above and must therefore likewise be declared admissible. However, having regard to the findings relating to Article 1 of Protocol No. 1 to the Convention (see paragraphs 15-19 above) and the fact that the eviction order has not been enforced to date and the applicants continue to reside in the flats, the Court considers that it is not necessary to examine the same facts from the standpoint of Article 8 of the Convention (compare Pchelintseva and Others v. Russia, nos. 47724/07 and 4 others, §§ 102-05, 17 November 2016).

IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION

24. 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.”

Damage

1. Pecuniary damage

25. Mr Zadorozhnyy and Ms T. Bystrova asked the Court to reserve the issue of pecuniary damage and to invite the Government to restore the first applicant’s title to the flat.

26. The Government submitted that no pecuniary damage should be awarded.

27. The Court notes the applicants’ request to reserve the question of the application of Article 41. However, in view of the materials in its possession, it considers that the question is ready for decision and it will deal with the first applicant’s request to restore her title to the flat (compare Bimer S.A. v. Moldova, no. 15084/03, § 67, 10 July 2007).

28. The Court takes into account that in the present case it has found a violation the rights guaranteed by Article 1 of Protocol No. 1 to the Convention in respect of Mr Zadorozhnyy and Ms T. Bystrova. It considers that there is a clear link between the violations found and the damage caused to them.

29. The Court reiterates that, normally, the priority under Article 41 of the Convention is restitutio in integrum, as the respondent State is expected to make all feasible reparation for the consequences of the violation in such a manner as to restore as far as possible the situation existing before the breach (see, among other authorities, Piersack v. Belgium (Article 50), 26 October 1984, § 12, Series A no. 85; Tchitchinadze v. Georgia, no. 18156/05, § 69, 27 May 2010; Fener Rum Patrikliği (Ecumenical Patriarchy) v. Turkey (just satisfaction), no. 14340/05, § 35, 15 June 2010; and Stoycheva v. Bulgaria, no. 43590/04, §§ 75-76, 19 July 2011). Consequently, having due regard to its findings in the instant case and to the fact that Mr Zadorozhnyy and Ms T. Bystrova did not receive compensation for loss of title to their respective flats in the domestic proceedings, the Court considers that the most appropriate form of redress would be to restore their respective titles to the flats. Thus, they would be put as far as possible in a situation equivalent to the one in which they would have been had there not been a breach of Article 1 of Protocol No. 1 to the Convention (compare, Gladysheva, cited above, § 106). In the alternative, if the State no longer owns the flats, or if they have been otherwise alienated, the Government should ensure that Mr Zadorozhnyy and Ms T. Bystrova receives title to an equivalent flat.

2. Non-pecuniary damage

30. As regards non-pecuniary damage, Mr Zadorozhnyy and Ms T. Bystrova claimed 10,000 euros (EUR) each. The other applicants did not submit any claims.

31. The Government considered the applicants’ claims excessive and unreasonable.

32. The Court has no doubt that the applicants have suffered distress and frustration on account of the deprivation of their possessions. Making its assessment on an equitable basis, the Court awards Mr Zadorozhnyy and Ms T. Bystrova each EUR 5,000 in respect of non-pecuniary damage, plus any tax that may be chargeable on that amount.

3. Costs and expenses

33. Mr Zadorozhnyy’s and Ms T. Bystrova’s claims in respect of cost and expenses can be summarised as follows:

Applicant Legal fee (Russian roubles, RUB) Postage
Domestic proceedings Proceedings before the Court
Mr Zadorozhnyy 130,000 140,000 3,700
Ms T. Bystrova 165,000 140,000 8,400

34. The Government considered that the expenses claimed by the applicants in connection with the domestic proceedings were not relevant for the proceedings before the Court and the claims should be dismissed. They further opined that the claims in connection with the legal expenses incurred in the course of the proceedings before the Court should be also dismissed given that the facts complained of by the applicants discerned no violation of her rights set out in the Convention. Lastly, the Government submitted that it had not been necessary for the applicant to use express courier service for correspondence with the Court.

35. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. Regard being had to the documents in the Court’s possession and the above criteria, the Court considers it reasonable to award EUR 3,707 to Mr Zadorozhnyy and EUR 3,885 to Ms T. Bystrova as reimbursement of their claims for costs and expenses under all heads.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

1. Decides to join the applications;

2. Declares the applications admissible;

3. Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention in respect of Mr Zadorozhnyy and Ms T. Bystrova;

4. Holdsthat there is no need to examine the complaint under Article 8 of the Convention;

5. Holds

(a) that the respondent State shall ensure, by appropriate means, full restitution of Mr Zadorozhnyy’s and Ms T. Bystrova’s respective titles to the flats. In the alternative, if the State no longer owns the flats, or if they have been otherwise alienated, the Government should ensure that Mr Zadorozhnyy and Ms T. Bystrova receive titles to an equivalent flat;

(b) that the respondent State is to pay the applicants, within three months, the following amounts, to be converted into the currency of the respondent State, at the rate applicable at the date of settlement:

(i) EUR 5,000 (five thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage to Mr Zadorozhnyy and Ms T. Bystrova each;

(ii) EUR 3,707 (three thousand seven hundred and seven euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses to Mr Zadorozhnyy;

(iii) EUR 3,885 (three thousand eight hundred and eighty-five euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses to Ms T. Bystrova;

(c) 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;

6. Dismisses the remainder of the applicants’ claim for just satisfaction.

Done in English, and notified in writing on 6 April 2021, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Olga Chernishova Darian Pavli
Deputy Registrar President

_____________

Appendix I


No.
Application No. Lodged on Applicant name
year of birth
place of residence
1. 55025/18 19/11/2018 Viktor Vasilyevich ZADOROZHNYY
Born in 1991
Balashikha
Svetlana Anatolyevna ZADOROZHNAYA
Born in 1969
Balashikha
Olga Anatolyevna ZADOROZHNAYA
Born in 1980
Balashikha
Eleonora Viktorovna ZADOROZHNAYA
Born in 2016
Balashikha
2. 12185/19 25/02/2019 Tatyana Valeryevna BYSTROVA
Born in 1986
Balashikha
Artem Stanislavovich BYSTROV
Born in 2010
Balashikha
Valeriya Stanislavovna BYSTROVA
Born in 2011
Balashikha
Stanislav Olegovich BYSTROV
Born in 1986
Balashikha

Appendix II

Facts in respect of each application

No. Application No. Annulment of the applicants’ title to the flats on the ground that the flats constituted bona vacantia
Background information concerning the applicant’s real property Acquisition of the flat by the applicant Proceedings before the court at first level of jurisdiction Appeal proceedings
1. 55025/18 On 29 November 2012 the state registration authorities registered the flat as the property of the Ministry of Defence.
On an unspecified date S. and several other persons forged a set of documents, according to which the flat was assigned to the V. family as social housing.
Subsequently the state registration authorities registered the V. family’s title to the flat.
On 15 August 2013 the V. family sold the flat to K.
On 23 September 2013 K. sold the flat to Mr Zadorozhnyy.
On 30 September 2013 the state registration authorities registered his title to the flat.
On 16 February 2016 the Balashikha Town Court found S. and several other persons guilty of the fraudulent misappropriation of the flat.
On an unspecified date the Ministry of Defence brought a civil claim against the applicants and previous owners of the flat seeking the restitution of the title to the flat and the applicants’ eviction.
On 17 March 2017 the Town Court granted the Ministry’s claims in full. The applicants appealed.
On 29 January 2018 the Moscow Regional Court upheld the judgment of 17 March 2017 on appeal.
On 8 June and 23 July 2018 the Regional Court and the Supreme Court of the Russian Federation respectively dismissed the applicants’ cassation appeals.
2. 38903/19 On 12 September 2012 the state registration authorities registered the flat as the property of the Ministry of Defence.
On an unspecified date S. and several other persons forged a set of documents, according to which the flat was assigned to Kul. as social housing. Subsequently the state registration authorities registered Kul.’s title to the flat.
On 21 March 2013 K. sold the flat to Rom., the first applicant’s mother. On 1 April 2014 the state registration authorities registered Rom.’s title to the flat. The applicants moved into the flat and resided there.
On 12 April 2014 Rom. sold the flat to Ms T. Bystrova. On 17 April 2014 the state registration authorities registered her title to the flat.
On 16 February 2016 the Balashikha Town Court found Kul. and several other persons guilty of the fraudulent misappropriation of the flat.
On an unspecified date the Ministry of Defence brought a civil claim against the applicants and previous owners of the flat seeking the restitution of the title to the flat and the applicants’ eviction.
On 20 March 2017 the Town Court granted the Ministry’s claims in full. The applicants appealed.
On 19 March 2018 the Moscow Regional Court quashed the judgment of 20 March 2017 and adopted a new judgment granting the Ministry’s claims in full.
On 28 June and 12 December 2018 the Regional Court and the Supreme Court of the Russian Federation respectively dismissed the first applicant’s cassation appeals.
On 6 March and 3 June 2019 the Regional Court and the Supreme Court of the Russian Federation respectively dismissed the second and third applicants’ cassation appeals.

Leave a Reply

Your email address will not be published.

*

code