Procedural succession in enforcement proceedings in the event of the debtor's death is possible - Supreme Court

The death of the debtor should be treated as the withdrawal of a party to the enforcement proceedings. At the same time, the law provides for the replacement of a party to enforcement proceedings (in the event of his death) by a successor.

In the event of the death of a party to the enforcement proceedings, the enforcement officer must check whether the relevant legal relationship allows for legal succession. If the enforcement proceedings were terminated by the enforcement officer, including in connection with the death of the debtor, and the enforcement officer did not take into account the requirements of the law regarding the possible succession of the debtor, the decision to terminate the enforcement proceedings may be challenged in court. If the complaint is upheld, the question of the replacement of a party to the enforcement proceedings by a legal successor, including in connection with the death of the debtor, can be resolved.

This conclusion was reached by the Grand Chamber of the Supreme Court.

In 2015, the court ordered the convict to pay the victim compensation for property and non-pecuniary damage. The state enforcement officer issued two resolutions to initiate enforcement proceedings to recover money, and later another to terminate the enforcement proceedings due to the death of the debtor. At that time, the obligation remained outstanding.

In light of this, the victim has asked the court to replace the debtor with his successors - the heirs - in the enforcement proceedings for the execution of the sentence.

The court of first instance, with which the court of appeal agreed, granted the application.

When referring the case to the Grand Chamber of the Supreme Court, the panel of judges of the Civil Cassation Court of the Supreme Court considered, in particular, that from 5 October 2016, with the entry into force of the Law of Ukraine No. 1404-VIII "On Enforcement Proceedings" dated 2 June 2016, procedural succession in enforcement proceedings in the event of the death of the debtor is not allowed, and the relevant enforcement proceedings are subject to termination on the basis of paragraph 3 of part 1 of Article 39 of Law No. 1404-VIII.

At the same time, the Grand Chamber of the Supreme Court stated that such a literal interpretation of the provisions of Law No. 1404-VIII was incorrect. The provisions on the termination of enforcement proceedings in the event of the debtor's death (paragraph 3, part 1, Article 39 of Law No. 1404-VIII) should be understood as applying, inter alia, to cases where the legal relations do not allow for legal succession.

In the case of disputed legal relationships, the inheritance includes, in particular, the obligation to compensate for the damage caused by the testator during his or her lifetime. This obligation did not cease as a result of the debtor's death and continues to exist. Therefore, procedural succession in the event of the death of a debtor (individual) is quite possible.

Therefore, since the disputed legal relations allow for legal succession, the state enforcement officer had to suspend the enforcement proceedings and decide on the involvement of the legal successors.

Furthermore, the Grand Chamber of the Supreme Court highlighted that the monetary debts of the debtor are deemed part of their inheritance upon decease. As a result, procedures and deadlines for the creditor to file claims against the debtor's heirs, including the means of securing these claims, are outlined under Articles 1281 and 1282 of the Civil Code of Ukraine. Article 1281 of the Civil Code of Ukraine, which establishes the limitation periods for filing such claims, also applies to debt obligations. The expiration of these terms results in the deprivation of the creditor's right to claim (termination of his civil right) under the principal and ancillary obligations, as well as the termination of these obligations.

The obligation of the debtor's heirs to the testator's creditors arises only within the limits provided for by Article 1282 of the Civil Code of Ukraine, i.e. within the value of the inherited property. If a person does not inherit any property from the testator, he or she does not acquire the status of an heir and, as a result, has no obligation to satisfy the claims of the deceased person's creditor.

Failure to determine the value of the inherited property does not affect the decision to replace the party to the enforcement proceedings. At the same time, when satisfying an application for replacement of a deceased debtor with his or her heir in enforcement proceedings, the court, pursuant to part 1 of Article 1282 of the Civil Code of Ukraine, must determine the amount of debt corresponding to the heir's share in the inheritance and indicate that such replacement is carried out within the value of the inherited property.

The applicant learned of the debtor's death only on 26 July 2017, when her representative received a decision to terminate the enforcement proceedings. At the end of December 2017, i.e. within the time limit set out in Article 1281 of the Civil Code of Ukraine, the applicant filed a motion to replace the debtor with his successors (heirs).

The Resolution of the Grand Chamber of the Supreme Court of 11 October 2023 in case No. 523/2357/20 (proceedings No. 14-11цс22) - https://reyestr.court.gov.ua/Review/114757808.

This and other legal positions of the Supreme Court can be found in the Database of Legal Positions of the Supreme Court - lpd.court.gov.ua.