CEDH · CASELAW;JUDGMENTS;CHAMBER;ENG — 22 février 2005

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POLAND     (Application no. 35014/97)     JUDGMENT     STRASBOURG     22 February 2005     THIS CASE WAS REFERRED TO THE GRAND CHAMBER, WHICH DELIVERED JUDGMENTS IN THE CASE ON 19 June 2006 (merits) and 28 April 2008 (struck out of the list – friendly settlement)     This judgment will become final in the circumstances set out in Article   44 §   2 of the Convention. It may be subject to editorial revision. In the case of Hutten-Czapska v. Poland, The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of:   Sir   Nicolas Bratza , President ,   Mr   M. Pellonpää ,   Mrs   V. Strážnická , appointed to sit in respect of Poland ,   Mr   J. Casadevall ,   Mr   R. Maruste ,   Mr   S. Pavlovschi ,   Mr   J. Borrego Borrego, judges , and Mr M. O’Boyle , Section Registrar , Having deliberated in private on 27   January 2004 and on 25   January 2005, Delivers the following judgment, which was adopted on the last ‑ mentioned date: PROCEDURE 1.     The case originated in an application (no. 35014/97) against the Republic of Poland lodged with the European Commission of Human Rights (“the Commission”) under former Article 25 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by Mrs Maria Hutten-Czapska, who is a French national of Polish origin (“the applicant”), on 6 December 1994. 2.     The applicant was represented by Mr B. Sochański, a lawyer practising in Szczecin, Poland. The Polish Government (“the Government”) were represented by their Agent, Mr J. Wołąsiewicz, of the Ministry of Foreign Affairs. 3.     The applicant alleged, in particular, that the situation created by the implementation of the laws imposing on landlords restrictions in respect of increasing rent and terminating leases that originated in administrative decisions amounted to a violation of Article 1 of Protocol No. 1 to the Convention. 4.     The application was transmitted to the Court on 1 November 1998, when Protocol No. 11 to the Convention came into force (Article 5 § 2 of Protocol No. 11). 5.     The application was allocated to the Fourth Section of the Court (Rule   52 §   1 of the Rules of Court). Within that Section, the Chamber that would consider the case (Article 27 § 1 of the Convention) was constituted as provided in Rule 26 § 1. 6.     On 1 November 2001 the Court changed the composition of its Sections (Rule 25 § 1). This case was assigned to the newly composed Fourth Section (Rule 52 § 1). 7.     Mr L. Garlicki, the judge elected in respect of Poland, withdrew from sitting in the case (Rule 28). The Government accordingly appointed Mrs   V.   Strážnicka, the judge elected in respect of the Slovak Republic, to sit in his place (Article 27 § 2 of the Convention and Rule 29 § 1). 8.     By a decision of 16 September 2003, the Court declared the application partly admissible. 9.     The applicant and the Government each filed observations on the merits (Rule 59 § 1). 10.     On 16 January 2004 the French Government informed the Court that they did not wish to exercise their right to intervene (Article 36 § 1 of the Convention and Rule 44 § 1 of the Rules of Court). 11.     A hearing on the merits of the case took place in public in the Human Rights Building, Strasbourg, on 27 January 2004 (Rule 59 § 3). There appeared before the Court: (a)     for the Government Mr   J. Wołąsiewicz ,   Agent , Mr   L. Łukasik , Mr   A. Bojańczyk ,   Advisers; (b)     for the applicant Mr   B. Sochański ,   Counsel , Mr   P. Paszkowski ,   Adviser.   The Court heard addresses by them. 12.     At the hearing, the parties were invited to submit further observations in writing. The Government filed their observations on 19   February and 31 March 2004. The applicant lodged her pleadings on 19   February, 11 March and 20 April 2004. 13.     On 30 September 2004 the Polish Association of Tenants ( Polskie Zrzeszenie Lokatorów ) filed with the Registry an application for leave to submit written comments on the merits of the case in the context of the general situation in Poland (Article 36 § 2 of the Convention and Rule 44 §   2 of the Rules of Court). The President of the Chamber rejected the request on 19 October 2004. 14.     On 4 October 2004 the Section Registrar, acting on the President of the Fourth Section’s instructions, drew the parties’ attention to the fact that the case was considered a “pilot case” for the purposes of ruling whether the impugned rent-control scheme was compatible with the requirements of Article 1 of Protocol No. 1. 15.     On 1 November 2004 the Court changed the composition of its Sections (Rule 25 § 1), but this case remained with the Chamber constituted within former Section IV. Subsequently, at the Government’s request, the parties were invited to submit written comments on the merits of the case in the light of new developments at domestic level. The Government filed their observations on 4   November 2004 and the applicant on 5 November 2004. THE FACTS I.     THE CIRCUMSTANCES OF THE CASE 16.     The applicant, who is a French national of Polish origin, was born in   1931 and lives in Andresy, France. She owns a house and a plot of land in Gdynia, Poland. The property previously belonged to her parents. A.     General situation 17.     Polish legislation on rent control has been the result of many historical and recent circumstances. Legislative schemes restricting rights of landlords and regulating increases in rent were already in operation before the Second World War. The description below of the general situation was based on the findings of the Polish Constitutional Court ( Trybunał Konstytucyjny ), which, on 12 January 2000, in one of its judgments concerning the constitutionality of certain aspects of the legislation on rent control gave thorough consideration to the historical background of such legislation and the factors contributing to the preservation of restrictions dating back to an early stage of the communist regime in Poland. 18.     The rent control scheme was the consequence of the introduction of the so-called “State management of housing matters” ( publiczna gospodarka lokalami ) by the former communist authorities (see paragraphs   71-74 below). It was accompanied by provisions drastically restricting the amount of rent chargeable. The applicable provisions originated in the exceptionally rigid distribution of housing resources which characterised the first 30 years of the communist regime in Poland. 19.     The circumstances did not change significantly after the end of the communist rule in 1989; indeed, at the beginning of the 1990s the situation of housing in Poland was particularly difficult, as was demonstrated, on the one hand, by a shortage of dwellings and, on the other hand, by the high cost of acquiring a flat. The State-controlled rent, which also applied to privately owned buildings, covered merely 30% of the actual cost of maintenance of buildings. In 1994 those social and economic factors prompted the legislature not only to maintain elements of the so-called “special lease scheme” ( szczególny tryb najmu ) (see also paragraph 73 below) in respect of State-owned dwellings but also to continue to apply that scheme – temporarily, for a period of 10 years expiring on 31   December 2004 – to privately owned buildings and dwellings. In short, the system was a combination of restrictions on the amount of rent chargeable and of limitations on the termination of leases, even in respect of tenants who did not comply with the terms of the contract. 20.     The material collected by the Constitutional Court in 2000 included a report prepared by the Office for Housing and Town Development ( Urząd Mieszkalnictwa i Rozwoju Miast ). According to that report, in 1998, after 4   years of the operation of the 1994 rent control scheme, the average rent as fixed under that scheme covered only 60% of the costs of maintenance of residential buildings. The shortfall was to be covered by landlords. The scale of the problem was considered to have been very large since at that time 2,960,000 dwellings (25.5% of the country’s entire housing resources) were let under the rent-control scheme; that number comprised some 600,000 flats in buildings owned by private individuals. The total number of flats in Poland was estimated at about 11,600,000. Flats in privately owned buildings subject to the rent-control scheme constituted 5.2% of the country’s housing resources. The report stated, among other things: “Before ... [1994], statutory rent determined by the Cabinet covered about 30% of running maintenance costs. At present, after four years of the operation of the [1994] rent control scheme, municipalities set levels of rent covering on average 60% of maintenance costs. ... In respect of buildings owned by municipalities, the shortfall is covered by municipalities, which frequently use for that purpose surplus received by means of letting commercial premises. As regards privately owned buildings, where tenants pay controlled rent, the shortfall is covered by owners of buildings.” 21.     In 2003-2004 the Government, in the course of the preparation of their bill amending the legislation on rent control (see paragraphs 118 et   seq. below) collected considerable material describing the present general situation of housing in Poland. The situation is characterised by a serious shortage of residential dwellings. According to the 2002 National Population and Housing Census, the relevant deficit, defined as the difference between the number of households and the number of flats, amounts to 1,500,000 flats. There is a particularly acute shortage of flats for lease. 22.     In the light of data collected by the Central Statistical Office ( Główny Urząd Statystyczny ) on the overall financial situation of households, in the years 1998-2003 household expenses such as rent and electricity bills amounted to 14.5%-15.4% of total expenses (18.6%-19.0% in pensioners’ households). At the same time between 7% and 10% of Polish households were in rent arrears (1998: 7.5%; 1999: 7%; 2000: 7%; 2002: 10%; 2003: 9%). In 2000 about 54% of the population lived below the poverty line, of which 8% were below the abject poverty line. In 2002 some 58% of the population lived below the poverty line, of which 11% were below the abject poverty line. 23.     Various reports received by the Office for Housing and Town Development confirmed that the provisions relating to the protection of tenants as applicable until 31 December 2004 (see also paragraphs 89-93 below) limited the supply of flats available for lease. In the authorities’ view, the introduction of the so-called “commercial lease” ( najem komercyjny ) – in other words a market-related lease – by removing restrictions on the increase of rent for privately owned buildings and freeing private landlords from their obligation to provide indigent tenants with an alternative accommodation upon the termination of their lease, should encourage private investors to build tenement houses designated solely to be let. 24.     The Government gave various figures to indicate the number of persons potentially affected by the operation of the rent-control scheme. They stated that according to information supplied by the Office for Housing and Town Development, the operation of the relevant legislation affected about 100,000 landlords and 600,000 tenants. Other sources cited by the Government stated that the total number of persons concerned was about 100,000 landlords and 900,000 tenants. B.     The facts of the case 1.     Events before 10 October 1994 25.     The applicant’s house was built in 1936 as a one-family house. It originally consisted of a duplex apartment, basement and attic. 26.     During the Second World War, officers of the German Army lived in the house. In May 1945 the Red Army took it over and placed its officers there for some time. 27.     On 19 May 1945 the Head of the Housing Department of the Gdynia City Council ( Kierownik Wydzialu Mieszkaniowego Magistratu Miasta Gdynia ) issued a decision assigning the first-floor part of the duplex apartment to a certain A.Z. 28.     In June 1945 the Gdynia City Court ( Sąd Grodzki ) ordered the return of the house to the applicant’s parents. They began renovation of the house but, shortly afterwards, were ordered to leave their property. In October   1945 A.Z. moved into the house. 29.     On 13 February 1946 the Decree of 21 December 1945 on the State Management of Housing and Lease Control ( Dekret o publicznej gospodarce lokalami i kontroli najmu ) entered into force. Under its provisions, the house became subject to the so-called “State management of housing matters” (see also paragraph 18 above). 30.     In 1948, at a public auction, the authorities unsuccessfully tried to sell the house to A.Z., who was at that time employed by the Gdynia City Council, an authority responsible for the State management of housing matters at the material time. At about the same time, the applicant’s parents, likewise unsuccessfully, tried to recover their property. 31.     On 1 August 1974 the Housing Act ( Prawo lokalowe ) (“the 1974 Housing Act”) entered into force. It replaced the State management of housing matters with the so-called “special lease scheme” (see also paragraphs   19 above and 73 below). 32.     On an unknown date in 1975 a certain W.P., who was at that time the Head of the Housing Department of the Gdynia City Council ( Kierownik Wydziału Spraw Lokalowych Urzędu Miejskiego ), tried to buy the house from the applicant’s brother. 33.     On 8 July 1975 the Mayor of Gdynia issued a decision allowing W.P. to exchange the flat he was leasing in another building under the special lease scheme for the ground-floor flat in the applicant’s house. That decision was signed on behalf of the Mayor of Gdynia by a civil servant who was subordinate to W.P. On 28   January   1976 the Gdynia City Council issued a decision confirming that under the provisions governing the special lease scheme the flat had been let to W.P. for an indefinite time. Later, in the 1990s, the applicant tried to have that decision declared null and void but succeeded only in obtaining a decision declaring that it had been issued contrary to the law (see also paragraphs 49-54 below). 34.     On 24 October 1975 the Head of the Local Management and Environment Office of the Gdynia City Council ( Kierownik Wydziału Gospodarki Terenowej i Ochrony Środowiska Urzędu Miejskiego w Gdyni ) ordered that the house became subject to State management ( przejęcie w zarząd państwowy ). That decision took effect on 2 January 1976. 35.     On 3 August 1988 the Gdynia District Court ( Sąd Rejonowy ), ruling on an application by A.Z.’s relatives, gave judgment, declaring that, after the A.Z.’s death, her daughter (J.P.) and son-in-law (M.P.) had inherited the right to lease the first-floor flat in the applicant’s house. 36.     On 18 September 1990 the Gdynia District Court gave a decision declaring that the applicant had inherited her parents’ property. On 25   October 1990 the Gdynia District Court entered her title in the relevant land register. 37.     On 26 October 1990 the Mayor of Gdynia issued a decision restoring the management of the house to the applicant. On 31 July 1991, acting through her representative, she took over the management of the house from the Gdynia City Council. Shortly afterwards, she began to refurbish the house. 38.     On an unknown date in the 1990s the applicant set up a private foundation called the Amber Trail Foundation ( Fundacja Bursztynowego Szlaku ). Since 1991 then, she has been making unsuccessful efforts to locate the seat of the Foundation in her house. 2.     Events after 10 October 1994 39.     After taking over the management of the house, the applicant initiated several sets of proceedings – civil and administrative – in order to annul the previous administrative decisions and regain possession of the flats in her house. (a)     Proceedings before the civil courts (i)     Eviction proceedings 40.     On 16 June 1992 the applicant asked the Gdynia District Court to order the eviction of her tenants. In April 1993, on an application by the defendants, those proceedings were stayed. On 26 April 1996 her claim was dismissed. (ii)     Proceedings concerning the relocation of tenants and compensation 41.     In April 1995 the applicant asked the Gdańsk Regional Court ( Sąd Wojewódzki ) to order the Gdynia City Council to relocate the tenants living in her house to dwellings owned by the municipality. She also asked the court to award her compensation, inter alia , for the fact that the authorities had deprived her parents and herself of any possibility of living in their own house, for damage to the property and arbitrary alteration of its use, and for mental suffering. On 5   July 1996 the Regional Court ruled that, under the Lease of Dwellings and Housing Allowances Act of 2   July   1994 ( Ustawa o najmie lokali mieszkalnych i dodatkach mieszkaniowych ), (“the 1994 Act”) the defendant authority had no obligation to relocate the tenants to accommodation owned by the municipality. It dismissed the remainder of the claims. The applicant appealed. 42.     On 17 January 1997 the Gdańsk Court of Appeal ( Sąd Apelacyjny ) heard, and dismissed, her appeal. It observed that no provision of the 1994 Act obliged the municipal authorities to relocate the applicant’s tenants or, at her request, to provide them with alternative accommodation ( lokal zastępczy ). The relevant provisions of the 1994 Act, namely section 56(4) and (7) (see also paragraph 81 below), stipulated that a tenant had to vacate a dwelling only if the owner had offered him another flat owned by him or the municipality had agreed to provide the tenant with an alternative accommodation owned or administered by it. As regards the applicant’s claim for damages for financial loss sustained as a result of the administrative decisions, the Court of Appeal observed that such claims could be determined by the courts of law only if a claimant had first applied for compensation to the administrative authorities and the outcome of the relevant administrative proceedings had been unfavourable. It referred the applicant to the Code of Administrative Procedure ( Kodeks postępowania administracyjnego ), which set out the rules governing the liability of public authorities for issuing wrongful decisions. In so far as the applicant sought compensation for damage to the house and for the alteration of its use, the Court of Appeal considered that the defendant authority could not be held liable for the consequences of the laws which had previously been in force. In particular, it was not liable for the enactment of the post-war legislation which had introduced restrictive rules concerning the lease of dwellings in privately owned houses and the State management of housing matters. Nor was it liable for the implementation of the special lease scheme introduced by the 1974 Housing Act and the operation of the 1994 Act, which incorporated certain similar rules for the protection of tenants whose right to lease flats in privately owned houses had been conferred on them by administrative decisions (see also paragraphs 75-76 below). Lastly, the court noted that the defendant could not be liable for any damage caused by the applicant’s tenants. 43.     Subsequently, the applicant lodged a cassation appeal ( kasacja ) with the Supreme Court ( Sąd Najwyższy ). On 13 November 1997 the Supreme Court rejected that appeal on procedural grounds. The court held that the applicant had not complied with the relevant formal requirements; in particular, she had not specified the errors of substantive civil law allegedly committed by the lower courts. (b)     Administrative proceedings (i)     Proceedings concerning the annulment of the decision of 19 May 1945 44.     In October 1995 the applicant asked the Gdańsk Self-Government Board of Appeal ( Samorządowe Kolegium Odwoławcze ) to declare null and void the decision of the Head of the Housing Department of the Gdynia City Council of 19 May 1945. By virtue of that decision, the first-floor flat in the house had been assigned to A.Z. It had also formed a basis for granting the right to lease that flat in the applicant’s house to A.Z.’s successors (see also paragraph 27 above). 45.     On 26 June 1997 the Board rejected her application. It noted that the impugned decision had been taken pursuant to the provisions of the Decree on Housing Commissions issued by the Polish Committee of National Liberation on 7 September 1944 ( Dekret Polskiego Komitetu Wyzwolenia Narodowego o komisjach mieszkaniowych ), a law which had at the relevant time governed all housing matters. It found that the decision had not been issued by the competent public authority and, in consequence, had not been lawful. Yet the Board could not declare the decision null and void ( stwierdzić nieważność decyzji ) because, pursuant to Article 156 § 2 of the Code of Administrative Procedure, if more than 10 years had elapsed from the date on which the unlawful decision had been made, the Board could only declare that the decision “had been issued contrary to the law” ( została wydana z naruszeniem prawa ). 46.     The applicant appealed to the Supreme Administrative Court ( Naczelny Sąd Administracyjny ). On 15 January 1998 the court dismissed her appeal because she had not exhausted an obligatory legal remedy in that she had not made an application to the Board for the matter to be reconsidered ( wniosek o ponowne rozpatrzenie sprawy ). 47.     The applicant subsequently made such an application. On 23   June 1998 the Board upheld its decision of 26 June 1997. The applicant appealed to the Supreme Administrative Court. The Gdańsk Regional Prosecutor ( Prokurator Wojewódzki ) joined the proceedings and lodged an appeal on the applicant’s behalf. 48.     On 8 June 1999 the Supreme Administrative Court rejected both appeals. It confirmed that the impugned decision had been unlawful. It added that there had been several procedural shortcomings (for instance, the applicant’s parents had not been notified of the proceedings and had never had any opportunity to challenge the decision; in addition, no legal basis had been given for it); however, in accordance with Article 156 § 2 of the Code of Administrative Procedure, the court could not annul the decision but could only declare that it had been issued contrary to the law. In passing, the court observed that the above-mentioned procedural shortcomings could be rectified by means of reopening the proceedings. (ii)     Proceedings concerning the annulment of the decision of 8 July 1975 49.     In 1992 the applicant asked the Gdańsk Self-Government Board of Appeal to declare null and void the decision of the Mayor of Gdynia of 8   July 1975. By virtue of that decision, W.P. had been granted the right to lease the ground-floor flat in the applicant’s house (see also paragraph   33 above) 50.     On 27 January 1994 the Board rejected her application. The applicant appealed to the Supreme Administrative Court. 51.     On 14 June 1995 the court dismissed her appeal. It found that the flats in the applicant’s house had been let under the special lease scheme introduced by the 1974 Housing Law and that, accordingly, the mayor had been competent to issue the decision in question. It further observed that, despite some procedural errors committed by the Mayor of Gdynia (which could be rectified by means of reopening the proceedings), the decision had had a legal basis and could not, therefore, be declared null and void. 52.     On 17 September 1994 the applicant asked the Mayor of Gdynia to reopen the relevant proceedings and to declare the impugned decision null and void. The mayor rejected her application as being lodged out of time. 53.     On 29 December 1995 the Gdańsk Self-Government Board of Appeal, of its own motion, reopened the proceedings. It found that the contested decision had been made on behalf of the Mayor of Gdynia by a civil servant who had been W.P.’s subordinate and that that fact had in itself constituted a sufficient ground for reopening the proceedings, pursuant to Article   145 §   1   (3) of the Code of Administrative Procedure. That fact had also rendered the decision unlawful. However, since more than 5 years had elapsed from the date on which the decision had been given, the Board could not annul it. It could merely declare that it had been issued contrary to the law, as laid down in Article 146 § 1 of the Code of Administrative Procedure. 54.     The applicant appealed to the Supreme Administrative Court, alleging that the decision had never been served on the owners of the house and that it should have been declared null and void. On 28   November   1996 her appeal was dismissed. (iii)     Proceedings concerning the annulment of the decision of 24   October   1975 55.     On 4   October 1994 the applicant asked the Gdynia City Council to reopen the administrative proceedings that had been terminated on 24   October 1975 by the decision of the Head of the Local Management and Environment Department of the Gdynia Municipality. By virtue of that decision, the applicant’s house had become subject to the State management (see also paragraph 34   above). She further asked to have the decision declared null and void, submitting that it had lacked any legal basis. In particular, the house had incorrectly been classified as a “tenement house” ( dom wielorodzinny ), whereas in reality it was, and always had been, a one-family house and, as such, should not have become subject to the State management. The decision, the applicant added, had been made solely for the personal benefit and gain of W.P., who had at that time been the Head of the Housing Department of the Gdynia City Council. In her view, it had been made to sanction the prior – and likewise unlawful – decision of 8   July 1975 whereby W.P. had acquired the right to lease the flat in her house. 56.     On 7 December 1994 the Mayor of Gdynia rejected her application, finding that she had lodged it outside the prescribed time-limit. On 12   June   1995 the Gdańsk Self-Government Board of Appeal upheld the mayor’s decision. Subsequently, the applicant appealed to the Supreme Administrative Court. On 14 November 1996 the court quashed both decisions because the Mayor of Gdynia had not been competent to rule on the application. 57.     On 27 February 1997 the Gdańsk Self-Government Board of Appeal reopened the proceedings terminated by the decision of 24   October   1975. On 28 April 1997 the Board declared that that decision had been issued contrary to the law because the owners of the house had not been notified of the proceedings. It found that the Gdynia City Council had not acted with due diligence. In particular, it had made no efforts to establish who had been the rightful successors to the owners of the house. Indeed, at the material time the applicant and her brother had - on a regular basis - paid the relevant taxes on the property to the City Council. Relying on Article 146 § 1 of the Code of Administrative Procedure, the Board refused to annul the decision because more than 5 years had elapsed from the date on which it had been given. 58.     On an unspecified date in 2002 the applicant asked the Governor of Pomerania ( Wojewoda Pomorski) to declare the decision of 24 October 1997 null and void. The application was referred to the Gdańsk Self-Government Board of Appeal, a body competent to deal with the matter. The Board refused the application on 13 May 2002. It held that the matter was res judicata . 3.     The situation of the applicant’s tenants (a)     The surface area of the flats 59.     The parties gave differing information on what was the actual usable surface area of the flats in the applicant’s house, a factor relevant for the determination of the chargeable rent. (i)     The Government 60.     The Government submitted that the usable surface area of the applicant’s house was 196 square metres. They produced an inventory made on 1   August 1991 in connection with the transfer of management of the house from the Gdynia City Council to the applicant (see also paragraph   37 above). The usable surface area of the house was estimated at 196 square metres; no net living area was indicated. There were four flats and no commercial premises. The number of habitable rooms in the flats was 12. The surface area of those flats was estimated at 148 square metres. The total surface area of the house was indicated as 255 square metres. (ii)     The applicant 61.     The applicant stated that the total surface area of the house occupied by the tenants and for which they paid rent was about 250 square metres. In that connection, she supplied a declaration of 28 May 2001, issued by the Gdynia Association of Landlords and Managing Agents ( Zrzeszenie Właścicieli i Zarządców Domów ), an agency that apparently administered her property. According to the declaration, since at least the 1950s the applicant’s house had been divided into three flats leased by means of the agreements originating in the administrative decisions described above. 62.     The usable surface areas of those flats for the purposes of fixing rent were as follows: flat no. 1 = 127.38 sq. m; flat no. 3 = 67.90 sq. m; and flat   no.   4   =   54.25 sq. m. Accordingly, the total usable surface area occupied by the tenants was 249.53 sq. m. (b)     Documentary evidence relating to rent paid by the applicant’s tenants 63.     On an unspecified date in 1995 W.P. asked the Gdynia District Court for a judgment determining the amount of the rent to be paid by him. On 20   March 1996 the District Court gave judgment and determined the amount of rent at 33.66 Polish zlotys (PLN) per month. It ordered the applicant to pay costs in the amount of PLN 528.90. 64.     According to the Gdynia Association of Landlords and Managing Agents’ declaration of 28 May 2001 (see paragraph 61 above), the amounts of rent to be paid by the applicant’s tenants were as follows: for flat no.   1 (usable surface area of 127.38 sq. m), occupied by J.P. and M.P., PLN   500.60; for flat no. 3 (usable surface area of 67.90 sq. m.), occupied by   W.P., PLN 322.65; for flat no. 4 (former attic; usable surface area 54.25   sq. m.), occupied by J.W., PLN 188.25. Dwelling no. 2 (apparently originally the bedroom of the applicant’s parents, which was later used as a drying room), which had previously been used by W.P. without any legal title or authorisation and for the use of which he had paid no fee, was at that time locked and sealed by the managing agent. W.P. was served with a notice ordering him to pay PLN 2,982.46 for the unauthorised use of the flat on pain of being evicted. At the oral hearing the Government informed the Court that the rent paid by J.P. and M.P. on that date (27 January 2004) was PLN 531.63. (c)     The tenants’ financial situation 65.     At the Court’s request to produce evidence demonstrating the situation of the applicant’s tenants, the Government supplied a certificate issued by the Gdynia District Centre for Social Services ( Dzielnicowy Ośrodek Pomocy Społecznej ) on 19 February 1993. The certificate stated that W.P. had received assistance from the centre as from January 1993. He was to obtain a periodical social welfare benefit for March and May 1993. In 1992 he had received assistance for housing purposes. The certificate further stated that W.P. had earlier been assessed as having the “second degree of disability”, the disability and its degree being subject to a medical verification in May 1993. 66.     On 12 February 2004, in reply to an enquiry by the Polish Government in connection with the present case, the Gdynia City Centre for Social Services ( Miejski Ośrodek Pomocy Społecznej ) stated that the applicant’s tenants, W.P., J.P, M.P. and J.W., were not receiving any assistance from the Centre and they had not received any assistance from social services for the past few years, i.e. from 1995. 4.     Amounts of controlled rent per 1 square metre in Gdynia in 1994-2004, as supplied by the Government 67.     In reply to the Court’s question as to the amount of controlled rent received by the applicant from 10 October 1994 to date, the Government stated that they had no details of the rent received by the applicant at the relevant time. However, they supplied indicators relevant for the fixing of a controlled rent, as determined by the Gdynia City Council for similar houses. 68.     According to this information, in December 1994 the rent per square metre was 9,817 old Polish zlotys (PLZ); from January to November 1995 PLN   1.04; from December 1995 to October 1996 PLN 2.11; from November 1996 to December 1997 PLN 2.63; from January 1998 to January 1999 PLN 3.37; from February 1999 to January 2000 PLN 4.01; from February 2000 to February 2001 PLN 4.37, and from April 2002 to October 2002 PLN 4.61. 69.     On 10 October 2002, following the entry into force of the Constitutional Court’s judgment of 2   October 2002, it became possible for landlords to increase the rent up to 3% of the reconstruction value of the dwelling (see also paragraphs 90, 106-108 and 117 below). From December 2002 to 30 June 2003 the relevant conversion index of the reconstruction value of the dwelling (see also paragraphs 79 and 89 below) was PLN 2,525.30. From 1 July to 31 December 2003 it amounted to PLN 2,471.86. In 2004, the conversion index was fixed at PLN 2,061.21. The Government submitted that the reconstruction value of the dwellings in the applicant’s house was calculated on the basis of the following 3 elements: 3% as above, the usable surface area of the flats and the relevant conversion index (PLN 2,061.21). The monthly rent per square metre in the applicant’s house corresponded to 3% of the conversion index of the reconstruction value of square metre divided by 12 months (3% x PLN 2,061.21 =   PLN   61.83/12). It accordingly amounted to approximately PLN 5.15 per   square metre. Having regard to the usable surface of the house as indicated by the Government, the maximum monthly chargeable rent was PLN   1,009.40 (PLN 5.15 x 196 square metres). Taking into account the surface as indicated by the applicant, the relevant amount was PLN   1,285.08 (PLN 5.15 x 249.53 square metres). 5.     Levels of free-market rent in Gdynia in 1994-2004 as supplied by the applicant 70.     According to the applicant, in the years 1994-1999 the free-market rent for the 3   flats in her house would have amounted to 1,700 United States dollars (USD) per month (USD 800 + USD 500 + USD 400 respectively, depending on the size of the flat). In the years 2000-2002 the rent would have decreased to USD 1,250 per month (USD 600 + USD 350 +   USD   300). In 2003 it would have further been reduced to USD 900 per   month (USD 450 + USD 250+ USD 200). She stated that her prognosis as to the decrease in rent was based on such factors as the devaluation of the house due to its age and the decreasing demand and increasing supply of flats available for rent on the market. II.     RELEVANT DOMESTIC LAW AND PRACTICE A.     “State management of housing matters” and the “special lease scheme” 71.     The Cabinet Decree of 21 December 1945 on the State Management of Housing and Lease Control ( Dekret z 21   grudnia   1945   r. o publicznej gospodarce lokalami i kontroli najmu ), which came into force on 13   February 1946, introduced “State management of housing matters”, which also applied to dwellings or commercial premises in privately owned buildings (see also paragraph 18 above). 72.     Later, on 1 September 1948, the Decree of 28 July 1948 on the Lease of Dwellings ( Dekret o najmie lokali ) entered into force. Under its provisions, the State authorities administered all housing matters in the State and private sector alike. The public authorities were given power to issue a decision assigning to a tenant a particular flat in a privately owned building. Those provisions also laid down rules concerning rent control. 73.     The 1974 Housing Act introduced the “special lease scheme”, which replaced “State management of housing matters”, although it did not significantly change the principles on which the right to lease was based. For instance, the right to lease a flat in a building subject to “State management” did not originate in a civil contract but was conferred on a tenant by an administrative decision. The owner of such a building had no say as to who could live in his or her house and for how long. The special lease scheme applied to residential and commercial premises. 74.     Decisions on “allocation to a dwelling” ( przydział lokalu ) were, for all practical purposes, tantamount to “granting” a right to lease a dwelling (or commercial premises) under the special lease scheme. They were issued by the relevant departments of the local council (depending on which of the many reforms of the system of public administration was being carried out, those departments were called variously “housing departments”, “departments of local management and environment”, “dwelling departments”, etc.). B.     The 1994 Act 1.     Abolition of the “special lease scheme” and introduction of a new rent control scheme 75.     This Act entered into force on 12 November 1994. It was intended to bring about a reform of the law governing the relationship between landlords and tenants. Although it abolished the “special lease scheme” and relaxed the control of rent by, for instance, allowing rents of commercial premises to be market-related and determined freely, as well as allowing rents for residential dwellings to be fixed freely in civil contracts between landlords and tenants, it maintained the control of rent of residential dwellings in which the right to lease a flat had earlier been conferred on a tenant by an administrative decision. 76.     The 1994 Act introduced the system of “controlled rent” ( czynsz regulowany ) and set out detailed regulations on the calculation of rent for residential dwellings which had so far been subject to the “special lease scheme”. The provisions concerning controlled rent, the ratio legis of which was to protect tenants in a difficult financial situation during the transition from a State-controlled to a free-market housing system, were to remain in force until 31 December 2004. The 1994 Act maintained, albeit with slightly modified wording, the rules concerning the protection of tenants against the termination of leases continued on the basis of previous administrative decisions and the right of succession to a lease. 2.     Succession to the right to lease a flat 77.     Section 8(1) of the Act read: “1.     In the event of a tenant’s death, his or her descendants, ascendants, adult siblings, adoptive parents or adopted children or a person who has lived wit