SECOND SECTION

CASE OF GOŠOVIĆ v. CROATIA

(Application no. 37006/13)

JUDGMENT

STRASBOURG

4 April 2017

This judgment is final but it may be subject to editorial revision.

In the case of Gošović v. Croatia,
The European Court of Human Rights (Second Section), sitting as a Committee composed of:
	Jon Fridrik Kjølbro, President,
	Ksenija Turković,
	Georges Ravarani, judges,
and Hasan Bakırcı, Deputy Section Registrar,
Having deliberated in private on 14 March 2017,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1.  The case originated in an application (no. 37006/13) against the Republic of Croatia lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Croatian national, Mr Gojko Gošović (“the applicant”), on 22 May 2013.
2.  The applicant was represented, first by Ms J. Ćurković Gošović, an advocate practising in Split, and subsequently by Mr J. Anzulović-Mirošević, an advocate practising in Supetar. The Croatian Government (“the Government”) were represented by their Agent, Ms Š. Stažnik.
3.  The applicant alleged that the domestic courts’ refusal to order eviction of the protected lessee living in his flat, together with inability to charge adequate rent for its lease, had been in violation of his right to peaceful enjoyment of his possessions.
4.  On 17 April 2015 the complaint concerning the right of property was communicated to the Government and the remainder of the application was declared inadmissible pursuant to Rule 54 § 3 of the Rules of Court.
THE FACTS
Article I.	I.  THE CIRCUMSTANCES OF THE CASE
5.  The applicant was born in 1963 and lives in Split.
6.  He is the owner of a flat in Split with a surface area of 106.90 square metres. According to the applicant, that flat is the only real estate in his ownership and his only property of value.
7.  It would appear that in 1971 the housing authorities awarded a specially protected tenancy (stanarsko pravo) of the flat to a certain Ms N.R. and her family.
8.  On 5 November 1996 the Lease of Flats Act entered into force. It abolished the legal concept of the specially protected tenancy and provided that the holders of such tenancies in respect of, inter alia, privately owned flats were to become “protected lessees” (zaštićeni najmoprimci). Under the Act such lessees are subject to a number of protective measures, such as the duty of landlords to contract a lease of indefinite duration, payment of protected rent (zaštićena najamnina), the amount of which is set by the Government and significantly lower than the market rent; and better protection against termination of the lease.
9.  The applicant refused to conclude a lease contract with N.R. under the protected lease scheme.
10.  Therefore, on 16 October 1997 she brought a civil action against him in the Split Municipal Court (Općinski sud u Splitu) with a view to obtaining a judgment in lieu of such a contract.
11.  At the hearing held on 4 November 1998 the applicant argued that N.R. was not entitled to protected rent because she owned a house in the tourist village of Rogoznica, some 53 kilometres from Split.
12.  At the hearing held on 15 April 2002 the applicant submitted a counter-claim seeking to obtain a judgment ordering N.R. and her family to vacate the flat in question. He argued that he intended to move into the flat.
13.  By a judgment of 27 February 2008 the Municipal Court found in favour of N.R. and imposed on the applicant a lease contract stipulating protected rent in the amount of 163.56 Croatian kunas (HRK) per month.
14.  On 21 October 2008 the Split County Court (Županijski sud u Splitu) dismissed an appeal by the applicant and upheld the first-instance judgment.
15.  The Municipal and the County Court established that N.R. was living in the flat with her son M.R., her daughter-in-law and her grandson whereas the applicant was living with his mother in a flat located in the same building. His mother also owned an adjacent building where he was running his medical practice in one of the flats. The court also found that N.R. and her son M.R. indeed owned a small summer home in Rogoznica surfacing 18 square metres only.
16.  Against this factual background the Municipal and the County Court held that the conditions provided in section 40(1) of the Lease of Flats Act, as interpreted by the Supreme Court (see Statileo v. Croatia, no. 12027/10, §§ 48-49, 10 July 2014), had not been met and that the applicant was therefore not entitled to refuse to enter into a lease contract with N.R. under the protected lease scheme. In particular, even though the applicant intended to move into the flat and had no other accommodation, he was neither entitled to permanent social assistance or was over sixty years of age, nor was N.R.’s summer home in Rogoznica located in the same municipality or township.
17.  Those courts also held that, apart from being protected from eviction, N.R. was also entitled to protected rent; the applicant thus having no right to charge her the market rent for living in his flat. That was so because they found that N.R.’s summer home did not constitute a habitable house within the meaning of section 31(2) of the Lease of Flats Act (see Statileo, cited above, § 41).
18.  By a decision of 21 November 2012 the Constitutional Court (Ustavni sud Republike Hrvatske) dismissed the applicant’s constitutional complaint against the judgments of the Municipal and the County Court, and served its decision on the applicant’s representative on 7 December 2012.
Article II.	II.  RELEVANT DOMESTIC LAW AND PRACTICE
19.  The relevant domestic law and practice is set out in the case of Statileo v. Croatia (cited above, §§ 23-87).
THE LAW
Article III.	I.  ALLEGED VIOLATION OF ARTICLE 1 PROTOCOL No. 1 TO THE CONVENTION
20.  The applicant complained that he had been unable to either evict the protected lessee from, and move into his own flat, or charge the market rent for its lease. The applicant relied on Article 1 of Protocol No. 1 to the Convention, which reads as follows:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
21.  The Government contested that argument.
Section 3.01	A.  Admissibility
22.  The Court notes that the application is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
Section 3.02	B.  Merits
23.  The Court notes that the present case concerns, inter alia, inadequate level of (protected) rent the applicant has been entitled to receive under the domestic law for his flat subject to the protected lease scheme. It is in this respect similar to the case of Statileo v. Croatia (cited above) where the Court found a violation of Article 1 of Protocol No. 1 to the Convention on that account.
24.  However, unlike in the Statileo case, the applicant’s complaints in the instant case, as initially formulated, seemed to primarily concern his inability to evict the tenant and move into his flat subject to the said scheme. This issue was also addressed in the Statileo case. Even though in that case the Court found a violation of Article 1 of Protocol No. 1 to the Convention having regard to, primarily, the small amount of protected rent the applicant had been entitled to receive and the statutory financial burdens imposed on him, it did so also in view of the restrictions on landlords’ rights in respect of the termination of protected leases (ibid, § 143). In particular, as regards those restrictions the Court noted:
“126. ... Not only is it not open to those landlords to repossess their flats solely on the basis of their wish to make other use of them (see, mutatis mutandis, Edwards, cited above, § 73) but their right to terminate the lease on the basis of their own need for accommodation or that of their relatives or because the protected lessee owns alternative accommodation and thus does not need protection against the termination of the lease (see, mutatis mutandis, Amato Gauci v. Malta, no. 47045/06, § 61, 15 September 2009), is considerably restricted.
127. In particular, under section 40 of the Lease of Flats Act (see paragraphs 48-49 above) a landlord who intends to move into the flat or install his children, parents or dependants in it is entitled to terminate the contract for lease of a flat to a protected lessee only if (1) the landlord does not have other accommodation for himself or herself and for his or her family, and is either entitled to permanent social assistance or is over sixty years of age, or (2) the lessee owns a suitable habitable flat in the same municipality or township.
128. Consequently, the protected lease scheme lacks adequate procedural safeguards aimed at achieving a balance between the interests of protected lessees and those of landlords (see, mutatis mutandis, Amato Gauci, loc. cit.). Those rules, combined with the statutory right of those who were members of the lessee’s household at the time the Lease of Flats Act entered into force to succeed to the status of the protected lessee (see paragraphs 46-47 above) has left little or no possibility for landlords to regain possession of their flats as the likelihood of protected lessees leaving flats voluntarily is generally remote (see, mutatis mutandis, Hutten-Czapska, cited above, § 196, and Amato Gauci, loc. cit.).”
25.  Yet, in his observations in reply to those of the Government – which did not significantly differ from those in the Statileo case (ibid, §§ 101-111) – the applicant focused on his inability to charge the market rent for the lease of his flat. In particular, his only argument was that the State rented out flats in its ownership at the price ten times higher than that it had imposed for renting out privately-owned flats under the protected lease scheme.
26.  That being so, the Court finds that the present case does not differ in any relevant respect from the case of Statileo (ibid.).
27.  There has accordingly been a breach of Article 1 of Protocol No. 1 to the Convention.
Article IV.	II.  APPLICATION OF ARTICLE 41 OF THE CONVENTION
28.  Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
Section 4.01	A.  Damage
(a)	1.  The parties’ submissions
29.  The applicant claimed HRK 160,440 in respect of pecuniary damage, which corresponded to the difference in the past ten years between the protected rent and the rent at which the State rented out its own flats. He also claimed euros (EUR) 30,000 in respect of non-pecuniary damage.
30.  The Government contested these claims.
(b)	2.  The Court’s assessment
(i)	(a)  Pecuniary damage
31.  The Court considers that the applicant must have suffered pecuniary damage as a result of his inability to charge the adequate rent for his flat starting from 5 November 1997 (the date of the entry into force of the Convention in respect of Croatia). However, given that in his claim for just satisfaction of 5 November 2015 the applicant sought compensation for pecuniary damage only for the past ten years, the Court can award him such compensation only as of November 2005 and up to the date of the present judgment.
32.  The Court had already stated in the Statileo case (ibid, § 157), that the compensation for such pecuniary damage should cover the difference between the protected rent, which the Court had found to be inadequate, and the adequate rent, and that it thus cannot comprise the amount of the protected rent the applicant would in any event be entitled to receive.
33.  In the light of the foregoing, and having regard to the information submitted by the parties, the Court considers it reasonable to award the applicant EUR 21,160 on account of pecuniary damage.
(ii)	(b)  Non-pecuniary damage
34.  The Court also finds that the applicants must have sustained non‑pecuniary damage (ibid, § 159). Ruling on an equitable basis, the Court awards him EUR 5,000 under that head.
Section 4.02	B.  Costs and expenses
35.  The applicant did not submit any claim for costs and expenses incurred in the proceedings before the domestic courts or before this Court. The Court therefore considers that there is no call to award him any sum on that account.
Section 4.03	C.  Default interest
36.  The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1.  Declares the application admissible;

2.  Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention;

3.  Holds

(a)  that the respondent State is to pay the applicant, within three months the following amounts, to be converted into Croatian kunas at the rate applicable at the date of settlement:
(i)  EUR 21,160 (twenty one thousand one hundred and sixty euros) in respect of pecuniary damage;
(ii)  EUR 5,000 (five thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;
(b)  that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;

4.  Dismisses the remainder of the applicant’s claim for just satisfaction.

Done in English, and notified in writing on 4 April 2017, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
	Hasan Bakırcı	Jon Fridrik Kjølbro
	Deputy Registrar	President