Real estate perspective... Can the transferee enjoy the right of priority compensation after the transfer of the construction project price claim?

Jurisprudence: (2022) Yue 01 Min Zhong No. 3841

The Court considers that:The Supreme People's Court on the application<中华人民共和国民法典>Article 3 of the Several Provisions on the Effectiveness of Time stipulates: "Civil dispute cases caused by legal facts before the implementation of the Civil Code, where the laws and judicial interpretations at the time did not provide for it but the Civil Code did, the provisions of the Civil Code may be applied, but it is obvious. Except for those that derogate from the legitimate rights and interests of the parties, increase the legal obligations of the parties, or deviate from the reasonable expectations of the parties." Article 545 of the Civil Code stipulates that "a creditor may transfer all or part of a claim to a third party, except in one of the following circumstances: (1) it may not be transferred according to the nature of the claim; the (II) may not be transferred according to the agreement of the parties; the (III) may not be transferred according to the provisions of the law. If the parties agree that a non-monetary claim may not be transferred, it may not be used against a bona fide third party. If the parties agree that the monetary claim shall not be transferred, it shall not be against a third party." The provision that the transfer of monetary claims cannot be opposed to third parties is a new provision in the Civil Code. In this case, the electric white construction and the majority of the company to carry out the settlement of the project, the amount of its settlement has been determined, the relationship between creditor's rights and debts has been fixed, obviously belongs to the monetary claims, the majority of the company to the electric white construction transfer of the above-mentioned project funds of the creditor's rights belong to the transfer of monetary claims. After the fact of the transfer of claims in this case, the majority of companies also issued a notice of the transfer of claims to China Railway Guangzhou Company, fulfilling the obligation to inform, the application of the new provisions of the Civil Code in this case will not significantly detract from the legitimate rights and interests of China Railway Guangzhou Company, increase its obligation to repay debts. Therefore, although China Railway Guangzhou Company and Electric Baiyi Construction agreed that the claims of the contract involved in the case may not be transferred, but China Railway Guangzhou Company and Electric Baiyi Construction of the aforementioned agreement can not be against the majority of the company. The court of first instance applied the relevant provisions of the Civil Code to hear the case and found that it was not improper for the majority of companies to claim to pay the remaining project fund of 1384567.13 yuan and the corresponding interest to China Railway Guangzhou Company, which was upheld by the court.

Jurisdictional precedent:(2020) Supreme Fa Min Shen No. 6337

The Court considers that:On the validity of the Confirmation of Assignment of Creditor's Rights. Article 2 of the Interpretation of the Supreme People's Court on the Application of Legal Issues in the Trial of Construction Contract Disputes stipulates that the construction contract for a construction project is invalid, but if the construction project has passed the completion acceptance, the contractor requests to pay the project price with reference to the contract, it shall be supported. In this case, although there is no valid construction contract between Ma Bin and others and Jiujian Company, the project involved in the case has been completed, delivered and put into use. Ma Bin, Chang Guanglin, Zhu Shuang and Zhang Fujun, as constructors, have the right to demand that Nine Construction Company pay the price of the project. Chang Guanglin, Zhu Shuang and Zhang Fujun transferred their claims on the project price to Ma Bin, which did not violate the law, and had notified the debtor Jiujian Company, which had effect on Jiujian Company. Nine Construction Company denies the validity of the "Confirmation of Assignment of Claims" by invalidating the subcontracting and subcontracting of construction contracts, which lacks legal basis.

1. The priority compensation right of construction project price is to protect the wage rights and interests of construction workers as the legislative intent, and allowing the transfer of the priority compensation right of construction project price is more conducive to the realization of the labor claims of construction workers.

Jurisdictional precedent:(2021) Supreme Famin No. 18

The Court considers that:The right of priority compensation for the construction project price is the legal priority, and the original intention of the legislation is to ensure that the wage rights and interests of construction workers can be realized by protecting the contractor's claim on the construction project price. The protection of the claim should not be changed due to the change of the subject of the claim, and the transferee is allowed to enjoy the priority compensation right, which is conducive to the original creditor to obtain reasonable and sufficient consideration for the transfer of the claim, and is more conducive to the realization of the labor claim of the construction workers; on the contrary, if the priority compensation right of the construction project price is eliminated, it will indirectly damage the compensation of the labor claim. In this case, Stane Company claimed that Yu Jinzhou was the actual builder of the construction project in this case, and Jianchang Company transferred the claim of the construction project involved in the case to Stane Company to facilitate the exercise of the rights of the actual builder, and Anju Company did not deny Yu Jinzhou as the actual builder in the trial. At the time of its establishment, Stamper was one of the two shareholders. In the "Creditor's Rights Assignment Agreement" signed by Stane Company and Jianchang Company, it is stated that "in order to facilitate the execution of the case, the creditor agrees to transfer the relevant creditor's rights to the transferee, and agrees to change the execution applicant in the court, and the transferee shall be the executor of the above case", which confirms Stane Company's above claim from the side. In a separate case, Tianjin Yusunda Iron and Steel Trading Co., Ltd. argued that the transfer of claims between Jianchang Company and Stane Company involved in this case was a free transfer to the detriment of its interests as a creditor of Jianchang Company, and requested the cancellation of the transfer of claims. The (2018) Su 04 Min Zhong No. 1238 effective civil judgment issued by the Intermediate people's Court of Changzhou City, Jiangsu Province confirmed that the property rights involved in the transfer agreement between Jianchang Company and Stane Company in this case are civil rights and interests between the two parties, and there is no evidence to prove that Jianchang Company gave up its creditor's rights, transferred property free of charge or disposed of property at a low price. Therefore, the confirmation of this case that Sdaner still enjoys the right of priority compensation after the transfer of the construction project price claim does not violate the institutional purpose of the system of priority compensation of the construction project price to protect the labor remuneration of construction workers.

2. The right of priority payment of the construction project price is the subordinate right of the claim of the project payment, and the transferee may still enjoy it after the transfer.

Jurisdictional precedent:(2021) Supreme Law No. 958

The Court considers that:After the transfer of the creditor's rights for the construction project funds, the priority right for compensation of the construction project price enjoyed by China Construction Seventh Bureau can be transferred to China Construction Strait Company for the following reasons: first, the priority right for compensation of the construction project price is a legal priority, and its function is to guarantee the priority payment of the project funds. It is the subordinate right of the creditor's rights for the project funds and does not belong to the contractor itself. It can be transferred together with the creditor's claim for the construction project price. Article 81 of the the People's Republic of China Contract Law provides that where a creditor assigns a right, the assignee acquires an subordinate right in relation to the claim, unless the subordinate right is exclusive to the creditor itself. Article 17 of the Interpretation (II) of the Supreme People's Court on the Application of Law in Cases of Disputes over Construction Contracts, although it is stipulated that the contractor shall claim the right of priority compensation, it cannot be concluded that the right of priority compensation for the price of the construction project has personal specificity. Therefore, if the claim of the construction project price is transferred, the transfer of the right of priority payment of the construction project price does not violate the law. Second, the transfer of the right of priority payment of the construction project price in this case together with the claim for the project does not increase the burden of Xingji Weiye Company, nor does it harm the interests of other creditors of Xingji Weiye Company. In summary, after the 7th Bureau of China Construction transferred the claim of the project involved in the case to China Construction Strait Company, China Construction Strait Company can enjoy the priority right of payment of the construction project price.

1. The right of priority compensation for the price of the construction project is personally dependent and belongs exclusively to the contractor who enters into a contract with the contractor.

Jurisdictional precedent:(2020) Su 13 Min Zhong No. 4127

The Court considers that:In this case, Xu Qian was not the contractor of the construction project in question, and his claim on the price of the construction project was transferred from the outsider Yangsheng Company by way of transfer of claims. As a kind of property transaction, the transfer of creditor's rights belongs to the scope of the autonomy of the parties, in addition to the rights of the creditor's own identity, the transfer of the main claim from the right should be transferred together. The creditor's rights involved in the case as the construction project price claims, the priority of such claims as the legal priority, the purpose of its establishment is to protect the rights of the contractor of the construction project, and then protect the wage rights and interests of the construction workers behind the contractor, so the priority should be determined to belong exclusively to the contractor. However, according to Xu Qian's statement in the first instance, the factual basis for the transfer of creditor's rights involved in the case is that after the construction project involved was contracted by a company in Yang, more than 10 actual constructors were affiliated with a company in Yang. As a company in Yang was unwilling to claim the remaining creditor's rights for the actual constructors, the actual constructors jointly negotiated to transfer the remaining creditor's rights to Xu Qian, who uniformly claimed to pay. Therefore, according to Xu Qian's statement, the claims involved in this case are actually the claims of the project funds enjoyed by the actual builder. The actual builder system is the system stipulated in Article 26 of the Interpretation of the Supreme People's Court on the Application of Law in the Trial of Construction Contract Disputes, but it is not clear whether the actual builder enjoys the priority of the construction project price. The actual construction person generally refers to the contractor, the contractor who is illegally subcontracted, the affiliated contractor, the contractor who does not have the construction qualification, etc. The physical rights and obligations of the actual construction person cannot be extended to the scope and conditions of application, and only under certain circumstances can the right be claimed against the contractor. Therefore, only the contractor who signed the construction contract with the contractor is entitled to the right of priority compensation of the project price, and the actual builder's conditional right to claim the project price from the contract is not necessarily related to the priority. Therefore, in this case, Xu Qian's transfer of the claims involved in the case, should not be found to enjoy the right of priority compensation.

2. After the transfer of the claim on the construction project price, the priority right to compensation for the construction project price is extinguished.

Jurisdictional precedent:(2020) Inner 0524 Minchu No. 2208

The Court considers that:In addition, the right of priority compensation of the construction project price and the right of claim for the construction project price have personal dependence, the contractor will transfer the claim of the construction project price, and the priority compensation right of the construction project price will be eliminated. In this case, Shandong Tiantai Construction Engineering Co., Ltd. transferred the project payment claim to Inner Mongolia Huateng Tianlong Biotechnology Development Co., Ltd. to the plaintiff Zong Xuening, who was not the contractor of the project involved. In view of the personal dependence of the priority compensation right of the construction project price and the right to claim the construction project price, the priority compensation right of the construction project price has been eliminated after Shandong Tiantai Construction Engineering Co., Ltd. transferred the construction project price claim; to sum up, the court supports the plaintiff zong xuening's demand that the defendant inner Mongolia huateng tianlong biotechnology development co., ltd. pay a total of 4.48 million yuan for the project fund and deposit and that the defendant Shandong huateng mining exploration and development group co., ltd. assume joint and several payment obligations for the 4.48 million yuan, but does not support the plaintiff zong xuening's demand for priority compensation for the project price involved.

The value of the system of priority compensation of construction project price lies in ensuring the realization of the contractor's claim for the project, and thus protecting the legitimate rights and interests of construction workers. To explore whether the transferee can obtain the priority compensation right after the transfer of the construction project price claim, that is, to explore whether the construction project price claim can be transferred and whether the priority compensation right of the construction project price can be transferred together with the project payment claim.

First of all,The claim on the price of the construction project is transferable. According to Article 545 of the Civil Code: "A creditor may transfer all or part of a claim to a third party, except under any of the following circumstances: (1) the nature of the claim may not be transferred; the (II) may not be transferred in accordance with the agreement of the parties; (III) may not be transferred in accordance with the provisions of the law. Where the parties agree that non-monetary claims may not be transferred, they may not be transferred against a bona bona bona bona fide third party." According to the above provisions and the aforementioned cases, the claim on the construction price is a monetary claim, the transfer of which is not prohibited by law, and the agreement of the parties to prohibit the transfer of the claim on the construction price may not be used against a third party.

Secondly,The right of priority payment of the construction project price may be transferred together with the claim of the construction project price. Article 547 of the Civil Code states: "Where a creditor transfers a claim, the assignee acquires an subordinate right in relation to the claim, except where the subordinate right belongs exclusively to the creditor itself." The premise that the right of priority payment of the construction project price can be transferred together with the claim of the construction project price is that the right does not belong exclusively to the creditor itself, that is, it does not have personal exclusiveness. On August 16, 2020, the First Civil Division of Shandong Higher People's Court made the following reply to the claim of the transferee of the project payment claim in the "Answers to Several Questions of the First Civil Division of Shandong Higher People's Court on the trial of disputes over the construction contract of the construction project": "The right of priority payment of the construction project price depends on the project payment claim, which belongs to the subordinate right, and the contractor transfers the construction project price claim, the right to priority compensation for the construction price is then transferred." The author tends to think that the priority of compensation for the construction project price is a legal priority, similar to the priority of ships and aircraft. It is the priority of special subjects in construction projects based on legal reasons. Its function is to guarantee the priority payment of project funds. It is the subordinate right of project funds creditor's rights, not exclusive to the contractor itself, and can be transferred together with the construction project price creditor's rights.

And finally,The right of priority payment of the construction project price is transferred together with the claim of the construction project price, and does not harm the wage rights and interests of construction workers. The establishment of the system of priority compensation of construction project price is to effectively solve the problem of arrears of project payment. The transfer of the right of priority payment of the construction price with the claim of the construction project price can enhance the liquidity and transfer value of the claim, which is more beneficial to the realization of the contractor's claim, and can also strengthen the protection of the wage interests of construction workers.