Sign a 3-year sales contract, customers only receive the principal
According to the first instance judgment No. 309/2022/DS-ST dated November 14, 2022 on "Apartment sale and purchase contract dispute" of Tan Phu District People's Court, Mr. NLV - a customer who bought a house at the A5 - Diamond Alnata Apartment Complex project (belonging to Celadon City - Tan Thang Sports and Residential Complex Project, Son Ky Ward, Tan Phu District, Ho Chi Minh City) sued the investor, Gamuda Land Joint Stock Company (Gamuda Land) for violating the terms of the contract.
Specifically, after signing the sales contract in June 2019, Mr. V. paid Gamuda Land 3 installments with a total amount of more than 1.7 billion VND, the apartment handover deadline was committed to August 7, 2021. By the 4th payment installment, Mr. V. had fully prepared his finances but did not receive a payment notice from the investor. This customer proactively sent a document requesting Gamuda Land to issue a payment notice for the next installment as agreed.
On September 16, 2020, Gamuda Land responded in writing, citing financial difficulties, not issuing further payment notices and requesting to suspend payment until the completion of the 6th floor construction. This investor also proposed to negotiate an adjustment to the house handover time and receive a discount, but did not specify the adjustment time.
Celadon City project is currently having many legal problems as well as disputes with customers.
Disagreeing with the above request, Mr. V. sent a written response to Gamuda Land, stating that financial difficulties were not a force majeure event. Furthermore, the delay in handing over the house would affect Mr. V.’s family’s residence and business.
Mr. V. also said that by the time of handing over the house as stated in the contract, Gamuda Land had no response regarding the delay in handing over the house to the customer. On August 10, 2021, based on the terms of the commitment in the sales contract, Mr. V. sent a notice of unilateral termination of the contract and requested compensation according to the agreed terms due to Gamuda Land's delay in handing over the apartment. However, by November 9, 2021, Gamuda Land only returned the principal amount received without any penalty for breach of contract. Although the customer sent a letter of inquiry, Gamuda Land did not respond.
At the first instance trial, through the trial proceedings and studying the case documents, the Trial Panel (TAP) of Tan Phu District People's Court held that Gamuda Land had delayed the handover of the apartment to Mr. V. The company's representative said that the COVID-19 pandemic had affected the construction progress. However, the time to restrict people's travel and public activities was only for a short period of time in 2021.
Previously, in May 2020, Gamuda Land issued a document requesting an extension of the house handover time to February 2022, which proves that the construction progress of Gamuda Company was delayed compared to the commitment in the contract, not until the outbreak of the epidemic.
According to the agreement in the apartment sale and purchase contract, the deadline for handing over the apartment is August 2021, by which time the construction must be completed in the rough. Therefore, when the epidemic broke out, the period of social distancing (from May 31, 2021 to September 30, 2021) only affected the level of completion of the project.
Many residents who signed contracts to buy apartments in the Diamond Alnata subdivision have filed lawsuits against the investor to claim their rights.
At the sentencing, Tan Phu District People's Court partially accepted Mr. NLV's lawsuit request, requiring Gamuda Land to pay Mr. V. more than 500 million VND in violation fines (30% of the total amount paid according to the contract terms) and interest for late payment of principal.
However, the dispute between Mr. V. and Gamuda Land did not stop there. In early January 2023, the Ho Chi Minh City People's Court opened a full-time appeal hearing following Gamuda Land's appeal. At this hearing, the representative of the Ho Chi Minh City People's Procuracy stated that Gamuda Land's delay in handing over the apartment was related to a force majeure event, the COVID-19 pandemic.
Ho Chi Minh City People's Court has partially accepted Mr. V's appeal, requiring Gamuda Land to pay the late interest on the principal of more than 10 million VND, and not accepting the 30% penalty for breach of contract as announced by the court of first instance.
Request to invalidate the sales contract because of selling the house without permission?
Through the content of the above court sessions, some customers who bought houses at the Celadon City project are suing the investor, claiming that Gamuda Land representatives have given strange arguments to avoid paying benefits to customers. That is, based on the fact that this project was constructed without a construction permit, they asked the court to declare the sales contract invalid, thereby only having to refund the principal that customers have paid.
Specifically, at the first instance trial, Gamuda Land’s representative requested the panel of judges to declare the Apartment Sale and Purchase Contract invalid. The reason given was that at the time of signing the contract, Gamuda Company had not yet been granted a Construction Permit by the competent authority. Therefore, the apartment sale and purchase contract between the two parties was invalid from the time of signing. The resolution of the consequences of an invalid contract is to return to each other what has been received.
Gamuda Land has returned to Mr. V. the amount of money he paid, which is more than 1.7 billion VND. If Mr. V. agrees to mediation, Gamuda Land will support the parties with 400 million VND to end the dispute. If Mr. V. does not agree to mediation, Gamuda Company requests the People's Court to resolve the dispute according to the provisions of law.
Gamuda Land's representative requested the court of first instance to declare the sales contract invalid because there was no construction permit at the time of signing the contract.
Regarding this view of the investor, Mr. V. said that he bought the apartment from Gamuda Land through the company's broker and had confidence in the company's reputation, so he did not carefully research the legal aspects. When the company offered the apartment for sale, it committed to customers to ensure legal aspects. The reason that Gamuda Company gave when signing the contract with Mr. Van and Ms. Vy that they did not have a construction permit to declare it invalid is unfounded.
At the time of the conciliation, Gamuda Land had just provided the Court with a Construction Permit issued in May 2021. This shows that Mr. V., the apartment buyer, could not have known that Gamuda Land had signed the contract with the customer without a construction permit. Therefore, that was not a reason to invalidate the contract at the time of signing. Therefore, Mr. V. did not accept the conciliation.
According to Mr. P.D.T, a customer who bought an apartment at A5 Apartment Complex and is currently preparing to sue Gamuda Land in court, “After studying the content of Mr. V.’s trial, the investor’s request to cancel the contract because it was signed without a construction permit has made us lose confidence and the negotiations will certainly not go anywhere. Therefore, I will wait for the court’s decision in the near future. With Gamuda Land’s violations having been handled by the authorities, the delay in handover has also been clearly determined. The claim for my rights and that of some other customers in the upcoming trials will certainly have a very different result. We cannot let them keep a large amount of our money for many years, only to receive the exact amount back due to the investor’s own violations.”
On April 13, the Ho Chi Minh City People's Committee issued a decision to fine Gamuda Land for violations at the Celadon City urban area project. This investor violated the law when signing a contract to buy and sell apartments at the A5 apartment complex of this project without a document from the Department of Construction notifying that it is eligible to sell and lease future housing according to the law.
Pursuant to Clause 4, Article 58 of Decree 16/2022 of the Government, Ho Chi Minh City People's Committee decided to fine Gamuda Land VND 900 million for illegal capital mobilization.
In addition, the company must also take remedial measures, which are to return the capital mobilized in violation of regulations. The time limit for implementing remedial measures is 10 days from the date of receipt of the decision. All costs for organizing the implementation of remedial measures shall be borne by the company.
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