CASE OF LEKIĆ v. SLOVENIA
Remainder inadmissible;No violation of Article 1 of Protocol No. 1 - Protection of property (Article 1 para. 1 of Protocol No. 1 - Deprivation of property;Peaceful enjoyment of possessions;Possessions)
András Sajó;Boštjan Zalar;Iulia Motoc;Marko Bošnjak;Nona Tsotsoria;Paulo Pinto De Albuquerque;Vincent A. De Gaetano;Gabriele Kucsko-Stadlmayer
5. The applicant was born in 1956 and lives in Ljubljana. 6. On 8 October 1992 the applicant acquired a share in L.E., a limited liability company based in Ljubljana. His name was entered in the court register of legal entities (hereinafter “the court register”) and he became one of nine equal registered members of the company, each holding an 11.11% share. The share capital of L.E. stood at 2,995,250 Slovenian tolars (SIT) (12,498.96 euros (EUR)). 7. Two of the founding members withdrew from company L.E. at the beginning of 1993. On 2 February 1993 the applicant, in addition to being a member, was also employed by company L.E. as head of its IT department. In addition, he provided assistance to the finance director. 8. On 19 February 1993 two key members and managers of company L.E. died in a car accident and two others were seriously injured. As a result, the company’s business operations could not be carried out and the company sustained a large financial loss. Moreover, its management was seriously undermined and during the course of 1993 all members except the applicant and another person withdrew from the company’s management board. Following those events, the applicant first assumed the role of acting director of company L.E. on 29 April 1993, and then the role of managing director on 23 February 1995. In that capacity he acted as the company’s representative. 9. Meanwhile, on 24 August 1993, the Railway Company of Slovenia (Slovenske železnice) had applied for an enforcement order against L.E. based on an authentic document for unpaid transport services. L.E. challenged the enforcement order and the parties were directed to settle the issue in contentious proceedings. The Railway Company lodged a civil action, claiming the payment of three sums totalling approximately SIT 5,000,000 (EUR 20,000). 10. In 1995, L.E. was converted into a limited liability company in accordance with section 580 of the Companies Act, which required companies falling under its jurisdiction to increase their share capital and to align their operations with the provisions of the Act (see paragraph 34 below). However, at the time of the conversion the company was no longer liquid or solvent. 11. On 6 May 1996 the applicant stepped down as managing director of L.E. following a decision of the general meeting of the company. The members failed to appoint a new managing director and henceforth the company existed without any management. The applicant’s resignation from the post of managing director was not entered in the court register of legal entities (hereinafter “the court register”). 12. On 19 June 1997 the members of company L.E. decided at its general meeting to apply for bankruptcy on account of the company’s insolvency. L.E. filed a bankruptcy petition with the competent court, but it was rejected as the company had failed to make the required advance payment to cover costs and expenses of the bankruptcy proceedings in the amount of SIT 150,000 (EUR 626). The members established that they could not incur the costs of bankruptcy and thus decided to wait for the courts to liquidate the company proprio motu, in accordance with the then applicable legislation, namely, the Compulsory Composition, Bankruptcy and Winding-Up Act as amended, which entered into force on 1 July 1997. The amendment to the Act authorised the courts to initiate bankruptcy proceedings of their own motion in certain specified circumstances (see paragraph 34 below). 13. On 31 July 1997 the applicant stopped working for company L.E. Moreover, by the end of 2000, another two members of the company had died. 14. In the civil proceedings initiated by the Railway Company against L.E. the applicant was summoned to appear at a hearing to be held on 22 November 2000. As he was unable to attend the hearing, he made written submissions explaining that the company had not been solvent for a number of years. On 22 November 2000 the District Court of Ljubljana rendered a judgment ordering L.E. to pay the Railway Company the three sums claimed. 15. Meanwhile, on 1 July 1999 the Compulsory Composition, Bankruptcy and Winding up Act was again amended, inter alia, to repeal the provisions on bankruptcy proprio motu. Moreover, on 23 July 1999 the Financial Operations of Companies Act (hereinafter “the FOCA”) entered into force. It introduced a measure decided proprio motu whereby insolvent and/or inactive companies were struck off from the court register without winding up. Thus those companies could be dissolved without the prior procedure of disposing of their assets and repaying – to the extent possible – their creditors. However, in order to ensure that creditors of struck-off companies were protected, the FOCA provided that the members of those companies would assume joint and several liability for the former companies’ debts. 16. On the basis of a notification from the Agency for Public Legal Records and Related Services that company L.E. had not performed any transactions through its bank account in a period of twelve consecutive months, on 19 January 2001 the Ljubljana District Court, acting in its capacity as the registry court, initiated proceedings to strike off the company from the court register. 17. On that day, the decision to initiate strike-off proceedings was entered in the court register and an unsuccessful attempt was made to serve it on the company at its registered office. The document was sent to the address of the company, but since no representative of the company was there to receive it, a delivery slip was left in its mailbox, informing the company that the relevant correspondence could be collected at the post office. On 12 February 2001 the document was returned to the registry court with the information that the addressee had failed to collect it. The registry court then served it by posting it on its notice board, as provided for by the Court Register of Legal Entities Act. According to the applicant, company L.E. had ceased to operate at the address of its registered office already in 1997 and had not been present at those or any other premises since. Moreover, there were no mailboxes at the office building at issue and all mail would have been left at the reception desk. 18. No objection was made to the decision to initiate strike-off proceedings either by company L.E. or by its members. Consequently, on 11 May 2001 the registry court issued a decision to strike off company L.E. from the court register. The decision was published in the Official Gazette on 30 May 2001. The registry court also attempted to serve the decision on company L.E. by sending it to the company’s address, but like the previous document it was returned on 4 June 2001 with the information that the addressee had failed to collect it. Again, the decision was posted on the registry court’s notice board. Neither company L.E. nor any of its members, who were entitled to lodge an appeal against the strike-off decision, appealed against the decision, so on 17 August 2001 it became final. 19. On 25 September 2001 company L.E. was struck off from the court register and thus ceased to exist. Notification of the strike-off was published in the Official Gazette on 6 February 2002. 20. The applicant stated that he had become aware that L.E. had been struck off from the court register on 22 December 2004, when an enforcement order was served on him for seizure of his property. 21. Meanwhile, based on the judgment ordering L.E. to pay the Railway Company approximately EUR 20,000 (see paragraph 9 above), on 5 April 2002 the creditor lodged an application for enforcement with the Ljubljana Local Court against seven members of the company. 22. On 5 June 2002 the Ljubljana Local Court granted the creditor an enforcement order to seize the applicant’s personal possessions, which was later expanded to include his salary. 23. On 29 December 2004 the applicant lodged an objection to the enforcement order, arguing that the local court had failed to establish his actual role in company L.E. and to acknowledge his status of an “inactive member” (see paragraphs 48-49 below), which would have exonerated him from liability for the company’s debts. He maintained that the creditor’s claim against the company had arisen before he had joined it, and that he had only become involved in the management of the company because the two members who had previously performed that role had died. Moreover, the applicant was of the view that the onus rested on the creditor to establish that he had been an active member of the company, and that the matter should be examined in contentious civil proceedings. Lastly, he applied for a stay of enforcement. 24. On 12 March 2005 the applicant’s objection was dismissed. The Local Court found that the onus of proving his inactive status was on the applicant, and that he had failed to prove that he had not been an active member of L.E. The Local Court established that with his 11.11% share in the company, the applicant had enjoyed the rights of a minority member, and furthermore, he had been employed by the company and actively involved in its management since April 1993. In his capacity as acting director and later managing director, he had been authorised to act on behalf of the company. Moreover, even after the applicant had resigned as managing director, he had still been active in the operations of the company and had also signed the bankruptcy petition. The Local Court further dismissed the applicant’s request for a stay of enforcement, as he had failed to demonstrate that the enforcement would have caused him irreparable or serious damage. The applicant appealed against that decision, reiterating the arguments he had raised in the objection to the enforcement order. 25. On 6 May 2005 the applicant attended a hearing with regard to an objection to the enforcement order raised by D.P., another member of company L.E. 26. On 9 February 2006 the Higher Court of Ljubljana dismissed the applicant’s appeal on essentially the same grounds as the first-instance court, and the enforcement order thus became final. The court noted, inter alia, that the Constitutional Court had found the measure of “lifting the corporate veil” under the applicable Financial Operations of Companies Act to be in accordance with the principle of separation of a company’s assets from those of its member, and thus consistent with the Constitution. The Higher Court considered it irrelevant whether the applicant had become a member of L.E. before or after the creditor’s claim had arisen. Having joined the company, he had assumed its assets as well as its liabilities, and moreover, he had had the rights of a minority member. The Higher Court placed considerable emphasis on the fact that the applicant had been actively involved in the management of the company. It explained that the reasons for lifting the corporate veil under the FOCA were not identical to those provided for in the Companies Act. The FOCA established a non-rebuttable presumption that members of inactive companies intended to have the companies dissolved and, to that end, made it clear that they assumed joint and several liability for their outstanding debts (see paragraph 41 below). 27. On 5 May 2006 the applicant lodged two constitutional complaints before the Constitutional Court, one concerning the strike-off proceedings and the other the enforcement proceedings. 28. On 31 January 2007 the Constitutional Court rejected the applicant’s complaint regarding the strike-off proceedings. The decision was served on the applicant on 5 February 2007. The court observed that the applicant lacked legal interest in challenging the decision of the registry court, as company L.E. had already been struck off from the court register. Therefore, even a positive outcome of the constitutional complaint could not improve the applicant’s legal position. On 9 July 2007 the Constitutional Court rejected also the complaint regarding the enforcement proceedings, finding that the applicant’s human rights had manifestly not been violated. Reiterating that only active members of struck-off companies could be held liable for the companies’ debts, the Constitutional Court found that the lower courts had correctly established that the applicant’s active involvement in the management of company L.E. could not exempt him from personal liability for the latter’s debts. 29. In 2010 the enforcement order against the applicant’s salary was executed and part of each of the applicant’s monthly salaries was seized to pay off his debt. On 23 September 2011 the applicant reached an out-of-court settlement with the Railway Company and paid the agreed amount, and the application for enforcement against him was withdrawn. The proceedings against the applicant were terminated on 28 September 2011. In total, the applicant paid EUR 32,795 to his creditor.