The Constitutional Court of the Republic of Belarus, comprising of the Presiding Officer - Chairman of the Constitutional Court G.A. Vasilevich, judges T.S. Boiko, K.I. Kenik, V.V. Podgrusha, A.A. Sarkisova, A.G. Tikovenko, R.I. Filipchik, G.B. Shishko, V.Z. Shuklin, has examined on the grounds of Article 40 and part one of Article 116 of the Constitution complaints of house building co-operatives concerning constitutionality of effective procedure for indexation and repayment of shares established by Temporary provision on procedure of indexation of shares repaying for citizens in case of their dropping out of house building co-operatives.

Thus, the Constitutional Court has been received complaint of a youth house building co-operative (hereafter - YHBC) "Kind neighbours" which has carried out construction of a dwelling house since November 1999 in the city of Minsk in microraion Malinovka-6.

Due to rise in the cost of building in 2000 a part of co-operative members has dropped out of it composition. Repayment of shares has been carried out in accordance with YHBC Statute, i.e. after admission of new members of the co-operative. However, because of high construction cost, admission of new members was not active. As a result of that several former HBC members have appealed to the court of law against co-operative on recovery from it shares and grounded their requirements by the reference to Temporary provision on procedure of indexation of shares repaying for citizens in case of their dropping out of house building co-operatives (HBC) approved by Resolution of the Cabinet of Ministers of the Republic of Belarus of 6 June 1996 No. 375 (hereafter - Temporary provision).

According to the Temporary provision in case of voluntary dropping out or expulsion of citizens from HBC which carry out construction of dwelling houses, their shares shall be indexated depending on change of cost of building and assembling works (point 4) and shall be repaid in terms fixed by HBC board, but 2 months from the day of dropping out (exclusion) of a citizen from co-operative at the latest (point 5). The court of Central district of the city of Minsk has satisfied the claim. In order to secure execution of decision the court has arrested the account of YHBC, to which budget purpose funds (subsidies) have been transferred for building, as well as funds of purpose loan allocated by Minsk Tractor Plant for its workers for building dwelling accommodations. YHBC considers that the court's decision shall infringe upon the constitutional rights of citizens who have remained to be YHBC members and who continue to take part in the process of building whereas: first, co-operative has no possibility to make repayment of shares for former members before admission of a new member, since there is no sources for those repayments; secondly, indexated cost of shares of all HBC members according to the procedure envisaged by the Temporary provision will excess balance cost of all incomplete building, that shall lead to violation of the rights of the citizens remained in co-operative.

The Constitutional Court, having analyzed Articles 2, 7, 13, 21, 22 and 48 of the Constitution of the Republic of Belarus, Articles 44, 46, 116, 214 of the Civil Code of the Republic of Belarus, Articles 107, 109 of the Housing Code of the Republic of Belarus, relevant provisions of Exemplary Statute of a house building co-operative approved by Resolution of the Council of Ministers of BSSR of 15 November 1984 No. 400 (with further alteration and addenda), found the following. House building co-operative - is an organization of citizens who carry out building which is created for the purposes of building dwelling house (houses) and for further operation and management of it (them) (Article 107 of the Housing Code). Property of a house building co-operative like property of other consumer co-operatives in accordance with point 1 of Article 116 of the Civil Code shall be formed as a result of pooling of the shares by its members. Property assigned to a house building co-operative by its members, as well as property acquired by a house building co-operative shall be its ownership (point 3 of Article 214 of the Civil Code). Members of a house building co-operative shall have liability rights as regards such a co-operative (point 2 of Article 44 of the Civil Code).

According to Article 109 of the Housing Code a member of a house building co-operative, another organization of citizens who carry out building shall have the right to withdraw from an organization at any time with realization of the cost of his/her share. Exemplary Statute of a house building co-operative envisages that a member of a co-operative shall have the right to withdraw voluntary from a co-operative at any time of its existence (sub-point 34.3). A person, who has dropped out of a co-operative, shall be repaid the sum of shares paid therein, i.e. the reduced sum in accordance with wear of a flat and the wear shall be determined under the norm of amortization for full renovation of a flat with the time of its use taken into account. The specified sum shall be repaid after making relevant contributions by a newly admitted member of a co-operative (point 57).

Thus, the Exemplary Statute shall regulate the issues of calculation as regards flats which are in operation. In case of withdrawal (exclusion) of citizens from HBC which carry out building of dwelling houses, Temporary provision establishes other procedure for repayment of shares for citizens. These shares shall be subject to indexation depending on changing cost of building and assembling works and shall be repaid in terms specified by the board of HBC two months after the day of withdrawal (exclusion) of a citizen from a co-operative at the latest.

The Constitutional Court deems that such a procedure of repayment of shares for citizens in case of their withdrawal (exclusion) from house building co-operatives which carry out building of dwelling houses shall not envisage the peculiarities of creation and expenditure of HBC financial resources. As a result there is an interference with the rights and lawful interests of citizens who preserve their membership in a co-operative, as well as of HBC as a whole as a legal entity. The Constitutional Court is based its arguments in the following way. A share, made by a member of HBC which carries out building of a dwelling house, shall obtain materialized nature: that is not monetary funds on a personal account of a shareholder, but a building (built) flat and auxiliary premises and equipment of a dwelling house (vestibules, corridors, galleries, flights of stairs, landings, lift halls, inside house engineering equipment etc.) which are appropriate to the share of each HBC member in financing of the specified building. In that connection the recovery of monetary funds, which are subject to be repaid for a former member or a member excluded from a co-operative, shall be possible, as a rule, only under the condition of admission of a new HBC member and making by that member initial shares which shall be equal to the cost of a payable share. The main purpose of shares making by HBC members shall be building of a dwelling house.

Those monetary funds made by HBC members shall be the sum which is necessary for building not a single flat of each HBC, but for building the whole house as unified complex. Therefore, there is a mutual responsibility among HBC members on proper performance of their duties for timely building of a dwelling house and its putting into operation. Since the Temporary provision envisages the obligation of a house building co-operative to repay shares for former members within two month period regardless of admission of a new member instead of the left one, then HBC before admission of a new member is taken monetary funds therefrom made by other participants for building (completion) of a house. Such a procedure is not in conformity with approaches of the lawmaker towards regulation of similar relations.

Thus, for instance, outpayment of the cost of a share for a leaving (excluding) participant of an economic partnership or society shall be carried out within the period up to 12 months from the date of application for withdrawal or adoption of decision about exclusion, unless otherwise stipulated by constituent documents (point 2 of Article 64 of the Civil Code); outpayment of the cost of a share or giving other property for a leaving member of a production co-operative shall be made after the end of a financial year and after the approval of an account balance of a co-operative, unless otherwise stipulated by regulations of a co-operative (point 1 of article 111 of the Civil Code). The given norms of the Civil Code shall have disposition nature.

Therefore, constituent documents may specify other terms including those exceeding the terms fixed by the lawmaker. In that connection, in the opinion of the Constitutional Court, for the repayment of shares for citizens who have left or have been excluded from HBC which carry out housing construction authorized bodies may fix other more long in comparison with those exist terms for repayment of shares (for example, up to 6 months).

The Constitutional Court emphasized that the terms for payment of indexated sums of shares for those HBC members who have left at their own desire or have been excluded therefrom may not be co-ordinated with entry of new members into HBC instead of those who have left only in case, if a co-operative will command special funds. Procedure and conditions for forming resources of payments of that kind should be specified in the legislation about house building co-operatives, other organizations of citizens who carry out building, as well as in constituent documents of HBC, HC etc.

In the opinion of the Constitutional Court in the presence of special reasonable excuses state bodies, economic entities etc. may become guarantors of those outpayments. In those instances it may be possible to insure damage risk of HBC as a result of changing the conditions of activities due to reasons beyond its control (with proper legal regulation of the relations in question).

Based on the aforestated and guided by Article 40, part one of Article 116 of the Constitution, by Articles 1, 7, 11, 36, 38, 40, 40¹ of the Law "On the Constitutional Court of the Republic of Belarus" the Constitutional Court

RULED:

1. To note, that the terms for recovery of the specified payments, envisaged by the Temporary provision on the procedure of indexation of shares repaying for citizens in case of their withdrawal from house building co-operatives approved by Resolution of the Cabinet of Ministers of the Republic of Belarus of 6 June 1996 No. 375, shall not take into account the peculiarities of creation and expenditure of financial resources of house building co-operatives that shall infringe upon the rights and lawful interests of members of co-operatives, make worse functioning of house building co-operatives as legal persons, delay completion of construction of dwelling houses and putting them into operation.

2. To propose the Council of Ministers of the Republic of Belarus: to determine the procedure of repayment of shares which shall secure legal protection of both those members who are leaving house building co-operatives, and those who remain to be members of house building co-operatives, other organizations of citizens who carry out building; to provide for possible mechanisms of rendering assistance for house building co-operatives, for other organizations of citizens who carry out building in settling issues concerning repayment of shares for citizens who have left a co-operative (other organizations of citizens who carry out building) taken into account good nature of reasons of withdrawal, other noteworthy circumstances. In case of necessity to prepare and submit relevant proposals to the lawmaker. 

3. The present Decision shall come into legal force from the date of its adoption.

4. To publish the present Decision in accordance with effective legislation.

Presiding Officer —

Chairman of the Constitutional Court

of the Republic of Belarus                                                                                               G.A. Vasilevich