Precedent No. 39/2020/AL was adopted by the Council of Justices of the Supreme People’s Court on August 13, 2020, and published under Decision No. 276/QD-CA dated October 02, 2020, by the Chief Justice of the Supreme People’s Court.
1. What is a precedent?
Precedent refers to arguments and rulings in legally effective judgments or decisions of the Court regarding a specific case, selected by the Council of Justices of the Supreme People’s Court and published by the Chief Justice of the Supreme People’s Court as a precedent for Courts to study and apply in adjudication. (Article 1 of Resolution 04/2019/NQ-HDTP)
A selected precedent must meet the following criteria:
– It has the value of clarifying legal provisions that have different interpretations; analyzing and explaining legal issues and events; and pointing out principles, guidelines for handling, and legal norms to be applied in a specific case or demonstrating equity toward issues not yet specifically regulated by law;
– It possesses normative character;
– It has the value of guiding the uniform application of law in adjudication.
2. Precedent No. 39/2020/AL on determining conditional civil transactions to be void due to impossible conditions
2.1. Source of the Precedent
Cassation Decision No. 29/2019/DS-GDT dated November 12, 2019, of the Council of Justices of the Supreme People’s Court regarding the case “Dispute over a house-staying contract” in Ho Chi Minh City between the plaintiff, Mrs. Tran Van C, and the defendants, Mr. Nguyen Cong H, Mrs. Tran Thị C1, and T Tourism One Member Limited Liability Company; along with 03 persons with related interests and obligations.
Location of the precedent content:
Paragraph 1 of the “Court’s Assessment” section.
2.2. Overview of the Precedent Content
– Precedent situation:
A tenant of state-owned housing (the seller) commits to transferring the house ownership to the buyer after purchasing the house from the state through a price-setting (privatization) process. The seller has received the money and handed over the house to the buyer, but subsequently, the State does not sell the house through price-setting and does not recognize the house ownership.
– Legal solution:
In this case, the house ownership transfer contract must be determined as a conditional civil transaction that is void because the contract condition cannot occur.
Legal provisions related to the precedent:
– Article 23 of the Ordinance on Civil Contracts 1991 (corresponding to Clause 6 Article 406 of the Civil Code 2005, Clause 6 Article 402 of the Civil Code 2015);
– Article 21 of the Law on Housing 2005 (corresponding to Article 10 of the Law on Housing 2014);
– Article 256 of the Civil Code of Vietnam 2005 (corresponding to Article 166 of the Civil Code of Vienam 2015).
Keywords of the precedent:
“Conditional civil transaction”; “Condition does not occur”; “Void transaction”.
CASE CONTENT:
In the Petition dated June 27, 2003, by Mrs. Tran Van C and the Petition to succeed procedural rights and obligations dated April 26, 2011, by Ms. Le Thi Minh C2, Mr. Le Minh S, Mr. Le Minh D, Mr. Le Minh T2, and during the case resolution process, the plaintiff, represented by Ms. Le Thi Minh C2, stated:
In 1982, the family of Mr. Nguyen Viet L (died in 1985) and Mrs. Tran Van C (died in 2011), along with their 03 children Mr. Le Minh S, Mr. Le Minh D, and Mr. Le Minh T2, were granted use of the front ground floor of house No. 182 A Street, Ward B, District D, Ho Chi Minh City by the State Bank of Vietnam. In May 1989, Mrs. C leased a part of the house with an area of 50.85m2, located at the corner of two fronts of A – D streets, to the Branch of T Tourism Company to open a general service store. Mrs. C1, then acting as the store manager, along with her husband Mr. Nguyen Cong H, directly conducted business and represented the T Tourism Company Branch to pay the June 1989 rent of 2.3 taels of 24K gold, and subsequent rent from July 1989 to December 1992 totaling 75 taels of 24K gold. The first payment on July 10, 1989, was 35 taels, and the second on September 01, 1989, was 40 taels. In total, Mrs. C received 7.5 taels of 24K gold.
In December 1989, the T Tourism Company Branch’s business was inefficient, so it was handed over to Mrs. C1 to continue business and fulfill rent payments until the end of February 2002. From March 2002 to present, Mrs. C1 and Mr. H still reside in this area without paying rent; a part of the house is currently used by Ms. T1 and another part by Ms. K.
During the use by Mrs. C1 and Mr. H, they built and repaired the house, so the disputed area has a value according to the appraisal report dated January 22, 2014, of 1,427,421,900 VND; the plaintiff now requests the Court to adjudicate according to law. Regarding the Joint Venture Contract No. 05 signed on May 20, 1989, with the T Tourism Company Branch, the plaintiff does not request resolution and withdraws the request to compel T Tourism One Member Limited Liability Company to pay 1.48 taels of 24K gold in rent.
Since the two parties did not have a house sale transaction and no longer have a rental relationship, the plaintiff requests the Court to declare the commitment letter established and signed on July 10, 1989, by Mrs. Tran Van C and Mrs. Tran Thi C1 as canceled; and compel Mrs. C1 and Mr. H to immediately return the area they are staying in. The plaintiff agrees to pay Mrs. C1 and Mr. H house repair costs of 64,105,000 VND.
The defendants, Mr. Nguyen Cong H and Mrs. Tran Thi C1, stated:
In 1989, Mr. H and Mrs. C1 purchased an area of over 40m2 within house No. 182 A Street, District D, from Mrs. Tran Van C for 7.5 taels of 24K gold. The two parties wrote a handwritten house sale paper on July 10, 1989. Mr. H and Mrs. C1 delivered the full amount of gold to Mrs. C, later adding 05 mace, totaling a sale price of 08 taels of 24K gold. The transferred area is at the corner of two fronts of A – D streets. At that time, Mrs. C was leasing the house from the State Bank of Vietnam, so ownership had not yet been granted; therefore, the two parties only used a handwritten paper and could not sign a formal sale contract. Later, Mr. H and Mrs. C1 transferred a part of the house (about 16m2) to Ms. Tran Thi Kim T1 by oral agreement. Around 2005, Mr. H and Mrs. C1 cooperated in business with Ms. Luong Thi K in the said area.
According to the commitment between the parties in the handwritten paper dated July 10, 1989, when the State allowed Mrs. C to purchase the house through price-setting (privatization), Mr. H and Mrs. C1 would pay the price-setting amount for the transferred area, and Mrs. C would be responsible for procedures to transfer ownership of the area to them. Simultaneously, based on the Law on Land 2003, since Mr. H and Mrs. C1 have used the house and land for over 25 years, they must be recognized for land and house use rights. Thus, they request recognition of the house transfer under the Commitment dated July 10, 1989, as this is a conditional civil transaction.
The heirs of Mrs. C’s rights and obligations requesting the house back are groundless because, according to the Certificate of House Ownership, Mrs. C only owned 167m2, while she did not own the disputed area and thus had no right to sue; Mr. H and Mrs. C1 do not accept the claim. Since the dispute arose in 1989 and the statute of limitations has expired, they request the case be dismissed.
The transfer of a part of the area to Ms. T1 and the business cooperation with Ms. K are not requested for resolution. During use, Mr. H and Mrs. C1 repaired the house with costs calculated at 64,105,000 VND; should the Court not recognize the house transfer, they request reimbursement of this amount.
The defendant, T Tourism One Member Limited Liability Company, represented by Mr. Nguyen Van T3, stated:
T Tourism One Member Limited Liability Company is the governing unit of the T Tourism Company Branch. In 1989, the Branch was managed by Mr. Nguyen S1 and was dissolved in 1990. Regarding the Branch signing a joint venture contract with Mrs. Tran Van C, Mr. S1 did not report this to the Company, and upon dissolution, no liabilities were handed over; thus, the Company has no basis to resolve Mrs. C’s claim for rent. Since Mrs. C’s heirs have no request regarding Joint Venture Contract No. 05 dated May 20, 1989, and have withdrawn the claim for 1.48 taels of gold, the Company has no further opinion. They request adjudication according to law, and Mr. T3 requests to be absent.
The person with related interests and obligations, Ms. Tran Thi Kim T1, stated:
Ms. T1 purchased a part of house No. 182 A Street, Ward B, District D, Ho Chi Minh City (about 16m2) from Mrs. C1 in 1989 for 04 taels of gold without documentation. Ms. T1 now requests Mrs. C’s side to be responsible for ownership transfer procedures for Mr. H and Mrs. C1. The transaction between Ms. T1 and Mr. H/Mrs. C1 is not requested for Court resolution. Additionally, according to Ms. T1, the disputed area is a common area for all households in house No. 182, which Mrs. C did not own and thus had no right to sue.
The person with related interests and obligations, Ms. Luong Thi K, stated:
On April 01, 2005, Ms. K cooperated in business with Mrs. C1. The business license was in Ms. K’s name at No. 182 A Street, Ward B, District D; when cooperating, Ms. K did not know the legal status of the house. Now that Mrs. C and Mrs. C1 are in dispute, she has no opinion or request. The cooperation with Mrs. C1 will be resolved privately between them.
The person with related interests and obligations, N Housing Business Management Company, represented by Ms. Pham Thuy H1, stated:
N Housing Business Management Company proceeded to sell house No. 182 A Street, Ward B, District D, in 2001. Before the sale, an inspection of the area used by each household was conducted. According to the report, the disputed residential area and land lie within the road alignment (road safety corridor) belonging to the owner (Mrs. C – deceased) until the State recovers it for a road expansion project. Mrs. C allowing others to stay, rent, or transfer is contrary to regulations, so N Company does not agree. They request adjudication according to law.
In First-Instance Civil Judgment No. 28/DS-ST dated July 27, 2006, the People’s Court of District 3, Ho Chi Minh City, decided:
– Cancel the commitment dated July 10, 1989, between Mrs. C and Mr. H, Mrs. C1.
– Mr. H, Mrs. C1, Ms. T1, and Ms. K are responsible for returning to Mrs. C a part of the ground floor of house No. 182 A Street, Ward B, District D, with an area of 50.85m2.
– Mrs. C shall pay Mr. H and Mrs. C1: 08 taels of gold received + 27.49 taels of gold for damages + 64,105,000 VND for repair costs. Total: 35.49 taels of gold and 64,105,000 VND.
Both the plaintiff and defendants filed appeals.
In Appellate Civil Judgment No. 188/2007/DS-PT dated February 07, 2007, the People’s Court of Ho Chi Minh City decided:
Amend a part of the First-Instance Judgment:
Recognize the house sale contract between Mrs. Tran Van C and Mr. Nguyen Công H, Mrs. Tran Thị C1 according to the commitment letter dated July 10, 1989.
Mrs. C is responsible for transferring house ownership to Mr. H and Mrs. C1.
Mr. H and Mrs. C1 shall pay Mrs. C the house price-setting amount of 169,432,000 VND.
Under Decision No. 138/QD-KNGDT-V5 dated November 13, 2007, the Procurator General of the Supreme People’s Procuracy protested the aforementioned appellate judgment.
Under Cassation Decision No. 01/2008/DS-GĐT dated January 25, 2008, the Civil Court of the Supreme People’s Court decided: Annul First-Instance Civil Judgment No. 28/DS-ST dated July 27, 2006, of the People’s Court of District 3 and Annul Appellate Civil Judgment No. 188/2007/DS-PT dated February 07, 2007, of the People’s Court of Ho Chi Minh City; transfer the case file to the People’s Court of District 3 for retrial under first-instance procedures.
In First-Instance Civil Judgment No. 12/2014/DS-ST dated April 16, 2014, the People’s Court of District 3, Ho Chi Minh City, decided: Accept a part of the request of the heirs of Mrs. Tran Van C’s rights and obligations.
– Declare the commitment regarding the transfer of use rights of a part of house No. 182 A Street, Ward B, District D, Ho Chi Minh City signed on July 10, 1989, between Mrs. Tran Van C and Mrs. Tran Thi C1 as void.
– Compel the heirs of Mrs. Tran Van C’s rights and obligations, namely Ms. Le Thi Minh C2, Mr. Le Minh S, Mr. Le Minh D, and Mr. Le Minh T2, to return to Mr. Nguyen Cong H and Mrs. Tran Thi C1 the amount of gold received: 08 taels of 24k gold = 276,320,000 VND.
– Compel the heirs of Mrs. Tran Van C to return to Mr. Nguyen Cong H and Mrs. Tran Thi C1 house construction and repair costs of 64,105,000 VND.
– Compel the heirs of Mrs. Tran Van C to pay damages to Mr. Nguyen Cong H and Mrs. Tran Thi C1 in the amount of 575,550,950 VND.
– Compel Mr. Nguyen Cong H, Mrs. Tran Thi C1, Ms. Tran Thi Kim T1, and Ms. Lương Thị K to return to the heirs of Mrs. Tran Van C the area of the house and land at house No. 182 A Street, Ward B, District D, Ho Chi Minh City consisting of: Area in the main house with a floor, consistent with planning: 8.11m2 + area within the road alignment: 42.74m2.
The first-instance court also decided on court fees and the parties’ right to appeal.
On April 24, 2014, Mr. Nguyen Cong H, Mrs. Tran Thi C1, and Ms. Tran Thi Kim T1 filed an appeal.
On April 28, 2014, Ms. Le Thi Minh C2 filed an appeal.
In Appellate Civil Judgment No. 1515/2014/DS-PT dated December 01, 2014, the People’s Court of Ho Chi Minh City decided:
Reject the appeals of Ms. Le Thi Minh C2, Mrs. Tran Thi C1, Mr. Nguyen Cong H, and Ms. Tran Thi Kim T1; uphold the first-instance civil judgment.
The appellate court also decided on court fees.
After the appellate trial, the defendants Mr. Nguyen Cong H and Mrs. Tran Thi C1 filed a petition for cassation review of the aforementioned Appellate Civil Judgment No. 1515/2014/DS-PT.
Under Cassation Protest Decision No. 38/KNGĐT-VC3-V2 dated March 21, 2016, the Procurator General of the High People’s Procuracy in Ho Chi Minh City protested Appellate Civil Judgment No. 1515/2014/DS-PT; requesting the Judges’ Committee of the High People’s Court in Ho Chi Minh City to conduct a cassation trial to annul the said appellate judgment and First-Instance Civil Judgment No. 12/2014/DS-ST; and transfer the case to the first-instance court for retrial.
Under Cassation Decision No. 234/2016/DS-GĐT dated September 09, 2016, the Judges’ Committee of the High People’s Court in Ho Chi Minh City decided:
Reject Protest No. 38/KNGĐT-VC3-V2 dated March 21, 2016, of the Procurator General of the High People’s Procuracy in Ho Chi Minh City; uphold Appellate Civil Judgment No. 1515/2014/DS-PT of the People’s Court of Ho Chi Minh City.
On January 21, 2017, Mr. Nguyen Cong H, Mrs. Tran Thi C1, and Ms. Tran Thi Kim T1 petitioned for cassation review of the aforementioned Cassation Decision No. 234/2016/DS-GĐT.
Under Cassation Protest Decision No. 56/2019/KN-DS dated August 05, 2019, the Chief Justice of the Supreme People’s Court protested Cassation Decision No. 234/2016/DS-GĐT of the Judges’ Committee of the High People’s Court in Ho Chi Minh City; requesting the Council of Justices of the Supreme People’s Court to conduct a cassation trial to annul Cassation Decision No. 234/2016/DS-GĐT, Appellate Civil Judgment No. 1515/2014/DS-PT, and First-Instance Civil Judgment No. 12/2014/DS-ST; and transfer the case file to the People’s Court of District 3 for retrial according to law.
At the cassation hearing, the representative of the Supreme People’s Procuracy agreed with the protest decision of the Chief Justice of the Supreme People’s Court.
COURT’S ASSESSMENT:
[1] The case file and evidence show that on July 10, 1989, Mrs. Tran Van C and Mrs. Tran Thi C1 signed a Commitment and a Receipt with the following content: Mrs. C received 75 taels of gold from Mrs. C1, allowing Mrs. C1 and her husband full use of the 45m2 area at house No. 182 A Street, Ward B, District D, Ho Chi Minh City; Mrs. C would never demand the house back, and Mrs. C1/Mr. H would not demand the gold back; when the State allowed Mrs. C to purchase the house through price-setting, Mr. H and Mrs. C1 would pay the price-setting amount for the area used, and Mrs. C would be responsible for ownership transfer procedures for Mr. H and Mrs. C1. Thus, there is a basis to determine that Mrs. C agreed to sell a part of house No. 182 A Street (leased from the State) to Mrs. C1 on the condition that Mrs. C could purchase it through the State’s price-setting process; in other words, the transaction between Mrs. C and Mrs. C1 is a conditional civil transaction, becoming effective only when Mrs. C is allowed to purchase the house through state price-setting. Article 23 of the Ordinance on Civil Contracts 1991 stipulates: “Where the parties agree on an event as a condition for the performance or termination of a contract, the contract must be performed or terminated when that event occurs”. Although the condition agreed upon in the contract did not violate legal prohibitions or social ethics, a part of the house and land area that Mrs. C agreed to transfer to Mrs. C1 (42.74m2) was within the road alignment, for which the State did not allow price-setting and did not recognize Mrs. C’s ownership of the house or land use rights; therefore, the majority of the condition did not occur. Consequently, the agreement between Mrs. C and Mrs. C1 did not take effect, and the first-instance and appellate courts’ declaration of it as void was well-founded.
[2] According to Article 21 of the Law on Housing 2005, point h clause 1 Article 10 of the Law on Housing 2014, and Article 256 of the Civil Code 2005, owners and other subjects with rights to property have the right to reclaim property from possessors, users, or persons who benefit from the property without legal grounds. Since the disputed 42.74m2 area lies within the road alignment, and the State did not allow price-setting or recognize Mrs. C’s ownership or land use rights, Mrs. C and her heirs do not have the right to sue for the recovery of that area. The first-instance and appellate courts’ compelling Mr. H, Mrs. C1, Ms. T1, and Ms. K to return the area within the road alignment to Mrs. C’s procedural successors—where the State does not recognize ownership or land use rights—was groundless. The Cassation Decision of the Judges’ Committee of the High People’s Court in Ho Chi Minh City failed to recognize the errors of the first-instance and appellate courts, thereby rejecting the protest of the Procurator General of the High People’s Procuracy and upholding the appellate judgment, which is inconsistent with clause 2 Article 345 of the Code of Civil Procedure 2015.
For the above reasons,
DECISION:
Based on Clause 2 Article 337, Clause 3 Article 343, Clause 2 Article 345 of the Code of Civil Procedure 2015;
1. Accept Cassation Protest Decision No. 56/2019/KN-DS dated August 05, 2019, of the Chief Justice of the Supreme People’s Court.
2. Annul Cassation Decision No. 234/2016/DS-GĐT dated September 09, 2016, of the Judges’ Committee of the High People’s Court in Ho Chi Minh City, annul Appellate Civil Judgment No. 1515/2014/DS-PT dated December 01, 2014, of the People’s Court of Ho Chi Minh City, and annul First-Instance Civil Judgment No. 12/2014/DS-ST dated April 16, 2014, of the People’s Court of District 3, Ho Chi Minh City, regarding the case “Dispute over a house-staying contract” between the plaintiff Mrs. Tran Van C (died April 02, 2011); successors of her rights and obligations Ms. Le Thi Minh C2, Mr. Le Minh S, Mr. Le Minh Đ, Mr. Le Minh T2, and the defendants Mr. Nguyen Cong H, Mrs. Tran Thị C1, and other persons with related interests and obligations.
3. Transfer the case file to the People’s Court of District 3, Ho Chi Minh City for retrial under first-instance procedures in accordance with the law.
PRECEDENT CONTENT:
“[1]…Thus, there is a basis to determine that Mrs. C agreed to sell a part of house No. 182 A Street (leased from the State) to Mrs. C1 on the condition that Mrs. C could purchase it through the State’s price-setting process; in other words, the transaction between Mrs. C and Mrs. C1 is a conditional civil transaction, becoming effective only when Mrs. C is allowed to purchase the house through state price-setting. Article 23 of the Ordinance on Civil Contracts 1991 stipulates: “Where the parties agree on an event as a condition for the performance or termination of a contract, the contract must be performed or terminated when that event occurs”. Although the condition agreed upon in the contract did not violate legal prohibitions or social ethics, a part of the house and land area that Mrs. C agreed to transfer to Mrs. C1 (42.74m2) was within the road alignment, for which the State did not allow price-setting and did not recognize Mrs. C’s ownership of the house or land use rights; therefore, the majority of the condition did not occur. Consequently, the agreement between Mrs. C and Mrs. C1 did not take effect, and the first-instance and appellate courts’ declaration of it as void was well-founded.”
