The SC Grand Chamber Commented on Limiting the Foreclosure on the Wages Held on the Debtor's Account

On the basis of executive proceedings, the employer made monthly deductions in the amount of 20% of the salary of the person against whom these executive proceedings were instituted, and only after the deductions were made, he transferred the salary to the person’s card account. The private executor seized the person's funds on these card accounts, as well as the funds on the accounts that will be opened after the adoption of the ruling for the seizure of funds. The person applied to the private executor to cancel the seizure of the wages on the card account, but the executor dismissed the application. The person challenged the inaction of the private executor in court.

The courts of first and appellate instances granted the claim. The private executor appealed these judgments to the Supreme Court. The Civil Cassation Court within the Supreme Court referred the case to the SC Grand Chamber due to the presence of different approaches to the application of prohibitions on the seizure of wages.

Following the results of consideration, the SC Grand Chamber refused to satisfy the cassation appeal and upheld the decisions of the courts of previous instances. The SC Grand Chamber proceeded from the fact that Art. 68 of the Law of Ukraine On Executive Proceedings defines funds constituting wages as a special object on which enforcement of the executive document may be applied, and limits such recovery by the absence of other means and/or objects of collection, types of debt obligations (periodic payments) and amount of recovery.

Seizure of funds constituting the debtor's wages after deductions from them being made according to executive documents and in excess of the amount established by the Law of Ukraine On Executive Proceedings for deductions from wages is an excessive burden for the debtor and a violation of his rights to receive remuneration for work and to decent living conditions.

The SC Grand Chamber stated: the funds constituting the debtor’s wages cannot be seized after the actual implementation of deductions from them according to executive documents and on all the debtor’s wages beyond the limits of deductions from such wages permitted by the Law of Ukraine On Executive Proceedings. If such a seizure is imposed, then it must be lifted.

At the same time, such restriction does not apply to funds on accounts that are not wages.

If at the stage of seizing the funds of the debtor-individual, which are on the debtor's account and are his wages, the executor failed to identify the legal nature (status) of these funds as funds for which the seizure is prohibited by the Law of Ukraine On Executive Proceedings, then the seizure on such funds is subject to removal on the basis of a relevant notification from the bank or an application from the debtor with the provision of relevant documents to confirm this.

The SC Grand Chamber did not agree with the arguments of the complainant that the account on which the funds were located was not the one on which the Law of Ukraine On Executive Proceedings prohibited seizure, because:

1) seizure may be imposed on funds, not on an account (paragraph 1, part 2, Article 48 of this Law);

2) limitation of foreclosure on wages funds held on the debtor's account relate to the category "funds on other accounts of the debtor, the seizure and / or foreclosure of which is prohibited by law" (paragraph 2, part 2, Article 48 of the said Law).

At the same time, the executor did not indicate in the cassation complaint, and the courts did not establish, that the funds on the card account did not constitute wages.

The Resolution of the Grand Chamber of the Supreme Court of April 20, 2022, in case No. 756/8815/20 (proceedings No. 14-218цс21)– https://reyestr.court.gov.ua/Review/104728588.

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