Analysis of the Judgment of the Basic Civil Court Skopje MALVP.No.2328/18 of 17.06.2020 and the Judgment of the Court of Appeals Skopje GZ-1050/21 of 28.10.2021
22.09.2022
Facts of the case
The plaintiff is the wife of an Enforcement agent appointed for the territory of the Basic Courts of Ohrid, Struga and Debar, who performed the function of Enforcement agent until his death on February 16, 2012. After his death, the cases in which he acted and took enforcement actions were taken over by the defendant as the Enforcement agent appointed for the same territory. With probate decision O.No. 117/12 UDR. No. 137/12 dated 08.06.2012 and a decision on additionally found property of 21.02.2018, the plaintiff was announced as the sole legal heir of her late husband's estate. In the meantime, even before the defendant began to act on the cases taken over from the deceased Enforcement agent, the defendant and the plaintiff entered into an agreement for the regulation of mutual rights and obligations arising from the completed and ongoing cases of the plaintiff's husband, with which, among other things, the plaintiff and the defendant agreed that she has the right to collect a reward and compensation for other Enforcement agents' work expenses in full from the initiated and uncompleted cases of the late Enforcement agent. The defendant acted in accordance with the agreement for a certain period of time, after which on April 15, 2014, he notified the plaintiff in writing that he was terminating the agreement. Some of the enforcement cases in which the plaintiff's husband took enforcement actions, and the defendant completed them, are cases I.No.858/2007-Oh, I.No.859/2007-Oh, I.No.860/2007-Oh and I.No. 861/2007-Oh. For the four cases, i.e. enforcement orders, the defendant charged MKD 115,020.00 on 11.05.2014 and 11.06.2014 to the special account opened in his name as Enforcement agent. The actions taken by the deceased Enforcement agent in the mentioned cases were determined at the amount of MKD 41,520.00. On 21.11.2014, from the total collected funds, the defendant transferred an amount of MKD 83,361.00 to his own account, while on 04.03.2016, he transferred an amount of MKD 11,783.00 to the account of the plaintiff.
The plaintiff, as the sole legal heir of the deceased Enforcement agent, filed a lawsuit against the defendant as a natural person, for acquisition without a basis, referring to provisions of Article 199 of the Law on Obligations in connection with Article 46 of the Law on Enforcement which was in force at the time of her husband's death, according to which the enforcement agent has the right to charge in his own name and for his own account only those actions that he personally undertook. The defendant was a pensioner at the time the lawsuit was filed. The subject of the proceedings are the funds collected by the defendant in the four cases, for actions taken by the plaintiff's husband, minus the VAT and the amount of MKD 11,783.00 already paid, on which amount the plaintiff requested only legal penalty interest.
The first-instance court rejected the claim as unfounded with its judgment MALVP. No. 2328/18 of 17.06.2020. The court determined that the claim of the plaintiff can only arise from compensation for damages due to the termination of the contract, after which it determined that the plaintiff found out about the damage and the party causing it on the day of termination of the contract - 15.04.2014, when, according to the court, the limitation period, which amounts to 3 years, began to run for the claims for damages, so it expired on 15.04.2017, long before the filing of the lawsuit on 22.11.2018, which made the plaintiff's claim time-barred.
The second-instance court with judgment GZ-1050/21 of 28.10.2021 rejected the plaintiff's appeal as unfounded and affirmed the first-instance judgment, fully agreeing with the reasoning of the first-instance court, the established factual situation and especially the application and interpretation of substantive law.
Meaning and application of the substantive law
In the procedure in which the judgments subject to analysis were passed, both the first and second instance courts based their decisions on the provisions of Article 113, Article 121 and Article 365 paragraph 1 of the Law on Obligations, without giving a detailed and legally sound explanation of the reasons why they considered that the provisions of Article 199 of the Law on Obligations are not applicable in relation to the provisions of Article 46 of the Enforcement Law.
According to the general rule of acquisition without a basis provided for in Article 199 of Law on Obligations, when a part of the property of one person is transferred in any way to the property of another person, and this transfer has no basis in any legal matter or in the law, the transferee is obliged to return that part of the property, if that is possible, otherwise he is obliged to compensate the value of the benefit achieved. The transfer of property also means the acquisition of a benefit by an action performed.
It is evident from the cited legal provision that for the creation of a relationship resulting from an acquisition without a basis, it is necessary to fulfill several essential assumptions such as an increase in the property (enrichment) of one party; reduction of property (depletion) of the other party; correlation between the decrease and increase in the property of those persons and the absence (non-existence) of the legal basis that would legally justify the decrease and increase in the property of those persons.
Pursuant to Article 46 paragraph 1 of the Enforcement Law (Official Gazette of RM No. 35/2005, 50/2006, 129/2006, 8/2008, 83/2009, 50/2010, 83/2010, 88/2010, 171/ 2010, 148/2011) The enforcement agent for the performed actions has the right to a fee and compensation of costs in accordance with the Tariff for fee and compensation of other costs for the work of the enforcement agent.
In the situation in question, this means that the fee and compensation collected by the defendant in the four enforcement cases in question, and related to actions taken by the plaintiff's husband, represented the property of the plaintiff's husband, while the remaining part related to actions taken by the defendant, represented his property.
In Macedonian inheritance law, one of the basic principles is the principle of universal succession and the principle of acquisition of inheritance by force of law in the sense of Article 127 of the Law on Inheritance. This applied in this particular case means that the legacy of the deceased enforcement agent passes to his heirs at the moment of his death, so the acceptance of the inheritance and the announcement of the plaintiff as the sole heir is declarative and not constitutive in nature. This further means that the entire property of the deceased enforcement agent, which undoubtedly includes the right to collect fees and compensation for actions performed in the initiated enforcement cases, has been transferred and is the property of the plaintiff.
From the above, it is indisputable that the assumptions for the creation of a relationship from an acquisition without a basis are fulfilled. That is, the property of the defendant increased by the amount of the funds transferred on the account of fee and compensation for actions performed by the husband of the plaintiff, at the expense of which the property of the plaintiff decreased by such amount. At the same time, such an increase, that is, a decrease in property, has no legal basis, given that there was no legal provision that provides for the defendant to charge the fees and compensations for the actions taken by the husband of the plaintiff, nor did such a legal provision exist, especially having in mind the content of Article 46 paragraph 1 of the Enforcement law.
The provisions of Article 113, Article 121 and Article 365 paragraph 1 of the Law on Obligations, on which the courts based their decisions, refer to the rights of one party when the other party fails to fulfill its obligation, the effect of the termination of the contract and the limitation period for claims of compensation for damage. That is, Article 113 provides for the creditor's right to compensation for damage when the debtor from a bilateral contract fails to fulfill its contractual obligation, regardless of whether the creditor decides to demand from the debtor the fulfillment of its obligation or terminates the contract. Article 121, on the other hand, stipulates that by terminating a contract, both contracting parties are released from their obligations, except for the obligation to compensate for possible damage. According to Article 365 paragraph 1, the limitation period is 3 years from the day when the injured party learned about the damage and about the party that committed it.
In this particular case, first of all, it is not a bilateral contract, because the plaintiff had only rights, and the defendant only obligations. This further means that the general provisions for the cessation of obligations by termination apply, as the defendant's statement can undoubtedly be interpreted which was entitled contract termination. The provisions of Article 347 of the Law on Obligations for termination of a permanent debt relationship do not provide for the right to compensation for damage, but only the right of the creditor to claim for the debtor’s liabilities which have become due. Moreover, the agreement between the plaintiff and the defendant is not of a constitutive nature regarding her right to collect the fee and compensations for the enforcement actions taken by her husband, whereby her right derives from the Enforcement Law and the Inheritance Law.
Even if there was a question of compensation for damages, what position did the courts take in the decisions subject to analysis, Article 376 of the Law on Obligations provided for an interruption of the limitation period, in addition to by the express recognition of a debt, as well as by conclusive actions, such as which is payment of part of the debt. In this case, the defendant paid the plaintiff a part of the amount of MKD 11,783.00 for the four orders in question on 03.04.2016, which points to the fact that he conclusively admitted that based on these enforcement cases and orders he has a debt to the plaintiff, so in terms of Article 381 of the Law on Obligations, the limitations period began to run again.
In the Law on Obligations, in chapter II Occurrence of obligations, Section 2 Causing damage, Section 9 Right of the injured party to claim compensation after the right becomes time-barred, Article 198 provides for the right of the injured party, after the right to claim compensation for damage becomes time-barred, to claim the things acquired with the harmful actions from the party causing the damage, in accordance with the provisions for acquisition without a basis, for which the general limitation period applies.
This means that even if the interpretation of the courts is correct that in this case it is a relationship resulting from causing damage with the termination of a contract and it is a time-barred claim, the legislator himself stood up for the protection of the injured party and referred to the application of the provisions of acquisition without basis, on which the plaintiff based her claim. The normative text of the law is divided into chapters, which are further divided into sections, which are further divided into sub-sections, and the sub-sections into parts and articles. This means that the provisions of the sub-section refer to the relationships created under the section, i.e. the right of the injured party after the claim for compensation for damage become time-barred, refers to all relationships created by causing damage, such as the courts have determined to be the subject relationship between the plaintiff and the defendant.
For comparison, in the same factual situation, between the same parties, on the same legal issue, as in the procedure and decisions subject to analysis, the same first-instance court, but represented by another judge, with Judgment MALVP-890/18 adopted the claim and determined that the assumptions for the obligations relationship acquisition without basis are fulfilled. The same second-instance court as in the decision under analysis, with the same president of the council, but different members of the council, with Judgment GZ-2046/21 of 17.02.2022 confirmed the first-instance judgment and fully agreed with the established factual situation and especially the interpretation and application of substantive law by the court of first instance.
Conclusions
It is evident from all of the above that the courts either wrongfully applied or did not apply provisions of substantive law, especially from the Law on Obligations, the Enforcement Law and Inheritance Law, in which way they actually violated the procedure, but also acted inconsistently.
Namely, in this particular case, the courts completely ignored the fact that the property of the deceased enforcement agent, which undoubtedly includes the right to collect the fees and compensations for the enforcement actions taken in the four enforcement proceedings in question, was transferred to the plaintiff, as his sole legal heir and represents her property, which decreased as a result of the fact that the defendant transferred the part that belonged to the late enforcement agent, i.e. to the plaintiff, to his own account during the collection of the enforcement costs. Hence, in terms of Article 46 paragraph 1 of the Enforcement Law and Article 199 of the Law on Obligations, the essential elements of the relationship acquisition without basis - enrichment of the defendant, impoverishment of the plaintiff, correlation between the same and the absence of a legal matter or law as a legal basis, are fulfilled in their entirety, and such provisions were not at all taken into consideration nor applied by the courts, without giving a legally sound rationale for it.
Furthermore, when they have already started and established that the claim can only be for compensation of damages, the courts did not distinguish whether the plaintiff and the defendant concluded a unilateral or bilateral contract, as well as the fact which contracting party and for what reasons stated to the other party that it is no longer bound by the contract, in order to apply the provisions for termination of a bilateral contract and the right to compensation for damages due to the termination. In addition, the courts seem not to have considered the fact that the defendant in the four enforcement cases in question made a payment to the plaintiff, in which way he interrupted the limitation period, so they did not apply the provisions for the interruption of the limitation period at all.
For unclear reasons, the courts failed to apply a crucial provision that refers to the rights of the injured party under the statute of limitations on the claim for compensation for damage, in a situation where they expressly determined that the claim can only refer to compensation for damage and that it is time-barred. Namely, the legislator himself in Article 198 of the Law on Obligations refers to the application of the provisions for acquisition without a basis in the existence of a time-barred claim for compensation for damage, and such provision the courts did not apply without reason.
I believe that in this case this is indisputably an acquisition without a basis, so the courts, by not applying the provisions on acquisition without a basis, but also by diametrically different decision-making on an identical legal issue in separate proceedings, violate the substantive law, act inconsistently, thus influencing the endangerment of the legal certainty of the parties and respect for the constitutionally elevated fundamental value, the rule of law.
The plaintiff is the wife of an Enforcement agent appointed for the territory of the Basic Courts of Ohrid, Struga and Debar, who performed the function of Enforcement agent until his death on February 16, 2012. After his death, the cases in which he acted and took enforcement actions were taken over by the defendant as the Enforcement agent appointed for the same territory. With probate decision O.No. 117/12 UDR. No. 137/12 dated 08.06.2012 and a decision on additionally found property of 21.02.2018, the plaintiff was announced as the sole legal heir of her late husband's estate. In the meantime, even before the defendant began to act on the cases taken over from the deceased Enforcement agent, the defendant and the plaintiff entered into an agreement for the regulation of mutual rights and obligations arising from the completed and ongoing cases of the plaintiff's husband, with which, among other things, the plaintiff and the defendant agreed that she has the right to collect a reward and compensation for other Enforcement agents' work expenses in full from the initiated and uncompleted cases of the late Enforcement agent. The defendant acted in accordance with the agreement for a certain period of time, after which on April 15, 2014, he notified the plaintiff in writing that he was terminating the agreement. Some of the enforcement cases in which the plaintiff's husband took enforcement actions, and the defendant completed them, are cases I.No.858/2007-Oh, I.No.859/2007-Oh, I.No.860/2007-Oh and I.No. 861/2007-Oh. For the four cases, i.e. enforcement orders, the defendant charged MKD 115,020.00 on 11.05.2014 and 11.06.2014 to the special account opened in his name as Enforcement agent. The actions taken by the deceased Enforcement agent in the mentioned cases were determined at the amount of MKD 41,520.00. On 21.11.2014, from the total collected funds, the defendant transferred an amount of MKD 83,361.00 to his own account, while on 04.03.2016, he transferred an amount of MKD 11,783.00 to the account of the plaintiff.
The plaintiff, as the sole legal heir of the deceased Enforcement agent, filed a lawsuit against the defendant as a natural person, for acquisition without a basis, referring to provisions of Article 199 of the Law on Obligations in connection with Article 46 of the Law on Enforcement which was in force at the time of her husband's death, according to which the enforcement agent has the right to charge in his own name and for his own account only those actions that he personally undertook. The defendant was a pensioner at the time the lawsuit was filed. The subject of the proceedings are the funds collected by the defendant in the four cases, for actions taken by the plaintiff's husband, minus the VAT and the amount of MKD 11,783.00 already paid, on which amount the plaintiff requested only legal penalty interest.
The first-instance court rejected the claim as unfounded with its judgment MALVP. No. 2328/18 of 17.06.2020. The court determined that the claim of the plaintiff can only arise from compensation for damages due to the termination of the contract, after which it determined that the plaintiff found out about the damage and the party causing it on the day of termination of the contract - 15.04.2014, when, according to the court, the limitation period, which amounts to 3 years, began to run for the claims for damages, so it expired on 15.04.2017, long before the filing of the lawsuit on 22.11.2018, which made the plaintiff's claim time-barred.
The second-instance court with judgment GZ-1050/21 of 28.10.2021 rejected the plaintiff's appeal as unfounded and affirmed the first-instance judgment, fully agreeing with the reasoning of the first-instance court, the established factual situation and especially the application and interpretation of substantive law.
Meaning and application of the substantive law
In the procedure in which the judgments subject to analysis were passed, both the first and second instance courts based their decisions on the provisions of Article 113, Article 121 and Article 365 paragraph 1 of the Law on Obligations, without giving a detailed and legally sound explanation of the reasons why they considered that the provisions of Article 199 of the Law on Obligations are not applicable in relation to the provisions of Article 46 of the Enforcement Law.
According to the general rule of acquisition without a basis provided for in Article 199 of Law on Obligations, when a part of the property of one person is transferred in any way to the property of another person, and this transfer has no basis in any legal matter or in the law, the transferee is obliged to return that part of the property, if that is possible, otherwise he is obliged to compensate the value of the benefit achieved. The transfer of property also means the acquisition of a benefit by an action performed.
It is evident from the cited legal provision that for the creation of a relationship resulting from an acquisition without a basis, it is necessary to fulfill several essential assumptions such as an increase in the property (enrichment) of one party; reduction of property (depletion) of the other party; correlation between the decrease and increase in the property of those persons and the absence (non-existence) of the legal basis that would legally justify the decrease and increase in the property of those persons.
Pursuant to Article 46 paragraph 1 of the Enforcement Law (Official Gazette of RM No. 35/2005, 50/2006, 129/2006, 8/2008, 83/2009, 50/2010, 83/2010, 88/2010, 171/ 2010, 148/2011) The enforcement agent for the performed actions has the right to a fee and compensation of costs in accordance with the Tariff for fee and compensation of other costs for the work of the enforcement agent.
In the situation in question, this means that the fee and compensation collected by the defendant in the four enforcement cases in question, and related to actions taken by the plaintiff's husband, represented the property of the plaintiff's husband, while the remaining part related to actions taken by the defendant, represented his property.
In Macedonian inheritance law, one of the basic principles is the principle of universal succession and the principle of acquisition of inheritance by force of law in the sense of Article 127 of the Law on Inheritance. This applied in this particular case means that the legacy of the deceased enforcement agent passes to his heirs at the moment of his death, so the acceptance of the inheritance and the announcement of the plaintiff as the sole heir is declarative and not constitutive in nature. This further means that the entire property of the deceased enforcement agent, which undoubtedly includes the right to collect fees and compensation for actions performed in the initiated enforcement cases, has been transferred and is the property of the plaintiff.
From the above, it is indisputable that the assumptions for the creation of a relationship from an acquisition without a basis are fulfilled. That is, the property of the defendant increased by the amount of the funds transferred on the account of fee and compensation for actions performed by the husband of the plaintiff, at the expense of which the property of the plaintiff decreased by such amount. At the same time, such an increase, that is, a decrease in property, has no legal basis, given that there was no legal provision that provides for the defendant to charge the fees and compensations for the actions taken by the husband of the plaintiff, nor did such a legal provision exist, especially having in mind the content of Article 46 paragraph 1 of the Enforcement law.
The provisions of Article 113, Article 121 and Article 365 paragraph 1 of the Law on Obligations, on which the courts based their decisions, refer to the rights of one party when the other party fails to fulfill its obligation, the effect of the termination of the contract and the limitation period for claims of compensation for damage. That is, Article 113 provides for the creditor's right to compensation for damage when the debtor from a bilateral contract fails to fulfill its contractual obligation, regardless of whether the creditor decides to demand from the debtor the fulfillment of its obligation or terminates the contract. Article 121, on the other hand, stipulates that by terminating a contract, both contracting parties are released from their obligations, except for the obligation to compensate for possible damage. According to Article 365 paragraph 1, the limitation period is 3 years from the day when the injured party learned about the damage and about the party that committed it.
In this particular case, first of all, it is not a bilateral contract, because the plaintiff had only rights, and the defendant only obligations. This further means that the general provisions for the cessation of obligations by termination apply, as the defendant's statement can undoubtedly be interpreted which was entitled contract termination. The provisions of Article 347 of the Law on Obligations for termination of a permanent debt relationship do not provide for the right to compensation for damage, but only the right of the creditor to claim for the debtor’s liabilities which have become due. Moreover, the agreement between the plaintiff and the defendant is not of a constitutive nature regarding her right to collect the fee and compensations for the enforcement actions taken by her husband, whereby her right derives from the Enforcement Law and the Inheritance Law.
Even if there was a question of compensation for damages, what position did the courts take in the decisions subject to analysis, Article 376 of the Law on Obligations provided for an interruption of the limitation period, in addition to by the express recognition of a debt, as well as by conclusive actions, such as which is payment of part of the debt. In this case, the defendant paid the plaintiff a part of the amount of MKD 11,783.00 for the four orders in question on 03.04.2016, which points to the fact that he conclusively admitted that based on these enforcement cases and orders he has a debt to the plaintiff, so in terms of Article 381 of the Law on Obligations, the limitations period began to run again.
In the Law on Obligations, in chapter II Occurrence of obligations, Section 2 Causing damage, Section 9 Right of the injured party to claim compensation after the right becomes time-barred, Article 198 provides for the right of the injured party, after the right to claim compensation for damage becomes time-barred, to claim the things acquired with the harmful actions from the party causing the damage, in accordance with the provisions for acquisition without a basis, for which the general limitation period applies.
This means that even if the interpretation of the courts is correct that in this case it is a relationship resulting from causing damage with the termination of a contract and it is a time-barred claim, the legislator himself stood up for the protection of the injured party and referred to the application of the provisions of acquisition without basis, on which the plaintiff based her claim. The normative text of the law is divided into chapters, which are further divided into sections, which are further divided into sub-sections, and the sub-sections into parts and articles. This means that the provisions of the sub-section refer to the relationships created under the section, i.e. the right of the injured party after the claim for compensation for damage become time-barred, refers to all relationships created by causing damage, such as the courts have determined to be the subject relationship between the plaintiff and the defendant.
For comparison, in the same factual situation, between the same parties, on the same legal issue, as in the procedure and decisions subject to analysis, the same first-instance court, but represented by another judge, with Judgment MALVP-890/18 adopted the claim and determined that the assumptions for the obligations relationship acquisition without basis are fulfilled. The same second-instance court as in the decision under analysis, with the same president of the council, but different members of the council, with Judgment GZ-2046/21 of 17.02.2022 confirmed the first-instance judgment and fully agreed with the established factual situation and especially the interpretation and application of substantive law by the court of first instance.
Conclusions
It is evident from all of the above that the courts either wrongfully applied or did not apply provisions of substantive law, especially from the Law on Obligations, the Enforcement Law and Inheritance Law, in which way they actually violated the procedure, but also acted inconsistently.
Namely, in this particular case, the courts completely ignored the fact that the property of the deceased enforcement agent, which undoubtedly includes the right to collect the fees and compensations for the enforcement actions taken in the four enforcement proceedings in question, was transferred to the plaintiff, as his sole legal heir and represents her property, which decreased as a result of the fact that the defendant transferred the part that belonged to the late enforcement agent, i.e. to the plaintiff, to his own account during the collection of the enforcement costs. Hence, in terms of Article 46 paragraph 1 of the Enforcement Law and Article 199 of the Law on Obligations, the essential elements of the relationship acquisition without basis - enrichment of the defendant, impoverishment of the plaintiff, correlation between the same and the absence of a legal matter or law as a legal basis, are fulfilled in their entirety, and such provisions were not at all taken into consideration nor applied by the courts, without giving a legally sound rationale for it.
Furthermore, when they have already started and established that the claim can only be for compensation of damages, the courts did not distinguish whether the plaintiff and the defendant concluded a unilateral or bilateral contract, as well as the fact which contracting party and for what reasons stated to the other party that it is no longer bound by the contract, in order to apply the provisions for termination of a bilateral contract and the right to compensation for damages due to the termination. In addition, the courts seem not to have considered the fact that the defendant in the four enforcement cases in question made a payment to the plaintiff, in which way he interrupted the limitation period, so they did not apply the provisions for the interruption of the limitation period at all.
For unclear reasons, the courts failed to apply a crucial provision that refers to the rights of the injured party under the statute of limitations on the claim for compensation for damage, in a situation where they expressly determined that the claim can only refer to compensation for damage and that it is time-barred. Namely, the legislator himself in Article 198 of the Law on Obligations refers to the application of the provisions for acquisition without a basis in the existence of a time-barred claim for compensation for damage, and such provision the courts did not apply without reason.
I believe that in this case this is indisputably an acquisition without a basis, so the courts, by not applying the provisions on acquisition without a basis, but also by diametrically different decision-making on an identical legal issue in separate proceedings, violate the substantive law, act inconsistently, thus influencing the endangerment of the legal certainty of the parties and respect for the constitutionally elevated fundamental value, the rule of law.