Precedent No. 39/2020/AL

On determining whether a civil transaction is conditionally invalid due to an impossible condition

Adopted by the Council of Judges of the Supreme People's Court on August 13, 2020 and promulgated under Decision No. 276/QD-CA dated October 2, 2020 of the Chief Justice of the Supreme People's Court.

Source of case law:

Final judgment No. 29/2019/DS-GDT dated November 12, 2019 of the Council of Judges of the Supreme People's Court on the case of "Dispute over housing contract" in Ho Chi Minh City between the plaintiff, Mr. Tran Van C, and the defendants, Mr. Nguyen Cong H, Ms. Tran Thi C1 and T Tourism One Member Co., Ltd.; the persons with related rights and obligations include 03 people.

Location of case law:

Paragraph 1 of the “Court's Opinion” section.

Overview of the case law:

- Case law:

The tenant of a state-owned house (seller) commits to transfer ownership of the house to the buyer after purchasing the state-owned house at a discounted price. The seller has received the money and delivered the house to the buyer, but the State has not subsequently discounted the house and does not recognize ownership of the house.

- Legal solutions:

In this case, it must be determined that the contract for transferring home ownership is a conditional civil transaction but is invalid because the conditions of the contract cannot occur.

Legal provisions relating to precedents:

- Article 23 of the 1991 Civil Contract Ordinance (corresponding to Clause 6, Article 406 of the 2005 Civil Code, Clause 6, Article 402 of the 2015 Civil Code);

- Article 21 of the 2005 Housing Law (corresponding to Article 10 of the 2014 Housing Law);

- Article 256 of the 2005 Civil Code (corresponding to Article 166 of the 2015 Civil Code).

Keywords of case law:

“Conditional civil transaction”; “Condition does not occur”; “Void transaction”.

CASE CONTENT:

In the Petition dated June 27, 2003 of Mr. Tran Van C and the Petition for Inheritance of Litigation Rights and Obligations dated April 26, 2011 of Ms. Le Thi Minh C2, Mr. Le Minh S, Mr. Le Minh D, Mr. Le Minh T2 and during the process of resolving the case, the plaintiff represented by Ms. Le Thi Minh C2 stated:

In 1982, the family of Mr. Nguyen Viet L (died in 1985) and Mr. Tran Van C (died in 2011) and their three children, Mr. Le Minh S, Mr. Le Minh D, Mr. Le Minh T2, were granted by the State Bank of Vietnam to use the ground floor in front of house number 182, A street, B ward, D district, Ho Chi Minh City. In May 1989, Mr. C rented a part of the house with an area of ​​50.85m2, located at the corner of 2 frontages of A - D street to the T Tourism Company Branch ^to open a general service store. At that time, Ms. C1, as the store manager, together with her husband, Mr. Nguyen Cong H, directly conducted business and represented the T Tourism Company Branch, paying the rent for June 1989 of 2.3 taels of 24K gold and continued to pay the rent from July 1989 to December 1992 of 75 taels of 24K gold, the first payment on July 10, 1989 was 35 taels of 24K gold, the second payment was 40 taels of gold on September 1, 1989. In total, Ms. C received 7.5 taels of 24K gold.

In December 1989, the T Tourism Company Branch was not doing business effectively, so it was assigned to Ms. C1 to continue the business and pay the rent until the end of February 2002. Since March 2002, Ms. C1 and Mr. H have been living in this area and have not paid the rent. Part of the house is currently used by Ms. T1 and part is used by Ms. K.

During the process of Ms. C1 and Mr. H using the house, they built and repaired, so the disputed area has a value calculated according to the valuation record dated January 22, 2014 of 1,427,421,900 VND. Now, the Court is requested to consider it according to the provisions of law. Regarding the Joint Contract No. 05 signed on May 20, 1989 with the Branch of T Tourism Company, the Plaintiff does not request a settlement and withdraws the request to force T Tourism Company to pay 1.48 taels of 24K gold for the house rent.

Because the two parties did not buy or sell the house and no longer have a rental relationship, the plaintiff requests the Court to declare the commitment made and signed by Mr. Tran Van C and Ms. Tran Thi C1 on July 10, 1989 null and void; force Ms. C1 and Mr. H to immediately return the house they are living in. Agree to pay Ms. C1 and Mr. H the cost of repairing the house, which is 64,105,000 VND.

The defendants, Mr. Nguyen Cong H and Ms. Tran Thi C1, stated:

In 1989, Mr. H and Ms. C1 transferred a part of an area of ​​about 40 square meters ^located in the house at 182 A Street, District D of Mr. Tran Van C for 7.5 taels of 24K gold. The two parties wrote a handwritten contract to sell the house on July 10, 1989. Mr. H and Ms. C1 delivered all of this gold to Mr. C, then added 5 more taels, for a total selling price of 8 taels of 24K gold. The transferred area is located at the corner of 2 frontages of A - D Street. At that time, Mr. C was renting the above house from the State Bank of Vietnam, so he had not been granted ownership of the house, so the two parties only wrote a handwritten contract, and could not sign a sales contract. After that, Mr. H and Ms. C1 transferred a part of the house with an area of ​​about 16 square meters to Ms. Tran Thi Kim T1 ^. The transfer with Ms. T1 was only agreed upon orally. Around 2005, Mr. H and Ms. C1 had a business cooperation with Ms. Luong Thi K in the above area.

According to the handwritten commitment between the two parties dated July 10, 1989, when the State allows Mr. C to buy the house at a discounted price, Mr. H and Ms. C1 must pay the discounted price for the transferred area and Mr. C is responsible for completing the procedures to transfer ownership of the transferred area to Mr. H and Ms. C1. At the same time, based on the 2003 Land Law, Mr. H and Ms. C1 have used the house and land for over 25 years, so they must have their land and house use rights recognized, so they request recognition of the house transfer according to the Commitment dated July 10, 1989 because this is a conditional civil transaction.

The request of the successors of Mr. C to claim the house for temporary residence is baseless because according to the House Ownership Certificate, Mr. C only has the right to own 167m2, and Mr. C ^does not have the right to own the above area, so he has no right to sue. Mr. H and Ms. C1 do not accept. Because the dispute that arose in 1989 has expired, the case should be suspended.

The transfer of a part of the area to Ms. T1 and the business cooperation with Ms. K do not require resolution. During the use of the house, Mr. H and Ms. C1 repaired the house with the repair cost calculated according to the inventory of 64,105,000 VND. In case the Court does not recognize the transfer of the house, the amount of money used for the repair must be returned.

The defendant is T Tourism One Member Co., Ltd. represented by Mr. Nguyen Van T3, who presented:

T Travel One Member LLC is the managing unit of T Travel Company Branch. In 1989, the Branch was directed by Mr. Nguyen S1, and the Branch was dissolved in 1990. Regarding the Branch signing an association contract with Mr. Tran Van C, Mr. S1 did not report to the Company before and when dissolved, there was no debt transfer, so the Company had no basis to resolve Mr. C's request for rent. The successors of Mr. C's rights and obligations did not request a resolution regarding Association Contract No. 05 dated May 20, 1989 signed with T Travel Company Branch and withdrew the request for 1.48 taels of 24K gold for rent, so T Travel One Member LLC has no other opinion. Requesting a trial according to the provisions of law, Mr. T3 asked to be absent.

The person with related rights and obligations, Ms. Tran Thi Kim T1, presented:

Ms. T1 transferred to Ms. C1 a part of the house at 182 A Street, Ward B, District D, Ho Chi Minh City, with an area of ​​about 16 square meters ⁱⁿ 1989, for 4 taels of gold, the transfer was not documented. Now, Ms. T1 requests that Mr. C be responsible for the procedures to transfer ownership to Mr. H and Ms. C1. The transfer between Ms. T1 and Mr. H and Ms. C1 does not require the Court to resolve. At the same time, according to Ms. T1, the area in dispute is the common use of the households in the house at 182 A Street, Ward B, District D, Ho Chi Minh City, Mr. C has no ownership rights and therefore has no right to sue.

The person with related rights and obligations, Ms. Luong Thi K, presented:

On April 1, 2005, Ms. K entered into a business cooperation with Ms. C1. The business license was registered under Ms. K's name at 182 A Street, Ward B, District D, Ho Chi Minh City. When she entered into the cooperation, Ms. K did not know clearly about the legal status of the house. Now that Mr. C and Ms. C1 have a dispute, she has no opinion and no request. Regarding the cooperation with Ms. C1, the two parties will resolve it themselves.

The person with related rights and obligations is House Business Management Company N, represented by Ms. Pham Thuy H1, presenting:

House Management Company N sold house No. 182, Street A, Ward B, District D, Ho Chi Minh City in 2001. Before selling, a record was made to check the area used by each household. According to the record, the area of ​​the house and land that the parties are disputing is within the road boundary under the right of use of the owner (Mr. C - deceased) until the State reclaims it to carry out the road boundary expansion project. Mr. C's letting him stay, renting, and transferring the house is against the regulations, so House Management Company N does not agree. Requesting a trial according to the provisions of law.

In the Civil Judgment at First Instance 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 Mr. C and Mr. H, Mrs. C1.

- Mr. H, Mrs. C1, Mrs. T1, Mrs. K are responsible for handing over to Mr. C a part of the ground floor of house 182, street A, ward B, district D, Ho Chi Minh City with an area of ^{​​50.85m2} .

- Mr. C paid Mr. H and Mrs. C1: 08 taels of gold received + 27.49 taels of damaged gold + 64,105,000 VND for repairs. Total 35.49 taels of gold and 64,105,000 VND.

Both the plaintiff and the defendant have filed appeals.

In Civil Appeal Judgment No. 188/2007/DS-PT dated February 7, 2007, the People's Court of Ho Chi Minh City decided:

Partial amendment of the First Instance Judgment:

Recognize the house sale contract between Mr. Tran Van C and Mr. Nguyen Cong H, Ms. Tran Thi C1 according to the commitment paper dated July 10, 1989.

Mr. C is responsible for transferring house ownership to Mr. H and Mrs. C1.

Mr. H and Mrs. C1 paid Mr. C 169,432,000 VND for the house price.

In Decision No. 138/QD-KNGDT-V5 dated November 13, 2007, the Chief Justice of the Supreme People's Procuracy appealed the above civil appellate judgment.

In the Decision of the Supreme People's Court No. 01/2008/DS-GDT dated January 25, 2008, the Civil Court of the Supreme People's Court decided to: Annul the Civil Judgment at First Instance No. 28/DS-ST dated July 27, 2006 of the People's Court of District 3 and annul the Civil Judgment at Appeal No. 188/2007/DS-PT dated February 7, 2007 of the People's Court of Ho Chi Minh City; transfer the case file to the People's Court of District 3 for trial according to the first instance procedure.

In the Civil Judgment at First Instance No. 12/2014/PS-ST dated April 16, 2014, the People's Court of District 3, Ho Chi Minh City decided to: Partially accept the request of the successors of the rights and obligations of Mr. Tran Van C.

- Declare the commitment on the transfer of the right to use part of the house No. 182, Street A, Ward B, District D, Ho Chi Minh City signed on July 10, 1989 between Mr. Tran Van C and Ms. Tran Thi C1 is invalid.

- Compel the successors of the rights and obligations of Mr. Tran Van C, namely Ms. Le Thi Minh C2, Mr. Le Minh S, Mr. Le Minh D, Mr. Le Minh T2 to be responsible for returning to Mr. Nguyen Cong H, Ms. Tran Thi C1 the amount of gold received, which is 08 taels of 24k gold = 276,320,000 VND.

- Compel the successors of the rights and obligations of Mr. Tran Van C, namely Ms. Le Thi Minh C2, Mr. Le Minh S, Mr. Le Minh D, Mr. Le Minh T2 to be responsible for paying back to Mr. Nguyen Cong H, Ms. Tran Thi C1 the cost of house construction and repair of 64,105,000 VND.

- Compel the successors of the rights and obligations of Mr. Tran Van C, namely Ms. Le Thi Minh C2, Mr. Le Minh S, Mr. Le Minh D, Mr. Le Minh T2 to be responsible for compensating Mr. Nguyen Cong H and Ms. Tran Thi C1 for damages in the amount of VND 575,550,950.

- Force Mr. Nguyen Cong H, Ms. Tran Thi C1, Ms. Tran Thi Kim T1, Ms. Luong Thi K to be responsible for returning to the successors of the rights and obligations of Mr. Tran Van C, namely Ms. Le Thi Minh C2, Mr. Le Minh S, Mr. Le Minh D, Mr. Le Minh T2 the area of ​​the house and land in the house number 182, street A, ward B, district D, Ho Chi Minh City including: The area of ​​the house and land in the main house with floors, in accordance with the planning is 8.11m ² + the area of ​​the house and land in the road boundary is 42.74m ² .

The court of first instance also decides on court fees and the parties' right to appeal.

On April 24, 2014, Mr. Nguyen Cong H, Ms. 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 Civil Appeal Judgment No. 1515/2014/DS-PT dated December 1, 2014, the People's Court of Ho Chi Minh City decided:

Not accepting the appeal request of Ms. Le Thi Minh C2, Ms. Tran Thi C1, Mr. Nguyen Cong H and Ms. Tran Thi Kim T1, upholding the first instance civil judgment.

The Court of Appeal also decides on court costs.

After the appeal trial, the defendants Mr. Nguyen Cong H and Ms. Tran Thi C1 submitted a request for review under the cassation procedure for the above-mentioned Civil Appeal Judgment No. 1515/2014/DS-PT dated December 1, 2014.

In Appeal Decision No. 38/KNGDT-VC3-V2 dated March 21, 2016, the Chief Prosecutor of the High People's Procuracy in Ho Chi Minh City appealed the Civil Appeal Judgment No. 1515/2014/DS-PT dated December 1, 2014 of the People's Court of Ho Chi Minh City; requested the Judicial Committee of the High People's Court in Ho Chi Minh City to review the case and annul the above Civil Appeal Judgment and the Civil Judgment at First Instance No. 12/2014/DS-ST dated April 16, 2014 of the People's Court of District 3, Ho Chi Minh City; and transfer the case file to the Court of First Instance for retrial.

In the Final Appeal Decision No. 234/2016/DS-GDT dated September 9, 2016, the Judicial Committee of the High People's Court in Ho Chi Minh City decided:

Not accepting Protest No. 38/KNGDT-VC3-V2 dated March 21, 2016 of the Chief Prosecutor of the High People's Procuracy in Ho Chi Minh City; upholding the Civil Appeal Judgment No. 1515/2014/DS-PT dated December 1, 2014 of the People's Court of Ho Chi Minh City.

On January 21, 2017, Mr. Nguyen Cong H, Ms. Tran Thi C1, Ms. Tran Thi Kim T1 submitted a request for review under the cassation procedure for the above-mentioned cassation decision No. 234/2016/DS-GDT dated September 9, 2016.

In the Decision on appeal of final judgment No. 56/2019/KN-DS dated August 5, 2019, the Chief Justice of the Supreme People's Court appealed the Decision on final judgment No. 234/2016/DS-GDT dated September 9, 2016 of the Committee of Judges of the High People's Court in Ho Chi Minh City; Request the Supreme People's Court's Judicial Council to review the case and annul the Final Judgment No. 234/2016/DS-GDT dated September 9, 2016 of the Judicial Committee of the High People's Court in Ho Chi Minh City, annul the Civil Appeal Judgment No. 1515/2014/DS-PT dated December 1, 2014 of the Ho Chi Minh City People's Court and the Civil Judgment at First Instance No. 12/2014/DS-ST dated April 16, 2014 of the District 3 People's Court, Ho Chi Minh City; transfer the case file to the District 3 People's Court, Ho Chi Minh City for a retrial according to the provisions of law.

At the appeal hearing, the representative of the Supreme People's Procuracy agreed with the appeal decision of the Chief Justice of the Supreme People's Court.

JUDGMENT OF THE COURT:

[1] The case file and evidence show that on July 10, 1989, Mr. Tran Van C and Mrs. Tran Thi C1 signed a Commitment and a Receipt with the following content: Mr. C received 75 taels of gold from Mrs. C1, giving Mrs. C1 and her husband full rights to use an area of ​​45 square meters ^at house number 182, A Street, Ward B, District D, Ho Chi Minh City; Mr. C will never claim the house back, nor will Mrs. C1 and her husband claim the gold back; when the State allows Mr. C to buy the house at a discounted price, Mr. H and Mrs. C1 must pay the discounted price for the area being used and Mr. C is responsible for completing the procedures to transfer ownership of the area transferred to Mr. H and Mrs. C1. Thus, there is a basis to determine that Mr. C agreed to sell part of the house at 182 A Street that he was renting from the State to Ms. C1 on the condition that Mr. C would be sold at a price by the State, or in other words, the transaction between Mr. C and Ms. C1 was a conditional civil transaction, when Mr. C was sold at a price by the State, the transaction would take effect. Article 23 of the 1991 Civil Contract Ordinance stipulates: "In case the parties agree on an event that is a condition for the performance or termination of the contract, when that event occurs, the contract must be performed or terminated" . Although the agreed conditions in the contract do not violate the prohibitions of the law and are not contrary to social ethics, in the part of the land that Mr. C agreed to transfer to Ms. C1 with an area of ​​42.74m2 ^within the road boundary, the State does not convert the price and does not recognize Mr. C's right to own the house and land use rights, so most of those conditions do not occur. Therefore, the agreement between Mr. C and Ms. C1 is invalid, and the Court of First Instance and the Court of Appeal declared it invalid.

[2] According to the provisions of Article 21 of the 2005 Housing Law, Point h, Clause 1, Article 10 of the 2014 Housing Law and Article 256 of the 2005 Civil Code, the owner and other subjects with rights to the property have the right to reclaim the property from the possessor, the user of the property, and the beneficiary of the property without legal basis. Because the disputed land and house area of ​​42.74m2 is ^located within the road boundary, the State does not evaluate or recognize the ownership of the house and the land use rights of Mr. C, then Mr. C and the heirs of Mr. C do not have the right to sue to claim that land and house area. The court of first instance and the court of appeal forced Mr. H, Ms. C1, Ms. T1, and Ms. K to be responsible for returning to the heirs the procedural rights and obligations of Mr. C the land and house area within the road boundary, the State does not recognize the ownership of the house and the land use rights is groundless. The final decision of the Judicial Committee of the High People's Court in Ho Chi Minh City did not find any errors in the Court of First Instance and the Court of Appeal, thereby declaring that the appeal of the Chief Prosecutor of the High People's Procuracy in Ho Chi Minh City was not accepted, and that the appellate judgment was upheld, which is not in accordance with the provisions of Clause 2, Article 345 of the 2015 Civil Procedure Code.

For the above reasons,

DECISION:

Pursuant to Clause 2, Article 337, Clause 3, Article 343, Clause 2, Article 345 of the 2015 Civil Procedure Code;

1. Accept the Decision of appeal for review No. 56/2019/KN-DS dated August 5, 2019 of the Chief Justice of the Supreme People's Court.
2. Annul the Final Appeal Decision No. 234/2016/DS-GDT dated September 9, 2016 of the Judicial Committee of the High People's Court in Ho Chi Minh City, annul the Civil Appeal Judgment No. 1515/2014/DS-PT dated December 1, 2014 of the People's Court of Ho Chi Minh City and annul the Civil First Instance Judgment No. 12/2014/DS-ST dated April 16, 2014 of the People's Court of District 3, Ho Chi Minh City on the case of "Dispute over housing contract" between the plaintiff, Mr. Tran Van C (died on April 2, 2011); the successors of the rights and obligations of Mr. Tran Van C, Ms. Le Thi Minh C2, Mr. Le Minh S, Mr. Le Minh D, Mr. Le Minh T2 and the defendants, Mr. Nguyen Cong H, Ms. Tran Thi C1 and other persons with related rights and obligations.
3. Transfer the case file to the People's Court of District 3, Ho Chi Minh City for retrial according to first instance procedures in accordance with the provisions of law.

CONTENT OF THE PRECEDENT:

“[1]...Thus, there is a basis to determine that Mr. C agreed to sell part of the house at 182 A Street that he was renting from the State to Ms. C1 on the condition that Mr. C would be sold at a price by the State, or in other words, the transaction between Mr. C and Ms. C1 was a conditional civil transaction, when Mr. C was sold at a price by the State, the transaction would become effective. Article 23 of the 1991 Civil Contract Ordinance stipulates: "In case the parties agree on an event that is a condition for the performance or termination of the contract, when that event occurs, the contract must be performed or terminated". Although the agreed conditions in the contract do not violate the prohibitions of the law and are not contrary to social ethics, in the part of the land that Mr. C agreed to transfer to Ms. C1 with an area of ​​42.74m2 ^within the road boundary, the State does not convert the price and does not recognize Mr. C's right to own the house and land use rights, so most of those conditions do not occur. Therefore, the agreement between Mr. C and Ms. C1 is invalid, and the Court of First Instance and the Court of Appeal declared it invalid, which is well-founded."

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