C-63/79

JUDGMENT OF 16. 10. 1980 — JOINED CASES 63 AND 64/79 BOIZARD v COMMISSION

CELEX: 61979CJ0063
Datum: 1980-10-16
Källa: eur-lex.europa.eu

In Joined Cases 63 and 64/79

THE COURT (First Chamber) composed of: T. Koopmans, President of Chamber, A. O'Keeffe and G. Bosco, Judges, Advocate General: J.-P. Warner Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the procedure and the conclusions, submissions and arguments of the parties may be summarized as follows:

I — Summary of the facts and written procedure

The applicants are the widow and the dependent child within the meaning of Article 2 of Annex VII to the Staff Regulations of Mr Boizard, a former official of the Commission, who died on 24 November 1972.

On 21 November 1972 the car which Mr Boizard was driving was involved in a collision after the other driver, a certain Mr Teugels, failed to observe the rule of giving way to traffic approaching from the right. The forensic pathologists instructed by the examining judge to investigate the cause of the deceased's death concluded:

that the accident in question had not caused fatal injury;

that death was due to a severe cardiac arrest resulting amongst other causes from a previous myocardial infarct;

that such a heart attack could have happened at any time, even without trauma, for example after a shock.

In a judgment of the Tribunal Correctionnel [Criminal Court], Brussels, of 29 November 1973 the accused, Teugels, was found guilty of being “the agent who occasioned the death, to which his offence is therefore directly linked by cause and effect”. Consequently the accused, Teugels, and his insurer were held liable for civil law purposes and jointly and severally ordered to pay the following amounts as damages:

a) To the widow:

BFR 75000 as compensation for the sorrow suffered

BFR 1066256 as material damages consisting in the loss of financial support by her husband; the court assessed Mr Boizard's expectation of life as being five years during which time he would have allowed 40% of his monthly salary of BFR 55306 for the cost of maintaining his wife;

b) To the dependent child:

BFR 25000 as compensation for the sorrow suffered;

BFR 574671 as material damages (cost of maintenance equal to 20% of Mr Boizard's salary during five years).

Following the decease of Mr Boizard the Commission paid the survivors' and orphans' pensions to the applicants to which they were entitled as from 1 March 1973. On the date on which it adopted the decision in issue the pensions amounted to BFR 29604 together with BFR 11159 family allowances in the case of Mrs Boizard and BFR 14953 in the case of her daughter.

By a letter of 19 April 1973 Mrs Boizard's lawyer asked the defendant to tell him “whether Mr Boizard was insured with the Communities under a group insurance policy against personal injury or came under contractual rules entitling his next-of-kin to claim financial assistance on account of his decease.”

On 22 May 1973 the defendant invited the applicant's lawyer “in view of the sensitive nature of this matter ... to send the judgment delivered by the court which should, I think, be notified to you within the next few days.”

In the meantime Mrs Boizard had asked Mr René Derveaux, an official at the Commission and a friend of the Boizard family, to intercede in the matter in order to obtain a statement of the amounts paid by way of pensions. The Commission contends that at that time Mr Derveaux himself knew nothing of the intentions of Mrs Boizard and proposed to the Court that it hear that official as a witness should it think fit. It maintains that although the financial certificates dated 10 May 1973 containing a breakdown of Mr Boizard's salary and the widows' and orphans' survivors' pensions were “issued for communication to the court authorities” it was not aware that the applicants were going to appear as “parties civiles” [civil parties] before the Tribunal Correctionnel in order to recover material damages from the third party liable. The applicants, for their part, maintain that the Commission's officers were kept informed of the criminal proceedings before that court..

By a letter of 14 March 1974 the applicants' lawyer sent to the Commission a copy of the judgment delivered on 29 November 1973 asking that it should be sent to the insurers with whom the Communities' group accident policy had been effected.

For its part on 10 November 1975 the Commission contacted the insurer of the third party responsible for the accident taking that step pursuant to Article 47 of Annex VIII to the Staff Regulations which provides that:

“Where the invalidity or death of an official is caused by a third party, the rights of action of the official or of those entitled under him against the third party shall vest in the Communities within the limits of their obligations under this pension scheme.”

The insurer of the third party liable claimed that that step was inadmissible on the ground that the judgment had been carried out and the damages awarded to those entitled under the deceased official had been paid, and that the Commission's rights by subrogation could not extend to more than the value at common law of the damages accruing to those entitled under the official. Accordingly it was suggested to the defendant that it should take action against those entitled under the official for the recovery of sums wrongly paid.

By a letter of 25 May 1977 the defendant informed the applicants that by obtaining judgment against the third party liable they had exercised rights of action which did not belong to them thereby depriving the Commission of its right to recourse under Article 47 of Annex VIII which prohibits double payments. The Commission invited the applicants to repay to it amongst other things the amounts awarded under the head of material damages, indicating that it would not be opposed to any proposals for repayment by instalments at “reasonable” intervals of the principal amount only and not the interest.

Negotiations took place between the parties during 1977. On 23 March 1978 the applicants' lawyer informed the Commission that if it believed that it was entitled to exercise belatedly its rights of subrogation its remedy was to apply by third party action to set aside the judgment of the Tribunal Correctionnel, Brussels, but he made the most express reservations as to any coercive measures or the withholding of the pension in whole or in part.

On 1 June 1978 the Commission adopted the decision in issue by which, pursuant to Article 41 of Annex VIII of the Staff Regulations prohibiting double payments, the monthly payments of the pensions falling due to Mrs Biozard and her daughter and amounting to BFR 29604 and BFR 14953 respectively were made subject to deductions of BFR 8000 and BFR 5000 respectively with effect from 1 June 1978 until the outstanding amounts of BFR 1066256 and BFR 574671 to be repaid in that way had been recovered, those deductions being indexed and varying automatically by the same percentage increase as the gross amount of the monthly pension payments before the deductions.

The applicants drew up a complaint dated 19 July 1978 against that decision which was lodged on 27 July 1978. By a letter dated 19 January 1979 from the defendant that complaint was rejected on the ground that it was unlawful for pension rights to overlap with damages recoverable at common law as compensation for the same injurious circumstances for which the pensions themselves are intended to be compensation, and on the ground of the legal principle by which the person who deprives another of the benefit of subrogation on which he could legitimately expect to rely must bear the consequences thereof.

The applications were brought on 12 April 1979 and registered at the Court Registry on 17 April 1979.

By order of 30 May 1979 the Court (First Chamber) joined the two cases.

On hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court decided to open the oral procedure without any preparatory inquiry.

II — Conclusions of the parties

The applicants claim that the Court should:

1) Declare the Decision of 1 June 1978 to be null and void;

2) Declare the express rejection of the applicants' complaint dated 19 January 1975, so far as necessary, to be null and void;

3) Order the opposite party to pay to the applicants all sums retained by it in pursuance of the decision of 1 June 1978 which the applicants estimate at BFR 100000, subject to amendment during the proceedings;

4) Order the opposite party to pay such interest as the Court may consider normal, from the date of the deductions in question;

5) Order the opposite party to pay the costs.

The Commission claims that the Court should:

1) If it thinks fit, hear Mr René Derveaux, a Commission official, as a witness as to the facts set forth in paragraph 5 of the defence;

2) In any event reject the applications as unfounded.

III — Submissions and arguments of the parties

1. The applicants believe that Article 47 of Annex VIII to the Staff Regulations does not prohibit the overlapping of pensions with damages payable to a third party. The principle of non-overlapping was certainly in the mind of the Community legislature when it drew up that provision, but it does not accord with any rule of equity. Article 47 is intended to adjust the respective rights of the administration and of officials or those entitled under them. The Community legislature vested the rights of action against the third party liable in the administration, apparently reserving to the administration the power not to act and to leave the official or those entitled under him to bring their own action which in principle subsists. The applicants contend that the content of their lawyer's letter of 19 April 1973, of the certificates sent to the applicants by the Commission on 10 May 1973, and of the Commission's letter of 22 May alone show that the defendant had waived the right to assert its rights of subrogation. The administration in fact believed that the action was a sensitive one and that the applicants had some prospects of success whereas it probably had none. The applicants therefore dispute that they have deprived the defendant of the possibility of commencing an action which it had no intention of bringing. Nor was it unaware that some of the applicants' claims impinged on the Communities' right of subrogation, for they had asked through their lawyer for documents concerning the amount of Mr Boizard's salary. The applicants claim that the Commission may not rely on Article 41 of Annex VIII as the provision is not applicable to the situation existing as between the parties. The first paragraph thereof allows the amount of the pension to be recalculated as does the second paragraph if there has been a mistake of law. In the instant case the pension is not in question. The issue is therefore one of misuse of powers. The applicants therefore advance three submissions; they are based: first, on the breach of Article 41 of Annex VIII to the Staff Regulations inasmuch as that provision covers only the recalculation, modification or withdrawal of a pension, and not a case in which neither the principle nor the amount of the pension is in question; the defendant is attempting by means of a wrong construction of the provision and by the misuse of procedures to achieve a set-off between the pension and a debt which is not vested in it: secondly, on the breach of Article 47 of Annex VIII to the Staff Regulations inasmuch as the defendant claims to be entitled to seek payment of the sums recovered by the applicants from the third party responsible for the accident whereas the provision in point makes provision only for “subrogation dans l'action” [subrogation] and not for “subrogation dans le droit” [assignment of the right of action]; in any event the defendant waived the right to avail itself of the provision referred to in its submissions; and inasmuch as, if the defendant claims that there was a mistake on the part of its officers, that mistake on the part of the defendant is inexcusable and the remedy for an inexcusable mistake is to allow matters to stand as they are; thirdly, on the breach of Article 85 of the Staff Regulations inasmuch as, although not expressly referring to that provision, and almost denying that it is relying thereon, the defendant purports to apply the rule which it lays down whilst the conditions attached by the Community legislature to the recovery of sums overpaid are not fulfilled in this case, as the defendant itself admits.

2. The defendant denies that the decision in issue constitutes “misuse of powers” and insists that it was taken in the normal exercise of the power of withdrawal or revocation of which the power to recalculate the amount of the pension, provided for by Article 41 of Annex VIII to the Staff Regulations, is but an illustration. That power had been legitimately exercised as soon as it was discovered, subsequent to the grant of the pensions, that the recipients thereof were receiving damages from the third party thereby altering the extent of their rights under the Staff Regulations as derived from the rule against double payments and calling in question the very principle that rights once granted should remain unchanged. The decision in issue does not operate a set-off between the pension rights of the individuals concerned and a debt accruing to the Communities. Although the operation criticized might look like a way of setting off two debts, the reality lying behind that appearance consists of nothing more than compliance with the Staff Regulations and the defendant's wish to prevent, by means of a reassessment of their entitlement, the individuals concerned from receiving an improper double payment. As regards the second submission the Commission contends that by the effect of “subrogation dans l'action”, that is to say, the vesting of the legal power to act, for which provision is made by Article 47 of Annex VIII to the Staff Regulations, that power was not vested in the applicants in this case. Since they had no power to act their rights were “illusory” and, to the extent to which one head of the damage was already made good or bound to be so made by the payment of pensions, did not even exist in the shape of rights to damages from the third party. The Staff Regulations cannot therefore allow those entitled under an official to bring their own action which in principle subsists; in fact subrogation consists of the divesting and transfer of rights, and the victim's right to damages falls to the ground when the burden of the injury to that person is assumed by a third party subrogated to the rights of the victim. The defendant states that the phrase “subrogation dans l'action” should not be understood in the narrow sense of “subrogation dans l'instance” [subrogation to the proceedings]. A study of comparative law shows that “subrogation dans l'action” has the same scope as “subrogation dans les droits du recours” [subrogation to the rights of redress] or “subrogation dans les droits” [subrogation to the rights] in general. It entails not only the right to step into the shoes of the person whose rights are subrogated and pursue the claim which he has made but also the right to commence an action in the place of that person and the right to step into his shoes in any action which he has improperly brought. The Commission points out that quite apart from the general principle that a waiver of a right is not to be presumed, no feature of the conduct of its officers might afford reason to believe that it had waived its rights of subrogation and still less that it has done so in favour of those entitled under the deceased, Mr Boizard. It was good administrative practice that, before formulating any kind of claim against the insurer of the third party liable, the administration, once informed of the criminal proceedings, should await their outcome. Moreover, if the applicant believed that they could pursue their civil action to the extent to which they did, the reason for that is to be found not in their belief that the Communities right to recourse had been waived in their favour, but in the applicants' ignorance of Article 47 of Annex VIII. Ignorance of the law is no excuse. At any rate a plaintiff cannot be considered to be entitled to exercise the right of action of a third party solely because that third party has waived the exercise of that right. The applicants did not appear before the Brussels court in furtherance of the “indirect” action nor as “assignees” of the right of action. They could not plead either that the person having the right to bring that action had not used it immediately (when it had five years to do so) in order to procure an admission that they were entitled to avail themselves of it from the first year. The Commission furhter asserts that in the decision in issue it did not give the error of its officers as one of the reasons therefor. As regards the third submission the Commission replies that the decision in issue was not taken pursuant to Article 85. “Any sum overpaid” to which that provision refers in order to bring it under the heading “recovery” is to be understood exclusively as being a sum received from the Communities and not from third parties. Moreover the decision in issue does not concern the amounts received at the end of 1973 by those entitled under Mr Boizard from the third party liable. Furthermore the pension payments made without deduction from 1973 to 1978 are not covered by the decision in issue either. The decision does not in fact constitute a “retroactive withdrawal” of previous pension payments; it is a partial “withdrawal/revocation” — taking effect, therefore, only in the future — of an earlier provision of pension rights.

3. In their statement in reply the applicants first of all point out that at the time when the events occurred, and particularly at the time of their rejoinder as “parties civiles”, Mr Boizard's daughter was barely 14 years old and since she did not intervene personally in the proceedings it cannot be argued that her conduct was at fault. They also maintain that the defendant's inaction prior to the pronouncement of the judgment as well as after it learned of it through Mrs Boizard in April 1974, inaction which lasted until 1977, can be explained by the particular circumstances of the action to which the Commission's letter of 22 May 1973 alludes, namely the sensitive nature of the case. It is not true that the defendant has actually calculated afresh or modified the pensions under the terms of Article 41 of Annex VIII to the Staff Regulations. The evidence for that is that if the applicants were at any given time to pay to the defendant the balance of the debts alleged to be owed to it the pension would cease to be subject to a deduction and would be once more paid without there being any need to apply Article 41 again. The same situation will arise when, after a certain number of years, the Commission will have recovered the alleged indebtedness and the pension will be paid without restriction and without any ground for applying Article 41. The applicant's right to the pension would not be affected by any regular deductions owing to the existence of other, earlier or later debts. If such debts exist it is for the institution to claim set-off provided that it can find a provision in the Staff Regulations whicli permits it. But it does not have the right to introduce set-off — which is nothing other than a coercive measure — and disguise it as a measure having a quite different purpose. As regards the second submission the applicants argue that if it is here a matter of “subrogation dans l'action” and not of “subrogation dans le droit” the original right of the “subrogeant” [the person whose rights are divested] remains on foot, or potentially so; if the “subrogé” [the person acquiring the right of action] does not exercise his right, the “subrogeant” may use his right which if not used remains in abeyance so to speak. In that contingency therefore the right is, as it were, broken up and the original right is “ceded” only to the extent to which the right of action is exercised. Everything about the case demonstrates that the Commission lost its interest in the action and what is more that it enabled Mrs Boizard to exercise the right of action herself. The applicants repeat that failure by the defendant to avail itself of the right to which it was subrogated does not automatically create a debt owed to it and that there is no suitable machinery in the Staff Regulations (save for Article 85 which the defendant cannot and does not want to invoke) to provide a set-off between the pensions and the debt allegedly owing to the Commission. The applicants believe that the Community legislature had in mind “subrogation dans l'action” and not “subrogation dans le droit”. The proof of that is that when, pursuant to the amendments of the Staff Regulations in 1978 incorporated in the consolidated text of May 1978 a fourth paragraph was added to Article 73 (concerning the pension scheme), the legislature then spoke of “subrogation dans les droits du recours” [“the Communities shall... assume the rights of redress”]. Of further significance is the proposal for a regulation to amend the Staff Regulations put forward by the Commission on 13 June 1979 (Official Journal C 191, p. 9) by which an Article 85a would be inserted; paragraph (1) is worded as follows: Therefore the defendant's efforts to prove on the one hand the repugnance to the legislature of double payments and, on the other hand, that “action” must be understood as “droit” are futile. As to the Commission's wish not to assert its right of action the applicants state that although waiver is not to be presumed it may still be proved by presumption. The fact that the applicants' conduct and indeed that of their lawyer may be explained by their ignorance of Article 47 of Annex VIII only bears out the argument set forth above. Finally, the applicants did not act as “assignees” but by virtue of their own original right, temporarily transferred to the “subrogé” as the legislature intended, and they were able to assert that right on account of the waiver, or in any event evidence of inaction, on the part of the Commission. Whether the waiver or inaction by the defendant was intentional or the result of an administrative error, the omission is sufficiently significant to be inexcusable and it falis to the Commission to bear the consequences. As regards the third submission the applicants remain of the opinion that the defendant tried to apply Article 85 of the Staff Regulations without actually saying so. That provision may not be applied, either expressly or by implication, since the Commission has acknowledged the good faith of the applicants.

“Where the death, accidental injury or sickness of a person covered by these Staff Regulations is caused by a third party, the Commission shall, in respect of the obligations incumbent upon them under the Staff Regulations consequent upon the event causing such death, injury or sickness, stand subrogated to the rights, including rights of action, of the victim or of those entitled under him against the third party.”

4. The Commission first points out as to the facts that it did not wait until 1977 before giving attention to the situation created by the condemnatory judgment. On 10 November 1975 it wrote to the insurer of the third party to try to recover the monetary gain awarded to the applicants following the decease of Mr Boizard. The defendant stresses that in no sense does it reproach Mrs Boizard for having appeared as “partie civile” before the Belgian criminal court; it reproaches her for exceeding her rights and claiming and obtaining for her own gain payment of sums which the Commission alone was entitled to claim. In arguing that there has been no recalculation of the pension in the circumstances envisaged in Article 41 since, when the amount of the damages is recovered, the pension will again be paid without a new decision having to be taken pursuant to Article 41, the applicants overlook the fact that if a new decision will not be necessary it is because the withdrawal/revocation decision is adopted for an indefinite period. The fact that in this case the recalculation of the pension has taken the form of a fixed deduction does not alter its nature in any way. To speak of set-off in relation to those deductions would be totally inappropriate. The decision in issue rests exclusively on the established fact that contrary to Article 47 of Annex VIII the applicants are in receipt of a double payment and there are sufficient grounds for that decision to be found in law in the general theory or rescission. In regard to the second submission the defendant contends that since “subrogation dans l'action” depends on “subrogation dans le droit” which underlies it, the differences in wording emphasized by the applicants appear to be accidental and to have no legal significance. Furthermore, by determining the subject-matter of a subrogation action, the Community legislature thereby laid down the true extent of the prohibition on double payment and defined the precise scope of the rights remaining vested in the victim and those entitled under that person. Since the rights of the latter persons are satisfied in so far as compensation is paid to them pursuant to the Staff Regulations their rights of action against the third party are divested in favour of the Communities and are retained only to the extent to which the damage they have suffered is not covered. The extent of subrogation, and consequently of the prohibition on double payment, depends broadly speaking on whether or not the benefits paid by the body in which rights become vested are in the nature of an indemnity. By specifically relating the subrogation action to the pensions paid to those entitled under an official killed in an accident due to the negligence of a third party the Community legislature ipso facto believed that by paying out pensions the Communities help to make good the damage suffered by those entitled under the official thereby incurring loss for which the Communities are entitled to claim compensation from the third party liable. Subrogation is a matter of public policy. Any waiver on the part of an institution would amount to a breach of the general principle of equal treatment of officials and those entitled under them, some being allowed to receive double payments, others not. Nothing is to be gained by allegations of some kind of misconduct in the context of an action for annulment. The defendant was not guilty of any misconduct. It was not compelled to appear as a “partie civile” and could just as well have brought its subrogation action in the civil courts, even up to the end of 1977. It was not until 1974 that it succeeded in ascertaining the mistake made by the applicants. Having contacted the insurer of the third party liable, with a view to taking all possible steps to recover the payments, it could do no more than abide by the reply of the insurer. As regards the first submission the Commission replies that if the Court is of the opinion that the reasons on which the decision in issue was based should have referred to Article 85 of the Staff Regulations it is within its power to replace the incorrect reason with the proper one. At the hearing on 13 June 1980 the applicants, represented by Paul Humblet and Marcel Slusny, of the Brussels Bar, and the Commission of the European Communities, represented by Robert Andersen, of the Brussels Bar, presented their oral submissions. The Advocate General delivered his opinion at the sitting on 10 July 1980.

Decision

1. By two applications dated 12 April 1979 the applicants, Mrs Liselotte Boizard née Herber, and Miss Martine Boizard, respectively the widow and daughter of Georges Boizard, a Commission official who died on 24 November 1972, brought actions for the annulment of the Commission's Decision of 1 June 1978 by which: The applicants further seek the annulment so far as necessary of the express rejection of their complaints dated 19 January 1979 and an order that the Commission pay them the sums deducted together with interest thereon.

“Article 1

with effect from 1 June 1978 and until an amount of BFR 1066256 to be repaid in this way has been recovered the net monthly payments of the pension falling due to Mrs Boizard, the widow of Georges Boizard, and amounting at present to BFR 29604 shall be subject to a deduction of BFR 8000. That deduction shall be indexed and shall vary automatically by the same percentage increase as the gross amount of the monthly pension before the deduction.

Article 2

with effect from 1 June 1978 and until an amount of BFR 574671 to be repaid in this way has been recovered the net monthly payments of the pension falling due to Martine Boizard and amounting at present to BFR 14953 shall be subject to a deduction of BFR 5000. That deduction shall be indexed and shall vary automatically by the same percentage increase as the gross amount of the monthly pension before the deduction.”

2. As the two cases are related the Court (First Chamber) by order of 30 May 1979 joined them for the purposes of the procedure and the judgment.

3. The facts giving rise to the dispute are the following. On 21 November 1972 the car which Mr Boizard was driving was in a collision with a vehicle which did not give way to him when he was approaching from the right. Mr Boizard died three days later. Proceedings were brought against the other driver in the Tribunal Correctionnel [Criminal Court], Brussels. The applicants appeared as “parties civiles” before the court and the accused and his insurer were declared liable and ordered by judgment of 29 November 1973 to pay the following amounts by way of damages: (a) To Mrs Boizard: BFR 75000 as compensation for the sorrow suffered BFR 1066256 as material damages consisting in the loss of financial support by her husband; the court assessed Mr Boizard's expectation of life as being five years during which time he would have allowed 40% of his monthly salary of BFR 55306 for the cost of his maintaining his wife; (b) To Miss Boizard: BFR 25000 as compensation for the sorrow suffered BFR 574671 as material damages (cost of maintenance equal to 20% of Mr Boizard's salary during five years).

4. Following the decease of Mr Boizard the Commission paid the widows' and ophans' pensions to the applicants to which they were entitled as from 1 March 1973.

5. By letter of 19 April 1973 the applicants' lawyer asked the Commission if Mr Boizard was insured with the Communities under a group insurance policy against personal injury or came under contractual rules entitling his next-of-kin to financial assistance on account of his decease.

6. The Commission invited the applicants' lawyer to send it a copy of the judgment delivered on 29 November 1973 which was done by letter of 14 March 1974.

7. On 10 November 1975 the Commission contacted the insurer of the third party responsible for the accident taking that step pursuant to Article 47 of Annex VIII to the Staff Regulations which provide that: The insurer of the third party liable claimed that that step was inadmissible on the ground that the judgment had been carried out and the damages awarded to those entitled under the deceased official had been paid, and that the Commission's rights by subrogation could not extend to more than the value at common law of the damages accruing to those entitled under the official. Accordingly it was suggested to the defendant that it should take action against those entitled under the official for the recovery of sums wrongly paid.

8. By a letter of 25 May 1977 the defendant informed the applicants that by obtaining judgment against the third party liable they had exercised rights of action which did not belong to them thereby depriving the Commission of its right of recourse under Article 47 of Annex VIII which prohibits double payments. The Commission invited the applicants to repay to it amongst other things the amounts awarded under the head of material damages indicating that it would not be opposed to any proposals for repayment by instalments at “reasonable” intervals of the principal amount only and not the interest.

9. On 1 June 1978 the Commission adopted the decision in issue pursuant to Article 41 of Annex VIII to the Staff Regulations.

10. On 19 July 1978 the applicants lodged a complaint with the appointing authority against that decision pursuant to Article 90 (2) of the Staff Regulations of Officials. By letter of 19 January 1979 the Commission rejected that complaint.

11. The decision in issue was not put into effect until 1 April 1979.

12. The applicants put forward three submissions. According to their first submission the Commission cannot rely on Article 41 of Annex VIII as that provision is not applicable to the situation existing as between the parties. It allows the amount of the pension to be recalculated in the case of error or omission and a pension to be modified or withdrawn if there has been a mistake of law. In the instant case the pension is not in question. The issue is therefore one of misuse of powers.

13. According to the second submission the Commission has acted in breach of Article 47 of Annex VIII inasmuch as it claims to be entitled to seek payment of the sums recovered by the applicants from the third party responsible for the accident whereas the provision in point makes provision for only “subrogation dans l'action” [subrogation] and not for “subrogation dans le droit” [assignment of the right of action]. The Community legislature vested the rights of action against the third party liable in the administration, apparently reserving to the administration the power not to act and to leave the official or those entitled under him to bring their own action which in principle subsists. The conduct of the Commission up to 25 May 1977 demonstrated that it had waived the assertion of its rights of subrogation.

14. By their third submission the applicants plead breach of Article 85 of the Staff Regulations inasmuch as the Commission, although not expressly referring to that provision, and almost denying that it is relying thereon, purports to apply the rule which it lays down whilst the conditions attached by the Community legislature to the recovery of sums overpaid are not fulfilled in this case, as the defendant itself admits.

15. The Commission denies that the decision in issue constitutes a misuse of powers and insists that it was taken in the normal exercise of the power to withdrawal or revocation of which the power to recalculate the amount of the pension provided for by Article 41 of Annex VIII to the Staff Regulations is but an illustration. In reality the decision does nothing more than comply with the Staff Regulations and prevent, by means of a reassessment of their entitlement, the individuals concerned from receiving an improper double payment.

16. As regards the second submission the Commission contends that by the effect of “subrogation dans l'action”, that is to say, the vesting of the legal power to act, for which provision is made by Article 47 of Annex VIII to the Staff Regulations, that power was not vested in the applicants in this case. Since they had no action their rights were “illusory” and, to the extent to which one head of the damage was already made good or bound to be so made by the payment of pensions, did not even exist in the shape of rights to damages from the third party.

17. As regards the third submission the Commission replies that the decision in issue was not taken pursuant to Article 85. “Any sum overpaid” to which that provision refers in order to bring it under the heading “recovery” is to be understood exclusively as being a sum received from the Communities and not from third parties.

18. The first submission of the applicants must be upheld. Article 41 of Annex VIII to the Staff Regulations provides : That article envisages the two specific cases of recalculation of the pension if there has been error or omission, and modification of withdrawal of the pension if the award was contrary to the Staff Regulations or to the annex.

“The amount of pensions may at any time be calculated afresh if there has been error or omission of any kind.

They shall be liable to modification or withdrawal if the award was contrary to the provisions of the Staff Regulations or of this annex.”

19. Furthermore Article 85 of the Staff Regulations 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. This last provision does not cover the recovery of a sum overpaid received from a third party; it covers only a sum overpaid by the Communities.

20. The Commission does not deny that the widows' and orphans' pensions were properly granted and determined as to their amount in accordance with the provisions of the Staff Regulations and Annex VIII thereto. The recalculation of those pensions in order to recover a sum allegedly received from a third party, even if to the possible detriment of the Communities, does not come within Artcile 41 of the annex.

21. Accordingly the decision in issue must be annulled and there is no further need to examine the other submissions.

22. Consequently the Commission should be ordered to pay to the applicants the sums deducted in respect of each of them together with interest calculated from the date of the deductions. A fair rate is 8%.

Costs

23. Under article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs.

24. As the defendant has failed in its submissions it should be ordered to pay the costs.

On those grounds, THE COURT (First Chamber) hereby:

1 Annuls the Commission's Decision of 1 June 1978;

2 Orders the Commission to pay each of the applicants the amounts deducted together with interest thereon at 8% from the date of the deductions;

3 Orders the Commission to pay the costs.