Military service is not a valid reason: The Supreme Court confirmed the refusal to return a mortgaged apartment through failure to meet the limitation period

The Supreme Court, composed of a panel of judges from the Second Judicial Chamber of the Cassation Civil Court, considered the dispute in case No. 607/23504/21 regarding the return of an apartment that was sold through electronic auctions within the framework of enforcement proceedings. The plaintiff attempted to challenge the sale of the property and reclaim the apartment, but the key issue in the case was the observance of the deadlines for filing a lawsuit and the legal grounds for canceling the auction results.

The plaintiff tried to return the apartment sold at auction

According to the case details, in 2008 the plaintiff concluded a credit line agreement with a bank and received a loan of 45,500 USD. To secure the obligations, he mortgaged a two-room apartment in Ternopil. In 2010, the court already recovered the debt from the borrower, after which enforcement proceedings were initiated. The apartment was seized as part of the compulsory enforcement.

Subsequently, the property was sold through the electronic auction system of the SE "SETAM", after which ownership initially transferred to the auction winner, who registered it in his name. Later, the apartment was sold to another person who became its final owner.

After that, the plaintiff went to court, believing that the sale of the apartment was illegal. He referred to the moratorium on compulsory seizure of property for foreign currency loans and argued that his apartment could not have been sold at auction. The plaintiff stated that he learned about the sale late and did not have the opportunity to timely challenge the actions of the enforcement service. He also cited military service as a reason for missing the deadline to file a lawsuit.

In his claim, the plaintiff requested to declare the electronic auction invalid, cancel the enforcement officer's act, invalidate the purchase and sale agreement, cancel the registration of ownership rights to the new owners, and reclaim the apartment from unlawful possession.

Lower courts denied the claim

The Ternopil City District Court, and later the Ternopil Court of Appeal, denied the claim. The courts concluded that the plaintiff missed the special deadline for challenging the results of electronic auctions for the sale of mortgaged property established by the Law of Ukraine "On Mortgage".

Disagreeing with this decision, the plaintiff filed a cassation appeal to the Supreme Court, requesting to overturn the decisions of the lower courts and issue a new ruling to satisfy the claim.

He argued that the courts incorrectly applied the law and did not consider the Supreme Court's conclusions in similar cases.

The plaintiff also insisted that the deadline for filing a lawsuit was not missed because during the moratorium on compulsory seizure of foreign currency mortgages from 2014 to 2021, the sale of the apartment was prohibited. He also cited military service and participation in the ATO as valid reasons for missing the deadline.

Supreme Court's conclusions

The Supreme Court reminded that according to Article 204 of the Civil Code of Ukraine, a transaction is considered lawful if its invalidity is not directly established by law or if it is not recognized as invalid by a court.

According to parts one and three of Article 215 of the Civil Code of Ukraine, the grounds for invalidity of a transaction are non-compliance with the requirements established by law at the time of its execution. If the invalidity of a transaction is not directly defined by law, but one of the parties or an interested person challenges its validity on grounds provided by law, such a transaction may be declared invalid by the court.

The Supreme Court agreed with the conclusions of the lower courts about refusing the claim due to the expiration of the statute of limitations, since its application was raised in the case. According to Article 48 of the Law of Ukraine "On Mortgage", participants in mortgage relations have the right to challenge the auction results in court within three months from the date of the auction at the location of the real estate.

Thus, in disputes regarding the invalidation of public auctions for the sale of mortgaged property, a special statute of limitations established by Article 48 of this Law applies.

The expiration of the statute of limitations, as claimed by the party, is grounds for refusal of the claim. If the court recognizes the reasons for missing the deadline as valid, the right may be protected as provided by parts 4 and 5 of Article 267 of the Civil Code of Ukraine.

Valid reasons for missing the statute of limitations are circumstances that objectively, independently of the person, made it impossible or significantly complicated the timely filing of the claim.

As a general rule, the statute of limitations begins from the day the person learned or could have learned about the violation of their right or about the person who violated it.

The Supreme Court noted that the formulation of the general rule regarding the start of the statute of limitations is related not only to the moment of actual awareness of the person about the violation of their rights but also to their objective possibility to learn about such circumstances. This possibility follows from the general principles of protection of civil rights and interests (Articles 15, 16, 20 of the Civil Code of Ukraine), according to which a person exercises the right to protection in the manner prescribed by law. The burden of proving the moment when the person became aware of the violation lies with the plaintiff.

The court applies the statute of limitations only when a violation of the plaintiff's right or interest is established. If there is no such violation, the claim is denied as unfounded. If the right is violated but the statute of limitations is missed and this is claimed by the party, the court denies the claim due to the expiration of the term, in the absence of valid reasons for missing it, which the plaintiff must prove.

The statute of limitations is not renewed after expiration, but according to part five of Article 267 of the Civil Code of Ukraine, the court may provide protection if it recognizes the reasons for missing the deadline as valid. The burden of proving these reasons also lies with the plaintiff.

In conclusion, the Supreme Court left the cassation appeal without satisfaction, and the decisions of the courts of first and appellate instances unchanged.

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