REPUBLIC OF TURKEY
CONSTITUTIONAL COURT
PLENARY
JUDGMENT
EROL KESGİN
(Application no. 2015/11192)
30 May 2019
On 30 May 2019, the Plenary of the Constitutional Court found no violation of the right to property safeguarded by Article 35 of the Constitution in the individual application lodged by Erol Kesgin (no. 2015/11192).
THE FACTS
[8-36] The applicant received the payment order issued by the Provincial Directorate of the Social Security Institution for the social security contributions of the company where he was a shareholder and a Board member as well as for the incurred default interest. The applicant filed an action with the labour court for annulment of the payment order. Having an expert report obtained on the issue, the labour court dismissed the action relying on the expert report as a ground. On the applicant’s appeal, the first instance decision was upheld by the Court of Cassation.
37. The Constitutional Court (“the Court”), at its session of 30 May 2019, examined the application and decided as follows:
38. Indicating that the Executive Board had decided on 24 September 2009 to exclusively authorise E.S., the Chair of the Executive Board, to represent and bind the Company on all matters for a term of three years, the applicant asserted that he did not have any representative authority and that he could not be held liable for the insurance premium and default interest debts concerned by the payment order. The applicant stressed that, according to the established case-law of the Supreme Administrative Court and the Court of Cassation, simply having the capacity of a member of the Executive Board is not sufficient to have several liability for the [Social Security] Institution’s receivables; in fact, the person concerned had to be either a senior executive or legal representative (agent) with the authority to represent and bind during the time period in which the premium debt accrued and became due in order to have such liability. The applicant also expressed that his allegations and objections were not sufficiently assessed by the inferior courts in their rulings. Stating that an attachment was imposed on his house, pension and vehicle and that deductions were made from his pension due to the premium debt, the applicant complained of an alleged violation of his rights to property and a fair trial enshrined in Articles 35 and 36 of the Constitution, respectively.
39. Article 35 of the Constitution provides as follows:
“Everyone has the right to own and inherit property.
These rights may be limited by law only in view of public interest.
The exercise of the right to property shall not contravene public interest.”
40. The Court is not bound by the legal qualification of the facts by the applicant and it makes such assessment itself (see Tahir Canan, no. 2012/969, 18 September 2013, § 16). In addition to an alleged violation of his right to property, the applicant also complained that he had not had a fair and equitable hearing within the scope of the right to a fair trial. However, considering that the applicant’s complaint concerning the fact that he had to pay the social security premium debt despite his alleged lack of liability therefor pertains to the right to property, the Court is of the opinion that these allegations must also be examined from the standpoint of the right to property.
41. The alleged violation of the right to property must be declared admissible for not being manifestly ill-founded and there being no other grounds for its inadmissibility.
a. Existence of Property
42. In the present case, a payment order was issued with a view to collecting from the applicant, in his capacity as a member of the executive board, the 8,841 Turkish liras (TRY) of social security premium and default interest debt for the period between December 2009 and August 2010. Accordingly, there is no doubt as to the fact that the amount of money which the he had to pay constituted property/possession from the applicant’s standpoint within the meaning of Article 35 of the Constitution (see, in the same vein, Ahmet Uğur Balkaner [Plenary], no. 2014/15237, 25 July 2017, § 46).
43. There is no doubt that there has been an interference with the right to property due to the fact that the applicant was held liable for the social security and default interest debt of the debtor Company. In previous cases, the Court has established that, on account of the purposes they carry, any interference aimed at determining, amending and securing the payment of taxes and similar liabilities as well as social security premiums and contributions must be examined within the scope of the State’s authority to control or regulate the use of property for the sake of public interest (see Arif Sarıgül, no. 2013/8324, 23 February 2016, § 50; and Narsan Plastik San. ve Tic. Ltd. Şti., no. 2013/6842, 20 April 2016, § 71). In the present case, as well, the interference in the form of holding the applicant liable for the Company’s unpaid social security premiums and default interest on account of his capacity as a member of the executive board must be examined within the framework of the third rule which concerns the control or regulation of the use of the property.
44. Article 13 of the Constitution provides as follows:
“Fundamental rights and freedoms may be restricted only by law and in conformity with the reasons mentioned in the relevant articles of the Constitution without infringing upon their essence. These restrictions shall not be contrary to the letter and spirit of the Constitution and the requirements of the democratic order of the society and the secular republic and the principle of proportionality.”
45. Article 35 of the Constitution does not envisage the right to property as an unlimited right; accordingly, this right may be limited by law and in the interest of the public. In interfering with the right to property, Article 13 of the Constitution must also be taken into consideration as it governs the general principles concerning the restriction of fundamental rights and freedoms. In order for the interference with the right to property to be in compliance with the Constitution, the interference must have a legal basis, pursue the aim of public interest, and be carried out in accordance with the principle of proportionality (see Recep Tarhan and Afife Tarhan, no. 2014/1546, 2 February 2017, § 62).
46. The first criterion required to be examined in case of an interference with the right to property is whether the interference had a legal basis. Where it is established that this criterion was not met, the Court will arrive at the conclusion that there has been a breach of the right to property, without holding any examination under the remaining criteria. For an interference to be prescribed by law, there must be sufficiently accessible, certain and foreseeable rules regarding the interference (see Türkiye İş Bankası A.Ş. [Plenary], no. 2014/6192, 12 November 2014, § 44; Ford Motor Company, no. 2014/13518, 26 October2017, § 49; and Necmiye Çiftçi and Others, no. 2013/1301, 30 December 2014, § 55).
47. The inferior courts cited Article 88 of Law no. 5510, which had repealed Law no. 506 that was in force at the material time, as the legal basis of the social security premium and default interest debts. This article stipulates that, if the [Social Security] Institution’s insurance premiums and other receivables are not paid within the indicated time-limits without a valid reason, the senior executives and officials of the company concerned, including members of the executive board, as well as the representatives of the institutions concerned shall be jointly and severally liable. Furthermore, Article 35-bis of the Law no. 6183 provides that the public receivables which cannot be collected, or are understood to be impossible to collect, from legal entities shall be collected from the personal assets of their legal representatives.
48. The Court of Cassation has held that, since Article 88 of Law no. 5510 governing the liability for insurance debts is a more specific provision than the provisions of Law no. 6183, the personal liability of a company’s representatives could directly be pursued in respect of such debts without seeking fulfilment of the prior condition of inability to collect from the company. Therefore, in view of the fact that the said provision of law is accessible, certain and foreseeable, the Court concludes that the interference had a legal basis.
49. According to Articles 13 and 35 of the Constitution, the right to property may only be restricted in the interest of the public. The notion of public interest serves as both a restrictive instrument, which allows for imposition of restrictions on the right to property where the public interest requires it, and an effective protection mechanism, which sets out limits to restrictions by preventing the imposition of any restrictions on the right to property outside public interest aims. The concept of public interest is the one that brings with it the margin of appreciation of the State bodies and it should be evaluated separately on the basis of each particular case as it does not fit a singular objective definition (see Nusrat Külah, no. 2013/6151, 21 April 2016, §§ 53, 56; and Yunis Ağlar, no. 2013/1239, 20 March 2014, §§ 28, 29).
50. The legislature enjoys a wide margin of appreciation in taking necessary measures in order to ensure payment of taxes and social security premiums and in selecting the required and appropriate means in this regard. In the present case, a payment order was issued in order to collect the Company’s debt to a public body from the applicant, as he was a member of its Executive Board. It may be said that the aim pursued by this interference was to improve the chances of successfully collecting public receivables. It is beyond dispute that there is public interest in securing the payment and improving the chances of collecting public receivables (see, in the same vein, the Court’s judgments no. E.2014/177, K.2015/49, 14 May 2015; no. E.2012/87, K.2014/41, 27 February 2014; no. E.2014/144, K.2015/29, 19 March 2015; no. E.2011/42, K.2013/60, 9 May 2013; and no. E.1992/29, K.1993/23, 24 June 1993). Thus, the Court concludes that there is a public interest-oriented legitimate aim in pursing the applicant’s personal liability, in his capacity as one of the Company’s shareholders and executives, with a view to collecting public receivables.
(1) General Principles
51. Lastly, the Court should examine whether there was a reasonable balance of proportionality between the objective sought by the interference with the applicant’s right to property and the means used for achieving this objective.
52. The principle of proportionality (ölçülülük) comprises of three subprinciples, which are “appropriateness” (elverişlilik), “necessity” (gereklilik) and “proportionality” (orantılılık). “Appropriateness” means that the prescribed interference is capable of achieving the objective aspired for; “necessity” shall mean that the interference is absolutely necessary for that objective, that is when achieving such objective with a lighter intervention is not possible; and “proportionality” shall refer to the need for striking a reasonable balance between the interference with the individual’s right and the objective sought (see the Court’s judgments no. E.2011/111, K.2012/56, 11 April 2012; no. E.2014/176, K.2015/53, 27 May 2015; and no. E.2016/13, K.2016/127, 22 June 2016, § 18; and Mehmet Akdoğan and Others, no. 2013/817, 19 December 2013, § 38).
53. In order for an interference with the right to property to be proportionate pursuant to Articles 13 and 35 of the Constitution, it must above all be capable of achieving the public interest aim pursued by this measure. Moreover, in the performance of the interference, the instrument that is best suited to achieve the relevant public interest aim must be chosen. In this respect, it is primarily for the relevant public authorities to decide which instruments to use since they are in a better position to make the appropriate decision. For this reason, the administrations enjoy discretionary powers to a certain extent with respect to the instruments to be preferred. Nonetheless, this discretion enjoyed by the administrations in regard to the necessity of the instrument chosen is not an unlimited power. Where the instrument chosen has aggravated the interference distinctly in comparison with the aim it sought to achieve, the Court may conclude that the interference was not exigent or necessary. However, the Court’s supervisory role in this context is not directed towards the degree of appropriateness of the instrument chosen but the gravity of its interference with rights and freedoms (see, mutatis mutandis, Hamdi Akın İpek, no. 2015/17763, 24 May 2018, § 108; and Hanife Ensaroğlu, no. 2014/14195, 20 September 2017, § 67).
54. Pursuant to the principle of proportionality, a fair balance must be struck between the public interest sought in restricting the right to property and the individual’s rights. This fair balance will have been upset where it is found out that the applicant has personally borne an excessive burden. In the assessment of proportionality of the interference, the Court will take account of the burden imposed on the applicant from two perspectives: on the one hand, it will examine the importance of the legitimate aim sought to be achieved; and, on the other, it will have regard to the nature of the interference along with the behaviour of the applicant and the public authorities (see Arif Güven, no. 2014/13966, 15 February 2017, §§ 58, 60; and Osman Ukav, no. 2014/12501, 6 July 2017, § 71).
55. In order to secure public receivables and improve the chances of collection, the legislature may either choose to distribute liability or prescribe several liability (see the Court’s judgment no. E.2014/144, K.2015/29, 19 March 2015).
56. The legal acts and transactions of the commercial companies, which do not have a material presence and are recognised as legal entities by virtue of the legal order, are carried out on their behalf by natural persons responsible for their management. These natural persons have the opportunity and power to carry out the legal acts and transactions of the legal entity they represent, to manage its personnel and assets, to determine the direction of its investments and activities and to take the measures required by its economic and financial situation. Therefore, it can be possible to hold those persons, who manage commercial companies and carry out acts and transactions on behalf of the company, severally liable to pay social security receivables, of which the immediate payment is deemed to be overwhelmingly in the interest of the public and imperative for the continuation of the social security system. In view of these powers and duties assigned thereto, it is understood that holding such persons severally liable for the unpaid public receivables does not, as a rule, place an excessive and extraordinary burden on them (see, with regard to tax debts, Ahmet Uğur Balkaner, § 58).
57. On the other hand, no liability beyond the powers and opportunities entrusted to the company executives should be imposed on them. Holding an executive liable for the payment of public receivables arising from certain acts and transactions carried out during a period when he had no chance to intervene in or prevent them or especially have control over the company’s activities may result in a disproportionate burden placed on that executive in the circumstances of the case at hand (see, in the same vein, Ahmet Uğur Balkaner, § 59).
58. Note must be taken in this connection of the fact that, pursuant to Article 375 § 1 (e) of Law no. 6102, the executive board is responsible for the supervision of the company’s executive managers. Indeed, one of the executive board’s duties is to give the necessary instructions to executive managers. Accordingly, it is within the unalienable duties and powers of the executive board to supervise whether the persons in charge of the management comply with, in particular, laws, articles of incorporation, internal directives, and the written instructions of the executive board (see the Court’s judgment no. E.2016/191, K.2017/131, 26 July 2017). Thus, the law explicitly prescribes that the executive board has the overall supervisory authority in cases where the executive management power is assigned/transferred to others.
59. The applicant became a shareholder of the Company by buying one share on 21 August 2009 and he was elected to Executive Board membership. Accordingly, it is beyond doubt that the Company owed an insurance premium debt and that the applicant was a Company executive at the time when this debt emerged and became due. Nevertheless, the applicant indicated that he was not the Company’s legal representative and he thus had no fault with regard to the payment of this debt as it was the legal representative who should be liable for the debt.
60. Both Article 80 of the now-repealed Law no. 506 and Article 88 of Law no. 5510 (coming into effect as of 1 July 2008) aim at ensuring the timely and regular collection of premiums. The Turkish social security system relies predominantly on a premium-based regime. In turn, the provision of social insurance benefits by the Social Security Institution depends on the timely and full payment of insurance premiums, which make up its most important source of income (see the decision of the Plenary Session of the Court of Cassation in Criminal Matters no. E.2014/21-2323, K.2017/152, 25 January 2017). In this context, it is clear that holding all members of the executive board, even if they were not authorised to represent and bind, jointly and severally liable for the premium debts which had not been duly paid in time was, in its manner of practice in the present case, capable of and exigent for achieving the aim of securing the full and timely collection of premium payments. Thus, the objective is to secure the collection of premiums and encourage the fulfilment of the duty of paying premiums in laying down the rule to the effect that the senior executives or officials, including executive board members, and the legal representatives of the private legal entities described in Article 88 of Law no. 5510 shall be held jointly and severally liable, as well as their employer, for the employer’s premium debts to the institution (see the decision of the Plenary Session of the Court of Cassation in Criminal Matters no. E.2014/21-2323, K.2017/152, 25 January 2017).
61. Having undoubtedly established the capability and exigence of the collection of public receivables directly from the applicant with regard to the achievement of the public interest aim pursued thereby, the Court must ascertain whether the interference was proportionate.
62. Accordingly, the Court must examine in the first place whether the applicant was afforded an opportunity to effectively put forward his allegations and defence submissions against the payment order he had been issued in his capacity as an Executive Board member for the social security premium and default interest debts. The applicant challenged the Social Security Institution’s enforcement order by filing an action before the Bolu Labour Court, where he denied any liability for the said social security premium debts. When his case was dismissed, he submitted a request for appeal. The applicant also requested an interim measure to stay the execution of the debt enforcement procedure until completion of this set of proceedings because the continuation of the procedure would cause irreparable harm. The Court observes that the applicant has had the opportunity of presenting all of his allegations and defence submissions in an effective manner over the course of the proceedings.
63. Nonetheless, even though the applicant indicated that, according to the established case-laws of the Supreme Administrative Court and the Court of Cassation, simply having the capacity of a member of the Executive Board is not sufficient to have several liability for the institution’s receivables and that the person concerned had to be either a senior executive or legal representative (agent) with the authority to represent and bind during the time period in which the premium debt accrued and became due to carry such liability, the Court notes that this case-law concerns the premium debts that pertained to the period preceding the entry into force of Law no. 5510.
64. In the present case, being a member of the Executive Board, the applicant had the chance to intervene in and prevent default, within the framework of the powers prescribed by law, in order to ensure the payment of the premium debts emerging at the time of his membership.
65. Moreover, since the applicant paid the enforced debt due to the enforcement proceedings pursued against him as a member of the Executive Board of the Company who was jointly and severally liable along with the employer for the premium payments, he can have recourse against the other shareholders of the Company in proportion to their shares within its internal operations by means of substituting himself for the administration by virtue of the principle of universal succession. The applicant can also have recourse against the legal entity of the Company for the portion of the payment he made corresponding to his share. Indeed, the applicant stated in his petition for action that, in addition to equipment pools and a factory, the Company owned immovable properties valued at TRY 35,000 according to the land registry records.
66. In sum, the Court has arrived at the conclusion that the applicant was not personally subjected to an excessive and extraordinary burden due to the fact that the applicant was held liable in his capacity as a member of the Executive Board for the public receivable arising as a result of non-payment of the Company’s social security premium debts and the default interest accrued thereon at a period of time when the Company had a legal representative. Therefore, the interference carried out in this way has not upset to the detriment of the applicant the fair balance which must be struck between the public interest sought by the interference and the owner’s right to property.
67. For these reasons, it must be held that there has been no violation of the right to property protected under Article 35 of the Constitution.
Mr. Zühtü ARSLAN, Mr. Engin YILDIRIM and Mr. Celal Mümtaz AKINCI expressed dissenting opinions in this respect.
For these reasons, the Constitutional Court held on 30 May 2019:
A. UNANIMOUSLY that the alleged violation of the right to property be DECLARED ADMISSIBLE;
B. By MAJORITY and by dissenting opinions of Mr. Zühtü ARSLAN, Mr. Engin YILDIRIM and Mr. Celal Mümtaz AKINCI, that the right to property safeguarded by Article 35 of the Constitution was NOT VIOLATED;
C. That the litigation costs be LEFT on the applicant; and
D. That a copy of the judgment be SENT to the Ministry of Justice.
1. The applicant complained of the alleged violation of his right to property due to the fact that he was held liable for the debts owed by the company, of which he was an executive board member, to a public body despite his lack of authority to represent that company. The majority of our Court decided that the applicant’s right to property was not violated.
2. In 2009 the applicant purchased one of the 100 shares, each valued at TRY 500, of the company and shortly afterwards he was elected to be a member of the executive board by the General Assembly of the Company. The Social Security Institution issued to the applicant a payment order for a debt in the amount of TRY 8,841 concerning the said Company’s social security premium and default interest debts pertaining to a period of time when the applicant was a member of the executive board. The action filed by the applicant for annulment of the payment order was dismissed.
3. It should be noted at the outset that the amount of money which the applicant had to pay in accordance with the payment order, which caused a reduction in his personal wealth, constituted property/possession within the meaning of Article 35 of the Constitution; therefore, it is beyond doubt that the payment order in question interfered with the applicant’s right to property (see Ahmet Uğur Balkaner [Plenary], no. 2014/15237, 25 July 2017, §§ 46-47). According to Article 13 of the Constitution, this interference would violate the right to property unless it had a legal basis, pursued a legitimate aim and was proportionate. Though the interference clearly had a legal basis and pursued a legitimate aim in the interest of the public, it cannot be considered to be proportionate.
4. The Court has explained it its previous rulings that the principle of proportionality consists of three sub-principles: appropriateness, necessity and proportionality. Appropriateness means that the envisaged interference must be capable of achieving the intended purpose; necessity describes that an interference must be absolutely necessary in order to achieve the intended purpose, in other words, that it is not possible to achieve the intended purpose by a lighter interference; and proportionality requires that a reasonable balance that must be struck between the rights of the individual and the intended purpose (see the Court’s judgment no. E.2018/142, K.2019/38, 15 May 2019, § 33; and Yaşar Çoban [Plenary], no. 2014/6673, 25 July 2017, § 64).
5. There is no doubt that the legislature enjoys a wide margin of appreciation in choosing the instruments which are necessary and appropriate for collection of the tax and premium receivables. In this scope, a provision oriented at ensuring collection of public receivables from the persons concerned through joint and several liability cannot be said to be incapable of achieving the public interest sought as a legitimate aim.
6. Still, the exigence and proportionality of the interference carried out in the present case need to be examined. Exigence principle prohibits resorting to a more restrictive interference which places a burden on individuals if it is possible to achieve the same purpose via a lighter interference. As a rule, the Company debt needs to be collected out of the assets of its legal entity. Certainly, in cases such as when this situation is abused or when it is impossible to collect the public receivable from the company’s legal entity, it may become necessary to lift the corporate veil. In such cases, a decision may be made to collect the debt, which cannot be collected from the corporate legal entity, from the company’s legal representative or shareholders in proportion to their shares.
7. In fact, the main road to be taken in the collection regime of public receivables is to primarily collect the debt from the company’s legal entity. According to Article 35-bis of the Law no. 6183 on Procedures for Recovery of Public Receivables, the public receivables which cannot be collected, or are understood to be impossible to collect, out of the corporate assets of legal entities shall be collected as per this Law from the personal assets of their legal representatives. Indeed, the Court has held in the past that the executives and legal representatives of companies could be held severally liable for the debts owed by companies to public bodies; however, this method could only be resorted to when there is no longer a chance to collect the debt from the legal entity of the company (see Ahmet Uğur Balkaner, § 58; and Arslan Gedik, no. 2014/17217, 14 September 2017, § 44).
8. On the other hand, Article 88 of the Law no. 5510 on Social Security and General Health Insurance, which was cited as the legal basis of the impugned interference, provides that the senior executives or officials, including executive board members, and the legal representatives of the private legal entities shall be held jointly and severally liable, as well as their employer, for insurance premiums and other receivables. It is understood that the legislature aimed to distribute the several liability with this provision. However, it is also clear that this provision may be interpreted in conjunction with Article 35-bis of Law no. 6183, in line with the guarantees set out by Articles 13 and 35 of the Constitution. In this context, it can be said that the provision in Article 88 of Law no. 5510 does not extinguish the subsidiarity of the liability stipulated by Article 35-bis of Law no. 6183, which regulates the collection of public receivables in general and also relies on a basis of several liability.
9. It is observed in the present case that a payment order was directly issued to the applicant, a member of the company’s executive board, without having initially attempted to collect the company’s debt out of its corporate assets. Whereas, in the petition for action he submitted with the Bolu Labour Court, the applicant contended that the Company actually owned TRY 35,000’s worth of registered immovable properties, equipment pools and a factory and, thus, the debt could have been collected out of the Company’s assets. Nonetheless, no weight was given to this point over the course of the proceedings. Therefore, the decision to initiate collection of the said premium debt and default interest directly from the applicant simply because of his position as a member of the executive board without having established the existence of any obstructions to collecting the debt from the legal entity of the Company cannot be considered to be necessary. In other words, it is incompatible with the necessity principle for the public authorities to try to achieve public interest with a heavier and more restrictive interference while it would be actually possible to attempt to collect the receivable out of the Company’s corporate assets, which would be a lighter interference.
10. What is more, the Company, of which the applicant was a shareholder, is a joint stock company whose liability is limited by law. Holding the applicant liable to pay the social security premium debt in the amount of TRY 8,841 owed by the Company, despite the fact that the applicant held only one share valued at TRY 500 and did not have the capacity of legal representative, constitutes a disproportionate interference with the right to property. The proportionality principle requires a fair balance to be struck between the public interest pursued by the public authorities in collecting public receivables and the individual’s right to property. In the instant case, there is no finding to suggest that the relevant authorities had not been able to collect, or had understood that it would have been impossible to collect, out of the Company’s assets the disputed debt which was directly collected from the applicant.
11. For the reasons set out above, I disagree with the majority’s view of finding no violation as I am of the opinion that there was a disproportionate interference with the right to property due to the fact that the public receivable had directly been collected from the applicant without having attempted to collect it out of the Company’s assets first.
1. The applicant complains that his right to property has been violated due to the fact that he was held liable for the debts owed to the public bodies by a company, of which he was an executive board member but did not have the capacity of legal representative.
2. It is clear that the liability imposed on the applicant for the debtor Company’s social security premium and default interest debts by considering him as its legal representative constitutes an interference with the right to property. In interfering with the right to property, which is not an unlimited right, Article 13 of the Constitution must also be taken into consideration as it governs the general principles concerning the restriction of fundamental rights and freedoms.
3. In the present case, there is a legal basis for the interference with the right to property. Also, there is a legitimate aim in the interest of the public pursued by the interference in seeking the applicant’s liability with a view to ensure collection of the public receivable on account of his position as one of the company’s shareholders and executives.
4. An assessment should be held as to whether there was a reasonable balance of proportionality between the objective sought by the interference with the applicant’s right to property and the means used for achieving this objective.
5. The principle of proportionality consists of three sub-principles: appropriateness, necessity and proportionality. “Appropriateness” means that the prescribed interference is capable of achieving the objective aspired for; “necessity” shall mean that the interference is absolutely necessary for that objective, that is when achieving such objective with a lighter intervention is not possible; and “proportionality” shall refer to the need for striking a reasonable balance between the interference with the individual’s right and the objective sought (see the Court’s judgments no. E.2011/111, K.2012/56, 11 April 2012; no. E.2014/176, K.2015/53, 27 May 2015; and no. E.2016/13, K.2016/127, 22 June 2016, § 18; and Mehmet Akdoğan and Others, no. 2013/817, 19 December 2013, § 38).
6. In order for an interference with the right to property to be proportionate pursuant to Articles 13 and 35 of the Constitution, it must above all be capable of achieving the public interest aim pursued by this measure. Moreover, in the performance of the interference, the instrument that is best suited to achieve the relevant public interest aim must be chosen. In this connection, though the public authorities enjoy a margin of appreciation in the choice of instruments to that end, an assessment needs to be made as to whether or not the chosen instrument serves to achieve the aim pursued.
7. Pursuant to the principle of proportionality, a fair balance must be struck between the public interest sought in restricting the right to property and the individual’s rights. In the assessment of proportionality of the interference, the Court will take account of the burden imposed on the applicant from two perspectives: on the one hand, it will examine the importance of the legitimate aim sought to be achieved; and, on the other, it will have regard to the nature of the interference along with the behaviour of the applicant and the public authorities (see Arif Güven, no. 2014/13966, 15 February 2017, §§ 58, 60; and Osman Ukav, no. 2014/12501, 6 July 2017, § 71).
8. When the liability of the legal representative is being evaluated, it should be borne in mind that the company has a separate legal entity and, as a rule, the company’s legal entity itself has to be held liable for the debts owed by the company. Thus, an effort should be made to collect the company’s debts primarily out of the corporate assets of the company’s legal entity. Personal liability of the legal representative for the company’s debts should only be sought in exceptional circumstances and as a last resort. It should be emphasised that, in cases where it is possible to cover the company’s debts with the assets owned by the company’s legal entity, i.e. if the company’s assets are deemed to be sufficient to pay the debt, the public authorities’ margin of appreciation will become narrower and that only unavoidable circumstances might justify collection from the legal representative directly of a debt owed by a company with insufficient assets. The public authorities carry the burden of proof in establishing the existence of those unavoidable circumstances.
9. In the present case, there is no doubt that the decision to collect the public receivable directly from the applicant was capable of achieving the public interest aim pursued. That being said, the exigence and proportionality of the interference need to be determined, as well. In this framework, it must be ascertained whether the interference in the form of attempting to collect the public receivable directly from the company’s shareholders or executives instead of the debtor company itself was the most appropriate instrument with regard to the protection of the applicant’s right to property.
10. It should be noted at the outset in this scope that the Company, of which the applicant was a shareholder, is a joint stock company which is recognised by law to have a limited liability. Accordingly, the liability of the legal entity of the joint stock company for its debts is, as a rule, limited to its capital. To put differently, creditors of the Company are to primarily seek to collect their receivables from the relevant legal entity itself. However, in some exceptional cases, such as when company shareholders or executives abuse their rights or are involved fraudulent conduct, it may be deemed necessary to lift the corporate veil of the legal entity. Accordingly, in certain circumstances, a decision might be made to collect public receivables directly out of the shareholders’ personal assets instead of the debtor Company that is liable with its capital. Nevertheless, there must be a compelling circumstance which makes it absolutely necessary to collect the public receivable at issue in this manner. In order to be able to also hold personally liable the shareholders or executives of a legal entity, of which the liability is recognised to be limited, there needs to be certain concrete circumstances to justify this measure and certain reasonable safeguards must be afforded.
11. In the case giving rise to the present application, the applicant was held liable to pay out of his personal assets the social security premium debt in the amount of TRY 8,841 owed by the Company whereas he held only one share valued at TRY 500 and did not have the capacity of legal representative of the Company. In return, the applicant claimed that the debt could be collected from the Company itself, as it owned immovable properties registered to its name, as well as equipment pools and a factory. Nevertheless, the Social Security Institution did not primarily attempt to approach the Company for collection of the debt but instead chose to directly hold the applicant personally liable along with the other shareholders. On the other hand, there is no finding to suggest that the public authorities had not been able to collect, or had understood that it would have been impossible to collect, the disputed debt from the Company.
12. Thus, what happened in this case is that the applicant’s personal liability was enforced without having initially attempted to initiate a debt enforcement procedure against the debtor Company. Accordingly, as it has been observed in the present case, holding the applicant directly liable with his personal wealth despite the alleged existence of assets owned by the Company was clearly not the lightest instrument available for the achievement of the aim pursued by the interference. Besides, the public authorities did not rely on any concrete facts that would indicate that it was absolutely necessary to directly pursue the applicant’s personal liability. As a result of this course of events, despite holding only one share of the company and not having the capacity of legal representative, the applicant was held liable with his personal assets. Thus, an excessive burden was placed on the applicant.
13. In conclusion, seeking the collection of the public receivable directly from the applicant without attempting to collect it from the debtor company caused an unnecessary interference with the applicant’s right to property. Therefore, the balance which had to be struck between the public interest pursued by the interference and the applicant’s right to property was upset to the detriment of the applicant. For this reason, concluding that there has been a violation of the right to property enshrined in Article 35 of the Constitution, we disagree with the majority’s view.
