Liu v. a metallurgical group co., LTD
-- The true intention of the parties should be determined in conjunction with the contract agreement, so as to characterize the legal relationship of the contract
keyword
- civil
- contract
- Representation of true meaning
- Determination of legal relationship
- Contract characteristics
Basic facts of the case
A metallurgical group co., LTD. (hereinafter referred to as a metallurgical group) contracted an outcropping trench mining and stripping project in a coal mining area that had obtained an exploration permit, and signed a "contracting agreement" with the contractor Liu. The "Contracting Agreement" stipulates that Liu shall pay the contracting fee to a certain metallurgical group, that it has the right to operate independently and obtain operating income through the sale of raw coal, and that Liu shall "mine in strict accordance with the safety operation procedures and mining design plan". Later, due to the revocation of the exploration permit of a metallurgical group, the two parties could not continue to perform the "Contracting Agreement", and Liu sued a metallurgical group to bear the liability for breach of contract and compensate for its project input losses and operating losses. The court of first instance held that the Contracting Agreement was in essence a contract for the contracting and operation of mining rights, and that the Contracting Agreement signed by a metallurgical group with Liu in violation of the state's prohibitive laws and regulations without obtaining a mining license should be invalid, and the liability for negligence borne by the parties should not exceed the benefits of contract performance. In the course of the performance of the agreement involved in the case, a metallurgical group had no other benefits to obtain except for the contract fee, so the liability for contractual negligence borne by the metallurgical group should not exceed the necessary limit, so it was ordered that the metallurgical group should return the contract fee of 7.5 million yuan to Liu and bear the interest on the bank loan for the same period incurred during the period of occupying the contract fee after the withdrawal in April 2009.
On June 20, 2021, the High People's Court of Ningxia Hui Autonomous Region rendered the (2019) Ning Min Chu No. 24 Civil Judgment: 1. A metallurgical group shall repay and return Liu's contracting fee of 7.5 million yuan within 15 days from the effective date of the first-instance judgment, and the interest shall be calculated according to the bank loan interest for the same period based on 7.5 million yuan from April 1, 2009 to August 19, 2019; The interest from August 20, 2019 to the date of performance determined in this judgment shall be calculated on the basis of RMB 7.5 million and shall be calculated at the loan market prime rate announced by the National Interbank Funding Center for the same period. 2. A metallurgical group repaid and returned the fine of 1.1 million yuan paid by Liu within 15 days from the effective date of the first-instance judgment, and the interest was calculated according to the bank's loan interest for the same period based on 1.1 million yuan from September 9, 2008 to August 19, 2019; The interest from August 20, 2019 to the date of performance determined in this judgment shall be calculated on the basis of RMB 1.1 million and shall be calculated at the loan market prime interest rate announced by the National Interbank Funding Center for the same period. 3. Rejecting Liu's other litigation claims. Liu was dissatisfied with the first-instance judgment, arguing that the "Contracting Agreement" was valid, and a metallurgical group should compensate for its project input losses and operating losses, and appealed. On June 30, 2022, the Supreme People's Court rendered the (2021) Zui Gao Fa Min Zhong No. 1201 Civil Judgment: 1. Items 1 and 2 of the (2019) Ning Min Chu No. 24 Civil Judgment of the High People's Court of Ningxia Hui Autonomous Region are upheld; 2. Revoke item 3 of the (2019) Ning Min Chu No. 24 Civil Judgment of the High People's Court of Ningxia Hui Autonomous Region; 3. A metallurgical group shall compensate Liu for a loss of 20 million yuan within 15 days from the effective date of this judgment; 4. Rejecting Liu's other litigation claims.
Reasons for the Adjudication
The effective judgment of the court held that: (1) whether the first-instance judgment erred in determining that the "Contracting Agreement" involved in the case was in fact a contract for the contracting and operation of mining rights, and that the contract was invalid
First, on the issue of the contractual nature of the Contracting Agreement. According to the terms of the contract, although the two parties agreed that the mining company would contract the mining and stripping project of the outcropping exploration trench in the residual mining area of the wind oxidation zone of a coal mine to Liu, the contract did not reflect the specific content of the project contract. The "Contracting Agreement" stipulates that Liu should pay the contracting fee to a metallurgical group, Liu has the right to operate autonomously, and obtains operating income through the sale of raw coal, and Liu should "mine in strict accordance with the safety operation procedures and mining design scheme", "pay attention to reasonable mining, avoid indiscriminate excavation, waste of resources, and pay attention to maintaining the natural environment in the process of mine construction and mining", "due to the depletion of mining resources during the contract period, Party A may appropriately give Party B other mineable areas for mining", Combined with the agreement that Liu needed to pay the contract fee to a certain metallurgical group, rather than the agreement that a certain metallurgical group paid the project labor fee to Liu, the first-instance judgment held that the Contracting Agreement did not have the characteristics of a contract and that the Contracting Agreement was not improper in essence as a contract for the contracting and operation of mining rights. Liu's assertion that the performance of the contract involved in the case was not "exploration instead of mining", but "combination of exploration and mining" also did not conform to the contract and could not be established.
Secondly, on the issue of the validity of the Contracting Agreement. Paragraph 3 of Article 3 of the Mineral Resources Law stipulates that "for the exploration and exploitation of mineral resources, the prospecting and mining rights shall be applied for and approved in accordance with the law, and the prospecting rights and mining rights shall be obtained, and the registration and ...... shall be completed", and Article 5 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Cases of Disputes over Mining Rights stipulates that "if a contract is signed to hand over the mineral resources to others for exploration and mining without obtaining a mineral resources exploration license or mining license, the people's court shall determine that the contract is invalid in accordance with the law." Therefore, the signing of the "Contracting Agreement" between a metallurgical group and Liu without obtaining a mining license violated the state's prohibitive laws and regulations, and the "Contracting Agreement" was invalid.
(2) Whether the first-instance judgment was wrong in determining the amount of the contract fee paid by Liu
In March and April 2008, Liu transferred a total of 7.5 million yuan in contract fees to companies or individuals designated by a metallurgical group, and neither party objected to this. Liu believes that the court of first instance did not determine that the fine of 1.1 million yuan paid on behalf of a metallurgical group on September 9, 2008 and the cash deposit of 300,000 yuan in the account of an employee of a metallurgical group, Ma, were wrongly determined as contract fees. The court of second instance held that with regard to the fine of 1.1 million yuan paid by Liu on behalf of a metallurgical group on September 9, 2008, because Liu did not provide evidence to prove that the two parties reached an agreement on the issue of the fine being offset by the contracting fee, Liu's claim that the fine of 1.1 million yuan paid by him on behalf of a metallurgical group was a contracting fee could not be established. With regard to Liu's cash deposit of 300,000 yuan into Ma's account, Liu's claim could not be established because Liu could not provide evidence to prove that Ma had the right to receive the above-mentioned money on behalf of a certain metallurgical group, and there was no evidence to prove that the payment was a contract fee. Therefore, the first-instance judgment was not improper in determining the amount of contract fees paid by Liu.
(3) Whether the first-instance judgment erred in determining that the liability for contractual negligence borne by a certain metallurgical group should not exceed the necessary limit, and did not support Liu's request for compensation for its losses
Since the Contract Agreement involved in the case was invalid, the handling of the invalid contract should be carried out in accordance with Article 58 of the original Contract Law. Article 58 of the original Contract Law stipulates that: "After a contract is invalid or revoked, the property acquired as a result of the contract shall be returned; where it cannot be returned or there is no need to return it, compensation shall be made at a discounted price. The party at fault shall compensate the other party for the losses suffered thereby, and if both parties are at fault, they shall each bear corresponding responsibility. ”
In this case, when Mr. Liu and a metallurgical group signed the Contracting Agreement, they knew that the metallurgical group had not yet obtained a mining license, and both parties were at fault for the invalidity of the contract, and the parties to the contract should bear the liability for property return, discount compensation and compensation for fault losses. After the signing of the "Contracting Agreement", Liu paid a contract fee of 7.5 million yuan to a metallurgical group, and the contract fee of 7.5 million yuan collected by a metallurgical group should be returned to Liu, and Liu returned the coal mine involved in the case to a metallurgical group. The Contracting Agreement is invalid, and the breach of contract clause under the contract is also invalid, so this court does not support Liu's claim that he should request a metallurgical group to return the contract fee twice in accordance with the Contracting Agreement. With regard to Liu's claim that a metallurgical group should compensate for its losses, since both parties in this case were at fault for the invalidity of the Contracting Agreement, both parties should bear corresponding liability for the losses suffered by Liu due to the invalidity of the contract according to the degree of fault.
First of all, the loss of 187,195,014 yuan for the open-pit trench mining and stripping construction project claimed by Liu. In the first instance of this case, a metallurgical group entrusted a quality investigation institute in Gansu Province to issue a report on satellite remote sensing interpretation and surveying and mapping results in the central and eastern exploration area of a coal mining area in Zhongwei City, Ningxia, which calculated the excavation and filling of earth and stone in the mining area involved in the case. This court held that, based on the "Report on Satellite Remote Sensing Interpretation and Surveying and Mapping Results in the Central and Eastern Exploration Area of a Coal Mining Area in Zhongwei City, Ningxia", combined with the actual circumstances of this case, it can be determined that Liu had construction investment in the mining area involved in the case. Because both parties are at fault for the invalidity of the contract, Liu's construction input loss should be shared by both parties. Liu's claim for the loss was based on the Surveying and Mapping Report issued by the Ningxia Mining Survey Institute and the Appraisal Opinion issued by Huijian Company. However, the time period of geomorphological change measurement in the "Surveying and Mapping Report" is inconsistent with Liu's operation time, so the calculation conclusion of the "Surveying and Mapping Report" lacks relevance to Liu's actual operation volume, and cannot be used as evidence to prove Liu's actual operation volume. The "Appraisal Opinion" was issued on the basis of the "Surveying and Mapping Report", and in the case that Liu did not provide other supporting documents to prove his actual investment, this evidence could not be directly used as the basis for proving Liu's actual investment loss, but it could be used as a reference for calculating Liu's actual loss. With reference to the "Report on Satellite Remote Sensing Interpretation and Surveying and Mapping Results of the Central and Eastern Exploration Area of a Coal Mining Area in Zhongwei City, Ningxia" submitted by a metallurgical group, regarding the total amount of excavated and filled earth and stone in the mining area involved in the case and the amount of losses corresponding to the total amount of excavated and filled earth and stone in the "Appraisal Opinion", this court determined that a certain metallurgical group should pay Liu 20 million yuan for the loss of the construction project.
Secondly, the loss of 85,842,000 yuan for the work stoppage claimed by Liu. Liu's basis for putting forward this claim is Ning Huijian (Jian) Zi [2019] No. 09 "Supplementary Appraisal Opinion", because the "Supplementary Appraisal Opinion" was unilaterally entrusted by Liu to Huijian Company, a certain metallurgical group did not recognize it, and Liu did not submit other evidence to support it, and this court did not support Liu's claim for the loss.
Finally, regarding Liu's claim for interest losses of 155,399,896.36 yuan and operating losses of 50 million yuan. With regard to the loss of interest of RMB 155,399,896.36, this court did not support Liu's claim for this loss because he did not provide evidence to prove the source of the interest loss. Liu's claim for an operating loss of 50 million yuan also lacks factual and legal basis, and this court does not support it.
Therefore, the first-instance judgment found that the liability for contractual negligence borne by a certain metallurgical group should not exceed the necessary limit, and did not support Liu's request for compensation for its losses, which was erroneous and should be corrected.
Summary of the trial
The parties signed the Contracting Agreement, stipulating that the outcropping trench mining and stripping project in the coal mining area involved in the case would be contracted to the other party, but the Contracting Agreement did not stipulate the specific content of the project contracting matters and the payment of project labor fees, but instead stipulated that the contractor had operational autonomy and could obtain operating income through the sale of raw coal, and the contractor needed to pay the contract fee, etc., so the Contracting Agreement involved in the case did not have the basic characteristics of a contract and was essentially a contract for the contracting and operation of mining rights. Because the parties' intention to contract the project is false, the legal relationship of contracting cannot be established, and the validity of the contract should be determined according to the hidden substantive legal relationship.
Associate indexes
Article 146 of the People's Republic of China Civil Code (Article 146 of the General Provisions of the People's Republic of China Civil Law, which came into force on October 1, 2017)
Article 3 of the People's Republic of China Mineral Resources Act (amended on August 27, 2009).
Article 5 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Mining Rights Dispute Cases (June 24, 2017).
First instance: Ningxia Hui Autonomous Region High People's Court (2019) Ning Min Chu No. 24 Civil Judgment (June 20, 2021)
Second instance: Supreme People's Court (2021) Zui Gao Fa Min Zhong No. 1201 Civil Judgment (June 30, 2022)