Lack of reasoning of a tax court regarding the basic claim of the applicant! Violation of a fair trial!
JUDGMENT
Melgarejo Martinez de Abellanosa v. Spain 14.12.2021 (app. no. 11200/19)
SUMMARY
Court’s decisions reasonong. Contradictory case law on the same issue. Fair trial.
The applicant brought an action for a double breach of the fair trial due to a lack of reasoning in the decision and conflicting case-law. Part of the applicant’s real estate was confiscated due to overdue debt to the tax office which included capital and surcharges due to interest amounting to 296,031 euros. He appealed to the tax courts and the original debt was canceled, but not the amount of the surcharges and interest. In a similar case in another decision concerning his brothers the court decision annulled the total amount of the principal debt and the surcharges and interest.
With regard to the different judgments of the domestic courts in the dispute between the applicant himself and that of his brothers, the ECtHR held that the possibility of conflicting judgments is an inherent feature of any judicial system and could not in itself be considered to infringe the ECHR. It therefore found no breach of this part.
On the contrary, as regards the lack of a statement of reasons, the Court reiterated that an obligation to state reasons is necessary in the arguments which are relevant to the outcome of the case.
It held that the failure to state reasons on the applicant’s claim that the surcharges and interest were of a consequential nature in relation to the main debt which had been annulled, which was a decisive factor in the outcome of the proceedings, had violated the fair trial.
The ECtHR did not award damages or non-pecuniary damage because no claim was made, however, the finding of the violation obliges the defendant state to a new trial with a retrial.
PROVISION
Article 6 par. 1
PRINCIPAL FACTS
The applicant, Francisco Javier Melgarejo Martinez de Abellanosa, is a Spanish national who was
born in 1965 and lives in Sevilla (Spain).
Following an inspection of his personal income tax returns, the Spanish Tax Management Agency
claimed arrears from him for tax years 1991 and 1993. However, those claims were declared null and
void by the Economic Administrative Court of Andalusia in 1999. Then, following an appeal by the
tax authorities, that decision was revoked in part by the Central Economic Administrative Court in
2001, and subsequent appeals by Mr Melgarejo Martinez de Abellanosa were dismissed.
In 2005, the tax authorities proceeded with the enforcement of the debt by seizing assets to the
amount of EUR 296,031 which included a surcharge for late payment and default interest.
Mr Melgarejo Martinez de Abellanosa subsequently lodged two applications for undue payment
against the tax authorities, one in respect of the main debt and the other in respect of the surcharge
and interest. The one in respect of the main debt was allowed and the debt was declared null and
void; the one in respect of the surcharge and interest, however, was dismissed. He appealed before
the Audiencia Nacional regarding the surcharge and interest, but his appeal was dismissed. In that
judgment, no reply was given to his allegation that the surcharge and interest should be declared
null and void as a result of the annulment of the main debt. By contrast, two months later, the
Audiencia Nacional allowed his siblings’ appeals, who had been subject to similar and parallel tax
claims, for that very reason.
In 2018 the Audiencia Nacional dismissed his application for annulment, without addressing the
particular issue of whether the previous judgment had responded to his submission concerning the
ancillary nature of the surcharge and interest. Appeals to the Supreme Court and the Constitutional
Court were declared inadmissible.
Relying on Article 6 § 1 (right to a fair hearing) of the Convention, Mr Melgarejo Martinez de
Abellanosa complained that his right to a fair trial had been breached on account of the Audiencia
Nacional’s failure to provide reasoning in response to his submission concerning the ancillary nature
of the surcharge and interest. He alleged that, as the main debt had been declared null and void, the
surcharge for late payment and default interest should equally have been cancelled. He also
submitted that the dismissal of his appeal, whereas his siblings’ appeals in the same circumstances
were allowed, implied a breach of legal certainty.
THE DECISION OF THE COURT…
Article 6 § 1
The Court examined the application under the criminal limb of Article 6 § 1, in view of the deterrent
and punitive nature of surcharges for late payment, the civil limb not being applicable regarding tax
issues. It examined the two issues separately.
(i) On divergent judgments in Mr Melgarejo Martinez de Abellanosa’s case and his siblings’ cases
The Court noted that the judgment on Mr Melgarejo Martinez de Abellanosa’s appeal had been
adopted two months earlier than the judgment on his siblings’ appeals and that his siblings, despite
being in identical or similar situations to him, had obtained favourable judgments from the
Audiencia Nacional. While that divergence was a matter of concern for those involved, the possibility
of conflicting court decisions was an inherent trait of any judicial system and could not in itself be
considered in breach of the Convention.
As it had not been proven that the divergence in this case went against a well-established case-law
or that it had occurred over a longer time-frame or been repeated in other cases, and bearing in
mind that it was not, in principle, the Court’s function to compare different decisions delivered by
national courts, the Court concluded that there were no “profound and long-standing differences” in
the relevant case-law and no breach of the principle of legal certainty to an extent incompatible with
the guarantees of Article 6 § 1.
There had therefore been no violation of Article 6 § 1 of the Convention on this account.
(ii) On the reasoning of the Audiencia Nacional
The Court observed that the Audiencia Nacional had failed to explain why, despite the fact that the
surcharge and interest were considered ancillary under the General Tax Act, the proceedings
concerning the surcharge and interest could be pursued even in the absence of a valid enforcement
title for the main debt.
The obligation for courts and tribunals to give reasons did not require a detailed answer to every
argument advanced but did require a specific and explicit reply to the arguments which were
decisive for the outcome of the proceedings. In this case, despite the argument concerning the
ancillary nature of the surcharge and interest being potentially decisive for the outcome of the case,
it was impossible to ascertain whether the Audiencia Nacional had examined that submission at all,
or whether it had assessed and dismissed it and, if so, what had been the reasons for doing so. The
Court therefore concluded that Mr Melgarejo Martinez de Abellanosa’s right to a reasoned
judgment had been breached. There had therefore been a violation of Article 6 § 1 of the
Convention on this account.
Just satisfaction (Article 41)
No supporting documents had been submitted for costs and expenses, so the Court dismissed
Mr Melgarejo Martinez de Abellanosa’s claim for those.
Moreover, he had not submitted a claim in respect of pecuniary or non-pecuniary damage.
Nevertheless, the Court noted that the domestic legislation provided for the possibility of the
revision of the final decision taken where a violation of the Convention had been found. It held that
in this case, a retrial or the reopening of the case would constitute the most appropriate form of
redress.
