The Difference Between Actions for Annulment of Disposition and Action for Nullity Filed for Collusion

Actions for annulment of disposition and Action for Nullity Filed for Collusion can be confused with each other due to their verbal connotations and, in some cases, the basis of a collusive transaction. In practice, it is common for one of these lawsuits to be filed where the other one should be filed. In this case, instead of rejecting the case, the courts, if the other conditions are appropriate, make the legal qualification correctly and make judgments and decide in accordance with which provisions the case should be heard.

In this bulletin, we focused on the differences between the actions for annulment of disposition and the actions for nullity filed for collusion, and evaluated the terms and outcome of both lawsuits.

1. What is the Action for Annulment of Disposition?

The action for annulment of disposition is a lawsuit filed by the creditor against the debtor, and the purpose of this lawsuit is to cancel the actions (dispositions) that prevent the debtor from obtaining the right to claim and make them invalid against the creditor. The actions of the debtor before the attachment or bankruptcy, which in some cases aim to harm the creditor and to render the enforcement proceedings unsuccessful, are subject to cancellation. Likewise, some of the transactions made by the debtor while she/he was incapacitated may be subject to an action for annulment. In this way, it is possible to make the assets that the debtor tries to save from the lien by removing them from the assets of the debtor making it seizable. In this case, if the dispositions are canceled, the property cannot be restored. For example; If the debtor has transferred his house and car to his/her relatives in order to smuggle goods from the creditor, if an annulment decision is made in the lawsuit filed for the annulment of these transfers, the goods will not return to the debtor’s property as before. These actions are considered invalid only at the rate of the creditor’s right to receivables and valid at the rate that they do not affect the creditor’s right. The creditor can have these goods seized and sold, and if there is any remaining amount from this sale, it is no longer paid to the debtor, but to the debtor’s relative who is the new owner of the property.

Certain conditions are required in order to file an action for annulment of disposition. First of all, the prerequisite for the prosecution of this case is that the creditor has a certificate of insolvency issued about the debtor. The creditor may file a lawsuit for the annulment of the disposition against the debtor who has a definitive or temporary insolvency document. This is a special case requirement and if it is not fulfilled, the case cannot be heard on the merits. If the insolvency certificate is missing, it may be given time to complete, and it is possible for this deficiency to be corrected during the trial process and even after reversal. Apart from this, enforcement proceedings have been made for the receivable and this enforcement proceeding (payment order) must have been finalized. One of the other special conditions sought in the case is that the savings that are the subject of the lawsuit and whose cancellation is requested are made on a date after the birth of the debt. In the decision of the Supreme Court, the conditions of the action for the annulment of the savings are expressed as follows;

The lawsuit is about the annulment of the disposition filed pursuant to EBL article 277 and its continuation.
In order for such cases to be heard, the claimant’s receivable from the debtor must be real, the enforcement proceedings against the debtor must be finalized, the disposition requested to be canceled must have been made after the debt subject to the proceedings, and there must be a final or temporary insolvency document (Article 277 of the EBL.) If these pre-conditions are found, it should be investigated whether there are cancellation conditions written in the 278, 279 and 280 of the EBL. In particular, in article 278 of the EBL., it should be examined whether there is a difference between the considerations by the court, since the debtor accepts a very low price as an imposition according to the value of what he has given at the time of the contract, and the savings that are subject to annulment as a pardon in the law must be cancelled. The degree of kinship etc. listed in the same article should be investigated. Likewise, since in article 280 of the EBL it is regulated that all transactions made by a debtor whose assets are not sufficient for his debts with the intention of harming his creditors, the financial situation of the debtor and the intention to cause harm are known to the other party of the transaction or there are clear indications that the disposition will be cancelled, the intent to smuggle property should be examined in the transaction. On the other hand, the reasons for cancellation are also counted in article 279 of the EBL, and it should be appreciated whether the reasons for cancellation written in this article are realized or not.

With the file numbered 2018/111 E of the Court of …………, it has been understood that the action for annulment of the objection has been filed, the case has not been concluded yet, and the follow-up has not been finalized,
That the defendant debtor objected within the time limit in the file numbered 2009/10740 of Mersin 4th Enforcement Directorate, which was initiated against the defendant debtor by the plaintiff,  And the lawsuit for the annulment of the objection with the file numbered 2011/590 of the Mersin 2nd Civil Court of First Instance has not been concluded yet, and the follow-up has not been finalized.

In this case, the work to be done by the court is to take into account ex officio the precondition that the enforcement proceedings initiated against the debtor in order to hear the action for annulment of disposition, the results of the action for the annulment of the objection filed by the plaintiff creditors should be made a protracted matter and a decision should be made in writing, while it is necessary to decide according to the result that will result. is against the law.”[1]

2. Actions for Annulment For Collusion

Collusion is a term used in the sense of presenting a transaction that is not real and which is not intended to have legal consequences between the parties, as if it were real to the outside world. Collusion can also be briefly referred to as a collusive transaction. Transactions that we encounter in our law, especially in the relations between the inheritor and the heir, and which are called collusion de cujus, are the most well-known examples of collusion. However, collusive actions can be made not only from the heir but also in order to smuggle goods from the creditor. To explain with an example, the debtor, who wants to save the  property from the lien that the creditors will place, can pretend to have sold these goods to someone else. Although there was no real transfer case, a fake transfer was made and the image of transfer was given to third parties. Such collusive transactions are legally invalid and their invalidity can be claimed by third parties. In the action for annulment, it is requested from the court to determine that the transaction is invalid.

3. The Differences Between the Two Cases

Action for annulment of disposition and action for annulment filed for collusion can be filed under the name of “action for annulment of disposition for collusion” in practice. In this case, the courts will reach a decision by examining whether the case is an action for the annulment of the disposition within the meaning of article 277 of the EBL or a case of butlan based on collusion within the meaning of article 19 of the TCO, depending on the demand in the case and the circumstances of the concrete case. To summarize the differences between the two cases;

  • The action for the annulment of the disposition is a personal lawsuit, and it is not possible to make a decision that changes or corrects the property right in kind, in this case. However, in cases of collusion based on collusion, if the collusion is fixed, it will be determined that the transaction has never been made, and the property is restored to its former state.
  • In annulment of disposition cases, most of the time, the action requested to be canceled is valid. An action for nullity based on collusion is filed against fraudulent transactions. However, there are cases where the actions for the annulment of the savings may be filed for collusive transactions. In such cases, the creditor may file the action for nullity of the transaction according to article 19 of the TCO, or the action for the annulment of the disposition according to article 277 of the EBL. Although the purpose of the judgment in both cases is the same, the result of the judgment will be different from each other. However, in both cases, the creditor acquires the right to seize the debtor’s property and sell it.

Below are the decisions of the Supreme Court which include the determinations made on the differences between the two cases;

“The case is about the cancellation of the collusive transaction filed based on Article 19 of the TCO. As a rule, third parties may claim the invalidity of these unilateral or multilateral legal transactions if their rights are damaged due to collusion. Because harming third parties with a collusive legal action is an unfair act against them. However, in order for the third party to accept that her/his rights have been damaged by the collusive transaction, she/he must be a creditor from the collusive transaction and the collusive transaction must have been made to prevent the payment of her receivables. On the surface, there is a similarity between annulment cases and collusion cases, but this similarity does not go beyond the aim pursued by both cases. Actions for annulment mentioned in Article 277 of the EBL are filed for the invalidation of some valid savings made by the debtor. However, the collusion case aims to establish that the debtor’s savings have never actually been made. The purpose of the plaintiff, in this case, is to ensure the nullity of the basically invalid transaction due to collusion in order to collect the receivables. In cases based on collusion, the plaintiff does not need to go to enforcement proceedings and get a proof of insolvency. Because, as explained above, the dispositions subject to the action for annulment in article 277 and the following articles of the EBL, although valid in essence, are the dispositions that the law allows to be annulled in terms of enforcement law.

In the concrete case, while the vehicle in question with license plate number ….. was registered in the name of the defendant ….., It has been understood that the vehicle was transferred to the defendant ………. with the vehicle sales contract numbered 22613 of the 3rd Notary Public of Bornova on 15.07.2010,  And it was transferred to the person outside the scope of the case on the same day (before the lawsuit was filed) by the defendant ………. Since the claimant’s request is an annulment action based on collusion legal grounds filed in accordance with Article 19 of the TCO, the other party of the collusive transaction, namely the person to whom the first sale was made by the debtor and, if any, other sales persons should be included in the case and constitute a party.[2]

In another decision, the Supreme Court made the following determinations;

The plaintiff’s attorney claimed and filed a case on the grounds that the disposition regarding the transfer of the immovable subject to the lawsuit be canceled in sufficient amount for the principal receivables, interest and ancillary in the execution follow-up file, and that the receivables subject to the proceedings be covered over this immovable stating that a bond worth 40,000.00 TL was issued by the defendants in return for his client’s receivable, and that, upon the defendant’s failure to pay this debt, proceedings were initiated with the file numbered 2011/7021 of the Mersin 3rd Enforcement Directorate, however the immovable property with parcel number 778 in village inner location of Mersin province Toroslar district … village, which belongs to the defendants, was sold to his uncle, the other defendant … in return for a small amount of money, the defendant … knew and could have known that the defendant … acted with the intention of harming his/her creditors, and that there was an exorbitant difference between the purchase and sale value of the real estate shown in the sales contract tables and the current market purchase and sale value.


According to the court, the claim, the defense, and the evidence collected; since it has been concluded that the bond amounting to TL 40,000.00 with a maturity date of 15/01/2010, dated 15/12/2009, which is the basis of the lawsuit, was issued against the money borrowed against interest by way of usury and the bond issued due to usury is absolutely null and void, since lending money by usury is contrary to the mandatory provisions of the law, the case was dismissed; The judgment was appealed by the plaintiff’s attorney.


The case is related to the request for annulment of the disposition filed pursuant to Articles 277 and the following of the  EBL.
Such lawsuits, in terms of their legal nature, are not related to the same property as the subject matter of the lawsuit, but are a personal lawsuit. As a natural consequence of this, the property subject to lawsuit and disposition is not removed from the property of the transferee and returned to the property of the debtor. It only provides the creditor with the opportunity to receive the receivable from the price of the goods. The purpose of the action for annulment is to cancel the savings of the debtor to reduce the existence of the debtor, as stipulated in the 277th and the following articles of the EBL. According to the provision of Article 283 of the EBL, if the subject of the action for annulment is the immovable property, the lien and sale of this immovable can be requested without the need for correction of the record on the defendant 3rd party. In other words, this case gives the creditor the authority to collect the receivable on the property related to the disposition of the debtor for the purpose of smuggling. This authority is also limited by the amount of receivables.

 

As a natural result of these features, one of the visibility conditions of the case is the existence of the receivable, in other words, the disposition of the person being indebted, and the other being the fact that the receivable is tied to the proof of insolvency. Due to this feature, in the action for the annulment of the disposition based on insolvency, the defendant can claim and prove that the claim based on the insolvency document is not in reality. Because one of the conditions of the lawsuit is that the person making the savings must be indebted.

 

If it is claimed that the saver does not have a real debt to the creditor, in this case, the debtor’s title of the
person who has the disposal should be resolved first. For this reason, the claim of the third party defendant that the debt is not real and the defense of the existence of collusion should be examined by the court. If there is no real debt, it will not be possible to hear the annulment case, since there will be no debt.

 

On the other hand, when the subject is taken into consideration, there is an obligation to investigate the defense of the third parties, who have acquired rights from the debtor of the proceedings, in the annulment lawsuits filed pursuant to Articles 277 et al. of the EBL. Otherwise, It is possible that the third parties who acquire property from the debtor will be damaged by the judiciary, in the face of this behaviour of the debtor who does not object to the enforcement proceedings by agreeing with the creditor of the proceeding or by not making the necessary effort because he/she is in debt anyway, and does not file a negative declaratory action against the proceedings based on the bills of exchange, which cannot be stopped upon objection, which cannot be accepted.  In fact, it may even be possible for malicious persons who are not indebted to take back the goods indirectly through an annulment lawsuit, by giving old dated debt notes to those with whom they are collaborating fraudulently, after transferring an element of their assets to bona fide third parties. Of course, these are not situations intended by law. While providing the creditor with the opportunity to collect the receivables in the cases of cancellation of disposition, it should not be ignored that the reality of the receivable of this creditor is aimed, not the formal existence.[3]

Conclusion

Actions for annulment of disposition and actions for nullity filed for collusion, which are similar to each other in terms of their purposes, are different from each other, and they differ from each other in terms of their conditions and results. If one of the cases is regulated in the Execution and Bankruptcy Law, the other is in the Code of Obligations. In particular, the cases where the debtor’s transfers and transactions are requested to be canceled in order to smuggle goods from the creditor, is the situation where these two cases come closest to each other. The debtor, whose debtor is involved in transactions with the aim of smuggling goods from her/him, can open file of the two lawsuits. However, the conditions of filing and proving the lawsuits are unique and the effect of the provisions given as a result is different from each other.

You can contact our team for detailed information about annulment of disposition and collusion cases.

Best Regards

Solmaz Law and Consultancy Team.

References

Nazif Kaçak, (2008),  İcra ve İflas Kanunu’nda Tasarrufun İptali Davaları, Seçkin Yayıncılık, Ankara.

17th Civil Chamber of the Supreme Court, 2019/2829 E., 2021/3185 K.

4st Civil Chamber of the Supreme Court, 2021/1984 E. , 2021/2275 K.

17th Civil Chamber of the Supreme Court,  2020/34 E., 2021/2358 K.

[1]17th Civil Chamber of the Supreme Court, 2019/2829 E., 2021/3185 K.

[2] 4st Civil Chamber of the Supreme Court, 2021/1984 E. , 2021/2275 K.

[3]17th Civil Chamber of the Supreme Court,  2020/34 E., 2021/2358 K.

Leave a Reply

Your email address will not be published.