Judgment No: 08/2017/DS-PT

Plaintiff: Mr. Tran Van T

Defendants:   Mr. Huynh X, Mrs. Pham Thi D

Regarding: Dispute Over the Deposit Contract for Future Land Use Rights

Case Summary

Plaintiff: Mr. Tran Van T

With a desire to purchase land, Mr. T became aware that Mr. Huynh X and Mrs. Pham Thi D had a plot of land to be formed in the future, which would be issued a land use right certificate in their names. Mr. T and Mr. X, along with Mrs. D, created both a commitment letter to transfer the land use right, and a deposit agreement on November 14, 2015. According to the commitment letter, Mr. X and Mrs. D would transfer to Mr. T a plot of land in the FPT west resettlement area, located in Ward H, District N, Da Nang City, valued at 400,000,000 VND. Mr. T deposited 50,000,000 VND with Mr. X and Mrs. D. Mr. X and Mrs. D committed, “Within 60 days, the sellers will complete all procedures to obtain the land use right certificate and proceed with notarizing the transfer to the buyer.” Both parties agreed to settle the remaining amount within 60 days from the date of the commitment. However, after Mr. X and Mrs. D received the land use right certificate on January 12, 2016, despite multiple requests from Mr. T to fulfill the agreement, Mr. X and Mrs. D avoided and refused to comply, even challenging him to file a lawsuit. Mr. T filed a lawsuit requesting the court to compel Mr. Huynh X and Mrs. Pham Thi D to refund the deposit of 50,000,000 VND and compensate for the breach of the 100,000,000 VND contract, totaling 150,000,000 VND.

Defendants: Mr. Huynh X and Mrs. Pham Thi D

Mr. Huynh X and Mrs. Pham Thi D were allocated a resettlement plot in Ward H, District N, Da Nang City according to the lot allocation certificate dated May 5, 2011. On November 14, 2015, Mr. X and Mrs. D entered into a commitment letter with Mr. Tran Van T regarding the transfer of land use rights and a deposit agreement. Accordingly, Mr. T deposited 50,000,000 VND with Mr. X and Mrs. D to purchase the plot. Both parties committed that within 60 days, the sellers would complete all procedures to obtain the land use right certificate and proceed with notarizing the transfer to the buyer, and the buyer committed to paying the remaining amount of 350,000,000 VND within 60 days from the signing of the commitment. Mr. T’s lawsuit demanding Mr. X and Mrs. D refund 150,000,000 VND because Mr. X and Mrs. D failed to honor the commitment was rejected by Mr. X and Mrs. D, who claimed they had fulfilled their obligations as per the commitment letter.

At the first-instance trial No. 39/2016/DS-ST dated October 11, 2016, the People’s Court of District N, Da Nang City accepted part of Mr. Tran Van T’s lawsuit regarding the deposit contract dispute against Mr. Huynh X and Mrs. Pham Thi D. The court declared the commitment letter to transfer the land use rights and the deposit agreement dated November 14, 2015, between Mr. Tran Van T and Mr. Huynh X and Mrs. Pham Thi D to be void. The court ordered Mr. Huynh X and Mrs. Pham Thi D to return the deposit of 50,000,000 VND to Mr. Tran Van T and rejected Mr. Tran Van T’s request for a penalty deposit of 100,000,000 VND from Mr. Huynh X and Mrs. Pham Thi D.

Mr. Tran Van T appealed, requesting the appellate court to reconsider part of the first-instance civil judgment No. 39/2016/DS-ST. Mr. Huynh X appealed, requesting the appellate court to annul the first-instance civil judgment No. 39/2016/DS-ST.

Representative of the People’s Procuracy of Da Nang City. The collection of evidence was not by Article 97 of the Civil Procedure Code, and the legal relationship was incorrectly identified. The first-instance court determined the legal relationship as a dispute over the transfer of land use rights and deemed the commitment letter to transfer land use rights and the deposit agreement dated November 14, 2015, between Mr. Tran Van T and Mr. Huynh X and Mrs. Pham Thi D, to be invalid due to non-compliance with legal formalities. This determination is inappropriate. Therefore, it is proposed that the appellate court annul the first-instance judgment No. 39/2016/DS-ST dated October 11, 2016, of the People’s Court of District N, Da Nang City.

Judgment of the Court

Mr. Huynh X and Mrs. Pham Thi D committed to transferring the land use rights of a plot in Ward H, District N, valued at 400,000,000 VND, to Mr. Tran Van T. Mr. T paid a deposit of 50,000,000 VND to Mr. X and Mrs. D. It was agreed that within 60 days, Mr. X and Mrs. D would complete the procedures to obtain the land use right certificate in their names and then notarize the transfer to Mr. T, who would pay the remaining amount of 350,000,000 VND. After receiving the land use right certificate on January 12, 2016, Mr. X and Mrs. D did not complete the agreed procedures for transferring to Mr. T. Therefore, Mr. T filed a lawsuit requesting Mr. X and Mrs. D to return the deposit of 50,000,000 VND and the penalty deposit of 100,000,000 VND. The legal dispute between Mr. T and Mr. X and Mrs. D is a dispute over the deposit contract, as Mr. X and Mrs. D did not fulfill their obligations as committed in the deposit agreement, thus Mr. T’s lawsuit is justified and by the law.

The first-instance court determined the legal relationship as a dispute over the transfer of land use rights and declared the commitment letter to transfer land use rights and deposit agreement dated November 14, 2015, between Mr. Tran Van T and Mr. Huynh X and Mrs. Pham Thi D to be invalid due to non-compliance with legal formalities. The first-instance court stated that both parties were at fault in the commitment, thus not requiring the parties to fulfill the agreement but returning to the initial state, which was incorrect. By misidentifying the legal relationship, the first-instance judgment’s decision was inappropriate. The deposit agreement mentioned above complies with the law. Therefore, a part of Mr. Tran Van T’s appeal should be accepted, requiring Mr. Huynh X and Mrs. Pham Thi D to refund the deposit of 50,000,000 VND and compensate 50,000,000 VND, by clause 8 of the commitment letter and deposit agreement dated November 14, 2015, and Article 358 of the Civil Code.

Decision of the Court

Accept part of Mr. Tran Van T’s appeal. Reject Mr. Huynh X’s appeal. Amend the first-instance civil judgment No: 39/2016/DS-ST dated October 11, 2016, of the People’s Court of District N, Da Nang City. Order Mr. Huynh X and Mrs. Pham Thi D to refund Mr. Tran Van T the deposit of 50,000,000 VND and compensate 50,000,000 VND for breach of contract, totaling 100,000,000 VND (one hundred million VND). From the date Mr. Tran Van T submits a request, Mr. Huynh X and Mrs. Pham Thi D must pay interest on the late payment as announced by the State Bank of Vietnam, corresponding to the amount and time of delayed execution at the time of payment. Mr. Huynh X and Mrs. Pham Thi D must bear 5,000,000 VND in first-instance civil court fees. Mr. Tran Van T must bear 2,500,000 VND. Mr. Huynh X and Mrs. Pham Thi D must bear 200,000 VND in appellate court fees.

Legal Basis

Article 124; Article 137; Article 358; Article 429; Article 689 of the Civil Code; Clause 1, Article 228, Article 147 of the 2015 Civil Procedure Code. Article 358 of the Civil Code. Article 358 of the Civil Code; Clause 2, Article 308, Article 309 of the 2015 Civil Procedure Code; Ordinance No. 10/2009/PL-UBTVQH12.