Realisation of a seized mortgage note: no obligation to serve the third-party owner of the pledged property and no amendment of final auction conditions

Facts

The appellant [C.] is the former wife of the debtor [B.] . In the course of the divorce, ownership of two properties in [U.] (VS) was transferred to her on 21 November 2016. These properties were encumbered with a bearer mortgage note (owner's mortgage note) for CHF 2.1 million in first rank, which was created on 30 October 2012. The appellant did not assume the personal claim under the mortgage note.

The Küsnacht-Zollikon-Zumikon Debt Enforcement Office seized the mortgage note in enforcement proceedings no. xxx of creditor [A.] on 22 November 2012 as movable property. On 3 October 2018 it was seized a second time in enforcement proceedings no. vvv of [D.] S.A. (seizure no. www). By order of 4 October 2018, the Debt Enforcement Office ordered realisation by way of auction; the auction notice is dated 30 October 2018. The appeal filed by the debtor against item 11 of the auction conditions was dismissed in final instance by judgment 5A_806/2019 of 14 September 2020. On 3 October 2019 [D.] S.A. filed the realisation request.

On 16 November 2020 the Debt Enforcement Office issued a new auction notice in both enforcement proceedings, with the auction on 27 January 2021. The auction notice and the auction conditions, described as final, were served on the appellant on 24 November 2020. She challenged this before the Meilen District Court and primarily requested the annulment of all orders and decisions in the enforcement proceedings (payment orders, provisional-discharge decisions, seizure certificates) and, secondarily, the amendment of item 5 of the auction conditions concerning acquisition by persons abroad (ANRA, 80% encumbrance limit) as well as clarifications in the new auction notice. The Debt Enforcement Office cancelled the auction on 6 January 2021 owing to the pandemic. The District Court dismissed the complaint on 28 January 2021, and the Higher Court of the Canton of Zurich likewise on 15 March 2021, insofar as it could be entered into.

The appellant lodged a civil law appeal with the Federal Supreme Court on 25 March 2021 and maintained her cantonal requests. The Federal Supreme Court obtained the cantonal files but did not order a second exchange of written submissions.

Before the Federal Supreme Court, the matters in dispute are essentially (1) a claim to service of enforcement documents as third-party pledgor, based on Art. 153 para. 2 DEBA (by analogy) or on Art. 29 para. 2 Cst., and (2) the reviewability of the final auction conditions (item 5).

Considerations

The civil law appeal is admissible (Art. 72 para. 2 lit. a FSCA in conjunction with Art. 19 DEBA; Art. 74 para. 2 lit. c, Art. 75, Art. 76 para. 1 FSCA). The Federal Supreme Court applies the law of its own motion but only examines complaints that are substantiated in summary form. For constitutional rights the strict principle of complaint applies (Art. 106 para. 2 FSCA). Facts are only reviewed if they are manifestly incorrect, i.e. arbitrary (Art. 97 para. 1 FSCA).

On the complaint of violation of the right to be heard and the prohibition of excessive formalism (Art. 29 paras. 1 and 2 Cst., Art. 9 Cst.): the subject matter of the proceedings before the Federal Supreme Court is only the decision of the last cantonal instance (Art. 75 FSCA), so complaints against the first-instance decision cannot be heard. Whether the Higher Court set excessive requirements for the reasoning of the appeal may remain open, since despite its non-entry it partly addressed the matter on the merits. The duty to give reasons under Art. 29 para. 2 Cst. is satisfied if the person concerned can understand the scope of the decision; the authority does not have to refute every submission (BGE 135 III 670 E. 3.3.1; BGE 145 III 324 E. 6.1).

On service of enforcement documents: Art. 153 para. 2 DEBA grants a payment order only to the actual owner or co-owner of the pledged object (BGE 127 III 115 E. 3). Since the mortgage note as a pledge belongs to the debtor, and the appellant acquired ownership of the properties only after the mortgage note was created, she is not a third-party pledgor within the meaning of this provision. The fear that the purchaser will terminate the mortgage note also does not establish direct affectedness. The right to be heard under Art. 29 para. 2 Cst. presupposes current affectedness in one's legal position in the concrete ongoing proceedings; a merely future, abstract affectedness in a possible later enforcement proceeding is not sufficient. The appellant did not engage with the correct considerations of the…