Aspects of calculating court fees when collecting a mortgage

“On claims for foreclosure on the subject of a mortgage, the court fee is calculated based on the value of the pledged property, and not on the amount of the debt obligation!” – expressed the Supreme Court of Ukraine by the decision on the case No. 307/23/18 dated 02.10.19.

The conclusion was made after considering the cassation appeal of the creditor-recoverer against the decisions of the courts of first and appellate instances, by which they refused the plaintiff to consider the claims.

Background of the analyzed dispute:

1. The legal entity went to court with a claim against three persons. He asked to recognize him as a proper mortgage holder, and two persons as proper mortgagers and to foreclose on the subject of a mortgage in order to pay off the debt on the loan.
2. The first instance left the claim without moving, notifying the applicant of the need to provide the court with information on the adoption of measures for pre-trial settlement of the dispute, if any.
3. The court also asked to provide an approximate estimate of court costs and a receipt for payment of the court fee.
4. The applicant did not respond to the court’s request, the application was returned with the comment “the shortcomings have not been eliminated, the court fee has not been paid”. The appeal claim also remained without progress.

The case came to the consideration of the Supreme Court of Ukraine

“The plaintiff pointed to the groundlessness of the refusal of the courts of the previous instances. Motivated by the following: declared two claims of a non-property nature and one property, namely, an appeal for the collection of a mortgage by recognizing ownership. According to Clause 2, Part 1, Article 176 of the Civil Code, in such claims, their price is determined by the value of the mortgage property, and plaintiff paid the court fee.”

Ukrainian Supreme Court analyzed the circumstances of the dispute

An error significant for judicial representation was found in the calculations of the court of first instance! The court erroneously proceeded from the amount of debt under the loan agreement, for the purpose of repayment of which the plaintiff applied to the court with a demand to foreclose on the subject of the mortgage by recognizing his ownership of the pledge.

Consequently, the case should have been heard because:

1. The legal basis (payers, objects and rates) for the collection of court fees is determined by the Law of Ukraine “On court fees” and for a property claim of a legal entity it is 1.5% of the cost of the claim.
2. The price of the claim is determined in this case under Art. 176 GPKU based on the value of the property, since the claim concerns the recognition of ownership.
3. The content of the declared claim is based on the existence of monetary claims on the basis of a separate agreement, the consequence of the satisfaction of which will be their termination.
4. In this case, the claims for the collection of the pledged property have a value estimate, are of a property nature and the rate for their filing is calculated in accordance with Art. 4th Law of Ukraine “On court fees”.