CEDH · CASELAW;DECISIONS;ADMISSIBILITY;ENG — 8 mars 2011

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display:inline-block } .sD002041 { width:9.97pt; display:inline-block } .s31DD39ED { width:10.63pt; display:inline-block } .s598389F8 { margin-top:0pt; margin-bottom:0pt; text-align:center; font-size:11pt } .s4CFADAD0 { margin-top:6pt; margin-left:36pt; margin-bottom:0pt; text-indent:-36pt; text-align:justify; font-size:11pt } .s21372870 { width:26.83pt; text-indent:0pt; display:inline-block } .s6964B726 { width:20.71pt; text-indent:0pt; display:inline-block } .sEDC0DAC3 { margin-top:6pt; margin-left:36pt; margin-bottom:0pt; text-indent:-36pt; text-align:justify } .sFE576133 { margin-top:6pt; margin-bottom:0pt; text-align:justify } .sF6A12959 { width:33%; height:1px; text-align:left } .s85226119 { margin-top:0pt; margin-bottom:0pt; text-align:justify; font-size:10pt } .s3133A7C8 { font-family:Arial; color:#0069d6 } FOURTH SECTION DECISION PILOT-JUDGMENT PROCEDURE Application no. 3485/02 by THE ASSOCIATION OF REAL PROPERTY OWNERS IN ŁÓDŹ against Poland and 24 other applications The European Court of Human Rights (Fourth Section), sitting on   8   March 2011 as a Chamber composed of:   Nicolas Bratza, President,   Lech Garlicki,   Ljiljana Mijović,   Sverre Erik Jebens,   Päivi Hirvelä,   Ledi Bianku,   Zdravka Kalaydjieva, judges, and Fatoş Aracı, Deputy Section Registrar , Having regard to the above application lodged on 29 December 2001, Having regard to the decision to grant priority to the above application under Rule 41 of the Rules of Court, Having regard to the decision to examine the case simultaneously with the case of Piotrowski v. Poland (no. 27910/07), pursuant to Rule 42   §   2 of   the Rules of Court, Having regard to the decision to apply the pilot-judgment procedure and to adjourn its consideration of applications deriving from the same systemic problem identified in the case of Hutten-Czapska v. Poland (no. 35014/97), Having regard to twenty-four adjourned similar cases, listed in annex no.   2 to the present decision, Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicants, Having deliberated, decides as follows: PROCEDURE 1.     The application was lodged by Stowarzyszenie Właścicieli Nieruchomości w Łodzi (“the Association of Real Property Owners in   Łódź”), an association set up by landlords residing in Łódź whose property was subject to the rent control scheme in Poland, on behalf of   239   individual applicants – members of the association. The association and individual applicants were represented before the Court by   Mr   A.   Rozenkowski, the president of the association, and Mr B. Orlicki, a   lawyer practising in Łódź. The Polish Government (“the Government”) were represented by their Agent, Mr J. Wołąsiewicz, of the Ministry of Foreign Affairs. 2.     After the Chamber had given notice of the application to the respondent Government, pursuant to Rule 54 § 2(b) of the Rules of Court, the representatives of the applicants submitted an updated list of applicants who wished to pursue the application before the Court. That list comprised 96 persons, whose names and personal details are listed in the attached annex no. 1 to the decision. THE FACTS A.     The circumstances of the case 3.     The facts of the case, as submitted by the parties, may be summarised as follows. 4.     Houses belonging to the applicants, or their predecessors in title, were at   various dates taken under the so-called “state management of housing matters”, introduced in 1946 and were subsequently made subject to the “special lease scheme”, introduced in 1974, and the system of “controlled rent”, which replaced the latter in 1994 and continued to apply until 10 July 2001 (see   also Hutten-Czapska v   Poland (merits) , no.   35014/97, [GC], §§   12-14 and 67-84, ECHR 2006-VIII). 5.     Since then, i.e. since the entry into force of the Act of 21 June 2001 on the protection of the rights of tenants, housing resources of municipalities and on amendments to the Civil Code ( Ustawa o ochronie praw lokatorów, mieszkaniowym zasobie gminy i o zmianie Kodeksu cywilnego ) (“the   2001   Act”) the lease of flats in their houses has been governed by the provisions of that law, particularly in respect of rent increases, termination of leases, maintenance and repairs and succession to leases (see   Hutten ‑ Czapska (merits) , cited above, §§ 85-106 and 113-146 and Hutten-Czapska v   Poland (friendly settlement ), no.   35014/97, [GC], §§   12 ‑ 13 and 15-19). B.     Relevant domestic law and practice 1.     General background and laws as applicable before the 2001 Act 6.     A detailed description of the historical, social and economic background to the case and of laws restricting landlords’ rights until the entry into force of the 2001 Act can be found in paragraphs 12-19 and 67-84 of the Hutten ‑ Czapska pilot judgment on the merits (cited above). 2.     The 2001 Act 7.     The relevant provisions of the 2001 Act (as amended on several occasions and as applicable until the adoption of the Hutten-Czapska merits judgment), together with the summary of the related Constitutional Court’s rulings, are set out in paragraphs 85-106, 113 and 124-146 of that judgment. 3.     The December 2006 Amendment 8.     The Act of 15 December 2006 on amendments to the 2001 Act on the protection of the rights of tenants, housing resources of municipalities and on amendments to the Civil Code (“the December 2006 Amendment”) ( ustawa o zmianie ustawy o ochronie praw lokatorów, mieszkaniowym zasobie gminy i o zmianie Kodeksu cywilnego ) entered into force on   1   January 2007. It modified a number of legal provisions governing leases, their termination and levels of rent with a view to implementing the Constitutional Court’s judgment of 19 April 2005 and the resultant recommendations for Parliament of 29 June 2005 (see Hutten-Czapska (merits) , cited above, §§ 133-142), as well as the subsequent Constitutional Court’s judgments of 17 May 2006 and 11 September 2006. Those judgments are rendered in paragraphs 12-13 of the Hutten-Czapska friendly ‑ settlement judgment. (a)     New statutory definition of expenses involved in maintenance of a rented dwelling 9.     The December 2006 Amendment added a new subsection 8a to   section 2(1) of the 2001 Act. Section 2(1) 8a reads: “If this law refers to expenses connected with maintenance of a dwelling, [this expression] should be understood as expenses incumbent on the landlord and calculated proportionally to the usable surface of the dwelling in relation to the total usable surface of all dwellings in the building, including a fee for perpetual use of the land, property tax and the [following] costs: (a)     maintenance and keeping property in a proper technical condition, as well as renovations; (b)     administration of property; (c)     upkeep of shared premises, lifts, collective aerial installations, intercoms and greenery; (d)     property insurance; (e)     other [items], if they are stipulated in a [lease] agreement.” (b)     New provisions on rent increases and conditions for the termination of   leases 10.     Following the December 2006 Amendment, section 8a (4) of the 2001 Act [1] is worded: “An increase whereby rent or other charges for the use of the dwelling would exceed 3% of the reconstruction value of the dwelling within 1 year may take place only in   justified cases, referred to in subsections 4(a) and 4(e). At the tenant’s written request, the landlord shall, within 14 days from receipt of the request, give reasons for the increase and its calculation in writing, failing which the increase shall be null and void.” 11.     Amended rules for rent increases are set out in the above-mentioned new subsections 4(a)-4(e), which were inserted into section 8a. In so far as relevant, they read: “4(a)   If the landlord does not receive income from rent or other charges for the use of a dwelling at a level covering the costs of maintenance of the dwelling as well as securing to him a return on capital investment and profit, ... an increase enabling him to reach that level shall be considered justified if it remains within the limits set out in subsection 4(b). 4(b)     In an increase of rent or other charges for the use of a dwelling, the landlord may include: (1)     a return on capital investment at the maximum level per year:   (a)     1.5% of the investments made by the landlord for the construction or purchase of a dwelling; or   (b)     10% of the investments made by the landlord for the permanent improvement of the dwelling, increasing its usable valueuntil the full return [of such investments]; (2)     decent profit. ... 4(e)   An increase in rent or other charges for use of a dwelling which does not exceed the average annual general retail price index in the previous calendar year shall be considered justified. The average annual general retail price index for the previous calendar year shall be published, in the form of a communiqué by the President of the Central Statistical Office in the ‘ Monitor Polski’, the Official Gazette of the Polish Republic.” While section 11 of the 2001 Act maintains the general conditions for the termination of leases as applicable on the date of adoption of the pilot judgment (see Hutten-Czapska (merits) cited above, §§ 127-129), pursuant to section 8a (2) and (5)(1-2), a tenant’s refusal to accept a rent increase deemed to be justified under the above-cited provisions is tantamount to   a   termination of the contract by the end of the period of notice (3   months). Otherwise, it is still open to a tenant to lodge a civil action to have the increase declared unjustified, or justified but in a different amount (ibid.   §   125). (c)     New rule governing the civil liability of municipalities for failure to supply social housing to a protected tenant 12.     Section 18(3) of the 2001 Act continues to maintain favourable provisions concerning the amount of rent to be paid during the period between the issuing of   an   eviction order and the vacation of a flat by protected tenants who, on   account of   their low income, are entitled to social housing from a   municipality (see the Constitutional Court’s judgment of   11   September   2006, set out in paragraph 13 of the Hutten-Czapska (friendly settlement) judgment; for the situation concerning the provision of social housing to tenants under the rent ‑ control scheme as applicable until the adoption of the Hutten-Czapska (merits) judgment, see its paragraphs 79 and 89). 13.     In implementation of the Constitutional Court’s judgment of 11 September 2006, the December 2006 Amendment added a new provision (subsection (5)) to section 18, which makes the municipality liable, under the rules of tort, for any damage sustained by the landlord on account of the municipality’s failure to provide the tenant with social housing. This provision reads: “(5)     If the municipality has not provided social housing to a person who is   entitled to it by virtue of a judgment, the landlord shall have a claim for damages against the municipality on the basis of Article 417 of the Civil Code.” Consequently, the municipality’s failure is statutorily deemed to   be   an   “unlawful omission” within the meaning of Article 417 of the Civil Code. 4.     Article 417 of the Civil Code 14.     In so far as relevant, Article 417 of the Civil Code provides: “1.     The State Treasury, municipality or another legal person wielding public power by virtue of the law shall be liable for damage caused by an unlawful act or omission in the exercise of that power.” 15.     The Supreme Court, in its ruling of 25 June 2008 (no. CZP 46/2008) concerning a claim for damages under section 18(5) of the 2001 Act read in   conjunction with Article 417 of the Civil Code, confirmed that a landlord was entitled to full compensation for any damage sustained on account of   a   municipality’s failure to provide social housing to a tenant. 5.     The December 2009 Amendment 16.     The Act of 17 December 2009 on amendments to the 2001 Act on   the protection of the rights of tenants, housing resources of   municipalities and on amendments to the Civil Code and amendments to   certain other statutes ( ustawa o zmianie ustawy o ochronie praw lokatorów, mieszkaniowym zasobie gminy i o zmianie Kodeksu cywilnego oraz o zmianie niektórych innych ustaw ) (“the December 2009 Amendment”) entered into force on 28 January 2010. It introduced a new chapter 12a, dealing with the so-called “occasional lease” ( “najem okazjonalny ”), into the 2001 Act. “Occasional leases” are essentially removed from the operation of most provisions of the 2001 Act, particularly those concerning rent increases, protection of tenants, termination of   contracts and restrictions on eviction. They are intended for physical persons who own flats and wish to rent them out in return for a freely determined and contractual rent for a   period not exceeding 10   years. A landlord who conducts business activity involving the lease of flats cannot take advantage of this form of lease. The rent and the conditions for its increase are freely determined in a lease agreement and are not subject to any of the limitations foreseen in the 2001 Act (see   paragraphs 10-11 above). The procedure for eviction is simplified. When drawing up the lease agreement, the tenant is obliged to make a   notarised declaration agreeing to a voluntary vacation of the rented flat on termination of the lease and must indicate a flat to which he is to be evicted should an eviction order be issued against him. Pursuant to section 3 of the December 2009 Amendment, income received from occasional leases is subject to a reduced tax rate of 8.5% per annum. 6.     Other related laws (a)     The 2006 Act 17.     The Act of 8 December 2006 on financial assistance for social housing, protected accommodation, night shelters and houses for the homeless (as amended) ( ustawa o finansowym wsparciu tworzenia lokali socjalnych, mieszkań chronionych, noclegowni i domów dla bezdomnych ) (“the 2006 Act”) sets out the conditions for obtaining financial assistance from the State for the construction of buildings or dwellings designated for social housing (as defined by the 2001 Act) and for the purpose of   securing other forms of   accommodation for the less well-off. Such assistance can be obtained by municipalities, unions of   municipalities and public benefit organisations ( organizacje pożytku publicznego ) in connection with the construction, renovation, conversion, alteration of use or purchase of buildings for social accommodation. Depending on the nature of the development, the subsidies available vary from 30% to   50% of the costs of the investment (section 13 as amended on   12   February 2009). The payments are secured by the State Economy Bank ( Bank   Gospodarstwa Krajowego ) from money allocated to the Subsidies Fund ( Fundusz Dopłat ). (b)     The August 2007 Amendment 18.     The Act of 24 August 2007 on amendments to the 1997 Land Administration Act and certain other statutes (“the August 2007 Amendment”) ( ustawa o zmianie ustawy o gospodarce nieruchomościami oraz o zmianie niektórych innych ustaw ) introduced an information system for monitoring the levels of rent within Poland. That system is referred to   as   a “rent mirror” ( lustro czynszowe ). It stores information on the average rent levels in a given region, thus creating an additional tool for civil courts adjudicating on disputes arising from rent increases by landlords (see   Hutten-Czapska (merits) , cited above, § 138). 19.     Under section 186a of the 1997 Land Administration Act, a new provision introduced by the August 2007 Amendment, a manager administering property that includes flats for rent is obliged to supply information to the relevant local government on the level of rent for flats rented out under tenancy agreements concluded in respect of dwellings in buildings administered by him. This information must include the building’s location, its age and technical condition, the usable area of the flat and its characteristics. Pursuant to section 6 of the August 2007 Amendment, the municipality is   required to publish in the regional official gazette ( wojewódzki dziennik urzędowy ) an inventory of data on levels of rent for privately ‑ owned residential dwellings within its administrative borders. 7.     The 2008 Act (a)     Relevant provisions 20.     The Law of 21 November 2008 on Supporting Thermo ‑ Modernisation and Renovations ( ustawa o wspieraniu termomodernizacji i   remontów ) (“the 2008 Act”) was adopted by   Parliament on 21 November 2008 and entered into force on 19 March 2009. The Act is part of the Government’s housing programme, aimed at   improving the existing housing stock. In particular, it concerns tenement houses – both State and privately-owned – which, as stated in   the explanatory report, have been neglected and fallen into disrepair as   a   result of the operation of the rent-control scheme, which made it   impossible for landlords to receive rent that would secure investment in   suitable maintenance and renovations. The explanatory report states that because of previous neglect, it will become necessary within the next 8 years to demolish 40,000   tenement houses, containing 200,000 flats, belonging to private individuals, municipalities or   housing communes. 21.     Under sections 3-7 of the Act, an investor who has carried out renovation or thermo-modernisation work is entitled to the so-called “renovation refund” ( premia remontowa ) or “thermo-modernisation refund” ( premia termomodernizacyjna ). The granting of those refunds is subject to the statutory condition that a   given renovation or thermo-modernisation project would result in energy savings, in particular as regards a building’s heating and hot water supply systems. The refunds are available only in respect of larger-scale, costly renovations. 22.     A renovation refund means in practice a partial refund of a loan taken out for the purposes of renovating a building, including the replacement of   windows, renovations of balconies, fitting of the necessary installations or equipment or alteration of the building resulting in its improvement. Under section 9, the renovation refund amounts to 20% of a loan taken out by   an investor but not more than 15% of the costs of the entire renovation project. Thermo-modernisation refunds are subject to ceilings of 20% and 16% respectively. The refund payments are to be secured by the State Economy Bank from money allocated to the Thermo-Modernisation and Renovations Fund ( Fundusz Termomodernizacji i Remontów ). 23.     The Act introduced a system of compensatory refunds ( premie   kompensacyjne ) available to owners whose property was subject to   the rent ‑ control scheme between 12 November 1994 and 25 April 2005 [2] (see   also Hutten-Czapska (merits) , cited above, §§ 71-72, 136-141 and 194). Section 2(13) of the 2008 Act provides: “     A dwelling subject to the rent-control scheme ( lokal kwaterunkowy ) shall be a dwelling within the meaning of   [the 2001 Act] in respect of which the lease originated in   an   administrative decision on allocation to a dwelling or had another legal basis dating back to the period before State management of housing matters or the special lease scheme were introduced in   the relevant town, and in respect of which rent was: (a)     controlled; (b)     statutorily limited to 3% of the reconstruction value of the dwelling per year; (c)     statutorily limited in its ... increase to 10% per year during any period between 12 November 1994 and 25 April 2005.” Section 10 provides: “1.     An investor – a physical person who on 25 April 2005 was an owner or heir to an owner of a building in which there was at least one dwelling subject to the rent ‑ control scheme – shall be entitled to a refund, hereinafter referred to   as   a   ’compensatory refund’. 2.     A compensatory refund shall be granted only once in respect of any one building. 3.     A compensatory refund shall be issued for paying off a loan granted for carrying out: (1)     a renovation project; or (2)     the renovation of a one-family house if [such a project] concerns the building referred to in subsection 1. 4.     Except for the renovation referred to in subsection 3(2), a compensatory refund shall be granted with a renovation refund.” 24.     In so far as relevant, section 11 provides: “1.     ... a compensatory refund shall be equal to the product of the indicator of the costs of the investment and a sum amounting to 2.1% of the conversion index for each square metre of the usable surface of the dwelling subject to the rent-control scheme and for each year in which the limitations referred to in section 2(13) applied in the period from 12 November 1994 to 25 April 2005 or, if the building was not acquired through succession, from the date of acquisition to 25 April 2005. 2.     If an indicator of the costs of the investment is lower than 0.5, for the purposes of   the calculation of the compensatory refund it shall be assumed that that indicator is   equal to 0.5. 3.     If an indicator of the costs of the investment is higher than 0.7, for the purposes of the calculation of the compensatory refund it shall be assumed that that indicator is   equal to 0.7. 4.     The formula for the calculation of a compensatory refund is set out in the annex to this law.” 25.     The annex sets out the following formula: The components of the formula are listed as follows: “ P – the amount of the compensatory refund k =   a)   0.5 if the indicator of the costs of the investment is lower than 0.5;     b) the indicator of the costs of the investment, if that indicator is not lower than 0.5 and not higher than 0.7;     c)     0.7, if the indicator of the costs of the investment is higher than 0.7. [The indicator of the costs of the investment is defined in section 2(12) as a ratio of   the costs of the thermo-modernisation or renovation investment which fulfils the criteria set out in section 10(1), calculated in relation to 1 square metre of the residential building’s usable area, the price for 1 square metre of the residential building’s usable area as established for the purposes of the calculation of   a   “guarantee refund” ( premia gwarancyjna ) – a kind of a loan refund granted by   the State to persons who, prior to the transformation to the market economy had savings plans for acquiring a flat from a housing cooperative.] w – the value of the indicator of the costs of the investment in the municipality on   whose territory the building is located as of the date on which an application for a   loan has been made; n – number of rented flats in the building; pu i – usable area of an i-th rented flat; m i – the period, expressed in months, during which an i-th rented flat was subject to   the restrictions referred to in section 2(12), from 12 November 1994 to 25 April 2005, and if the building has not been acquired through succession after 12 November 1994, from the date of acquisition to 25 April 2005.” 26.     Under section 19, the State Economy Bank is to transfer refunds to   the lending bank if the project is carried out within the time-limit set out in   the loan agreement. Section 19 provides: “   The State Economy Bank shall transfer a compensatory refund [to the lending bank] after the amount of the loan spent [has reached the level of] the renovation refund granted.” Section 20 provides that the State Economy Bank is to keep an electronic database register of buildings in respect of which refunds have been granted. (b)     Operation in practice in 2008-2009 27.     According to reports published in the Polish press in September 2009, no landlord had by that time taken advantage of the compensatory scheme under the 2008 Act. There were only 5 banks cooperating with the State Economy Bank and involved in the scheme. In contrast, 15   banks offered loans that included thermo-modernisation or renovation refunds. As   the Ministry for Infrastructure stated, most banks were not interested in   giving loans that included a compensatory refund. The Ministry intended to propose amendments to   the 2008 Act whereby landlords who had made investments would be able to profit from the scheme, irrespective of whether they had taken out a   loan for this purpose. (c)     The March 2010 Amendment 28.     On 5 March 2010 Parliament adopted the Act of 5 March 2010 on   amendments to the Law on Supporting Thermo-Modernisation and Renovations ( ustawa o zmianie ustawy o wspieraniu termomodernixacji i   remontów) (“the March 2010 Amendment”). It entered into force on   7   June 2010. 29.     In so far as relevant, section 10 (as amended) currently provides: “     “1.     An investor, a physical person who is an owner of a residential building in   which there is at least one dwelling subject to the rent-control scheme or an owner of part of a residential building and who, on 25 April 2005, was the owner of this residential building or this part of the residential building or heir of   a person who was the owner on that date – shall be entitled to a compensatory refund. ... 3.     A compensatory refund in respect of a residential building or part of a residential building shall be granted only once. 4.     A compensatory refund shall be designated for the reimbursement of entire or   partial costs of: 1)     a renovation project; or (2)     the renovation of a one-family house.” 30.     New subsections 4 and 5 were added to section 12, enabling a   landlord to obtain a compensatory refund without the need to take out a   bank loan for the investment. In   so far as relevant, the amended section 12 currently provides: “4.     If [an investor] intends to carry out a renovation project or renovation referred to in section 10(4) entirely on the basis of financial resources other than a bank loan in   connection with which a thermo-modernisation or renovation refund has been granted, he shall make an application for a compensatory refund directly to the [State Economy Bank]. 5.     In cases referred to in subsection 4, the requirements laid down in section 7(1)1), (2) and (3) 1 shall not apply [the relevant requirements comprise particular conditions that must be fulfilled by other persons wishing to take advantage of the refunds scheme under the 2008 Act, such as a reduction in or savings of energy consumption that must result from a given renovation].” 31.     In order to obtain a compensatory refund, a landlord must attach to   his application certified copies of documents confirming that his property was subject to the rent-control scheme and indicating the relevant period or   periods during which restrictions applied. Also, he must submit documents showing the extent of the renovation work and the estimated cost of the investment. 32.     Under the amended section 19(4), the State Economy Bank is to transfer a compensatory refund to the investor after he has incurred expenses arising from the renovation project, in accordance with the indicated extent of the work. The compensatory refund may not exceed the costs of the investment. 33.     As a result of the above amendments, a landlord can choose between an ordinary or simplified procedure for obtaining a compensatory refund. In the ordinary procedure, it is necessary to take out a loan for the planned investment and to fulfil the requirements laid down in section 7 of the 2008 Act with regard to the reduction in energy consumption that must result from a given renovation project. A detailed building plan and construction or energy audit are also required. The minimum cost of the investment must reach the statutory threshold, which is determined by reference to the so-called “indicator of the costs of the investment” (see the components of   the mathematical formula for the calculation of the compensatory refund in paragraph 24 above). This indicator may not be lower than 0.05 and higher than 0.7, which in practice means that the refund is available only in   respect of substantial investments. A landlord may take advantage of   compensatory and renovation refunds or compensatory and thermo ‑ modernisation refunds at the same time. On termination of the project, the State Economy Bank transfers the money to the lending bank, which deducts the relevant amount from the loan. In the simplified procedure, a landlord may invest his own money or find sources of finance for the project other than a bank loan. An   application must be supported by documents indicating the extent and cost of the planned works, but no building plan, construction or energy audit is required. There is no specific requirement with regard to the cost of   the planned investment, but it must be at least equal to or higher than the compensatory refund available to the person concerned. The landlord deals directly with the State Economy Bank in seeking authorisation for and payment of the refund. A landlord who has chosen the simplified procedure may, if he fulfils the relevant requirements, take advantage of a renovation or   thermo-modernisation refund at a future date. 34.     The authorities have disseminated detailed information about the conditions for compensatory refunds to persons affected by the operation of the rent-control scheme and a comprehensive explanation of   the mathematical formula and its respective components. They also made an information technology system available to potential applicants on the website of the State Economy Bank (http://www.bgk.com), enabling them to calculate or make a simulation of their refund with the help of   a   special calculator. All the necessary data (applicable conversion indexes, relevant indicators of the reconstruction value of one square metre of   the usable area of residential buildings in all regions of Poland, prices for one square metre of a building at a given time and all other relevant statistical information) are also available on the website. Applicants also have at their disposal PDF texts of the 2008 Act, the March 2010 Amendment, the Rules for Investors ( Regulamin dla Inwestorów ), and two standard application forms for obtaining a compensatory refund – one for the ordinary procedure and one for the simplified procedure. 35.     The explanation of the mathematical formula describes, in simple terms, the steps that are to be followed by an applicant in order to calculate the amount of the refund. To this end, applicants indicate the cost of the planned investment, the total usable area of the building in question, the surface area of the flats that were subject to the rent-control scheme and the period during which restrictions applied. After uploading the relevant statistical information giving the price per square metre of their building at   the time of lodging an application and an indicator of the reconstruction value of one   square metre of the building in the region in question, they   obtain the amount of the compensatory refund available. By making a simulation of the approximate costs of a renovation project, applicants may determine the amount of the available compensatory refund in such a way that it would cover all the costs involved in the investment. (d)     Calculations of hypothetical compensatory refunds supplied by the Government 36.     The Government, at the Court’s request, supplied several calculations of hypothetical compensatory refunds in respect of various notional properties situated in the different regions in Poland which, for the purposes of the simulation, were considered to have been subject to the rent ‑ control scheme for the entire period referred to in the 2008 Act. The amount varied depending on the specific features of the property and level of the expenses to be incurred. For instance, as of the end of January 2010 an owner of a tenement house in Łódź, with a total surface area of   780   m 2 and comprising 12 flats which were all subject to the rent-control scheme for the entire statutory period (12 November 1994 – 25 April 2005) and who would incur expenses of 150,000 Polish zlotys (PLN) (approx. 36,800 euros (EUR)) for a renovation project, would be entitled to a compensatory refund amounting to PLN 366,912 (approx. EUR 90,000). This refund, if   recalculated with the help of the calculator accessible via the State Economy Bank’s website, would amount to PLN 393,530 (approx.   EUR   96,500) in December 2010; however, since the maximum refund available cannot be higher than the costs of the investment, the landlord would receive PLN 150,000. If only 6 flats with a total surface area of 490 m 2 were subject to the rent-control scheme over the relevant period, the compensatory refund would decrease to PLN 230,496 (approx. EUR 56,500) which, given the statutory ceiling, would not change the amount of the reimbursement. 37.     The Government were also asked to supply the figures for the refund in a situation where the statutory cut-off date was not 25 April 2005 but 1   January 2007, the date of entry into force of the December 2006 Amendment (see paragraph 8 et seq. above). As of the end of January 2010, such a hypothetical refund would amount to PLN 425,152 (approx.   EUR   104,000). The comparison with the refund as determined under the 2008 Act (PLN 366,912) shows a difference of some 15-16%. (e)     Operation of the March 2010 Amendment in practice 38.     According to the Government, from 7 June 2010, the date of the March 2010 Amendment’s entry into force, to the end of October 2010, forty-one applications for a compensatory refund had been lodged with the State Economy Bank, of which 12 were granted and the remainder required supplementary information. No application has been rejected and the total amount of refunds granted was PLN 750,000 (approx. EUR 184,000). In   contrast, in 2009 only one application was made – and granted. COMPLAINT 39.     The applicants complained that the continued various restrictions on   their property rights, including the control of rent increases, limitations on lease termination and vacation of flats, and also defective rules for the recovery of their property maintenance costs imposed on them by   successive laws, in particular the 2001 Act, amounted to a breach of   Article   1 of Protocol No. 1 to the Convention. THE LAW A.     Scope of the case before the Court 1.     Questions put to the parties by the Court 40.     When giving notice of the application to the respondent Government under Rule 54 § 2 (b) of the Rules of Court, the Court referred, in particular, to two points. First, it made reference to the laws adopted after the delivery of the merits and friendly-settlement judgments in the Hutten-Czapska v.   Poland case, in particular the December 2006 Amendment, the 2006 Act, the August 2007 Amendment and the 2008 Act. Furthermore, the Court referred to the compensatory scheme under the 2008 Act, providing redress for the Convention violation to landlords affected by the operation of the laws found to be incompatible with Article 1 of Protocol No. 1 in the Hutten–Czapska pilot judgment. In this connection, it invited the parties to state whether, having regard to   the above-mentioned laws, Convention claims under Article 1 of Protocol No. 1 of the applicants and other similarly situated Polish landlords’ had been satisfied at domestic level and, in consequence, whether “the matter ha[d] been resolved” within the meaning of Article 37 § 1 (b) of the Convention and whether, having regard to the features of the compensatory scheme under the 2008 Act, the redress offered by the State for the systemic violation of   Article 1 of Protocol No. 1 was satisfactory. 41.     Accordingly, the Court’s examination of the case is limited at this stage to the issue of whether or not it is justified to apply Article 37 § 1 of   the Convention. 2.     Individual and general dimension of the case 42.     The present case, originally lodged by 239 Polish landlords and currently pursued by 96 applicants, and the related case of Piotrowski v.   Poland and the remaining 24 similar adjourned cases currently on   the   Court’s docket, originated in the same structural shortcoming that was found by the Court in the Hutten–Czapska case to be at the root of its finding of the violation of Article 1 of Protocol No. 1. That shortcoming was defined as “a systemic problem connected with the malfunctioning of   domestic legislation in that: (a) it [had] imposed, and continue[d] to   impose, restrictions on landlords’ rights, including defective provisions on the determination of rent; [and] (b) it [had] not and still [did] not provide for any procedure or mechanism enabling landlords to recover losses incurred in connection with property maintenance” (see Hutten-Czapska (merits), cited above, the third operative provision of the judgment). The Court perceived the problem as “a combination of restrictions on   landlords’ rights, including defective provisions on the determination of   rent, which [had been] and still [wa]s exacerbated by the lack of any legal ways and means enabling them at least to recover losses incurred in   connection with property maintenance, rather than as an issue solely related to the State’s failure to secure to landlords a level of rent reasonably commensurate with the costs of property maintenance” (ibid. § 237). In that connection, it directed that “in order to put an end to the systemic violation identified in the present case, the respondent State must, through appropriate legal and/or other measures, secure in its domestic legal order a   mechanism maintaining a fair balance between the interests of landlords and the general interest of the community, in accordance with the standards of protection of property rights under the Convention” (ibid. the fourth operative provision of the judgment). In consequence, the Court, applying the pilot-judgment procedure in the individual applicant’s case, not only recognised the Convention violation in   respect of all actual and potential applicants who found themselves in   a   similar situation but also made clear that general measures at national level were called for in execution of the judgment and that those measures should take into account the other persons affected and remedy the systemic defect underlying the Court’s finding of a violation. B.     Application of the pilot-judgment procedure 43.     The object of the Court’s designating a case for a “pilot-judgment procedure” is to facilitate the speediest and most effective resolution of   a   dysfunction affecting the protection of the Convention right in question in the national legal order. The pilot-judgment procedure is primarily designed to assist the Contracting States in fulfilling their role in the Convention system by   resolving problems at national level, thereby securing to the persons concerned their Convention rights and freedoms as required by Article 1 of   the Convention, offering to them more rapid redress but also, at the same time, making it unnecessary for the Court to adjudicate on large numbers of   applications similar in substance which it would otherwise have to take to   judgment (see Broniowski (friendly settlement), [GC], no. 31443/06, § 35, ECHR 2005-IX; Hutten-Czapska (merits) , cited above §§ 231-234; and Wolkenberg and Others v. Poland (dec.) no. 50003/99, 4 December 2007, §§ 34-35, ECHR 2007 ‑ XIV). 44.     Another important aim of this procedure is to induce the respondent State to resolve large numbers of individual cases arising from the same structural problem at the domestic level, thus implementing the principle of   subsidiarity which underpins the Convention system. Indeed, the Court’s task as defined by Article 19, that is, to “ensure the observance of the engagements undertaken by the High Contracting Parties in the Convention and the Protocols thereto”, is not necessarily best achieved by repeating the same findings in a large series of cases (see E. G. and 175 Other Bug River applications v. Poland (dec.), no.   50425/99, §   27, ECHR 2008-...; and Suljagić v. Bosnia and Herzegovina (no. 27912/02), § 62, ECHR 2009-...). The respondent State’s action should primarily aim at the resolution of   the systemic dysfunction found in the pilot judgment and at the introduction, where appropriate, of effective domestic remedies in respect of   the violations in question. If, however, the respondent State fails to adopt such measures following a pilot judgment and continues to violate the Convention, the Court will have no choice but to examine the remaining cases p