DOBRZAŃSKA AND DOBRZAŃSKI v. POLAND
Inadmissible
András Sajó;Krzysztof Wojtyczek;Nona Tsotsoria;Vincent A. De Gaetano;Gabriele Kucsko-Stadlmayer
1. The applicants, Ms Danuta Dobrzańska and Mr Wiktor Dobrzański, are Polish nationals, who were born in 1928 and 1941 respectively and live in Sosnowiec. They were represented before the Court by Mr Z. Cichoń, a lawyer practising in Cracow. 2. The Polish Government (“the Government”) were represented by their Agent, Ms J. Chrzanowska of the Ministry of Foreign Affairs. 3. The facts of the case, as submitted by the parties, may be summarised as follows. 4. The applicants are the legal successors of former owners of land situated in Niwka, Poland. In 1951 the applicants’ legal predecessors were obliged to transfer their property to the State Treasury without compensation. The transfer was confirmed by a protocol dated 8 February 1951 issued by the Ministry of Mining. 5. On 19 September 2002, at the applicants’ request, the Minister of Economy declared the 1951 protocol null and void. This decision entitled the applicants to seek compensation on the basis of the relevant provisions of the Code of Administrative Proceedings. 6. The applicants applied to the Ministry of Economy for compensation for the loss of profit they could have made had they had the property at their disposal. Their request concerned the period between 17 October 1997 (the date of entry into force of the 1997 Constitution) and 19 September 2002 (the date on which the property in question was returned to the applicants). 7. On 9 July 2008 the Ministry of Economy refused to grant the applicants compensation for lost profit, finding that the rights to the property in question had been restored to the applicants and that they had not proved that they had sustained any further damage. It also found that according to the case-law of the Polish Supreme Court and Constitutional Court, the applicants could not seek compensation for the loss of expected profit which they had allegedly sustained before the entry into force of the 1997 Constitution. 8. The applicants then applied to the civil courts seeking compensation for the loss of expected profit. On 18 December 2008 they lodged a claim with the Warsaw Regional Court. Subsequently, they limited their claim to the period from the entry into force of the 1997 Constitution until 2008; they maintained that the conduct of the authorities had prevented them from using their property even after its return. They claimed 126,726.75 zlotys (PLN) and requested exemption from the court fees. 9. On 12 January 2009 the applicants’ request was granted and they were exempted from court fees in excess of PLN 300 (approximately 75 euros (EUR)). 10. On 9 July 2009 the applicants further limited their claim to compensation for the period between 1997 and 2002. 11. On 22 July 2010 the Warsaw Regional Court dismissed the applicants’ claim. The court admitted that the Supreme Court’s case-law had gone in two opposite directions; the first line of case-law accepted that in situations similar to that of the applicants they could seek both actual loss (damnum emergens) and loss of expected profit (lucrum caessans), whereas the second line limited the compensation to actual loss only. The court decided to base its judgment on the latter case-law of the Supreme Court and held that it could not grant the applicants compensation for loss of expected profit because the right to full compensation had not been inserted in the Polish Constitution until 17 October 1997, when the Constitution entered into force, whereas the damage in question had occurred before that date. 12. Taking into consideration the incoherent case-law of the Supreme Court, the Regional Court applied Article 102 of the Code of Civil Proceedings and decided not to impose the costs of the proceedings on the applicants. 13. The applicants appealed against the first-instance judgment. 14. On 20 January 2011 the applicants’ lawyer requested that the court stay the proceedings pending a decision by the Supreme Court on the legal issue in question. 15. On 21 January 2011 the Warsaw Court of Appeal granted the request and stayed the proceedings. 16. On 31 March 2011 the Supreme Court, sitting as a full bench, adopted a resolution (III CZP 112/10) in which it acknowledged that the respective provisions of civil and administrative law had given rise to serious difficulties and to divergent interpretation in judicial practice. It held that in situations similar to that of the applicants, if a final decision had been given in breach of the law before the entry into force of the 1997 Constitution, compensation on the basis of Article 160 of the Code of Administrative Proceedings would not include lucrum caessans even if the loss of expected profit had happened after the entry into force of the 1997 Constitution. 17. On 31 January 2012 the proceedings before the Warsaw Court of Appeal were resumed. 18. On 15 March 2012 the Court of Appeal referred to the abovementioned Supreme Court resolution of 31 March 2011 and held that compensation for loss of expected profit could be granted only if the wrongful decision had been issued after the entry into force of the 1997 Constitution. Finding that the loss in the applicants’ case had occurred before that date, it dismissed the applicants’ appeal. 19. The court did not impose the costs of the proceedings on the applicants. 20. The applicants did not lodge a cassation appeal, since it would not have had any prospects of success; the Supreme Court would have had to follow the resolution adopted in 2011 by the Supreme Court plenary. 21. Article 77 of the Polish Constitution, which entered into force on 17 October 1997, provides: “1. Everyone is entitled to compensation for damage caused by the unlawful acts of a public authority. 2. A statute shall not bar access to court to persons seeking redress for any breach of their freedoms or rights.” 22. Article 155 of the Code of Administrative Proceedings permits the amendment or revocation of any final administrative decision whenever necessary in the general or individual interest, if this is not prohibited by specific legal provisions. In particular, pursuant to Article 156, a final administrative decision is subject to revocation if it has been issued by an authority which had no jurisdiction to do so, or if it has no legal basis or is contrary to the applicable laws. 23. The relevant part of Article 156 § 2 of the Code of Administrative Procedure reads as follows: “A decision shall not be revoked ... if more than ten years has passed since the date on which it was delivered or if the decision had irreversible legal consequences.” 24. Article 158 § 2 of the Code of Administrative Proceedings reads as follows: “If it is impossible to set aside a decision for reasons referred to in Article 156 § 2, the administrative authority shall only declare that the challenged decision has been issued in flagrant breach of the law and shall give reasons for refusing to set it aside.” 25. The relevant part of Article 160 of the Code of Administrative Proceedings, as applicable to the applicants’ case, reads: “Anyone who has suffered loss on account of the issuing of a decision in a manner contrary to Article 156 § 1 or on account of the revocation of such a decision may claim compensation for actual damage, unless he has been responsible for the circumstances mentioned in this provision.” 26. By a judgment of 23 September 2003 (K 20/02) the Constitutional Court declared Article 160 of the Code of Administrative Proceedings unconstitutional in so far as it limited the scope of compensation to actual damage only. The Constitutional Court held that its judgment applied only to losses which had occurred after the entry into force of the 1997 Constitution, that is, after 17 October 1997. 27. On 1 September 2004 the Law of 17 June 2004 on amendments to the Civil Code and other statutes (Ustawa o zmianie ustawy – Kodeks cywilny oraz niektórych innych ustaw) (“the 2004 Amendment”) entered into force. The relevant amendments were in essence aimed at enlarging the scope of the State Treasury’s liability in tort under Article 417 of the Civil Code, including the addition of a new Article 4171. New Article 417 1 § 2 of the Civil Code provides that compensation can be claimed for damage caused by way of an unlawful and final decision, after the unlawfulness of such a decision has been declared in separate administrative proceedings. The 2004 Amendment abrogated Article 160 of the Code of Administrative Procedure. However, under the transitional provisions of section 5 of the 2004 Amendment, Article 417 of the Civil Code as applicable before 1 September 2004 and Article 160 of the Code of Administrative Procedure apply to all events and legal situations that subsisted before that date. 28. An administrative decision in respect of a compensation claim was amenable to appeal before a civil court. Article 417 § 1 of the Civil Code, as applicable after 1 September 2004, provides: “The State Treasury, or [as the case may be] a self-government entity or other legal person responsible for exercising public authority, shall be liable for any damage (szkoda) caused by an unlawful act or omission [committed] in connection with the exercise of public authority.” 29. Following the judgment of the Constitutional Court, the domestic courts, including the Supreme Court, took two different approaches in interpreting the term “time in which loss occurred”. 30. According to the first approach, which could be observed from 2006 onwards, the decisive date was that on which the original decision had been issued. This, in turn, meant that if the decision in question had been issued before the entry into force of the Constitution, only actual damage could be compensated for. The first approach was adopted by the Supreme Court in its judgments of 25 January 2006 (I CK 273/05), 26 April 2006 (III CZP 125/05), 12 September 2007 (I CSK 220/07), 5 December 2007 (I CSK 301/07), 16 April 2009 (CSK 524/08), 18 June 2009 (II CSK 26/09) and 15 October 2009 (I CSK 66/09). 31. According to the second approach adopted for the first time in 2008, loss could occur after the entry into force of the Constitution even if the decision constituting the source of the loss had been issued long before that date. In such circumstances, a claimant could effectively seek full compensation for both: actual loss and expected profit. This approach was adopted by the Supreme Court in the judgments of 22 January 2008 (case no. 376/07), 8 February 2008 (I CSK 477/07), 12 March 2008 (I CSK 435/07), 9 January 2009 (I CSK 272/08), 14 May 2009 (I CSK 306/08) and 14 May 2009 (I CSK 485/08). 32. On 8 January 2010 the President of the Supreme Court requested that a bench of the Civil Chamber composed of seven judges convene to clarify a legal question and adopt a resolution. The issue concerned the substantive law governing compensation claims in respect of damage caused by administrative decisions issued before 1 September 2004 where the unlawfulness of the decisions had been declared by way of an administrative decision given after that date. The President noted, inter alia, that two strands had developed in the case-law of the Supreme Court and other courts, against a background of serious difficulties concerning the temporal scope and consequences of the Law of 17 June 2004 as to the applicable substantive law (see paragraphs 11 and 16 above). These divergences decisively affected the compensation rights of individuals in respect of whom unlawful administrative decisions had been made prior to 1 September 2004. 33. On 24 August 2010 the Civil Chamber of the Supreme Court, sitting as a bench of seven judges, requested the full composition of that Chamber to adopt a resolution clarifying the issues raised by the President (III CZP 4/10). The Chamber noted that the issue had given rise to serious discrepancies in judicial practice, including that of the Supreme Court itself. Considering the importance of the issues involved and the fact that previous decisions and resolutions of the Supreme Court had failed to bring uniformity to judicial practice, a resolution by the Civil Chamber of the Court sitting as a full bench was called for. 34. On 31 March 2011 the Civil Chamber of the Supreme Court, sitting as a full bench, adopted a resolution (III CZP 112/10). It acknowledged that the applicable provisions had given rise to serious difficulties and to divergent interpretations in judicial practice. The Supreme Court held that former Article 160 of the Code of Administrative Procedure was applicable. It further held that: “If a final administrative decision which was deficient (wadliwa) was issued before the date of entry into force of the Constitution, compensation due on the basis of Article 160 § 1 of the Code of Administrative Proceedings shall not encompass lost profits, even if the damage occurred after the entry into force of the Constitution.” 35. On 24 April 2014 the Constitutional Court gave judgment (SK 56/12) holding as follows: “Article160 § 1 of the Code of Administrative Proceedings in conjunction with Article 5 of the Act of 17 June 2004 amending the Civil Code, as far as it limits compensation for damaged caused by an unlawful act of a public authority to actual loss in cases where the deficient final decision was issued before 17 October 1997: a. is consistent with Article 2 [rule of law in a democratic state] and with Article 32 § 1 [equality before the law] of the Constitution; b. is not inconsistent with Article 77 § 1 of the Constitution.”