CASE OF ŠIDLAUSKAS v. LITHUANIA
Violation of Article 1 of Protocol No. 1 - Protection of property (Article 1 para. 1 of Protocol No. 1 - Peaceful enjoyment of possessions)
Egidijus Kūris;Ganna Yudkivska;Iulia Motoc;Marko Bošnjak;Paulo Pinto De Albuquerque;Vincent A. De Gaetano;Georges Ravarani
5. The applicant was born in 1945 and lives in Jonava. 6. In 1994 the applicant bought an apartment in Jonava. In 1998 he lost his regular job and was no longer able to pay for utilities. 7. In 2000 the utility provider instituted civil proceedings against the applicant concerning his debt of 2,861 Lithuanian litai (LTL – approximately 828.60 euros (EUR)). The domestic courts allowed the claim. In 2003 the judgment was transferred to a bailiff for enforcement. The bailiff decided to direct enforcement against the applicant’s apartment. On 6 October 2004 he organised a public auction at which the apartment was sold to a third party for LTL 3,390 (approximately EUR 982). On 18 November 2004 a district court confirmed the transfer of the apartment to the third party. 8. Since that date, the applicant has not had a permanent home. He submitted that he had been living in temporary accommodation, at times in unsuitable conditions, and often in exchange for manual work. 9. Between 2006 and 2008 the apartment was resold and gifted to different individuals on several occasions. 10. In November 2007 the applicant instituted civil proceedings before the Jonava District Court, arguing that the sale of his apartment at the public auction had been unlawful. The applicant submitted that, in accordance with the domestic law, taking a person’s home in order to enforce a court judgment was only permitted when the debt in question was larger than LTL 3,000 (see paragraph 22 below), which had not been the case here (see paragraph 7 above). The applicant also submitted that he had owned 0.05 hectares of land near Jonava, so the enforcement should have begun in respect of that property and not his only home (vienintelė gyvenamoji vieta). In view of the alleged unlawfulness of the sale, the applicant claimed damages jointly from the bailiff and the bailiff’s professional liability insurer. According to the applicant, restitution in integrum was not possible because there was no indication that the third party who had bought the apartment at the public auction had acted in bad faith. Therefore, he claimed LTL 51,000 (approximately EUR 14,770) in damages, an amount corresponding to the market price of the apartment at the time of the submission of the claim. 11. The defendants (the bailiff and his professional liability insurer) contested the applicant’s claim. They submitted that the value of the applicant’s land had been insufficient to cover his debt, so the enforcement had had to be directed against the apartment. They also argued that the applicant’s debt (LTL 2,861) and the enforcement expenses (LTL 540), taken together, had exceeded LTL 3,000, and thus the sale of his apartment had been in accordance with the domestic law. The defendants further argued that the applicant had acted in bad faith – he had not appealed against the execution writ or the results of the public auction, and he had submitted his claim at the very end of the time-limit because he had been waiting for the market price of the apartment to increase. Therefore, they argued that the applicant could not claim damages corresponding to the market price of the apartment at the time of the submission of the claim, but only the price for which the apartment had been sold at the public auction – LTL 3,390 (see paragraph 7 above). 12. On 17 June 2009 the Jonava District Court dismissed the applicant’s claim. It acknowledged that his debt had been below the required threshold of LTL 3,000 and that the bailiff had erred by calculating the debt together with the enforcement expenses. However, the court considered that this breach had not been such as to warrant the annulment of the sale. Accordingly, it dismissed the applicant’s claim for damages. The court also noted that the applicant had submitted his claim three years after the sale and on the last day permitted by the time-limit, when the market price of housing was several times higher than in 2004. Therefore, his claim for damages corresponding to the market price of the apartment at the time of the submission of the claim could be regarded as an attempt at unjust enrichment (vertintinas kaip siekimas nepagrįstai praturtėti). 13. The applicant appealed against the Jonava District Court’s judgment. He and the defendants presented essentially the same arguments as in their pleadings before the first-instance court (see paragraphs 10-11 above). 14. On 1 October 2009 the Kaunas Regional Court quashed the firstinstance judgment and allowed the applicant’s claim in its entirety. The court held that the bailiff had acted in violation of domestic law, firstly by failing to direct the enforcement against the applicant’s land, but also by selling his apartment at a public auction even though his debt had been less than LTL 3,000. The court considered that the bailiff had failed to respect the balance between the interests of the debtor (the applicant) and the creditor. It held that, because of the material breaches of the relevant law, the sale of the applicant’s apartment had to be declared unlawful. 15. Accordingly, the Kaunas Regional Court decided to award the applicant damages from the bailiff’s professional liability insurer. It stated that it “essentially agreed with the amount claimed by the applicant” (iš esmės sutinka su ieškovo nurodyta suma) and awarded him LTL 51,000 (approximately EUR 14,770), after subtracting the amount of his debt (see paragraph 7 above). 16. The bailiff’s professional liability insurer appealed against the Kaunas Regional Court’s judgment. It submitted, inter alia, that the amount of damages awarded to the applicant had no basis, and the court should have either ordered restitution in integrum or awarded the applicant the amount for which his apartment had been sold at the auction (see paragraph 7 above), but not its market price in 2007, which had increased significantly since 2004. 17. The applicant contested the appeal, arguing that there was no legal obligation for him to ask for restitution rather than for damages, and that the amount of damages was a question of fact which the Supreme Court could not examine. 18. On 8 February 2010 the Supreme Court amended the judgment of the Kaunas Regional Court in part. It upheld the conclusion that the sale of the applicant’s apartment had been unlawful for the reasons established by the lower court (see paragraph 14 above). The Supreme Court then reiterated its own case-law that, where the sale of property at a public auction is unlawful because of a bailiff’s actions, restitution in integrum should not be applied; accordingly, it considered that the most appropriate way of protecting the applicant’s rights was by awarding him damages. However, the court considered that, in line with “the nature of the obligation and the principles of equity, reasonableness and good faith” (pagal prievolės esmę, atsižvelgiant į teisingumo, protingumo ir sąžiningumo kriterijus), the amount of damages in the applicant’s case had to be assessed at the moment of the unlawful act, that is, the sale of the apartment. According to the State Enterprise Centre of Registers, the market price of the applicant’s apartment at the time of its sale had been LTL 12,100 (approximately EUR 3,504). Therefore, the Supreme Court awarded the applicant that amount, after subtracting his debt (see paragraph 7 above) and the bailiff’s enforcement expenses (see paragraph 11 above).