The content of the Precedent No. 25/2018/AL regarding not being subject to deposit payment penalty for objective reasons in Vietnam

The content of the Precedent No. 25/2018/AL regarding not being subject to deposit payment penalty for objective reasons in Vietnam (Image from the Internet)

According to Decision 269/QD-CA in 2018, the Precedent No. 25/2018/AL regarding not being subject to deposit payment penalty for objective reasons has the following content:

Source of the Precedent:

Decision No. 79/2012/DS-GĐT dated 23-02-2012 by the Civil Court of the Supreme People's Court on the civil case "Dispute over deposit contract" in Ho Chi Minh City between the plaintiff Mr. Phan Thanh L and the defendant Mrs. Truong Hong Ngoc H; the person with related rights and obligations is Mr. Lai Quang T.

Position of legal Precedent content:

Paragraphs 1, 3, 4 of the "Court's assessment".

Summary of legal Precedent content:

- Legal case scenario:

The deposit contract is to secure the conclusion of a house sale contract agreed upon within a certain period. The party receiving the deposit must complete all procedures to obtain the house ownership certificate, and if violated, they must pay a penalty.

Upon expiration of the agreed period, if the party receiving the deposit has not been granted the house ownership certificate due to reasons from the competent state authority.

- Legal solution:

In this case, it must be determined that the party receiving the deposit cannot fulfill the commitment due to objective reasons, and the party receiving the deposit is not liable for the penalty.

Relevant legal provisions related to the legal Precedent:

Article 358 of the Civil Code of 2005 (corresponding to Article 328 of the Civil Code of 2015).

Keywords of the legal Precedent:

"Deposit contract"; "House sale contract"; "Penalty for deposit"; "Conclusion of contract"; "Objective reasons".

CASE CONTENT:

According to the lawsuit filed on July 20, 2009, the plaintiff Mr. Phan Thanh L stated:

On May 12, 2009, Mrs. Truong Hong Ngoc H agreed to sell house No. 1222C (new number 25/2) on 43rd Street, Ward T, District H, Ho Chi Minh City, which was auctioned by the Civil Enforcement Agency of Ho Chi Minh City under the decision to transfer property No. 786/QD-THA dated March 2, 2009. After the agreement, Mr. L deposited 2,000,000,000 dong for Mrs. H. In Article 5 of the deposit contract, the parties agreed that from the date of signing the contract, Mrs. H must complete all procedures to obtain the ownership certificate for the mentioned house, then sign a notarized sale contract; if the deadline is violated, Mrs. H must pay a penalty equivalent to the deposit amount of 2,000,000,000 dong. By the deadline of June 12, 2009, Mrs. H did not comply with the agreement, so the parties could not proceed according to the contract. On July 1, 2009, Mrs. H sent a letter requesting Mr. L to extend for 60 days. On July 7, 2009, Mr. L replied in a letter refusing to extend and requested Mrs. H to return the deposit money along with the penalty as agreed. After 05 months of contract violation, Mrs. H still did not fulfill the commitment, Mr. L filed a lawsuit demanding Mrs. H to refund the deposit and penalty, totaling 4,000,000,000 dong.

Mrs. Truong Hong Ngoc H presented:

Mrs. H admits to having an agreement to deposit to sell the above-mentioned house to Mr. L as Mr. L has presented. After receiving the deposit, Mrs. H tried to complete the procedures to be granted the house ownership certificate within the agreed 30-day period, but due to objective obstacles, she could not fulfill it. She admits to violating the commitment with Mr. L, agrees to return the deposit and interest according to the regulations, and does not agree to the penalty.

The person with related rights and obligations, Mr. Lai Quang T, presented:

Mr. T has been living with Mrs. H since 1997, without registering marriage. The above-mentioned house is the joint property of Mr. T and Mrs. H. Mr. T admits to receiving the deposit money from Mr. L together with Mrs. H. He agrees to return the deposit and interest to Mr. L according to the legal regulations, and does not agree to the penalty as requested by Mr. L.

In the civil case judgment 344/2009/DS-ST on November 11, 2009, the People's Court of Phu Nhuan District, Ho Chi Minh City, decided:

To accept the lawsuit request of Mr. Phan Thanh L with Mr. Duong Nguyen Y L as the representative.

To compel Mrs. Truong Hong Ngoc H to pay Mr. Phan Thanh L 4,000,000,000 VND immediately after the judgment takes legal effect.

In addition, the court of first instance also decided on the court fees and the right to appeal.

On November 18, 2009, Mrs. Truong Hong Ngoc H appealed and disagreed with the first-instance judgment.

On November 19, 2009, Mr. Lai Quang T appealed and disagreed with the first-instance judgment.

In the appellate civil case judgment 522/2010/DS-PT on May 6, 2010, the People's Court of Ho Chi Minh City decided:

To uphold the first-instance civil judgment number 344/DS-ST on November 11, 2009 of the People's Court of Phu Nhuan District, Ho Chi Minh City.

To accept the request of Mr. Phan Thanh L.

To compel Mrs. Truong Hong Ngoc H to pay Mr. Phan Thanh L 2,000,000,000 VND as a deposit and 2,000,000,000 VND as a penalty. In total, 4,000,000,000 VND immediately after the judgment takes legal effect.

To maintain the decision to apply temporary urgent measures number 495/2010/QD-BPKCTT on May 4, 2010 of the People's Court of Ho Chi Minh City, regarding the prohibition of transferring property rights for the house at 25/2, Street 43, Ward T, District H, Ho Chi Minh City.

In addition, the court of appeal also decided on the court fees.

On June 23, 2010, Mrs. Truong Hong Ngoc H filed a complaint stating disagreement with the compensation for the deposit, as she believed that the reason for not being able to fulfill the agreement within the deadline was due to objective factors, specifically the slow transfer of ownership of the house to Mrs. H by the enforcement agency, so Mrs. H could not transfer the ownership to Mr. L.

In the decision number 688/2011/KN-DS on November 18, 2011, the Chief Justice of the Supreme People's Court appealed the above-mentioned appellate judgment according to the directorial procedure, requesting the Civil Court of the Supreme People's Court to review and annul the above-mentioned appellate judgment and the first-instance civil judgment number 344/2009/DS-ST on November 11, 2009 of the People's Court of Phu Nhuan District, Ho Chi Minh City, and transfer the case file to the People's Court of Phu Nhuan District, Ho Chi Minh City for retrial according to the provisions of the law.

At the trial, the representative of the Supreme People's Procuracy agreed with the appeal of the Chief Justice of the Supreme People's Court, requesting the Trial Council to annul the appellate civil judgment number 522/2010/DS-PT on May 6, 2010 of the People's Court of Ho Chi Minh City and the first-instance civil judgment number 344/2009/DS-ST on November 11, 2009 of the People's Court of Phu Nhuan District, Ho Chi Minh City, and transfer the case file to the People's Court of Phu Nhuan District, Ho Chi Minh City for retrial according to the provisions of the law.

COURT'S OPINION:

[1] On May 12, 2009, Mr. Phan Thanh L deposited 2,000,000,000 VND with Mrs. Truong Hong Ngoc H to buy the house at 1222C (new number is 25/2) Street 43, Ward T, District H, Ho Chi Minh City, which was purchased at auction by Mrs. H on behalf of the Civil Enforcement Agency of Ho Chi Minh City, according to the decision on the transfer of assets number 786/QD-THA on March 2, 2009. Article 5 of the deposit contract states that within a 30-day period from the date of signing the contract, Mrs. H must complete the procedures to be granted the ownership certificate for the above-mentioned house, and then sign a notarized sales contract; if the above-mentioned deadline is violated, Mrs. H will be fined an amount equivalent to the deposit of 2,000,000,000 VND. After the deadline, Mrs. H did not fulfill the commitment, so Mr. L filed a lawsuit requesting Mrs. H to return the deposit of 2,000,000,000 VND and a penalty of 2,000,000,000 VND.

[2] Ms. Truong Hong Ngoc H disagreed with the penalty deposit, only agreeing to repay the deposit along with interest at the bank's interest rate, as she believed that the reason she could not fulfill the commitment was due to the civil enforcement agency being slow in transferring the property into her name.

[3] Considering the demand for the deposit penalty from Mr. Phan Thanh L, it was found that at the time Mr. L deposited 2,000,000,000 VND for Ms. Truong Hong Ngoc H, she had received the house but had not completed the transfer procedures as the civil enforcement agency of Ho Chi Minh City was managing all the relevant documents related to the house. Therefore, the fact that Ms. H did not have ownership rights to the house within 30 days as per the initial agreement needed to be reviewed, either due to Ms. H's negligence in contacting the civil enforcement agency to complete the transfer procedures or due to the agency's delay in transferring the property into her name.

[4] After the appellate trial, along with the complaint, Ms. H submitted to the Supreme People's Court a letter No. 4362/THA dated June 5, 2009 from the Civil Enforcement Department of Ho Chi Minh City. The content of the letter explained that the reason Ms. H, the winning bidder at the auction, had not completed the transfer procedures was due to a complaint from Mr. Nguyen Tan L1 demanding that Ms. Tram Thi Kim P pay the remaining 38 maces of SJC gold when Mr. L1 purchased the house. Therefore, in the re-trial, the Court needed to verify and obtain the original document No. 4362/THA dated June 5, 2009 from the Civil Enforcement Department of Ho Chi Minh City and the process of transferring ownership rights to the winning bidder by the civil enforcement agency. If there is evidence to determine that the civil enforcement agency was late in transferring ownership rights to Ms. H, the fault leading to Ms. H's inability to fulfill the commitment to Mr. L would be objective, and Ms. H would not be subject to the deposit penalty. If there is evidence to determine that Ms. H was late in completing the procedures to transfer ownership rights, the fault would entirely lie with Ms. H, and she would then be subject to the deposit penalty.

[5] The Court of First Instance and the Appellate Court did not verify or clarify the above issues but immediately accepted Mr. Phan Thanh L's lawsuit to compel Ms. Truong Hong Ngoc H to pay a deposit penalty of 2,000,000,000 VND, which was insufficient basis.

Based on the above reasons, pursuant to Clause 2, Article 291 and Clause 3, Article 297 of the Civil Procedure Code;

DECISION:

Annul the appellate civil judgment No. 522/2010/DS-PT dated May 6, 2010 of the People's Court of Ho Chi Minh City, and annul the first-instance civil judgment No. 344/DS-ST dated November 11, 2009 of the People's Court of Phu Nhuan District, Ho Chi Minh City, regarding the case "Dispute over a deposit contract" between the plaintiff Mr. Phan Thanh L and the defendant Ms. Truong Hong Ngoc H; the party with related rights and obligations being Mr. Lai Quang T.

Transfer the case file to the People's Court of Phu Nhuan District, Ho Chi Minh City for re-trial in accordance with the law.

CONTENT OF THE PRECEDENT

At Article 5 of the deposit contract, it is stated that, within 30 days from the date of signing the contract, Ms. H must complete the procedures to be granted the ownership certificate for the mentioned house, then will sign a notarized sales contract; if she violates the above deadline, Ms. H shall be fined an amount equivalent to the deposit of 2,000,000,000 VND. After the above deadline, if Ms. H does not fulfill her commitment, Mr. L will sue and demand Ms. H to return the deposit of 2,000,000,000 VND and a penalty of 2,000,000,000 VND.

At the time Mr. L deposited 2,000,000,000 VND for Ms. Truong Hong Ngoc H, Ms. H had received the house but had not completed the transfer procedures as the Civil Enforcement Agency of Ho Chi Minh City was managing all relevant documents related to the house.

If there is evidence that the civil enforcement agency is delayed in transferring the ownership rights to Ms. H, leading to Ms. H's inability to fulfill her commitment to Mr. L due to objective reasons, and Ms. H is not subject to the deposit penalty.

The above is the content of Precedent No. 25/2018/AL regarding not being subject to the deposit penalty for objective reasons.

Additionally, you can refer to the list of 39 Precedents announced and applied in Vietnam (the latest) here.

Best regards!