CASE OF DŽINIĆ v. CROATIA
Violation of Article 1 of Protocol No. 1 - Protection of property (Article 1 para. 1 of Protocol No. 1 - Peaceful enjoyment of possessions;Possessions;Article 1 para. 2 of Protocol No. 1 - Control of the use of property);Non-pecuniary damage - award (Article 41 - Non-pecuniary damage;Just satisfaction)
Jon Fridrik Kjølbro;Julia Laffranque;Nebojša Vučinić;Paul Lemmens;Stéphanie Mourou-Vikström;Ksenija Turković
5. The applicant was born in 1952. He is a businessman living in Županja. 6. On 11 August 2000 the Vukovar County State Attorney’s Office (Županijsko državno odvjetništvo u Vukovaru) asked an investigating judge of the Vukovar County Court (Županijski sud u Vukovaru) to open an investigation in respect of the applicant, in his capacity of the director of company M., in connection with suspicion of several charges of economic crime. It also requested that several items of the applicant’s real property be restrained so as to secure effective enforcement of a probable confiscation order in the amount of 3,573,747.24 Croatian kunas (HRK) (approximately 469,475 Euros (EUR)). 7. The investigation was opened on 21 August 2000, and on 6 March 2001 the investigating judge declared the request for seizure of the applicant’s property inadmissible on the ground that under the Code of Criminal Procedure applicable at the time the State Attorney’s Office had not been authorised to make such a request. 8. After the completion of the investigation, on 10 May 2002 the applicant was indicted, together with three other persons, in the Vukovar County Court on several charges of economic crime, concerning in particular misappropriation of company shares, and misuse of the company M.’s assets and facilities. 9. On 28 May 2007 the Vukovar County State Attorney’s Office amended the indictment, dropping the charges on six counts against the applicant and charging him on one count of misappropriation of company shares, and several counts of misuse of the company M.’s assets and facilities. The total value of the pecuniary gain which the applicant had allegedly obtained by the commission of these offences was set out at approximately EUR 1,060,000. 10. On the basis of the amended indictment, on 8 April 2008 the Vukovar County Court found the applicant guilty of charges of misappropriation of company shares and acquitted him of all other charges. The applicant was sentenced to three years and six months’ imprisonment and confiscation of the pecuniary gain in the amount of HRK 6,169,977.35 (approximately EUR 850,000) allegedly obtained by the commission of the offence of which he was found guilty. 11. Upon appeal by the applicant and the Vukovar County State Attorney’s Office against this judgment, on 18 October 2011 the Supreme Court (Vrhovni sud Republike Hrvatske) quashed it and ordered a retrial. 12. In the resumed proceedings, and after the 2010 Confiscation of the Proceeds of Crime Act (see paragraph 36 below) had entered into force, on 27 June 2012 the Vukovar County State Attorney’s Office requested the Vukovar County Court that several items of the applicant’s real property be seized (ten plots of land, two houses and a commercial building) so as to secure effective enforcement of a probable confiscation order in the amount of approximately EUR 1,060,000. 13. In support of its request the Vukovar County State Attorney’s Office submitted records from the land registry attesting to the applicant’s ownership of the real properties in respect of which the request for a seizure order was made. It did not submit an assessment of the value of the property nor did it make any reference to its possible value. However, according to the information submitted by the Government, the assessment of the value of several items of the real property, which were the subject matter of the proceedings, had been made on the basis of the material available from the investigation case file and their estimated value at the moment of purchase in 1997 (in total estimated at approximately EUR 440,000), whereas the assessment of the value of the remainder of the real property had been made by the Vukovar County State Attorney’s Office with regard to the information available in the land registry, although the records in the land registry did not contain information on the value of the property itself. 14. On 27 June 2012 a single judge of the Vukovar County Court ordered seizure of the applicant’s real property listed in the request of the Vukovar County State Attorney’s Office so as to secure effective enforcement of a possible confiscation order in the amount of approximately EUR 1,060,000. No reasoning was provided with regard to the proportionality of the alleged pecuniary gain obtained and the value of the restrained real property. 15. On the basis of an order of the Vukovar County Court, the seizure of the applicant’s real property was registered in the land registry. 16. The applicant challenged the decision of the Vukovar County Court before the Supreme Court and on 5 September 2012 the Supreme Court quashed it and remitted the matter for re-examination on the grounds that the decision on seizure of the real property was not within the competence of a single judge but a panel of three judges. 17. On 17 October 2012 the applicant requested the Vukovar County Court that the quashed seizure order be removed from the land registry. He contended that he had taken a bank loan which was secured by a mortgage on his real property and that the loan would not be extended due to the seizure of his property, which could lead to his total bankruptcy and destruction of his business. In support of his request, the applicant submitted email correspondence with the bank asking him to clarify when the seizure order would be lifted, as it affected the management of his loan. 18. On 18 October 2012 the applicant’s representative received a summons by the Vukovar County Court to appear before a three-judge panel of that court on 30 October 2012, without specifying the exact reason for the summons. It was also indicated that the court session could be held in the absence of the defence. 19. On 30 October 2012 a three-judge panel of the Vukovar County Court examined the request of the Vukovar County State Attorney’s Office for the seizure of the applicant’s real property. On the same day it accepted the request in full and ordered restraint of the applicant’s real property listed in the request of the Vukovar County State Attorney’s Office (see paragraph 12 above) by prohibiting its alienation or encumbrance. The relevant part of the decision reads: “The records from the land registry ... show that the accused Antun Džinić is the owner of the above listed items of real property. Under section 11 § 1(A) in conjunction with section 31 § 2 of the Confiscation of the Proceeds of Crime Act (Official Gazette no. 145/2010), and also in view of section 12 of the Confiscation of the Proceeds of Crime Act, this panel finds that it is presumed that there is a danger that the claim of the Republic of Croatia with regard to confiscation of the proceeds of crime would not be enforceable or that its enforcement would be difficult without ordering of a restraint measure. Under Article 82 of the Criminal Code no one can retain the proceeds of crime. By the indictment of the Vukovar County State Attorney’s Office ... the accused Antun Džinić is charged, under count 4 (a), (b) and (c), of having procured for himself a pecuniary gain in the amount of HRK 1,800,857.74. ... [T]he proceedings at issue concern ... the confiscation of the proceeds of crime under section 11 § 1(A) in conjunction with section 31 § 2 of the Confiscation of the Proceeds of Crime Act. In view of the above, it is ordered to the land registry of the Županja Municipal Court to register the restraint of the listed property in the land registry.” 20. The restraint of the applicant’s real property was registered in the land registry on the basis of an order of the Vukovar County Court. 21. On 12 November 2012 the applicant lodged an appeal before the Supreme Court challenging the decision of the Vukovar County Court ordering the seizure of his property. He contended in particular that the value of the restrained property was according to his provisional estimate more than HRK 20,000,000 (approximately EUR 2,600,000), which significantly surpassed the pecuniary gain allegedly obtained by the commission of the offences which were the subject matter of the proceedings. He also stressed that it was reasonably expected from the Vukovar County Court to conduct at least a general assessment of the value of the property restrained and the pecuniary gain allegedly obtained by the commission of the offences in question. The applicant therefore submitted that by failing to make any such assessment, the Vukovar County Court had imposed an excessive individual burden on his property rights. 22. The Supreme Court dismissed the applicant’s appeal on 27 December 2012. With regard to the applicant’s specific complaint concerning the lack of proportionality of the measure imposed, the Supreme Court noted: “The Supreme Court finds that the principle of proportionality has not been breached since Antun Džinić is charged with having obtained a pecuniary gain in the amount of HRK 1,800,857.74, and the value of the restrained property does not justify [his] argument that the value of the restrained property listed in the operative part of the impugned decision significantly surpasses the [possible confiscation] claim.” 23. On 18 February 2013 the applicant lodged a constitutional complaint before the Constitutional Court (Ustavni sud Republike Hrvatske) challenging the decisions of the lower courts on the seizure of his property. He relied on the Convention and the Court’s case-law, contending that the decision on the seizure of his property had been disproportionate. 24. On 20 February 2013 the applicant requested the Vukovar County Court that the seizure order be lifted or reassessed. He argued that there were other less restrictive means of securing the enforcement of a possible confiscation order, and contended that it had not been alleged that the seized property had been obtained by a criminal activity. He also urged the Vukovar County Court to make an assessment of the value of the seized property so as to limit the scope of the restraint to the value of the pecuniary gain allegedly obtained. He also contended that the value of the seized property significantly surpassed the alleged pecuniary gain obtained, which had endangered the normal functioning of his business. 25. On 25 April 2013 the Constitutional Court declared the applicant’s constitutional complaint of 18 February 2013 (see paragraph 23 above) inadmissible on the ground that the decisions of the lower courts did not concern a decision on the merits of any of the applicant’s rights or obligations or any criminal charge against him. 26. On 9 July 2013 a three-judge panel of the Vukovar County Court dismissed the applicant’s request that the seizure order be lifted or reassessed (see paragraph 24 above). The relevant part of the decision reads: “The request for the lifting of the restraint and the request for its modification are unfounded. It follows from the final indictment of the Vukovar County State Attorney’s Office ... that there is a reasonable suspicion that the accused Antun Džinić, by the offences listed in count 4 (a), (b) and (c) [of the indictment], obtained pecuniary gain in the total amount of HRK 1,800,857. Since the [seizure order] is based, under section 12 § 1 of the Confiscation of the Proceeds of Crime Act, on the presumption that there is a danger that the confiscation of the proceeds from crime would not be enforceable or that its enforcement would be difficult without ordering of a restraint measure, it was decided as noted in the operative part of this decision.” 27. On 12 July 2013 the applicant challenged this decision by lodging an appeal before the Supreme Court. He complained that he had not had an effective opportunity to challenge the seizure order in a hearing before the Vukovar County Court and that the seizure of his property had been disproportionate and thus contrary to Article 1 of Protocol No. 1. The applicant further stressed that it was unclear for which amount of the alleged pecuniary gain the seizure order had been made given that the Vukovar County Court had only referred to one count of the indictment, alleging that he had obtained pecuniary gain in the amount of HRK 1,800,857, whereas it had ignored the other count of the indictment according to which he had obtained a pecuniary gain in the amount of HRK 6,169,977.35. The applicant, therefore, assuming that the overall amount of the pecuniary gain for which the seizure order had been made corresponded to the sum of the two amounts noted (approximately EUR 1,060,000), submitted a detailed estimate value of each item of the restrained property based on the information from a publicly available Internet portal on the market values of real properties in Croatia. According to this estimate, the total value of the seized property corresponded to some EUR 9,887,084. The applicant thus contended that there was a gross disproportionality between the alleged pecuniary gain obtained by the commission of the offences referred to in the indictment and the value of the seized property, which imposed on him an excessive individual burden. 28. On 17 October 2013 the Supreme Court, acting as the appeal court, dismissed the applicant’s appeal by noting the following: “The same complaints had been made against the decision of 30 October 2012 ... and then it was answered to the appellant that the principle of proportionality had not been breached ... By a speculative assessment of the value of the real properties listed in the appeal, the appellant did not manage to put into doubt the findings of the first-instance court. The appellant’s argument that it is not clear from the impugned decision which amount of the pecuniary gain he has allegedly obtained is unfounded. The first-instance court stated in the impugned decision that the accused had obtained a pecuniary gain in the amount of HRK 1,800,857, as referred to in count 4 of the indictment, but it failed to cite the amount referred to in count 1 of the indictment of HRK 6,169,977.35, which is as such, in view of the status of the case, uncontested. There is therefore no doubt that the [seizure order] was made in respect of the overall amount of the possible pecuniary gain, as it was explained in the first decision by which the measure was ordered.” 29. The applicant challenged this decision before the Constitutional Court and on 7 February 2014 the Constitutional Court declared it inadmissible, reiterating its previous reasoning (see paragraph 25 above). 30. At a closing hearing in the criminal proceedings before the Vukovar County Court on 8 July 2014, the applicant again requested that the seizure order be lifted. 31. On 11 July 2014 the Vukovar County Court found the applicant guilty on the charges of misuse of the company M.’s assets and facilities by which he had allegedly obtained a pecuniary gain in the amount of HRK 1,800,857.74 (approximately EUR 240,000), and acquitted him on charges of misappropriation of company shares and one alleged event of misuse of the company M.’s assets and facilities. The applicant was sentenced to two years’ imprisonment and confiscation of the amount of HRK 1,800,857.74. The case is pending on appeal before the Supreme Court. 32. On the same day the Vukovar County Court dismissed the applicant’s request for lifting of the seizure order made at the hearing on 8 July 2014 (see paragraph 30 above) as ill-founded on the ground that the seizure of the property could be maintained for sixty days following the relevant procedures related to the finality of the judgment. As the judgment had not become final, the Vukovar County Court considered that there was no ground for lifting of the seizure order.