EHRM, 12-12-2006, nr. 13378/05

The Government further contended in the alternative that, if the applicants had an arguable complaint under the Convention, they could and should have brought a claim for a declaration of incompatibility under section 4 of the 1998 Act (see paragraph 21 above).

The applicants were both currently alive and neither had yet incurred any liability to inheritance tax. Since no pecuniary loss had been suffered, the Court could not make a pecuniary award in their favour, and would, at most, make a declaration that there had been a violation of the applicants' Convention rights. If a declaration by this Court would constitute just satisfaction for any breach of the applicants' rights, a declaration of incompatibility by the High Court should similarly be regarded as an effective remedy.

The Government argued that, consistently with the Court's approach and with the generally accepted principles of international law, they did not have to demonstrate either

It was sufficient, for Article 35 § 1 to be engaged, that there was an available domestic remedy with a realistic prospect of success which the applicants had failed to pursue.

They noted that in Hobbs v. the United Kingdom (dec.), no. 63684/00, 18 June 2002, the Court had found that, in the circumstances of that case, a declaration of incompatibility under section 4 of the 1998 Act was not sufficiently certain to be capable of providing redress, such as to require exhaustion by the applicant, on the grounds that:

Hobbs, however, was a decision on its particular facts and could not be regarded as authority for any general proposition that a declaration of incompatibility under section 4 of the 1998 Act would never be capable of providing an effective remedy. In particular, the applicant in Hobbs had already suffered a financial disadvantage for which he was seeking monetary compensation. The present application was different because neither applicant had yet suffered any financial disadvantage. Moreover, the decision in Hobbs had inevitably been based on the extremely limited evidence and submissions then before the Court. Since the Court had now been provided with more information about the domestic law, in particular the ministerial statements set out in paragraph 23 above, it was both possible and appropriate for it to revisit its previous decision.

The applicants referred to the Commission's case-law to the effect that the remedies an applicant is required to make use of must not only be effective but also independent of discretionary action by the authorities (for example, Montion v. France, no. 11192/84, Commission decision of 14 May 1987, Decisions and Reports (DR) 52, p. 227 and G. v. Belgium, no. 12604/86, Commission decision of 10 July 1991, DR 70, p. 125). They argued that a declaration of incompatibility could not be regarded as an effective remedy because the procedures to change the law could not be initiated by those who had obtained a declaration or enforced by any court or organ of State. The Court had accepted a similar argument in Hobbs and also in Dodds v. the United Kingdom (dec.), no. 59314/00, 8 April 2003, Walker v. the United Kingdom (dec.), no. 37212/02, 16 March 2004, Pearson v. the United Kingdom (dec.), no. 8374/03, 27 April 2004 and, finally, B. and L. v. the United Kingdom (dec.), no. 36536/02, 29 June 2004, where the Government had made submissions almost identical to those in the present case.

The Court is very much aware of the subsidiary nature of its role and that the object and purpose underlying the Convention, as set out in Article 1—that rights and freedoms should be secured by the Contracting State within its jurisdiction—would be undermined, along with its own capacity to function, if applicants were not encouraged to pursue the means at their disposal within the State to obtain available redress (see the B. and L. decision, cited above). The rule of exhaustion of domestic remedies referred to in Article 35 § 1 of the Convention thus obliges applicants to use first the remedies that are normally available and sufficient in the domestic legal system to enable them to obtain redress for the breaches alleged. The existence of the remedies must be sufficiently certain, in practice as well as in theory, failing which they will lack the requisite accessibility and effectiveness (Akdivar and Others v. Turkey, no. 21893/93, §§ 65–67, Reports 1996-IV; Aksoy v. Turkey, no. 21987/93, §§ 51–52, Reports of Judgments and Decisions 1996-VI).

The Government argue that the remedy under the Human Rights Act allowing an applicant to seek a declaration from a domestic court that legislation is incompatible with the Convention is sufficiently certain and effective for the purposes of Article 35 § 1. Such a declaration creates a discretionary power in the relevant government minister to take steps to amend the offending provision, either by a remedial order or by introducing a Bill in Parliament.

The Court found in its Hobbs decision (cited above) that this remedy was not sufficiently effective, essentially for two reasons: first, because a declaration was not binding on the parties to the proceedings in which it was made; and, secondly, because a declaration provided the appropriate minister with a power, not a duty, to amend the offending legislation by order so as to make it compatible with the Convention. Moreover, the minister concerned could exercise that power only if he considered that there were ‘compelling reasons’ for doing so.

The Court considers that the instant case is distinguishable from Hobbs, where the applicant had already suffered financial loss as a result of the discrimination about which he complained but could not have obtained monetary compensation through the grant of a declaration of incompatibility. It is closer to B. and L., where there had been no financial loss, although those applicants had already been prevented by the impugned legislation from marrying each other. In the present case, as inB. and L., it is arguable that, had a declaration of incompatibility been sought and made, the applicants might have been able to benefit from a future change in the law.

However, it remains the case that there is no legal obligation on the minister to amend a legislative provision which has been found by a court to be incompatible with the Convention. The Court notes that, according to the information provided by the Government, by August 2006 such amendments had occurred in ten out of the thirteen cases where a declaration had been finally issued by the courts, and in the remaining three, reforms were pending or under consideration (see paragraph 23 above). It is possible that at some future date evidence of a long-standing and established practice of ministers giving effect to the courts' declarations of incompatibility might be sufficient to persuade the Court of the effectiveness of the procedure. At the present time, however, there is insufficient material on which to base such a finding.

The Court does not consider that these applicants could have been expected to have exhausted, before bringing their application to Strasbourg, a remedy which is dependent on the discretion of the executive and which the Court has previously found to be ineffective on that ground.

It therefore rejects the Government's second objection to admissibility.

In the alternative, the Government submitted that the application was inadmissible under the six-months rule. The discrimination of which the applicants complained arose when an exemption for spouses was first introduced by the Finance Act 1975, and it first impacted on the applicants when they began co-habiting.

The applicants contended that the violation about which they complained, arising out of legislative measures, was continuing, so that the six-months time-limit did not apply (see Norris, cited above). Further and in the alternative, the discrimination has intensified since the coming into force of the 2004 Act on 5 December 2005.

The Court repeats that it has found the applicants to be directly affected by a provision of domestic law, given the high probability that it will automatically apply to the survivor following the first sister's death. In these circumstances and since there is no domestic remedy which the applicants can be required to exhaust, the six-months time-limit does not apply.

The Court considers that the application as a whole raises questions of law which are sufficiently serious that their determination should depend on an examination of the merits. No other ground for declaring it inadmissible has been established. The application must therefore be declared admissible. Pursuant to Article 29 § 3 of the Convention, the Court will now consider the merits of the applicants' complaint.

The Government emphasised that there was no right under Article 1 of Protocol No. 1 to acquire possessions; in the Court's case-law on domestic inheritance laws, it had consistently held that, before the relevant death occurred, the presumptive heir had no property rights and that his or her hope of inheriting in the event of death could not therefore amount to a ‘possession’ (see Marckx, § 50; and also Inze v. Austria, judgment of 28 October 1987, Series A no. 126, § 38; Mazurek v. France, no. 34406/96, §§ 42–43, ECHR 2000-II). Since each applicant was still alive and her complaint, as surviving sister, concerned the potential future impact of domestic law on their power to inherit, Article 1 of Protocol No. 1 did not apply, and nor therefore did Article 14. The complaint made by each sister as the prospective first-to-die was also outside the ambit of Article 1 of Protocol No. 1, because there was no restriction under domestic law on the applicants' ability to dispose of their property, only a potential liability to tax arising after death, when the deceased would no longer be in a position to enjoy her former possessions.

In the alternative, if the Court were to find that the complaint fell within the ambit of Article 1 of Protocol No. 1, the Government denied that domestic law gave rise to any discrimination contrary to Article 14.

First, the applicants could not claim to be in an analogous situation to a couple created by marriage or civil partnership (‘a couple’). The very essence of their relationship was different, because a couple chose to become connected, whereas for sisters it was an accident of birth. In choosing to become a couple by entering into a formal relationship recognised by law, the partners also made a financial commitment to each other, and agreed to give the courts powers to divide their property and to order one partner to provide for the other on separation. The special legal status of parties to a marriage had been recognised by the Commission in Lindsay v. the United Kingdom, no. 11098/84, Commission decision of 11 November 1986, Decisions and Reports 49, p. 181 and by the Court in Shackell v. the United Kingdom (dec.), no. 45851/99, 27 April 2000. No such financial commitment arose by virtue of the relationship between siblings.

The Government accepted that, if the applicants could be described as in an analogous position to a couple, there was a difference in treatment as regards exemption from inheritance tax. However, this difference in treatment did not exceed the wide margin of appreciation enjoyed by the State, both in the field of taxation and when it came to financial measures designed to promote marriage (see Lindsay and Shackell).

The policy underlying the inheritance tax concession given to married couples was to provide the survivor with a measure of financial security, and thus promote marriage. The purpose of the 2004 Act was to provide same-sex couples with a formal mechanism for recognising and giving legal effect to their relationships, and the inheritance tax concession for civil partners served the same legitimate aim as it did in relation to married couples. Given the development of society's attitudes, the same arguments justified the promotion of stable, committed same-sex relationships. That objective would not be served by extending similar benefits to unmarried members of an existing family, such as siblings, whose relationship was already established by their consanguinity, and recognised by law. The difference in treatment thus pursued a legitimate aim.

The difference in treatment was, moreover, proportionate, given that the applicants, as siblings, had not undertaken any of the burdens and obligations created by a legally recognised marriage or civil partnership. If the Government were to consider extending the inheritance tax concession to siblings, there would be no obvious reason not to extend it also to other co-habiting family members. Such a change would have considerable financial implications, given that the annual income from inheritance tax was approximately GBP 2.8 billion.

The applicants argued that if, as they had previously argued, they could claim to be victims of discrimination, the fact that neither had yet died could not provide a separate and substantive defence. Unlike the applicants in Marckx, the present applicants were not complaining about a provision of the English law of inheritance and, the principle that the Convention does not guarantee the right to acquire possessions on intestacy or through voluntary disposition was irrelevant. In circumstances where it was effectively inevitable that there would be significant tax to pay by the surviving sister, the facts fell within the scope of Article 1 of Protocol No. 1, and Article 14 was thus also applicable.

The applicants could properly be regarded as being in a similar situation to a married or same-sex Civil Partnership Act couple. While it was true, as the Government had asserted, that many siblings were connected by nothing more than their common parentage, this was far from the case with the present applicants, who had chosen to live together in a loving, committed and stable relationship for several decades, sharing their only home, to the exclusion of other partners. Their actions in so doing were just as much an expression of their respective self-determination and personal development as would have been the case had they been joined by marriage or a civil partnership. The powers of the domestic courts to make property orders upon the breakdown of a marriage or civil partnership did not entail that the applicants were not in an analogous situation to such couples as regards inheritance tax. Moreover, the very reason that the applicants were not subject by law to the same corpus of legal rights and obligations as other couples was that they were prevented, on grounds of consanguinity, from entering into a civil partnership. The one significant difference between the applicants and a married couple was that the applicants, being sisters, would not lawfully be entitled to have a sexual relationship. This difference was not, however, relied upon by the Government, nor could it be, given that there was no requirement in the 2004 Act for those wishing to enter into a civil partnership to be in a sexual relationship with each other.

Given that, as the Government asserted, the purpose of the inheritance tax exemption for married and civil partnership couples was the promotion of stable and committed relationships, the denial of an exemption to co-habiting adult siblings served no legitimate aim. The mere fact of being sisters did not entail a stable, committed relationship, and only a small minority of adult siblings were likely to share the type of relationship enjoyed by the applicants, involving prolonged mutual support, commitment and co-habitation.

The applicants agreed with the Government that there was no obvious reason why, if the exception were granted to siblings, it should not also be extended to other family members who co-habit, but argued that this did not support a conclusion that the difference in treatment bore any relationship of proportionality to any legitimate aim. Such an exemption would, in fact, serve the policy interest invoked by the Government, namely the promotion of stable, committed family relationships among adults. Whilst the applicants accepted that the Court had no jurisdiction to dictate to the Government how best to remedy the discrimination, the amendments to the Civil Partnership Bill passed by the House of Lords (see paragraph 19 above) showed that it would be possible to construct a statutory scheme whereby two siblings or other close relations who had co-habited for a fixed number of years and chosen not to enter into a marriage or civil partnership could obtain certain fiscal rights or advantages. The Government's reliance on the margin of appreciation was misplaced in the light of the recognition given to the injustice faced by those in the applicants' position when the 2004 Act was passing through Parliament (ibid.). The applicants pointed out that the Government had been unable to provide an estimate of the loss of revenue which would flow from an inheritance tax exemption along the lines proposed in the House of Lords. They could not estimate the cost either, but pointed out that the lost revenue would have to be offset by the potential gains, for example, those flowing from an increased tendency, encouraged by the exemption, of close relations to care for disabled or elderly relatives, thus avoiding the need for State-funded care.