Precedent No. 02/2016/AL on the Dispute over Property Recovery in Vietnam

Precedent No. 02/2016/AL, adopted by the Judicial Council of the Supreme People’s Court on April 6, 2016, and promulgated pursuant to Decision No. 220/QD-CA dated April 6, 2016, issued by the Chief Justice of the Supreme People’s Court.

1. Definition of a Precedent

A precedent refers to the legal reasoning and rulings contained in a legally effective judgment or decision of a court regarding a specific case, selected by the Judicial Council of the Supreme People’s Court and promulgated by the Chief Justice of the Supreme People’s Court as a precedent for courts to study and apply in adjudication. (Article 1, Resolution No. 04/2019/NQ-HDTP)

A precedent must meet the following criteria:

• It clarifies legal provisions subject to differing interpretations, provides analysis and explanation of legal issues and events, and indicates principles, guidelines for adjudication, or applicable legal norms in a specific case, or reflects fairness in matters not specifically regulated by law;
• It is normative;
• It provides guidance for the uniform application of law in adjudication.

2. Precedent No. 02/2016/AL on the Dispute over Property Recovery in Vietnam

2.1. Source of the Precedent

Cassation Decision No. 27/2010/DS-GDT dated July 8, 2010, issued by the Judicial Council of the Supreme People’s Court regarding the “Dispute over Property Recovery” case in Soc Trang Province between the plaintiff, Ms. Nguyen Thi Thanh, and the defendant, Mr. Nguyen Van Tam; with Ms. Nguyen Thi Yem as a person with related rights and obligations.

2.2. Summary of Precedent No. 02/2016/AL

In cases where a Vietnamese citizen residing abroad has paid for the transfer of land use rights and arranged for a person in Vietnam to act as a nominee to receive the transfer of land use rights on their behalf, when resolving disputes, the court must consider and account for the efforts of the nominee in preserving, maintaining, and improving the land use rights, thereby increasing its value. If the precise contribution of the nominee cannot be determined, the court must establish that the person who actually paid for the transfer of land use rights and the nominee who holds the title share equal contributions to divide the increased value of the land use rights, after deducting the original amount paid for the transfer.

Relevant legal provisions:

• Article 137 and Article 235 of the Civil Code of Vietnam 2005.

Keywords of the precedent:

“Invalid civil transaction”; “Property recovery”; “Basis for establishing ownership”; “Establishment of ownership over profits”; “Vietnamese citizen residing abroad.”

CASE DETAILS

In the lawsuit filed on January 24, 2005, the statement dated February 7, 2005, and throughout the case proceedings, the plaintiff, Ms. Nguyen Thi Thanh, stated:

Ms. Thanh, a Vietnamese citizen residing in the Netherlands, returned to Vietnam to visit relatives and intended to acquire land use rights. On August 10, 1993, she acquired the land use rights to 7,595.7 m² of rice field land in Ward 7, Soc Trang Town, from the couple Mr. Heng Tinh and Ms. Ly Thi Sa Quenh for 21.99 taels of gold. Ms. Thanh directly negotiated, agreed on the transfer, and paid the money and gold to Mr. Heng Tinh and his wife. Her purpose was to acquire the land to entrust it to her younger brother, Mr. Nguyen Van Tam, and Ms. Nguyen Thi Chinh Em to cultivate and support their parents. As a Vietnamese citizen residing abroad, Ms. Thanh arranged for Mr. Tam to be named in the transfer documents. She presented a “Rice Field Transfer Document” dated August 10, 1993, certified by the People’s Committee of An Hiep Commune. After the transfer, she allowed Mr. Tam and his wife to cultivate the land. However, in 2004, without her consent, Mr. Tam transferred the entire 7,595.7 m² of land to Minh Chau Limited Liability Company for a land use rights value of 1,260,000,000 VND. Therefore, she demanded that Mr. Tam return the proceeds from the transfer of her land.

The defendant, Mr. Nguyen Van Tam, stated:

The 7,595.7 m² of land in dispute was acquired by him and his wife with their own money and gold from Mr. Heng Tinh and his wife, and he was named in the “Rice Field Transfer Document” dated August 10, 1993. This document was not certified by the local authorities. However, he and Mr. Heng Tinh’s couple later signed a contract and an application for the transfer of land use rights on August 11, 1993, which were certified by the People’s Committee of An Hiep Commune and approved by the People’s Committee of My Tu District for the transfer. After the transfer, he registered and declared the land, receiving a land use rights certificate on May 28, 1994. Consequently, in 2004, he transferred the entire land to Minh Chau Limited Liability Company for 1,260,000,000 VND. He claimed that the “Rice Field Transfer Document” dated August 10, 1993, certified by the People’s Committee of An Hiep Commune and presented by Ms. Thanh, was forged, as per Forensic Conclusion No. 2784/C21 (P7) dated October 25, 2005, by the Institute of Criminal Science, General Police Department, which determined that it did not bear his signature. Therefore, he did not agree with Ms. Thanh’s claims.

Ms. Nguyen Thi Yem (Mr. Tam’s wife), a person with related rights and obligations, stated: In 1993, she and her husband acquired the land from Mr. Heng Tinh. She did not participate in the transfer procedures but provided money and gold to Mr. Tam to pay Mr. Heng Tinh and his wife, so she also did not accept Ms. Thanh’s claims.

Mr. Heng Tinh and Ms. Ly Thi Sa Quenh (also known as Ly Thi Sa Venh), the transferors of the land, affirmed that Ms. Thanh directly negotiated the transfer, paid 21.99 taels of gold to them, and arranged for Mr. Tam to be named in the transfer document dated August 10, 1993. They confirmed that the signatures on the transfer document presented by Ms. Thanh were indeed theirs.

At First-Instance Civil Judgment No. 04/2006/DS-ST dated April 28, 2006, the Soc Trang Province People’s Court decided:

To partially accept Ms. Nguyen Thi Thanh’s claim for the recovery of the land transfer proceeds.

To order Mr. Nguyen Van Tam and Ms. Nguyen Thi Yem to repay Ms. Nguyen Thi Thanh 630,000,000 VND.

Additionally, the first-instance court ruled on court fees, appraisal costs, and declared the parties’ right to appeal in accordance with the law.

On May 10, 2006, Mr. Nguyen Van Tam appealed, arguing that Ms. Thanh was not entitled to the land use rights he transferred to Minh Chau Limited Liability Company, and that the first-instance court’s order for him to pay 630,000,000 VND to Ms. Thanh was incorrect.

On May 12, 2006, Mr. Nguyen Huu Phong (representing Ms. Thanh) appealed, requesting the appellate court to order Mr. Tam to repay the full amount of 1,260,000,000 VND from the land transfer to Ms. Thanh.

At Appellate Civil Judgment No. 334/2006/DS-PT dated August 25, 2006, the Appellate Court of the Supreme People’s Court in Ho Chi Minh City decided: to reject the appeals of both the plaintiff and the defendant, and to amend the first-instance judgment as follows:

To partially accept Ms. Nguyen Thi Thanh’s claim for the recovery of the land use rights transfer proceeds.

To order Mr. Nguyen Van Tam and Ms. Nguyen Thi Yem to repay Ms. Nguyen Thi Thanh 27,047,700 VND, equivalent to 21.99 taels of 24k gold.

To order Mr. Nguyen Van Tam and Ms. Nguyen Thi Yem to surrender 1,232,266,860 VND to the State treasury.

Additionally, the appellate court ruled on court fees.

Following the appellate trial, Mr. Nguyen Van Tam lodged a complaint against the appellate civil judgment.

In Decision No. 449/2009/KN-DS dated August 21, 2009, the Chief Justice of the Supreme People’s Court protested Appellate Civil Judgment No. 334/2006/DS-PT dated August 25, 2006, of the Appellate Court of the Supreme People’s Court in Ho Chi Minh City, proposing that the Judicial Council of the Supreme People’s Court conduct a cassation review to annul the appellate judgment and First-Instance Civil Judgment No. 04/2006/DS-ST dated April 28, 2006, of the Soc Trang Province People’s Court; and to transfer the case file to the Soc Trang Province People’s Court for re-adjudication at first instance in accordance with the law, with the following findings:

“Ms. Nguyen Thi Thanh filed a lawsuit to recover property from Mr. Nguyen Van Tam, claiming that, as a Vietnamese citizen residing abroad, she had asked Mr. Tam (her brother) to act as a nominee to receive the land transfer from Mr. Heng Tinh and his wife on her behalf, but Mr. Tam subsequently transferred her land to another party.

The first-instance and appellate courts’ determination that Mr. Tam acted as a nominee for Ms. Thanh in receiving the land transfer from Mr. Heng Tinh and his wife was well-founded.

As Ms. Thanh is a Vietnamese citizen residing abroad, she was not entitled to be allocated land and could only recover the value of her investment in the land transfer.

Regarding the difference in land value, at the time of the first-instance and appellate trials, the Civil Code of Vietnam 2005 was in effect, which did not mandate the confiscation of such differences for the State treasury. Thus, this difference should be shared by Ms. Thanh and Mr. Tam. The first-instance court’s decision not to order Mr. Tam to surrender the difference to the State was well-founded, but its failure to order Mr. Tam to repay Ms. Thanh the initial investment value was incorrect. The appellate court’s order for Mr. Tam to surrender the entire difference (1,232,266,860 VND) to the State treasury, without legal basis, was contrary to the law.”

At the cassation hearing, the representative of the Supreme People’s Procuracy proposed that the Judicial Council of the Supreme People’s Court accept the Chief Justice’s protest to annul the appellate judgment and First-Instance Civil Judgment No. 04/2006/DS-ST dated April 28, 2006, of the Soc Trang Province People’s Court; and to transfer the case file to the Soc Trang Province People’s Court for re-adjudication at first instance in accordance with the law.

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

Ms. Nguyen Thi Thanh filed a lawsuit demanding that Mr. Nguyen Van Tam repay her 1,260,000,000 VND, claiming that she directly negotiated and paid for the transfer of 7,595.7 m² of land from Mr. Heng Tinh and his wife, but, as a Vietnamese citizen residing abroad, she arranged for Mr. Tam (her brother) to be named in the transfer documents. Without her consent, Mr. Tam transferred the entire land to Minh Chau Limited Liability Company for 1,260,000,000 VND.

Mr. Tam claimed that he negotiated the transfer and paid Mr. Heng Tinh, so the transfer documents were in his name. After the transfer, he directly managed and used the land, registered and declared it, obtained a land use rights certificate, and transferred it to Minh Chau Limited Liability Company with the authorities’ approval, so he did not accept Ms. Thanh’s claims.

However, during the case proceedings, Mr. Tam and his wife provided contradictory statements regarding the amount of money and gold paid to Mr. Heng Tinh, and he failed to prove the source of the money or gold he claimed to have paid.

In contrast, Mr. Heng Tinh and Ms. Quenh affirmed that they negotiated the transfer and received gold only from Ms. Thanh, and the transfer document was made in Mr. Tam’s name at Ms. Thanh’s request because she was residing abroad.

According to the statements of Ms. Thai Thi Ba, Mr. Nguyen Phuoc Hoang, and Ms. Nguyen Thi Chinh Em (the mother and siblings of Ms. Thanh and Mr. Tam), Ms. Thanh negotiated and paid for the land transfer to Mr. Heng Tinh and his wife, while Mr. Tam only acted as a nominee.

Based on the above evidence, there are sufficient grounds to affirm that the first-instance and appellate courts correctly determined that Ms. Thanh paid the entire amount of 21.99 taels of gold for the transfer of the land, while Mr. Tam acted as a nominee. As Mr. Tam transferred the land to Minh Chau Limited Liability Company and Ms. Thanh only demanded the repayment of the 1,260,000,000 VND transfer proceeds, the first-instance and appellate courts’ acceptance of the case was in accordance with the law.

Although Ms. Thanh paid 21.99 taels of gold for the transfer (equivalent to approximately 27,047,700 VND), the transfer documents were in Mr. Tam’s name, and after the transfer, Mr. Tam managed the land and later transferred it to another party. Therefore, it should have been determined that Mr. Tam contributed to preserving, maintaining, and improving the land, thereby increasing its value. The amount (after deducting the original amount equivalent to 21.99 taels of gold paid by Ms. Thanh) should be considered the joint profit of Ms. Thanh and Mr. Tam. Additionally, Mr. Tam’s contribution should have been determined to allocate him a portion corresponding to his efforts to ensure the parties’ rights (if Mr. Tam’s precise contribution could not be determined, Ms. Thanh and Mr. Tam should be deemed to have equal contributions for division).

The first-instance court’s recognition that Ms. Thanh and Mr. Tam each owned half of the amount but failure to allocate to Ms. Thanh the amount corresponding to 21.99 taels of gold was incorrect.

The appellate court’s recognition that Ms. Thanh was entitled only to the amount equivalent to 21.99 taels of gold, with the remaining profit confiscated for the State treasury, was contrary to the provisions of the Civil Code of Vietnam 2005 and did not ensure the parties’ rights.

Furthermore, Ms. Thanh filed a lawsuit demanding that Mr. Tam repay her 1,260,000,000 VND, the amount he received from transferring the land use rights to 7,595.7 m², without disputing the land use rights, while Mr. Tam claimed the amount was his. Thus, the parties disputed the ownership of the aforementioned amount. However, the first-instance and appellate courts’ determination of the legal relationship as a “Dispute over Property Recovery” was inaccurate.

For the foregoing reasons, pursuant to Clause 3, Article 297 and Article 299 of the Civil Procedure Code of Vietnam 2004;

DECISION

1. Annul Appellate Civil Judgment No. 334/2006/DS-PT dated August 25, 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, 2006, of the Soc Trang Province People’s Court regarding the dispute over property recovery between the plaintiff, Ms. Nguyen Thi Thanh, and the defendant, Mr. Nguyen Van Tam; with Ms. Nguyen Thi Yem as a person with related rights and obligations.

2. Transfer the case file to the Soc Trang Province People’s Court for re-adjudication at first instance in accordance with the law.

CONTENT OF THE PRECEDENT

Although Ms. Thanh paid 21.99 taels of gold for the transfer (equivalent to approximately 27,047,700 VND), the transfer documents were in Mr. Tam’s name, and after the transfer, Mr. Tam managed the land and later transferred it to another party. Therefore, it should have been determined that Mr. Tam contributed to preserving, maintaining, and improving the land, thereby increasing its value. The amount (after deducting the original amount equivalent to 21.99 taels of gold paid by Ms. Thanh) should be considered the joint profit of Ms. Thanh and Mr. Tam. Additionally, Mr. Tam’s contribution should have been determined to allocate him a portion corresponding to his efforts to ensure the parties’ rights. If Mr. Tam’s precise contribution could not be determined, Ms. Thanh and Mr. Tam should be deemed to have equal contributions for division.