Transcript from Lovdata – 18.02.2014 10:50
The Supreme Court of Norway – HR-2010-1613-A – Rt-2010-1121 – UTV-2010-1383
Court: / The Norwegian Supreme Court - judgmentDate / 27 September 2010.
Published / HR-2010-1613-A – Rt-2010-1121[1] – UTV-2010-1383[2]
Keywords: / Criminal law. Surtax. Double jeopardy. ECHR Protocol No 7 Art. 4. The Norwegian Tax Assessment Act Section 12-1(1)(a), cf. Section 12-2.
Abstract / The case concerned whether the imposition of ordinary surtax and criminal prosecution were in contravention of the prohibition on double jeopardy set out in ECHR Protocol No 7 Art. 4 or whether these were lawful parallel proceedings. The Supreme Court made reference to case law and concluded that ordinary surtax must still be deemed to be punishment within the meaning of ECHR. There were sufficiently close connections in substance and in time between the administrative case and the criminal case for them to be considered in parallel and the convicted person had no expectation worthy of protection of being subject to one set of proceedings only. Criminal prosecution after the decision on surtax became legally enforceable was therefore not in contravention of ECHR P7-4.
Proceedings / Follo District Court TFOLL-2008-155151 – Borgarting Court of Appeal LB-2009-57764 – Supreme Court HR-2010-1613-A (Case No 2010/884), criminal case, appeal of judgment. The appeal case against Norway is pending a decision by ECtHR, case nos 24130/11 and 29758/11.
Parties / A (Advocate Roland Kjeldahl - on test basis) versus the public prosecuting authority (Chief Public Prosecutor Petter Nordeng).
Author(s) / Møse, Bruzelius, Tønder, Matheson, Schei.
(1) / Justice Møse: The case concerns the question of whether the imposition of ordinary surtax and criminal prosecution were in contravention of the prohibition on double jeopardy pursuant to the European Convention on Human Rights (ECHR) Protocol No 7 Article 4 (P7-4 ) or whether it was a case of legally permissible parallel proceedings.
(2) / A held shares in the Norwegian technology company X Partner AS, partly in his own name and partly through his ownership interest in the investment company Y Investment Ltd., which was registered in Gibraltar. In August 2001, he sold all his shares to Z Innovation ASA. It is not disputed that the amount constituted taxable income for A. The price of the shares he owned through Y Investment Ltd. amounted to NOK 3 259 341. The amount was transferred to the Gibraltar-registered company Æ Holding Ltd., in which A was the sole shareholder. He did not declare this amount in his tax return for 2002, while he did declare the income from the shares he owned personally for taxation.
(3) / In connection with a tax audit of Z Innovation ASA in 2005, it was discovered that foreign companies had been shareholders in X Partner AS. Following further investigations, on 26 August 2008,Tax Norway East sent A notice of revision of his tax assessment, and a decision to revise the tax assessment was made on 24 November 2008. His ordinary income for 2002 was increased by the amount he had failed to declare, namely NOK 3 259 341, and surtax of 30% was also imposed. His tax assessments for the period 2003–2007 were also revised with respect to wealth tax. The decision was not appealed within the three-week deadline for submitting an appeal.
(4) / Following the tax audit in 2005, A and others who were involved in the Gibraltar-registered companies were reported to the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (Økokrim), and, based on its investigations, the latter took out preliminary charges against him on 14 December 2007. On 14 October 2008 he was indicted for wilfully or through gross negligence having provided the tax authorities with incorrect or incomplete information; see Section 12-1(1)(a) of the Tax Assessment Act,cf. Section 12-2. The grounds for the indictment were as follows:
'For the 2001 and/or 2002 income year he omitted to declare in his tax return income in the total amount of NOK 3 259 341. The assessed tax on this income amounts to NOK 912 615.'
(5) / On 2 March 2009, Follo District Court pronounced judgment with the following rendition of judgment:
'1. / A, born 13 May 1960, is convicted of violation of Section 12-1(1)(a) of the Tax Assessment Act, cf. Section 12-2, and sentenced to 1 – one – year's imprisonment with the deduction of 4 – four – days for time served on remand.
2. / A will pay the costs of the case in the amount of NOK 15 000 – fifteen thousand.'
(6) / The conviction concerned the tax return for 2002. When deciding the sentence, the District Court took account of the fact that surtax had already been imposed on A.
(7) / A appealed to Borgarting Court of Appeal, which, on 1 September 2009, declared his appeal against the assessment of the evidence and application of the law with regard to the issue of guilt and the sentencing inadmissible. Furthermore, with reference to a judgment by the European Court of Human Rights (ECtHR) pronounced on 10 February 2009 in the Zolotukhin case (ECtHR-2003-14939) A submitted, as a new plea in law before the Court of Appeal, that the District Court's judgment must be set aside and the case dismissed because the prohibition on double jeopardy in P7-4 had been contravened. This claim, which was deemed to be an appeal against the court proceedings, was admitted for hearing.
(8) / The Court of Appeal found that there had been no contravention of P7-4 and pronounced judgment on 12 April 2010 (LB-2009-57764) with the following rendition of judgment:
'The appeal is rejected.'
(9) / A has appealed against the court proceedings to the Supreme Court, arguing in brief that:
(10) / The nature of the prosecution has been such that the prohibition on double jeopardy in P7-4 is very strongly applicable. The primary intention of the provision is to take account of the burden involved. In December 2007 he was charged, questioned and incarcerated, and a seizure was subsequently made in his home. Despite the fact that he acknowledged the facts of the case, the prosecuting authority failed to act until ten months later when the indictment was issued in October 2008. It was not until March 2009 that he was convicted.
(11) / Compared with the progress of the case concerning surtax, this was in contravention of P7-4, as it has been interpreted in ECHR case law. The criminal case and the tax case are not so closely linked as to permit parallel proceedings.
(12) / The Director General of Public Prosecutions' new guidelines on double jeopardy of April 2009 led A to expect that the prosecuting authority would enter a claim that the District Court's judgment be set aside. The fact that this did not happen after all made the burden on him even greater. He has not been treated in the same way as the other indicted persons in the same case.
(13) / A has entered the following statement of claim:
'That the District Court's judgment following the main hearing be set aside and that the case be dismissed.'
(14) / The public prosecuting authority has essentially argued as follows:
(15) / The Court of Appeal's judgment is correct and was based on a correct assessment of the burden involved. The considerations underlying the protection afforded by P7-4 are not strongly applicable in the present case.
(16) / ECtHR case law shows that the parallel treatment of the case concerning surtax and the criminal case is not in contravention of P7-4. There are close connections in substance and in time between the two prosecutions.
(17) / The reason why A's case was not dealt with in accordance with the new guidelines in the Director General of Public Prosecutions' circular was a desire to achieve a correct reaction in relation to the other persons indicted in the same related set of cases. Some of these cases have been put on hold pending a final decision in the present case.
(18) / A has entered the following statement of claim:
'That the appeal be rejected.'
(19) / I have reached the same conclusion as the District Court.
(20) / P7-4(1) on the right not to be tried or punished twice for the same offence (non bis in idem) reads as follows:
'No one shall be liable to be tried or punished again in criminal proceedings under the jurisdiction of the same State for an offence for which he has already been finally acquitted or convicted in accordance with the law and penal procedure of that State.'
(21) / The Norwegian translation reads:
'Ingen skal kunne bli stilt for retten eller straffet på ny i en straffesak under den samme stats domsmyndighet, for en straffbar handling som han allerede er blitt endelig frikjent eller domfelt for i samsvar med loven og rettergangsordningen i straffesaker i denne stat.'
(22) / The ECtHR has established that several cumulative conditions must be met for a decision in one case to preclude a new case: Both cases must entail prosecution within in the meaning of P7-4. They must also concern the same criminal offence. Furthermore, the first decision must be final. In addition, the proceedings in the second case must entail repetition of the prosecution. I will return to each of these conditions. A fifth condition for application of the provision, namely that both cases concern the same legal person, does not need to be considered in our case.
(23) / The same criminal offence
(24) / ECHR case law regarding what is meant by the same criminal offence ('same offence') is extensive, but not unequivocal. The requirement was commonly understood to consist of two components: one factual and one legal. According to this interpretation, the second prosecution (for example the criminal case) will only concern the same offence as the previous one (for example the case concerning surtax) if both cases concern the same facts or the 'same conduct' and the contents of the relevant national provisions mainly concern the 'same essential elements'.
(25) / In Rt-2006-1409, the Supreme Court (in plenary session) found, on this basis, that a decision to impose ordinary surtax did not preclude a subsequent criminal case, as the two prosecutions concerned different offences within the meaning of P7-4. Among other things, emphasis was placed on the the ECtHR's inadmissibility decision in the case of Rosenquist versus Sweden (no 60619/00) (ECtHR-2000-60619), in which the facts of the case were similar. A majority of the Supreme Court (14 justices) found that the provision on ordinary surtax in Section 10-2 of the Tax Assessment Act, cf. Section 10-4(1) first sentence, did not contain the same fundamental elements as the penal provision in Section 12-1of the Tax Assessment Act. Decisive weight was given to the fact that, while the penal provision can only be applied in cases involving intent or gross negligence, ordinary surtax is imposed on a virtually objective basis. Reference was also made to the difference in purpose between these sanctions.
(26) / ECHR case law was not unequivocal, however, and in a judgment of 10 February 2009 in the case of Zolotukhin versus Russia (no 14939/03) (ECtHR-2003-14939), the ECtHR found that it was necessary to sit as a Grand Chamber to consider the interpretation of the term 'same offence' (the 'idem' element). The case concerned punishment and administrative prosecution for disturbing the peace. After having described the various approaches that had been used (paragraphs 70 to 77), the ECtHR stated that legal clarification was now needed (paragraph 78). Case law based on other international conventions showed that the interpretation of the non bis in idem principle supported an approach 'based strictly on the identity of the material acts and rejecting the legal classification of such acts as irrelevant' (paragraph 79). Such an interpretation would make the right set out in P7-4 more effective and be in accordance with the purpose of the provision and in line with developments in society, while, on the other hand, 'the approach which emphasises the legal characterisation of the two offences is too restrictive on the rights of the individual' (paragraphs 80-81). The ECtHR concluded as follows (paragraphs 82 and 84):
'Accordingly, the Court takes the view that Article 4 of Protocol No. 7 must be understood as prohibiting the prosecution or trial of a second “offence” in so far as it arises from identical facts or facts which are substantially the same. ...
The Court's inquiry should therefore focus on those facts which constitute a set of concrete factual circumstances involving the same defendant and inextricably linked together in time and space ...'
(27) / After the ECtHR had clarified in the Zolotukhin case that the assessment of whether or not both prosecutions concern the same offence should be made on the basis of the conduct alone, the Director General of Public Prosecutions stated the following in a circular of 3 April 2009 (RA-2009-187):
'In the Director General of Public Prosecutions' opinion, the Supreme Court's view in Rt-2006-1409, which was primarily based on differences in the criterion of guilt, cannot be upheld following the ECtHR's decision in the Zolotukhin case. As long as the imposition of surtax and the subsequent criminal case are based on the same act or omission, as will normally be the case, it must be assumed that, pursuant to P7-4, also [the imposition of] ordinary surtax precludes a subsequent criminal prosecution. Following discussions with the Norwegian Directorate of Taxes, the Director General of Public Prosecutions is aware that this opinion is shared by the Directorate.'
(28) / In Rt-2010-72, the Supreme Court expressed its view on the significance of the Zolotukhin case for the first time. The question was whether the imposition of 60% surtax and additional charges precluded criminal prosecution for related breaches of the Accounting Act and the Tax Assessment Act. With the support of the other justices, the first-voting justice stated that the Norwegian courts must now apply the norm set by the ECtHR in the Zolotukhin case (ECtHR-2000-60619) (paragraph 13). I agree with this and add that cases concerning ordinary surtax are thereby also subject to the ECtHR's new interpretation of 'same offence' in P7-4.
(29) / In our case, there is no doubt that the factual circumstances on which the decision to impose surtax and the criminal prosecution were based have sufficient points in common. Both cases were based on the failure to inform about income in the tax return. The condition that the prosecutions must concern the same offence is thus fulfilled.
(30) / The concept of 'criminal'
(31) / As mentioned above, for P7-4 to be applicable, both cases must also concern a criminal matter ('offence') within the meaning of that provision.
(32) / Firstly, a reminder that the Supreme Court in a plenary ruling cited in Rt-2002-509 established that ordinary surtax must be deemed to be a 'penal sanction' resulting from a 'criminal charge' within the meaning of ECHR Art. 6(1), where the latter term is used. The assessment emphasised the classification of the sanction in national law, the nature of the offence, and the content and severity of the sanction (pages 517-518 ff.). These elements, which were established in the fundamental judgment of 8 June 1976 in the case of Engel versus the Netherlands (ECtHR-1971-5100), and which are therefore often called the 'Engel criteria', formed the basis for subsequent ECHR case law. In its assessment, the Supreme Court attached particular importance to surtax as a general deterrent and the fact that it could be a substantial amount because 30% was a high rate (page 521).
(33) / In Rt-2004-645, which concerned the incorporation of 30% surtax when determining the fine for failing to submit a tax return, the Supreme Court stated that the notion of 'criminal' was the same in ECHR Art. 6(1) and P7-4 (paragraph 8)
'By way of introduction, I find it necessary to say something about the general background to the matter at issue in our case. In a plenary ruling of 3 May 2002 (Rt-2002-557), the Supreme Court concluded that, pursuant to ECHR Protocol No 7 Article 4( 1), a criminal case is inadmissible where the indictment concerns having furnished the tax authorities with incorrect or incomplete information, if surtax has previously been imposed on the person indicted for the same offence. Another plenary ruling of the same date (Rt-2002-509), concluded that it was necessary to deem the use of ordinary surtax a “criminal charge” within the meaning of ECHR Article 6(1). It also follows from case law that the matter at issue is no different pursuant to ECHR Protocol No 7 Article 4 than it is pursuant to ECHR Article 6, cf. Rt-2003-1100 (paragraph 47) and Rt-2003-1376 (paragraph 18). On this basis, the imposition of ordinary surtax will also preclude a subsequent criminal case.'
(34) / As stated in the decision, with reference to ECtHR case law, it was based on the concept of 'criminal' being the same in P7-4 as in ECHR Article 6(1), even though these provisions pursue different objectives and are worded differently. And the plenary ruling in Rt-2006-1409 took it as given that ordinary surtax was a criminal charge pursuant to P7-4.
(35) / On the basis of subsequent ECHR case law, the question has been raised of whether such conformity continues to exist between the notions of criminal used in the two provisions. Of particular interest in this context are the ECtHR's inadmissibility decisions of 1 February 2007 in the cases Storbråten versus Norway (no 12277/04) (ECtHR-2004-12277) and Mjelde versus Norway (no 11143/04) (ECtHR-2004-11143), both of which concerned the imposition of a period of disqualification following insolvency; see also Haarvig versus Norway concerning a licence to practice medicine (no 11187/05) (ECtHR-2005-11187) in which judgment was pronounced on 11 December 2007.