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HEADNOTES
The
Constitutional Court has interpreted this constitutional principle in a
number of its judgments. In them, it agreed with the understanding of
the equality principle as it had already been expressed by the
Constitutional Court of the CSFR (Collection of Decisions of the
Constitutional Court of the CSFR, judgment no. 11, 1992), which stated
that “it is up to the state, in the interests of securing its functions,
to decide that it will provide fewer advantages to one group than to
another. However, even here it may not act completely arbitrarily … If
the law provides a benefit to one group, and at the same time thereby
imposes disproportionate obligations on another, this may be done only
on the basis of the public values.” The Constitutional Court thereby
rejected an absolute concept of the principle of equality; it also
stated that the equality of citizens can not be understood as an
abstract category, but as relative equality, as understood by all modern
constitutions. It thereby shifted the principle of equality into the
area of constitutionally acceptable factors for differentiating subjects
and rights. It sees the first factor to be the elimination of
arbitrariness; the second factor follows from the legal opinion stated
in the judgment file no. Pl. US 4/95 (Collection of Decisions of the
Constitutional Court of the CR, volume 3, p. 209), which states:
“inequality in social relationships, if it is to affect fundamental
human rights, must reach a level of intensity which undermines, at least
in a certain regard, the very essence of equality. This generally
happens if the violation of equality is connected to violation of
another fundamental right, for example, the right to own property under
Art. 11 of the Charter, one of the political rights under Art. 17 et
seq. of the Charter, and so on.” Thus, the second factor in evaluating
the unconstitutionality of a legal regulation which allegedly creates
inequality is that it affects some other fundamental right or freedom
(Note: the Constitutional Court has summarized these conclusions, with
reference to specific judgments, in, for example, the matter file no.
Pl. US 33/96, Collection of Decisions of the Constitutional Court of the
CR, volume 8, pp. 170-171).
The
difference in the penalties affecting the parties to the lease
relationship – which basically consists of the landlord’s obligation to
pay default interest and the tenant’s obligation to pay late charges, or
the ensuing ability to set different levels of default interest and
late charges by an implementing regulation – does not establish
unconstitutionality. A certain difference in the amounts of these
penalties, or a certain difference in how they are calculated, is
rationally justifiable in the reviewed matter, not only under the
principle of equality, but also in terms of the principle of
proportionality. At the present time the legal framework for the
landlord-tenant relationship in general is skewed in favor of the tenant
(a protected lease, de facto regulation of rent, etc.). The existence
of a differentiated approach to the subjects of a lease relationship by
setting different legal means which stabilize the legal relationship as
such is therefore possible. While the landlord performs his primary
obligation (delivering the apartment for use), the tenant does not
perform his (use of the apartment in exchange for rent); therefore, the
late charges for late payment of rent can not be without anything
further compared to a penalty against the landlord connected with, for
example, returning overpayment of rent, i.e. default interest, because
this obligation of the landlord is of a secondary nature and is not a
fundamental element of the lease relationship. Therefore, the
Constitutional Court believes that establishing the contested special
provision of § 697 in the Civil Code was not arbitrary conduct by the
legislature, and that the cited statutory framework which potentially
permits giving, through a subsequent sub-statutory regulation, one
category of parties to a legal relationship an advantage compared to the
other category, does not lead to violation of the constitutional
principle of equality, or to violation of the principle of
proportionality.
Therefore,
these conclusions are not inconsistent with judgment file no. Pl. US
15/02 (Collection of Decisions of the Constitutional Court, volume 29,
judgment no. 11). In it the Constitutional Court stated, among other
things, that a certain legal framework, which gives an advantage to one
group or category of persons compared to others, can not in and of
itself, without anything further, be described as violation of the
principle of equality. The legislature has a certain amount of
discretion to establish such preferential treatment. In doing so it must
take care that the preferential approach is based on objective and
reasonable grounds (a legitimate aim of the legislature) and that there
be a proportional relationship between that aim and the means used to
achieve it (legal advantages).
CZECH REPUBLIC
CONSTITUTIONAL COURT
JUDGMENT
JUDGMENT
IN THE NAME OF THE CZECH REPUBLIC
The Plenum of the Constitutional Court, composed of Stanislav Balík, František Duchoň, Vlasta Formánková, Vojen Güttler, Pavel Holländer, Vladimír Kůrka, Jiří Nykodým, Pavel Rychetský, Eliška Wagnerová a Michaele Židlická decided on a petition from the petitioner, the District Court in Cheb, seeking the annulment of § 697 of Act no. 40/1964 Coll., the Civil 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, petitioned the Constitutional Court to issue a
judgment annulling § 697 of Act no. 40/1964 Coll., the Civil Code. It
stated that proceedings are being conducted before it, as a general
court, under file no. 15 C 127/2004, concerning a claim of the landlord,
the town of Aš, against the tenant, J. Z., for payment of apartment
rent, and a claim for payment of late charges; the amount to be paid is
CZK 6,315 with late charges of 0.25% per day, with a minimum of CZK 25
for each month or part thereof, of the amount of CZK 6,315, from 16
December 2003 until payment is made. In the course of preparations for
the proceedings, the petitioner concluded that the plaintiff’s claim for
payment of rent would be appropriately evaluated under § 696 par. 1 of
the Civil Code, and the claim for payment of the late charges under 697
of the Civil Code. At the same time, however, it concluded that § 697 of
the Civil Code, which is to be applied in deciding this matter, is
inconsistent with the Charter of Fundamental Rights and Freedoms (the
“Charter”), with the general legal principle of equal rights, as regards
the statutorily established position of the parties to this obligation
relationship.
Under § 697 of
the Civil Code, if a tenant fails to pay the rent or pay for services
relating to the use of an apartment within five days after they are due,
he is required to pay the landlord late charges. The petitioner states
that it evaluated whether the contested provision was consistent with
the Charter in light of the decision of the Plenum of the Constitutional
Court, file no. Pl. US 15/02, which was published in the Collection of
Laws as no. 40/2003. In it the Constitutional Court stated that legal
differentiation in the approach to certain rights may not be an
expression of arbitrariness, and that the principle of equality of
rights is violated if various subjects in the same or comparable
situation are treated in a different manner, without there being
objective and reasonable grounds for the different approach applied. In
the petitioner’s opinion, the contested provision of § 697 of the Civil
Code violates the principle of equal rights for parties in this
particular obligation relationship because, in the event of lateness, it
provides a different penalty for each party, which is fundamentally
unequal and conflicts with Art. 1 of the Charter. Yet, the position of
the landlord and tenant in the event of late payment is comparable,
because both are parties to an obligation relationship, which is not
fundamentally different from other obligation relationships. If the
apartment tenant is late in paying rent or paying for services relating
to the use of the apartment, the landlord is entitled to require late
charges from him, under § 697 of the Civil Code, whereas if the landlord
is late in returning overpayment of rent, or overpayment for services
relating to the use of the apartment, the tenant is entitled to require
only default interest from him, under § 517 par. 2 of the Civil Code. It
can not be overlooked that the amounts of default interest and late
charges are very different. Whereas, under government directive no.
142/1994 Coll., default interest is at present twice the discount rate
of the Czech National Bank, or 2% per annum (and at its peak during the
period from 27 May 1997 to 13 August 1998 it apparently reached 26% per
annum), the amount of the late charges is set by the same regulation at
0.25% per day, i.e. more than 91% per annum.
The
petitioner also stated that if the legislature perhaps wished to
penalize non-payment of rent and services relating to the use of an
apartment through a penalty with a greater effect than default interest,
there was no rational reason for it, because non-payment of rent is
sufficiently penalized as grounds to give notice terminating a lease
under § 711 par. 1 let. d) of the Civil Code. In contrast, it is claimed
that the result of this unequal position is an unjustifiable burden on
tenants who (often for objective reasons) find themselves in financial
difficulty and therefore are also late in paying rent, which only makes
their social position more difficult.
In
the petitioner’s opinion it is not enough to simply not apply
government directive no. 142/1994 Coll. in a general court’s decision
making under Art. 95 par. 1 of the Constitution of the Czech Republic,
because in such a case it would also not be possible to acknowledge the
landlord’s right to late charges (i.e. not at all), because the amount
of them would not be set, or the right to default interest, because a
tenant’s late payment of rent and services relating to the use of an
apartment is subject to a special provision, § 697 of the Civil Code,
which takes precedence in application over the general regulation of §
517 par. 2 of the Civil Code.
II.
The
Constitutional Court, in accordance with § 69 of the Act on the
Constitutional Court, sent the petition to open proceedings to the
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 CR
states that equal status means, among other things, that the subjects
must agree on their rights and obligations, provided, of course, that
these obligations do not arise directly by law on the basis of an
anticipated legal fact. An express provision of the Civil Code is also
the basis for application of the penalty provision, which, in specific
cases provides the creditor’s right to require late charges from the
debtor under § 697 of the Civil Code, if the tenant did not pay rent or
services relating to the use of an apartment within five days after the
due date. Therefore, in the opinion of the Chamber of Deputies, one can
not agree with the petitioner’s opinion that, in this case, an
impermissible advantage is given to tenants, or that this is
inconsistent with Art. 1 of the Charter.
In
its extensive statement, the Senate of the Parliament of the CR stated
that the term “late charges” was implemented in the Civil Code - and cum
grano salis in the civil law as such – as of 1 April 1964, in
connection with the passage of Act no. 40/1964 Coll., the Civil Code.
This legal institution was, together with the more general default
interest, seen as generalized compensation of damages, applied as a
consequence of the debtor being late with payment of debt, but only in
matters expressly defined in the Civil Code. The late charges came into
consideration with payment for use of an apartment, or services relating
to the use of an apartment, as well as with the obligation to return
borrowed things, and finally, in connection with paying an invoiced
price for a service to which the obligation applied. Apart from the last
cited cases, which was cancelled upon the transformation to a market
economy, in the Senate’s opinion both the other types maintained their
exceptional nature, in a transformed form, in the Civil Code until the
present day. Thus, the obligation to pay late charges penalizes, ex lege
– “apart from, as contested by the petition, the failure to pay rent or
services relating to the use of an apartment within five days after
payment is due (§ 697),” – only a lessee who is late in returning things
in a business lease of personal property (§ 723 par. 1). Although the
nature of social relationships in 1964 was diametrically opposed to the
current situation, we can see the establishment of late charges as,
above all, the effort of the legislature at the time to find a legally
simple instrument which permitted penalizing selected relationships with
a special penalty for delay, i.e. different from “default interest.”
The special nature manifested itself externally primarily in the amount
of the penalty, which, in view of the importance of the protected right,
was intended to deter the obligated party, with greater urgency, from
illegal behavior (a higher threat of penalties), or to have a more
palpable effect on his property if he violated his obligations
(increased penalization). Thus, these were legal exceptions, including
the case of late payment for use of an apartment (today, a lease) and
services relating to it. Even the post-November 1989 legislature did not
question, in 1991, that violation of the duty to pay rent and services
relating to the use of an apartment (rent in largo sensu) had to be
penalized differently – more strictly – than other financial debts.
Therefore it made us of the already established, consistently perceived
legal instrument – the late charges, modified in the spirit of the new
social-economic conditions.
The
Senate added that in terms of constitutionally protected right the
landlord (owner) – tenant relationship has internal conflicts. This is
caused by the conflict of the public interest in protection of the right
to housing with the interest in protection of the (landlord’s) property
right. This is also an asymmetrical relationship, in which the tenant
was given an advantage, in the interests of the functionality or
continuation of the lease relationship to an apartment, through
traditional means, e.g. the [landlord’s] ability to give notice
terminating the lease only on the basis of an exclusive list of grounds.
In the Senate’s opinion we must realize that the tenant received this
non-standard advantage only at the price of non-ordinary limitation of
(the landlord’s) property rights. Thus, based on these considerations,
the existence of different treatment of the parties of a lease
relationship by setting different legal means – balancing the powers on
both sides and thus stabilizing the relationship as such – is possible
or even desirable. The late charge can be included in the category of
“so-called” stabilizers. Whereas the landlord fulfills his primary
obligation (delivering the apartment for use), the tenant does not
fulfill his (use of the apartment in exchange for rent). Thus, the late
charges, as a penalty for late payment of rent, can not, according to
the defined criteria, be compared to the penalty tied to returning an
overpayment, i.e. default interest. The landlord’s debt, resulting from
not returning an overpayment must be considered a debt from “ordinary”
unjustified holding (not returning) of money, which is, in a lease
relationship – compared to the abovementioned primary obligation of the
tenant – “a level lower.”
Finally,
the Senate stated that in comparable cases (a debt of rent in largo
sensu, or “overpayment” of rent), under this model the actual higher
financial penalty falls on the tenant; therefore, we can say that the
relevant government directive transmits the statutory principle of
stricter penalization of the party from whom increased responsibility
for his conduct can be justifiably demanded, into the sub-statutory
level in a constitutional manner. In other matters, i.e. as regards the
questions of the amount of the late charge or methods of calculating it,
and other economic aspects of the entire issue, the Senate states that
it does not have competent authority to comment without thereby
inappropriately violating the principle of separation of powers. It
follows that the problem of evaluating constitutionality in the disputed
matter shifts to the sub-statutory level. The Senate also pointed out
that § 697 of the Civil Code provides not only an obligation to pay the
penalty, but also extends the deadline for payment of rent and payments
for services provided with use of an apartment by five days. Annulling
this provision would thus counterproductively lead to dismantling an
age-old principle, and in practical terms, worsen the tenant’s position.
The Senate considers establishing different institutions for cases of
late payment of a monetary debt, i.e. in one case late charges, in the
other case default interest to be objectively determined, acceptable,
proportionate, rationally justifiable, and therefore not unequal at a
constitutional level. Thus, this difference does not create a relevant
unconstitutional moment due to which § 697 of the Civil Code should be
annulled. The Senate also added that “the general courts should, in
response to petitions to annul statutes or individual provisions or
statute, stick to se legal argumentation, which should be as persuasive
as possible, especially where a lower court contests a provision which
has been used on a long-term basis and frequently applied by higher
(supreme) courts without the slightest doubts about its
constitutionality.”
The
Ministry of Justice, in its statement, signed by the deputy minister of
justice, JUDr. R. P., basically agreed with the petitioner’s opinion. It
said that § 697 of the Civil Code established an evident inequality
between the rights of the tenant and the landlord, as regards the legal
effects of late payment, in view of the marked difference between the
amounts of late charges (tenant’s obligation) and default interest
(landlord’s obligation). This inequality – affecting the tenant – can
not be defended on the basis of an attempt to protect landlords from
non-paying tenants, because that protection is available through other
legal means (e.g the possibility of terminating a lease, as argued by
the petitioner, the District Court in Cheb). In the opinion of the
Ministry of Justice one likewise can not defend the opinion that the
landlord especially needs protection in a lease relationship, to the
detriment of the tenant’s rights.
The
Constitutional Court – with the consent of all parties to the
proceedings – waived oral hearings, because it considered that such
hearings could not be expected to clarify the matter further.
III.
The
Constitutional Court is required – under § 68 par. 2 of the Act on the
Constitutional Court, no. 182/1993 Coll. – to first consider the
question whether the statute, whose provision is claimed to be
unconstitutional, was passed and issued within the bounds of
constitutionally provided jurisdiction and in a constitutionally
prescribed manner. However, the contested Civil Code provision was
passed and issued during the period of the previous constitutional
regulation of the legislative process and division of legislative
competence between the then-existing Czechoslovak federation and the
republics (Act no. 509/1991 Coll. of 5 November 1991, which amends,
supplements and adjusts the Civil Code, with effect as of 1 January
1992), so the Constitutional Court did not evaluated the fulfillment of
the abovementioned requirements. In the case of legal regulations issued
before the Constitution of the CR went into effect the Constitutional
Court reviews – under settled case law – only their consistency with the
existing constitutional order, and not the constitutionality of the
process whereby they were created and the observance of norm-creating
competence (see, e.g. judgment file no. Pl. US 10/99, Collection of
Decisions of the Constitutional Court of the CR, volume 16, p. 119).
IV.
The
Constitutional Court thus 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), § 68 par. 2 of the Act on the
Constitutional Court.
The
provision of § 697 of the Civil Code, which the petitioner contests and
proposes to be annulled, reads: “If the tenant fails to pay the rent or
pay for for services relating to the use of the apartment within five
days after they are due, he is required to pay the landlord late
charges.”
In resolving the
present case, we can not overlook, first of all, that the cited
statutory provision is closely related to § 517 par. 2 of the Civil Code
– as one of the general provisions of the law of obligations (Part
VIII. of the Civil Code) – which establishes the claim of a creditor
(landlord versus tenant) to default interest if a debtor is late with
payment of a monetary debt, as well as – especially – to the relevant
implementing regulation to § 517 par. 2 of the Civil Code, which is
government directive no. 142/1994 Coll., which sets the levels of
default interest and the late charges under the Civil Code. In the
directive, especially for implementing § 517 par. 2 of the Civil Code,
the government directed, in § 1, that “the level of default interest is,
per annum, twice the Czech National Bank discount rate in effect as of
the first day that payment of the monetary debt is late” and in § 2,
that “the level of the late charges is 0.25% of the owed amount per day,
but at least CZK 25 for each month of delay, or part thereof.” However,
it must be noted here that in the interim government directive no.163
of 23 March 2005 was issued, which amends government directive no.
142/1994 Coll. The cited § 1 was amended as follows: “The level of
default interest equals, per annum, the Czech National Bank repo rate,
plus seven percentage points. In each half of the calendar year in which
the debtor’s lateness continues, the level of default interest depends
on the level of the Czech National Bank repo rate and in effect on the
first day of the relevant half year.”
The
provision of § 517 par. 2 of the Civil Code reads: “If the default
concerns performance of a monetary obligation, (debt), the creditor
shall have the right, in addition to performance of the obligation, to
claim interest on the amount in default, unless the debtor is obliged by
virtue of this Code to pay late charges; implementing regulations
(legal provisions) shall stipulate the rate of interest on the amount in
default and the computation of late charges). It is evident from the
existing text, or from the petitioner’s constitutional law arguments,
that the petition basically contests the legal situation which resulted
from the regulation established (at the time the petition was filed) by a
sub-statutory regulation, issued on the basis of authorization
contained in § 517 par. 2 of the Civil Code (…implementing regulations
shall stipulate the rate of interest on the amount in default and the
computation of late charges). Here we can only note that the government
is authorized, under Art. 78 of the Constitution, to issue directives,
for implementing a statute, and within its bounds. Thus, an express
authorization to issue a directive is not necessary for the
norm-creating competence of the government – in contrast to the legal
regulations of ministries, other administrative offices, and local
government bodies, under Art. 79 par. 3 of the Constitution. However,
this changes nothing about the fact that the Constitutional Court, being
bound by the requested verdict in the petition, can evaluated the
contested provision of § 697 of the Civil Code only in terms of the
consistency or inconsistency with the constitutional order of the Czech
Republic of that provision alone, and not the implementing regulation.
(Note: For completeness we can add – as stated above, that the cited
government directive no. 142/1994 Coll. was issued to implement § 517
par. 2 of the Civil Code, not expressly to implement the contested § 697
of the Civil Code, although, read comprehensively, it also implements
the latter.) However, the possible unconstitutionality of a
sub-statutory implementing regulation – even if authoritatively
determined to exist – can not in and of itself serve as grounds for
annulling a specific statutory provision (if we also set aside the
situation which has arisen in the interim due to the abovementioned
amendment of the sub-statutory regulation in question). The
Constitutional Court can, under § 70 par. 3 of the Act on the
Constitutional Court – even without a petition – state which
implementing regulations cease to be in effect simultaneously with a
statute which is annulled, but not – in essentially the reverse process –
derive possible unconstitutionality of the contested statutory
provision from an alleged inequality (in this case established by the
different level of default interest and late charges), which is only
established in the implementing regulation (the cited government
directive) and on that basis annul the contested statutory regulation.
Thus,
the Constitutional Court considers – in terms of the contested
statutory provision, and taking into account the petitioner’s objection –
whether it is constitutionally acceptable, under the constitutional
principle of equality applied by the petitioner, to set a legal regime
which is to a certain degree different for the case of a tenant who is
late with payment of rent or payment for services provided with use of
an apartment, on the one hand, and the case of a landlord who is late
with fulfillment of a monetary debt, on the other hand. The
Constitutional Court has interpreted this constitutional principle in a
number of its judgments. In them, it agreed with the understanding of
the equality principle as it had already been expressed by the
Constitutional Court of the CSFR (Collection of Decisions of the
Constitutional Court of the CSFR, judgment no. 11, 1992), which stated
that “it is up to the state, in the interests of securing its functions,
to decide that it will provide fewer advantages to one group than to
another. However, even here it may not act completely arbitrarily … If
the law provides a benefit to one group, and at the same time thereby
imposes disproportionate obligations on another, this may be done only
on the basis of the public values.” The Constitutional Court thereby
rejected an absolute concept of the principle of equality; it also
stated that the equality of citizens can not be understood as an
abstract category, but as relative equality, as understood by all modern
constitutions. It thereby shifted the principle of equality into the
area of constitutionally acceptable factors for differentiating subjects
and rights. It sees the first factor to be the elimination of
arbitrariness; the second factor follows from the legal opinion stated
in the judgment file no. Pl. US 4/95 (Collection of Decisions of the
Constitutional Court of the CR, volume 3, p. 209), which states:
“inequality in social relationships, if it is to affect fundamental
human rights, must reach a level of intensity which undermines, at least
in a certain regard, the very essence of equality. This generally
happens if the violation of equality is connected to violation of
another fundamental right, for example, the right to own property under
Art. 11 of the Charter, one of the political rights under Art. 17 et
seq. of the Charter, and so on.” Thus, the second factor in evaluating
the unconstitutionality of a legal regulation which allegedly creates
inequality is that it affects some other fundamental right or freedom
(Note: the Constitutional Court has summarized these conclusions, with
reference to specific judgments, in, for example, the matter file no.
Pl. US 33/96, Collection of Decisions of the Constitutional Court of the
CR, volume 8, pp. 170-171).
Based
on the foregoing general definition of requirements for the
legislature’s constitutional approach to the subjects of the obligation
relationship being reviewed, the Constitutional Court concluded that it
would be difficult to consider the contested § 697 of the Civil Code to
be unconstitutional. The difference in the penalties affecting the
parties to the lease relationship – which basically consists of the
landlord’s obligation to pay default interest and the tenant’s
obligation to pay late charges, or the ensuing ability to set different
levels of default interest and late charges by an implementing
regulation – does not establish unconstitutionality. Default interest
and late charges, as appurtenances to a receivable, generally serve as
instruments to increase the legal certainty of creditors.
If
a debtor is in default, the content of the obligation changes, and the
debtor is also required to pay default interest or late charges if the
law so provides (§ 517 par. 2 of the Civil Code). A certain difference
in the amounts of these penalties, or a certain difference in how they
are calculated, is rationally justifiable in the reviewed matter, not
only under the principle of equality, but also in terms of the principle
of proportionality. At the present time the legal framework for the
landlord-tenant relationship in general is skewed in favor of the tenant
(a protected lease, de facto regulation of rent, etc.). Therefore, to a
certain extent one can agree with the arguments in the statement from
the Senate of the Parliament of the CR; the landlord-tenant relationship
is a unique legal relationship, asymmetrical in a certain way, in
which, in the interests of functionality of an apartment lease, the
tenant was and is given an advantage through traditional means such as
the [landlord’s] ability to terminate the lease only for certain
enumerated reasons. The existence of a differentiated approach to the
subjects of a lease relationship by setting different legal means which
stabilize the legal relationship as such is therefore possible. While
the landlord performs his primary obligation (delivering the apartment
for use), the tenant does not perform his (use of the apartment in
exchange for rent); therefore, the late charges for late payment of rent
can not be without anything further compared to a penalty against the
landlord connected with, for example, returning overpayment of rent,
i.e. default interest, because this obligation of the landlord is of a
secondary nature and is not a fundamental element of the lease
relationship. Therefore, the Constitutional Court believes that
establishing the contested special provision of § 697 in the Civil Code
was not arbitrary conduct by the legislature, and that the cited
statutory framework which potentially permits giving, through a
subsequent sub-statutory regulation, one category of parties to a legal
relationship an advantage compared to the other category, does not lead
to violation of the constitutional principle of equality, or to
violation of the principle of proportionality (note: although the
petitioner does not expressly cite it). The legislature must have a
certain amount of discretion to set such preferential treatment.
Therefore, it does not appear to the Constitutional Court that this
approach, in this case permitting giving the landlord a certain
advantage, is not based on reasonable and objective grounds. If a
certain disproportionality or inequality is established, this is – in
view of the particular positions of the landlord and tenant – a
constitutionally acceptable disproportionality or inequality, and a
legal situation which is not discriminatory.
Therefore,
these conclusions are not inconsistent with judgment file no. Pl. US
15/02 (Collection of Decisions of the Constitutional Court, volume 29,
judgment no. 11), to which the petitioner also refers. In it the
Constitutional Court stated, among other things, that a certain legal
framework, which gives an advantage to one group or category of persons
compared to others, can not in and of itself, without anything further,
be described as violation of the principle of equality. The legislature
has a certain amount of discretion to establish such preferential
treatment. In doing so it must take care that the preferential approach
is based on objective and reasonable grounds (a legitimate aim of the
legislature) and that there be a proportional relationship between that
aim and the means used to achieve it (legal advantages). It is then
difficult to conclude that the contested statutory provision violates
these principles. This is sufficiently evident from the forgoing
arguments in this judgment.
In
general, we can add that the possibly asymmetry, originating in the
period of the totalitarian regime, and the residue from that period
which continues in the present have no place – in principle – in a
democratic law-based state. This, however, would require comprehensively
evaluating the entire legal framework for the positions of landlord and
tenant; of course, the Constitutional Court is not authorized to do so
in these proceedings, in view of the content and scope of the petition.
The primary responsibility in this regard lies in the area of
legislation.
For all the foregoing reasons, the Constitutional Court concluded that § 697 of the Civil Code is not inconsistent with the principle of equality under Art. 1 of the Charter, which the petitioner cites, or with other principles arising from the constitutional order of the Czech Republic.
For all the foregoing reasons, the Constitutional Court concluded that § 697 of the Civil Code is not inconsistent with the principle of equality under Art. 1 of the Charter, which the petitioner cites, or with other principles arising from the constitutional order of the Czech Republic.
Therefore, the Constitutional Court, in accordance with § 70 par. 2 of the Act on the Constitutional Court, denied the petition.
Notice: Decisions of the Constitutional Court can not be appealed.
Notice: Decisions of the Constitutional Court can not be appealed.
Brno, 14 March 2006
Dissenting Opinion
of judge Jiří Nykodým
In my dissenting opinion to judgment file no. Pl. US 20/05, I expressed the opinion that the special regulation of apartment leases as a whole is inconsistent with the constitutional order. I maintain that opinion, and therefore can not agree with the reasoning of judgment Pl. US 30/04. If § 697 of Act no. 40/64 Coll., the Civil Code, is evaluated in isolation, there is nothing about it that can be found inconsistent with the constitutional order. It is a completely indifferent provision, which provides that if a tenant does not make timely payment of rent or services relating to the use of an apartment, he shall pay late charges and not default interest. It does not establish inequality, as the petitioner claims, because it says nothing to the effect that there must necessarily be a difference between the amount of default interest and late charges. The fact that such a difference exists results only from the implementing regulation which sets the rate of default interest and the level of late charges. Therefore, insofar as the petition for annulment was aimed against the cited statutory provision, it should have been denied as obviously unsubstantiated.
The
fact that a provision was added to the Civil Code in 1964 which
differentiated default interest and late charges was not at all
motivated by the grounds set forth in the reasoning, but by protection
of socialist ownership, because at that time practically all housing was
owned by the state, or by socialist organizations, i.e. they were under
socialist ownership. Justifying the constitutionality of the contested
provision by pointing to the fact that it balances the difference
between performance of the primary obligation of the landlord, who
performs it by delivering an apartment to the tenant for use, and the
primary obligation of the tenant, who is obligated to perform his
primary obligation of paying rent, whereas the landlord’s returning of
overpayment is not a primary obligation, and therefore does not need to
be penalized by an increased penalty in the form of late charges, is
extremely unpersuasive. The contested provision does not address whether
late charges are to be higher than default interest, so this provision
permits it to be lower. The fact that late charges are at present higher
than default interest is therefore not a result of the contested
provision, but of the implementing regulation, which, however, is not
contested by the petition. The arguments in the judgment’s reasoning are
thus quite unrelated to the subject matter of the proceedings, which is
§ 697 of the Civil Code, and not government directive 142/94 Coll.,
which regulates the rate of late charges and default interest.
Dissenting Opinion
of judge Eliška Wagnerová
I have a dissenting opinion on the reasoning in the majority decision, for the following reasons:
One
the one hand, I maintain the opinion which I stated in my dissenting
opinion to judgment file no. Pl. US 20/05. I also believe that in the
case of legal regulation of apartment rent individual provisions can not
be evaluated individually, but only in the context of the entire legal
framework for that subject matter.
In
the present matter, I believe that the late charges for late payment of
rent or services relating to it should fundamentally be subject to
agreement by the parties, which would reflect their free will. In other
words, in this area the legislature does not, in my opinion, have
discretion to pass a mandatory statutory regulation. Insofar as I did
not vote to annul this provision, it is only because annulling would, in
the present situation, worsen the already unbalanced position of
apartment landlords.
Brno, 14 March 2006
Brno, 14 March 2006
Dissenting Opinion
of judges Vlasta Formánková and Stanislav Balík
It is too bad that one can not step into the same river twice, and that historical “ifs” do not apply.
Couldn’t
the petitioner in the matter Pl. US 20/05, in the proceedings before
it, also have applied § 697 of the Civil Code, which, upon “second
measurement” could have led to different definition of the parties and
secondary parties in the matter Pl. US 20/05 and in this matter?
Acta est fabula, and so we can only add that as to the rest we concur with the dissenting opinion of Jiří Nykodým.