STICHTING VOOR EDUCATIE EN BEROEPSONDERWIJS ZADKINE v. THE NETHERLANDS
Inadmissible
Corneliu Bîrsan;Egbert Myjer;Elisabet Fura;Josep Casadevall;Luis López Guerra
The applicant, Stichting voor Educatie en Beroepsonderwijs Zadkine (hereafter “the applicant institution”) is a foundation (stichting) possessing legal personality under Netherlands law and domiciled in Rotterdam, Netherlands. It was represented before the Court by Mr W.E. Pors, a lawyer practising in The Hague, Netherlands. The facts of the case, as submitted by the applicant institution, may be summarised as follows. The applicant is an educational institution that provides adult education and secondary vocational training at a number of locations in the Rotterdam area. Although primarily dependent on Government funding, the applicant institution is a private legal entity. In matters of funding and tuition fees, the applicant institution is bound by law. In so far as the applicant institution could not command income from private sources, it depended on Government grants paid by the Minister of Education, Culture and Sciences (Minister van Onderwijs, Cultuur en Wetenschappen, “the Minister”); the necessary powers were delegated to, and exercised by, a Deputy Minister (staatssecretaris). The precise amount of public money payable to each educational institution was calculated annually by dividing a sum of money budgeted for educational institutions collectively by the total number of students registered across the country and multiplying the resulting figure by the number of students per institution. A detailed formula was applied which made allowance for, among other things, individuals in part-time education. It was possible for students to register for more than one course at the same time. On 12 July 2002 and again on 14 October 2003 the Deputy Minister granted Government funding to the applicant institution. The precise amounts were calculated in accordance with the law in force, based on information provided by the applicant institution itself. The applicant institution had in both years reported a number of students as having registered for more than one course, tuition fees for the additional courses to be met by it from its own budget instead of by the students themselves. The applicant institution admits that in actual fact there was no provision for additional tuition fees in its books. In early 2002, following findings of irregularities, the Deputy Minister ordered an investigation into the accounting practices of educational institutions that provided adult education and secondary vocational training. All such educational institutions were asked to clarify their reporting practices. This investigation became known as the “Self-Cleansing Investigation” (Zelfreinigend Onderzoek). The applicant institution stated to the investigators, as relevant to the case before the Court, that a number of students had entered for more than one course at the same time. They were counted as separate students in respect of each course – meaning that, for the purpose of calculating the applicant institution’s share of Government funds, a number of individual students were counted for two or more – the additional tuition fees being covered by the applicant institution itself out of its private funds. The report of the Self-Cleansing Investigation, which synthesised the submissions of the various educational institutions, came out on 23 October 2002. It was forwarded to Parliament in December 2002. An investigating committee, known as the “Schutte Committee” after the name of its chairman Mr G.J. Schutte (a former member of Parliament), was set up and tasked with, among other things, examining specific cases of abuse with a view to the recovery of monies paid to educational institutions in excess of their entitlement. In July 2002 and again in October 2003 the Deputy Minister responsible granted the applicant institution a share of the available funds based on the applicant institution’s own figures. On 1 April 2004 the Schutte Committee published its report, entitled “Share and share alike: Investigation into irregularities in the funding of higher education and secondary vocational education” (Eerlijk delen: Onderzoek naar onregelmatigheden in de bekostiging van het hoger onderwijs en het middelbaar beroepsonderwijs), which among other things singled out particular educational institutions which had received funding in excess of their entitlement. The applicant institution was among those mentioned. On the same day the Schutte Committee informed the applicant institution that it had found the applicant institution to have received funding unlawfully and would advise the Deputy Minister to recover the sums concerned. On 11 November 2004 the Deputy Minister gave a decision modifying the earlier decisions of July 2002 and October 2003. This decision was based on the findings of the Schutte Committee of which the applicant institution had been informed on 1 April 2004. It stated that the applicant institution had unlawfully waived tuition fees but had received Government funding in respect of the students concerned. The grants for the latter two years were reduced retrospectively, the applicant institution being ordered to repay 435,584 euros (EUR) which would be set off against the funding due in 2005. The applicant institution submitted an administrative objection (bezwaar) to the Deputy Minister. A hearing was held before an advisory board on 31 May 2005. On 7 July 2005 the Deputy Minister gave a decision dismissing the objection. The applicant institution appealed to the Regional Court (rechtbank) of Rotterdam. The Regional Court gave its decision on 10 March 2006. It established as fact that the applicant institution had misreported the number of students and obtained government funding exceeding its entitlement, so that the Deputy Minister had, in principle, the right under section 4:49 of the General Administrative Law Act (Algemene wet bestuursrecht) to reclaim the excess. Nonetheless the Regional Court quashed the Deputy Minister’s decision on the following grounds: the applicant institution’s lack of good faith had not been proved; the Deputy Minister had been aware of the applicant institution’s reporting methods (or ought to have been so aware) at the time when the subsidies were granted; and the repayment order was disproportionate in the light of, firstly, a policy rule according to which repayment would not be demanded if it could be shown from bookkeeping records that the additional tuition fees were adequately covered by the applicant institution itself using funds obtained from non-governmental sources, and secondly, the finding that the applicant institution’s income from non-governmental sources appeared adequate and the students concerned had actually followed the courses, so that there was no misapplication of public funds. The Deputy Minister appealed to the final appellate Court: Administrative Jurisdiction Division (Afdeling bestuursrechtspraak) of the Council of State (Raad van State). The Chamber of the Administrative Jurisdiction Division appointed to hear the case included Councillor D., an ordinary councillor of the Council of State, and two extraordinary councillors. It held a public hearing on 26 September 2006 and gave its decision on 14 February 2007. The Administrative Jurisdiction Division quashed the Regional Court’s decision. It found as a matter of fact that the applicant institution did not deny having misreported the number of students to be counted for the Government subsidy. Admittedly the Deputy Minister had been aware of the applicant institution’s misreporting as early as October 2002 when the report of the “Self-Cleansing Investigation” became available, but the funding decision of July 2002 antedated this report. The Deputy Minister had therefore been unaware of the said misreporting when the decision of July 2002 was taken, from which it followed that that decision could lawfully be reconsidered in the light of information subsequently becoming available. As regards the subsidy grant of October 2003, it had transpired at the Administrative Jurisdiction Division’s hearing that the funding decision had been provisional and might have to be revisited in the light of the outcome of further investigations, in particular the investigation of the Schutte Committee. That being so the Deputy Minister had been entitled to reconsider the latter grant of subsidy also. The Deputy Minister’s decision had not been disproportionate as that expression had to be understood in the light of the Administrative Jurisdiction Division’s case-law. In particular, while it might have been the case that the applicant institution could have evaded its obligations to repay the excess subsidy by means of a simple administrative expedient, that was not a fact that the Deputy Minister had failed to take into account but which would have required a deviation from otherwise quite reasonable Government policy. The Adult Education and Vocational Training Act, as relevant and applicable at the time of the events complained of, provided as follows: “1. If the need arises as a result of the fixing of the State budget, the Minister (sc. of Education, Culture and Sciences) may, within eight weeks after the budget has been fixed, make corrections to the State contribution. The Minister shall inform the competent authority of a correction as referred to in the first sentence within eight weeks after the State budget has been fixed. The correction shall be set off against the State contribution for the year concerned or paid in that year. 2. If it appears from the [institution’s] annual statement, from the statement of the accountant [as to the reliability of the annual statement], an investigation [into the propriety of the institution’s expenditure and the efficiency of its management, ordered by the Minister] or an investigation [by an accountant appointed by the Minister] that the State contribution was determined on incorrect grounds or was improperly spent, the Minister may make corrections to the State contribution within one year after receiving the annual statement. The Minister shall inform the competent authority of any correction as referred to in the first sentence within one year after receiving the annual statement. The correction shall be set off against the State contribution for the following year or paid in that year.” “1. Any person wishing to be able to use educational and examination facilities shall have themselves registered as a student by the competent authority. ...” “Registration shall not be made conditional on any monetary contribution other than those regulated by or pursuant to the law.” The School and Tuition Fees Act, as relevant and applicable at the time of the events complained of, provided as follows: “1. Tuition fees shall be payable in order to follow publicly-funded training on courses. 2. Any persons wishing to be admitted to training on a course shall have themselves registered in order to follow training in a particular year of the course. 3. Registration shall not take place unless and until proof has been submitted that the tuition fee due has been paid or will be paid. 4. The tuition fee referred to in the first paragraph, the charging and payment thereof, and the registration referred to in the second paragraph shall be regulated by delegated legislation (algemene maatregel van bestuur). ...” “If the competent authority of a non-State school (bijzondere school) or a municipal school or course does not abide by the rules set by or pursuant to this Act, the Minister may decide that public funding (vergoeding uit de openbare kas) shall be withheld in whole or in part.” The delegated legislation referred to in section 6(4) of the School and Tuition Fees Act is the 2000 School and Tuition Fees Schedule. As relevant and applicable at the time of the events complained of, it provided as follows: “In this schedule, the following expressions shall have these meanings: student (cursist): a person following a course (degene die een opleiding volgt) ... ... person owing the tuition fee (cursusgeldplichtige): a student or, if he or she is a minor, their legal representative; ...” [emphases in the original] “1. An application to register as a participant for a course can be submitted only by the person from whom the tuition fee shall be due on the ground of such registration. ... 4. Registration shall not take place unless and until: the tuition fee has been paid, unless section 13 applies [sc. an exemption limited to persons less than eighteen years of age in certain cases]; an arrangement for deferred payment has been agreed ...” “1. The tuition fee shall be payable (verschuldigd) by the person owing the tuition fee. ...” The General Administrative Law Act contains the following substantive provisions relevant to the case before the Court: “1. The expression ‘subsidy’ shall mean: any claim to financial means issued by an administrative body with a view to particular activities of the claimant, not being payment for goods or services supplied to the administrative body. ... 4. [The following legal provisions relating to subsidies] shall apply by analogy to the funding of education and research.” “1. An administrative body may revoke a subsidy award or change it to the detriment of the recipient: on the ground of facts or circumstances of which, at the time the subsidy was awarded, it could not reasonably be aware and based on which the subsidy would have been set lower than the sum actually awarded; if the award of subsidy was incorrect (onjuist) and the recipient of the subsidy knew this or ought to have been aware of it; ...” “Subsidy monies and advances that have been paid but were not owed may be recovered in so far as the lapse of time after the day on which the subsidy was awarded ... is less than five years.” The Council of State is composed of ordinary and extraordinary councillors. Its tasks include advising the Government and Parliament on proposed legislation and acting as appellate court of administrative jurisdiction. The judicial function is exercised by the Administrative Jurisdiction Division. Ordinary councillors may be called to take part in both of the Council of State’s functions, unlike extraordinary councillors who participate only in the Council’s jurisdictional tasks. For a detailed description of the Council of State’s organisation and functions, see Kleyn and Others v. the Netherlands [GC], nos. 39343/98, 39651/98, 43147/98 and 46664/99, ECHR 2003VI. Councillors sitting as judges of the Administrative Jurisdiction Division in a particular case may be challenged on the ground of facts or circumstances which may affect their impartiality (section 8:15 of the General Administrative Law Act in conjunction with section 39(1) of the Council of State Act (Wet op de Raad van State)). Judicial decisions of the Administrative Jurisdiction Division shall be based on the statement of grounds of appeal (beroepschrift), the documents submitted, the findings of the preliminary investigation, and the examination of the case at its hearing. The Administrative Jurisdiction Division is explicitly empowered to supplement the facts and the law ex officio (section 8:69 of the General Administrative Law Act in conjunction with section 39(1) of the Council of State Act).