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RESOLUTION OF THE SUPREME ECONOMIC COURT OF UKRAINE

of January 19, 2006 No. 20/184d

About agreement cancelation of lease and release of leased rooms

(determination of Trial chamber on economic cases of the Supreme Court of Ukraine of 23.03.2006 it is refused to open production on review)

The Supreme Economic Court of Ukraine as a part of board of judges:

the chairman - Ostapenko M. I. judges: Bordenyuk E. M., Harchenko V. M. having considered the writ of appeal of the Ukrainian-American Olichik LLC on the resolution of the Zaporizhia Economic Court of Appeal of 16.11.2005 on case on the claim of JSC Zaporozhsky plemptitsesovkhoz-reproduktor to Ukrainian American Olichik LLC the third party Regional department of Fund of state-owned property of Ukraine for the Zaporizhia region about agreement cancelation of lease and release of leased rooms

ESTABLISHED:

in May, 2005 JSC Zaporozhsky plemptitsesovkhoz-reproduktor appealed to economic court of the Zaporizhia region with the claim to Ukrainian American Olichik LLC for agreement cancelation of lease and eviction of the defendant from leased rooms.

In reasons for the requirements the claimant specified that it agrees to the lease agreement signed by the parties of 03.06.2003, the part of production rooms and the equipment of complex for cultivation of bird, on condition of payment of lease payments, annual till July, in the amount of 135 000 UAH, insurance of object of lease and accomplishment, under approval, current and other types of repair is transferred to the defendant to use.

But the defendant satisfies the specified terms of the contract in an unseemly way, the rent for the second year of lease was paid with delay for seven days, by object of lease in a month, since the conclusion of the lease agreement, did not insure, performed repair work without approval that according to item 6.1.2 of the agreement grants it the right to require lease agreement cancelation judicially.

The claim is satisfied with the decision of economic court of the Zaporizhia region of 18.08.2005.

By results of reconsideration of the case in appeal procedure the petition for appeal of Olichik LLC is left by the resolution of the Zaporizhia Economic Court of Appeal of 16.11.2005 without satisfaction, and resolution of the Trial Court - without changes.

In the writ of appeal the defendant refers to the wrong legal treatment courts of the facts of the case, the inaccuracy of the conclusions about availability of the bases for agreement cancelation and asks the judgments made to cancel and make on case the new decision on refusal in satisfaction of the claim.

Having heard the judge-speaker, explanations of agents of the parties, having checked case papers and having discussed arguments of the writ of appeal, the judicial board considers that the decision of economic court of the first instance and the resolution of Economic Court of Appeal cannot be left without changes and are subject to cancellation, and case - to the direction on new judicial review, proceeding from the following.

Making the decision on satisfaction of the claim, the economic court of the first instance and Economic Court of Appeal recognized that the delay by the defendant of the next payment for several days, insurance of object of lease, with violation of the terms established by the agreement and accomplishment of separate repair and recovery work without approval of the lessor is the unconditional basis for agreement cancelation.

However completely to agree with the provided conclusions, about consequence in law of the circumstances connected with accomplishment by the defendant of the controversial agreement it is impossible.

Signing 03.06.2003 the lease agreement of production rooms of complex for cultivation of bird, the parties stipulated that provisions of the Law of Ukraine on the relations settled by this agreement do not expatiate "On lease of the state-owned and utility property".

Thus the relations of the parties on lease for the period of the conclusion of the agreement were governed by Chapter XXV of the Civil code of Ukraine (in edition of 18.07.1963), and from enforcement of 31.01.2004 of the Civil code of Ukraine - are determined by this code and conditions of the controversial agreement.

According to Art. 269 of USSR Group, the nayemodatel can impose requirement about early agreement cancelation of hiring in court if the tenant did not bring payment within three months from day of the termination of payment due date, and after enforcement of the Civil code of Ukraine, for the same reasons, to refuse the employment contract (Art. 782 of Civil Code of Ukraine).

Smaller, than it is specified in these regulations, terms of violation of monetary commitments of the tenant on introduction of the rent do not give the grounds for refusal of the tenant of the employment contract and therefore the reference of court to seven-day delay of the defendant of introduction of the rent as on the hiring agreement cancelation basis, it is impossible to recognize such which is based on precepts of law which regulate legal relationship of the parties on lease of disputable property.

Untimely accomplishment by the defendant obligation to insure object of lease was one more basis of the address of the claimant with requirements about lease agreement cancelation.

Recognizing these arguments of the claimant sufficient for lease agreement cancelation, courts did not pay attention that violation of time in which object of lease was subject to insurance is not that condition in the presence of which the claimant, according to Art. 783 of Civil Code of Ukraine or item 6.1.2 of the agreement, has right to require hiring agreement cancelation, for the period of consideration of dispute by court object of lease is insured, i.e. violation is stopped and therefore, concerning these circumstances, it is impossible to recognize the legal conclusion of court correct.

Signing the agreement, the parties were specified that the claimant has the right to require agreement cancelation in case of deterioration in object of lease owing to failure to carry out or unseemly accomplishment by the defendant of terms of the contract, inappropriate use of object of lease and in other cases provided by the current legislation (item 6. 1.2 agreements).

According to Art. 783 of Civil Code of Ukraine, the nayemodatel has the right to require hiring agreement cancelation if: the tenant uses thing contrary to the agreement or purpose of thing; the tenant without the permission of nayemodatel gave thing to use to other person; the tenant the negligent behavior creates threat to damage of thing; the tenant did not start carrying out capital repairs of thing if the obligation of carrying out capital repairs was assigned to the tenant.

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