CASE LAW NO. 02/2016/AL on asset recovery dispute

CASE LAW NO. 02/2016/AL

The Cassation Decision No. 27/2010/DS-GDT dated July 8^th, 2010, by the Judicial Council of the Supreme People’s Court regarding the case of “Asset Recovery Dispute” in Sóc Trăng Province

Approved by the Judicial Council of the Supreme People’s Court on April 6^th, 2016, and published under Decision No. 220/QĐ-CA on April 6^th, 2016, by the Chief Justice of the Supreme People’s Court.

Source of the Case Law:

The Cassation Decision No. 27/2010/DS-GDT dated July 8^th, 2010, by the Judicial Council of the Supreme People’s Court regarding the case of “Asset Recovery Dispute” in Sóc Trăng Province between the plaintiff, Ms. Nguyễn Thị Thảnh, and the defendant, Mr. Nguyễn Văn Tám, the party with relevant rights and interests being Ms. Nguyễn Thị Yêm.

Summary of the Case Law:

In instances where a Vietnamese national residing abroad has paid for the transfer of land use rights and designated a local person to hold the land use rights on their behalf, the court must consider and account for the efforts in maintaining, preserving, and enhancing the value of the land use rights made by the designated person.

If the precise value of these efforts cannot be determined, it should be presumed that the person who actually paid for the land use transfer and the person holding the land use rights on behalf of the payer contributed equally to the increased value of the land use rights, and thus, the value increment over the original transfer price should be equally divided.

Relevant Legal Provisions:

Articles 137 and 235 of the 2005 Civil Code.

Keywords:

“Invalid Civil Transaction”; “Asset Recovery”; “Basis for Establishing Ownership Rights”; “Establishing Ownership Rights to Profits”; “Vietnamese Nationals Residing Abroad”.

CASE DETAILS

In the complaint dated January 24^th, 2005, the declaration dated February 7^th, 2005, and during the case proceedings, the plaintiff Ms. Nguyễn Thị Thảnh stated:

Ms. Thảnh, a Vietnamese expatriate in the Netherlands, visited her family in Vietnam and intended to transfer land use rights. On August 10^th, 1993, she purchased 7,595.7 square meters of paddy land in Ward 7, Sóc Trăng Town from Mr. Hêng Tính and Mrs. Lý Thị Sà Quênh for 21.99 maces of gold. Ms. Thảnh directly negotiated the transfer, paid the money and gold to Mr. Hêng Tính and his wife. Her purpose was to acquire the land for her brother, Mr. Nguyễn Văn Tám, and her sister, Mrs. Nguyễn Thị Chính Em, to cultivate and support their parents.

Because she was a Vietnamese national residing abroad, she had Mr. Tám’s name listed on the transfer documents. She also presented a “Land Transfer Deed” dated August 10^th, 1993, confirmed by the People’s Committee of An Hiệp Commune. After the transfer, she allowed Mr. Tám and his wife to cultivate the land, but in 2004, without her consent, Mr. Tám transferred the entire 7,595.7 square meters of land to Minh Châu Co., Ltd. for a value of VND 1,260,000,000. Therefore, she requested Mr. Tám to return the proceeds from the land transfer to her.

The defendant, Mr. Nguyễn Văn Tám, contended:

The 7,595.7 square meters of land in dispute was acquired by his family using their own money and gold from Mr. Hêng Tính and his wife, and his name was on the “Land Transfer Deed” dated August 10, 1993, which lacked local government confirmation. Subsequently, on August 11, 1993, he and Mr. Hêng Tính’s family signed a contract and a land use right transfer application, which were confirmed by the People’s Committee of An Hiệp Commune and the People’s Committee of Mỹ Tú District, approving the transfer.

He registered and was issued a land use right certificate on May 28^th, 1994. In 2004, he transferred the land to Minh Châu Co., Ltd. for VND 1,260,000,000. He argued that the “Land Transfer Deed” dated August 10^th, 1993, presented by Ms. Thảnh, was a forgery, as confirmed by the Forensic Science Institute’s conclusion No. 2784/C21 (P7) dated October 25^th, 2005, stating the signature on the deed was not his. Therefore, he did not agree with Ms. Thảnh’s claim.

Ms. Nguyễn Thị Yêm (Mr. Tám’s wife), a party with relevant rights and interests, stated: In 1993, she and her husband transferred the land from Mr. Hêng Tính. Although she did not participate in the transfer procedures, she provided money and gold for Mr. Tám to pay Mr. Hêng Tính’s family, so she did not accept Ms. Thảnh’s claim.

Mr. Hêng Tính and Mrs. Lý Thị Sà Quênh (also known as Lý Thị Sà Vênh), who transferred the land, confirmed that Ms. Thảnh directly negotiated the transfer and paid 21.99 maces of gold to them, and that she allowed Mr. Tám to hold the title in the “Land Transfer Deed” dated August 10^th, 1993. The signatures on the deed presented by Ms. Thảnh were indeed theirs.

First Instance Civil Judgment No. 04/2006/DS-ST dated April 28^th, 2006, by the People’s Court of Sóc Trăng Province:

The court accepted part of Ms. Nguyễn Thị Thảnh’s claim for the return of the land transfer money.

Ordered Mr. Nguyễn Văn Tám and Mrs. Nguyễn Thị Yêm to return VND 630,000,000 to Ms. Nguyễn Thị Thảnh.

The court also ruled on court fees, appraisal costs, and granted the parties the right to appeal according to law.

Appeal:

On May 10^th, 2006, Mr. Nguyễn Văn Tám appealed, claiming that Ms. Thảnh was not entitled to the land he transferred to Minh Châu Co., Ltd., and that the lower court’s order for him to pay Ms. Thảnh VND 630,000,000 was incorrect.

On May 12^th, 2006, Mr. Nguyễn Hữu Phòng (representing Ms. Thảnh) appealed, requesting the appellate court to order Mr. Tám to return the entire VND 1,260,000,000 from the land transfer to Ms. Thảnh.

Appellate Civil Judgment No. 334/2006/DS-PT dated August 25^th, 2006, by the Appellate Court of the Supreme People’s Court in Ho Chi Minh City:

The court rejected the appeals of both the plaintiff and the defendant, amending the first instance judgment as follows:

Accepted part of Ms. Nguyễn Thị Thảnh’s claim for the return of the land use right transfer money.

Ordered Mr. Nguyễn Văn Tám and Mrs. Nguyễn Thị Yêm to return VND 27,047,700 (equivalent to 21.99 maces of 24k gold) to Ms. Nguyễn Thị Thảnh.

Ordered Mr. Nguyễn Văn Tám and Mrs. Nguyễn Thị Yêm to pay VND 1,232,266,860 to the state treasury.

The appellate court also ruled on court fees.

After the appellate trial, Mr. Nguyễn Văn Tám filed a complaint against the aforementioned appellate civil judgment.

Decision No. 449/2009/KN-DS dated August 21th, 2009, the Chief Justice of the Supreme People’s Court lodged a protest against Appellate Civil Judgment No. 334/2006/DS-PT dated August 25^th, 2006, of the Appellate Court of the Supreme People’s Court in Ho Chi Minh City, requesting the Judicial Council of the Supreme People’s Court to conduct a cassation review, vacate the said appellate judgment and the First Instance Civil Judgment No. 04/2006/DS-ST dated April 28^th, 2006, of the People’s Court of Sóc Trăng Province; and to remand the case file to the People’s Court of Sóc Trăng Province for a retrial in accordance with the law, with the following rationale:

“Ms. Nguyễn Thị Thảnh initiated a lawsuit to reclaim her property from Mr. Nguyễn Văn Tám, asserting that as a Vietnamese national residing abroad, she had asked Mr. Tám (her brother) to hold the title to the land transferred from Mr. Hêng Tính and his wife on her behalf. However, Mr. Tám later transferred her land to someone else.

The first instance and appellate courts determined that Mr. Tám was merely holding the title to the land transferred from Mr. Hêng Tính and his wife on behalf of Ms. Thảnh, which is substantiated.

As Ms. Thảnh is a Vietnamese national residing abroad, she is not entitled to the land but is entitled to the investment value of the land transfer money.

Regarding the value difference of the land, at the time of the first instance and appellate trials, the 2005 Civil Code was in effect, which did not mandate confiscation to the state treasury, hence the difference in value should be shared between Ms. Thảnh and Mr. Tám. The first instance court did not require Mr. Tám to remit the difference in land value to the state treasury, which is justified, but did not require Mr. Tám to return the initial investment value to Ms. Thảnh, which is incorrect. The appellate court, lacking legal grounds, required Mr. Tám to remit the entire difference (VND 1,232,226,860) to the state treasury, which is contrary to legal provisions.”

At the cassation review hearing, the representative of the Supreme People’s Procuracy requested the Judicial Council of the Supreme People’s Court to accept the Chief Justice’s protest, vacate the aforementioned appellate judgment and the First Instance Civil Judgment No. 04/2006/DS-ST dated April 28^th, 2006, of the People’s Court of Sóc Trăng Province; and to remand the case file to the People’s Court of Sóc Trăng Province for a retrial in accordance with the law.

The Judicial Council of the Supreme People’s Court found:

Ms. Nguyễn Thị Thảnh initiated a lawsuit requesting Mr. Nguyễn Văn Tám to return VND 1,260,000,000 because she claimed she directly conducted the transaction, paid for the land transfer from Mr. Hêng Tính and his wife for 7,595.7 square meters of land. However, as she was a Vietnamese national residing abroad, she had Mr. Tám (her brother) hold the title, but without her consent, Mr. Tám transferred the entire land area to Minh Châu Co., Ltd., receiving VND 1,260,000,000.

Mr. Tám claimed he was the one who negotiated the land transfer and paid Mr. Hêng Tính, hence the transfer documents were in his name. After the transfer, he managed, used, registered, and was granted the land use right certificate. When he transferred the land to Minh Châu Co., Ltd., it was with governmental approval, so he did not accept Ms. Thảnh’s claim.

However, during the case proceedings, Mr. Tám and his wife gave conflicting testimonies about the amount of money and gold they had paid Mr. Hêng Tính, and Mr. Tám could not prove the origin of the money and gold he claimed to have paid Mr. Tính.

Meanwhile, Mr. Tính and his wife, Mrs. Quênh, affirmed that they only negotiated the land transfer and received gold from Ms. Thảnh, and that the transfer documents were in Mr. Tám’s name at Ms. Thảnh’s request because she was residing abroad.

According to the testimonies of Mrs. Thái Thị Ba, Mr. Nguyễn Phước Hoàng, and Mrs. Nguyễn Thị Chính Em (mother and siblings of Ms. Thảnh and Mr. Tám), Ms. Thảnh conducted the transaction and paid for the land transfer from Mr. Tính, while Mr. Tám merely held the title on her behalf.

Based on the above evidence, it can be confirmed that the first instance and appellate courts correctly determined that Ms. Thảnh provided the entire amount of 21.99 maces of gold to acquire the said land, and Mr. Tám merely held the title on her behalf. Since Mr. Tám transferred the land to Minh Châu Co., Ltd., and Ms. Thảnh only requested Mr. Tám to return the transferred amount of VND 1,260,000,000, the courts’ handling of the case was in accordance with the law.

Although Ms. Thảnh provided 21.99 maces of gold to transfer the land (equivalent to about VND 27,047,700), the transfer documents were in Mr. Tám’s name, and after the transfer, he managed and later transferred the land to others.

Thus, it must be determined that Mr. Tám contributed efforts in maintaining, preserving, and enhancing the land’s value, and the amount above (after deducting the initial amount equivalent to 21.99 maces of gold by Ms. Thảnh) is a joint profit of Ms. Thảnh and Mr. Tám. Mr. Tám’s efforts should be recognized and a corresponding portion should be allocated to him to ensure the parties’ rights (if Mr. Tám’s efforts cannot be precisely determined, it should be assumed that Ms. Thảnh and Mr. Tám contributed equally to the effort).

The first instance court recognized that Ms. Thảnh and Mr. Tám each had ownership of half of the amount but did not allocate to Ms. Thảnh the amount equivalent to 21.99 maces of gold, which was incorrect.

The appellate court only recognized Ms. Thảnh’s ownership of the amount equivalent to 21.99 maces of gold, while the remaining profit was confiscated to the state treasury, which is contrary to the provisions of the 2005 Civil Code and did not ensure the parties’ rights.

Furthermore, Ms. Thảnh’s lawsuit requested Mr. Tám to return VND 1,260,000,000, which was the amount Mr. Tám received from transferring the 7,595.7 square meters of land, without disputing the land use rights, while Mr. Tám claimed the money was his. Thus, the parties disputed ownership of the said amount. However, the first instance and appellate courts incorrectly identified the legal relationship as an “Asset Recovery Dispute.”

In light of the foregoing, pursuant to Clause 3, Article 297, and Article 299 of the Civil Procedure Code;

DECISION:

• Vacate Appellate Civil Judgment No. 334/2006/DS-PT dated August 25^th, 2006, of the Appellate Court of the Supreme People’s Court in Ho Chi Minh City and First Instance Civil Judgment No. 04/2006/DS-ST dated April 28^th, 2006, of the People’s Court of Sóc Trăng Province, regarding the asset recovery dispute between the plaintiff, Ms. Nguyễn Thị Thảnh, and the defendant, Mr. Nguyễn Văn Tám; the party with the relevant rights and interests being Ms. Nguyễn Thị Yêm.
• Remand the case file to the People’s Court of Sóc Trăng Province for a retrial in accordance with the law.

CONTENT OF THE CASE LAW

“Although Ms. Thảnh provided 21.99 maces of gold to transfer the land (equivalent to about 27,047,700 VND), the transfer documents were in Mr. Tám‘s name. After the transfer, Mr. Tám managed the land and later transferred it to another party. Thus, it should be determined that Mr. Tám contributed efforts in maintaining, preserving, and enhancing the value of the land.

Therefore, the amount above (after deducting the initial amount equivalent to 21.99 maces of gold provided by Ms. Thảnh) should be considered as joint profit of Ms. Thảnh and Mr. Tám. Additionally, Mr. Tám’s efforts should be recognized, and an appropriate portion should be allocated to him, ensuring the rights of both parties. (If Mr. Tám‘s efforts cannot be precisely determined, it should be assumed that Ms. Thảnh and Mr. Tám contributed equally to the effort.)”

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