Case Study – Abuse of enforcement proceedings

LEGAL INSIGHT

Andreas Asimakopoulos, Lawyer

Recently, Decision No. 1734/2023 was issued by the Single-Member Athens Court of First Instance, by which the enforcement actions (writs of payment, order for execution, seizure of real estate properties report), on the basis of which the forced auction of our principals’ real estate was initiated, were annulled.

The aforementioned Decision acknowledged the legal and substantive validity our opposition, according to which we requested the annulment of the enforcement actions due to abusive, in violation of article 116 of the Code of Civil Procedure and of article 281 of the Civil Code, exercise of procedural rights in order to achieve the satisfaction of alleged claims against our principals.

More specifically, the opposing party, in an earlier time, in December 2021, had imposed a seizure on the litigated properties for the same alleged claim. These earlier enforcement proceedings (writs of payment, seizure of real estate properties report) were annulled in July 2022 (find more about it here), preventing the forced auction of their properties. The opposing party immediately filed an appeal in front of the Court of Appeals of Athens for the annulment of the first-instance decision. The appeal was programmed to be heard on March 2023. However, even though the opposing party had already chosen the path of questioning the legal correctness of the first-instance decision by which the aforementioned acts of enforced execution were annulled, at the end of October 2022 it proceeded to serve new writs of payment and at the beginning of November 2022 imposed a new seizure against the same immovable properties for the same alleged claims against our principals, without waiting for the trial to take place and for the issuance of the judgement on its appeal, forcing our principals to take over an additional legal battles to defend their legitimate defense rights.

Decision No. 1734/2023 of the Single-Member Court of First Instance of Athens, dealing with a series of critical issues raised before the Court in the considered grounds of our opposition, sets as its central issues of concern, which it examines, the following 2 key points: a) should the opposing party have waited for the final outcome of the trial on the opposition of our principals against the previous enforcement actions from year 2021, and b) should the initiation of a new enforcement procedure constitute prohibited and excessively burdensome abuse of procedural rights. The decision, with its fully substantiated legal considerations, gives an affirmative answer to both of the above questions.

Specifically, the decision includes the following considerations: “The acceleration of a new enforcement procedure and in particular the seizure of the appelants’ same properties for the same demand, though there is a pending appeal, constitutes an action disproportionately burdensome for their interests. The latter, for the same debt and for the same assets, their aforementioned properties…, were de facto obliged, in order not to lose the 45-day deadline from the article 934 par. 1a of the Greek Code of Civil Procedure, to issue the aforementioned opposition in order to prevent the planned auction for … June, in view of the fact that according to article 938 par. 2 of the Greek Code of Civil Procedure, as valid and applicable after Law 4842/2021, in the seizure of real estate properties, there is no capability of judicial suspension in the jurisdiction of the first-instance, an opinion that is followed by the major part in the jurisprudence of the courts of substance. Self-evidently, the issue of legal opposition alongside the 2021 legal procedure which is now pending before the Court of Appeal of Athens, doubled the expenses of the objectors, who, alongside the legal battle which they will have to conduct to that Court with the aim of rejecting of their opponent’s appeal, they will have to give an additional ‘battle’ in the procedural field though the present opposition, in order to prevent a possible auction of their properties by a formally independent from the first, new enforcement procedure, but for the same claim and for the same assets, beyond of course the mental cost which they will have to bear from the threat of a new, albeit legal measure according to the process. With its behavior, the opposing party, in fact, tried to neutralize the procedural acquis of the objectors, that of the first-instance annulment of the above-mentioned acts of the previous procedure, decision that had immediate power, speeding up new ones, doubling the entire procedure with unnecessary expenses both for itself and for its opponents with parallel consumption of double and even multiple legal effort with the visible risk of issuing contradictory judicial judgments for the same claim and for the same assets, despite the fact that from a formal-procedural point of view there is no some negative procedural obstacle (pending proceedings) between the two oppositions, given that these are other enforcement measures but with the same enforceable title as a starting point. The entire attitude and the entire procedural behaviour of the creditor, although formally legal, involves a contradiction. On the one hand, as it has the inalienable right according to the Constitution, (a. 20 par. 1), it appeals the decision no …/2022 to the second degree of jurisdiction and therefore continues the previous enforcement procedure in order to reach, as it is entitled to, a forced auction of the properties of the objectors in order to satisfy its well-founded and already finally awarded claims. However, from the other side, without waiving from the above appeal, initiates a new enforcement procedure with the delivery of new writs of execution and with the imposition of an essentially new (despite the fact that it is formally the first) seizure, which may happen, if the appeal to the Court of Appeal is accepted, as it seeks to with its appeal, to become retroactively second and therefore prohibited (invalid). Nevertheless, the invalidity of this situation (if the previous opposition will be rejected at the Court of Appeal) should, for the same reason, be declared by a new court decision following the exercise of a new opposition (i.e. the present one) on behalf of the defendants. In addition to the fact that the hastener itself does not clarify which of the two enforcement procedures it will stick to (obviously the nature of the enforcement procedure does not allow for more and even overlapping procedures to be conducted for the same claim and at the expense of the same assets), with its whole attitude indicates that it wishes to bypass, (at least in time) the appellate jurisdictional function, demonstrating an underlying mistrust, and in the end to burden the entire executive procedure, doubling it, an action which may be pointless and futile if its appeal ultimately succeeds and the previous enforcement procedure is strengthened, to the detriment of the objectors who in any case (whether its appeal is rejected or accepted and the opposition rejected) would have to exercise and the opposition in question, as it happened indeed, initiating in fact a superimposed new procedure of execution, just in case its appeal is rejected. The above mandated initiation of a new enforcement procedure for ‘just in case’, disproportionately affects the interests of the objectors who, due to their position as debtors of unmanageable financial debts (approximately 6.000.000 euros), do not have the corresponding financial expediting powers to hold consecutive trials on successive – repeated enforcement proceedings for the same claim and for the same assets. On the other hand, of course, it should not be overlooked, as mentioned in the above considerations, that the lack of coincidence of res judicata and constructive action of the annulment decision on the opposition based on article 933 of the Greek Code of Civil Procedure, creates the risk, since with the annulment of the seizure at first instance and until the judgment of the Court of Appeal, the asset is released, the bad faith debtor to hasten to make it available to third parties in order to frustrate the possibility for it to be auctioned if the opposition is ultimately rejected in the second degree, given that it can be considered that the seizure was never annulled however, the disposal which took place while there was no seizure due to its first instance annulment, is not annulled (overturned) retroactively. Indeed, in such a case, the creditor has every reason and also a special legal interest in this regard, until the appeal is decided by the Court of Appeal, to re-impose seizure in order to prevent the disposal of the object by the malicious debtor. In such a case, the acceleration of a new enforcement procedure in order to impose a seizure to prevent the asset from being expropriated appears justified. However, when such a risk does not exist either due to the existence of security in rem, [no one would wish to acquire an encumbered property subject to the lender’s mortgage in rem], or because there is a title for the autonomous imposition of a preventive seizure (in the prohibition of articles 958 par. 2 and 997 par. 5 of the Greek Code of Civil Procedure does not fall under the preventive seizure), by virtue of a payment order (a. 724 of the Greek Code of Civil Procedure), with which (preventive seizure) a prohibition of the disposal of the thing occurs without its imposition meaning the initiation of enforcement proceedings, then indeed the acceleration of a new enforcement proceedings for the purpose of imposing a new seizure, nothing more substantial offers the creditor than, of course, an economy of time, if in the end its appeal is rejected. However, this saving of time in the event that the creditor’s appeal is rejected, appears to be extremely detrimental to the debtor who is necessarily led to exercise new opposition under article 933 of the Greek Code of Civil Procedure. In the present case, as also confessed by the parties, the seized properties of the objectors are encumbered with mortgage notes in favor of the lender and therefore the risk of their expropriation due to the annulment of the first instance seizure from the year 2021 until a decision of the Court of Appeal is issued is practically minimal. The creditor apparently by a misconceived excessive providence, did not make only use of its procedural powers, even to the fullest extent, but relying on its superior economic powers in relation to the objectors, but abused them without running any substantial risk of affecting the, otherwise, its reasonable interests. In fact, if its appeal is successful, the second enforcement procedure may be vain, to the excessive detriment of the objectors, who in any case will have to bear the cost of an additional legal battle, under conditions of suffocating time pressure for the opposite party, in case in which the appeal is rejected, to ensure time savings, i.e. the next forced auction is already planned instead of restarting a new enforcement procedure from the beginning. The hastener therefore has to wait for the final outcome of the trial on the opposition from the year 2021 and act accordingly, as mentioned above and not, as a result of ‘procedural maximalism’, to expedite the pending enforcement procedure. Subject to the conditions of article 116 of the Greek Code of Civil Procedure and article 281 of the Civil Code, upon acceptance of the grounds for opposition in question an as substantially valid, the acts of enforcement (writs of payment, order for execution, seizure report) challenged by this opposition should be annulled…”.

From the above cited passages of the decision, it follows that the decision bases its judgement on the abusiveness of the hastener’ s behaviour in 5 interrelated axes: 1) the coercion of our principals into additional procedural actions in order to protect their legal rights, which in their turn they cause 2) doubling of our principals’ costs and 3) unbearable psychological cost for them, when at the same time the opposing party manifests 4) strong contradictory behaviour, imposing a new enforcement procedure, which runs the risk of being annulled if its pending appeal succeeds, thus doubling the enforcement proceedings with superimposed acts of forced execution, with its only possible benefit being the saving of time, taking advantage of its superior financial position and demonstrating procedural maximalism, at the moment 5) there is a lack of substantial legal interest in the imposition of new enforcement proceedings due to a lack of risk of failure to satisfy its alleged claim by auctioning our principals’ properties, given the fact of the existence of security in rem on the disputed properties. This decision is extremely important because it demonstrates in the most clear way that the abuse of the procedural capabilities given by the law to the creditor can be a reason for the annulment of the enforcement actions, which (will) happen when the creditor does not simply act in order to satisfy its alleged claims, but it exhausts, beyond the limits of good faith and the transactions ethics, its aggression leading to obvious financial and procedural damage of its (alleged) debtors, a fact that is not tolerated by the law.