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HEADNOTES
The
mere fact that the final result may be a situation where a business
trustee’s claims are not satisfied is not unconstitutional. This fact
must also be seen in light of the abovementioned decision of the
European Court of Human Rights (Van der Mussele v. Belgium), which
emphasized that the risks undertaken in connection with the practice of a
particular profession (in the cited case, of an attorney), which
include the risk of non-payment of compensation for work performed, are
balanced out by advantages connected with that profession (in the cited
case, a professional monopoly in defense and representation). These
conclusion can also be applied, without anything further, to the
activity and position of a business trustee, in whose case the risk of
non-satisfaction of statutory claims, which is of course quite
insignificant, basically has a counterweight in his monopoly status for
conducting the activity of an trustee.
The
Constitutional Court concluded that there are no grounds for granting
the constitutional complaint, and it is not necessary to annul § 338zo
par. 4 of the CPC, because in the overwhelming majority of cases
satisfaction of a business trustee’s statutory claims can be achieved
with the help of instruments contained in the CPC.
CZECH REPUBLIC
CONSTITUTIONAL COURT
JUDGMENT
IN THE NAME OF THE CZECH EPUBLIC
The Plenum of the Constitutional Court, composed of Stanislav Balík, František Duchoň, Vlasta Formánková, Vojen Güttler, Pavel Holländer, Ivana Janů, Dagmar Lastovecká, Jiří Mucha, Jan Musil, Jiří Nykodým, Pavel Rychetský, Miloslav Výborný, Eliška Wagnerová a Michaela Židlická decided on this day on a petition from the District Court in Ostrava, seeking the annulment of § 338zo par. 4 of Act no. 99/1963 Coll., the Civil Procedure Code, as amended by later regulations, as follows:
The petition is denied.
REASONING
I.
The
petitioner, in accordance with Art. 95 par. 2 of the Constitution of
the Czech Republic seeks to have the Constitutional Court issue a
judgment annulling § 338zo par. 4 of the Civil Procedure Code (the
“CPC”). It stated that in its decision-making in the matter file no. 90 E
1096/2002 it concluded that this provision is inconsistent with Art. 1
and Art. 3 par. 1 of the Charter of Fundamental Rights and Freedoms, for
the following reasons:
In
its decision of 7 April 2003, ref. no. 90 E 1096/2002-8, the District
Court in Ostrava ordered execution of its decision by sale of the
obligated party’s business, and appointed Mgr. Z. N. as the trustee. In a
filing of 14 November 2003, the trustee gave the court a report on the
price of the business under § 338m of the CPC. According to this report,
the obligated party’s business has debts totaling CZK 26,035. As
regards the obligated party’s assets, it was determined that the
business has de facto not existed for over 4 years, and it has no
personal property, real estate, or receivables. By decision of 23
January 2004, ref. no. 90 E 1096/2002-37, the District Court in Ostrava
stopped execution of the decision under § 338n par. 6 of the CPC,
because the value of things, rights and other assets belong to the
business is not greater than the amount of the business’s payable
financial obligations, the expected compensation for the trustee, and
reimbursement of the trustee’s cash expenses. In her filing of 11 March
2004, the trustee, pursuant to § 338zo par. 4 of the CPC, provided an
accounting of the trustee’s compensation and cash expenses. She listed
cash expenses of CZK 106 for postage, and proposed that the court set
the compensation for the trustee in its discretion, based on the time
required to perform the office; under § 2 of Decree no. 485/2000 Coll.
on Compensation of Trustees, the basis for determining a trustee’s
compensation is the price determined under § 338n par. 2 of the CPC, but
in this case it is impossible to determine that compensation, because
the business has no property.
The
petitioner also pointed to § 338h par. 1 of the CPC, under which a
court, in a decision ordering execution of a decision by sale of a
business, shall appoint a trustee for the business, whom the law (e.g. §
338k of the CPC, 338m of the CPC) charges with fulfilling a number of
obligations, and also makes him liable for damages which he causes by
at-fault violation of his obligations. The court shall appoint as
trustee a person registered under special regulations in the list of
bankruptcy trustees. Under § 338i par. 4 of the CPC, the trustee is
entitled to compensation and to reimbursement of cash expenses. The
amount of trustee compensation, how it is determined, and determination
of cash expenses is regulated by Ministry of Justice Decree no. 485/2000
Coll. The basis for determining a trustee’s compensation is the price
of the business determined under § 338n par. 2 of the CPC (the net
assets of the business). The decree does not provide for compensation of
the trustee in the event that execution of the decision is stopped,
e.g. under § 338n par. 6 of the CPC. According to the court, the
inconsistency between the regulation provided by the cited § 338i par. 4
and the decree can be overcome by interpreting the statute so that the
court determines the compensation in its discretion, and taking into
account the scope of the trustee’s work.
The
petitioner also referred to the contested § 338zo par. 4 of the CPC,
under which the court shall impose an obligation to pay the trustee
compensation and reimbursement of cash expenses if execution of a
decision is stopped, either on the obligated party, or jointly and
severally on the entitled party, those who entered proceedings as
additional entitled parties, and creditors who have registered their
claims (§ 338s and 338zn of the CPC), depending on the grounds on which
the execution of the decision was stopped (§ 338zo par. 4 of the CPC).
However, the statutory construction of § 338zo par. 4 of the CPC makes
it possible for a situation to arise in the proceedings, where the
ability to satisfy the trustee’s claims is directly dependent on the
solvency of the parties to the proceedings. Because an entitled party
can be required to pay the trustee’s claims only in exceptional cases
(usually when he did not observe the necessary level of care when filing
the petition for execution of a decision), in most cases it is the
obligated party who is bound by this obligation. Especially in a
situation where the obligated party’s business is over-indebted (§ 338n
par. 6 of the CPC), it is evident that the trustee’s claims will not be
satisfied, or will be satisfied only in part; if the business trustee
was not made the bankruptcy trustee under § 13b par. 3 of Act no.
328/1991 Coll., on Bankruptcy and Settlement (the “Bankruptcy Act”), the
business trustee has only non-priority claims against the bankrupt (§
31 par. 5 of the Bankruptcy Act). If the bankruptcy petition was denied,
then the business trustee does not have even this possibility for
satisfying his claims. As a result of the statutory framework for
compensation of trustees, in a number of cases the business trustee,
although he fulfills all obligations imposed by law, does not receive
compensation for fulfilling his office, and he is not reimbursed for
cash expenses which he paid out of his own funds. The structure of
compensation for business trustees not only leads to failure to satisfy
their lawful claims, but also thus deforms the overall results of
execution of a decision by sale of a business, because it removes from a
certain group of business trustees the important motivation of
compensation.
The petitioner
added that a business trustee must be considered a special public law
body, just like a bankruptcy trustee (see Constitutional Court judgment
file no. Pl. US 36/01, published as no. 403/2002 Coll., also Collection
of Decisions of the Constitutional Court, volume 26, judgment no. 80).
The abovementioned statutory structure for deciding on a trustee’s
compensation and cash expenses (§ 338zo par. 4 of the CPC) creates a
situation where it is impossible to satisfy a business trustee’s lawful
claims for compensation and cash expenses, without establishing another,
alternative source for paying these claims (e.g. an obligation of the
state to pay a trustee’s claims, or an obligation on the entitled party
to provide a deposit for the compensation and cash expenses). The
provision of § 338zo par. 4 of the CPC does not even permit using as an
alternative source any deposit paid under § 270 par. 3 of the CPC,
because that deposit can be used only to pay expenses of execution of a
decision which are paid by the state. Thus, in the petitioner’s opinion,
this creates an inequality in compensation for two groups of business
trustees – a first group of business trustees, the satisfaction of whose
claims for compensation and cash expenses is secured by law (in the
budget of revenues from sale of a business or in the budget of
bankruptcy assets under § 31 par. 5 of the Bankruptcy Act) and a second
group of business trustees without the possibility of satisfying their
claims, or with only a negligible possibility – even though both groups
of business trustees fulfill all the obligations imposed on them by law.
II.
The
Constitutional Court, in accordance with § 69 of Act no. 182/1993
Coll., on the Constitutional Court, as amended by later regulations (the
Act on the Constitutional Court”), sent the petition to open
proceedings to parties to the proceedings – the Chamber of Deputies and
the Senate of the Parliament of the Czech Republic and also requested a
position statement from the Ministry of Justice of the Czech Republic.
The
statement from the Chamber of Deputies of the Parliament of the Czech
Republic begins by recapitulating the content of the petition to annul
the contested statutory provision and then the statutory process leading
to the enactment of that provision. The amending proposals which were
passed did not affect the contested provision. The legislature acted in
the belief that the enacted statute was in accordance with the
Constitution and our legal order, and leaves it to on the Constitutional
Court to evaluate its constitutionality.
The
Senate of the Parliament of the Czech Republic, in its extensive
statement on the merits of the matter, stated that in the case of a sale
of a business the legislature could not ignore the situation where, in
the course of an execution of a decision by sale of a business it
becomes apparent that the business is insolvent (over-indebted). The
only procedural methods for addressing insolvency in our law are
bankruptcy and settlement; therefore, when insolvency was discovered, it
was appropriate to address it by stopping the execution proceedings (§
338n par. 6 of the CPC, § 338w par. 3 of the CPC), in favor of
bankruptcy proceedings which were intended for that purpose (§ 4b of the
Bankruptcy Act). If a court stops execution of a decision, it shall,
under § 338zo par. 4 of the CPC, impose an obligation to pay the
business trustee compensation and reimbursement of cash expenses, on the
obligated party, or jointly and severally on the subjects cited
therein. Thus, the legislature did not leave the claims of business
trustees without statutory support – although in the form of a monetary
claim. In the Senate’s opinion, on can conclude from these
circumstances, supported by further statutory texts (§ 338i par. 4 of
the CPC, § 338ze par. 7 of the CPC), that one can not ascribe to the
legislature an intent to create a legal situation which would deny
business trustees the possibility of being paid compensation and
reimbursement of cash expenses. In this regard, a source of funds for
satisfying the claims of a business trustee found primarily with those
(private) persons as a result of whose conduct the business trustee’s
expenses arose, can also be considered legitimate (and constitutional).
The
Senate also points to § 338i par. 4 of the CPC, under which the trustee
is entitled to compensation and reimbursement of cash expenses. If a
business is successfully sold, the claim is satisfied from the assets
being divided; if the claim is not satisfied in full from the assets,
the court shall recognize the business trustee’s claim against the
obligated party, secured under § 338ze par. 7 of the CPC. However, if
the business is not sold in civil proceedings, the court – as already
stated – shall stop the proceedings and impose an obligation to pay the
trustee’s claim on subjects specified in § 338zo par. 4 of the CPC. If a
qualified reason for the “unsuccessful” sale of a business is that
funds obtained through the sale are insufficient to cover the specified
obligations (the price of things, rights and other property valued
belonging to the business together with the funds … does not exceed the
amount of the business’s payable monetary obligations, the claims of the
entitled party, of persons who joined the proceedings as additional
entitled parties … the compensation of the trustee and reimbursement of
his cash expenses, or exceeds it only negligibly), the business trustee
has an opportunity to realize his claim under the Bankruptcy Act. The
fate of the satisfaction of the claim depends on whether the bankruptcy
trustee in the matter is the same person (a business trustee, who,
however, does not perform his function while the bankruptcy proceedings
are going on) or not.
Thus,
in the Senate’s opinion, one can say that, as regards the claim to
compensation and reimbursement of cash expenses, a business trustee who
is also the bankruptcy trustee has a “more advantageous position” in
bankruptcy proceedings than a “mere” business trustee. The advantage of
the claim consists in the fact that it will be satisfied from the
bankruptcy assets (§ 31 par. 5, together with § 31 par. 2 of the
Bankruptcy Act), at any time during the bankruptcy proceedings (§ 31
par. 1 of the Bankruptcy Act). In its filing, the petitioner objects to
the “inequality of business trustees” or the “creation of two groups of
business trustees,” insofar as it places other trustees, the
satisfaction of whose claims is “secured from the budget proceeding from
the sale of the business or from the budget from the bankruptcy
assets,” opposite the group of business trustees who do not have the
opportunity to have their claims thus satisfied. In the Senate’s
opinion, the inequality according to the selected structure is not
“claimed” comprehensively. Other examples could be constructed in
addition to the one provided by the petitioner, for example, one where a
business trustee’s claim was not fully satisfied from the proceedings
of sale of real estate, and he was also unable to exercise his claim
against a guarantor (§ 338ze par. 7 of the CPC). Therefore, the Senate
closed this part of its statement by saying that if “perfect” equality
was to have been achieved (here one allegedly can not literally use the
claim stated by the petitioner to secure the same right for compensation
and cash expenses, because that would make the entire problem
unsolvable) in satisfying the claims of business trustees for
compensation and cash expenses, their claim would have to be satisfied
as part of the execution of a decision by sale of the business. This
would basically mean that the remainder of the claim (or perhaps all of
it) would have to be paid by the state. Here it is possible – in the
Senate’s opinion – to counter the petitioner’s claim about de-motivation
of business trustees with the argument that it is not the threat of
non-satisfaction of their claims, but the “one hundred percent”
certainty, that could be the de-motivating factor. Likewise, it is not
insignificant that full satisfaction of a trustee’s claims in the regime
of execution proceedings would, in the case of an over-indebted
business, lead to an undesirable exemption of the claims from the regime
of the Bankruptcy Act.
In
its statement the Senate refers to judgment no. 403/2002 Coll., in which
the Constitutional Court addressed the similar issue of compensation
and reimbursement of expenses of a bankruptcy trustee in bankruptcy
proceedings. In the Senate’s opinion, the following statement by the
Constitutional Court will be fundamental to the key issue of
differentiating two groups of business trustees (with unequal
possibilities for satisfaction of their claims) even though both groups
fulfill all the obligations imposed by law: “If the purpose of the
statutory framework permitting bankruptcy proceedings is also
constitutional in a case where, in bankruptcy proceedings, no bankruptcy
assets are converted to money, and a deposit for bankruptcy expenses
was not paid … (note: and there was thus no other source) …, it is then
necessary to consider that the situation which this creates at the
statutory level of payment to the trustee of cash expenses and
compensation must be considered to violate the constitutional principle
of non-accessory equality.” However, in the Senate’s opinion, it would
easy, viewed through the prism of that text, to “succumb to the
impression that there is a clear solution even in the event that § 338zo
par. 4 of the CPC is annulled.” However, it is necessary to consider
other circumstances. As was already stated, the claim of a business
trustee is satisfied from the bankruptcy assets (§ 338ze of the CPC), or
from other sources. Apart from the obligated party, these sources are
the guarantors, under § 338ze par. 7 of the CPC, or the entitled parties
or creditors, under § 338zo par. 4 of the CPC. Of course, in the
special case of the company being over-indebted, sources for satisfying a
business trustee’s claims must be sought in bankruptcy proceedings.
Thus, from the point of view of the Civil Procedure Code, no other
source of funds for a business trustee exists, but the civil procedure
code does not prevent (on the contrary, it creates essential
prerequisites for) the use of a special, standard, and legislatively
adequate source for the situation (over-indebtedness of a business);
(here the Senate referred to part of its statement, already cited
above). However, according to the Senate, the entire matter appears
different from the point of view of the Bankruptcy Act. In that regard
one can share the petitioner’s concerns about the unequal approach to
satisfying the claims of a business trustee (regarding this, see above –
claims with a “more advantageous” position). However, according to the
Senate a possible solution would be outside the regime of the Civil
Procedure Code and is thus not the topic of this detailed statement,
which the Senate closed by stating that it is completely up to the
Constitutional Court, to evaluate the constitutionality of the contested
provision.
The brief
position statement of the Ministry of Justice, which proposes not
granting the petition, states that annulling the contested provision
would, on the contrary, create inequality, because “the court would not
have a provision in the law” under which it could allocate compensation
and reimbursement of cash expenses to the trustee.
III.
The
Constitutional Court, in accordance with § 68 par. 2 of the Act on the
Constitutional Court, considered the question whether the Act whose
contested provision is claimed to be unconstitutional was passed and
issued within the bounds of constitutionally provided jurisdiction and
in a constitutionally prescribed manner.
The
statute in question is Act no. 30/2000 Coll., which amends Act no.
99/1963 Coll., the Civil Procedure Code, as amended by later
regulations, and certain other Acts. In this regard, the Constitutional
Court determined from the relevant parliamentary publications, shorthand
transcripts, and voting records, that the Chamber of Deputies of the
Parliament of the CR duly approved the draft of this Act at its session
on 9 December 1999 and the Senate of the Parliament of the CR approved
the draft in the wording approved by the Chamber of Deputies at its
session on 12 January 2000. After signature by the President and the
Prime Minister, the Act was promulgated in the Collection of Law, in
part 11, as number 30/2000 Coll. Thus, the statute in question was
passed and issued within the bounds of constitutionally provided
jurisdiction and in a constitutionally prescribed manner.
IV.
After
this determination, the Constitutional Court turned to evaluating the
content of the contested statutory provision in terms of its consistency
with the constitutional order of the Czech Republic [Art. 87 par. 1
let. a) of the Constitution of the Czech Republic].
The provision which the petitioner contests and seeks to have annulled reads:
The provision which the petitioner contests and seeks to have annulled reads:
“The
court shall impose an obligation to pay the trustee compensation and
reimbursement of cash expenses either on the obligated party or jointly
and severally to the entitled party, those who joined the proceedings as
additional entitled parties, and creditors who registered their claims
(§ 338s a 338zn), according to the grounds on which the execution of the
decision was stopped.”
To
begin with, the Constitutional Court dealt with the question of the
status of a business trustee and his definition in relation to a
bankruptcy trustee. The activity and status of a business trustee is
similar to the status and activity of a bankruptcy trustee under the
Bankruptcy Act. As with bankruptcy proceedings, the appointment of a
business trustee is an obligatory, conceptual component of execution of a
decision by sale of a business (§ 338i of the CPC). As was already
stated in Constitutional Court judgment file no. Pl. US 36/01, doctrine
ranks a bankruptcy trustee among special public law bodies, and his task
is to ensure the proper conduct of bankruptcy proceedings (see K.
Eliáš, Konkurs [Bankruptcy]. Právník [The Lawyer], no. 2/1995, p. 123;
H. Hrstková, R. Tománek, Některé základní otázky zákona o konkursu a
vyrovnání [Some Basic Issues of the Bankruptcy Act]. Právo a podnikání
[Law and Business], no. 10/1994, p. 27 et seq.; Fr. Štajgr, Konkursní
právo [Bankruptcy Law]. Prague 1947, p. 71).
The
Constitutional Court agrees with the doctrinaire definition in relation
to a bankruptcy trustee, and has no reservations to its use in relation
to a business trustee. The doctrinaire definition is based on factors
defining the concept of a public law body, which are public purpose, the
manner of appointment, and authority. The public purpose of the
institution of a bankruptcy trustee, as well as of a business trustee,
must be seen in acceptance of limited public interference in the
resolution of property relations. The manner of appointment of a
business trustee results from a decision by a state body – a court (§
338i par. 1 of the CPC). His authority and obligations, which are
established in a number of provisions of the CPC, are then the exercise
of authority.
A business
trustee is appointed by a court, from a list of persons registered under
the Bankruptcy Act in the list of bankruptcy trustees. The list of
trustees can include only individuals with a clean criminal record, who
have full legal capacity, have appropriate expert competence, and agree
to be registered, or a general partnership, which will perform the
trustee’s activities through its partners, and proves that they meet the
conditions for being registered in the list. In exceptional cases, the
court may appoint as trustee a person who is not registered in the list,
provided he meets the conditions for registration, if he agrees to be
appointed as trustee.
As in
its previously cited judgment (file no. Pl. 36/01), to which it refers
in this regard, the Constitutional Court starts with the fact that the
performance of the office of a business trustee appointed by a court can
not, from a constitutional law standpoint, be classified as work or
services required by law for the protection of the rights of others
under Art. 9 par. 2 let. d) of the Charter. This follows from the fact
that a business trustee is chosen from the list of bankruptcy trustees
(§ 338i par. 1 of the CPC) maintained by the appropriate court, and an
individual or general partnership can be registered in the list only if
he or it agrees to be registered. A person who is already in the list
can refuse appointment as a business trustee only if there are serious
reason for doing so. In exceptional cases, the court may appoint as
trustee a person who is not registered in the list, if, of course, the
person agrees to be appointed. This mechanism ensures either an
implicit, prior consent to perform the office of trustee, or specific
consent in a given case. Therefore, the performance of this office does
not meet the element of lack of consent, as a condition for the
performance of work or services under Art. 9 par. 2 of the Charter, or
Art. 4 par. 3 of the Convention. This conclusion is also consistent with
the legal opinion stated by the European Court of Human Rights in the
matter Van der Mussele v. Belgium (decision of 23 November 1983). A
person registered in the list of bankruptcy trustees, by applying for
and registering in the list, gave preliminary consent to appointment to
the position and the related risks, which include the risk that a
business trustee may not have all his statutory claims satisfied in all
cases. The fact that a business trustee may not have all his claims
satisfied, even in bankruptcy proceedings, if the process of execution
of a decision fails, is a risk which applies to all business trustees,
and there is thus no inequality in their position. In any case, not only
a business trustee, but everyone who performs a similar office by state
authorization (e.g. a notary) is in a similar situation.
Performance
of the office of a business trustee is also not part of an employment
relationship, and thus neither the content, nor the purpose and
significance of Art. 26 of the Charter apply to it. It is also not the
conduct of business, although it is similar to it, because of the nature
of the activity which is conducted for purposes of earning profits, nor
is it the conduct of other economic activity, and therefore, from a
constitutional law viewpoint, it can not be classified in the framework
defined by Art. 26 of the Charter.
In
addition to the abovementioned common elements, to which we can add the
liability of a business trustee or a bankruptcy trustee for violation
of obligations caused by his fault, there are of course also substantial
differences between the two offices. It must be kept in mind that both
the regulations for a bankruptcy trustee in the Bankruptcy Act, and the
regulations for a business trustee in the Civil Procedure Code are
different, comprehensive, and independent frameworks. While the activity
of a business trustee is aimed only at the sale of a business, the
activity of a bankruptcy trustee is aimed at converting all the
bankruptcy assets to money, and the main purpose is the proportional
satisfaction of the claims of all creditors from the property included
in the bankruptcy assets. In the case of execution of a decision by sale
of the business of the obligated party, there is usually no
interference in the activity of the business itself, as often happens
with bankruptcy, but only a forced change of the business owner (the
original owner, the obligated party, is replaced by a new owner – the
winner at auction).
However,
the main, and fundamental difference between the two kinds of
proceedings lies in the fact that while bankruptcy proceedings are
opened if the debtor is insolvent, on the basis of a bankruptcy petition
filed by the debtor, or a creditor (thus, opening proceedings is not
available to only one person), execution of a decision by sale of a
business is comprehensively governed by the dispositive principle. Thus,
it is fundamentally a proceeding which is opened only at the proposal
of the entitled party. This brings with it the specific features of
execution proceedings. Above all, the entitled party has the opportunity
to choose the manner of executing the decision, and it is purely up to
him whether to turn to execution of a decision by sale of a business,
where there may be, e.g., a danger of over-indebtedness. Therefore he
also bears greater responsibility for his decision. Before filing a
petition for execution of a decision the entitled person must carefully
weigh how he will proceed. In addition, the entitled person has
relatively effective means for determining the extent of the obligated
party’s property. These include primarily the institution of a property
declaration, established in § 260a et seq. of the CPC, under which a
creditor whose monetary claim has been recognized by an executable
decision, before filing a petition for execution of the decision, may
petition the court to summon the obligated party and require him to make
a property declaration. That, in addition to § 260 of the CPC (court
assistance in determining the financial abilities of the obligated
party) is another form of assistance which the court provides to
creditors so that they can successfully exercise their claims through
execution of a decision. Moreover, the court too is supposed to evaluate
the suitability of the proposed method of executing a decision, and if
it considers it evidently unsuitable, it should order execution of the
decision in another suitable manner. (§ 264 par. 1 of the CPC).
In
the present matter, annulment of § 338zo par. 4 of the CPC is proposed,
because in the petitioner’s opinion the manner of compensating a
business trustee provided in the statute need not lead to satisfaction
of his statutory claims (the claim for reimbursement of cash expenses
and to compensation). The statutory construction permits a situation to
arise where the statutory claims of a business trustee can not be
satisfied, without establishing another alternative source for paying
these claims. According to the petitioner, this deforms the overall
results of execution of a decision by sale of a business, because it
removes from a certain group of business trustees the important
motivation of compensation; it establishes inequality in compensation
between a bankruptcy trustee, the satisfaction of whose claim for
compensation and cash expenses is secured by the Bankruptcy Act (§ 31
par. 5 of the Bankruptcy Act) and a business trustee under the Civil
Procedure Code, who does not have the possibility of satisfying his
claims, or the possibility for satisfying them is only negligible. The
Constitutional Court does not completely agree with this opinion. It
must be kept in mind, as mentioned above, that execution of a decision
is a proceeding based on a petition. This also underlies the regulation
in the CPC. Under § 338i par. 4 of the CPC, a business trustee is
entitled to compensation and reimbursement of cash expenses. If a
business is successfully sold, his claims is satisfied from the
distributed assets. The business trustee’s claim to compensation and
cash expenses must be satisfied even if the distributed assets are not
sufficient. Thus, it the claim is not fully satisfied from the assets,
the court shall recognize the business trustee’s claim against the
obligated party, the fulfillment of which is guaranteed jointly and
severally by the entitled party, those who joined the proceedings as
additional entitled parties, and creditors who registered their claims
(§ 338ze par. 7 of the CPC). The obligation to satisfy the trustee’s
claims is primarily imposed on the obligated party. In the interests of
actual satisfaction of the business trustee is provided that the
entitled party, those who joined the proceedings as additional entitled
parties, and creditors who registered their claims (§ 338s of the CPC)
are jointly and severally liable for fulfillment of this obligation.
This regulation ensures that a business trustee will not find himself in
a situation where his statutory claims are not paid.
If
the sale of a business does not take place in civil proceedings, the
court shall stop the proceedings and impose an obligation to pay the
trustees’ claims on the subjects specified in § 338zo par. 4 of the CPC.
These are either the obligated party or, jointly and severally the
entitled party, those who joined the proceedings as additional entitled
parties, and creditors who registered their claims (§ 338s of the CPC
and § 338zn of the CPC). If the obligated party does not have sufficient
funds to pay the claims of the business trustee, it is quite legitimate
to require them to be paid by the entitled party or other creditors,
because, as stated above, the entitled person is responsible for the
choice of the manner of execution of the decision, and bears the related
risk for possible non-payment of the business trustee’s claims by the
obligated party. The business trustee’s claims for payment of his
compensation and expenses is thus not completely statutory without legal
support. In this regard we must point out that a business trustee can
request advances for cash expenses, as indicated in § 338i par. 5 of the
CPC. The advance for cash expenses shall be provided to the trustee by
the court on the basis of the request. Although this provision speaks in
particular about expenses in connection with engaging an expert, it is
not ruled out for the trustee to request an advance for other expenses
which he will incur in the sale or preparation of the sale of the
business. Therefore, if, in the course of the execution of the decision,
a need arises to cover expenses for cash expenditures, there is nothing
to prevent the court from requiring the entitled party to provide an
advance for paying them. This also applies in a situation where it is
obvious that it will not be possible to pay the business trustee’s
expenses from the sale of the business. The court can also take such
measures ahead of time, e.g. when ordering execution of the decision.
Thus, it is up to the business trustee to thoroughly use all the
opportunities and mechanisms which the CPC provides him. Cash expenses
paid from this advance are considered to be expenses of the sale of the
business. Thus, the situation in the judgment cited above concerning a
bankruptcy trustee can not arise; in that situation the bankruptcy
trustee incurred expenses which he had to pay himself. The only problem
can arise at the point where the entitled party has fulfilled the
conditions for exemption from court fees. The court can not require such
a person to pay an advance for expenses of executing a decision (§ 270
par. 3 second sentence of the CPC). If there is any revenue from the
sale of the business, the business trustee’s statutory claims are of
course paid from it. If that is not the case, the business trustee must
pay the expenses of execution of a decision himself. However, if it is
evident before execution of a decision is ordered that the profit from
sale of the business will not be sufficient even to pay the business
trustee’s claims and a situation could arise where satisfaction of the
business trustee’s claims could be threatened, it is up to the court, to
carefully evaluate the obligated party’s financial situation before
ordering execution of the decision. If it is quite evident that the
obligated party’s assets will not suffice even to cover expenses, it
should not order execution of the decision at all. The court is also
directed to follow these steps by § 264 par. 2 of the CPC, under which
the court shall deny the petition to execute a decision if it is evident
from the petition that the revenue which would be achieved would not
even suffice to cover the expenses of executing the decision. The
properly functioning system, opportunities and mechanisms established in
the CPC, together with careful evaluation of the situation both by the
entitled party and by the court, should prevent a situation from arising
which would be a basis for a petition to annul § 338zo par. 4 of the
CPC. Thus, we can conclude that the contested § 338zo par. 4 of the CPC
is not a violation of the constitutional law principle of equality.
If,
despite all the foregoing, a situation arises where a business trustee
is required to pay the expenses of execution of a decision himself, he
has an opportunity to exercise his claim against the obligated party by a
different method of execution of the decision, or by bankruptcy
proceedings. Another non-negligible difference between the execution of a
decision and bankruptcy lies in the fact that when bankruptcy is
completed, it is quite evident that the bankrupt has left only the
assets which are part of the bankruptcy assets, or that he has no assets
left. This is not the case with execution of a decision by sale of a
business. If the sale of a business as part of execution of a decision
is unsuccessful, the court can not determine the overall financial
situation of the obligated party from the materials which it has at its
disposal. It can only speculate, but can not reach a reliable
conclusion, because proceedings on execution of a decision by sale of a
business are not proceedings on total assets, but only on part of them.
Therefore, if the abovementioned opportunities and mechanisms fail, a
business trustee always has, within execution of a decision under the
CPC (guarantee by the entitled party, advances for expenses, etc.), an
opportunity to exercise recognized claims for compensation and cash
expenses through a different manner of execution of a decision, and in
an extreme case also through bankruptcy proceedings.
In
conclusion, the Constitutional Court emphasizes that the mere fact that
the final result may be a situation where a business trustee’s claims
are not satisfied is not unconstitutional. This fact must also be seen
in light of the abovementioned decision of the European Court of Human
Rights (Van der Mussele v. Belgium), which emphasized that the risks
undertaken in connection with the practice of a particular profession
(in the cited case, of an attorney), which include the risk of
non-payment of compensation for work performed, are balanced out by
advantages connected with that profession (in the cited case, a
professional monopoly in defense and representation). These conclusion
can also be applied, without anything further, to the activity and
position of a business trustee, in whose case the risk of
non-satisfaction of statutory claims, which is of course quite
insignificant, basically has a counterweight in his monopoly status for
conducting the activity of an trustee.
It
is true that in terms of the Bankruptcy Act, one can agree with the
petitioner’s fears about an unequal approach to satisfying the claims of
a business trustee who later, in bankruptcy proceedings, became the
bankruptcy trustee, and a business trustee who did not become a
bankruptcy trustee. However, that question exceeds the regime of the
Civil Procedure Code, and is therefore also not the subject of the
reasoning of this judgment.
Based
on the foregoing considerations, the Constitutional Court concluded
that there are no grounds for granting the constitutional complaint, and
it is not necessary to annul § 338zo par. 4 of the CPC, because in the
overwhelming majority of cases satisfaction of a business trustee’s
statutory claims can be achieved with the help of instruments contained
in the CPC. Given correctly functioning mechanisms and correct use of
the procedural regulation of execution of a decision, a situation should
not arise where a business trustee’s claims are not satisfied. If the
Constitutional Court annulled the cited provision, it would thereby, for
example, deprive the court of the ability to bind the obligated party
to pay a business trustee’s claims in a situation where a claim was
exercised that was satisfied by the obligated party from other funds,
and the court stopped the execution of the decision.
In
view of the foregoing conclusions, the Constitutional Court did not
find the petition for annulment of § 338zo par. 4 of the CPC to be
justified. Therefore, it denied it under § 82 par. 1 of the Act on the
Constitutional Court.
Notice: Decisions of the Constitutional Court can not be appealed.
Notice: Decisions of the Constitutional Court can not be appealed.
Brno, 25 October 2005
Dissenting Opinion
of judges Vojen Güttler, Ivana Janů, Dagmar Lastovecká, Miloslav Výborný and Eliška Wagnerová to the judgment of the Plenum of the Constitutional Court of 25 October 2005, which denied the petition from the District Court in Ostrava to annul § 338zo par. 4 of Act no. 99/1963 Coll., the Civil Procedure Code, as amended by later regulations
I. The reasoning of the Plenum’s judgment remains primarily at the level of simple law. The detailed interpretation of the provisions of the CPC under consideration, which can more or less relate to the adjudicated matter is certainly of good quality from an expert standpoint, but it misses the constitutional law substance of the case, and in the conclusion admits that the final result can be a situation (which it does not consider unconstitutional) where the business trustee’s claims won’t be satisfied anyway.
It
is, of course, not the task of the Constitutional Court, in proceedings
on a petition to annul a certain statutory provision, to give
exhaustive instructions on how to proceed in interpreting simple law in a
particular case, but to evaluate – either as part of specific review of
constitutionality (at the petition of a general court) – whether the
contested provision will stand in terms of constitutionality.
Here
one also can not overlook the constitutional requirement of clarity and
certainty of law (note: in relation to the detailed legal regulation of
the issues under review the gap in the statute becomes all the more
apparent, if it does not regulate a subsidiary source from which a
business trustee’s claim can be paid), as well as (in particular) the
requirement of transparency of the decision making of the Constitutional
Court itself (to handle similar matters in a similar manner). The
Plenum’s judgment – in the opinion of the dissenting judges – does not
respect these requirements because it does not sufficiently reflect the
similar situation discussed in Constitutional Court judgment file no.
Pl. US 36/01, which concerns a bankruptcy trustee.
The
general court rightly proposed – knowing the Constitutional Court’s
case law, with express reference to the previously addressed comparable
matter – annulment of the contested provision of the CPC, evoking
similar unconstitutional results. With reference to the key
constitutional arguments which are analyzed in the following text, in
particular the opinion that both matters are comparable from a
constitutional law viewpoint (not only in terms of ordinary law), we can
not but conclude that also in terms of the principle of predictable
decision making by the Constitutional Court itself the petition should
have been granted.
II. That conclusion can be based, in particular, on the following grounds.
The essence of the matter is (in particular) the already mentioned question whether the conclusions stated in Constitutional Court judgment file no. Pl. US 36/01 (Collection of Laws no. 403/2002), concerning a bankruptcy trustee, apply in principle (mutatis mutandis) to the present matter, i.e. for a situation in which a business trustee can find himself, as regards his claim for compensation and reimbursement of cash expenses. Basically the question is one of weighing whether the position of a business trustee is comparable with the position of a bankruptcy trustee, as the petitioner believes, or whether there are sufficiently important differences that would justify different treatment of them as regards the claim for compensation and reimbursement of cash expenses (giving an advantage to a bankruptcy trustee), as the Senate of the Parliament of the CR indicated in its statement – although not with a clear conclusion – and as the Plenum’s majority opinion concludes.
II. That conclusion can be based, in particular, on the following grounds.
The essence of the matter is (in particular) the already mentioned question whether the conclusions stated in Constitutional Court judgment file no. Pl. US 36/01 (Collection of Laws no. 403/2002), concerning a bankruptcy trustee, apply in principle (mutatis mutandis) to the present matter, i.e. for a situation in which a business trustee can find himself, as regards his claim for compensation and reimbursement of cash expenses. Basically the question is one of weighing whether the position of a business trustee is comparable with the position of a bankruptcy trustee, as the petitioner believes, or whether there are sufficiently important differences that would justify different treatment of them as regards the claim for compensation and reimbursement of cash expenses (giving an advantage to a bankruptcy trustee), as the Senate of the Parliament of the CR indicated in its statement – although not with a clear conclusion – and as the Plenum’s majority opinion concludes.
The
dissenting judges emphasize that this evaluation must, naturally, and
primarily, be based on a constitutional law viewpoint, not only on the
position of simple law. They conclude that the key part of the
constitutional law arguments contained in the abovementioned judgment is
also applicable to the present case; because they did not find grounds
to diverge from the previously expressed opinions they state (repeat)
the following arguments, which led the Constitutional Court to grant the
previous petition.
Execution
of a decision by sale of the business of the obligated party is,
generally speaking, a relatively effective means of enforcing a
financial claim; yet, there is no interference in the actual activity of
the business, but only a forced change of its owner (the original
owner, the obligated party, is replaced by a new owner – the winner at
auction). However, a different situation arises if the court determines
that the business is over-indebted – i.e. in the event that the value of
things, rights and other assets belong to the business together with
the funds specified in § 338n par. 1 let. b) is not greater than the
amount of the business’s payable financial obligations, the claims of
the entitled party and those who joined the proceedings as additional
entitled parties, which do not belong to the business, and the expected
expenses of the sale, compensation for the trustee, and reimbursement of
the trustee’s cash expenses or exceeds it only negligibly (§ 338n par. 6
of the CPC); in that case the court shall stop execution of the
decision. It is precisely this situation that arose in the case that led
the general court to file the present petition to annul the contested
statutory provision.
An
obligatory component of proceedings to execute a decision by sale of a
business is – similarly to the appointment of a bankruptcy trustee in
bankruptcy proceedings – appointment of a business trustee. Under § 338i
of the CPC the court shall appoint as trustee a person registered under
special regulations in the list of bankruptcy trustees. In exceptional
cases, the court may also appoint a person who is not registered in the
list, provided he meets the conditions for registration, if he agrees to
be appointed as trustee. Persons registered in the list of bankruptcy
trustees can refuse the position only for serious reason, which the
court will evaluate. The trustee is required to perform his position
with expert care, and is liable for damages which he caused by at-fault
violation of his obligations imposed by law or by the court.
In
the cited judgment, file no. Pl. US 36/01, published as no. 403/2002
Coll., the Constitutional Court defined the elements of a public law
body as follows: they are public purpose, the manner of appointment, and
authority. The public purpose of the institution of a business trustee
must also be seen in acceptance of limited public interference in the
resolution of property relations which have reached a crisis (in the
form of forced sale of the obligated party’s business), the manner of
appointment results from a decision by a state body (a court), and his
authority, as in the case of a bankruptcy trustee, are the exercise of
authority. Thus, one can conclude that a business trustee is a special
public law body whose activity is, also in doctrinaire opinion, similar
to the activity of bankruptcy trustees (cf., e.g., Bureš, Drápal,
Krčmář, Mazanec, Občanský soudní řád, komentář, 6. vydání [The Civil
Procedure Code, Commentary, 6th ed.], Prague, C. H. Beck, 2003, p.
1427). It is precisely in the public law nature of the position of a
business trustee in execution proceedings under the CPC that the
dissenting judges see substantial grounds which lead them to consider
the petition to annul the contested provision to be justified.
Under
§ 338i par. 4 of the CPC the (business) trustee is entitled to
compensation and to reimbursement of cash expenses. If execution of a
decision is stopped, then under the contested provision, the court shall
impose an obligation to pay the trustee compensation and reimbursement
of cash expenses either on the obligated party, or jointly and severally
on the entitled party, those who entered proceedings as additional
entitled parties, and creditors who have registered their claims (§ 338s
a 338zn), depending on the grounds on which the execution of the
decision was stopped. As the petitioner correctly stated, this statutory
structure for deciding on the trustee’s compensation and cash expenses
permits a situation to arise where the business trustee’s statutory
claims to compensation and reimbursement of cash expenses can not be
satisfied, without establishing another alternative source for paying
these claims. The provision of § 338zo par. 4 of the CPC does not permit
using as an alternative source any deposit paid under § 270 par. 3 of
the CPC, because that deposit can be used only to pay expenses of
execution of a decision which are paid by the state. Thus, the
possibility of satisfying a business trustee’s claims is really tied to
the solvency of the parties to the proceedings. The dissenting judges
are naturally aware that proceedings on bankruptcy and execution
proceedings are not of a completely identical nature, and that in
execution proceedings the entitled party initially bears certain costs
of the proceedings (e.g. the court fee for a petition). However, in this
adjudicated matter a special regulation applies (§ 338zo par. 4); it
permits imposing an obligation to pay the trustee’s compensation and
reimbursement of cash expenses on the entitled party, but depending on
the grounds for which the proceedings were stopped. In this regard we
can agree with the petitioner that the obligation to pay the trustee’s
claims can be imposed on the entitled party only in exceptional cases –
usually when he did not observe the necessary level of care when filing
the petition for execution of a decision (i.e. in the case of procedural
fault on the part of the entitled party) – and that in most cases it is
the obligated party who is bound by this obligation (cf. also the cited
Commentary, p. 1461,1268). Especially in a situation where the
obligated party’s business is over-indebted (§ 338n par. 6 of the CPC),
it is evident that the trustee’s claims will not be satisfied, or will
be satisfied only in part; if the trustee of the business was not made
the bankruptcy trustee under § 13b par. 3 of Act no. 328/1991 Coll., the
business trustee has only non-priority claims against the bankrupt (cf.
§ 31 par. 5 of Act no. 328/1991 Coll.); and if the bankruptcy petition
was denied, the business trustee does not have even this possibility for
satisfying his claims. Thus, in the petitioner’s opinion, this creates
an inequality in compensation for two groups of business trustees – a
first group of trustees of businesses, the satisfaction of whose claims
for compensation and cash expenses is secured by law (in the budget of
proceeds from sale of a business or in the budget of bankruptcy assets
under § 31 par. 5 of Act no. 328/1991 Coll.) and a second group of
business trustees who do not have the possibility of satisfying their
claims, or with only a negligible possibility, even though both groups
of trustees of businesses fulfill all the obligations imposed on them by
law. In the opinion of the dissenting judges this opinion of the
general court can not be completely ruled out – with reference to the
already stated conclusions of the Constitutional Court in judgment file
no. Pl. US 36/01, published as no. 403/2002 Coll. – or from a
constitutional law viewpoint. In particular we must conclude that the
legal framework in question also establishes inequality between business
trustees as a public law body and a comparable group of other public
law bodies (e.g. bankruptcy trustees) although no reasonable grounds for
such differential treatment can not be found. As was already stated, a
business trustee can refuse the public law position to which he is
appointed by a court only in exceptional cases (“for serious reasons,
which the court shall evaluate”), and he is required to perform it with
expert care, and is liable for damages which he caused by violation of
his obligations. Surely it can not be allowed for the state not to
ensure for the holder of a public position, on whom it imposes
non-negligible obligations, and on whom it has increased demands,
appropriate compensation and reimbursement of cash expenses, or for a
situation to be permitted to arise – not as an exception – in which he
would basically perform this position for free, or even pay for doing
it.
Thus, we can only repeat
that if the Constitutional Court accepts as its starting point the
hypothesis that a business trustee – similarly to a bankruptcy trustee –
can be classified as a special public law body, then from a
constitutional viewpoint the key issue for this matter is that of
constitutional safeguards for compensation and reimbursement of expenses
connected with the exercise of public positions. These safeguards are
provided by the normative content arising from the constitutional
principle of equality (Art. 1 and Art. 3 par. 1 of the Charter). In the
understanding of the constitutional principle of equality the
Constitutional Court agreed (in particular in the judgments in matters
file nos. Pl. US 16/93, Pl. US 36/93, Pl. US 5/95, Pl. US 9/95) with the
concept of the constitutional principle of equality as it was expressed
by the Constitutional Court of the CSFR (R 11, 1992): “It is a matter
for the state, in the interests of securing its functions, to decide to
provide a particular group fewer advantages than another. Even here,
however, it may not proceed arbitrarily … If the law provides benefits
for one group, and simultaneously thereby imposes disproportionate
obligations on another group, this can be done only on the basis of
public interests.” The Constitutional Court thereby rejected an absolute
concept of the principle of equality, and further stated: “the equality
of citizens can not be understood as an abstract category, but as
relative equality, as is intended by all modern constitutions.” (Pl. US
36/93). It thus shifted the content of the principle of equality into
the area of constitutional acceptability of viewpoints for
differentiating subjects and rights. It sees the first viewpoint in
ruling out arbitrariness. The second viewpoint arises from the legal
opinion stated in the judgment in the matter file no. Pl. US 4/95:
“inequality in social relationships, if it is to affect fundamental
human rights, must reach an intensity which casts doubt, at least in a
certain regard, on the very essence of equality. As a rule this happens
if the violation of equality is connected to violation of another
fundamental right, e.g. the right to own property under Art. 11 of the
Charter, one of the political rights under Art. 17 et seq. of the
Charter, etc.” (concurring, Pl. US 5/95). The second viewpoint in
evaluating the unconstitutionality of a legal regulation establishing
inequality is thus the interference it establishes in another
fundamental right and freedom.
The
Constitutional Court points out, as it stated in the cited judgment
file no. Pl. US 36/01, that in its case law it interprets the
constitutional principle of equality in the sense of accessory and
non-accessory equality. In the cited judgment, the Constitutional Court
among other things stated as regards the issue, concerning the
adjudicated case, that “If the purpose of the statutory framework
permitting bankruptcy proceedings is also constitutional in a case
where, in bankruptcy proceedings, no bankruptcy assets are converted to
money, and a deposit for bankruptcy expenses was not paid because the
petitioner seeking a declaration of bankruptcy was exempt from that
obligation, then the situation which this creates at the statutory level
of reimbursement of cash expenses and compensation of the trustee must
be considered to violate the constitutional principle of non-accessory
equality. Compared to cases where, in bankruptcy proceedings, assets
were converted into money, or a deposit for bankruptcy expenses was
paid, and the funds used to pay trustees’ cash expenses and
compensation, the trustees’ claims (payment of cash expenses and
compensation) in cases of an insolvent bankrupt and a petitioner exempt
from the obligation to pay a deposit for bankruptcy proceedings expenses
will not be satisfied, because the bankruptcy assets are insufficient
to pay the expenses of bankruptcy proceedings.” The text of the
then-valid and effective provisions of the Bankruptcy Act, which the
Constitutional Court, in that judgment, found to be unconstitutional,
was the following: “If the petitioner’s claim arises from wage claims,
the petitioner is exempt from payment of advances, with the exception of
employees specified in § 67b.” (§ 5 par. 1 second sentence of the
Bankruptcy Act) and “The trustee’s claims shall be paid from the
bankruptcy assets, and if they are insufficient, from the advance for
bankruptcy proceedings expenses paid by the petitioner.” (§ 8 par. 3
second sentence of the Bankruptcy Act). The dissenting judges do not
overlook the fact that the normative framework in the present case is –
as follows from the foregoing text – somewhat different; however, the
unconstitutional consequences established by the relevant statutory
framework (i.e. the lack of provision of an alternative source for
paying the trustee’s compensation and expenses, see above) affecting the
position of a business trustee, or some of them, are basically
identical. The obligated party is simply over-indebted. If there are no
funds and no person to pay the justified claims of a business trustee,
it must be explicitly stated how to address such a situation; this
applies all the more if the relevant statutory framework concerning
execution of a decision by sale of a business is otherwise so
comprehensive and detailed that it evidently tries to address every
situation which could arise in the course of execution. In this regard
it can not be overlooked that § 338i par. 5 of the CPC does provide the
obligation of a court to provide an advance to the request of a business
trustee, but only for payment of cash expenses incurred, in particular
for engaging an expert; thus, it does not concern the trustee’s
compensation at all. However, the constitutional principle of
non-accessory equality, which includes ruling out arbitrariness by the
legislature in differentiating subjects and rights, also implies the
maxim of proportionality for the area of compensation and reimbursement
of expenses connected with the exercise of public positions. Therefore,
the dissenting judges conclude that the inequality created in
compensation and reimbursement of expenses connected with the exercise
of the public position of a business trustee is an inequality which is
extreme (because it permits non-payment of compensation and
reimbursement of cash expenses for one group of trustees), as well as an
inequality which lacks a reasonable purpose and significance. At this
point we can also state that in these cases it would evidently be
appropriate – de lege ferenda – to have the state pay the trustees’
compensation and cash expenses. As regards the consideration expressed
in the statement from the Senate of the Parliament of the CR about the
allegedly de-motivating factor of “one hundred percent” certainty of
satisfying a business trustee’s claims, we can only state, for
completeness, that this matter is not about the issue of motivation or
de-motivation of a business trustee, but about the entitlement to
compensation and reimbursement of cash expenses to the holder of a
public office, which is expressly stated by law (the cited § 338i par. 4
of the CPC).
As in the case
of judgment file no. Pl. US 36/01, it must be stated that if the
contested provision, for the reasons stated, is inconsistent with Art. 1
and Art. 3 par. 1 of the Charter of Fundamental Rights and Freedoms,
this is not caused by its text, but by the gap in the law which it
creates. What is unconstitutional is the omission by the legislature,
which results in an unconstitutionally unacceptable inequality (on the
doctrinaire concept of the concept of legislative omission see V.
Šimíček, Opomenutí zákonodárce jako porušení základních práv
[Legislative Omission as a Violation of Fundamental Rights]. In: Deset
let Listiny základních práv a svobod v právním řádu České republiky a
Slovenské republiky [Ten Years of the Charter of Fundamental Rights and
Freedoms in the Legal Order of the Czech Republic and the Slovak
Republic]. Eds. B. Dančák, V. Šimíček, Brno 2001, pp. 144-159). This
matter concerns a false gap, which is the incompleteness (absence) of
the written law compared to the explicit regulation of similar cases,
i.e. incompleteness in terms of the principle of equality, or in terms
of general legal principles. An illustration of how to solve such a gap
is the judgment in the matter file no. Pl. US 48/95 (Collection of
Decisions of the Constitutional Court, volume 5, judgment no. 21), in
which the Constitutional Court normatively filled the gap created by
inequality in the legal framework with the help of constitutionally
consistent interpretation of the relevant legal framework. However, that
method can not be used in the present matter. Likewise, it is not
possible to derive, e.g. by expansive interpretation of general
provisions of the CPC (see, e.g., § 270 par. 3 of the CPC) a subsidiary
obligation on the part of the state to pay a business trustee’s
compensation and cash expenses, if the provision of that obligation is
lacking in the special provisions concerning the execution of a decision
by sale of a business. It would be difficult to understand the cited §
270 par. 3 of the CPC as a sort of “general rule,” establishing the
state’s obligation to pay expenses for execution of a decision in all
situations coming into consideration. In this adjudicated matter there
is a special, exhaustively conceived framework for the execution of a
decision by sale of a business, moreover in a situation where
proceedings are stopped (§ 338n par. 6, § 338zo par. 4 of the CPC).
Another special provision, i.e. § 338i par. 5 of the CPC permitting the
business trustee to ask the court for an advance – as was already stated
– also does not resolve the matter, because the advance applies
expressly only to payment of cash expenses (not to the trustees’
compensation), and generally only in connection with engaging an expert.
Therefore
the Constitutional Court – as was already stated – should have granted
the petition and annulled § 338zo par. 4 of Act no. 99/1963 Coll., the
Civil Procedure Code, as amended by later regulations.
III.
The dissenting judges – only for completeness – add to the main
arguments of the Plenum’s judgments, which are basically built on
interpretation of ordinary (general) law, the following:
1)
The judgment argues on the basis of § 260a et seq. of the CPC (the
obligated party’s property declaration), which permits the entitled
party to determine the obligated party’s financial situation and not
propose execution of a decision by sale of a business, where there may
be a danger of over-indebtedness. In the opinion of the dissenting
judges, however, this does not address the essence of the matter,
because the contested provision § 338zo par. 4 involves an entitlement
of the business trustee, not an entitlement of the entitled party; the
business trustee himself can not affect the conduct of the entitled
party in any way.
2) The
judgment argues on the basis of § 338ze, par. 7 of the CPC, under which –
if the business trustee’s claims were not satisfied from the
distributed assets – the court shall impose this obligation on the
obligated party; the entitled party and other specified persons are
guarantors for the fulfillment of this obligation (note: in other words
satisfaction of the business trustee is thus guaranteed).
This
argument can not be accepted. The contested § 338zo par. 4 involves a
completely different procedural situation, because there the business is
over-indebted, and the court has therefore stopped the proceedings
without the execution of the decision having been performed (the
business was not, in fact, sold). Thus, one can not proceed according to
§ 338ze par. 7 (see judgment), where the business was already sold and
paid for, i.e. the execution of the decision was implemented and the
budget is being implemented. We can also add that if it was not
possible, even after stopping execution of a decision due to
over-indebtedness (§ 338n par. 6 of the CPC) to proceed under § 338ze
par. 7 of the CPC (as the judgment states), then the existence of the
contested provision § 338zo par. 4 of the CPC would have no purpose at
all. However, it does have a purpose, it is a special regulation for the
case of stopping execution of a decision, which imposes an obligation
to pay a business trustee’s claims, possibly on the entitled party, but
according to the grounds on which the execution of the decision was
stopped. (Note: It is precisely in view of this that the legal framework
does not ensure that a business trustee’s claims will always be
satisfied. This is discussed in more detail at another point in this
dissenting opinion.)
3) The
judgment also points to § 338i par. 5 of the CPC and states that a
business trustee may request an advance for the payment of cash
expenses, even if it is evident that it will not be possible to pay his
expenses from the sale of the business. In the opinion of the dissenting
judges, however, this will not be sufficient in a number of cases,
because the cited provision makes it possible to provide an advance only
for payment of cash expenses, but not for the trustee’s compensation,
which is often considerably higher (e.g., in this matter, the cash
expenses were only CZK 106). In addition, in a number of cases the
trustee will not request an advance, because often it is not possible to
estimate that a business is over-indebted; if the entitled party then
meets the conditions for being exempt from court fees, he can not be
given an obligation to pay an advance for expenses of execution of the
decision at all (§ 270 par. 3 of the CPC).
4)
The judgment also argues on the basis of § 264 par. 2 of the CPC, under
which the court shall deny the petition ... if it is evident from the
petition that the revenue which would be achieved would not suffice to
cover the expenses of executing the decision; thus it is claimed to be
up to the court, before proposing execution of a decision, to carefully
evaluate the obligated party’s financial situation so that – depending
on that – it might not order execution of the decision at all. In the
opinion of the dissenting judges even this does not address the essence
of the matter; the present case concerns the already existing claims of a
business trustee, which arose after a court simply ordered execution of
a decision by sale of a business, and did not proceed according to §
264 par. 2 of the CPC. In any case, in a number of cases the court will
not determine the financial situation of the obligated party, and (in
particular) the over-indebtedness of the business will not be evident
“from the petition,” as the cited § 264 par. 2 of the CPC presumes.
5)
The judgment also states that even if a business trustee were
nevertheless forced to pay the expenses of execution of a decision
himself, he can exercise his claim against the obligated party through a
different manner of execution of a decision, or through bankruptcy
proceedings. In the opinion of the dissenting judges this is an academic
consideration, because in a number of cases there will be no other
executable property of the obligated party, all the more so if an
unsuccessful execution of a decision was exercised on his over-indebted
business.
6) Finally, the
judgment considers that if a business trustee’s claims were not
satisfied at all, this would not be an unconstitutional situation. It
argues on the basis of the decision of the European court of Human
Rights (Van der Mussele v. Belgium), which states that the risks of the
work of a lawyer (including the risk of non-payment of fees) are
balanced out by the professional monopoly in defense and representation;
these conclusions can allegedly also be applied to the activity and
position of business trustees. In the opinion of the dissenting judges,
however, this comparison is not appropriate, because a lawyer conducts
his profession continually, as his permanent and paid profession (and
only as part of that can he be appointed, for example, as a defense
counsel ex offo), whereas the position of a business trustee is not a
permanent profession.
It is
evident from this text that the routes which should – according to the
judgment of the Plenum – with the help of interpretation of ordinary
law, lead to securing a business trustee’s claims to compensation and
payment of cash expenses are not an unambiguous and clear solution to
the matter. If the execution of a decision is stopped, they are – in the
opinion of the dissenting judges – largely unusable, including from the
viewpoint of the cited ordinary law. The important thing is that it is
the state that is required – from the point of view of constitutionality
– to guarantee to a public functionary whom it appoints (the business
trustee) payment of his statutory financial claims. However, the state
has not done this, because, as has already been stated, the statutory
framework of the Civil Procedure Code contains a gap which can not be
filled in by constitutionally consistent interpretation.Brno, 25 October 2005