JUDGMENT OF 30. 5. 1973 — CASE 36/72 MEGANCK v COMMISSION

In Case 36/72

THE COURT (Second Chamber) composed of: P. Pescatore (Rapporteur), President of Chamber, R. Monaco and H. Kutscher, Judges, Advocate-General: H. Mayras Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Statement of facts

Mr François Meganck, of Belgian nationality, entered the services of the High Authority of the ECSC in 1961, as a ‘free-lance’ corrector.

He was appointed to the temporary staff in the same capacity at the Official Publications Office of the Communities on 1 June 1970.

After a probationary period he was established as an official on 1 December 1971.

Mr Meganck, who was a widower and had a minor daughter in receipt of full-time education dependent on him was at the time of his appointment to the temporary staff regarded as head of a household pursuant to Article 21 of the Conditions of Employment of Other Servants, of Article 3 (b) and of Article 23 (b) of Annex VII of the Staff Regulations.

In this capacity he has received the head of household allowance provided for by Article 1 (1) of Annex VII of the Staff Regulations, the dependent child allowance provided for by Article 2 (1), the education allowance provided for by Article 3 and the daily subsistence allowance at the head of household rate provided for by Article 10 of the said Annex VII.

In October 1970 Mr Meganck informed the office of the Commission that his daughter had decided at the end of the school year 1969/1970 to take remunerative employment.

As a result the Personnel Department informed him in a note dated 25 November 1970 that the dependent child allowance, the head of household allowance and the education allowance had been withdrawn with effect from 1 July 1970.

In January 1972, Mr Meganck, in accordance with an oral agreement between him and an official in the Personnel Department began to repay the sum of 4452 BFr.

In February 1972, Mr Meganck was informed orally that the note of 25 November 1970 had not been completely executed in the sense that only the dependent child allowance and the education allowance had been withdrawn and the head of household allowance had continued to be paid and moreover his daily subsistence allowance had not been reduced to the rate provided for a single person following the loss of this status as head of household.

On 23 February 1972, Mr Meganck submitted a complaint to the President of the Commission under Article 90 of the Staff Regulations, in which, refering to his bona fides, he requested, in accordance with Article 85 of the Regulations, that the sums which had been paid to him might be retained.

By note dated 10 March 1972, the head of the Personnel Department of the Commission informed Mr Meganck that an overpayment of 69519 BFr (38850 Fr by way of subsistence allowance and 30669 Fr by way of allowance for head of household) would be recovered by the administration.

Save for an acknowledgment of receipt the complaint by Mr Meganck of 23 February 1972 has not been answered by the Commission.

II — Procedure

On 22 June 1972 Mr Meganck made the present application.

The written procedure followed a regular course.

The Court, after hearing the Advocate-General, decided to open the oral procedure without preparatory inquiries.

The President of the Chamber, R. Monaco, was appointed under Article 26 (3) of the Rules of Procedure to replace Judge Trabucchi, who was indisposed.

The parties presented oral arguments and their replies to the questions put by the President at the hearing on 22 November 1972.

The Advocate-General presented his opinion at the hearing on 13 December 1972.

Pursuant to an Order of the Court (Second Chamber) of 27 February 1973 the parties submitted certain documents and replied in writing to various questions.

III — Submissions of the parties

The applicant submits that the Court should

a) declare his application admissible and well-founded;

b) declare that he was not aware that there was no due reason for the payment made to him and that the fact of the overpayment was not patently such that he could not have been unaware of it;

c) declare in consequence that the sums overpaid should give no right to recovery;

d) order the Commission to pay the costs of the proceedings.

The Commission submits that the Court should

‘a) dismiss the application in its entirety as unfounded; (b) order the applicant to pay the costs’.

IV — Pleas and arguments of the parties

The pleas and arguments of the parties may be summarized as follows:

The applicant maintains that there was on the part of the Commission not a decision with regard to recovery in due and proper form but a simple administrative constraint. In all circumstances, the measure of which he complained had been taken by an authority lacking competence, and infringed Article 85 of the Staff Regulations.

a) It follows from Article 5 of the decision of the Commission of 26 February 1971 regarding the exercise of the powers conferred by the Staff Regulations on the appointing authority that for the application of Article 85 of the Regulations, the powers conferred on the appointing authority are exercised, with regard to officials posted to Luxembourg and paid from working funds, by the Assistant Director-General of Personnel and Administration holding office in that town. From Article 7 of the same decision listing the provisions of the Regulations the application of which the powers conferred on the appointing authority are exercised in their respective spheres by the heads of department of the Directorate-General of Administration. It follows also that the head of the Personnel Department, who signed the note of 10 March 1972, had no competence whatsoever to take any measure with regard to the recovery of sums overpaid. Since the ground of lack of competence is a matter of public interest it ought to be admitted although it had been raised only during the course of the oral proceedings.

b) The decision or the administrative constraint referred to in the proceedings disregards moreover Article 85 of the Staff Regulations, under the terms of which ‘any sum overpaid shall be recovered if the recipient was aware that there was no due reason for the payment or if the fact of the overpayment was patently such that he could not have been unaware of it’.

None of the conditions requisite for recovery was fulfilled in the present case: it was not a question of knowing whether the recipient could have been in a position to be aware that there was no due reason for the payment but whether in fact he was aware of it or whether by reason of the seriousness of the overpayment he could not have been unaware of it.

The burden of proof is on the administration. It must establish that the applicant has acted fraudently or that he has been guilty of a grave breach equivalent to fraud. Such is not at all the position in the present case.

As regards the head of household allowance the applicant was at no time aware that there was no due reason for the payment. Having in all honesty notified the administration of his new position he had no reason not to assume that the appropriate deductions had not been made from his salary. As to the total sum of his final salary statement, he could legitimately have attributed it to various successive increases in his basic salary without being guilty of any serious negligence.

It cannot be maintained that the error committed by the administration, that is that there was no due reason for the payment, was patently such that the applicant could not have been unaware of it: all the Administrative departments who had received the memorandum of 25 November 1970 had made the same mistake and the salary statements sent to officials are difficult to understand.

With regard to the subsistence allowance the applicant was unaware that there was no due reason for its payment at the rate applicable to officials who were heads of household.

These allowances are not even mentioned in the memorandum of 25 November 1970; the applicant cannot be supposed to be better able to appreciate that there was no due reason for the payment than all the officials specializing in the matter.

The Commission considers it as perfectly normal and regular practice to recover overpayment by deduction; in the present case this deduction was in no way the act of an authority lacking competence.

a) As regards competence, it is appropriate to note that it is the Assistant Director-General of Personnel and Administration holding office at Luxembourg who is normally responsible for the orders to pay and the payment of salaries, grants and allowances. The present case concerns the deduction from the monthly payment of salary made on the order of the same Assistant Director-General. The allegation of lack of competence was thus not substantiated.

b) The interpretation which the applicant places on Article 85 of the Regulations disregards the duties of officials; it likewise disregards the inevitable errors which an administration can commit and which is the very reason for the provisions regarding the recovery of overpayments. It would tend to limit the recovery of overpayments solely to those payments obtained or retained by an official. Such an interpretation would make Article 85 almost inapplicable.

The German and French laws regarding public office especially do not place on the official the sole duty of keeping his administration informed of any changes in his personal position; he must also be acquainted with the rules which govern him and verify at least briefly according to these rules statements which are sent him.

It cannot be necessary to show fraud in order to justify recovery of overpayments. In German law an undue neglect of the attention which should be given to the perusal of statements suffices; the French Council of State tends to be even less indulgent.

The fact that an administration makes an overpayment could be a simple mistake; the overpayment would not prevent partial or complete recovery unless it was continued for a very long time or in spite of what the recipient says.

As regards the facts in question it is appropriate to note that the applicant has received statements the perusal of which with a minimum of diligence and normal attention must, in view of the Staff Regulations of which he had been reminded or of which he could not have been unaware, have made the overpayments obvious. With regard to the head of household allowance it should be pointed out that from June to December 1970 the applicant's salary, instead of being reduced, had increased.

Moreover the salary notice for December 1970 consisted not of a printed salary slip but of plain paper in such a way that the various columns of amounts made on this notice comprised no printed information giving details of it; it should have been a normal reaction for the applicant to ask the administration for details of the various sums.

These details in any case were given in writing at the time of payment of his salary in February 1971; the document in question showed very clearly to what sums the various columns of the salary slip referred. From then on the applicant could not have been unaware that he was being paid a head of household allowance to which he had no right. Finally, as from February 1971 the payment of salaries was again made on printed slips on which were clearly shown the various items of remuneration.

The argument that the administrative department did not notice the error is irrelevant; Article 85 of the Regulations could only have any meaning on the basis that its authors foresaw that the administration could be led to make, without realizing it, overpayments of which the recipient could not be unaware.

Regarding payments where the sum depends on the particular situation of the recipient, the latter can, when the overpayment is sufficiently detailed and quite clearly conflicts with the recipient's entitlement, perceive a mistake more easily than the administrative Staff who have to control several thousand officials. The recipient could thus not have been unaware that he was receiving a head of household allowance to which he was not entitled; Article 85 of the Regulations is quite obviously applicable.

As to the subsistence allowance, this had to be claimed each month on a special form; consequently when making his claim the applicant would necessarily have known of Article 10 of Annex VII of the Regulations, which clearly stipulates a different rate of subsistence allowance according to whether the official is head of household or not. The applicant ought then to have perceived that the subsistence allowance, which was being paid to him, was at the rate of that of head of household by reason on the one hand of its amount and on the other hand of the details given on the payment slip.

Article 85 of the Regulations is likewise applicable here.

Grounds of judgment

1. The application relates to a dispute between the Commission and the applicant regarding recovery of sums overpaid to the latter, as head of household allowance and the proportion of subsistence allowance relating to the capacity as head of household, as a result of a change having taken place in the domestic circumstances of the applicant.

The subject matter of the dispute

2. The applicant, informed orally by the department of the Directorate-General of the Personnel of the mistake made and of their intention to recover all the sums overpaid, submitted immediately on 23 February 1973, under Article 90 of the Staff Regulations, a complaint to the President of the Commission in which he requested that there be taken with regard to him ‘a decision allowing him to retain the sums paid’ under the provisions of Article 85 of the Regulations.

3. This request was unanswered save by an acknowledgment of receipt dated 25 February 1972 from the General Secretariat of the Commission.

4. On 10 March 1972 the head of the Personnel Department of the Directorate-General of Personnel sent the applicant a note giving details of the reason and the amount of the sums to be repaid as well as the manner of recovery.

5. The application lodged on 22 June 1972 is concerned with the implied decision rejecting the request, arising from the failure on the part of the competent authority to reply within a period of two months from the lodging of the complaint of 23 February 1972.

6. It follows on the other hand from the very terms of the application that the applicant did not consider the note of 10 March 1972 as a decision on which an application could be made, especially as at the date of 22 June 1972 the period for an application against this act had expired.

7. It follows that the admissibility and basis of the application must be judged solely on the implied decision of rejection which is deemed to be constituted by the silence maintained by the Commission with regard to the complaint of 23 February 1972.

The ground of lack of competence

8. During the course of the oral proceedings the applicant raised a new ground arising from the fact that the disputed decision was signed by an official, i.e. the head of the Personnel Department holding office in Luxembourg, who was incompetent to exercise delegated powers such as arise from the decision of the Commission of 26 February 1971 regarding the exercise of powers conferred by the Staff Regulations on the appointing authority, which decision was made under the first paragraph of Article 2 of the Staff Regulations.

9. According to this decision ‘recovery of undue payment’ does not come within the competence of the signatory to the decision mentioned.

10. It follows from the premises that this plea relates to an act — the note of 10 March 1972 — which is not the true subject of the application.

11. On the other hand this ground does not affect the implied decision to reject, which, according to the provisions of Article 91 (2), second indent, of the Regulations in the version applicable to the present application, is deemed to come ‘from the competent authority’, to whom the applicant has submitted his request.

12. In these circumstances it is not necessary to consider whether the validity of the note of 10 March 1972 could have been affected by the fact that, by virtue of the delegation of power agreed to by the Commission, the recovery of undue payment is entrusted to an official other than the one who appears as signatory to this note.

13. The plea must therefore be rejected as irrelevant.

Merits

14. The nature and the amount of the overpayments are not disputed by the applicant.

15. The dispute relates solely to the question whether the Commission is within its rights to exact repayment of the disputed sums having regard to Article 85 of the Regulations, which provides that any sum overpaid shall be recovered ‘if the recipient was aware that there was no due reason for the payment or if the fact of the overpayment was patently such that he could not have been unaware of it’.

16. It is established that the applicant, following the change in his domestic circumstances which took place about 1 July 1970, delayed until October of the same year giving notice of this to the Community authorities.

17. Thus having placed himself in an irregular situation by his own conduct he cannot rely on his good faith to be released from the obligation to return the sums overpaid during this period.

18. As regards the payment of the head of household allowance for the period afterwards, it is established by the documents produced by the Commission that the salary slips issued to the applicant from March 1971 to January 1972 show each time the payment of an allowance as ‘head of household’.

19. As regards these monthly payments even a superficial examination of the salary slips would have shown the applicant that he was continuing to receive an allowance in a capacity which was no longer his.

20. On the other hand for the salary periods from November 1970 — the first monthly payment following the declaration by the applicant of the change in his domestic situation — until February 1971 the vouchers issued to the applicant did not allow a person exercising normal diligence to recognize the undue payment of an allowance as head of household.

21. For November 1970 the applicant received only an advance on his salary, his position not being at that time completely settled.

22. For December 1970, January 1971 and February 1971, he received his salary slips on plain paper, the stock of printed forms having been temporarily exhausted, as is established by the statements of the Commission.

23. In addition, the issue of these salary slips coincided with an increase in the salaries paid by the Community.

24. It is true that details were subsequently given in an explanatory note issued to the officials and staff of the Commission in Luxembourg on the salary computations for February 1971, but these were not of a nature to permit the actual identification of the figures shown in the salary slips previously issued.

25. It must be recognized that for this period the overpayment was not patent.

26. Finally as regards the daily subsistence allowance paid for the period from November 1970 to October 1971, it appears from the explanations given by the parties and the documents produced by the Commission that these allowances were made on a declaration by the applicant by a special payment distinct from the payment of salary.

27. The declarations signed to this effect by the applicant on forms supplied by the administration contain no visible distinction as to whether these allowances were claimed as head of household or not.

28. Although the internal accounting documents of the Commission make a distinction in this respect, it is equally established that the vouchers issued to the applicant at the time of payment indicated the ground of payment only in a general manner as being ‘daily subsistence allowances’.

29. In these circumstances it cannot be held against the applicant that he did not recognize the fact that these allowances were still being paid to him at the rate applicable to officials who were heads of household.

30. It follows from the premises that the Commission is not entitled to recover from the applicant the undue payment as regards the allowance as head of household for the months of November 1970, December 1970, January 1971 and February 1971 and, as regards the daily subsistence allowances, all the monthly payments from November 1970.

31. To this extent the decision of the Commission must therefore be annulled.

Costs

32. Under the terms of Article 69 (3) of the Rules of Procedure, where each party succeeds on same and fails on other heads, the Court may order that the parties bear their own costs in whole or in part.

33. The applicant has been successful in part of his claim.

34. It is thus appropriate that the Commission should pay a part of the costs of the applicant, assessed at 50 %.

35. Moreover, under the terms of Article 70 of the Rules of Procedure, the costs incurred by the institutions in proceedings instituted by servants of the Communities shall be borne by the institutions.

On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the oral observations of the parties; Upon hearing the opinion of the Advocate-General; Having regard to the Staff Regulations, especially Articles 85, 90 and 91; Having regard to the Protocols on the Statute of the Court of Justice; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, especially Articles 69 and 70; THE COURT (Second Chamber) hereby:

1 Annuls the decision whereby the Commission refused to forego recovery from the applicant of the sums overpaid as head of household allowance for the period July 1970 to January 1972 and that part of the daily subsistence allowances attributable to the capacity of head of household for the period from July 1970 to November 1971, as regards the head of household allowance: the monthly payments for November 1970, December 1970, January 1971 and February 1971; the part of the daily subsistence allowances attributable to the capacity of head of household: the monthly payments for November 1970 to November 1971;

2 Orders the Commission to bear its own costs and half the costs of the applicant.