Zhang Tianpei v Hainan Changmao Runde Real Estate Development Co., Ltd. and Kou Guangqian (third party) in respect of Dispute over Objection to Enforcement by the Applicant for Enforcement

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Zhang Tianpei v Hainan Changmao Runde Real Estate Development Co., Ltd. and Kou Guangqian (third party) in respect of Dispute over Objection to Enforcement by the Applicant for Enforcement

 

Case No.: (2015) QHFZSZ No.5

Cause of action:  Dispute over objection to enforcement

by the applicant for enforcement

Sea area involved: N/A

Date:  22 December 2015

 

Gist

 

In a lawsuit of objection to enforcement by an applicant for enforcement, the Claimant (the applicant for enforcement) only have claims to continue the enforcement of the subject matter, thus its request shall be limited to “request for continuous enforcement of the subject matter”. Requests other than the said one fall out the scope of trial and shall not be tried by the court.

 

Applicable laws

 

  1. Article 227 of the Civil Procedure Law of the People’s Republic of China
  2. Articles 311 and 313 of the Interpretations of the Supreme People’s Court on Applicability of the Civil Procedure Law of the People’s Republic of China

 

Basic facts

 

On 19 March 2009, the Defendant Changmao company and Kou Guangqian (the third party) concluded a Purchase and Sales of Commercial Real Estate, under which Kou Guangqian purchased from the Defendant the Suit No.704 at 7/F, Bld. B, Chang Mao-Hupan Renjia located at Jinken Road Longhua Distract Haikou City at the price of RMB438,172. On 27 March 2009, after an initial payment of RMB132,172 to Changmao company, Kou Guangqian concluded with China Everbright Bank and Changmao company an Individual Loan Agreement, under which China Everbright Bank lent a housing loan in an amount of RMB306,000 to Kou Guangqian with Changmao company as guarantor. As Kou Guangqian failed to pay the loan as agreed, China Everbright Bank transferred RMB8,021.78 and RMB281,011.50 from Changmao company’s account respectively on 30 September 2011 and 29 January 2012, which totaled RMB289,033.28. On 30 August 2013, Zhang Tianpei brought an arbitration before Hainan Arbitration Committee against Kou Guangqian on the ground of a dispute over purchase and sales of commercial real estate. On 6 September, Hainan Arbitration Committee rendered the Mediation Award of (2013) HZZ No.454. As per the Award, both parties agreed, under the mediation of the Arbitration Committee, as follows: 1. Kou Guangqian shall assist Zhang Tianpei to handle the formalities for ownership transfer of Suit No.704 at 7/F, Bld. B, Hupan Renjia located at Jinken Road South, Haikou City before 15 January 2014; 2. The arbitration fee of RMB3,000 shall be borne by Kou Guangqian. As Kou Guangqian failed to performed the aforesaid effective arbitration mediation award, Zhang Tianpei filed a lawsuit before this Court for compulsory enforcement on 16 June 2014, requesting: 1. Kou Guangqian to transfer the ownership of Suit No.704 at 7/F, Bld. B, Chang Mao-Hupan Renjia located at Jinken Road Longhua Distract Haikou City to Zhang Tianpei; 2. Kou Guangqian to bear all the enforcement fee. On the same day, this Court accepted the case and posted an announcement on inquiry for objections in Hainan Daily on 24 June 2014.

 

In addition, this Court found that Suit No.704 at 7/F, Bld. B, Chang Mao-Hupan Renjia located at Jinken Road Longhua Distract Haikou City has been registered under the name of the Defendant Changmao company since 22 July 2013 with the ownership certificate number of HK387801. On 24 June 2014, Hainan Arbitration Committee rendered a corrective Mediation Award of (2013) HZZ No.454-1 on the ground that item 1 of the mediation results in the Mediation Award of (2013) HZZ No.454 was incomplete, and changed it as “the correspondent (Kou Guangqian) shall assist the applicant (Zhang Tianpei) to handle the formalities for ownership transfer of Suit No.704 at 7/F, Bld. B, Chang Mao-Hupan Renjia located at # 33 Jinken Road Longhua Distract Haikou City (with the ownership certificate number of HK387801) before 15 January 2014”.

 

Zhang Tianpei’s claims were: 1, continue to enforce the Mediation Award of (2013) HHZ No.454 rendered by Hainan Arbitration Committee and transfer the ownership of Suit No.704 at 7/F, Bld. B, Hupan Renjia located at Jinken Road South, Haikou City to Zhang Tianpei; 2, the Defendant Changmao company shall assist the ownership transfer of Suit No.704 at 7/F, Bld. B, Hupan Renjia located at Jinken Road South, Haikou City; 3, the court fees shall be borne by the Defendant.

 

Reasoning

 

The effective judgement held that:

 

This was a case of dispute over objections to enforcement by the applicant for enforcement. The focal issues in this case were: 1, whether Zhang Tianpei’s claims were within the scope of trial for lawsuit of objections to enforcement by the applicant for enforcement; 2, whether the Defendant Changmao company has civil rights over the subject matter that can preclude compulsory enforcement.

 

As regards the issue whether Zhang Tianpei’s claims were within the scope of trial for lawsuit of objections to enforcement by the applicant for enforcement, this Court held that in a lawsuit of objections to enforcement by the applicant for enforcement, the claimant merely has claims on whether the enforcement of the subject matter should be continued, and thus the claimant’s request shall be limited to “request for continue to enforce the subject matter”. Hence, requests fell beyond were not the trial scope of such kind of case and the court shall not hear and make any judgement. The first request by the Claimant was the same with that in the enforcement proceedings and was a clear request for continue to enforce the subject matter, which was in line with Article 306 of the Interpretations of the Supreme People’s Court on Applicability of the Civil Procedure Law of the People’s Republic of China and within the trial scope of this Court. The second request by the Claimant fell out the scope for request continuous enforcement of the subject matter and the Defendant (as a third party in the enforcement proceedings) has no statutory obligations to assist the enforcement. Hence, the said request was not accepted by this Court for trial.

 

Regarding the issue whether the Defendant Changmao company has civil rights over the subject matter that can preclude compulsory enforcement, this Court held that: 1, as per Article 17 of the Property Law of the People’s Republic of China, the ownership certificate of the immovables is the proof that the obligee is entitled to the property right of the said immovables. In this case, although Kou Guangqian (the third party in this case) concluded the Purchase and Sales of Commercial Real Estate with the Defendant Changmao company and paid a part of the contract price, the ownership of the subject real estate has not been transferred and the real estate was still registered under the name of Changmao company. Hence, Changmao company was the owner of the said real estate. 2, Article 17 of the Provisions of the Supreme People's Court for the People's Courts to Seal up, Distrain and Freeze Properties in Civil Enforcement aims at solving the problem that whether enforcement measures such as sealing up, distraining and freezing could be taken over the properties purchased in full payment and actually possessed by bona fide third party. In this case, the Claimant (Zhang Tianpei) did not perform its duty of care when signing the purchase and sales contract for the subject real estate with Kou Guangqian, i.e. Zhang Tianpei signed the contract and made the payment on the same day under the circumstance that Kou Guangqian did not provide the originals of the Purchase and Sales of Commercial Real Estate and the corresponding invoice to prove his ownership over the subject real estate. Zhang Tianpei has obvious fault in this respect and thus could not be deemed as bona fide third party. In the meantime, the Claimant has not actually possessed the subject real estate. Therefore, the Claimant did not have the right to invoke Article 17 of the Provisions of the Supreme People's Court for the People's Courts to Seal up, Distrain and Freeze Properties in Civil Enforcement to make his claims.

 

The Defendant Changmao company alleged that the purchase and sales of real estate between the Claimant and Kou Guangqian was false and it shall be ascertained as private lending relationship between the two parties. Judging from the facts found, the conclusion of the purchase and sales contract with Kou Guangqian and the payment of the housing price by the Claimant did not in line with common practice and thus this Court held that the Claimant had not perform his duty of care and was at fault. However, the evidence was insufficient to ascertain that the purchase and sales contract between the two parties was false. Hence, this Court did not support the Defendant’s said allegation. As to the Defendant’s request relying on the aforesaid grounds that the Arbitration Mediation Award made by Hainan Arbitration Committee shall not be enforced or shall be revoked was not within the trial scope of this case. The Defendant may seek for remedy from other proceedings according to law.

 

In light of the above, the Defendant Changmao company has civil claims over the subject matter which could preclude the compulsory enforcement. Hence the claims by the Claimant Zhang Tianpei should be overruled.

 

Judgement

 

The Claimant’s claims were overruled. (The parties concerned did not appeal.)