Judgment No. 11/2017/DS-ST dated september 26, 2017 on dispute over a credit agreement

 THE PEOPLE’S COURT OF QUANG BINH PROVINCE

JUDGMENT NO. 11/2017/DS-ST DATED SEPTEMBER 26, 2017 ON DISPUTE OVER A CREDIT AGREEMENT

On September 26, 2017, at the headquarters of the People’s Court of Quang Binh Province, a civil first instance trial is conducted to hear the civil case No. 18/2017/TLST-DS dated June 30, 2017 in the matter of “Dispute over credit agreement”, according to the Decision to Bring the Case to Trial No.  786/2017/QD-ST dated September 4, 2017, among the involved parties:

- Petitioner:  Vietnam Bank for Agriculture and Rural Development (hereinafter referred to as Agribank)

Address: No. 18, Street T, Ward M, District T, Hanoi City.

Legal representative: Mr. Tiet Van T - General Director of Agribank.

Authorized representative: Mr. Tran V - Director of Agribank, Branch Q, Quang Binh Province (under the Power of Attorney No. 509/QD-HDTV-PC dated June 19, 2017).

Address: No. 48Q, City D, Quang Binh Province.

Mr. Tran V appears in court.

- Respondent: Mr. Lai Huy V, born in 1976, residence: Village M, Commune B, City D, Quang Binh Province and Mrs. Nguyen Thi Kim L, born in 1977, registered permanent residence: Village M, Commune B, City D, Quang Binh Province, emigrated, unknown address. Mr. Lai Huy V appears in court, Mrs. Nguyen Thi Kim L does not appear in court.

FACTUAL AND PROCEDURAL BACKGROUND

Representation of the petitioner, BIDV, in the lawsuit petition dated June 13, 2017, voluntary statement and at the first-instance court hearing, through the authorized representative:

On July 21, 2016, Agribank Branch Quang T, Quang Binh (hereinafter referred to as the Bank), represented by Mr. Tran V - Director of Branch, together with Mr. Lai Huy V and Mrs. Nguyen Thi Kim L, entered into a credit agreement No. 201600055, stating that the Bank grants Mr. Lai Huy V and Mrs. Nguyen Thi Kim L a loan of VND 2,500,000,000 for house building, loan term of 60 months; interest rate of 10 percent per annum, overdue interest of 150 percent of the normal interest rate. At the time of signing the contract, Mr. V and Mrs. L are husband and wife.

The collateral for the loan repayment obligation under the mortgage agreements, with specific properties as follows:

- The mortgage agreement No. 55/2016/10TD dated July 21, 2016 between Mr. Lai Huy V, Ms. Nguyen Thi Kim L (the mortgagor) and Agribank branch T Quang Binh (the mortgagee).   The collateral is the land use right, ownership of houses and property on land (hereinafter referred to as the land use right) of the parcel No. 314, map sheet No. 35, area of 124.7m2, address:  Commune B, City D, Quang Binh province, certificate of land use right No. BB787280, issued by People's Committee of City D on November 15, 2010, bearing the names of Mr. Lai Huy V and Mrs. Nguyen Thi Kim L;

- The mortgage agreement No. 55/2016/10TD dated July 21, 2016 between Mr. Lai Huy V, Ms. Nguyen Thi Kim L (the mortgagor) and Agribank branch T Quang Binh (the mortgagee).   The collateral is the land use right of the parcel No. 281, map sheet No. 1, area of 260m2, address:  Commune B, City D, Quang Binh province, certificate of land use right No.O326093, issued by People's Committee of City D on July 12, 2000, bearing the name of Mr. Lai Huy V.

During the performance of the agreement, Mr. V and Mrs. L paid the Bank VND 356,300,000 of principal and VND 133,454,029 of normal interest.  After that, because Mr. V and Mrs. L violated the agreement and failed to pay the principal and interest in due time, the Bank carried forward the above loan to overdue debt from April 21, 2017. The Bank has also repeatedly urged loan repayment, but so far Mr. V and Mrs. L have not fulfilled their committed obligations.  Currently, the Bank detects that Mr. Lai Huy V and Mrs. Nguyen Thi Kim L have completed the divorce proceedings at the Court from February 2017, Mrs. Nguyen Thi Kim L has gone abroad but did not notify the Bank, Mr. Lai Huy V said that there was no information about the new residence of Mrs. L.

Therefore, the Agribank sued Mr. Lai Huy V and Mrs. Nguyen Thi Kim L asking to repay the amount of VND 2,143,700 of principal and VND 117,578,611 of interest (temporarily calculated until the date of first instance trial), the total of both principal and interest is VND 2,261,278,611.

Request Mr. Lai Huy V and Mrs. Nguyen Thi Kim L to pay the interest accrued until the principal is fully paid at the interest rate stated in the above credit agreement. In case Mr. V and Mrs. L cannot repay the debt, the Court is requested to handle the collateral in accordance with the mortgage agreements signed with the Bank to secure the debt repayment obligation.

On the respondent's side:

As for Mrs. Nguyen Thi Kim L, through verification from relatives and Immigration Administration, the Court determines that Mrs. L has emigrated abroad.  However, no one has information about the exact residence of Mrs. L in the foreign country, the Court has conducted the procedures to post up at the residence of Mrs. Nguyen Thi Kim L and announced on the mass media about the case but so far there is no news of Mrs. Le.

Representation of Mr. Lai Huy V in the voluntary statement, conciliation sessions and at the first instance trial: He admitted that he and Mrs. Nguyen Thi Kim, while they were married couple, they borrowed from Agribank Quang T Branch, Quang Binh a sum of money as stated in the credit agreements and the mortgage agreement that the plaintiff presented above for the purpose of building houses. During the performance of the agreements, Mr. and Mrs. L have paid the Bank the amount of VND 356,300,000 of principal and VND 133,454,029 of normal interest, but after that, the they had a conflict and resulting in a divorce in February 2017. Currently, Mrs. L has left, he has to raise the children by himself, so he has faced much financial hardship, he himself cannot repay the loan of the Bank so he agreed to dispose of the collateral to secure payment of the remaining debt.

Representative of the People's Procuracy of Quang Binh Province states:

* Regarding legal proceedings:

- The Judge and the Trial Panel have strictly abided by the procedural law provisions in the course of proceedings and settlement of the case.

- Mrs. Nguyen Thi Kim L has emigrated abroad; it is considered the case where the litigant changes their place of residence or work in association with the performance of rights and obligations in the agreement without notification to the Bank about the new residence or working place.  This is considered the case where the litigant intentionally hides the address and request the Court to continue resolving the case according to general procedures.

Since the case acceptance as well as at the trial today, the petitioner and the respondent have fully implemented the procedural rights and obligations in accordance with the law.

* Regarding the content: Request the trial panel to accept the petition of Agribank against Mr. Lai Huy V, Mrs. Nguyen Thi Kim L about the credit agreement dispute.

JUDGEMENT OF THE COURT

After considering the documents contained in the case files which have been verified at the trial and based on the results of the oral argument at the trial, the Trial Panel determines:

[1] In terms of court procedures: The respondent Mrs. Nguyen Thi Kim L is determined to have gone abroad during the performance of the agreement, which is considered the case where the litigant changes their residence or work in association with the performance of rights and obligations in agreement without notifying the Bank of the new residence or working place as prescribed in clause 3 Article 40, point b clause 2 Article 277 of the Civil Code 2015. So this case shall be considered as deliberately hiding the address, pursuant to Point a, Clause 2, Article 6 of Resolution 04/2017/NQ-HDTP in Viet Nam dated May 5, 2017 of the Council of Judges of the Supreme People's Court on guidance on Clauses 1 and 3, Article 192 of Civil Procedure Code 2015 in Viet Nam on returning of lawsuit petition, the right to file lawsuit again, the Court continues to resolve the case according to general procedures.

After accepting the case, the Court has posted the Notice of Acceptance at the last residence of Mrs. Le in Vietnam and announced it on the mass media in accordance with the law.  However, up to now, there has been no response from Mrs. Nguyen Thi Kim L. According to the provisions of Point a, Clause 1, Article 37 of the Civil Procedure Code, this case falls under jurisdiction of the People's Court of Quang Binh Province.

[2]. Regarding the content:

[2.1]. Agribank - Quang T branch Quang Binh, together with Mr. Lai Huy V and Mrs. Nguyen Thi Kim L, signed the credit agreement No. 201600055 on July 21, 2016. Accordingly, Mr. V and Mrs. L borrowed from the Bank for Agriculture and Rural Development Quang T Branch of Quang Binh with the amount of VND 2,500,000,000 for the purpose of building houses, interest payment term: every 3 months, on the 21st of each month, the loan interest rate at the time of signing the agreement: 10 percent per annum (p.a.). This interest rate will be adjusted to increase or decrease according to the bank's regulations; the overdue debt interest rate is 150 percent of the normal interest rate. The loan is secured by collateral which is the land use right of Mr. Lai Huy V and Mrs. Nguyen Thi Kim L.

Judgment of Trial Panel: Credit agreement No. 201600055 dated July 21, 2016, mortgage agreement No. 55/2016/10TD dated July 21, 2016, mortgage agreement No. 56/2016/10TD on July 21, 2016 signed between Mr. Lai Huy V, Mrs. Nguyen Thi Kim L and Agribank, Quang T Branch, Quang Binh are completely voluntary civil transactions with form and the content in compliance with the provisions of the law, not contrary to social ethics, registered for security transactions in accordance with the provisions of Decree No. 178/1999/ND-CP in Viet Nam dated December 29, 1999 of the Government on security of loans from credit institutions, so, they are deemed effective, giving rise to the rights and obligations of contracting parties. After being disbursed by the Bank the amount of VND 2,500,000,000, Mr. V and Mrs. L, at first, have fulfilled the obligation to repay principal and interest, but since April 21, 2017 until now, they have not fulfilled their obligations of loan repayment to the Bank, the loan under the above credit agreement of Mr. V, Mrs. L has been carried forward to overdue debt from April 21, 2017. On the other hand, the fact that Mr. V and Mrs. L completed the divorce procedure, Mrs. L then went abroad without notifying the Bank that it violated the commitments that the two parties agreed on in the Agreement.  The petitioner is well-grounded when requiring Mr. Lai Huy V and Mrs. Nguyen Thi Kim L to repay the principal and interest in debt to the Bank or, in case of inability to repay the debt, dispose of the collateral to pay the debt pursuant to Article 721 of the Civil Code 2005 in Viet Nam.

[2.3]. According to the interest spreadsheet presented by the petitioner's representative at the trial, as of the date of the first instance trial (September 26, 2017), Mr. Lai Huy V and Mrs. Nguyen Thi Kim L owed the Bank a total amount of VND 2,261,278,611, in which:  principal is VND 2,143,700,000 and overdue interest and normal interest are VND 117,578,611.

- In term of normal interest rate:  Pursuant to Clause 2, Article 91 of the Law on Credit Institutions 2010 in Viet Nam; Decision No. 2868/QD-NHNN in Viet Nam dated November 29, 2010 of the State Bank on the announcement of the basic interest rate of 9 percent p.a., Article 1 of Decision No. 16/2008/QD-NHNN in Viet Nam dated May 16, 2008 by the State Bank of Vietnam on management mechanism of the basic interest rate, the lending interest rate provided by Agribank - Quang T Branch, Quang Binh from disbursement date to April 21, 2017 is 10 percent p.a., which is in accordant with Article 476 of the Civil Code 2005 .

- In terms of overdue interest rate: Pursuant to Articles 474 and 476 of the Civil Code 2005; Decision No. 2868/QD-NHNN dated November 29, /2010 of the State Bank on the announcement of the basic interest rate of 9 percent p.a., so disbursement from April 21, 2017 until the end of 26/9/2017, the re-application of overdue debt rate of 150 percent p.a. is appropriate and does not go beyond the provisions of the Civil Code, so it is accepted.

[2.4]. The collateral for the loan of Mr. Lai Huy V and Mrs. Nguyen Thi Kim L at the Bank includes: the land use right of the parcel No. 314, map sheet No. 35, area of 124.7m2, address:  Commune B, City D, Quang Binh province, certificate of land use right No. BB787280, issued by People's Committee of City D on November 15, 2010, bearing the names of Mr. Lai Huy V and Mrs. Nguyen Thi Kim L; under the mortgage agreement No. 55/2016/10TD July 21, 2016 and land use rights of land parcel No. 281, map sheet No. 1, area 260m2, address:  Commune B, City D, Quang Binh Province, certificate of land use right No. O326093, issued by the People's Committee of City D on July 12, 2000, in the name of Mr. Lai Huy V under the mortgage agreement No. 56/2016/10TD dated July 21, 2016, will be disposed of to secure the debt repayment obligation of Mr. Lai Huy V and Mrs. Nguyen Thi Kim L.

[3] Regarding first instance civil court fee: Pursuant to Clause 1 Article 147 of the Civil Procedure Code 2015; pursuant to clause 2 Article 26 of Resolution No. 326/2016/UBTVQH14 in Viet Nam dated December 30, 2016 of the National Assembly Standing Committee, stipulating the court fees and charges, collection, exemption, reduction, management, and use thereof: respondents Mr. Lai Huy V and Mrs. Nguyen Thi Kim L must bear the court fee as the petition filed by the petitioner is accepted by the Court.

Mr. Lai Huy V and Mrs. Nguyen Thi Kim L are subject to first-instance civil court fee of VND 77,225,572 since they lose the lawsuit, but Mr. Lai Huy V has a request stating that his family is suffering financial hardship because the typhoon No. 10 washed away all property with certification of the local government, the Trial Panel finds that it was a force majeure event due to the recent typhoon No. 10 happened in Quang Binh Province, so, the Trial Panel finds just to consider reducing 50 percent of the court fee for Mr. Van.  Thus, Mr. V and Mrs. L must pay civil court fee of VND 38,612,500.

With reference to the right to appeal: The litigants have a right to appeal the judgment as per the law.

Therefore;

DISPOSITION

Pursuant to Articles 121, 122, 471, 474, 476, 715, 717, 720, 721 of the Civil Code 2005.

Pursuant to Point a Clause 1 Article 37, Clause 1 Article 147, Point e Clause 1 Article 192, Article 273, Article 479 of the Civil Procedure Code 2015;

Pursuant to Point a, Clause 2, Article 6 of Resolution 04/2017/NQ-HDTP dated May 5, 2017 of the Council of Judges of the Supreme People's Court on guidance on Clauses 1 and 3, Article 192 of the Civil Procedure Code 2015 on returning of the petition, the right to file a lawsuit again; Clause 2, Article 26 of Resolution No. 326/2016/UBTVQH14 dated December 30, 2016 on the court fees and charges, collection, exemption, reduction, collection, management and use thereof:

1. Accept the petition of the Agribank, and force Mr. Lai Huy V and Mrs. Nguyen Thi Kim L to repay the debt to the Agribank: VND 2,261,278,611, in which principal: VND 2,143,700,000, interest up to the date of first instance trial (September 26, 2017): VND 117,578,611.

2. The land use right of the parcel No. 314, map sheet No. 35, area of 124.7m2, address:  Commune B, City D, Quang Binh province, certificate of land use right No. BB787280, issued by People's Committee of City D on November 15, 2010, bearing the names of Mr. Lai Huy V and Mrs. Nguyen Thi Kim L; under the mortgage agreement No. 55/2016/10TD July 21, 2016 and land use rights of land parcel No. 281, map sheet No. 1, area 260m2, address: Commune B, City D, Quang Binh Province, certificate of land use right No. O326093, issued by the People's Committee of City D on July 12, 2000, in the name of Mr. Lai Huy V under the mortgage agreement No. 56/2016/10TD dated July 21, 2016, will be disposed of to secure the debt repayment obligation of Mr. Lai Huy V and Mrs. Nguyen Thi Kim L.

After the judgment takes legal effect, the judgment creditor, the Agribank, requests the enforcement of judgments, requests the disposal of collateral, which is the land use right of Mr. Lai Huy V and Mrs. Nguyen Thi Kim L to secure the judgment execution obligation, the above land and housing papers (currently maintained by Agribank Quang T branch, Quang Binh) will be transferred to the Department of Civil Judgment Enforcement of Quang Binh Province to handle according to the provisions of the Law on Enforcement of Civil Judgments.

With reference to court fees:

Mr. Lai Huy V and Mrs. Nguyen Thi Kim L have to pay the first-instance civil court fee of VND 38,612,500;

Reimburse to Agribank Quang T Branch Quang Binh VND 38,167,000 of the court fee advance paid according to the receipt of court fee advance No. 0000086 dated June 29, 2017 Department of Civil Judgment Enforcement of Quang Binh Province.

Following the date of first instance judgment (September 26, 2017) until the judgment debtor has paid off the principal, each month, the judgment debtor is obliged to pay the interest accrued on the unpaid principal (including normal interest and overdue interest) according to the interest rate stated in Credit Agreement No. 201600055 dated July 21, 2016.

In case the judgment or court decision is enforced as per regulations in Article 2 of the Law on enforcements of civil judgments 2008, the judgment creditor and judgment debtor are lawfully allowed to reach an agreement on judgment enforcement, request judgment enforcement, be subject to voluntary execution or coercive judgment enforcement in compliance with regulations in Article 6, 7 and 9 of the Law on enforcement of civil judgments.  The effective period of judgment enforcement shall comply within provisions in Article 30 of the Law on enforcement of civil judgments in Viet Nam.

Agribank Quang T Branch, Quang Binh and Mr. Lai Huy V have the right to appeal this judgment within 15 days from the date of pronouncement; Mrs. Nguyen Thi Kim L has the right to appeal. within 30 days after receiving the judgment or the judgment is duly served