Right to a fair hearing

The First Hall of the Civil Court (Constitutional), presided over by Mr Justice Joseph R. Micallef, in the case “Neil Carter and his wife Susan vs the Prime Minister, the Attorney General, and the VAT Commissioner”, held, among other things, that it was a violation of a person’s right to a fair hearing to request an appellant to pay a percentage of the VAT in dispute in order to be in a position to contest a VAT assessment.

The facts in this case were as follows.

An appellant had to satisfy all conditions to make an appeal

Neil Carter filed a human rights action requesting the court to declare that the requirement to pay an administration fee, to settle upfront the VAT not in dispute as well as fiv e per cent of the VAT in dispute under paragraphs (b) (c) and (f) of Part 4 of the 9th Schedule of the 1998 Vat Act violated his fundamental rights to a fair hearing, (Article 39 of the Constitution and Article 6 of the European Convention) and his right to enjoy his possessions/ property (Article 37 of the Constitution and Article 1 of the First Protocol of the Convention).

It was stated that this placed an excessive and disproportionate burden, which unduly restricted his access to justice and the right to enjoy his property without interference.

He asked the court, therefore, to order the VAT Commissioner:

• to refund, within a short time limit, the payment which he was compelled to make to present his appeal from the VAT assessments;

• to award fair compensation; and

• to give a remedy, as appropriate.

Neil Carter filed his human rights action against the Prime Minister, the VAT Commissioner and the Attorney General, to contest a VAT assessment for the period May 2003 to October 2004. The VAT Commissioner and the Prime Minister, in reply, submitted that they should not have been sued and that it was sufficient for the legal action to proceed solely against the Attorney General.

As regards the merits, the defendants disputed any human rights violation. They put forward the argument that the fact that an appellant had to pay five per cent of the VAT in contestation (previously it was 25 per cent) was not an impediment; and nor disproportionate. Defendants claimed that it was reasonable to collect a sum to cover administration expenses of the Board of Appeal.

On November 30, 2011, the First Hall of the Civil Court decided by declaring that Mr Carter suffered a violation of his fundamental right to a fair hearing.

It declared that:

1. The Prime Minister was not a legitimate defendant and was freed from the proceedings;

2. The VAT Commissioner was a legitimate defendant in the proceedings.

3. Mr Carter did not suffer a deprivation of his property rights under Article 37 of the Constitution but it said that his rights under Article 1 of the First Protocol of the Convention were infringed insofar as he was requested to pay an administration fee in order to present an appeal.

4. Mr Carter suffered a violation of his right to a fair hearing under Article 39(2) of the Constitution and Article 6(1) of the European Convention for being compelled to pay five per cent of the VAT in dispute (paragraph 4(1)(C) of the 9th Schedule of Chapter 406).

The court in addition ordered the VAT Commissioner to refund to Mr Carter the administrative fee as well as the five per cent of the VAT in dispute, which he had paid, in order to file an appeal.

The following reasons were given for its decision:

Preliminary plea: The court said that the VAT Commissioner should be involved in the proceedings. It did not feel, however, that it was necessary for the Prime Minister to remain present in the proceedings.

Merits: The court noted that an appellant had to satisfy all conditions to make an appeal.

Article 37 of the Constitution provides:

“(1) No property of any description shall be compulsorily taken possession of, and no interest in or right over property of any description shall be compulsorily acquired, except where provision is made by a law applicable to that taking of possession or acquisition:

(a) for the payment of adequate compensation;

(b) securing to any person claiming such compensation a right of access to an independent and impartial court or tribunal established by law for the purpose of determining his interest in or right over the property and the amount of any compensation to which he may be entitled, and for the purpose of obtaining payment of that compensation; and

(c) securing to any party to proceedings in that court or tribunal relating to such a claim a right of appeal from its determination to the Court of Appeal in Malta:

“Provided that in special cases Parliament may, if it deems it appropriate so to act in the national interest, by law establish the criteria which are to be followed, including the factors and other circumstances to be taken into account, in the determination of the compensation payable in respect of property compulsorily taken possession of or acquired; and in any such case the compensation shall be determined and shall be payable accordingly.”

The court considered that, insofar as it was shown that what was requested was in fact according to law, Mr Carter could not invoke the protection under Article 37(2)(A) of the Constitution.

However, it noted that Article 1 of the First Protocol of the European Convention was wider in scope.

“An individual’s right to enjoyment of his property is accordingly subject to the state’s right to assess, levy and enforce contributions by way of tax under the second paragraph of Article 1 of the First Protocol. The provision is to be interpreted in the light of the underlying principle in the first sentence of the first paragraph... Measures taken to ensure the payment of taxes, or prevent defaulting are generally found compatible with the second paragraph. Consideration is given to whether the measure is of such a kind that it can reasonably be considered as necessary for the purpose and whether its application is grossly disproportionate; re: Reid: A Practitioner’s Guide to the European Convention on Human Rights” (3rd Edition 2008)

It noted that at the time Mr Carter filed his appeal in October 2009 he was requested to pay an administrative fee, although there was no law imposing this obligation then.

In this respect, the court said that Mr Carter suffered a violation of his rights under Article 1 of the European Convention.

Right to a Fair Hearing: Access to the Courts: Article 39(2) of the Constitution provides that “any court or other adjudicating authority prescribed by law for the determination of the existence or the extent of civil rights or obligations shall be independent and impartial; and where proceedings for such a determination are instituted by any person before such a court or other adjudicating authority, the case shall be given a fair hearing within a reasonable time.”

The right to have effective access to justice was deemed to be an important element for the protection of the right to a fair hearing.

It was possible to have limitations on the right to the access to the courts, in particular in matters involving public law.

“Article 6 does not apply to proceedings relating to the assessment or imposition of tax, including the consequences of a change in tax legislation. In Ferrazzini vs Italy, the court emphasised that tax matters still formed part of the hard core of public authority prerogatives. The fact that pecuniary interests of the taxpayer might be at stake was not sufficient to remove tax from the public law sphere.’’

This did not mean that anything related to the collection of tax was outside the scope of the Constitution and the European Convention of Human Rights, pointed out the court.

The court said that once the law provided a procedure for a person who received a VAT assessment to contest it before a tribunal, the person should therefore be given access to the tribunal. The tribunal had to provide a fair hearing and the right of access was in itself a private right.

Every cost was an inconvenience but not every inconvenience was a loss of rights, maintained the court.

In this case, the court noted that Mr Carter’s main grievance was the requirement to pay five per cent of the VAT in dispute.

Reference was made to previous case law: Frendo vs Attorney General dated November 30, .2001.

Mr Carter did not object to paying the VAT not in contestation, noted the court.

The court declared that it was a violation of a person’s right to a fair hearing to request an appellant to pay a percentage of the VAT in dispute in order to contest a VAT assessment.

Dr Grech Orr is a partner at Ganado & Associates.