1-) ANNULMENT OF DISPOSITION CASES
The action for annulment of disposition is a type of lawsuit regulated in Articles 277 and following of the Execution and Bankruptcy Law No. 2004. The action for annulment of disposition is a lawsuit organized for the creditor to obtain the creditor’s receivables by canceling the sales of movable and immovable property and real estate made by the debtor retrospectively and with the aim of evading property in the event that a creditor cannot collect its receivables as a result of the enforcement proceedings against the debtor. In other words, collusive dispositions made by the debtor without encountering a situation that restricts savings such as execution or bankruptcy constitute the subject of this lawsuit.
The dispositions subject to the action for annulment of dispositions are “dispositions without consideration” as regulated under Article 278 of the EBL, “dispositions made in case of insolvency” as stipulated under Article 279, and “all transactions made with the intention to cause damage” as stipulated under Article 280 of the EBL. Pursuant to Article 284 of the EBL, the action for annulment of the disposition must be filed within five years from the date of the disposition, which is the prescriptive period. In the event that the action for annulment of the disposals is established, the plaintiff shall be entitled to obtain his/her rights through forced execution on the property subject to the action, and if the subject of the disposition is immovable property, the defendant may request the seizure and sale of that immovable property without the need to correct the registration on the third party (Art. 283/1 of the EBL). (Art. 283/1 of the EBL) In this respect, the action for annulment of the disposals is a relative action arising from the law, which enables the creditor to collect his/her receivables, and is not related to the property subject to the disposition. Likewise, the property that is the subject of the annulment of the disposition and is in the hands of a third party is not taken from the third party and given to the creditor in case the creditor wins this lawsuit. In other words, as in a deed cancellation and registration case, the title deed in the hands of the third party is not canceled and transferred to the creditor. The procedure here is to foreclose the title deed in the hands of the third party and have it sold, and the creditor receives his/her receivables from the sale price.
The examination of the merits of the action for annulment of disposals depends on the existence of the conditions of the lawsuit. In terms of the action for annulment of disposals, in addition to the general litigation conditions required for each case, there are special litigation conditions specifically stipulated in the Execution and Bankruptcy Law for these cases and also accepted by the Court of Cassation.
2-) WHAT ARE THE CONDITIONS OF THE ACTION FOR ANNULMENT OF DISPOSITION
A – An Execution Proceeding must have been filed and finalized before or during the lawsuit
In order to file a lawsuit for annulment of savings, an enforcement proceeding must be filed against the debtor before the date of the lawsuit or before the lawsuit is finalized, that is, during the lawsuit, and this enforcement proceeding must be finalized. Here, finalization is an absolute rule. If the creditor has filed an execution proceeding against the debtor without a judgment and the debtor has objected to this objection within 7 days, the creditor must eliminate this objection. This is possible in two legal ways.
One of them is the “annulment of objection case” and the other is the “removal of objection case”. Since the annulment or removal of the objection will not be completed immediately (as a matter of fact, the legal remedy is open in these cases and the legal remedies of appeal and appeal can be taken if the conditions are available), the court hearing the annulment of the disposition case should wait until the annulment or removal of the objection is finalized by making that case a “waiting matter”. Only after the proceedings are finalized as a result of those lawsuits, the annulment of the disposition case can be brought to a decision.
Again, since the debtor has the right to object for certain reasons by applying to the enforcement court in enforcement proceedings based on a bill of exchange or enforcement proceedings based on writ of execution, those procedures must be completed and the enforcement proceedings must be finalized.
If the execution proceedings are not finalized, the court must reject the case for annulment of the disposition. This is because, in terms of their nature, actions for annulment of disposals can be filed in cases where the creditor cannot receive his/her receivables through a legal proceeding.
B – The Claimant Creditor’s Receivable must arise before the Disposition
Another condition of the action for annulment of the disposition is that the claimant creditor’s receivable must arise before the disposition made by the debtor. This issue is actually not certain. Different opinions have been put forward in the doctrine regarding this issue.
However, the Court of Cassation, which is a court of jurisprudence, consistently decides that the creditor’s claim must arise before the disposition. In other words, if the person sold the immovable property on January 1, 2015, the creditor’s receivable must arise before January 1, 2015. If the receivable arose after January 1, 2015, the action for annulment of the disposition will be canceled on the grounds that this condition is not met. In summary; in order to file a lawsuit for annulment of the disposition based on Articles 277 et seq. of the Enforcement and Bankruptcy Law, the disposition requested to be annulled must be made after the date of birth of the debt subject to enforcement proceedings.
The decision of the 17th Civil Chamber of the Court of Cassation regarding this issue is as follows:
T.C YARGITAY 17th Civil Chamber Esas: 2012/ 8979 Decision: 2013 / 4519 Date of Decision: 01.04.201
SUMMARY: The lawsuit is related to the request for annulment of the disposition based on the articles of law. In order for the actions for annulment of dispositions to be heard, it is a prerequisite for the lawsuit that the debt arises before the disposition to be annulled, and the court should investigate this ex officio. If the condition of the lawsuit is not fulfilled, a judgment cannot be rendered on the merits of the case. In the concrete case, the date of issuance of the bonds underlying the proceedings is after the sale requested to be annulled. In this case, taking into account the statements of the plaintiff’s witness Ramadan, it should be determined from which relationship the plaintiff’s receivable arises, whether it is before the annulled bill, and a decision should be made according to the result. For the reasons explained, the judgment should be reversed.
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C – The Defendant Third Party Must Not Be in Good Faith
Another condition of the action for annulment of the disposition is that the third person who will be the defendant must not be in good faith in this disposition transaction. In other words, the third party must know or be in a position to know that the debtor made this disposition with the aim of evading property. If the third party is in good faith, then the plaintiff creditor’s lawsuit will be dismissed.
Here, the question arises as to what it means for the third party to know or be in a position to know that the disposition is made for the purpose of evading property. In other words, how will the third party prove that the disposition was made in good faith? The way the courts deal with this issue is as follows; either the third party must know that the disposition is fraudulent or the third party must be in a position to understand that the debtor has made these dispositions with the aim of evading property through a simple investigation.
In both of these cases, the creditor may prove that the disposals were made fraudulently with all kinds of evidence. Here, “full proof” is not required, but the case can be proved with “approximate proof”. Approximate proof can be proved especially by what we call the ordinary course of life. For example, if a property is sold to a third party for a price far below its value, this is contrary to the ordinary course of life. Thus, it may be revealed that the disposition was made for the purpose of evading property.
Ç – The Creditor Must File a Certificate of Final or Provisional Insolvency
The debtor must have a final or provisional certificate of insolvency; a certificate of insolvency must be obtained for the debtor of the receivable subject to enforcement proceedings. However, a certificate of insolvency is not required at the stage of filing the lawsuit. The certificate of insolvency is one of the conditions of the lawsuit that can be substituted later. The creditor, i.e. the plaintiff in the annulment of disposals case, may submit the certificate of insolvency to the court at any stage of the case, including the appeal process. The plaintiff, who submits the provisional certificate of insolvency at the beginning of the case, must then submit the final certificate of insolvency to the file. The seizure report showing that the debtor has no attachable property also replaces the certificate of insolvency.
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T.C YARGITAY 17th Civil Chamber Main: 2012/2516 Decision No: 2013/224 K.
No final or provisional certificate of insolvency was submitted to the file. In this case, it was not correct to decide to accept the case as a result of incomplete examination and research, while the court should decide to dismiss the case due to the failure to submit a final or provisional certificate of insolvency, which is a condition of the lawsuit.
Competent and Authorized Court
The competent court is the Civil Court of First Instance pursuant to Article 281 of the EBL. It is important to note that even if the relationship between the parties is based on a commercial relationship (such as commercial or general loan agreements that constitute bank receivables), the competent court is the Civil Court of First Instance, not the Commercial Court of First Instance. A special jurisdiction rule has not been determined. Pursuant to the general jurisdiction rule of the CCP, a lawsuit may be filed in the court of the place of residence of the debtor or the third party.
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T.C YARGITAY General Assembly of Civil Chambers Esas: 2014/ 17-2389 Decision: 2016 / 129 Date of Decision: 10.02.2016
SUMMARY: It is contrary to the procedure and the law to resist the previous decision while it is necessary to comply with the reversal decision of the Special Chamber, which was also adopted by the General Assembly of Civil Chambers, that the Civil Court of First Instance has jurisdiction in the collusion case requesting the application of Article 283 of the EBL by analogy in accordance with Article 19 of the TCO.
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3-) WHO CAN FILE AN ACTION FOR ANNULMENT OF DISPOSITION (WHO CAN BE A PLAINTIFF IN AN ACTION FOR ANNULMENT OF DISPOSITION)
Article 277 of the Execution and Bankruptcy Law No. 2004 lists who may file a case for annulment of savings. The relevant article is as follows:
Annulment proceedings and plaintiffs:
Article 277 – (Amended: 3/7/1940-3890/1 Art.)
The purpose of the action for annulment is to have the dispositions mentioned in Articles 278, 279 and 280 declared null and void. The following persons may file this action:
1 – Any creditor who has a certificate of temporary or final insolvency,
2 – The bankruptcy administration or the creditors themselves in the cases specified in Article 245 and paragraph 3 of Article 255
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Accordingly, the plaintiffs of the action for annulment of the disposition to be filed through execution proceedings are specified in the law. A person who does not have a final or temporary certificate of incapacity cannot file this lawsuit. This situation is clearly stated in the law.
4-) THE PRESCRIPTION PERIOD IN THE ACTION FOR ANNULMENT OF DISPOSITION
In annulment of savings cases, there is no statute of limitations, but a prescription period.
Cancellation due to intent to harm; All transactions made by the debtor, whose existing assets do not cover his debts, in order to harm his creditors, may be canceled in cases where the debtor’s situation and intent to harm are known or known by the other party to the transaction. However, a proceeding must have been initiated through attachment or bankruptcy within 5 years from the date of the transaction (Article 280 of the Bankruptcy and Insolvency Law).
If the third party is the debtor’s husband or wife, his/her parents or children, his/her relatives by blood or marriage up to the third degree (including this degree), his/her adoptive parents or adopted children, the debtor is deemed to know this situation.
A person who transfers or purchases the whole or a substantial part of the commercial enterprise or the existing commodities in the workplace, or who subsequently occupies the workplace with the acquisition of a part of it, is deemed to know the debtor’s intention to harass the debtor’s creditors and the debtor is deemed to act with the intention of harassment in these cases.
5-) HOW TO DETERMINE THE VALUE OF THE CASE IN THE ACTION FOR ANNULMENT OF DISPOSITION
Since the action for annulment of disposition is not an action in rem, the value of the action is not determined according to the value of the property subject to annulment. The value of the case is determined by considering two issues. The first of these is the unpaid receivable of the creditor according to the insolvency certificate held by the creditor, and the second is the value of the property subject to the disposition. Whichever of these two values is less, this value is determined as the case value in the annulment of disposition case.
Consequences of the Action for Cancellation of Disposition
If the court decides to accept the case as a result of the annulment of the disposition, the creditor will be authorized to obtain its receivables through forced execution on the immovable property subject to the lawsuit as if it is still in the assets of the debtor. In the judgment established by the court, it will state that by deciding for the cancellation of the disposition, it will be possible to proceed to forced execution within the limit of the receivable and its accessories. However, this will not cancel the transfer made by the debtor on the immovable property, the third party will continue to be the owner.
However, if the plaintiff loses the nullity of disposition case, he/she will be obliged to pay the trial expenses and the relative attorney fee.
Attorney Fee for Cancellation of Disposal Case
The attorney fee varies according to the type and process of the case. The agreement on the attorney fee should be based on a relationship of mutual trust between the lawyer and the client. While filing a lawsuit, the amount of expenses to be incurred, the amount of fees, and the details of the attorney service will be specified. However, the attorney’s fee cannot be determined below the Attorney Minimum Fee Tariff determined annually by the Union of Turkish Bar Associations.
Trial Procedure in Cancellation of Disposition Case
Article 281 of the Execution and Bankruptcy Code (EBL) regulates the procedure of the proceedings. It is ruled that annulment cases are subject to simple trial procedure. Since it is subject to the simple procedure, the petitions stage consists only of the petition for lawsuit and the petition for reply.
Action for Cancellation of Disposition against Surety
In order for the disposition that will be subject to the annulment of the disposition to be subject to the lawsuit, it must be realized after the birth of the debt. Therefore, the date of the surety’s debt is important. When the debtor fails to pay the debt, enforcement proceedings are initiated against the surety to fulfill the debt arising from the surety. If the surety transfers the immovable property after the execution proceedings are initiated against the surety, it may be subject to the annulment of disposition lawsuit. However, in the established practices of the Court of Cassation, it has been ruled that the beginning of the surety’s debt is not the date when the principal debtor’s debt begins, and that the disposition made after the surety’s suretyship may be subject to the lawsuit. As a matter of fact, the surety’s debt is not the date the principal debt arises, but the date of its own debt arising on the date of suretyship.
Action for Cancellation of Disposition Bona Fide 3rd Person
The action for annulment of savings deals with the debtor’s transactions with third parties. Since the lawsuit is filed based on the transaction made by the debtor, the lawsuit will not be filed against third parties. However, a lawsuit may be filed against malicious third parties. A lawsuit cannot be filed against persons acting in good faith. A third party acting in good faith is a person who does not know or is not in a position to know that the debtor has made a transaction based on the disposal of the property when he took over the real estate. The rights of bona fide persons will not be violated, and the transaction regarding the disposition will be valid.
Cancellation of disposals without consideration
Except for customary gifts, all donations and gratuitous dispositions made within the period from the date of sequestration or insolvency due to lack of property to be seized or the opening of bankruptcy until the date on which the oldest of the receivables that were the reason for the sequestration or the issuance of the certificate of insolvency or the receivables admitted to the table were established are null and void. However, this period may not exceed 2 years prior to attachment or insolvency or bankruptcy. (Article 278 et seq. of the EBL)
The following dispositions are in the nature of donation:
” Husband and wife and their descendants, relatives within the third degree of consanguinity or affinity,
” Fiduciary dispositions made between the adopter and the adopted child,
“a contract in which the debtor accepts as consideration a price that is very low in relation to the value of what he has given at the time of the contract,
” Contracts where the debtor establishes a right of usufruct and usufruct for his own benefit or for the benefit of a third party on condition of life, and contracts of maintenance until death.
If the Cancellation of Disposition Case is Lost
If the court decides to accept the case, the defendant will have lost the action for annulment of the disposition. If the defendant reiterates his/her defense regarding the annulment of the annulment of the disposition lawsuit and believes that there is a violation of law in the judgment of the court, he/she may appeal against the decision.
On the other hand, if the court decides to dismiss the case in the annulment of the disposition case, a judgment will be against the plaintiff. If the plaintiff is of the opinion that the court decision is contrary to the law, he/she has the right to appeal against the decision.