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You are here: BAILII >> Databases >> European Court of Human Rights >> MIAILHE v. FRANCE (No. 2) - 18978/91 [1996] ECHR 42 (26 September 1996) URL: http://www.bailii.org/eu/cases/ECHR/1996/42.html Cite as: (1997) 23 EHRR 491, [1996] ECHR 42

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In the case of Miailhe v. France (no. 2) (1),

The European Court of Human Rights, sitting, in accordance with

Article 43 (art. 43) of the Convention for the Protection of

Human Rights and Fundamental Freedoms ("the Convention") and the

relevant provisions of Rules of Court A (2), as a Chamber composed of

the following judges:

Mr R. Bernhardt, President,

Mr L.-E. Pettiti,

Mr C. Russo,

Mr N. Valticos,

Mrs E. Palm,

Mr R. Pekkanen,

Mr A.N. Loizou,

Mr P. Jambrek,

Mr P. Kuris,

and also of Mr H. Petzold, Registrar, and Mr P.J. Mahoney, Deputy

Registrar,

Having deliberated in private on 28 March and 27 August 1996,

Delivers the following judgment, which was adopted on the

last-mentioned date:

_______________

Notes by the Registrar

1. The case is numbered 47/1995/553/639. The first number is the

case's position on the list of cases referred to the Court in the

relevant year (second number). The last two numbers indicate the

case's position on the list of cases referred to the Court since its

creation and on the list of the corresponding originating applications

to the Commission.

2. Rules A apply to all cases referred to the Court before the entry

into force of Protocol No. 9 (P9) (1 October 1994) and thereafter only

to cases concerning States not bound by that Protocol (P9). They

correspond to the Rules that came into force on 1 January 1983, as

amended several times subsequently.

_______________

PROCEDURE

1. The case was referred to the Court by the European Commission

of Human Rights ("the Commission") on 29 May 1995, within the

three-month period laid down by Article 32 para. 1 and Article 47 of

the Convention (art. 32-1, art. 47). It originated in an application

(no. 18978/91) against the French Republic lodged with the Commission

under Article 25 (art. 25) by a French national, Mr William Miailhe,

who also has Philippine nationality, on 16 September 1991.

The Commission's request referred to Articles 44 and 48

(art. 44, art. 48) and to the declaration whereby France recognised the

compulsory jurisdiction of the Court (Article 46) (art. 46). The

object of the request was to obtain a decision as to whether the facts

of the case disclosed a breach by the respondent State of its

obligations under Article 6 para. 1 of the Convention (art. 6-1).

2. In response to the enquiry made in accordance with

Rule 33 para. 3 (d) of Rules of Court A, the applicant stated that he

wished to take part in the proceedings and designated the lawyers who

would represent him (Rule 30).

3. The Chamber to be constituted included ex officio

Mr L.-E. Pettiti, the elected judge of French nationality (Article 43

of the Convention) (art. 43), and Mr R. Bernhardt, the Vice-President

of the Court (Rule 21 para. 4 (b)). On 8 June 1995, in the presence

of the Registrar, the President of the Court, Mr R. Ryssdal, drew by

lot the names of the other seven members, namely Mr B. Walsh,

Mr C. Russo, Mr N. Valticos, Mrs E. Palm, Mr A.N. Loizou, Mr P. Jambrek

and Mr P. Kuris (Article 43 in fine of the Convention and Rule 21

para. 5) (art. 43). Subsequently Mr R. Pekkanen, substitute judge,

replaced Mr Walsh, who was unable to take part in the further

consideration of the case (Rules 22 para. 1 and 24 para. 1).

4. As President of the Chamber (Rule 21 para. 6), Mr Bernhardt,

acting through the Registrar, consulted the Agent of the

French Government ("the Government"), the applicant's lawyer and the

Delegate of the Commission on the organisation of the proceedings

(Rules 37 para. 1 and 38). Pursuant to the order made in consequence,

the Registrar received the applicant's and the Government's memorials

on 20 and 28 November 1995 respectively. On 1 February 1996 the

Secretary to the Commission informed the Registrar that the Delegate

did not wish to reply in writing.

On 13 December 1995 and 22 January 1996 the Commission produced

the documents of the proceedings before it, as requested by the

Registrar on the President's instructions.

5. In accordance with the President's decision, the hearing took

place in public in the Human Rights Building, Strasbourg, on

26 March 1996. The Court had held a preparatory meeting beforehand.

There appeared before the Court:

(a) for the Government

Mr M. Perrin de Brichambaut, Director of Legal Affairs,

Ministry of Foreign Affairs, Agent,

Mr B. Nedelec, magistrat, on secondment to the Legal

Affairs Department, Ministry of Foreign Affairs,

Mr E. Bourgoin, Director of Taxes, Legal Department,

Ministry of the Budget,

Mr B. Hacquin, département Director of Taxes, on

secondment to the Ministry of Justice, Counsel;

(b) for the Commission

Mr J.-C. Soyer, Delegate;

(c) for the applicant

Mr D. Baudin, of the Conseil d'Etat and

Court of Cassation Bar,

Mr F. Goguel, of the Paris Court of Appeal Bar, Counsel.

The Court heard Mr Soyer, Mr Baudin, Mr Goguel and

Mr Perrin de Brichambaut.

AS TO THE FACTS

I. Circumstances of the case

6. Mr Miailhe has dual French and Philippine nationality. He was

honorary consul of the Philippines in Bordeaux from 1960 to May 1983

and also looked after that country's consulate in Toulouse.

A. The origins of the case - the customs prosecution

7. On 5 and 6 January 1983 customs officers seized nearly

15,000 documents at the applicant's Bordeaux residence, on premises

housing the head offices of companies he managed and the consulate of

the Republic of the Philippines. This operation was part of an

investigation to determine, among other things, whether the applicant

and his mother were to be regarded as being resident in France.

The judicial investigation that had been commenced on a

complaint lodged by the director of customs investigations alleging

unlawful accumulation and holding of assets abroad ended in a judgment

of the Criminal Court of 2 December 1992 in which the court ruled that

the public prosecution and the proceedings for imposition of customs

penalties in respect of Mr and Mrs Miailhe were barred as a result of

changes in the criminal law and ordered the return of the seized

documents. These were returned in January 1993.

8. Mr Miailhe challenged before the Strasbourg institutions the

lawfulness of the customs seizures made pursuant to Articles 64 and 454

of the Customs Code. Those proceedings led to two judgments of the

European Court of Human Rights. In the first of these it was held that

there had been a breach of Article 8 of the Convention (art. 8), on the

ground that the house searches and seizures made by customs officers

without a judicial warrant had interfered with the private life of the

applicant, his mother and his wife; and in the second, France was

ordered to pay Mr Miailhe 50,000 French francs (FRF) in respect of

non-pecuniary damage and FRF 60,000 for costs and expenses (see the

Miailhe v. France (no. 1) judgments of 25 February 1993, Series A

no. 256-C, and 29 November 1993, Series A no. 277-C).

B. The administrative tax-inspection proceedings

9. On 4 March 1983 the National Head Office for Tax Investigations

sent the applicant notice of a full audit of his overall tax position

in respect of his income for the years 1979, 1980, 1981 and 1982.

Since Mr Miailhe regarded himself as being resident for

tax purposes in the Philippines, and accordingly not under an

obligation to pay tax to the French State, the Revenue asked him to

produce copies of his tax assessment notices in the Philippines and

documents giving details of all bank accounts in his name both in

France and abroad.

On 20 April 1983 Mr Miailhe replied that it was impossible for

him to forward some of the documents that had been kept by the customs

and which he had asked to have returned to him.

10. During May 1983 the tax inspector exercised the right of

inspection provided in Articles L.81 et seq. of the

Code of Tax Procedure and Article 64A of the Customs Code.

At the offices of his customs colleagues he examined the

9,478 documents that had been kept and classified by the customs

authorities and made copies of 1,200 to 1,300 of them.

11. On 9 February 1984 the tax inspector asked the Philippine

authorities for administrative assistance as provided for in Article 26

of the Franco-Philippine Tax Convention of 9 January 1976 "for the

avoidance of double taxation and prevention of fiscal evasion in

relation to income tax" (see paragraph 27 below).

On 21 March 1985 he inspected 41 sheets concerning returns and

annexes of the applicant and his mother for the years 1980 and 1982,

27 sheets concerning returns, appended financial statements and

certificates from the accountant of the AMIBU company managed by the

applicant in respect of the years 1979, 1980 and 1981, and three sheets

relating to a provisional accounting statement and a bank

reconciliation as at 15 September 1982.

These documents reached the Revenue's administrative

headquarters in Paris on 8 November 1984.

12. At the end of the tax audit four supplementary assessments were

served on Mr Miailhe: on 22 December 1983 for the year 1979, on

4 December 1984 for the year 1980, on 19 February 1985 for the

year 1981 and on 12 March 1985 for the year 1982. The Revenue

subsequently amended the notices in respect of the years 1979, 1980 and

1981, once on 16 July 1985, in the light of comments by the applicant,

and again on 8 November 1985, to correct erroneous reasons.

13. The relevant documents to be studied for each category of

proceedings - administrative, tax and criminal - were not all the same,

since different tax years and bases of assessment were involved, as

were failures to make returns and real-property and agricultural taxes

distinct from the general income tax to which the dispute over tax

residence related more particularly.

C. Appeals against the assessments to the administrative courts

14. Mr Miailhe challenged the supplementary tax assessments for the

years 1979-82 in the administrative courts, which have jurisdiction in

tax matters, by lodging an appeal founded partly on the non-adversarial

nature of the Revenue's preparation of the case against him.

In a judgment of 12 December 1991 the Bordeaux Administrative

Court held that the applicant had not proved that he had expressly

asked the Revenue to produce the documents on which it had allegedly

based the assessments for the years 1980, 1981 and 1982 and ordered

further inquiries on this point. As to the assessment raised for the

year 1979, on the other hand, the court found that the Revenue had

failed to accede to an application for production made by the

applicant's lawyer and accordingly remitted the additional tax sought

from the applicant in the category of income from movable assets and

in respect of income from undetermined sources for that year. An

appeal by the Minister for the Budget regarding the remission of tax

granted for the single year 1979 was dismissed by the

Bordeaux Administrative Court of Appeal.

An appeal on points of law against the Administrative Court's

judgment is pending before the Conseil d'Etat. The

Administrative Court has not yet ruled on the merits as regards the

supplementary tax assessments for the years 1980, 1981 and 1982.

15. In other proceedings brought against the Revenue by the

AMIBU company, managed by the applicant, the Bordeaux Administrative

Court of Appeal found that the tax assessment challenged by the company

was based in part on documents seized by the customs in circumstances

that had been held to be contrary to Article 8 of the Convention

(art. 8). In a judgment of 15 June 1995 it allowed the company's

application for remission of tax as follows:

"While the unlawfulness of the seizure, in proceedings brought

under different legislation, of documents on the basis of

which the Revenue, exercising its right of inspection,

assessed the taxes has no effect on the lawfulness of the

tax proceedings, it is such as to deprive those documents of

any probative value, including inasmuch as they revealed to

the Revenue that the taxpayer was in a position to have his

tax assessed by the Revenue of its own motion. Where an

international judicial body set up by an international treaty

or agreement that has been lawfully ratified or approved has

ruled that the seizure of documents did not comply with the

said treaty or agreement, the court having jurisdiction in

tax matters must regard the seized documents as having no

probative value ..."

D. The criminal proceedings for tax evasion

16. On 15 April 1986 the Tax Offences Board ("the CIF") gave

approval for a complaint to be lodged seeking the imposition of

criminal tax penalties, pursuant to Article L.228 of the

Code of Tax Procedure (see paragraph 29 below).

In consequence, the Department of Revenue lodged a complaint,

together with an application to join the proceedings as a civil party,

against the applicant for tax evasion in respect of the years 1981 and

1982. It accused him of not having made any general tax return for

1981 and of having understated his agricultural income for 1982.

17. The Revenue annexed to its complaint some of the documents

given to it by the customs authorities. It did not at that juncture

append any of the documents forwarded by the Philippine authorities,

although the tax inspector's summary report that had been placed in the

file of the judicial investigation mentioned the correspondence between

the French and the Philippine authorities.

The investigating judge raised this point with the

tax inspector, who referred back to his central authorities and

subsequently told the judge that his authorities had hesitated to

produce in criminal proceedings documents which the

ordinary judicial authorities could not have procured for themselves.

At the judge's request, the inspector added to the file the documents

from the Philippines provided by his authorities, that is to say the

only documents concerning Mr Miailhe in respect of the offences

charged. The documents not placed in the file related either to

Mrs Miailhe and the AMIBU company - and neither of these was implicated

- or, in respect of the defendant, to the years 1980 and 1982, which

the proceedings for failure to make a tax return were not concerned

with.

18. On 6 May 1988 the investigating judge committed the applicant

for trial at the Bordeaux Criminal Court on a charge of having

fraudulently evaded, in part, assessment and payment of income tax for

the years 1981 and 1982 "by having failed to make certain

category-specific returns (in respect of income from movable assets,

'RCM', and industrial and commercial profits, 'BIC', Article 92 of the

General Tax Code) within the prescribed time-limits (in respect of

1981) and by having omitted from his returns (for 1981 and 1982) part

of his income from farming and real property, thus deliberately

concealing in his overall returns part of the sums liable to tax".

1. In the Bordeaux Criminal Court

19. Before any defence on the merits Mr Miailhe filed submissions

in which he sought to have the Revenue's complaint and the judicial

investigation proceedings declared null and void. He argued that the

customs seizures were null and void, that the adversarial principle had

not been respected by the Revenue and that the latter, in particular

during the judicial investigation, had withheld documents from the

judicial authorities and made false statements.

He himself filed certain documents that he had been able to

obtain from the Philippine authorities: the French tax authorities'

request to their Philippine opposite numbers, the Philippine

authorities' reply indicating that Mr and Mrs Miailhe had been resident

for tax purposes in the Philippines for 1980 and 1982, information

concerning the AMIBU company, untranslated bank documents, a

certificate by a registered accountant to the effect that Mr Miailhe's

tax return for 1982 had been made in good faith, a statement of his

income and expenditure for 1982, an amortisation table for 1981, a

statement of his income for 1981, the tax return he made in the

Philippines for 1981 and a tax return for 1982.

20. On 11 January 1989 the Criminal Court gave its judgment.

It began by dismissing all Mr Miailhe's preliminary objections.

As regards the first of those, it pointed out that on an appeal

by the applicant concerning the lawfulness of the seizures, the

Court of Cassation had upheld a judgment of the Paris Court of Appeal

in which that court had said that "the customs officials did not exceed

their powers and that there was no manifest, deliberate violation of

a personal freedom"; the customs seizures were covered by paragraph 2

of Article 8 of the Convention (art. 8-2) and the seized documents had

been lawfully made available to the Revenue.

It dealt with the second objection as follows:

"... on account of the principle that tax and

criminal proceedings are independent, the [criminal] courts

cannot rule on the nullity of tax proceedings. The only

exception to this principle is provided in Article L.47 of the

Code of Tax Procedure ... This Article provides that

proceedings shall be null and void where a notice of audit

does not mention that the taxpayer has the right to be

assisted by an adviser of his own choosing. As the defendant

does not dispute that this information was given to him, he

cannot rely on any other argument in order to obtain from the

criminal courts a declaration that the tax proceedings are

null and void."

As to the last objection, the court found, in the light of the

documents produced by the applicant at the hearing, that the letters

and documents exchanged by the French and Philippine authorities were

not in the file and it held:

"... The failure to place in the file some documents of

importance to the accused's defence, which had been sought in

their entirety by the investigating judge, amounts to a breach

of his rights.

That breach of the rights of the defence cannot, however, have

the consequence that the earlier proceedings were a nullity.

By producing these documents at the hearing, the accused was

able to explain their content and have them submitted to

adversarial argument. The breach of his rights did not

therefore have the effect of prejudicing his interests."

21. Ruling on the question whether Mr Miailhe was under an

obligation to make a return in France of his category-specific income

and whether he had with fraudulent intent evaded paying that tax for

the year 1981, the court held that the applicant was resident for

tax purposes in France at the time, both under French law and under the

Franco-Philippine Convention. In order to determine whether there had

been fraudulent intent, it relied among other things on a manuscript

document written by Mr Miailhe that was reproduced in the

tax-audit report and on the applicant's conduct in producing only at

the hearing his full return for 1981, which had been submitted to the

tax inspector with the figures whited out.

As to the undeclared income from farming and real property for

the years 1981 and 1982, the court found that the applicant had lent

money to himself through the bank accounts of his companies and

subsequently deducted from his agricultural income the interest charges

and exchange losses. He thus realised a tax loss for those years and

legally exported his capital by means of the repayments.

The court concluded that Mr Miailhe had personally put in place

fraudulent arrangements designed to evade liability to and payment of

tax in France. It sentenced him to three years' imprisonment, of which

six months were to be served immediately, and a fine of FRF 150,000.

Extracts from the judgment were ordered to be published in the

French Official Gazette and in the daily newspapers Le Monde, Le Figaro

and Sud-Ouest.

2. In the Bordeaux Court of Appeal

22. The defendant appealed and in the Bordeaux Court of Appeal

reiterated the three objections of nullity already raised, stating as

to the last of them that:

"... although he ha[d] been able to obtain a number of

withheld documents by seeking them from the

Philippine authorities, he ha[d] been unable to inspect most

of the documents attached to the correspondence, he still

[did] not know what they contained and ha[d] been unable to

give explanations concerning them; in particular, he ha[d] not

been able to refer to the withheld documents before the

Tax Offences Board; ..."

23. The Court of Appeal gave judgment on 7 June 1989.

It joined the objections to the merits and dismissed them,

referring "in the case of the first two applications for a declaration

of nullity that were reiterated but not strongly argued" to the

reasoning of the Criminal Court. The last objection, concerning the

withholding of documents and the false statements, it dismissed as

follows:

"These documents should have been handed over but provide no

information that could have any bearing on the decision of the

court below or of this court: for the most part they did not

concern Miailhe or the period in question, 1981; ... the

documents not filed were of no relevance to the case and, at

all events, were produced at the hearing in the court below

and examined adversarially on that occasion; the same

reasoning, except for the adversarial examination of the

documents, applies to the Tax Offences Board; moreover, at

first instance no application was made for a declaration that

the proceedings before the Board were null and void.

As regards the very large number of other documents handed

over but not placed in the file, their existence, alleged by

[the applicant], has not been proved and they cannot be taken

into account in any way."

24. On the merits the court held, as to the first offence of

failure to declare income for 1981, that the applicant was a

French resident for tax purposes under French law alone, as the

Franco-Philippine Convention did not operate in the instant case since

there was no conflict between the two sets of national legislation.

The court pointed out that the Revenue's calculations had been based

on documents signed in France by Mr Miailhe, which it listed. The

court held that he had had fraudulent intent from a scrutiny of notes

by him that had been seized and were in the file and documents that he

had placed in it himself, which showed that notwithstanding his alleged

status as Philippine resident and citizen, he had not discharged his

obligation to declare his world income in the Philippines either.

The Court of Appeal, which upheld the Criminal Court's judgment

in its entirety, sentenced the defendant to three years' imprisonment,

of which ten months were to be served immediately, and a fine of

FRF 250,000.

3. In the Court of Cassation

25. Mr Miailhe lodged an appeal on points of law, which was

dismissed by the Court of Cassation (Criminal Division) on

18 March 1991.

The judgment read as follows:

"As to the second ground of appeal, based on the breach of

Article 8 (art. 8) of the ... Convention ...

...

The ground must therefore fail;

As to the third ground of appeal, based on a breach of ...

Article 6 (art. 6) of the ... Convention ...

...

Firstly, the accused merely raised, in the court of trial

before any defence on the merits, an objection of nullity

going to the lawfulness of the supplementary tax assessment

proceedings, which, as they are purely administrative, are

irrelevant to the criminal proceedings.

That being so, the first limb of the ground of appeal, which

raises for the first time before the Court of Cassation the

objection based on the alleged nullity of the proceedings

before the Tax Offences Board gave its opinion, is

inadmissible under Article 385 of the

Code of Criminal Procedure.

Secondly, as a ground for refusing to allow the objection that

the ordinary criminal proceedings were a nullity on account of

the Revenue's withholding of documents useful to the defence,

the Court of Appeal noted that under the

Franco-Philippine Tax Convention of 9 January 1976, the

French authorities sought administrative assistance from the

Philippine authorities. The accused maintained that

71 documents were sent to the French authorities in this way.

The accused, who had been able to obtain some of these

documents, produced them at the hearing in the Criminal Court.

After studying these documents, the Court of Appeal found that

they were of no relevance to the case, most of them not

concerning [William] Miailhe or the period referred to in the

charge. At all events, they were produced at the hearing in

the Criminal Court and examined adversarially on that

occasion. The Court of Appeal added that the existence of the

other documents allegedly sent and not placed in the file had

not been proved.

In ruling as it did, the Court of Appeal, which based its

judgment only on the documents produced at the hearing,

provided a legal basis for its decision.

The second limb of the ground of appeal must likewise fail."

26. The applicant was committed to prison on 18 March 1991 and was

released on licence on 21 July of the same year. He was placed under

judicial supervision until 8 November 1991.

II. Relevant international and domestic law

A. The Franco-Philippine Convention of 9 January 1976

27. At Kingston on 9 January 1976 the French and

Philippine Governments signed a convention "for the avoidance of double

taxation and prevention of fiscal evasion in relation to income tax".

Article 26 ("Exchange of information") provides:

"1. The competent authorities of the Contracting States shall

exchange such information (being information which is at their

disposal under their respective tax administrative practices

and those which may be procured by special inquiry) as is

necessary for the carrying out of this Convention and of the

domestic laws of the Contracting States concerning taxes

covered by this Convention, in particular, for the prevention

of fraud or evasion of such taxes. Any information so

exchanged shall be treated as secret and shall not be

disclosed to any persons or authorities other than those

(including a court or administrative body) concerned with the

assessment, collection, or enforcement in respect of taxes

which are the subject of the Convention or with the

prosecution, claims and appeals relating thereto.

2. In no case shall the provisions of paragraph 1 be

construed so as to impose on one of the Contracting States the

obligation:

(a) to carry out administrative measures at variance with the

laws or the administrative practices of that or of the other

Contracting State;

(b) to supply particulars which are not obtainable under the

laws or in the normal course of the administration of that or

of the other Contracting State;

(c) ..."

B. The Code of Tax Procedure

28. Administrative tax-inspection proceedings are governed by the

Code of Tax Procedure. By Article L.47 of that code,

"A full audit of the overall tax position of a natural person

in regard to income tax or an audit of accounts cannot be

undertaken unless the taxpayer has been informed of it by the

sending or handing over of a notice of audit.

Such a notice must specify the years in respect of which the

audit is to be made and expressly mention, failing which the

proceedings will be null and void, that the taxpayer has the

right to be assisted by an adviser of his own choosing.

In the event of an unannounced inspection for the purpose of

identifying physical features of the business or establishing

the existence and state of the books, the notice of an audit

of the accounts shall be handed over at the beginning of the

search operation. A thorough scrutiny of the books may only

begin after the taxpayer has been given a reasonable time to

seek the assistance of an adviser."

The courts with jurisdiction in tax matters, which in the case

of direct taxes are the administrative courts, are competent in

principle to deal with irregularities in administrative tax-inspection

proceedings. They ensure that the safeguards afforded to taxpayers are

complied with. Thus "a final decision by a criminal court cannot

prevent a taxpayer from arguing before a court with jurisdiction in

tax matters that the audit which gave rise to the impugned

tax assessments was irregular" (Conseil d'Etat, 9 April 1986,

no. 22691, Revue de jurisprudence fiscale, June 1986, no. 625).

29. Article L.228 of the Code of Tax Procedure provides:

"To be admissible, complaints seeking the imposition of

criminal penalties in respect of direct taxes, value-added tax

and other turnover taxes, registration fees, land registry

fees and stamp duty must be lodged by the administrative

authorities after approval from the Tax Offences Board.

The Board shall consider the cases submitted to it by the

Minister of Finance. The taxpayer shall be given notice of

the application to the Board, which shall invite him to send

it, within thirty days, any information it considers

necessary.

The Minister shall be bound by the Board's opinions."

The Revenue is not required by any provision of statute or of

regulations to institute criminal proceedings in respect of the

offences referred to in Article 1741 of the General Tax Code

(Conseil d'Etat, 5 November 1980, Droit fiscal 1981, p. 365).

The CIF was set up under the Act of 29 December 1977 in order

to afford taxpayers fresh safeguards and it is made up of

six senior members of the Conseil d'Etat (judges of the

administrative courts) and six senior members of the Court of Audit

(judges of the financial courts). Parliament absolutely excluded the

possibility of the CIF being a court of first instance. It refused to

allow the CIF's opinions to contain reasons, in order to avoid

influencing the ordinary courts. As long as there is no breach of due

process, a taxpayer accused of tax evasion may not challenge in the

criminal courts the lawfulness of the administrative proceedings which

took place prior to the CIF's favourable opinion; the criminal court

must only establish the existence and date of that opinion

(Court of Cassation, Criminal Division, 2 December 1985,

Recueil Dalloz Sirey ("DS") 1986, p. 489).

The only function of the criminal courts that hear tax-evasion

cases is to punish the offence. The Court of Cassation has held:

"... Criminal proceedings instituted under Article 1741 of the

General Tax Code and the administrative proceedings for

establishing the tax base and the scope of tax are in their

nature and purpose different and independent from each other

... the function of courts which try criminal cases under

Article 1741 is limited to determining whether the defendant

evaded or attempted to evade tax by reprehensible subterfuges

in respect of sums exceeding the statutory allowance."

(Criminal Division, 9 April 1970, DS 1970, p. 755)

Article L.47 provides that any breach of its provisions shall

entail a nullity of the proceedings "without any distinction being made

between administrative proceedings and criminal proceedings ... Since

the latter proceedings may be based on findings made by the inspectors

in the books and documents held by a taxpayer, compliance with the

requirements of [Article L.47] is an essential safeguard of the rights

of the defence, which it is for the criminal courts to ensure are

respected" (Court of Cassation, Criminal Division, 4 December 1978,

Venutolo, DS 1979, p. 90). However, "it is not within the jurisdiction

of the criminal courts to assess the lawfulness of the

tax proceedings ... The criminal courts' response to failure to comply

with the provisions of Article L.47, in that it departs from the

general principle of the separation of administrative and ordinary

courts, must be based on a strict construction and accordingly cannot

be extended beyond the cases to which the statute expressly meant to

limit it" (Court of Cassation, Criminal Division, 9 May 1983, DS 1983,

p. 621).

PROCEEDINGS BEFORE THE COMMISSION

30. Mr Miailhe applied to the Commission on 16 September 1991.

Relying on Article 6 of the Convention (art. 6), he complained firstly

of a breach of the principle of equality of arms during the

administrative phase of the proceedings, before the CIF gave its

opinion, and secondly of a breach of the rights of the defence during

the trial.

31. The Commission declared the application (no. 18978/91)

admissible on 6 April 1994. In its report of 11 April 1995

(Article 31) (art. 31), it expressed the opinion by eleven votes to two

that there had been a breach of Article 6 para. 1 (art. 6-1). The full

text of the Commission's opinion and of the dissenting opinion

contained in the report is reproduced as an annex to this judgment (1).

_______________

Note by the Registrar

1. For practical reasons this annex will appear only with the printed

version of the judgment (in Reports of Judgments and

Decisions 1996-IV), but a copy of the Commission's report is obtainable

from the registry.

_______________

FINAL SUBMISSIONS TO THE COURT BY THE GOVERNMENT

32. In their memorial the Government asked the Court to "dismiss

all the applicant's complaints".

AS TO THE LAW

ALLEGED VIOLATION OF ARTICLE 6 PARA. 1 OF THE CONVENTION (art. 6-1)

33. Mr Miailhe complained that he had not had access to all the

documents held by the Revenue and that this had contravened the

principle of equality of arms during the administrative stage before

the Tax Offences Board (CIF) gave its opinion and had infringed the

rights of the defence during the criminal trial. He relied on

Article 6 para. 1 of the Convention (art. 6-1), which provides:

"In the determination of ... any criminal charge against him,

everyone is entitled to a ... hearing ... by an independent

and impartial tribunal ..."

A. The Government's preliminary objections

34. Before the Court the Government reiterated the three objections

they had already raised before the Commission. The first of these was

that the application was incompatible ratione materiae with the

Convention inasmuch as it related to the supplementary tax assessment

proceedings; the second, that domestic remedies had not been exhausted

in respect of the supplementary tax assessment proceedings and the

procedure of consulting the CIF; and the third, that the applicant was

not a victim in respect of the complaint that the documents seized by

the customs had not been produced.

They maintained, firstly, that the application contained

two separate complaints. The Court could not entertain the first of

these since it concerned the administrative supplementary tax

assessment stage and the Revenue's refusal to hand over documents

seized by the customs, a refusal which had allegedly made it impossible

for Mr Miailhe to meet the requests for proof or to respond to the

supplementary tax assessment notices. The Commission had, the

Government continued, unjustly dealt with the different sets of

proceedings together notwithstanding that they were independent of each

other. The administrative tax-inspection proceedings, disputes over

which came within the jurisdiction of the administrative courts that

were currently dealing with another identical complaint of Mr Miailhe's

concerning failure to produce documents during the supplementary tax

assessment proceedings, were not covered by Article 6 of the Convention

(art. 6); they were unconnected with the administrative proceedings

before the CIF, whose opinion, though certainly a mandatory

prerequisite for lodging a criminal complaint of tax evasion, was not

binding on the authorities and still less on the courts.

Furthermore, as the Court of Cassation had declared

inadmissible the ground of appeal relating to the procedure of

consulting the CIF, the Commission should have dismissed that part of

the application.

Lastly, the applicant had never sought to obtain any of the

documents seized by the customs relating to the years concerned in the

present case; he could not therefore complain of a refusal by the

authorities.

In short, the Court had to deal solely with the criminal

proceedings that ended with the Court of Cassation's judgment of

18 March 1991 whereby Mr Miailhe's conviction for tax evasion became

final.

35. According to the Delegate of the Commission, the CIF's

favourable opinion, without which no application could be made to the

criminal courts, had had a decisive bearing on the outcome of the

criminal trial, and Mr Miailhe had properly exhausted domestic remedies

by alleging in the national courts that all the proceedings that had

taken place before the CIF's opinion was given were null and void. The

proceedings before the CIF ought, under the Court's case-law in the

Imbrioscia v. Switzerland case (judgment of 24 November 1993, Series A

no. 275), to afford the safeguards required by Article 6 of the

Convention (art. 6).

36. The applicant stated that his complaint of failure to respect

the adversarial principle referred only to the procedure of consulting

the CIF, which was decisive for the subsequent criminal trial. He was

not for the time being attacking the proceedings relating solely to

tax, which had not yet been concluded in the administrative courts.

He added that he had continually asked for the seized documents.

37. The Court notes at the outset that the administrative

supplementary tax assessment proceedings are currently pending before

the Conseil d'Etat as the court which hears appeals on points of law

(see paragraph 14 above). To that extent, the objection of

incompatibility ratione materiae and, in so far as it relates to those

proceedings, the objection that domestic remedies have not been

exhausted are devoid of purpose.

The second objection, that domestic remedies have not been

exhausted as regards the procedure of consulting the CIF, has already

been considered by the Commission, which decided to dismiss it. The

Court sees no reason to depart from the Commission's analysis and

dismisses it likewise.

The third objection, that the applicant was not a victim, goes

to the merits of the case, and the Court therefore joins it to them.

B. The merits of the complaint

38. In Mr Miailhe's view, Article 6 (art. 6) had the consequence

that the Revenue could base its prosecutions only on information that

had been obtained fairly. Yet all the documents used against him to

determine his place of principal residence - which was at the heart of

the case - had been found among documents that had been seized

unlawfully and related to his or his family's private life. He had not

had access to them to defend himself during the administrative

proceedings, up to and including the CIF's decision.

Essentially, the applicant said he was the victim of the

consequences of the original breach of Article 8 of the Convention

(art. 8) found by the Court in the Miailhe (no. 1) judgment; the

prosecuting authorities had rendered his criminal conviction unfair,

based as it was almost exclusively on the documents seized by the

customs in circumstances held to have been contrary to the Convention.

Moreover, it was only at the stage of the judicial

investigation in the criminal proceedings, on an order from the

investigating judge, that the Revenue had placed in the file the

documents it had obtained from the Philippine authorities, and then

only some of them. Mr Miailhe had made an oral request to the judge

to obtain all these documents. While he had himself been able to

procure some of them from the Philippine authorities, he did not have

a key document, the letter in which the Philippine authorities

recognised his status as a Philippine resident.

By producing only the documents that supported its submissions

to the trial court, the Revenue had therefore deprived him of the means

of proving that he was resident for tax purposes in the Philippines and

infringed the rights of the defence. The trial court had, moreover,

acknowledged that documents had indeed been withheld.

39. The Commission accepted Mr Miailhe's submissions in substance.

It pointed out that he had not been in a position to make useful

submissions to the CIF on account of the refusal to hand over to him

prosecution documents obtained by the customs in circumstances

condemned by the European Court. Furthermore, the failure to produce

all the documents supplied by the Philippine authorities had deprived

the applicant of a fair trial.

40. In the Government's submission, the seized documents were

passed on by the customs to the Revenue in accordance with

national statutory provisions, and there was nothing at the time to

warrant regarding those documents as having been seized unlawfully

under French law. Moreover, in its judgment of 6 December 1995 in a

leading case the Conseil d'Etat by implication invalidated the approach

adopted in the applicant's favour by the

Bordeaux Administrative Court of Appeal (see paragraph 15 above), as

there was no "contamination by procedural defects" in respect of

documents lawfully made available to the Revenue by the

judicial authorities where the documents had subsequently been declared

null and void by the criminal courts. Furthermore, Mr Miailhe, the

Government said, had never sought production of the documents seized

in respect of the relevant proceedings and supplementary tax assessment

years. He had asked only for the documents from the

Philippine assistance file.

Contrary to the Commission's findings on the consultation

procedure prior to the lodging of a complaint for tax evasion, the

Government continued to maintain that the CIF was a non-judicial body.

It had been established to afford taxpayers new procedural safeguards

and limited the discretion previously enjoyed by the Minister, who was

now bound where an opinion was to the effect that a complaint should

not be lodged. It ruled on the advisability of prosecution, and its

opinion, which was purely advisory, could not in any circumstances be

regarded as tantamount to a judgment at first instance in regard to the

taxpayer.

As to the Philippine documents, the Government submitted that

their existence had never been concealed and that the only ones

relevant to the case had eventually been placed in the case file. The

courts, which had considered the reasons put forward by the authorities

to explain why they had not been produced, had based their judgments

on grounds of fact and of law.

The applicant had been able to present argument on the whole

of the file, which also contained other documents, and as he had

enjoyed equality of arms at the trial, he had not found himself at a

disadvantage.

41. The Court notes, firstly, that the documents seized by the

customs were passed on by them to the Revenue in May 1983

(see paragraph 10 above). Three years later the Revenue lodged a

complaint alleging tax evasion against Mr Miailhe, whom it accused of

having fraudulently omitted to declare his general income for 1981 and

of having understated his agricultural income for 1982

(see paragraph 16 above). It had already served

supplementary tax assessments on him, on 19 February 1985 in respect

of the year 1981 and on 12 March 1985 in respect of the year 1982 (see

paragraph 12 above).

The applicant now complained that he had not been given the

documents seized by the customs in breach of Article 8 of the

Convention (art. 8) so that he could contest the fraud charges by

proving that he was resident for tax purposes in the Philippines, both

during the criminal proceedings and during the preceding stage before

the CIF.

The Court points out that the Miailhe (no. 1) judgment on the

merits was given on 25 February 1993, that is to say after the customs

had passed documents on to the Revenue.

Of the private letters and personal documents referred to in

the judgment, those which were used for the judicial investigation in

the criminal proceedings had been annexed to the

summary tax-audit report filed by the Revenue in support of its

complaint (see paragraph 17 above). At the investigating judge's

request, the Revenue added documents from the Philippines

(see paragraph 17 above). All those documents were in the criminal

case file, to which the applicant had access.

42. Admittedly, that file did not contain all of the documents

provided by the Philippine authorities (see paragraphs 11 and 17

above). However, the documents relevant to the criminal case were

added to the file during the judicial investigation, at the request of

the investigating judge alone.

On this point the Criminal Court held (see paragraph 20 above):

"... The failure to place in the file some documents of

importance to the accused's defence, which had been sought in

their entirety by the investigating judge, amounts to a breach

of his rights.

[It] cannot, however, have the consequence that the earlier

proceedings were a nullity. By producing these documents at

the hearing, the accused was able to explain their content and

have them submitted to adversarial argument. The breach of

his rights did not therefore have the effect of prejudicing

his interests."

The Court of Appeal held (see paragraph 23 above):

"These documents should have been handed over but provide no

information that could have any bearing on the decision of the

court below or of this Court: for the most part they did not

concern Miailhe or the period in question, 1981; ... the

documents not filed were of no relevance to the case and, at

all events, were produced at the hearing in the court below

and examined adversarially on that occasion; the same

reasoning, except for the adversarial examination of the

documents, applies to the Tax Offences Board; ...

As regards the very large number of other documents handed

over but not placed in the file, their existence, alleged by

[the applicant], has not been proved and they cannot be taken

into account in any way."

By himself filing some of the documents from the Philippines

(see paragraph 19 above), Mr Miailhe had the possibility of

establishing the genuineness of his links with the Philippines. Such

evidence, however, was relevant only to the first offence of failure

to declare his general income for the year 1981, as the second offence

concerned agricultural and land income that he had declared in France.

43. It is not for the Court to substitute its view for that of the

national courts which are primarily competent to determine the

admissibility of evidence (see, among other authorities, the Schenk

v. Switzerland judgment of 12 July 1988, Series A no. 140, p. 29,

para. 46). It must nevertheless satisfy itself that the proceedings

as a whole were fair, having regard to any possible irregularities

before the case was brought before the courts of trial and appeal and

checking that those courts had been able to remedy them if there were

any (see the Imbrioscia judgment previously cited, p. 14, para. 38).

44. The Court points out that in the instant case the ordinary

courts did, within the limits of their jurisdiction, consider the

objections of nullity raised by Mr Miailhe and dismissed them.

Furthermore, it appears clearly from their decisions that they

based their rulings - among other things as to residence for tax

purposes - solely on the documents in the case file, on which the

parties had presented argument at hearings before them, thereby

ensuring that the applicant had a fair trial. The failure to produce

certain documents during the procedure of consulting the CIF or in the

criminal proceedings therefore did not infringe Mr Miailhe's defence

rights or the principle of equality of arms (see, among other

authorities, the Bendenoun v. France judgment of 24 February 1994,

Series A no. 284, p. 22, para. 53).

45. The Court notes, besides, that before the CIF the taxpayer may,

within thirty days of the application to it, communicate any

information he deems necessary.

When it is consulted on the advisability of lodging a complaint

for the offences referred to in Article 1741 of the General Tax Code,

the CIF gives an opinion which is binding on the Minister

(Article L.228 of the Code of Tax Procedure - see paragraph 29 above).

The criminal courts - the Criminal Court and the Court of

Appeal - have unfettered discretion to assess the facts of an alleged

fraud and may acquit.

The fact that there are no adversarial proceedings before the

CIF gives its opinion may in some cases give rise to a fear that the

taxpayer will find himself in a more difficult position. Nevertheless,

only the preliminary intervention of an advisory body is concerned.

In the instant case there was a judicial investigation and no direct

summons.

Furthermore, the criminal proceedings that were set in motion

following the Revenue's complaint were conducted at two levels of

jurisdiction - first instance and appeal - and this enabled Mr Miailhe,

to whom it was further open to lodge an appeal on points of law, to

present argument on the prosecution evidence and the charges against

him.

46. In conclusion, the proceedings in issue, taken as a whole, were

fair. There has therefore been no breach of Article 6 para. 1

(art. 6-1).

FOR THESE REASONS, THE COURT UNANIMOUSLY

1. Holds that the objection of incompatibility ratione materiae

with the Convention and the objection that domestic remedies

have not been exhausted, in so far as the latter relates to

the administrative supplementary tax assessment proceedings,

are devoid of purpose;

2. Dismisses the objection that domestic remedies have not been

exhausted as to the procedure of consulting the Tax Offences

Board;

3. Joins to the merits the objection that the applicant is not a

victim and dismisses it;

4. Holds that there has been no breach of Article 6 para. 1 of

the Convention (art. 6-1).

Done in English and in French, and delivered at a public

hearing in the Human Rights Building, Strasbourg, on 26 September 1996.

Signed: Rudolf BERNHARDT

President

Signed: Herbert PETZOLD

Registrar