Decided 10 March 2004 – Pl. US 12/03
                                
                       “A minimum penalty”

HEADNOTE
Under certain circumstances a fine can amount to interference  in
a  fundamental  right  under Art. 11 par. 1  of  the  Charter  of
Fundamental  Rights and Freedoms, that is, if it interferes  with
an   individual’s   property  relationships   with   considerable
intensity.  Incorporating  a  minimal  penalty  amount  into  the
statute  basically pursues a legitimate aim, because this permits
distinguishing the gravity or danger of various types of unlawful
conduct.  It  can be a certain means of protection from  possible
discrimination;  only  the  other  hand,  however,  it  leads  to
limiting  the  ability of the administrative body  to  take  into
account the specific circumstances of the case, the person of the
offender and his economic level. Setting and increasing the lower
limit   for   penalties  does  not  always  permit   proportional
intervention, and in relation to the persons who are penalized by
a fine, it can sometimes be of a liquidatory nature.

JUDGMENT
The  Plenum of the Constitutional Court, composed of JUDr.  Pavel
Rychetsky,  JUDr.  Frantisek Duchon, JUDr. Vojen  Guttler,  JUDr.
Pavel  Hollander, JUDr. Dagmar Lastovecka, JUDr. Jiri Malenovsky,
JUDr.  Jiri  Mucha, JUDr. Jiri Nykodym, JUDr. Pavel  Varvarovsky,
and JUDr. Miloslav Vyborny, ruled on a petition from the Regional
Court in Usti nad Labem, Liberec branch, seeking the annulment of
part of § 106 par. 2 of Act no. 50/1976 Coll., on Zoning and  the
Buidling  Code (the Building Act), as amended by Act no.  83/1998
Coll., as follows:
      The  words  “from CZK 200,000” in § 106 par. 2 of  Act  no.
50/1976 Coll., on Zoning and the Building Code(the Building Act),
as  amended by Act no. 83/1998 Coll., are annulled as of the  day
this judgment is promulgated in the Collection of Laws.

REASONING
On  27  May  2003  the  Constitutional Court  received  from  the
Regional  Court  in  Usti nad Labem, Liberec branch,  a  petition
under  Art.  95 par. 2 of the Constitution of the Czech  Republic
(the  “Constitution”) to annul part of § 106 par. 2  of  Act  no.
50/1976  Coll.,  on  Zoning and the Building Code  (the  Building
Act),  as  amended  by of Act no. 83/1998 Coll.,  (the  “Building
Act”),  beginning  with  the words “from  CZK  200,000,”  due  to
inconsistency with Art. 1 of the Constitution, Art. 1 and 11 par.
1  of  the  Charter  of  Fundamental  Rights  and  Freedoms  (the
“Charter”)  and  Art.  1  of  the  Additional  Protocol  to   the
Convention  for  the Protection of Human Rights  and  Fundamental
Freedoms (the “Additional Protocol”).
      In  the  petition  the  Regional  Court  recapitulates  the
proceedings   which  preceded  its  petition.   During   building
proceedings, the Fund for Children and Youth “in liquidation” was
given  a  fine  of CZK 200,000 for not completing  urgent  safety
works,  consisting of enclosure fencing and partial stabilization
of  a  roof truss and “bracing it against wind,” as well as other
safety works labeled as a violation of the obligation imposed  by
§  106  par.  2  let.  g) of the Building Act. In  administration
proceedings and in a complaint against an administrative decision
imposing a fine, the Fund for Children and Youth objected that it
performed  the  works to the extent it was  able,  and  that  the
collapse of part of the roof was caused by exceptionally  adverse
weather.  It  pointed  out  that,  as  a  state  organization  in
liquidation,  it  did  not have money for  new  investments.  The
Regional  Court  believes that the lower limit  of  a  fine,  CZK
200,000  does not permit taking the cited situation into account,
and  in particular the fact that, under Art. I point 4 of Act no.
364/2000 Coll., on Dissolution of the Fund for Children and Youth
and  Amending Certain Acts, the liquidator acting in the name  of
the  fund  can  assume new obligations only if they are  directly
connected  to  “termination  of  uncompleted  obligations.”   The
Regional  Court believes that the words “from CZK 200,000”  in  §
106  par.  2  of  the Building Act, setting the lowest  fine  for
defined  infractions in the building field are incompatible  with
the  cited  articles  of the Constitution, the  Charter  and  the
Additional Protocol. It finds its arguments in the conclusions in
the  Constitutional Court judgment of 13 August 2002  promulgated
under  no.  405/2002  Coll. The courts points  to  the  imbalance
between  the  wordings of par. 2 and 3 of § 106 of  the  Building
Act.  In  appendices  the court submits  the  complaint  and  the
decisions  by  the  building  administration  bodies   which   it
contests.
      On  4  June  2003 the Constitutional Court  called  on  the
Chamber of Deputies and the Senate of the Parliament of the Czech
Republic for position statements and asked the regional court  to
lend it its file.
       In   its  position  statement,  the  Chamber  of  Deputies
recapitulates the court’s petition, including a reference to  the
existing  case law of the Constitutional Court and the course  of
the  legislative process. The present wording of § 106 par. 2  of
the  Building Act was amended by Act no. 83/1998 Coll.; the draft
was  proposed  by  the  government of the CR.  According  to  the
background report, the amendment of §§ 105 and 106 resulted  from
the  need to fundamentally change the level of fines for building
infractions found in the comment proceedings and to set  a  range
of  fines  for offences and administrative infractions .  Setting
stricter penalties was supported by certain towns, which have the
most experience with failure to observe building regulations. The
draft act was approved by the prescribed majority of deputies  on
13  February 1998, the Senate approved it on 18 March  1998,  the
president  signed  it  on 6 April 1998,  and  the  Act  was  duly
promulgated.  The legislative assembly acted in the  belief  that
the   passed  Act  was  consistent  with  the  Constitution,  the
constitutional order, and international treaties. It is up to the
Constitutional  Court  to evaluate the constitutionality  of  the
contested provision.
      In  its position statement on the petition, the Senate also
states  that due to the extensive amendment of the Building  Act,
effective as of 1 July 1998, there was an effort to set  stricter
penalties  for violation of obligations imposed by  the  Act  for
purposes   of  tightening  observance  of  regulations   in   the
construction and use of buildings. In the interests of  achieving
this  aim, the passage of the Act considerably narrowed the scope
of  the  relevant administrative body’s discretion, but  did  not
remove  it  entirely. The administrative body is to  continue  to
weight  the  circumstances of a case and take them  into  account
when  setting a fine. The Senate points out that it accepted this
intention  of  the petitioner, and on 18 March 1998 approved  the
draft  act  in  the form passed by the Chamber  of  Deputies.  In
discussion  the draft, it did not find, as it already  stated  in
its  position  statement to the petition under file  no.  Pl.  US
3/02, constitutional grounds to withhold consent. It is up to the
Constitutional Court to evaluate the contested provision,  taking
into  account  the judgment published under no.  405/2002  Coll.,
which concerned the lower limit for fines under § 106 par.  3  of
the  Building  Act. In an appendix the Senate sent  part  of  the
transcript of the discussion of this amendment.
      The  way  in which Act no. 83/1998 Coll., which  newly  set
fines    for   infractions   in   the   field   of   construction
administration, was passed has already been subject to review  by
the Constitutional Court when it dealt with the matter under file
no. Pl. US 3/02. The results authorize review of the petition  on
the  merits, as the Constitutional Court stated that the Act  was
passed and promulgated in the constitutionally prescribed manner,
within  the  bounds of constitutionally prescribed  jurisdiction,
and  the  quorums  specified in Art. 39  par.  1  and  2  of  the
Constitution existed.
      The starting point for the Constitutional Court’s judgment,
if it is not to deviate fundamentally from its previous case law,
is  the  conclusions expressed in the cited judgment of 13 August
2002  in  the  matter  under file no. Pl. US 3/02  (no.  405/2002
Coll.) on a petition from the Regional Court in Hradec Kralove to
annul  the  words  “from CZK 500,000” in §  106  par.  3  of  the
Building Act.
      In  that  judgment, the Constitutional  Court  stated  that
incorporating a minimal penalty amount into the statute basically
pursues a legitimate aim, because this permits distinguishing the
gravity  or danger of various types of unlawful conduct far  more
clearly  than  was  possible by setting only an  upper  limit.  A
subsidiary consequence of this step is that this limits the  room
for administrative discretion by the relevant state bodies, which
has  positive  consequences in, for example,  the  fact  that  it
unifies  to a certain extent the level of punishments imposed  or
limits   the   room   for  arbitrary  or   corrupt   conduct   by
administrative  bodies.  Thus, it  can  be  a  certain  means  of
protection  from  possible discrimination; only the  other  hand,
however, it equalizes the gravity of various unlawful conduct, to
a  greater or lesser degree, which leads to limiting the  ability
of  the  administrative body to take into  account  the  specific
circumstances  of  the case, the person of the offender  and  his
economic level.
      The  Constitutional  Court  concluded  that  under  certain
circumstances a fine can amount to interference in a  fundamental
right  under  Art.  11  par. 1 of the  Charter.  A  fine  can  be
considered interference with a constitutional law dimension if it
interferes  with  an  individual’s  property  relationships  with
considerable  intensity.  Therefore,  the  Constitutional   Court
evaluated the aim of interference in relation to the means  used,
and  the  measure  for  this  evaluation  was  the  principle  of
proportionality.  Setting  progressive  levels  of   penalization
through  increasing the maximum amount of fines can  achieve  the
intended  aim, and in view of adequate room to take into  account
the  circumstances of a particular case, it also permits  meeting
the  condition  of  proportionality of  interference.  Naturally,
setting  and increasing the lower limit for penalties, minimizing
this  room  for  discretion, does not always permit  proportional
intervention,  because,  in  relation  to  the  persons  who  are
penalized by a fine, it can sometimes be of a liquidatory nature.
For the abovementioned reasons, the Constitutional Court annulled
part  of § 106 par. 3 of the Building Act by its judgment in  the
matter under file no. Pl. US 3/02.
     In the cited judgment, the Constitutional Court observed the
rule  of  being limited by the proposed judgment in the petition,
and  thus could not annul the now contested part of § 106 par  2.
However, it pointed out that the overall system could be violated
and inequality introduced by § 106 par. 2 of the Building Act, in
which  the  lower  limit of fines remained.  It  also  indirectly
expressed the expectation that the legislature would also  review
its constitutionality.
      Thus,  review  of the petition filed by the Regional  Court
in  Usti  na  Labem,  Liberec branch, can  not  be  substantially
different.  The  lowest statutorily set fines for  legislatively-
defined  “medium”  serious  violations of  buildings  regulations
under  §  106  par.  2  of the Building Act,  for  violations  of
buildings regulations legislatively defined as being of  “medium”
gravity, can, in the cases that a regional court handles,  amount
to    the   same   unconstitutional   interference   which    the
Constitutional  Court  already found  to  exist.  The  difference
between  the lowest fine level of CZK 500,000 in the case already
adjudicated and CZK 200,000 in the case now under review  is  not
substantial.  A  minimum  fine  of CZK  200,000  for  infractions
defined  in § 106 par. 2 of the Building Act can, in many  cases,
be  just  as  liquidatory  as  a  fine  of  CZK  500,000  Kc  for
infractions  which  the  legislature  considers  “more  serious,”
defined  in  §  106  par. 3 of the Building  Act.  Moreover,  the
continued  existence of the contested provision would confirm  an
imbalance between penalties for otherwise serious infractions  of
building  law envisaged by the Building Act as amended after  the
Constitutional Court’s intervention in 2002.
      Beyond  the  framework  of  the  foregoing  arguments,  the
Constitutional  Court  emphasizes that  it  did  not  review  the
circumstance  of  the  individual application  of  administrative
punishment   which  occurred  in  the  preceding   administrative
proceedings,  as  proceedings on a petition to annul  part  of  a
statute  under Art. 87 par. 1 let. a) of the Constitution  are  a
means of abstract inspection of norms. The Constitutional Court’s
conclusion does not anticipate the result of specific review  and
proceedings  on the infracting conduct by the Fund  for  Children
and  Youth “in liquidation” which is now taking place before  the
Regional  Court in Usti nad Labem, Liberec branch. Likewise,  the
Constitutional  Court can speak only peripherally concerning  the
reference  to limiting the Fund’s administrator under  the  legal
framework given by a special statute (this is, of course, similar
with,  e.g.,  bankruptcy  administrators).  The  prohibition   on
assuming  new commitments can not prevent fulfilling  obligations
in   an  important  public  interest.  Obligations  arising  from
regulations  which  ensure important public interests  (here  the
Building  Act)  must  take precedence before  a  framework  which
determines  the handling of property, or that framework  must  be
interpreted  in  such a manner as to permit  the  fulfillment  of
those  obligations. The argument which consists  of  the  opinion
that  a  legal  entity  in  liquidation  has  a  lower  level  of
responsibility for the condition and administration  of  property
which  it  owns,  being dependent on the momentary  property  and
organizational  situation,  could  create  de  facto   inequality
between the content of property rights for individual owners.
      In view of the cited arguments, largely already articulated
in  the Constitutional Court’s case law, the Constitutional Court
believes  that  the  contested  provision,  or  part  of  it,  is
incompatible with the principles of a state governed by the  rule
of  law,  the  Charter  and Art. 1 of the  Constitution,  and  is
inconsistent  with Art. 1 and Art. 11 par. 1 of the  Charter  and
Art.  1 of the Additional Protocol. Therefore, the Constitutional
Court had no choice but to annul it, under § 70 par. 1 of Act no.
182/1993 Coll., on the Constitutional Court, as amended by  later
regulations.

Notice:  Judgments  of  the  Constitutional  Court  can  not   be
appealed.

Brno, 10 March 2004