Decision of the Court of Cassation General Assembly of Civil Chambers on Proof of Excess Damage
Introduction
The issue of proving damages in cases related to the excess damages is frequently subject to the examination and evaluation of both the Supreme Court and different chambers of the Court of Cassation. With its decision dated 29.03.2022 and numbered 2021/928 E. 2022/401 K., the Court of Cassation General Assembly of Civil Chambers ("General Assembly") once again addressed this issue and decided that the plaintiff must prove their excess damages with concrete facts peculiar to their situation. In this article, the relevant decision is analyzed and the different opinions in the judicial decisions are given.
The Case at Hand
In the case subject to the decision, a lawsuit was filed for the collection of excess damages.
The plaintiff claims that the money they deposited was transferred to another account improperly, that their receivable was accepted by a court decision, that they were able to collect their receivable 16 years later and only with the advance interest charged on the principal, but that they incurred a large amount of excess damage that could not be covered by default interest, that if they had received their receivable on time, even if they had not invested it, they could have made use it by earning interest on the interest, thus preserving the real value of the money, and that the purchasing power of their money has been significantly reduced due to the charging of interest only on the principal.
The defendant states that the claim of excess damages was hypothetical, not based on concrete evidence, that the conditions for excess damages are not there, and argues that the lawsuit should be dismissed.
The court of first instance dismissed the lawsuit on the grounds that it was necessary to prove the damage in excess of interest, yet the plaintiff did not provide any evidence to prove the claim. The plaintiff filed an appeal against the decision.
The court of appeal dismissed the appeal against the decision of the court of instance on the merits. This time, the plaintiff appealed to the Court of Cassation.
The 11th Civil Chamber of the Court of Cassation, which examined the file as a specialized chamber, drew attention to the fact that different conditions of proof should be sought between the periods when inflation was on the agenda and the periods when it was not, and deemed it inappropriate for the trial court to reach a conclusion seeking concrete proof for the entire period without considering this difference. For the reasons explained, it has been ruled that the judgment based on incomplete examination is not correct and the decision should be reversed.
The court of first instance decided to resist. The decision to resist was appealed by the plaintiff and the dispute came before the General Assembly.
The General Assembly has determined the subject of dispute as whether the alleged damage should be proved with concrete facts according to the situation of the plaintiff in the face of the economic conditions in the market.
Overview to the Concepts
Before proceeding with the assessments, it would be useful to explain the concepts of default interest and excess damages, which are also primarily analyzed in the decision.
Default interest is the interest that starts to accrue upon the default of the debtor by not paying the monetary debt on time, regardless of the existence of damage and the fault of the debtor, pursuant to Article 120 of the Turkish Code of Obligations numbered 6098 ("TCO"). In other words, the creditor does not need to prove that there is a damage in order to claim default interest.
Article 122 of the TCO sets forth the regulation on excess damages. According to Article 122/1 of the TCO, “If the creditor incurs a damage in excess of the default interest, the debtor is obliged to compensate for this damage, unless the debtor proves that he/she is not at fault.”[1]
Accordingly, excess damage is a loss that is incurred in the event that the creditor's damage cannot be covered by default interest due to the default of the debtor in performing their monetary obligation. In order for an award to be made for excess damages; the existence of default, the existence of creditor damage that cannot be covered by default interest, the debtor's fault in defaulting, the existence of a causal link between default and the creditor's excess damage, and the creditor's claim for this damage are required. Unlike default interest, in the case of excess damages, the creditor must prove that the damage is not covered by default interest.[2]
Opinion of the General Assembly
In the relevant decision, the General Assembly emphasizes that the creditor must prove the excess damage in a concrete, credible and clear manner through legal means of proof.
In this respect, the General Assembly states that the claim for excess damages based on facts such as inflation, high interest rates, depreciation in the value of money, which are among the unfavorable economic conditions that existed in certain periods in our country, cannot be accepted as evidence of the fact of damage; the decrease in the purchasing power of money due to the unfavorable economic conditions alone is not proof of the existence of a damage other than the default interest of the plaintiff; that unfavorable conditions such as high inflation, fluctuations in exchange rates, high interest rates in the free market, and the decrease in the purchasing power of money cannot be accepted as a presumption and will not relieve the plaintiff from the obligation to prove the alleged damage with facts specific to its concrete situation, nor will it provide the plaintiff with any ease of proof in this direction. In this context, the General Assembly emphasizes that the plaintiff must prove the damage with concrete facts specific to their situation, and for the mentioned reasons, the General Assembly unanimously decides that the decision of resistance should be upheld since the plaintiff has not been able to prove the excess damage in a concrete manner specific to their situation.
Different Opinions in Judicial Decisions
The proof of damages in cases related to excess damages has been the subject of examination and evaluation by both the Constitutional Court and various chambers of the Court of Cassation.
The previous established practice of the 15th Civil Chamber of the Court of Cassation was that the existence of an excess damage must be proved with concrete evidence.[3] However the Constitutional Court, in its decision dated 21.12.2017 and numbered 2014/2267,[4] concluded that the applicant’s right to property was violated due to the rigid interpretation that the applicant had to prove that he had suffered a damage, since it was understood that the applicant's claim had been paid with a significant loss of value against inflation and that an excessive and extraordinary burden was imposed on the applicant personally. Upon this decision, the 15th Civil Chamber of the Court of Cassation changed its established practice.[5] With this amendment, the 15th Civil Chamber of the Court of Cassation stated that it has adopted the view that if inflation and, accordingly, exchange rates, interest rates on deposits, government bonds and other investment instruments, as well as interest rates and yields are higher than the default interest, the existence of excess damage should be accepted as a presumption.
On the other hand, as can be seen from the above-mentioned explanations regarding the decision, the practice of the 11th Civil Chamber of the Court of Cassation is also in the direction that the excess damage should be proved concretely only in periods when there is no inflation.[6]
As also previously explained, the General Assembly does not share the same opinion. In its previous decision,[7] the General Assembly has also expressed the view that the excess damages must be proved with concrete facts specific to the situation.
In summary, it is not possible to speak of unity of practice in judicial decisions, and there are different opinions on the subject.
Conclusion
The question of whether or not or under what conditions proof of damages is required in cases related to excess damages is answered in different ways by different courts. At this point, the opinions adopted by the Constitutional Court, various chambers of the Court of Cassation and the General Assembly differ. Most recently, with its decision dated 29.03.2022 and numbered 2021/928 E. and 2022/401 K., the General Assembly, by deciding that the claimant must prove their additional damages with concrete facts specific to their situation, demonstrated that it insisted on the view adopted in its previous decisions, despite the decision of the Constitutional Court in a different direction.
- Translated by the author.
- Oğuzman, Kemal / Öz, Turgut: Borçlar Hukuku Genel Hükümler, 14th Edition, İstanbul, Vedat, 2016, p. 500.
- For a decision of the 15th Civil Chamber of the Court of Cassation stating that the existence of excess damage must be proved with concrete evidence, see. 15th Civil Chamber of Court of Cassation, E. 2016/1049 K. 2016/2737, T. 12.05.2016, www.lexpera.com.tr
- For the Constitutional Court's decision dated 21.12.2017 with application number 2014/2267, see. https://www.anayasa.gov.tr/tr/kararlar-bilgi-bankasi/
- For the decision stating that the established practice has been changed based on the Constitutional Court decision and containing the new opinion of the chamber, see 15th Civil Chamber of the Court of Cassation, E. 2020/967, K. 2021/859, T. 15.03.2021, www.lexpera.com.tr
- For another decision in this direction, see 11th Civil Chamber of the Court of Cassation, E. 2018/1512, K. 2019/3201, T. 29.04.2019, www.lexpera.com.tr
- General Assembly E. 2017/2800, K. 2021/1629, T. 09.12.2021, www.lexpera.com.tr; For another decision in the same direction, see General Assembly E. 2007/11-668, K. 2007/798, T. 31.10.2007, www.lexpera.com.tr
All rights of this article are reserved. This article may not be used, reproduced, copied, published, distributed, or otherwise disseminated without quotation or Erdem & Erdem Law Firm's written consent. Any content created without citing the resource or Erdem & Erdem Law Firm’s written consent is regularly tracked, and legal action will be taken in case of violation.
Other Contents
The Decree No. 32 on the Protection of the Value of Turkish Currency (“Decree No. 32”) and the Communiqué No. 2008-32/34 on the Decree No. 32 on the Protection of the Value of Turkish Currency (“Communiqué”) prohibit the determination of the contract prices of certain contracts and other payment obligations...
The Constitutional Court's decision dated 14.09.2022 and published in the Official Gazette dated 25.10.2022 and numbered 31994 ("the Constitutional Court Decision") examines whether the start of the application period related to the applicant’s request for appeal being from the date of the pronouncement of...
Although the general principle in the law of contracts is freedom of contract or, in other words, freedom of will, the parties’ wills are not completely free in the case of exemption agreements. The validity of these agreements is limited by the mandatory provisions of the Turkish Code of Obligations...
The Constitutional Court, in its decision dated 14.09.2021 on application no. 2018/25663 (“Decision"), found that applicant Cahide Demir’s right to property was violated on the ground that the mortgage on her real estate, established to secure a third party’s debt, had not been released by the...
The use of general terms and conditions is a commercial reality not only in consumer transactions but also in commercial transactions in certain industries such as automotive, banking, insurance, telecommunications and energy...