EHRM, 07-05-2015, nr. 13712/11

The Government submitted that in the applicants' initial application to the Court the latter had stated that the house measured 174 square metres, whereas in fact it measured only half that, namely 87 square metres. They had also failed to disclose that they had received the additional payment of 10,000 DEM corresponding to their parents' investment in the house, and had falsely stated that V.L. had been a registered drug addict at the time relevant to the events. In the Government's view, all these facts had been relevant to the case and, by failing to disclose them correctly, the applicants had therefore abused their right of individual application.

The applicants maintained their complaints, explaining, in particular, that the house in fact consisted of two floors and that the ground floor measured approximately 80 square metres. Thus, the Government's reference to 87 square metres applied only in relation to the ground plan but not the overall surface area of the house, which they considered to be relevant. They also pointed out that this could have been seen from the changes to that effect in the land register.

The notion of ‘abuse’, within the meaning of Article 35 § 3 (a) of the Convention, must be understood as any conduct on the part of the applicant that is manifestly contrary to the purpose of the right of individual application as provided for in the Convention and which impedes the proper functioning of the Court or the proper conduct of the proceedings before it (see Miroļubovs and Others v. Latvia, no. 798/05, §§ 62 and 65, 15 September 2009). An application may exceptionally be rejected on that ground if, among other things, it is knowingly based on untrue facts (see, as a recent example, F.A. v. Cyprus (dec.), no. 41816/10, §§ 39, 40, 42 and 43, 25 March 2014; and Gross v. Switzerland [GC], no. 67810/10, § 28, ECHR 2014), the most egregious example being applications based on forged documents (see, for instance, Jian v. Romania (dec.), no. 46640/99, 30 March 2004; Bagheri and Maliki v. the Netherlands (dec.), no. 30164/06, 15 May 2007; and Poznanski and Others v. Germany (dec.), no. 25101/05, 3 July 2007). However, any deliberate attempt to mislead the Court must be established with sufficient certainty (see, amongst many others, Gross, cited above, § 28).

In the case at issue the Court does not take the view that the applicants deliberately provided false information concerning the surface area of the house or the receipt of the additional payment, since this information was apparent from the documents available to the Court. In any event it forms part of the dispute between the parties as to whether or not there has been a breach of Article 1 of Protocol No. 1 in relation to the swap agreement. As such, it can be the subject of the parties' arguments and counter-arguments, which the Court can accept or reject, but cannot in itself be regarded as an abuse of the right of individual application (see Udovičić v. Croatia, no. 27310/09, § 125, 24 April 2014; and Harakchiev and Tolumov v. Bulgaria, nos. 15018/11 and 61199/12, § 185, 8 July 2014). This is also true in respect of the changes in the land register concerning the surface area of the property (see paragraph 36 above). Similarly, the Court notes that the question of whether V.L.'s drug abuse problem was known to the Centre is another contentious issue which had already been argued at the domestic level, and in any event does not appear central to the case (see paragraphs 30 and 32 above). Accordingly, irrespective of whether or not she had been registered as a drug addict in a particular database of the competent authorities, it cannot be said that the applicants abused their right of individual application by pursuing those arguments before the Court.

The Government's objection should thus be rejected.

The Government pointed out that the applicants' guardians, namely their parents, had failed to challenge on behalf of their children the Centre's decision authorising the swap agreement, which they could have done through the available administrative remedies, thereby raising all their complaints concerning the aforementioned agreement. The decision authorising the swap agreement had been duly served on their representative and they had therefore been at liberty to challenge it before the competent bodies. Moreover, the applicants' parents had failed to lodge a civil claim in order to establish that the swap agreement was voidable, as provided under Article 139 of the Civil Obligations Act. Instead, they had erroneously lodged a civil action asking for the swap agreement to be declared null and void, which had prevented the domestic courts — which held that the claim was ill-founded — to reclassify their action as a claim under Article 139 of the Civil Obligations Act. In the Government's view, their capacity for using such remedies had perhaps been hampered by the fact that Z.L. had been in detention at the time, but that could not explain his failure to undertake the necessary inquiries and actions concerning the swap agreement, or the failure of V.L. and E.B. to challenge the Centre's decision and the conclusion of the swap agreement, as provided under the relevant domestic law.

The applicants considered that they had properly exhausted the domestic remedies, and maintained that it had been incumbent on the Centre to protect their interests in relation to the conclusion of the swap agreement, which it had failed to do. In particular, it had been impossible for them to lodge a complaint concerning the Centre's decision authorising the swap agreement when the decision had been served exclusively on M.I., whose conflict of interest meant that he had no reason to complain about the aforementioned decision.

The Court considers that the question of the exhaustion of domestic remedies as argued by the parties should be joined to the merits, since it is closely linked to the substance of the applicants' complaints.

The Court notes at the outset that it is undisputed in the present case that the questions relating to the applicants' proprietary interests concerning the real estate swap agreement fall to be examined under Article 1 of Protocol No. 1.

While the essential object of Article 1 of Protocol No. 1 is to protect the individual against unjustified interference by the State with the peaceful enjoyment of his or her possessions, it may also entail positive obligations requiring the State to take certain measures necessary to protect property rights, particularly where there is a direct link between the measures an applicant may legitimately expect from the authorities and his or her effective enjoyment of his or her possessions (see Sovtransavto Holding v. Ukraine, no. 48553/99, § 96, ECHR 2002-VII, and cases cited therein; Öneryıldız v. Turkey [GC], no. 48939/99, § 134, ECHR 2004-XII; Broniowski v. Poland [GC], no. 31443/96, § 143, ECHR 2004-V; Păduraru v. Romania, no. 63252/00, § 88, ECHR 2005-XII; Bistrović v. Croatia, no. 25774/05, § 35, 31 May 2007; and Zolotas v. Greece (no. 2), no. 66610/09, § 47, CEDH 2013). In particular, allegations of a failure on the part of the State to take positive action in order to protect private property should be examined in the light of the general rule in the first sentence of the first paragraph of Article 1 of Protocol No. 1 to the Convention, which lays down the right to the peaceful enjoyment of possessions (see Kolyadenko and Others v. Russia, nos. 17423/05, 20534/05, 20678/05, 23263/05, 24283/05 and 35673/05, § 213, 28 February 2012).

Although the boundaries between the State's positive and negative obligations under Article 1 of Protocol No. 1 do not lend themselves to precise definition the applicable principles are nonetheless similar. Whether the case is analysed in terms of a positive duty on the part of the State or in terms of interference by a public authority which needs to be justified, the criteria to be applied do not differ in substance. In both the case of an interference with the peaceful enjoyment of possessions and that of an abstention from action, a fair balance must be struck between the demands of the general interests of the community and the requirement to protect the individual's fundamental rights (see, among other authorities, Sporrong and Lönnroth v. Sweden, 23 September 1982, § 69, Series A no. 52, and Kotov v. Russia [GC], no. 54522/00, § 110, 3 April 2012).

In order to assess whether the State's conduct satisfied the requirements of Article 1 of Protocol No. 1, the Court must have regard to the fact that the Convention is intended to guarantee rights that are practical and effective. It must go beneath superficial appearances and look into the reality of the situation, which requires an overall examination of the various interests in issue; this may call for an analysis of, inter alia, the conduct of the parties to the proceedings, including the steps taken by the State (see Beyeler v. Italy [GC], no. 33202/96, § 114, ECHR 2000-I; Novoseletskiy v. Ukraine, no. 47148/99, § 102, 22 February 2005).

Furthermore, the positive obligations imply, in particular, that States are obliged to provide judicial procedures that offer the necessary procedural guarantees and therefore enable the domestic courts and tribunals to adjudicate effectively and fairly any cases concerning property matters (see Anheuser-Busch Inc. v. Portugal [GC], no. 73049/01, § 83, ECHR 2007-I, and Chadzitaskos and Franta v. the Czech Republic, nos. 7398/07, 31244/07, 11993/08 and 3957/09, § 48, 27 September 2012), including those between private parties (see Zehentner v. Austria, no. 20082/02, §§ 73 and 75, 16 July 2009). The proceedings at issue must afford the individual a reasonable opportunity of putting his or her case to the relevant authorities for the purpose of effectively challenging the measures interfering with the rights guaranteed by this provision. In ascertaining whether this condition has been satisfied, the Court takes a comprehensive view (see Jokela v. Finland, no. 28856/95, § 45, ECHR 2002-IV, and cases cited therein, and Zehentner, cited above, § 73).

The Court has also held that where children are involved, their best interests must be taken into account (see, for example, X v. Latvia [GC], no. 27853/09, § 96, ECHR 2013). On this particular point, the Court reiterates that there is a broad consensus, including in international law, in support of the idea that in all decisions concerning children, their best interests are of paramount importance. Whilst alone they cannot be decisive, such interests certainly must be afforded significant weight (see Jeunesse v. the Netherlands [GC], no. 12738/10, § 109, 3 October 2014). Indeed, the Convention on the Rights of the Child gives the child the right to have his or her best interests assessed and taken into account as a primary consideration in all actions or decisions that concern him or her, both in the public and private sphere, which expresses one of the fundamental values of that Convention (see paragraphs 42 and 43 above).

The Court's case-law shows that these considerations are of significance also in the area of protection of the child's proprietary interests that falls under Article 1 of Protocol No. 1. Thus, the Court must assess the manner in which the domestic authorities' acted in protecting the child's proprietary interests against any malevolent or negligent actions on the part of others, including their legal representatives and natural parents (see Lazarev and Lazarev v. Russia (dec.), no. 16153/03, 24 November 2005).

The Court notes that the central question in the case at issue is the alleged failure of the State to take adequately into account the best interests of the applicants and to protect their property rights in the allegedly unlawful and immoral real estate swap agreement. While it is true that under the relevant domestic law the precondition for such an agreement was the consent of the Centre — which could also raise an issue from the perspective of the State's negative obligations (see Lazarev, cited above) — the Court considers that, in the circumstances, it is more appropriate to analyse the case from the perspective of the State's positive obligations, bearing in mind that the boundaries between the State's positive and negative obligations under Article 1 of Protocol No. 1 do not lend themselves to precise definition and yet the applicable principles are nonetheless similar (see paragraph 59 above).

The Court observes that it is undisputed between the parties that prior to the impugned real estate swap agreement the applicants were the owners of the house in which they lived with their mother V.L., and their legal guardian Z.L., who is the father of the second applicant. The house was purchased by V.L. and Z.L. in 1997, although the ownership was from the very outset registered as vesting in both applicants in equal shares (see paragraph 8 above). It thus represented the applicants' possession legally protected from an unjustified interference or action by any third party, including the applicants' parents (see paragraph 37 above, Article 48 of the Constitution; and paragraph 39 above, section 265 of the Family Act).

The house is a seaside villa consisting of two floors plus an adjacent courtyard, located in a seaside neighbourhood of P. At the time of its acquisition by the applicants, the house was in poor condition. Thus, in addition to paying HRK 450,000 (approximately EUR 60,000) as the purchase price of the house, V.L. and Z.L. invested additional funds of 80,000 DEM (approximately EUR 40,000) in its renovation (see paragraphs 6–8, and 54–55 above).

The Court notes that the applicants' ownership of the house was exchanged for the ownership of a flat and a garage in P. The flat at issue is a four-room flat located on the fourth floor of a residential building in P. (see paragraph 13 above). This exchange occurred by the disposition of the applicants' parents and consent of the Centre which was involved in the case due to the fact that at the relevant time the first applicant was fourteen years old and the second applicant was nine years old, which meant that their parents could dispose of their property only with the consent of the Centre (see paragraph 39 above).

In this connection the Court observes a complex set of factual circumstances in which the real estate swap agreement took place. In particular, the Court notes that V.L. and Z.L. first approached the Centre in 2000 asking for its consent to the sale of the applicants' house, but without specifying to whom or for what amount (see paragraph 10 above). Meanwhile, V.L. and Z.L. fell into financial difficulties and Z.L. was arrested and held in detention pending criminal proceedings on charges of attempted murder and unlawful possession of firearms, for which he was sentenced to six years' imprisonment (see paragraphs 11 and 14 above).

It was within these circumstances that lawyer M.I., acting as the representative of V.L., Z.L. and E.B. (the father of the first applicant), submitted a formal request to the Centre in October 2001 asking for consent to a real estate swap agreement whereby the applicants would transfer their house to a certain D.M. while she would transfer her ownership of the flat to the applicants.

The Court notes that the circumstances in which V.L., Z.L. and E.B. authorised M.I. to act on their behalf for the real estate swap agreement are not fully clear. M.I. had been the defence lawyer to Z.L. in the above-mentioned criminal proceedings against him, and D.M., who was the other party to the swap agreement, was M.I.'s mother-in-law. Furthermore, the powers of attorney in favour of M.I. were issued for the purpose of obtaining the Centre's consent to an unspecified real estate swap agreement (see paragraph 12 above), and it does not appear that V.L., while interviewed at the Centre in connection with M.I.'s request, was ever presented with the specific details of the draft swap agreement in question (see paragraph 14 above). This, therefore, leaves unexplained the discrepancy in her statement as to the difference in value between the house and the flat — estimated at some 100,000 DEM (see paragraph 14 above) — and the amount of 10,000 DEM which the Centre eventually accepted as the amount that the applicants should receive in that regard (see paragraph 17 above).

It is equally unclear why the Centre, when giving its consent to the swap agreement, also mentioned a garage as forming part of the property exchange when no garage had been mentioned in the draft swap agreement submitted by lawyer M.I. (see paragraphs 13 and 15 above) and nothing to that effect had been mentioned by V.L. during her interview at the Centre. Moreover, the Centre did not interview any of the other parties with a direct interest in the swap agreement, namely Z.L. and E.B., which in turn raises the issue of whether, and to what extent, they were aware of the substance of the draft swap agreement in question.

The Court further observes that the draft swap agreement contained a clause stating that the value of the exchanged property was equal and that the parties waived their right to object that they had sustained damage as a result of giving the exchanged property away at below half of its real value. The draft swap agreement was supplemented by a document in which the parties thereto acknowledged that V.L. and Z.L. had made significant investments in the house and that D.M. would compensate for those investments in an unspecified amount (see paragraph 13 above).

Eventually, this draft was formalised in the swap agreement of 16 December 2001 under which the applicants transferred their ownership of the house to D.M. while she transferred her ownership of the flat and a garage to the applicants. This version of the swap agreement contains a clause under which the parties agreed that there was no difference in value between the exchanged properties, and that they had no further claims on that account. The value of the property exchange was assessed at some HRK 400,000 (see paragraph 19 above). Based on this swap agreement, the applicants acquired ownership of the flat and the garage in exchange for their ownership of the house. In addition, they each received 5,000 DEM on account of the difference in value between the two properties (see paragraphs 17, 20 and 21 above).

In these circumstances, in assessing the protection of the applicants' property rights under Article 1 of Protocol No. 1, the initial concerns are raised with regard to the actual relative value of the exchanged properties (see, inter alia, Lazarev, cited above). While, in principle, it is not for the Court to substitute itself for the national courts and to deal with such matters, it is unfortunate that the domestic courts dismissed all the applicants' evidence in the civil proceedings and thus left this question unexplained (see paragraph 25 above).

The Court therefore observes that it is undisputed between the parties that V.L. and Z.L. purchased the house for HRK 450,000 (approximately EUR 60,000) and that they additionally invested some 80,000 DEM in the house (approximately EUR 40,000). If nothing else, this fails to explain how the value of the house could have corresponded to the value of the flat and the garage — estimated at a total of some HRK 400,000 (approximately EUR 55,000; see paragraphs 19 and 55–56 above) — and an additional amount of 10,000 DEM (approximately EUR 5,000).

As to the Government's reference to the tax assessment of the properties, the Court notes that the assessment was based only on the declared value of the transaction from the swap agreement (see paragraph 22 above) while Article 1 of Protocol No. 1 requires an assessment that goes beneath superficial appearances and looks into the reality of the situation (see, for example, Bistrović, cited above, § 35). Similarly, in view of the fact that the Centre took no action in assessing the reality of the circumstances of the property exchange (see paragraph 79 below), the Court cannot accept the Government's argument that the flat needed no further investment or renovation and was in a better condition than the house. In these circumstances, given that the real estate swap agreement on the face of it raises an issue of the equality of giving which remained unexplained by the domestic authorities, it is difficult to adhere to the argument of equal value of the exchanged properties.

Against the above background, given that under the relevant domestic (see paragraph 39 above; section 265 of the Family Act) and international law (see paragraph 62 above) the applicants, as children, could legitimately have expected the domestic authorities to take measures to safeguard their rights, the Court must assess whether the State authorities took the necessary measures to safeguard their proprietary interests in the event of the alienation of their property (see Lazarev, cited above). It will thus, in view of the principle that the best interests of the child must be taken as a primary consideration (see paragraphs 42 and 62 above), asses the actions taken by the Centre and the manner in which the competent domestic courts have approached the matter once it had been brought to their attention.

As to the conduct of the Centre, the Court notes that following M.I.'s request for authorisation of the swap agreement, the only action taken by the Centre in assessing the circumstances of the case was the questioning of V.L. (see paragraph 14 above). None of the other legal guardians was interviewed or informed about the draft swap agreement, though the Government have at no point suggested that it had not been possible to arrange their questioning.

Furthermore, the Centre failed to take any action to assess the actual condition or the value of the properties which could reasonably have been expected given the reality of the circumstances of the property exchange and the available information. In particular, the Centre had been informed of the purchase price of the house and the applicants' parents' further investment in its renovation, which, as noted above, amounted to some EUR 100,000 in total (see paragraph 66 above). In spite of this knowledge, without conducting further assessments through, for example, an on-site inspection or an expert report, the Centre accepted that the total value of the house could be assessed and the exchange carried out at a value of some EUR 60,000 in total (HRK 400,000 and 10,000 DEM; see paragraph 75 above).

The Court is likewise not persuaded that the Centre approached the applicants' particular family situation with the necessary diligence, in terms of assessing whether their proprietary interests were adequately protected against malevolent and/or negligent actions on the part of their parents (see Lazarev, cited above). In particular, the Centre was well aware of the fact that Z.L. was in detention and had been convicted on serious charges in criminal proceedings, and that V.L. was facing financial problems, all of which could have prompted them to take injudicious actions to the detriment of the applicants' property.

It this connection the Court observes that when V.L. was interviewed in the Centre she alleged poor financial situation of her family which allegedly affected the applicants' upbringing and results in school. Whereas this would be an aspect of importance in the assessment of the overall situation surrounding the impugned real estate swap agreement, the Court notes that the Centre took no further measures to verify or evaluate V.L.'s submissions concerning her financial situation, nor did it interview Z.L. or consult the relevant authorities concerning their particular situation. Thus, for instance, it did not accordingly verify the applicants' school results nor did it interview the applicants although the first applicant was at the time fourteen years old and thus could have provided relevant information concerning her family's situation.

Moreover, the Centre gave no consideration to whether, in the particular circumstances of the case, a special guardian should have been appointed who could have impartially and independently protected the applicants' interests against all those involved in the impugned swap agreement, including their parents (see paragraph 39 above; section 192 of the Family Act).

In these circumstances, the Court finds that the Centre did not asses adequately the applicants' family situation and the possible adverse impact of the impugned real estate swap agreement on their rights. It thereby failed to evaluate whether the circumstances of the real estate swap agreement complied with the principle of the best interests of the child in the applicants' particular case.

As to the civil proceedings before the competent courts in which the applicants challenged the validity of the real estate swap agreement, the Court firstly notes that the procedural position of the applicants, as minors, in the administrative proceedings before the Centre was fully in the hands of their legal representatives, V.L. and Z.L., who were represented by M.I., a lawyer who had a conflict of interest. The applicants were thus unable to take any autonomous procedural actions, such as challenging the Centre's decision authorising the swap agreement (compare Zehentner, cited above, § 76), nor, as noted above, had the authorities appointed a guardian ad litem who could have independently protected the applicants' interests against all those involved in the swap agreement.

In these circumstances, the civil proceedings instituted by the applicants represented were the only means by which the circumstances of the property exchange could have been scrutinised. Nevertheless, even this possibility remained in the hands of their legal representatives at least until one of the applicants reached the age of majority and was able to take the legal actions herself, namely by lodging an appeal on points of law before the Supreme Court in 2007 (see paragraph 29 above).

However, the civil courts failed to appreciate the particular circumstances of the case and dismissed the applicants' civil action solely on the grounds that the Centre's decision authorising the swap agreement had not been challenged in the administrative proceedings (see paragraphs 25–26, 28 and 31 above). The civil courts thereby ignored the applicants' position in the administrative proceedings (see paragraph 83 above); the evidence concerning M.I.'s conflict of interest as well as the applicants' family circumstances, namely, at the time of the civil proceedings already disclosed, V.L.'s drug addiction and her financial problems; and Z.L.'s criminal conviction in the period leading up to the conclusion of the swap agreement. They also ignored the allegations of the Centre's failure to protect the applicants' best interests in relation to the conclusion of the swap agreement.

In the Court's view, all the allegations concerning the conclusion of the swap agreement — if nothing else — raised the issue of compliance with the relevant constitutional obligation of the State to protect children (see paragraph 37, Articles 63 and 65 of the Constitution), as a result of which it was incumbent on the civil courts to examine the allegations carefully (see paragraph 38, sections 103 and 110 of the Civil Obligations Act) in accordance with the principle of the best interests of the child (see paragraph 43 above).

Consequently, the Court sees no relevance in the civil courts' reference to the applicants' possibility of claiming that the swap agreement was perhaps only voidable — on which the Government also relied (see paragraphs 26 and 51 above) — since the applicants, as minors, were not able to lodge such a claim autonomously within the relevant statutory prescription period of one year after the conclusion of the swap agreement (see paragraph 38 above; sections 111 and 139 of the Civil Obligations Act; and compare Stagno v. Belgium, no. 1062/07, §§ 32–33, 7 July 2009). The Court therefore dismisses the Government's preliminary objection concerning the non-exhaustion of domestic remedies (see paragraph 53 above).

Taking the above into account, the Court finds that the domestic authorities failed to take the necessary measures to safeguard the proprietary interests of the applicants, as children, in the impugned real estate swap agreement and to afford them a reasonable opportunity to effectively challenge the measures interfering with their rights guaranteed by Article 1 of Protocol No. 1.

There has accordingly been a violation of Article 1 of Protocol No. 1 to the Convention.