Cassation judgment No. 05/2008/DS-GDT dated April 3, 2008 regarding dispute over borrowing contract

THE SUPREME PEOPLE’S COURT 

CASSATION JUDGMENT NO. 05/2008/DS-GDT DATED APRIL 3, 2008 REGARDING DISPUTE OVER BORROWING CONTRACT 

On April 3, 2008, the cassation trial was conducted at the office of the Supreme People’s Court to hear the civil case of dispute over borrowing contract between:

Plaintiff:

Mr. Nguyen Quang Thuat, born in 1964, residing at 217 Le Duan, Hanoi city.

Defendant:

1. Mr. Soudent Thavixay, born in 1947, nationality: Thailand and Laos;

2. Mrs. Nguyen Thi Tuyet Hoa - Mr. Soudent Thavixay’s wife), born in 1976;

Both residing at 12-22-34 Lot I, Cong Vi ward (now is 16, alley 71, Linh Lang neighborhood, Cong Vi ward, Ba Dinh district, Hanoi city; represented by Mr. Vu Quang Huy (Letter of Authorization dated December 22, 2004).

DEEMING THAT

Representation of Mr. Nguyen Quang Thuat in the lawsuit petition dated November 1, 2004 and during the lawsuit settlement:

In 1990, he and Mr. Soudent Thavixay (hereinafter referred to as Mr. Soudent) have known each other through business, since then the relationship between them became closer as brothers. Since 1995, Mr. Soudent was in desperate need of capital for real estate business and investment in a number of big projects (such as: the joint venture to manufacture automobile and motorbike parts in Van Lam - Hung Yen, the Ha Long Dream hotel joint venture in Quang Ninh) so he persuaded Mr. Thuat to invest, but Mr. Thuat did not agree. He raised capital and lent money to Mr. Soudent several times but cash receipt was not always made every time the money was lent. On August 18, 2000, at the private house of Mr. Soudent, to confirm and aggregate loans that had been granted, he and Mr. Soudent made a “Debt Acknowledgment Letter” specifying that: Mr. Soudent and Mrs. Hoa borrowed him VND 19.200.000.000 and USD 550.000 and committed to repay them before October 30, 2000; Mr. Soudent, on behalf of Mr. Hoa, sign the Letter in front of him; Mr. Soudent and Mr. Soudent’s wife and he unanimously cancel all debt acknowledgment letters made previously and consider this “Debt Acknowledgment Letter” as the only letter which is valid for payment purpose.

When the payment was due, he requested many times but Mr. Soudent did not repay and gave the house 68 Mai Hac De, Hanoi as payment of the debt and promised to complete paperwork to transfer the house to him. After that, he repaired the house and moved here. Mr. Soudent, however, did not complete paperwork to transfer the house to him and denied that he gave the house 68 Mai Hac De as payment of the debt. On August 1, 2003, Soudent filed a lawsuit reclaiming the house 68 Mai Hac De, stating that Mr. Thuat was staying in the house of Mr. Soudent as a free-rent shelter.  During the time the court resolved the case of the house 68 Mai Hac De, he often went on business, so it was not possible to present the issues related to the house 68 Mai Hac De given as payment of the debt as well as the debt of VND 19,200,000,000 and USD 550,000 that Mr. Soudent and Mrs. Hoa owed him.

The date of “Debt Acknowledgment Letter” is the date after Mr. Soudent returned to Vietnam from aboard; the two parties agreed to take the due date of previous Debt Acknowledgment Letter which is August 18, 2000 (the previous Debt Acknowledgment Letter date is from June 18, 2000 to August 18, 2000) for continuation of the repayment schedule as the basis for due date October 30, 2000. He did not notice the date of debt acknowledgment letter is August 18, 2000, but only paid attention to the repayment of Mr. Soudent.

On November 18, 2000 (the date on which the Debt Acknowledgment Letter was actually made), Mr. Soudent also signed a “Commitment to Repay Letter", specifying that Mr. Soudent confirmed the above Debt Acknowledgment Letter and committed to repay the debt as soon as possible; and in order to prove the commitment, Mr. Soudent and Mrs. Hoa agreed to give the house 68 Mai Hac De to him as payment of the debt and would complete paperwork to transfer the house to him if Mr. Soudent and Mrs. Hoa default on the debt.

Mr. Soudent and Mrs. Hoa's long-term debt (from 1995 to 2000) was indicated in "Debt Acknowledgment Letter" and "Commitment to Repay Letter," but they have not paid the debt yet.  So, he asked the court to force Mr. Soudent to pay him the principal and interest in accordance with the law; furthermore, to distil and distribute some of Soudent's existing assets such as distrain and liquidate a number of existing property of Mr. Soudent and Mrs. Hoa such as:  the house 68 Mai Hac De, Hanoi; the house I12, I22, I34, Cong Vi ward, Ba Dinh district, Hanoi city to ensure the trial and judgment enforcement.

Representation of the defendants Mr. Soudent Thavixay and Mrs. Nguyen Thi Tuyet Hoa (represented by Mr. Vu Quang Huy): The date of “Debt Acknowledgment Letter” is August 18, 2000, however, he was not present in Vietnam on that day. Mr. Thuat claims that Mr. Soudent used the seal of the BKS company, but he did not know this company. While working as a Director of Ha Long Dream Hotel Joint Venture Company, due to frequent travel missions, he bore his signature in some papers (without content therein) for staff to use them in the work.  Mr. Thuat is an employee of the company. He used some of papers which were already signed by him and then filled out the untrue content that Mr. Soudent had borrowed money from Mr. Thuat.

Using the same trick, Mr. Thuat forged "Commitment to Pay Letter" dated November 18, 2000 to take possession of his house 68 Mai Hac De. It is clear to say that Mr. Thuat forged such a commitment letter: the Commitment to Repay Letter was made on November 18, 2000, but Mr. Soudent and Mrs. Hoa did not receive a certificate of ownership of the house until November 15, 2001, so they cannot bring the property not under their ownership as payment of the debt.

Mr. Thuat was an employee of Ha Long Dream Hotel Joint Venture Company. Due to closer relationship, he helped Mr. Thuat in his need and employed him to the company. At the time, Mr. Thuat had no house; before 2000, Mr. Thuat cannot have such a large amount of money to lend him. Mr. Thuat lost the case in the lawsuit reclaiming the house 68 Mai Hac De, so, he tried to forge documents to seize the house from him and his wife, his act shows signs of a criminal offence. Mr. Soudent asked to determine the origin of money that Mr. Thuat lent him, verify the Debt Acknowledgment Letter and Commitment to Repay Letter, verify if BKS company exists. Furthermore, he and his wife denied all of requests of Mr. Thuat.

In the First Instance Civil Judgment No. 54/DS-ST dated August 5, 2005, the People’s Court of Hanoi City judged:

- Accepting Mr. Thuat's request reclaiming the debt from Mr. Soudent and Ms. Hoa; compelling Mr. Soudent and Mrs. Hoa to pay the amount of VND 19.200.000.000 and USD 550.000 equivalent to VND 8.706.500.000.  And the interest: 19.200.000.000 VND x 56 months x 0,3% = 3.335.600.000 VND.  The total amount of Mr. Soudent and Mrs. Hoa had to pay Mr. Thuat is VND 31.132.100.000.

- Since the first-instance trial date August 5, 2005, Mr. Soudent and Mrs. Hoa may not sell the house 68 Mai Hac De to ensure the judgment enforcement.

In addition, the judgment also determined the court fees and the right to appeal.

On August 8, 2005, Mr. Soudent appealed the first instance judgment on the ground that the court ordered him to repay debt under a fake Debt Acknowledgment Letter.

On August 15, 2005, Mr. Thuat filed an appeal, requesting the application of blockade of 12-22-334 Lot I, Co Vi, Ba Dinh, Hanoi of Mr. Soudent and Mrs. Hoa to ensure fulfillment of obligations.

In the appellate civil judgment No. 86/2006DSPT dated April 20, 2006, the Appellate Court of the Supreme People’s Court in Hanoi judged:

- Accept the Mr. Thuat’s request for reclaiming debt against Mr. Soudent and Mrs. Hoa represented by Mr. Quang Huy.

- Compelling Mr. Soudent and Mrs. Hoa (represented by Mr. Huy) to repay Mr. Thuat the debt of amounting to VND 19.200.000.000 and USD 550.000 equivalent to VND 8.706.500.000 and interest equal VND 19.200.000.000 x 56 months x 0.3% = VND 3.225.600.000.  The total amount of Mr. Soudent and Mrs. Hoa had to pay Mr. Thuat is VND 31.132.100.000.

- Since the date of the first instance trial (August 5, 2005), Mr. Soudent and Mrs. Hoa have not been allowed to transfer the house ​​68 Mai Hac De, Hanoi and since the date of the appellate trial (April 20, 2006), Mr. Soudent and Mrs. Hoa are not allowed to transfer the house ​​12,22,34, lot I, Cong Vi ward, Ba Dinh, Hanoi to ensure the judgment enforcement.

In addition, the judgment also determined the court fee.

After the appellate trial, Mr. Soudent and Mrs. Hoa filed several claims requesting a review of the appellate judgment on the grounds that the court was incorrect when forcing him and his wife to repay Mr. Thuat while the Debt Acknowledgment Letter and Commitment to Repay Letter are fake documents; he asked for his signature in the Commitment to Repay Letter to be verified but it had not been assessed; he also asked the origin of money that Mr. Thuat lent him; and what company that the BKS's seal belongs to?  He denied his signature in the Money Transfer Order dated August 21, 2000. The court was wrong when taking marital property between him and his wife for judgment enforcement while Mrs. Hoa was unrelated to the borrowing.

In the Appeal No. 236/2007/KN-DS dated December 28, 2007, the Chief Justice of the Supreme People’s Court appealed the Appellate Judgment No. 86/2006/DSPT dated April 20, 2006 of the Appellate Court of the Supreme People’s Court of Hanoi city and requested the Council of Judges of the Supreme People’s Court in charge of cassation trial to quash the above Appellate Judgment and the First Instance Judgment No. 37/2005/DSST dated August 5, 2005 of People’s Court of Hanoi city, refer the case to People’s Court of Hanoi city for re-conduct the first instance trial as per the law.

At the cassation court hearing, representative of the Supreme People’s Procuracy requests the Council of Judges of the Supreme People’s Court to accept the Appeal No. 236/2007/KN-DS dated December 28, 2007 of the Chief Justice of the Supreme People’s Court.

CONSIDERING THAT

Mr. Nguyen Quang Thuat declared that he and Mr. Soudent have had business relationship since 1990, from 1995 to 2000, Mr. Thuat lent money to Mr. Soudent for business purpose. Mr. Thuat presented a document with the title “Debt Acknowledgment Letter” dated August 18, 2000 with the signature of Mr. Soudent (bearing the seal of B.K.S International Co., Ltd., Bangkok Thailand), indicating that Mr. Soudent and Mrs. Hoa borrowed Mr. Thuat a sum of VND 19.200.000.000 and USD 550.000, due date: October 30, 2000. Furthermore, Mr. Thuat presented a document with the title “Commitment to Repay Letter” dated November 18, 2000 with the signature of Mr. Soudent, indicating that Mr. Soudent and Mrs. Hoa certified the borrowing and committed to repay the debt as soon as possible, and handed over the house as a security and complete the paperwork soon. Mr. Soudent claimed that he bore his signatures in a number of papers (without content) in order for staff to use in the work, Mr. Thuat, who was used to his employee, used these papers which were already signed by him and filled out untrue content that he had borrowed money from Mr. Thuat like Debt Acknowledgment Letter and Commitment to Repay Letter.

Both Debt Acknowledgment Letter dated August 18, 2000 and Commitment to Repay Letter dated November 18, 2000 are not document forms, only bear signature of Mr. Soudent, without a witness, and the seal affixed on the signature belongs to an unidentifiable company. The Debt Acknowledgment Letter dated August 18, 2000 states that “…I hereby make and, on behalf of my wife, sign this document at our house, in a state of complete consciousness, without any force to certify the borrowing sum and due date as mentioned above..."; however, on this date, Mr. Soudent was not present in Vietnam (pursuant to the Official Dispatch No. 80/P2 dated March 11, 2005, Immigration Department affiliated to the Ministry of Public Security certifies that Mr. Soudent left Vietnam on August 15, 2000 and entered Vietnam on August 27, 2000). Mr. Thuat claimed that Mr. Soudent signed the Debt Acknowledgment Letter after he returned to Vietnam, and the date August 18, 2000 stated in the Debt Acknowledgment Letter was written for the continuity of time (rounding the debt period); however, Mr. Thuat did not produce evidence to prove that this explanation is grounded. On the other hand, the Commitment to Repay Letter dated November 18, 2000 states that Mr. Soudent and Mrs. Hoa handed over the house 68 Mai Hac De to Mr. That as a security and would complete the transfer paperwork if Mr. Soudent and Mrs. Hoa default on the debt; however, while the People’s Court of Hanoi City and Appellate Court of the Supreme People’s Court of Hanoi city were hearing the case reclaiming the house 68 Mai Hac De between Mr. Soudent, Mrs. Hoa and Mr. Thuat (in 2003 and 2004), Mr. Thuat did not present the Commitment to Repay Letter to request the court to compel the handover of the house as committed but still claimed that they gave the house 68 Mai Hac De to Mr. Thuat. The Commitment to Repay Letter was only be presented when Mr. Soudent protested that: on August 18, 2000, Mr. Soudent was not presented in Vietnam and Immigration Department affiliated to the Ministry of Public Security certified that Mr. Soudent left Vietnam on August 15, 2000 and entered Vietnam on August 27, 2000 in the Official Dispatch No. 80/P2 dated March 11, 2005. During the lawsuit settlement, Mr. Soudent asked for his signature United Nations the Money Transfer Order dated August 21, 2000 at the ANZ bank to be verified (Mr. Thuat presented this paper to prove that Mr. Soudent was presented in Vietnam on August 21, 2000), and verify what company that the seal in the Debt Acknowledgment Letter belongs to; however, the first instance court and the appellate court failed to do so. Accordingly, it was ungrounded to prove that Mr. Thuat lent Mr. Soudent and Mrs. Hoa VND 19.200.000.000 and USD 550.000 solely based on the Debt Acknowledgment Letter dated August 18, 2000 and Commitment to Repay Letter dated November 18, 2000, and the signature of Mr. Soudent in the Money Transfer Order dated August 21, 2000.

With regard to the origin of money Mr. Thuat lent Mr. Soudent, he stated that a part of that sum of money was saved by him and his wife, a part was raised from his relatives (in which, his mother gave him more than 300 taels of gold and more than VND 100.000.000, Mrs. Nguyen Thi Chau and Mr. Nguyen Huu Ngoc, who have lived abroad, transferred him USD 500.000 and VND 5.000.000.000), and the remaining sum of money was borrowed from Mrs. Huong (VND 3.700.000.000, USD 25.000 and gold). Borrowing money and transferring foreign currency from abroad in such large amount, but he could not produce evidence documents; meanwhile, during the legal proceedings, Mr. Soudent requested verification of the origin of the money, but the first instance court and the appellate court failed to clarify them.

In addition, the Debt Acknowledgment Letter stated that Mr. Soudent and Mrs. Hoa used the borrowing sum of money to buy the house and deposited it to Vietcombank to wait for investment projects, but Mrs. Hoa did not sign the document; furthermore, there is no document showing that Mr. Soudent and Mrs. Hoa borrowed money for use in the general purpose of the family, but the first instance court and the appellate court compelling Mrs. Hoa to take joint debt liability with Mr. Soudent is incorrect.

From the above analysis, it is necessary to overrule the first instance judgment and the appellate judgment for first instance re-trial, in the direction of collecting more evidence to clarify the above contents, If Mr. Thuat cannot give extra proof of his petition, his request must be rejected.

After the appellate trial, on May 25, 2006 and January 5, 2007, the Civil Judgment Enforcement of Hanoi city has partially enforced the above-mentioned Appellate Judgment (the Civil Judgment Enforcement of Hanoi city has forcibly collected Soudent USD 8.906,82 at Bangkok Bank and sold the house at No. 68 Mai Hac De, Bui Thi Xuan Ward, Hai Ba Trung District, Hanoi for 7.362.000.000 at auction); therefore, in the first instance re-trial, the first instance court should take the person who purchased the auction house 68 Mai Hac De to participate in proceedings as the person with related interests.

According to facts and matters, pursuant to Clause 3 Article 291, Clause 3 Article 297 and Clause 2 Article 299 of the Civil Procedure Code;

HEREBY DECIDES

1. Overrule the Appellate Civil Judgment No. 86/2006/DSPT dated April 20, 2006 of Appellate Court of the Supreme People’s Court of Hanoi city and First Instance Civil Judgment No. 37/2005/DSST dated August 5, 2005 of the People’s Court of Hanoi City regarding the dispute over borrowing contract between plaintiff-Mr. Nguyen Quang Thuat and defendant-Mr. Soudent Thavixay and Mrs. Nguyen Thi Hoa.

2. Refer the case file to People’s Court of Hanoi City for re-conducting the first-instance trial as per the law.

Grounds for quashing the first instance judgment and appellate judgment:

There are insufficient grounds to conclude that whether a borrowing agreement between the defendant and the plaintiff exists as determined by the courts.