EHRM, 29-04-2008, nr. 13378/05

The case originated in an application (no. 13378/05) against the United Kingdom of Great Britain and Northern Ireland lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (‘the Convention’) by two British nationals, Ms J.M. and Ms S.D. Burden (‘the applicants’), on 29 March 2005.

The applicants were represented by Ms E. Gedye of Wood, Awdry and Ford, a solicitor practising in Chippenham. The United Kingdom Government (‘the Government’) were represented by their Agent, Mr J. Grainger, Foreign and Commonwealth Office.

The applicants complained under Article 14 taken in conjunction with Article 1 of Protocol No. 1 that, when the first of them died, the survivor would be required to pay inheritance tax on the dead sister's share of the family home, whereas the survivor of a married couple or a homosexual relationship registered under the Civil Partnership Act 2004, would be exempt from paying inheritance tax in these circumstances.

The application was allocated to a Chamber within the Fourth Section of the Court (Rule 52 § 1 of the Rules of Court), composed of Judges Casadevall, Bratza, Bonello, Traja, Pavlovschi, Garlicki and Mijović, together with T.L. Early, Section Registrar. On 30 June 2005, the Chamber President decided to give the case priority under Rule 41 of the Rules of Court and that the admissibility and merits should be examined jointly, in accordance with Article 29 § 3 of the Convention and Rule 54A. On 12 December 2006, the Chamber unanimously declared the application admissible and delivered a judgment in which it held, by four votes to three, that there had been no violation of Article 14 of the Convention taken in conjunction with Article 1 of Protocol No. 1.

On 23 May 2007, pursuant to a request by the applicants dated 8 March 2007, the Panel of the Grand Chamber decided to refer the case to the Grand Chamber in accordance with Article 43 of the Convention.

The composition of the Grand Chamber was determined according to the provisions of Article 27 §§ 2 and 3 of the Convention and Rule 24 of the Rules of Court.

The applicant and the Government each filed written observations. In addition, third-party comments were received from the Belgian and Irish Governments on 28 August 2007.

A hearing took place in public in the Human Rights Building, Strasbourg, on 12 September 2007.

There appeared before the Court:

The Court heard addresses by Mr Pannick and Mr Crow, as well as their answers to questions put by Judge Zupančič.

The applicants complained under Article 1 of Protocol No. 1, taken in conjunction with Article 14 of the Convention, that when one of them died, the survivor would face a significant liability to inheritance tax, which would not be faced by the survivor of a marriage or a civil partnership.

Article 1 of Protocol No. 1 provides:

Article 14 of the Convention provides:

The Grand Chamber has reached the same conclusion as the Chamber but by a somewhat different route. As appears from the judgment (paragraph 47), the Chamber left open the question whether the applicants, as siblings, could claim to be in an analogous position to a married couple or to those in a civil partnership, holding that any difference of treatment was in any event reasonably and objectively justified, regard being had to the wide margin of appreciation enjoyed by States in the area of taxation. The Grand Chamber has preferred to found its decision on the lack of analogy between those who have entered into a legally binding marriage or civil partnership agreement, on the one hand and those, such as the applicants, who are in a long term relationship of co-habitation, on the other.

While I fully share the view of the majority of the Grand Chamber that there has been no violation of Article 14 of the Convention taken in conjunction with Article 1 of Protocol No. 1, I continue to have a preference for the reasoning of the Chamber in arriving at this conclusion.

I agree with the majority in finding that there has been no violation of Article 14 of the Convention taken in conjunction with Article 1 of Protocol No. 1. However, I prefer different reasoning.

When Article 14 is applied, in essence two questions must be answered: first, whether there is a difference in treatment of persons in relevantly similar or analogous situations; secondly, if this is the case, whether the difference in treatment is justified.

The majority has in paragraphs 62–65 of the judgment found that cohabiting sisters cannot be compared for the purposes of Article 14 of the Convention to married or civil partnership couples. Therefore they are not in a relevantly similar or analogues situation and no breach of Article 14 has occurred.

The reasoning of the majority, as presented in paragraphs 62–65 of the judgment, is in my view flawed by the fact that it is based on comparison of factors of a different nature and which are not comparable from a logical point of view. It is to a large extent based on reference to the specific legal framework which is applicable to married couples and civil partnership couples but which does not, under the present legislation, apply to the applicants as cohabiting sisters. However, although in the strict sense the complaint only relates to a difference in treatment as concerns inheritance tax, in the wider context it relates, in essence, to the facts that different rules apply and that consanguinity between the applicants prevents them from entering into a legally binding agreement similar to marriage or civil partnership, which would make the legal framework applicable to them, including the relevant provisions of the law on inheritance tax.

I believe that in these circumstances any comparison of the relationship between the applicants, on the one hand, and the relationship between married couples and civil partnership couples, on the other, should be made without specific reference to the different legal framework applicable, and should focus only on the substantive or material differences in the nature of the relationship as such. Despite important differences, mainly as concerns the sexual nature of the relationship between married couples and civil partner couples, when it comes to the decision to live together, closeness of the personal attachment and for most practical purposes of daily life and financial matters, the relationship between the applicants in this case has, in general and for the alleged purposes of the relevant inheritance tax exemptions in particular, more in common with the relationship between married or civil partnership couples, than there are differences between them. Despite this fact, the law prohibits them from entering into an agreement similar to marriage or civil partnership and thus take advantage of the applicable rules, including the inheritance tax rules. That being so, I am not convinced that the relationship between the applicants as cohabiting sisters cannot be compared with married or civil partner couples for the purposes of Article 14 of the Convention. On the contrary there is in this case a difference in treatment of persons in situations which are, as a matter of fact, to a large extent similar and analogous.

The question then arises whether the difference in treatment is objectively and reasonably justified. In substance I agree with the reasoning offered in paragraphs 59 – 61 of the Chamber judgment on this point, which are cited in paragraph 47 of this judgment, namely that the difference in treatment for the purposes of granting of inheritance tax exemptions was reasonably and objectively justified.

In this regard it should also be borne in mind that the institution of marriage is closely linked to the idea of the family, consisting of a man and a woman and their children, as one of the cornerstones of the social structure in the United Kingdom, as well as in the other Member States of the Council of Europe. On the basis of this assumption, a whole framework of legal rules, of both a private and public nature, has come into existence over a long period of time. These rules relate to the establishment of marriage and mutual rights and obligations between spouses in both personal and financial matters (including inheritance) and in relation to their children, if any, as well as with regard to taxes (including inheritance taxes), social security, and other matters. The applicability of such rules, or similar rules, in many of the Member States have gradually, step by step, and mostly upon the initiative of the legislature in the respective countries, been extended to cover relationships other than those traditionally falling under marriage in the formal legal sense, namely civil partnership couples (including individuals of the same sex), and thereby the legislator has responded to new social realities and changing moral and social values. However, it is important to have in mind that each and every step taken in this direction, positive as it may seem to be from the point of view of equal rights, potentially has important and far reaching consequences for the social structure of society, as well as legal consequences, i.e. for the social security and tax system in the respective countries. It is precisely for this reason that it is not the role of this Court to take the initiative in this matter and impose upon the Member States a duty further to extend the applicability of these rules with no clear view of the consequences that it may have in the different Member States. In my view it must fall within the margin of appreciation of the respondent State to decide when and to what extent this will be done.

I have voted for a violation in this case for reasons which have little to do with policy and values but have everything to do with formal logic. In other words, the majority's position is logically inconsistent. The simplest way of explaining this is to say that where a person in certain situations has said A, he is logically required to say B. In this case the issue is clearly discrimination concerning the inheritance tax exemption for two unmarried sisters who have lived for many years together in the same household. They, when approaching old age, wanted to have the right to inheritance tax exemption given that the exemption has been granted by the U.K. legislature to other couples living together in the same household.

This brings us straight to the medias res of the tax law. The policies applied to taxation are clearly very important because they give financial incentives to certain choices that people are likely to make. For example, if it were to be a policy of the law-giver to encourage heterosexual marriage it would then be logical for the legislator to offer certain tax credits, advantages, incentives to couples living together irrespective of whether they have children or not. If the legislature wants to encourage childbearing it will give the same traditional tax incentives only to couples living together and having children. If the legislature wishes to discourage divorce, it will premise these advantages on the couples remaining together.

As to the reasonable goals such incentives are intended to further, they may or they may not be disclosed by the law-giver. But even if they are completely disclosed it does not mean that they are completely predictable. These tax incentives act together with many other factors including many other tax incentives and disincentives. In any event, tax policy is an economic policy but it is also a social policy in disguise. For example, progressive taxation is a strongly equalising economic factor undoing many untoward aspects of social stratification.

As for the inheritance tax policy, radical solutions have sometimes been applied. An extremely high inheritance tax, for example, may indicate the law-giver's preference for earned rather than inherited wealth. Be that as it may, the inheritance tax policy is not a simple linear decision-making choice. Rather, it is an integral part of a complex web of economic decisions that heavily influence the distribution of wealth and thus the whole social structure.

Before we move into the question of discrimination, let us point out that discrimination as such simply means making and establishing differences. This meaning also derives from the Latin word discriminare. All decision-making in all three branches of power all the time is about establishing and enforcing different decisions for different situations. In this sense, there is nothing wrong with ‘discriminating’ unless the ‘specific establishment of differences’ pertains to what in constitutional law we call a ‘suspect class’ such as the classes taxatively enumerated in Article 14 of the European Convention on Human Rights. In other words, where gender, race, colour of skin, language, religion, political or other opinion, national or social origin, minority status, property, birth or other status are concerned, discrimination is in principle proscribed. These suspect classes, it is well to point out, are simply an exception to the general rule which permits all kinds of differentiated decision-making for other non-suspect classes. Prohibition of discrimination — enforcing distinction — is thus an exception rather than the rule.

When it comes to the suspect classes this does not mean that the discrimination is categorically forbidden. Rather, it means that within these classes discrimination is permitted through the application of equal protection, proportionality and reasonableness tests. Even within the suspect classes discrimination may be permissible if the goal pursued by the discrimination is sufficiently compelling and if the law or other decision under scrutiny is rationally related to this sufficiently important interest.

It is clear that some of the Article 14 categories, for example, race or national origin, call for the strictest scrutiny test. Under this test, the decision (or the law underlying it) would be upheld only if it was suitably tailored to serve a compelling state interest. When it comes to gender, or illegitimacy of birth, the decision would be presumed invalid under the intermediate test unless substantially related to a sufficiently important interest.

The mildest proportionality (reasonableness) test is applied to social and economic matters such as the one at hand. Here the test inquires whether the legislation at issue is rationally related to a legitimate government interest. The question in other words is whether not giving tax exemption to the two Burden sisters is rationally related to a legitimate government interest.

Of course, it is always possible to say that a government has a legitimate interest in collecting money from taxes paid by the tax payers. The same goes for the inheritance tax payable upon the death of the person whose estate becomes taxable when transferred through inheritance to another person. What is the legitimate government interest behind this kind of taxation?

It is difficult to maintain that there is anything inherently legitimate about taxing the transfer of wealth upon the death of an individual. For example, one might argue that the State adds insult to injury when taxing an estate left to the survivors of a close relationship. In this sense, one might imagine a scale of taxation that would be progressive in positive correlation with the relational distance between the deceased and the surviving relative. But this is just one aspect of inheritance taxation, an example perhaps of how inherently questionable the inheritance taxation is in principle.

When it comes, therefore, to the differentiation between different classes as regards inheritance taxation it is inherently difficult to maintain that the treatment of one class in preference to another class is rationally related to any legitimate government interest. Yet, once we accept inheritance taxation as something normal, the differentiation between different classes for inheritance taxation purposes become decisive.

If the Government has decided not to tax married couples, this is the starting point for the suspicion of discrimination in our case. The Government may reasonably maintain that the close relationship of a couple provides sufficient reason for the tax exemption. Those who are not married, in other words, are then a priori not entitled for the tax exemption. The cut-off criterion is clear.

However, when the Government decides to extend this privilege to other modes of association, this black and white distinction is broken and the door is open for re-consideration of the question whether the denial of the tax advantage to other modes of association is rationally related to a legitimate government interest.

The majority deals with these questions in paragraphs 62–65. In paragraph 62 the majority remarks: ‘the relationship between siblings is qualitatively of a different nature to that between married couples and homosexual civil partners under the United Kingdom's Civil Partnership Act. The very essence of the connection between siblings is consanguinity, whereas one of the defining characteristics of a marriage or Civil Partnership Act union is that it is forbidden to close family members’. I ask myself, at this point, why would consanguinity be any less important than the relationship between married and civil partners? Of course, the quality of consanguinity is different from sexual relationships but this has no inherent bearing on the proximity of the persons in question.

One could easily reverse the argument and say, for example, that the ‘consanguine’ identical twins are far closer genetically and otherwise since in reality they are clones of one another, than anybody could ever be to anybody else. And yet if the Burden sisters were identical twins they would not be entitled to the same exemption, in counter distinction to even the most ephemeral and fleeting relationship. So, what does the qualitative difference referred to by the majority come to? Is it having sex with one another that provides the rational relationship to a legitimate government interest?

In paragraph 63 the Grand Chamber then expresses the view that marriage confers a special status on those who enter into it. The analysis of paragraph 63 tends to show that the majority does not regard the arguments in paragraph 62 as sufficiently persuasive, i.e. the majority feels that it must add, ex abundante cautela, this ‘special nature’ of marriage as a contract. If the contract is not explicit, the legal consequences do not flow from it. But this argument, too, is specious — even if we do not consider common law marriage as a historical phenomenon in which consensual co-habitation, even under canon law, confers all the rights and duties on the couple concerned. The further reference to different solutions in different Member States being irrelevant — since at least some of them consider co-habitation a factual question with legal consequences equivalent to an explicit marriage — makes it imperative for the majority to resort to the final rescue in saying:

Needless to say, this final reference to margins of appreciation makes all other argumentation superfluous.

The logic ‘if you say A, you should also say B’, which I referred to at the beginning of this dissenting opinion, is explicitly reiterated in § 53 of Stec v. the United Kingdom:

A priori, the State is not required to create a benefit, in this case extra-marital tax exemptions. If the state nevertheless does decide to extend the tax exemption to one extra-marital group, it should employ at least a minimum of reasonableness while deciding not to apply the benefit to other groups of people in relationship of similar or closer proximity.

I believe making consanguinity an impediment is simply arbitrary.

(Translation)

To my great regret, I cannot agree with the majority's approach, as in my opinion the judgment does not deal with the problem raised by this case.

Done in English and in French and delivered at a public hearing in the Human Rights Building, Strasbourg, on 29 April 2008.

Vincent BERGER

Jurisconsult

Jean-Paul COSTA

President

In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the following separate opinions are annexed to this judgment:

J-P.C.

V.B.