Cancellation of a real estate auction by the enforcement office for alleged nullity and the right to be heard

Facts

By enforcement notice (precetto esecutivo) of 28 April 2018 issued by the Mendrisio Enforcement Office (UE), the creditor bank (appellant) initiated enforcement proceedings against the debtor to realise the real estate pledge encumbering plot no. 1532 of X., to recover CHF 1'379'764.70 plus interest. The property was owned 5% by the debtor and 95% by the debtor's former wife (respondent), and was subject to a criminal seizure ordered on 20 October 2014 by the Criminal Complaints Chamber of the Ticino Court of Appeal, with a prohibition on disposal noted in the land register.

At the bank's request, the UE consulted the Criminal Complaints Chamber to obtain authorisation for the sale. In the meantime the criminal proceedings had been transferred to the Cantonal Criminal Court, which, by decision of 18 July 2018 of the Criminal Assize Court, ordered, among other things, the removal of the land register block, authorised the UE to realise the property, provided for the conservatory seizure of the net proceeds as security for the fine, court fee and costs, and ordered the confiscation of the mortgage certificates, without prejudice to the UE's power to request their delivery in the enforcement proceedings.

By order of 8 August 2018 the UE set the auction for 27 November 2018. Having learned of the appeal against the criminal judgment, by decision of 28 August 2018 the UE cancelled the auction. The bank then filed a request for reconsideration, alternatively an complaint under art. 17 DEBA, seeking annulment of the revocation and the setting of a new auction. The UE justified the revocation on the ground that the criminal judgment had not become final and had not been communicated to it.

The Enforcement and Bankruptcy Chamber of the Court of Appeal, acting as supervisory authority, by decision of 23 April 2019 dismissed the complaint. The bank then brought an appeal in civil matters before the Federal Supreme Court, seeking annulment of the cantonal decision and of the UE's order, with an order to set a new auction. The municipality of X., a statutory mortgage creditor, left the matter to the court's judgment; the respondent requested dismissal of the appeal; the cantonal authority referred to its own decision.

Considerations

The Federal Supreme Court admits the appeal in civil matters as admissible, as it concerns a final decision of last cantonal instance in enforcement and bankruptcy matters (art. 72 para. 2 let. a, art. 75, art. 90 FSCA), without the amount in dispute being relevant (art. 74 para. 2 let. c FSCA). The Court recalls that its review is limited to the grievances raised (art. 42 paras. 1 and 2 FSCA) and that the findings of fact may be challenged only if manifestly incorrect or arrived at in breach of the law (art. 105 para. 2 FSCA). The circumstance, invoked by the respondent, of the withdrawal of the criminal appeal of 18 March 2019 is an inadmissible new fact (art. 99 para. 1 FSCA).

On the merits, the Court refers to art. 44 DEBA: the realisation of assets subject to criminal seizure as security for a future confiscation does not take place under the DEBA, but under criminal law, unless the competent criminal authority authorises it. Under art. 17 para. 4 DEBA, the office may reconsider its order until the response is sent to the supervisory authority; beyond the time limits for appeal this is admissible only if the decision is absolutely null under art. 22 DEBA, not otherwise having become final.

Absolute nullity (art. 22 para. 1 DEBA) presupposes a particularly serious defect that is manifest or easily recognisable, and recognition of the nullity must not seriously prejudice legal certainty; generally, serious procedural errors or a qualified lack of competence ratione materiae or ratione officii are relevant, whereas the mere incorrect application of substantive law is not sufficient. The Federal Supreme Court notes that the cantonal decision is vague on this point and does not expressly rule on the nullity of the setting of the auction, confining itself to an ambiguous formulation on the criminal seizure still being valid (cf. BGE 135 III 28 consid. 3.2, which however concerned a suspension and not nullity). In the absence of a challenge against the setting of the auction, the question of nullity could not be left unanswered.

As regards the right to be heard (art. 29 para. 2…