Disputes about foreclosure on collateral, foreclosure on mortgaged property in order to satisfy the claims of the mortgagee (creditor) may be brought in the event of non-fulfillment or improper fulfillment by the debtor of the obligation secured by the pledge for which he is responsible.
JSC "N" (hereinafter referred to as the Bank) applied to the court for a change in the method and procedure for executing the decision of the Almaly district Court of Almaty dated September 12, 2014 on the Bank's claim for recovery from LLP "K", B. jointly and severally indebted in the amount of KZT 179,231,067 and court costs by foreclosing on the collateral in the form of a residential building with a total area of 578.1 sq.m., with a land plot of 0.1 ha, located at 181 Kablukova Street, Almaty (hereinafter referred to as the disputed property), owned by the right of ownership of B., explaining the long-term failure to execute a judicial act. By the ruling of the Almaly District Court No. 2 of Almaty dated March 20, 2018, the application was denied. By the ruling of the Judicial Board for Civil Cases of the Almaty City Court dated May 31, 2018, the court's ruling remained unchanged. The Judicial Board for Civil Cases of the Supreme Court overturned the judicial acts of local courts and issued a new decision to satisfy the claim of JSC "N" for changing the method and procedure for the execution of court decisions on the following grounds. As follows from the case file, under the bank loan agreement dated March 5, 2012 No. 91/12-01, the Bank provided the borrower with K LLP with a loan in the amount of 140,000,000 tenge for a period of 12 months. The borrower's obligations to repay the loan are secured by a personal guarantee from the head of company B., as well as a pledge of the above-mentioned disputed property belonging to her.
Disputes about foreclosure on collateral, foreclosure on mortgaged property in order to satisfy the claims of the mortgagee (creditor) may be brought in the event of non-fulfillment or improper fulfillment by the debtor of the obligation secured by the pledge for which he is responsible.
By the effective decision of the District Court No. 2 of Almaly district of Almaty dated September 12, 2014, K and B. LLP jointly and severally collected in favor of the Bank the debt under the loan agreement in the amount of KZT 5,642,439 and the cost of paying the state duty in the amount of KZT 2,688,466 from each. On February 23, 2016, the writ of execution was handed over to the private bailiff A. (hereinafter referred to as the bailiff). As part of the enforcement proceedings, it was established that the debtor of K LLP had no movable or immovable property registered, and there were no funds in bank accounts. In accordance with article 40 of the Law of the Republic of Kazakhstan "On Enforcement Proceedings and the Status of Bailiffs" (hereinafter referred to as the Law), if there are circumstances that make performing enforcement actions difficult or impossible, the bailiff, recoverer or debtor has the right to raise before the court that reviewed the case or before the court at the place of execution the issue of changing the method and the order of execution. In accordance with Part 1 of Article 246 of the Civil Procedure Code of the Republic of Kazakhstan (hereinafter – CPC) the court that issued the decision or court order in the case, as well as the court at the place of execution of the decision, may, at the request of the state bailiff for enforcement proceedings for which the state is the recoverer, and (or) at the request of the parties to the enforcement proceedings, change the method or procedure for its execution, at the request of the parties to the enforcement proceedings, postpone or to delay the execution of a court decision if circumstances arise that make it difficult or impossible to perform enforcement actions. The court of first instance motivated the refusal to satisfy the Bank's application by the presence of movable property at K LLP, the presence of accounts receivable from both debtors, as well as violation of the rights of the former spouse of the pledgor – M. during the sale of the pledged property. The court of appeal found the conclusions of the court of first instance to be justified.
At the same time, these conclusions of the local courts do not correspond to the actual circumstances of the case and the applicable rules of substantive law. By virtue of the provisions of paragraph 1 of Article 317 of the Civil Code of the Republic of Kazakhstan (hereinafter referred to as the Civil Code), foreclosure on pledged property may be levied to satisfy the claims of the pledgee (creditor) in the event of non–fulfillment or improper fulfillment by the debtor of the obligation secured by the pledge for which he is responsible. In the case, it was established that, despite the entry into force of the court's decision, the debtors, in violation of the provisions of part 4 of Article 21 of the CPC, did not voluntarily comply with it for a long time. The repayment of the debt was made in total in the amount of 1,500,000 tenge. The violation of the obligation secured by the pledge committed by the debtors is significant. Consequently, the Bank has an indisputable right to receive satisfaction from the value of the collateral. At the same time, the Bank does not need to file a separate claim for foreclosure on the disputed property pledged by the joint debtor B., since the issue of foreclosure on the pledged property is resolved in accordance with the provisions of Articles 316-319 of the Civil Code. In the course of the enforcement actions, it was established that the debtor of K LLP does not have funds, movable and immovable property to fulfill obligations to the Bank. Director O. is wanted. Reliable evidence of the existence of accounts receivable to LLP "K" and B. has not been presented to the court. The arguments of the petition that during the execution by the bailiff it was not possible to determine the location of the vehicles of K LLP, they are missing at the debtor's registration address, which is confirmed by the relevant act, deserve attention. The decision of the bailiff dated July 25, 2017 on the seizure, detention of vehicles and their placement in a penalty parking lot has not been executed. The shares in the property of the convicted M. were not transferred to B. and were not registered for her, therefore they cannot indicate that the debtor has receivables. In such circumstances, the courts had no legal grounds to refuse to satisfy the claimant's application, since due to the debtors' prolonged failure to fulfill their obligations, the Bank is entitled to receive satisfaction from the value of the collateral in accordance with the provisions of Article 317 of the Civil Code. The contested judicial acts violate the principle of equality of the parties, enshrined in Article 15 of the CPC, and deprive the Bank of the opportunity to fully restore violated rights and legitimate interests. The court's conclusions on the violation of the rights of the former spouse of the pledgor – M. during the sale of the pledged property are unfounded. According to the agreement, B. pledged the disputed property with a notarized statement of the spouse's consent dated March 2, 2012, including for its extrajudicial sale in case of default by the borrower. Consequently, M. was aware of the possible consequences for him of borrowers' failure to fulfill their obligations to the Bank and the alienation of the collateral in the event of debtors' failure to fulfill the requirements of the secured obligation. Accordingly, the court's decision of July 20, 2015 on the division of property between the spouses, with M. 1/2 of the share of jointly acquired property, including disputed housing construction, does not affect the Bank's right to sell the collateral as a whole, since it does not entail the cancellation of the collateral.
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