Communicated on 28 February 2019<\/p>\n
FIFTH SECTION<\/p>\n
Application no. 71694\/12
\nZhivko Zhekov ZHEKOV and others
\nagainst Bulgaria
\nlodged on 3 November 2012<\/p>\n
STATEMENT OF FACTS<\/strong><\/p>\n The applicants, Mr Zhivko Zhekov Zhekov (\u201cthe first applicant\u201d), Ms\u00a0Emilia Ruseva Zhekova (\u201cthe second applicant\u201d) and Mr Zheko Zhivkov Zhekov (\u201cthe third applicant\u201d), are Bulgarian nationals who were born in 1966, 1971 and 1991 respectively. The first and second applicant live in Plovdiv and the third applicant lives in Athens, Greece. The applicants are represented before the Court by Mr D. Kalinchev, lawyer practicing in Plovdiv.<\/p>\n A.\u00a0\u00a0The circumstances of the case<\/strong><\/p>\n The facts of the case, as submitted by the applicants, may be summarised as follows.<\/p>\n The second applicant is the first applicant\u2019s wife, and the third applicant is his son from a previous marriage.<\/p>\n 1.\u00a0\u00a0The first applicant\u2019s conviction<\/em><\/p>\n In a judgment of the Plovdiv Regional Court of 26 May 2008 the first applicant was convicted of document forgery committed in complicity with the second applicant and of participation in an organised criminal group \u2013 offences under Article 308 \u00a7 3 and Article 321 \u00a7 1 of the Criminal Code. It was established that between January and June 2007 the applicants had created false identity papers and other official documents and had forged such existing documents, including issued by other countries, with the aim of obtaining a financial gain.<\/p>\n 2.\u00a0\u00a0Forfeiture proceedings<\/em><\/p>\n (a)\u00a0\u00a0Forfeiture application<\/strong><\/p>\n Since the offence the first applicant had been convicted of fell within the scope of the Forfeiture of Proceeds of Crime Act 2005 (hereinafter \u201cthe 2005 Act\u201d, see \u201cRelevant domestic law and practice\u201d below), in the beginning of 2009 the Commission for Uncovering Proceeds of Crime (hereinafter \u201cthe Commission\u201d) filed an application with the Plovdiv Regional Court, seeking the forfeiture of the following assets: a flat in Plovdiv bought by the first applicant in 2002; another flat in Plovdiv, bought in the third applicant\u2019s name by his mother in 2007; two cars bought by the first applicant respectively in 2002 and 2003; 14,400 euros (EUR) and 730 United States dollars (USD) in cash, found in the first and second applicants\u2019 home during search and seizure in 2007; sums deposited on bank accounts owned by the first and second applicants. According to the Commission, the value of all assets above totalled 268,709 Bulgarian levs (BGN), the equivalent of EUR\u00a0137,000.<\/p>\n The forfeiture application was the result of checks and verifications by the Commissions on the first applicant\u2019s financial situation between 1\u00a0January 1985 and 31 December 2008, and the second applicant\u2019s situation between 1\u00a0March 1997 and 31 December 2008.<\/p>\n (b)\u00a0\u00a0Judgments of the Plovdiv Regional Court and the Plovdiv Court of Appeal<\/strong><\/p>\n In a judgment of 5 August 2010 the Plovdiv Regional Court dismissed the forfeiture application.<\/p>\n It found that while, indeed, the first applicant had been convicted of an offence falling within the scope of the 2005 Act and, in addition, during the period under examination the three applicants had acquired assets of considerable value, the preconditions for forfeiture had not been fulfilled, because the applicants had in fact proven sufficient income from legal sources to acquire such assets. These included the first applicant\u2019s disability pension, sums given to the second applicant by her parents in whose farming business she had participated, sums donated to the first and second applicant at their wedding, and sums given to the three applicants by the first applicant\u2019s father who had inherited considerable assets from his own father.<\/p>\n Upon an appeal lodged by the Commission, on 18 February 2011 the Plovdiv Court of Appeal upheld the above judgment. It affirmed the Plovdiv Regional Court\u2019s reasoning, adding, as concerns the second applicant\u2019s participation in her parents\u2019 farming business, that even if the parents had not been registered as farmers and had not paid the taxes due, this did not in itself mean that any income received by the second applicant was to be considered illegal.<\/p>\n (c)\u00a0\u00a0Judgment of the Supreme Court of Cassation<\/strong><\/p>\n The Commission lodged an appeal on points of law. In a decision of 13\u00a0December 2011 the Supreme Court of Cassation accepted it for cassation review, and in a final judgment of 4 May 2012 allowed the forfeiture application, ordering the forfeiture of all assets described above.<\/p>\n The Supreme Court of Cassation noted that the lower courts had accepted as evidence documents concerning the first applicant\u2019s father\u2019s inheritance, which had in fact been submitted by the applicants after the relevant time-limit to do so had expired. Accordingly, that evidence was inadmissible and had to be excluded from the case file. On the basis of the remaining evidence concerning that inheritance \u2013 in particular the witness testimony of family members, which was controversial and in addition unreliable since they were interested in the outcome of the case \u2013 it could not be concluded that the first applicant\u2019s father had indeed been able to provide the money necessary for the acquisition of the disputed assets. As to the income allegedly received from the farming business of the second applicant\u2019s parents and the monetary gifts made at the first and second applicant\u2019s wedding, these had not been proven by any documents but, again, the applicants had relied on the witness testimony of family members. Lastly, it had not been shown that the third applicant\u2019s mother (the first applicant\u2019s first wife) had had sufficient legal income to purchase a flat for her son in 2007.<\/p>\n Accordingly, it had not been proven that during the period under examination the applicants had had sufficient legal income to acquire the assets for which forfeiture was being sought. This meant that it could be reasonably assumed that those assets were the proceeds of crime.<\/p>\n B.\u00a0\u00a0Relevant domestic law and practice<\/strong><\/p>\n 1.\u00a0\u00a0The 2005 Act<\/em><\/p>\n The Forfeiture of Proceeds of Crime Act 2005 (\u0417\u0430\u043a\u043e\u043d \u0437\u0430 \u043e\u0442\u043d\u0435\u043c\u0430\u043d\u0435 \u0432 \u043f\u043e\u043b\u0437\u0430 \u043d\u0430 \u0434\u044a\u0440\u0436\u0430\u0432\u0430\u0442\u0430 \u043d\u0430 \u0438\u043c\u0443\u0449\u0435\u0441\u0442\u0432\u043e \u043f\u0440\u0438\u0434\u043e\u0431\u0438\u0442\u043e \u043e\u0442 \u043f\u0440\u0435\u0441\u0442\u044a\u043f\u043d\u0430 \u0434\u0435\u0439\u043d\u043e\u0441\u0442, \u201cthe 2005 Act\u201d) 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.<\/p>\n 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 \u201cconsiderable value\u201d in respect of which a reasonable assumption could be made that they were the proceeds of crime (section\u00a03(1)). \u201cConsiderable value\u201d 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 \u0440\u0435\u0448. \u2116 89 \u043e\u0442 29\u00a0\u044f\u043d\u0443\u0430\u0440\u0438 2010 \u0433. \u043f\u043e \u0433\u0440. \u0434. \u2116 717\/2009 \u0433., \u0412\u041a\u0421, III \u0433. \u043e.).<\/p>\n The offences that could trigger the opening of proceedings under the 2005 Act were enumerated in section 3(1).<\/p>\n 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)).<\/p>\n The State\u2019s right to forfeit an asset expired twenty-five years after it had been acquired (section 11).<\/p>\n The authority in charge of initiating and pursuing proceedings under the 2005 Act was the Commission for Uncovering Proceeds of Crime (\u201cthe Commission\u201d). The forfeiture itself was to be ordered by the courts.<\/p>\n The remaining relevant provisions of the 2005 Act have been summarised in Nedyalkov and Others v. Bulgaria (dec.), no. 663\/11, \u00a7\u00a7\u00a033\u201161, 10 September 2013).<\/p>\n 2.\u00a0\u00a0Case law of the domestic courts and Interpretative Decision No. 7 of 30 June 2014<\/em><\/p>\n 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 (\u0420\u0435\u0448\u0435\u043d\u0438\u0435 \u2116 671 \u043e\u0442 9.11.2010 \u0433. \u043d\u0430 \u0412\u041a\u0421 \u043f\u043e \u0433\u0440. \u0434. \u2116\u00a0875\/2010 \u0433., IV \u0433. \u043e.; \u0420\u0435\u0448\u0435\u043d\u0438\u0435 \u2116 156 \u043e\u0442 29.05.2013 \u0433. \u043d\u0430 \u0412\u041a\u0421 \u043f\u043e \u0433\u0440. \u0434. \u2116 890\/2012 \u0433., IV \u0433. \u043e.). 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 (\u0420\u0435\u0448\u0435\u043d\u0438\u0435 \u2116 607 \u043e\u0442 29.10.2010 \u0433. \u043d\u0430 \u0412\u041a\u0421 \u043f\u043e \u0433\u0440. \u0434. \u2116 1116\/2009 \u0433., IV \u0433. \u043e.; \u0420\u0435\u0448\u0435\u043d\u0438\u0435 \u2116 209 \u043e\u0442 26.07.2011 \u0433. \u043d\u0430 \u0412\u041a\u0421 \u043f\u043e \u0433\u0440. \u0434. \u2116 1462\/2010 \u0433., III\u00a0\u0433. \u043e.).<\/p>\n The matter was settled in a binding Interpretative Decision No. 7, given by the Supreme Court of Cassation on 30 June 2014 (\u0422\u044a\u043b\u043a\u0443\u0432\u0430\u0442\u0435\u043b\u043d\u043e \u0440\u0435\u0448\u0435\u043d\u0438\u0435 \u2116 7\/2014 \u0433. \u043d\u0430 \u0412\u041a\u0421 \u043f\u043e \u0442. \u0434. \u2116 7\/2013 \u0433., \u041e\u0421\u0413\u041a), 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,<\/p>\n \u201cbut in all cases that link has to be established, or its existence must be presumable\u201d.<\/p>\n The presumption at issue had to be \u201clogically justified\u201d and \u201cbased on the facts and circumstances\u201d. The Supreme Court of Cassation held further that<\/p>\n \u201c[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.\u201d<\/p>\n 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 \u201cpenalty\u201d without a conviction.<\/p>\n Subsequently, relying on this Interpretative Decision, the national courts dismissed forfeiture applications under the 2005 Act lodged by the Commission, holding that no causal link had been established between the assets for which forfeiture had been sought and the target\u2019s criminal activity, notwithstanding the fact that no lawful source had been shown to exist for some of the latter\u2019s revenues (\u0420\u0435\u0448\u0435\u043d\u0438\u0435 \u2116 256 \u043e\u0442 14.10.2014 \u0433. \u043d\u0430 \u041e\u0421 \u041b\u043e\u0432\u0435\u0447 \u043f\u043e \u0433\u0440. \u0434. \u2116 603\/2011 \u0433.; \u0420\u0435\u0448\u0435\u043d\u0438\u0435 \u2116 79 \u043e\u0442 22.05.2015 \u0433. \u043d\u0430 \u0410\u0421 \u0412\u0430\u0440\u043d\u0430 \u043f\u043e \u0432. \u0433\u0440. \u0434. \u2116 154\/2015 \u0433.; \u0420\u0435\u0448\u0435\u043d\u0438\u0435 \u2116 194 \u043e\u0442 5.11.2015 \u0433. \u043d\u0430 \u0410\u0421 \u041f\u043b\u043e\u0432\u0434\u0438\u0432 \u043f\u043e \u0432. \u0433\u0440. \u0434. \u2116\u00a0442\/2015\u00a0\u0433.).<\/p>\n