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Translated from Turkish by Tim Drayton

Joint Civil Chambers of the Court of Cassation
Case No: 2017/12-329, Decision No: 2017/912, Date: 03.05.2017

Summary:
The judge must of his own motion characterize the claim as either a claim of non-attachability or a claim of ownership as regulated under the Law on Enforcement and Bankruptcy regardless of the assertions made and relief sought by the parties.

Relevant Articles:
Articles 82, 83, 96, 97 and 99 of the Law on Enforcement and Bankruptcy


REPUBLIC OF TURKEY
COURT OF CASSATION
JOINT CIVIL CHAMBERS

CASE NO: 2017/12-329
DECISION NO: 2017/912

COURT OF CASSATION JUDGMENT

COURT: Istanbul Anatolian Enforcement Civil Court No 7
DATE: 30/10/2014
NUMBER: 2014/343 2014/482
CLAIMANT: E.M., attorney of the Republic of Turkey Ministry of Health
DEFENDANT: S.T., attorney of D. Gda San. ve Tic. A..
OF THE DECISION EXAMINED

With cassation review sought by the complainant’s attorney of the ruling number 2013/402 E., 2013/807 K. of 26.12.2013 passed by Istanbul Anatolian Enforcement (Civil) Court No 7 at the conclusion of the proceedings held in respect of the complainant’s ”non-attachability complaint“, which dismissed the complaint, it was quashed by ruling number 2014/4098 E., 2014/7254 K. of 13.03.2014 of Civil Law Chamber No 12 on the grounds:

“It was seen that the complainant Ministry of Health, asserting that movables located in the L.K. Training and Research Hospital kitchen had been attached in recovery proceedings instituted against the obligor, a large part of the movables were not entered onto the hospital inventory list and were non-attachable pursuant to Article 82/1 of the Law on Enforcement and Bankruptcy and they were goods which assisted in the provision of meal service to patients, lodged a non-attachment complaint, and dismissal of the complaint was ordered by the court.

The complainant’s application to the enforcement court was for annulment of attachment due to the attached movables being its property. It was ascertained that the complainant did not have the capacity of obligor in the recovery case and had third party status and was asserting a claim of ownership over the attached goods. Pursuant to Article 33 of the Code of Civil Procedure, legal characterization falls to the judge and the case should have been heard as a claim of ownership by the court.

As such, the framing of the judgment as drafted was ill-founded given the need for the third-party complainant’s claim to be treated as a claim of ownership, for party status to be granted (the statement of claim should have also been served on the obligor), for the application fee shortfall to be made good, for the evidence the parties would have adduced to be collected and for a decision to be rendered as the outcome dictated ”

and the case was sent back, with reinstatement of the previous ruling made by the court at the conclusion of the retrial that was held.

CASSATION APPELLANT : Complainant’s attorney

JOINT CIVIL CHAMBERS RULING

With it determined on examination that timely cassation review had been sought of the reinstatement ruling and following reading of the documents in the file, it was held:

The complaint is in respect of the non-attachability of movables whose use revolves around the complainant.

The attorney of the complainant Health Ministry, averring that precautionary attachment procedure had been carried out at the hospital owned by his client in the recovery case in which the complainee was the obligee with the allegation this was the property of the obligor in the case, and the attached goods were state owned and used for public service and could not be attached, sought a decision for annulment of attachment.

The complainee’s attorney, stating that the attached goods were owned by the obligor company and not the Ministry and were attachable, called for dismissal of the claim.

The ruling by the enforcement court dismissing the complaint on the grounds that the claim was of the nature of a non-attachability complaint (Article 82/1 of the Law on Enforcement and Bankruptcy), the complainant was not asserting a claim of ownership and the attached goods did not appear on the hospital list of fixtures and fittings, a claim of ownership had been raised by a third party and, on the other hand, the complainant who did not have obligor status could not make a claim of non-attachability was quashed on the complainant’s attorney seeking cassation review by Civil Chamber No 12 on the grounds set out in the introductory section above.

Reinstatement of the earlier ruling was made by the local court with the additional grounds that the complainant never made statement or claim concerning ownership or that the goods were its property and the presence of the attached goods at the hospital was service-procurement related.

Cassation review of the reinstated ruling was sought by the complainant’s attorney.

The dispute that has come before the Joint Civil Chambers by virtue of reinstatement of the ruling revolves around whether the claim is a non-attachability complaint or a claim of ownership with regard to the case in hand.

It would be beneficial at this point to dwell on the notions and arrangements of non-attachability and (attachment-related) claim of ownership.

Should the obligor not fulfil his obligation consensually (for example, failure to pay a monetary debt), the obligee makes recourse to compulsory enforcement and the enforcement office attaches and sells the obligor’s property and pays the proceeds to the obligee, thereby ensuring that the obligee is satisfied. As such, the obligor’s property functions as a rule - as security for the obligeee’s claim. However, not all the obligor’s property is capable of being attached. It is the case that the obligor’s property having no economic value even if being of sentimental value cannot be attached. On the other hand, there also exist certain property and rights which, while having economic value, cannot be attached; this is accounted for by the notion of “non-attachability”.

Certain of the obligor’s property and rights having economic value cannot be attached in any way. These are property and rights that cannot be transferred to others under substantive law (for example, uniquely personal rights, Article 23 of the Turkish Civil Code) or the property and rights enumerated in Article 82 of the Law on Enforcement and Bankruptcy. Conversely, some of the obligor’s property is capable of being partially attached (Article 83 of the Law on Enforcement and Bankruptcy, Article 35 of the Labour Law, etc.).

A natural consequence of the non-attachability principle is the non-attachability complaint afforded to the obligor in the event of attachment by the enforcement office of property or a right that is (fully or partially) incapable of being attached. This complaint is subject to the general provisions (Articles 16-18) on complaint of the Law on Enforcement and Bankruptcy and, if the complaint is upheld, attachment over the property or rights that have been attached by the enforcement office is annulled.

Despite the principle that the obligee may only be satisfied out of the proceeds of attachment and sale of property and rights owned by the obligor, one can sometimes see attachment being placed over property and rights that are alleged to be owned or held by third parties. The arrangement of “claim of ownerhip” (as opposed to non-attachability) has been adopted for the protection of third-party property owners and right holders in such eventuality.

The assertion by a third party (apart from the obligee and obligor) that he has ownership of or another in-rem right over attached property is called a claim of ownership (Kuru, B., Enforcement and Bankruptcy Law, Handbook, 2.b., Ankara 2013, p. 543).

The claim of ownership and ensuing claim of ownership action have been subjected to different procedures (Articles 96, 97 and 99 of the Law on Enforcement and Bankruptcy) dependent on whether the attached property is in the possession of the obligor or a third party.

The basic difference between the claim of non-attachment and ownership is that, while the right to make a complaint of non-attachment attaches to the obligor, in other words it is only possible to make a complaint of non-attachment in respect of property owned by the obligor, a claim of ownership is as a rule possible when the attached property is owned by a third party. Put differently, a non-attachability complaint and claim of ownership cannot coexist; the obligor may not resort to a non-attachability complaint in respect of property or a right that is not his, he may purely suffice with stating that the property is not his.

It is on the other hand beyond dispute that, by way of basic rule of procedural law, the facts and evidence are to be adduced by the parties and legal characterization is to be made by the judge. Accordingly, the judge should examine the facts the parties adduce and the relief sought in the claim and answer but, in characterizing the action or complaint, should not have regard to their statements and should make this characterization himself.

Turning to the case at hand, it was stated in the course of attachment that the goods were not entered onto the hospital inventory list, in other words, the attached goods were not in the Ministry’s ownership; however, in the complaint submission it was initially stated that a portion of the attached goods were owned by the hospital and public property could not be attached (Article 82/1 of the Law on Enforcement and Bankruptcy) and later said that these were goods enabling patients to be served with meals and supplied for the furtherance of the hospital’s public service.

Given both that the goods were not owned by the complainant Ministry and the averral that the attached goods were owned by a third party and were used out of the need to feed patients, there is no legal possibility for characterization of the complaint as “non-attachability” and adoption of the complainant’s characterization to this effect.

With the complainant’s objection in effect having the nature of a claim of ownership and examination of the merits requiring to be made with recourse to this notion, it was deemed incorrect for a conclusion to be reached through adjudication on erroneous characterization.

Even if the view was expressed during discussions held at the Joint Civil Chambers that the Specific Chamber’s characterization of the action as a claim of ownership action was incorrect because the Ministry did not assert a right constituting a preference encompassing ownership of the attached goods and the claim was restricted in ambit merely to the attached goods being used for public service purposes and, as such, could not be said to rely on the non-attachability of “public property” in Article 82/1 of the Law on Enforcement and Bankruptcy, and, moreover, that a non-litigant company had also brought a claim of ownership action and upholding of the ruling was merited under such circumstances, this view was not adopted for the reasons expounded on above.

For the reasons expounded on, the local court’s reinstatement of its ruling was contrary to procedure and the law and quashing of the reinstatement order is warranted.

CONCLUSION : It was decided by majority vote on 03.05.2017, with recourse available to rectification of decision within ten days of service pursuant to Article 366/III of the Law on Enforcement and Bankruptcy number 2004, that, in granting the complainant’s objections raised in cassation, the reinstatement order be QUASHED for the above justifications and reasons.

INFORMATION : Of the 23 members on the Joint Civil Chambers, 17 voted to QUASH and 6 to UPHOLD.

Archive of Turkish legal translations by Tim Drayton