The courts have failed to take into account the appreciation of the husband’s assets
The essence of the case was a property dispute between the divorcing spouses, which arose during the settlement of the matrimonial property. Historically, there have been various property transactions in marriages. Shortly after the marriage, the husband sold his house, which was his sole property. He received approximately one hundred and eighty thousand crowns for the sale and the couple then bought a joint residential property for an almost identical amount. The property had already become part of their community property (formerly known as community of property). Together, they then invested in improvements to the property.
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The democratic state and the limits of judicial power
The Constitutional Court disagreed with the idea that the valorisation of investments in joint property should depend on a prior agreement between the spouses. The valorisation of contributions occurs directly on the basis of this provision of the law.
Moreover, it added that the ordinary courts, when deciding specific cases, are entitled to shape the legislation by taking into account its purpose and meaning. However, the Supreme Court’s powers of interpretation are not unlimited and have their constitutional limits. In particular, extreme creativity or an emptying of the will of the legislator cannot be allowed.
Courts may step outside the boundaries of the broadest possible linguistic meaning of statutory provisions, provided that they respect generally accepted methods of law-making. In such a case, they are still within the bounds of constitutionally permissible statutory interpretation. However, even such a conclusion may be quite controversial for some.
In any case, if the general default rule was transformed into an exception, the application of which the court made conditional on the agreement of the spouses, it has thus completed the law even in a situation where there were no preconditions for this at all. The intention of the legislator was quite clear, but in the present case it was not created but changed.
The approach taken by the courts in the case could create a dangerous precedent where the courts arbitrarily set rules that affect ordinary citizens. It is important for the ordinary person to be able to rely on the stability and predictability of court decisions, especially in matters involving personal and financial matters such as divorce.
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Taking into account the valorisation of assets
The Constitutional Court has ruled that if a spouse monetises part of his/her sole property (typically from before the marriage) in order to use the funds to purchase an asset in the matrimonial property, he/she can claim to be compensated for this input in the course of the division of the matrimonial property. The value of the contribution is indexed, i.e. it is determined by the increase or decrease in the value of the part of the property on which the contribution was made. Typically, this situation arises in the case of real estate ownership, the value of which can change significantly over the years.
Conflict with the Constitution and the Charter of Fundamental Rights and Freedoms
For the reasons set out above, the Constitutional Court annulled the contested decisions on the grounds of conflict with Article 36(1) of the Charter of Fundamental Rights and Freedoms (which enshrines the right to judicial protection) in conjunction with Article 2(1) and Article 95(1) of the Constitution (separation of powers and the binding force of the law on the judge).
However, it is not for the Constitutional Court, by the nature of its activity, to deal with the merits of the case or to decide it itself. Therefore, the Regional Court will now re-examine the case, but it is no longer bound by the legal opinion of the Supreme Court. It should therefore find a solution to the property dispute which is in accordance with the provisions of Section 742(2) of the Civil Code and the Constitution of the Czech Republic.
