Friday, 17 August 2018

Court head: State should compensate H-system clients

ČTK |
1 August 2018

Prague, July 31 (CTK) - The Czech state should step in the case of the bankrupt H-system housing project and compensate the damaged people, Supreme Court (NS) chairman Pavel Samal said after a meeting with President Milos Zeman on Tuesday.

Justice Minister Jan Knezinek (for ANO) said current laws do not allow for a general compensation, but the clients may address his ministry with a request for the compensation of the damage that would be caused by unlawful or wrong steps of the authorities within the H-System case.

Along with Samal, Zeman also received Constitutional Court (US) chairman Pavel Rychetsky who said the H-system case was an example of the Czech state's failure in the 1990s.

Samal apologised for the lengthy proceedings in the H-system case. The courts were deciding on it for a disproportionately long time, he said.

The one-hour meeting with the top courts' chairmen mainly focused on the length of court proceedings, Zeman said in a statement he issued afterwards.

The lengthy cases of H-System and of former regional governor and ex-minister David Rath, who was sent to prison for corruption in June again, but appealed the verdict, harm the public trust in the judiciary system, Zeman said.

He added that he was prepared to join a possible constitutional complaint to be filed by the Svatopluk housing cooperative, associating some of the H-system former clients, and thereby support it.

Svatopluk plans to turn to the US in reaction to the recent verdict by the NS, under which the Svatopluk members must leave their flats in eight houses in Horomerice near Prague, which they completed on their own after H-System went bankrupt, within a month of the court verdict's effect. The court complied with H-System bankruptcy administrator Josef Monsport who would like to sell the flats in Horomerice in order to compensate all the damaged clients.

The NS declared the rent contracts between the Svatopluk cooperative and the dwellers void, since Svatopluk had completed a developer project on the H-System plots, thereby actually investing money in another owner's property.

Samal admitted he can understand while the people from Horomerice perceived the verdict as unjust. "They have the right to feel so. I personally would like to stress that I must apologise for the length of these proceedings," he said.

However, the question of justice is sensitive, he added.

"Justice cannot be build on injustice towards other people, justice for a certain group cannot be balanced by injustice done to others," he said.

The NS verdict affects some 60 families. In total, some 1000 people were damaged in the H-system case, of which Samal again reminded on Tuesday.

No top courts's verdicts are able to solve the situation clearly for all damaged people, and this is why the state must step in the case and compensate the damaged parties in various ways, Samal said.

"There is at least an alternative of the state paying off the difference between what the bankruptcy administrator demands and what the people in the Svatopluk cooperative offer for purchasing the real estate," he said.

The state should proportionately compensate all who invested their money in the H-System project, he added.

Samal also said the law on crime victims should be amended. Now it does not apply to the H-system case, which is wrong, he added.

In connection with lengthy court proceedings and law enforceability, Samal criticised a too high number of various regulations calling it "a legal jungle" and, on the other hand, the lack of procedural regulations that would speed up proceedings.

The H-system case started in the 1990s when the state did not fulfil its regulatory role, and politicians should now act and redress what they caused then, Samal stressed.

Rychetsky said the length and inefficiency of court proceedings affect insolvency proceedings the most.

"The H-System, though we did not deal with it in detail, was given as an example. It is an example of the failure of not only the judiciary, but the Czech state in the 1990s," he said.

The Presidential Office announced Zeman's meeting with Samal and Rychetsky last week in reaction to the NS's verdict in the H-system case. The court chairmen accepted the invitation, but they stressed in the media that they cannot discuss a particular case with the head of state.

Rychetsky said after he arrived in Prague Castle, the president's seat, that the meeting's topics were changed to judiciary systemic problems and insolvency.

They agreed that the state would have to enter into the H-system case, Samal said afterwards.

After its establishment in 1993, the H-System developer signed contracts on the construction of flats and houses near Prague with hundreds of clients. However, it went bankrupt in 1997, after it built only 34 houses. In total, the clients lost about one billion crowns. H-System's majority owner Petr Smetka spent 12 years in prison.

Part of the damaged H-system clients established Svatopluk in October 1997 with the aim to complete their housing even with further investments. Then bankruptcy administrator Karel Kudlacek permitted them to do so under certain conditions. However, Monsport called on them to leave the real estate to enable their sale.

The lower-level courts in Prague previously dismissed Monsport's lawsuit against the Svatopluk members, among others because it was contrary to good morals. However, the NS had a different view.

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