CEDH · CASELAW;DECISIONS;ADMISSIBILITYCOM;ENG — 28 mars 2023

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They were represented before the Court by Mr K. Gregorczyk, a lawyer practising in Szczecin; the decision to give notice of the complaint under Article 1 of Protocol No.   1 to the Polish Government (“the Government”), represented by their Agent, Mr J. Sobczak of the Ministry of Foreign Affairs, and to declare the remainder of the application inadmissible; the parties’ observations; Having deliberated, decides as follows: SUBJECT MATTER OF THE CASE 1.     The case concerns the revocation of a discount granted, pursuant to statutory conditions, to persons buying out their tenancy apartments from the State. 2.     In May 2001 the applicants, who were long-time tenants of a 74 sq. m apartment owned by the Szczecin municipality ( gmina ), bought the apartment with the statutory 75% discount (plus an additional discount). The market value of the apartment was estimated at 129,762 Polish zlotys (PLN   –   proximately 32,440 euros (EUR)). The applicants bought it for PLN   22,708 (approximately EUR 5,677). 3.     Pursuant to section 68.2 and 2(a) of the Land Administration Act of 21   August   1997 ( Ustawa o gospodarce nieruchomościami , “the 1997 Act”), as in force at the material time, if the buyer of a discounted tenancy apartment sold or otherwise disposed of the property within five years, he or she had to repay the amount of the discount. The obligation to repay the discount did not arise if the property was transferred to a “close person” ( osoba bliska ), such as a relative. 4.     The applicants’ sale contract did not refer to the 1997 Act and they were not otherwise informed about the conditions for revoking the discount in question. 5.     In July 2001 the applicants signed a contract with a third party to exchange their apartment for another one which was of a higher standard, had lower maintenance charges and was located in a better neighbourhood. No additional payments were effected for the purpose of this transaction. 6.     The applicants have been living in the second apartment ever since. 7.     On 25 May 2010 the Szczecin mayor ( prezydent ) ordered the applicants to repay PLN   133,943 (approximately EUR   33,485), which corresponded to the discount they had obtained, with adjustments. 8.     The applicants did not comply with the order and the municipality initiated proceedings against them for payment, arguing that by exchanging their apartment with a third party two months after having purchased it at a discounted price, the applicants had breached the statutory conditions for the discount. 9.     On 18 November 2011 the Szczecin Regional Court ( Sąd Okręgowy ) dismissed the municipality’s action, holding that the applicants were not under a duty to repay the discount. Firstly, they had switched apartments in order to improve their housing conditions. They had thus complied with the purpose of the 1997 Act. Secondly, the municipality’s action had gone against the principles of coexistence with others ( zasady współżycia społecznego ) protected by Article 5 of the Civil Code. 10.     On 22 February 2012 the Szczecin Court of Appeal ( Sąd Apelacyjny ) reversed the first-instance judgment and ordered the applicants to pay back an adjusted discount amounting to PLN 108,123 (approximately EUR   27,030), with interest payable as from 12 June 2010. 11.     The appellate court observed that it was only in the 2007 amendment to the 1997 Act that exceptions to the obligation to repay the discount had been provided for, specifically when an apartment was sold or exchanged for another apartment or another residential property. The purpose of meeting a person’s residential needs had therefore been taken into consideration by the legislature only in 2007. As the 2007 amendment did not contain any transitional provisions, section 68 of the 1997 Act should have been interpreted strictly, in accordance with its text as it stood at the material time, rather than in accordance with its implied purpose. 12.     The Szczecin Court of Appeal further observed that, despite the fact that, in accordance with section 68 as it stood before the 2007 amendment, lodging a claim to have the discount repaid had been optional and not mandatory, it had not been necessary to include a clause to that effect in a sale contract. In other words, the right to lodge such a claim did not arise from a contract, but arose directly from the law in the event that the relevant circumstances occurred in the future. 13.     The appellate court further held that lodging a claim for the repayment of the discount was not against the principles of coexistence with others. Article 5 of the Civil Code required exceptional circumstances which would be flagrantly unacceptable socially; the failure to inform the applicants about the possibility of a claim being lodged against them for repayment of the discount did not fall into that category. Moreover, the change in the law and the subsequent liberalisation of the conditions for the discount could not, in and of themselves, constitute grounds for considering the municipality’s claim to be in breach of Article 5 of the Civil Code. Lastly, that provision could not be reasonably relied on by persons who had themselves acted in a manner contrary to the principles of coexistence with others. Granting the discount had pursued the statutory aim of providing the applicants with stability, housing security and a foundation for their life for years to come. The applicants had acted disloyally and dishonestly. They had pretended that the apartment satisfied their housing needs, whereas they had not had any intention of keeping it for themselves and had very quickly transferred it to a third party. Such conduct could not be accepted in the light of the principles of coexistence with others even though the applicants had ultimately found other means of meeting their housing needs. 14.     On 6 December 2012 the Supreme Court refused to entertain the cassation appeal lodged by the applicants. That decision was served on the applicants’ lawyer on 7 January 2013. 15.     In 2012 the applicants were pensioners whose total income was around EUR 653 per month. 16.     On 16 November 2013 the second applicant died. According to the inheritance certificate, the first applicant and Ms   W. Gościńska (the applicants’ daughter) were his legal heirs. 17.     On 19 October 2015 the municipality and the first applicant and her daughter (on behalf of the second applicant) signed an agreement for repayment of the discount (PLN 108,123 (EUR 27,030)), plus interest (PLN   24,646 (EUR 6,161)) and costs (PLN 9,536 (EUR 2,384)) in 300   instalments over twenty-five years (PLN 474 (EUR 118) per month). 18.     The applicants essentially complained under Article 1 of Protocol No. 1 to the Convention that the obligation to repay the adjusted discount constituted a disproportionate financial sanction which had been based on an ambiguous law and its erroneous interpretation by the domestic courts . THE COURT’S ASSESSMENT Preliminary issue 19.     The Court takes note of the death of the second applicant and the wish of his heirs, the first applicant and Ms W. Gościńska, to continue the proceedings in his stead, as well as of the absence of any objection on the Government’s part. Therefore, the Court considers that the first applicant and Ms   W. Gościńska has standing to continue the proceedings on behalf of the deceased. Alleged violation of Article 1 of Protocol No. 1 to the Convention 20.     The general principles concerning Article 1 of Protocol No. 1 to the Convention, as applicable in the context of the present case, are set out in Bugajny and Others v. Poland (no. 22531/05, §§ 62-67, 6 November 2007, with further references; see also Falkowska v. Poland [Committee] (dec.), no.   70286/12, §§ 32-34 and 36, 25 May 2021). 21.     The Court notes, firstly, that the impugned measure depriving the applicants of their possession was based on section 68 of the 1997 Act and therefore was in accordance with the law ( mutatis mutandis , Falkowska , cited above, § 40). 22.     Secondly, the Court observes that the legitimate aim of the above ‑ mentioned law was to improve the material living conditions of city tenants while not allowing them to make an immediate profit at the expense of the State budget (ibid., mutatis mutandis , § 41). 23.     The Court must now examine whether the interference with the applicants’ right to the peaceful enjoyment of their possessions struck the requisite fair balance between the demands of the general interest of the public and the requirements of the protection of the individuals’ fundamental rights, or whether it imposed a disproportionate and excessive burden on them (see Bugajny and Others , cited above, § 67).   Finding it natural that the margin of appreciation available to the legislature in implementing social and economic policies should be a wide one, the Court has on many occasions declared that it will respect the legislature’s judgment as to what is in the “public” or “general” interest unless that judgment is manifestly without reasonable foundation (see Immobiliare Saffi v. Italy [GC], no. 22774/93, §   49, ECHR 1999-V, and, mutatis mutandis , Broniowski v. Poland [GC], no.   31443/96, § 149, ECHR 2004‑V). 24.     In the present case, the applicants were not informed about the conditions for revoking the statutory discount for tenancy apartments. The fact remains, however, that these conditions were described in clear and unequivocal terms in the 1997 Act, and that the procedure for obtaining the discount was triggered by the applicants themselves when they submitted an application to the municipality. The Court therefore accepts that the obligation to repay the discount arose ex lege and not from the contract, and that in seeking to obtain the discount, the applicants ought to have been aware of their legal situation. 25.     Moreover, despite subsequent amendments to section 68 of the 1997 Act, it is clear that, at the time when the applicants bought their tenancy apartment and when they exchanged it with a third party for another apartment, the obligation to repay the discount arose regardless of whether or not the newly acquired property served to satisfy the applicants’ housing needs or whether or not they were in any way enriched as a result of the transactions in question. 26.     Likewise, at the time when the applicants’ case was examined by the domestic courts, there was no uniform judicial practice interpreting section   68 in the light of the 2007 amendment and in a manner that was more favourable to owners in the applicants’ position (see, mutatis mutandis , Falkowska , cited above, § 40). 27.     Under the legal framework, the revocation of a tenancy discount was subject to a judicial review that effectively included a proportionality assessment of the conduct and personal situation of the respondent party. In particular, under Article 5 of the Civil Code, judges had discretion to refuse a municipality’s action where an otherwise lawful claim for repayment of the discount would be exceptionally unfair to the owner or would constitute “an abuse of the right”. The judicial review had, by law, to consider the entirety of the specific circumstances of the case. The Government submitted examples of judgments in contexts similar to that of the present case in which the domestic courts had indeed found that there had been a breach of the principles of coexistence with others owing to a combination of factors such as the sale or exchange of the apartment several years after the date of the discounted purchase, the use of the profit from the sale for housing purposes (the acquisition of new property, renovation or mortgage payment), or the owner’s old age, indigent status or changed family situation (divorce, death or the birth of children). The Government cited the following cases: Supreme Court, II CSK 494/10, 15/04/2011; Szczecin Court of Appeal, I ACa 162/13, 29/05/2013; and Szczecin Court of Appeal, I ACa 354/13, 10/10/2013. It follows that Polish law ensured that the discount revocation mechanism was not automatic or arbitrary. 28.     In the present case, the judicial review involved courts at three levels of jurisdiction and was fully adversarial. The applicants were represented by a professional lawyer and their argument about the alleged unfairness of the revocation of their discount was indeed examined by the appellate court, referring to their conduct. The applicants argued that the court had refused to give due consideration to their personal situation; however, the court’s reasoning clearly shows that the central issue of the assessment under Article   5 of the Civil Code, that is, the applicants’ conduct, was examined thoroughly. In particular, the appellate court assessed various factual elements of the case (see paragraph 13 above) and concluded that the applicants had not acted with loyalty or honesty in that they had participated in the special social scheme of tenancy discounts without the necessary intention of living in the apartment in question. 29.     Although the amount to be repaid was high, the first applicant’s financial hardship and personal situation were taken into consideration, as it was agreed that she would pay the debt over twenty-five years (see paragraph   17 above). Given the first applicant’s advanced age, lowering the amount of the monthly instalments further does not appear to have been a valid option. 30.     The Court has previously recognised that housing plays a central role in the welfare and economic policies of modern societies and that the State enjoys a wide discretion in this sphere (see Immobiliare Saffi , cited above, §   49). In the Court’s view, in the present case the State did not commit a manifest error of judgment in regulating the transition from the socialist system of protected tenancies to private ownership of flats (see Falkowska , cited above, § 48). 31.     In view of the above considerations, the Court finds that the domestic authorities struck a fair balance between the general interest of the community and the applicants’ individual interests, without placing an excessive burden on them. 32.     Accordingly, the application is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention. For these reasons, the Court, unanimously, Declares the application inadmissible. Done in English and notified in writing on 20 April 2023.     Liv Tigerstedt   Ivana Jelić   Deputy Registrar   President