FIRST SECTION
\nCASE OF TILOCCA v. CROATIA
\n(Application no. 40559\/12)<\/p>\n
JUDGMENT
\nSTRASBOURG
\n5 April 2018<\/p>\n
This judgment is final but it may be subject to editorial revision.<\/p>\n
In the case of Tilocca v. Croatia,<\/strong><\/p>\n The European Court of Human Rights (First Section), sitting as a Committee composed of:<\/p>\n Kristina Pardalos, President, Having deliberated in private on 13 March 2018,<\/p>\n Delivers the following judgment, which was adopted on that date:<\/p>\n PROCEDURE<\/strong><\/p>\n 1.\u00a0\u00a0The case originated in an application (no. 40559\/12) against the Republic of Croatia lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (\u201cthe Convention\u201d) by an Italian national, Mr Giuseppe Tilocca (\u201cthe applicant\u201d), on 25 May 2012.<\/p>\n 2.\u00a0\u00a0The applicant was represented before the Court by Mr D.S. Jankovi\u0107 and Mr H. Grenac of Abel &\u00a0Grenac Law Firm, advocates practising in Zagreb. The Croatian Government (\u201cthe Government\u201d) were represented by their Agent, Ms \u0160. Sta\u017enik.<\/p>\n 3.\u00a0\u00a0On 19 May 2015 the complaint concerning the right of property was communicated to the Government and the remainder of the application was declared inadmissiblepursuant to Rule 54 \u00a7 3 of the Rules of Court.<\/p>\n 4.\u00a0\u00a0The Government of Italy did not make use of their right to intervene in the proceedings (Article36 \u00a7 1 of the Convention).<\/p>\n THE FACTS<\/strong><\/p>\n I.\u00a0\u00a0THE CIRCUMSTANCES OF THE CASE<\/p>\n 5.\u00a0\u00a0The applicant was born in 1963 and currently lives in Alexandria (Egypt).<\/p>\n 6.\u00a0\u00a0On 15 February 2010, while crossing the border between Serbia and Croatia with his wife, the applicantwascaught by the Croatian customs authorities carrying the sum of 563,300 euros (EUR) which he had failed to declare, contrary to the law. The customs authorities immediately seized the EUR\u00a0560,000.<\/p>\n 7.\u00a0\u00a0On the same day the customs authorities instituted administrative\u2011offence proceedings (prekr\u0161ajni postupak) against the applicant before the Financial Inspectorate of the Ministry of Finance (Ministarstvo financija, Financijski inspektorat \u2013 \u201cthe Ministry\u201d) for failing to declare EUR\u00a0560,000 \u2013a sum exceeding EUR 10,000 \u2013 an administrative offence defined in section 40(1) of the Foreign Currency Act and section\u00a074 of the Prevention of Money Laundering and Financing of Terrorism Act.<\/p>\n 8.\u00a0\u00a0In his defence, the applicant explained that he and his wife had been visiting her daughter in Serbia who had recently had a serious attack of epilepsy, and submitted documentary evidence suggesting that his wife\u2019s daughter did indeed suffer from epilepsy. The money he had been carrying originated from: (a) a company calledSCI (soci\u00e9t\u00e9 civile immobili\u00e8re) M. registered in France, of which he was the director and the only member, from whose account he had withdrawn EUR 326,008.03 with a view to starting another business; and (b) the sale of their house in France (the remaining amount). The applicant submitted relevant documents as evidence of those transactions. He also explained that he had not wished to deposit the money in a bank account because, in the wake of the global financial crisis of 2007-2008, he had been afraid that his bank would go bankrupt and that he would lose most of that money, given that the French State only guaranteed up to EUR 50,000 of bank deposits.<\/p>\n 9.\u00a0\u00a0During the proceedings the Ministry requested information from the relevant authorities in Serbia, France and Italy. While the Italian authorities did not reply at all, the Serbian authorities informed the Ministry that neither the applicant nor his wife had been recorded in their register of suspicious transactions, and the French authorities only confirmed the authenticity of the transactions on which the applicant relied to prove the origin of the money he had been carrying.<\/p>\n 10.\u00a0\u00a0By a decision of 9 July 2010 the Ministry found the applicant guilty of having committed the administrative offence in question and fined him 5,000 Croatian kunas (HRK). At the same time, the Ministry imposed a protective measure (za\u0161titna mjera) confiscating EUR 318,500 under section\u00a069(2) of the Foreign Currency Act.<\/p>\n 11.\u00a0\u00a0On the basis of the documentary evidence,the Ministry established that: (a)\u00a0\u00a0the company SCI M. had been founded in 2002 and recorded in the business and companies register in Strasbourg, and under French law its members were liable for its debts in proportion with their share in the company, that is, the applicant in respect of 99.75% and his wife in respect of 0.25%; (b)\u00a0\u00a0on 6\u00a0July 2009 the applicant had indeed sold his house in France,and EUR 243,091.82 from the proceeds of sale had been paid into his bank account on 29 July 2009, from which he had first transferred EUR\u00a030,000 to his company\u2019s account on the same day and then withdrawn EUR 211,500; and (c)\u00a0\u00a0on 21\u00a0December 2009 the applicant, acting as the company\u2019s director, had sold its real estate,and EUR 326,008.03 from the proceeds of sale had been paid into the company\u2019s bank account on 19\u00a0January 2010, a sum which had been withdrawn by the applicant the next day.<\/p>\n 12.\u00a0\u00a0The Ministry held that the origin of the money which the applicant had failed to declare was irrelevant in relation to the commission of the offence of which he had been convicted or the imposition of the fine. However, that consideration was relevant in relation to the imposition of the protective measure of confiscation.<\/p>\n 13.\u00a0\u00a0In particular, the Ministry decided not to confiscate EUR 241,500 of the money which the applicant had not declared, because it found that this sum did indeed originate from the sale of his house in France.<\/p>\n 14.\u00a0\u00a0As regards the remaining EUR 318,500 (of the EUR\u00a0560,000 which had been seized),the Ministry held that this sum was part of the funds which the applicant had withdrawn from his company\u2019s bank account (EUR\u00a0326,008.03) on 20\u00a0January 2010 (see paragraph 11 above). The Ministry further held that: (a)\u00a0\u00a0since there was no evidence that the applicant had borrowed that money from his company, by carrying it across border he had disposed of it as if it had belonged to him, which amounted to misappropriation of the company\u2019s funds, an offence punishable in every country; and (b)\u00a0\u00a0he had failed to pay the relevant taxes in France on that amount. It therefore decided to confiscate that sum.<\/p>\n 15.\u00a0\u00a0The applicant appealed by arguing that: (a)\u00a0\u00a0the evidence collected indicated that the French authorities had been aware of the transaction from which the confiscated sum originated, but had done nothing about it, which suggested that they considered that it originated from a legitimate source, (b)\u00a0\u00a0the Ministry correctly assumed that he had not borrowed the confiscated sum from his company, as he had actually lent EUR\u00a0358,600.81 to his company in 2008 and 2009, for which he had submitted documentary evidence; (c)\u00a0\u00a0under French law, he was fully liable for the debts of his company,the payment of which, including taxes, he therefore could not have avoided by misappropriating the company\u2019s funds as the Ministry implied; (d)\u00a0\u00a0the Ministry had attempted to interpret foreign (French) law, and in such a complex area as tax and commercial law, about which it had known very little; and (e)\u00a0\u00a0it was peculiar that the Ministry had confiscated for the benefit of the Croatian State budget the amount on which he had, in the Ministry\u2019s own view, not paid the relevant taxes in France.<\/p>\n 16.\u00a0\u00a0By a decision of 17 September 2010 the High Court for Administrative Offences (Visoki prekr\u0161ajni sud Republike Hrvatske) dismissed the applicant\u2019s appeal and upheld the Ministry\u2019s decision, endorsing the reasons given therein.<\/p>\n 17.\u00a0\u00a0The applicant then, on 17 December 2010, lodged a constitutional complaint, alleging, inter alia, a violation of his constitutionally protected right of ownership.<\/p>\n 18.\u00a0\u00a0By a decision of 17 November 2011 the Constitutional Court (Ustavni sud Republike Hrvatske) declared the applicant\u2019s constitutional complaint inadmissible and served its decision on his representative on 2\u00a0December 2012. It found that, even though the applicant had relied on the relevant Articles of the Constitution in his constitutional complaint, he had not substantiated his complaint by any constitutional-law arguments, but had merely repeated the arguments raised in the proceedings before the Ministry and the High Court for Administrative Offences. Therefore, the Constitutional Court had been unable to examine the merits of his constitutional complaint.<\/p>\n II.\u00a0\u00a0RELEVANT CROATIANAND INTERNATIONAL LAW<\/p>\n 19.\u00a0\u00a0The relevant domestic and international law and practice is summarised in the case of Boljevi\u0107 v. Croatia, no. 43492\/11, \u00a7\u00a7 16-21, 31\u00a0January 2017.<\/p>\n III.\u00a0\u00a0RELEVANT FRENCH LAW<\/p>\n 20.\u00a0\u00a0Under French law, a soci\u00e9t\u00e9 civile immobili\u00e8re (SCI) is a civil (non\u2011commercial) company constituted for the ownership and management of real estate (Articles 1845 to 1870-1 of the French Civil Code). It is a legal entity, meaning it has a legal personality distinct from that of its members. The members are, however, liable for the debts of the company without limitation, meaning that they may be liable in relation to their personal assets (Article 1857 of the French Civil Code).<\/p>\n THE LAW<\/strong><\/p>\n I.\u00a0\u00a0ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION<\/p>\n 21.\u00a0\u00a0The applicant complained that the decision of the domestic authorities in the administrative-offence proceedings to confiscate EUR\u00a0318,500 from him for having failed to declare the sum of EUR\u00a0560,000 at customs had not been justified. The Court decided to examine this complaint under Article 1 of Protocol No. 1 to the Convention, which reads as follows:<\/p>\n \u201cEvery 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.<\/p>\n 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.\u201d<\/p>\n A.\u00a0\u00a0Admissibility<\/strong><\/p>\n 1.\u00a0\u00a0The parties\u2019 submissions<\/em><\/p>\n 22.\u00a0\u00a0The Government submitted that the amount of EUR 318,500 which had eventually been confiscated from the applicant was part of the funds which he had withdrawn from his company\u2019s bank account (EUR\u00a0326,008.03) on 20 January 2010 (see paragraphs 11 and 14 above). The confiscated sum had thus not belonged to him personally, but to his company. The Government therefore argued that the applicant could not be considered a victim of the violation complained of.<\/p>\n 23.\u00a0\u00a0The applicant emphasised that the protective measure of confiscation had been imposed on him and the amount of EUR 318,500 confiscated from him personally. He had therefore been directly affected by the confiscation. The applicant further stressed that, in order to ensure thatprotection of the rights guaranteed by the Convention did not remain ineffectual and illusory, the interpretation of the term \u201cvictim\u201d must not be excessively formalistic (see Gorraiz Lizarraga and Others v. Spain, no.\u00a062543\/00, \u00a7 38, ECHR\u00a02004\u2011III, and Stukus and Others v. Poland, no.\u00a012534\/03, \u00a7 35, 1\u00a0April2008). In any event, the applicant submitted that he had been a creditor of his company,as he had lent it a total amount of EUR\u00a0358,600.81 in 2008 and 2009(see paragraph 15 above). The confiscated sum of EUR\u00a0326,008.03 which he had withdrawn from his company\u2019s bank account on 20 January 2010 (see paragraphs 11 and 14 above)represented the reimbursement of that loan.The sum had thus belonged to him and not to his company.<\/p>\n 2.\u00a0\u00a0The Court\u2019s assessment<\/em><\/p>\n 24.\u00a0\u00a0For the reasons set out below (see paragraphs 25-29), the Court does not find it necessary to decide whether the confiscated sum belonged to the applicant or to his company.<\/p>\n 25.\u00a0\u00a0In that connection, it first reiterates that an applicant can allege a violation of Article 1 of Protocol No. 1 to the Convention only in so far as the impugned decisions relate to his \u201cpossessions\u201d within the meaning of this provision (see Von Maltzan and Others v. Germany (dec.) [GC],nos.\u00a071916\/01, 71917\/01 and 10260\/02, \u00a7 74(c), ECHR 2005\u2011V).<\/p>\n 26.\u00a0\u00a0The Court further reiterates that where the acts or omissions complained of affect a company, the application should be brought by that company. Disregarding a company\u2019s legal personality as regards the question of being a \u201cvictim\u201d will be justified only in exceptional circumstances (see, notably, Agrotexim and Others v. Greece, 24\u00a0October1995, \u00a7 66, Series A no. 330\u2011A).On the other hand, the sole owner of a company can claim to be a \u201cvictim\u201d within the meaning of Article 34 of the Convention in so far as the impugned measures taken in respect of his or her company are concerned, because in the case of a sole owner there is no risk of differences of opinion among shareholders or between shareholders and a board of directors as to the reality of infringement of Convention rights, or as to the most appropriate way of reacting to such an infringement (see, for example,Ankarcrona v. Sweden (dec.), no.\u00a035178\/97, 27 June 2000, Gubiyev v.\u00a0Russia, no. 29309\/03, \u00a7 53, 19\u00a0July 2011, and Begu\u0161 v. Slovenia, no.\u00a025634\/05, \u00a7 25, 15\u00a0December\u00a02011).<\/p>\n 27.\u00a0\u00a0In the present case,the applicant claimedthat he was the sole member andthe director of the company in question, whereas in the domestic proceedings it was established that his share in the company was 99.75% and his wife\u2019s share was 0.25% (see paragraphs 8 and 11 above).<\/p>\n 28.\u00a0\u00a0The Court considers that, while formally the applicant thus might not have been the only member of the company, hewas certainly its only legal representative (director), and held such a substantial share in it (see, for example, G.J. v. Luxembourg, no. 21156\/93, \u00a7 24, 26 October 2000) that for all practical purposes he has to be seen as its sole owner. Specifically, it is clear that there is no risk of any competing interests and\/or differences of opinion which could create difficulties as reflected in the Court\u2019s relevant case-law (see the preceding paragraph). It would therefore be artificial to distinguish the present case from those in which the Court hasheld that the sole owner of a company could claim to be a \u201cvictim\u201d within the meaning of Article 34 of the Convention (see the preceding paragraph).<\/p>\n 29.\u00a0\u00a0In the instant case, this conclusion is further reinforced by the fact that the applicant was liable for the company\u2019s debtsin relation to his personal property (see paragraph 20 above). The Court has already held that where an individual and a professional entity are so closely connected, such an individual applicantcould be considered to be directly affected by the measures taken in respect of such an entity (see Okle\u0161en and Pokopali\u0161ko Pogrebne Storitve Leopold Okle\u0161en S.P. v. Slovenia, no. 35264\/04, \u00a7 40, 30\u00a0November 2010).<\/p>\n 30.\u00a0\u00a0It follows that the Government\u2019s objection based on the applicant\u2019s lack of victim statusmust therefore be dismissed.<\/p>\n 31.\u00a0\u00a0The Court further notes that this complaint is not manifestly ill\u2011founded within the meaning of Article 35 \u00a7 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.<\/p>\n B.\u00a0\u00a0Merits<\/strong><\/p>\n 32.\u00a0\u00a0The Court notes that it has already found violations of Article 1 of Protocol\u00a0No. 1 to the Convention in cases raising similar issues to those in the present case (see, for example,Ismayilov v. Russia, no. 30352\/03, 6\u00a0November 2008; Gabri\u0107 v. Croatia, no. 9702\/04, 5 February 2009; Grifhorst v. France, no. 28336\/02, 26 February 2009; Moon v. France, no.\u00a039973\/03, 9 July 2009; and Boljevi\u0107, cited above).<\/p>\n 33.\u00a0\u00a0Having examined all the submitted material, the Court considers that the Government have not put forward any fact or argument capable of persuading it to reach a different conclusion in the present case.<\/p>\n 34.\u00a0\u00a0In particular, what is relevant is that: the applicant was never charged with any criminal offence; bringing the money into Croatia was not prohibited; and the only illegal (but not criminal) conduct which could be attributed to him in respect of the money was his failure to declare it (see Gabri\u0107, cited above, \u00a7 38, and Boljevi\u0107, cited above, \u00a7\u00a7 42-46).<\/p>\n 35.\u00a0\u00a0Having regard to its case-law on the matter (see paragraph32\u00a0above), the Court therefore finds that there has been a breach of Article 1 of Protocol\u00a0No. 1 to the Convention in the present case.<\/p>\n II.\u00a0\u00a0APPLICATION OF ARTICLE 41 OF THE CONVENTION<\/p>\n 36.\u00a0\u00a0Article 41 of the Convention provides:<\/p>\n \u201cIf 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.\u201d<\/p>\n A.\u00a0\u00a0Damage<\/strong><\/p>\n 37.\u00a0\u00a0The applicant claimed the total of 521,500 euros (EUR) in respect of pecuniary damage, of which EUR 318,500 represented the sum confiscated from him. As to the remaining amount sought, the applicant explained that in order to maintain the same level of support for his family,he had been forced to sell two items of his immovable property approximately a month after the confiscation at prices which, as certified by a chartered surveyor, had been EUR 203,000 below their market value.<\/p>\n 38.\u00a0\u00a0The applicant also claimed 400,000 in respect of non-pecuniary damage.<\/p>\n 39.\u00a0\u00a0The Government contested these claims.<\/p>\n 40.\u00a0\u00a0The Court has found that an amount of EUR 318,500 was confiscated from the applicant in breach of Article 1 of Protocol No. 1 to the Convention. Therefore, in so far as the applicant\u2019s claim in respect of pecuniary damage concerns that amount, the Court accepts it and awards him EUR 318,500 under this head, plus any tax that may be chargeable. On the other hand,the Court rejects the remainder of this claim, as it does not discern any causal link between the violation found and the pecuniary damage alleged.<\/p>\n 41.\u00a0\u00a0As regards non-pecuniary damage, the Court considers that, in the circumstances of the present case,the finding of a violation of Article 1 of Protocol No. 1 to the Convention constitutes in itself sufficient just satisfaction (in that sense, see Gabri\u0107, cited above, \u00a7 49, and Boljevi\u0107, cited above, \u00a7 54).<\/p>\n B.\u00a0\u00a0Costs and expenses<\/strong><\/p>\n 42.\u00a0\u00a0The applicant also claimed EUR 36,661.36 for costs and expenses incurred before the domestic courts, and EUR 2,617.33 for those incurred before the Court.<\/p>\n 43.\u00a0\u00a0The Government contested theseclaims.<\/p>\n 44.\u00a0\u00a0According to the Court\u2019s 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. In the present case, regard being had to the information in its possession and the above criteria, the Court considers it reasonable to award the sum of EUR 1,770 for costs and expenses in the domestic proceedings and EUR 1,780 for those incurred in the proceedings before the Court.<\/p>\n C.\u00a0\u00a0Default interest<\/strong><\/p>\n 45.\u00a0\u00a0The 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.<\/p>\n FOR THESE REASONS, THE COURT, UNANIMOUSLY,<\/strong><\/p>\n 1.\u00a0\u00a0Declaresthe application admissible;<\/p>\n 2.\u00a0\u00a0Holdsthat there has been a violation of Article 1 of Protocol No. 1 tothe Convention;<\/p>\n 3.\u00a0\u00a0Holds that the finding of a violation constitutes in itself sufficient just satisfaction for the non-pecuniary damage sustained by the applicant;<\/p>\n 4.\u00a0\u00a0Holds<\/p>\n (a)\u00a0\u00a0that the respondent State is to pay the applicant, within three months,the following amounts:<\/p>\n (i)\u00a0\u00a0EUR 318,500 (three hundred and eighteen thousand five hundred euros), plus any tax that may be chargeable, in respect of pecuniary damage;<\/p>\n (ii)\u00a0\u00a0EUR 3,550 (three thousand five hundred and fifty euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses;<\/p>\n (b)\u00a0\u00a0that 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;<\/p>\n 5.\u00a0\u00a0Dismissesthe remainder of the applicant\u2019s claim for just satisfaction.<\/p>\n Done in English, and notified in writing on 5 April 2018, pursuant to Rule\u00a077\u00a0\u00a7\u00a7\u00a02 and 3 of the Rules of Court.<\/p>\n Renata Degener\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Kristina Pardalos
\nKsenija Turkovi\u0107,
\nPauliine Koskelo, judges,
\nand Renata Degener, Deputy Section Registrar,<\/p>\n
\nDeputy Registrar\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 President<\/p>\n