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[(2019) Q-M-Z-No.310]Hainan Higher People’s Court Paper of Civil Mediation

Hainan Higher People’s Court 

Paper of Civil Mediation
(2019) Q-M-Z-No.310
Appellant (the Plaintiff in the First Instance): Wu Zongzhan, male, born on January 7, 1971, with the number of Mainland Travel Permit for Taiwan Residents of 05216856, having his domicile at No. 46, Lane 2, Commodity Street, Jiyang District, Sanya City.
Attorney: Ye Bo, a lawyer of Guangdong Baizhi Law Firm.
Appellee (the Defendant in the First Instance): Sanya Nanyuan Agricultural Development Co., Ltd., having its domicile at Bu’e Village, Hongtang Village Committee, Tianya Town, Sanya City.
Legal Representative: Liao Jianxiong, president of the Company.
Appellee (the Defendant in the First Instance): Liao Jianxiong, male, born on September 25, 1964, with the number of Mainland Travel Permit for Taiwan Residents of 00444455, having his domicile at Room 1, 12/F, Building A, Jinhe Apartment, Hexi Road, Sanya City.
Joint Attorney of the two Appellees above: Li Qian, a lawyer from Hainan Zhengyi Law Firm.
Appellee (the Defendant in the First Instance): Xiao Shifu, male, born on April 7, 1949, with the number of Mainland Travel Permit for Taiwan Residents of 0281881503 (B), having his domicile at (Room) 4#, Lane 25, Street 630, Bei’an Road, Taibei.
With respect to the case of dispute over the transfer of contracted land-use rights between the Appellant Wu Zongzhan and the Appellees Sanya Nanyuan Agricultural Development Co., Ltd. (hereinafter referred to as “Nanyuan Company”), Liao Jianxiong and Xiao Shifu, the Appellant was dissatisfied with the civil judgement of the Intermediate People's Court Sanya (2017) Q-02-M-C-No.65 (hereinafter referred to as “First-Instance Judgement”) and appealed to this Court. After being filed and accepted by the Court on April 29, 2019, a Collegiate Bench was set up according to law, and the case was openly heard on November 13, 2019. The Appellant Wu Zongzhan and his attorney Ye Bo, and the Appellees Nanyuan Company, Liao Jianxiong and their joint attorney Li Qian attended the proceedings in court. One of the Appellee, Xiao Shifu, was legally summoned by this Court, but he did not appear to attend the proceedings in court without justifiable reasons. This Court made judgment by default pursuant to law. By now, the trial process has been completed.
The Appellant Wu Zongzhan’s appealed that 1. the first-instance judgment shall be canceled and revised to support the claims 1 and 4 of Wu Zongzhan in the first instance; 2. Nanyuan Company, Liao Jianxiong and Xiao Shifu shall bear the litigation costs in the first and second instances. Facts and reasons: On July 24, 2004, Wu Zongzhan and Nanyuan Company concluded the Land Lease Contract, which was signed by Xiao Shifu, former legal representative, and sealed with official stamp of the Company. According to the contents of the Contract: Nanyuan Company would lease the vacant lands between fruit trees (about 2 meters each line) located in 210mu bases of Tianya Town, Sanya City to Wu Zongzhan to plant betel nuts, totally 26 years as of April 20, 2004 to May 17, 2031. The rent shall be paid every three years. 
Xiao Shifu, the former legal representative, shall have full authority to deal with the Contract and related matters in connection therewith. Moreover, Clause 7 of Article 4 of the Contract also stipulates that the weeding area of Party B (Wu Zongzhan) is about two meters wide for planting betel nuts. It was the year when the Contract was concluded, Wu Zongzhan began to invest in planting betel nuts. On September 18, Xiao Shifu received Wu Zongzhan’s rent of 85,374 yuan and issued the first rent receipt. On December 14, 2010, Xiao Shifu secretly transferred the mango base to Liao Jianxiong without telling Wu Zongzhan. On July 10, 2011, Liao Jianxiong and Xiao Shifu entered into the Resolution of the Shareholders’ Meeting, went through the registration for industrial and commercial change: Liao Jianxiong was changed as a shareholder and legal representative, which infringed the privilege of Wu Zongzhan. Now, the mango trees have grown tall with luxuriant foliage; the branches and leaves extend to all sides. Nanyuan Company and Liao Jianxiong failed to trim the branches and leaves of the mango trees. As a result, the betel nut trees are surrounded by the mango trees without space between them. As a result, Wu Zongzhan was unable to normally irrigate, fertilize, weed, pest control and conduct fruit picking of the betel nut trees, thereby seriously affecting Wu Zongzhan's management of betel nuts. Wu Zongzhan loses money every year due to the increased costs and the affected output of betel nuts. Xiao Shifu leased the lands to Wu Zongzhan, and Wu Zongzhan invested in the plantation of betel nuts on the lands. If Xiao Shifu should have informed Wu Zongzhan of the transfer of the lands, Wu Zongzhan could purchase and accept the transfer. Moreover, the Contract also stipulated that Xiao Shifu shall inform Wu Zongzhan in advance if Xiao Shifu intends to transfer the mango bases; however, when Xiao Shifu transferred the land bases to Liao Jianxiong, he did not fulfill the obligation of notification and Wu Zongzhan did not know about the truth. The legitimate rights and interests of Wu Zongzhan were damaged due to the breach of contract and bad faith of Xiao Shifu. The first-instance judgment found that the facts were wrong. Firstly, the mango trees grew in all directions, rather than the two sides of the betel nut trees and leaving open space for Wu Zongzhan to manage and operate the betel nuts, which is consistent with the Contract between the parties. Secondly, the interplanting crops and the main crops should take care of each other. Thirdly, the Contract stipulates that Wu Zongzhan shall be notified with respect to any transfer of the land bases, which aims at protecting his legitimate rights and interests. However, Xiao Shifu did not notify Wu Zongzhan, thereby jeopardizing the privilege thereof. In conclusion, the facts found in the first instance were non liquet and the application of laws was wrong. Therefore, the judgement shall be revised in accordance with law.
The Appellees Nanyuan Company and Liao Jianxiong argued that: I. Nanyuan Company had set aside passageways for Wu Zongzhan to manage betel nuts and fruit picking. 1. In this Case, the betel nut trees and the mango trees are adjacent to each other, that is, the passages for the betel nut trees are actually those for the mango trees. If the passages between the mango tree sand the betel nut trees are no longer accessible, Nanyuan Company cannot pass the same and manage the mango trees as well. 2. The fact that Wu Zongzhan has been continuing planting trees is true. On the one hand, Wu Zongzhan said that the growth of mango trees has affected his management of betel nuts, and even without open space for passages; but on the other hand, he has continuously added betel nuts to the existing ones, which increased the density of fruit trees. This means that vacant lands had been left for him to manage. II. The parties agreed that the rent shall be paid pursuant to the actual number of betel nuts interplanted, rather than the 2-meter-wide weeding area. Therefore, there is no agreement on leasing the 2-meter lands. 1. In practice, it does not and is impossible to calculate the rent of intercropping crops based on areas because the natural extension of the main crops after growth is uncertain. Thus, the parties herein did not adopt the land area as the rent calculation unit; instead, they used the betel nut trees actually planted within the affordable range of the lands as the rent calculation unit. As an interplanting crop, betel nuts are often planted after the main crops. With respect to its planting, attentions should be fully paid to consider the space required for management and fruit picking of betel nuts. If the growth space is predicted to be saturated, the planting should be stopped. The rent shall be paid according to the actual number of stems to be planted. To the contrary, it is not allowed to damage the main crop after mango colonization to satisfy the so-called “space” of the intercrop on the grounds that the main crops affect it. In other words, Wu Zongzhan should have a basic sense of foresight and control the number of plantings within the 2-meter range of weeding. Even if the 2-meter range of weeding between mango trees reaches 100 mu. Wu Zongzhan only planted a betel nut tree, and he still needs to pay 2 yuan rent to Nanyuan Company for one year. 2. The 2-meter space refers to the area where Wu Zongzhan is responsible for weeding, not the land area leased to him by Nanyuan Company. Mango trees should be sprayed with herbs for weeding operations. However, Wu Zongzhan proposed to be responsible for weeding of the 2-meter space at the time of concluding the Contract because he was worried that the spraying of unqualified herbs on the mango trees would cause damage to the betel nut trees. Herbs would not be used for the mango trees in this area in the form of spray weeding. Therefore, the parties have made a special agreement on weeding within the 2-meter range. On the contrary, as stated by Wu Zongzhan, since Nanyuan Company has leased all the lands within 2 meters to him, the problem of weeding within 2 meters should of course be solved by him. Why did the parties take a superfluous action to separately agree on the subject of weeding responsibility within 2 meters? Obviously, the 2-meter range of lands leased Nanyuan Company is the subjective judgment of Wu Zongzhan, and the claims for Nanyuan Company to trim the canopy and reserve a passage are completely the behaviors breaking the Contract. III. Wu Zongzhan has never raised any objection to the natural extension of the canopies of mango trees and agreeing to interplant on this basis. Now, Wu Zongzhan turned to the mango trees for no reason because betel nut trees could not achieve the expected benefits, so as to achieve the purpose of claiming compensation. The growth cycle of mango trees is 3-4 years with diameter of canopy of about 3.5 meters. These trees were all planted in May 2001. It has been 13 years from the date when the parties concluded the Contract in 2004 to the date when Wu Zongzhan filed the first instance of this case on May 12, 2017. That is, Wu Zongzhan fully knew that the diameter of canopies of the mango trees were about 3.5 meters in the process of concluding and performing the Contract, and agreed to plant betel nut trees on this basis. On account of this, no objection was raised in the course of 13 years. However, the water shortage of the betel nut trees has been increasing due to the severe drought situation in Sanya in recent years, which has caused Wu Zongzhan to fail to achieve the expected benefits. As a result, he thought that the cause lied in the mango trees and required the mango trees to cut the canopy branches and leaves to increase the space of the betel nut trees. This means that Nanyuan Company must cut the mango canopy by only 1/2. Wu Zongzhan knew that the claim could not be approved by Nanyuan Company; so he took this as a bargaining chip to claim compensation. IV. There is no direct causal relationship between the “dramatic decrease in yield and annual loss of betel nut trees” and the normal and natural growth of mangoes as the main crop. 1. It can be seen from common knowledge of agriculture that betel nut is a kind of high-stalk light-loving crop, so are the mango trees. According to the interpretation of the Sanya Tropical Crops Technology Extension and Service Center on interplanting technology of tropical crops and fruits, such crops and fruits commonly include coconut, betel nut, oil palm, jackfruit, avocado, mango, lychee, longan, etc., and dungarungas or shrubs, as well as herb or vine crops such as pepper, pineapple, passion fruit, vegetables, beans, southern medicine, potato, etc., forming a three-dimensional planting of 2 to 4 layers. Therefore, both mango and betel nut are high-stalk light-loving crops that are not suitable for interplanting. However, one of the reasons for the loss is that Wu Zongzhan forcibly chose to plant betel nuts in mango trees as he did not understand agricultural planting. 2. Sanya is a city short of water, nor does it have any paddy fields for irrigation, and the planting lands are sandy that cannot retain water. As a result, betel nut is not considered suitable for growing crops in Sanya by Sanya Department of Agriculture. But Wu Zongzhan was so determined to plant that cased huge damages. For this purpose, under the condition that Nanyuan Company has fully reserved the passageways, Wu Zongzhan still believes that the normal natural growth of mango trees affects the betel nut trees, which is forcing the causality. V. There was no infringement of the right of first refusal in this case as Nanyuan Company did not transfer the mango orchard bases. The land contracting and management right herein is still registered under the name of Nanyuan Company, and in combination with the foregoing discussions, Wu Zongzhan did not lease the lands in the 2-meter-wide weeding area. Therefore, there is no objective fact of transfer. The privilege advocated by Wu Zongzhan does not have any foundation of rights. VI. These two items do not belong to the same legal relationship as the dispute over the transfer contract of the land contracting and management right herein, nor should they be dealt with in this Case. For this purpose, these will not be repeated here. In conclusion, the absence of passway argued by Wu Zongzhan is disregard of facts, and requirement for cutting canopies of mango trees seriously violates the spirit of the contract, and his claim for the right of first refusal does not have any foundation of rights. On account of this, this Court is obtested to investigate in accordance with law and reject the appeal and uphold verdict.
Xiao Shifu did not submit a reply.
During the trial process of this Court, upon hosting and mediation, the parties voluntarily reached the following mediation agreement and requested the People's Court to affirm:
In the Case among Nanyuan Company, Wu Zongzhan, and Liao Jianxiong (2019) Q-M-Z No. 310, the parties voluntarily reached the following mediation agreement upon hosting and mediation by Hainan Higher People's Court:
1. Nanyuan Company agrees to pay Wu Zongzhan the compensation for the removal of the betel nut trees and the water pipe equipment for irrigating the betel nut trees in Tianya land bases, a total of one million seven hundred and twenty-seven thousand five hundred yuan only (1,727,500 yuan). This amount contains Wu Zongzhan's pre-paid rent of 52,500 yuan until August 2022, all land acquisition compensation fees for Tianya bases, etc.
2. Wu Zongzhan shall harvest the betel nut fruits, remove small betel nut trees and water pipe equipment, and vacate the Tianya base prior to October 30, 2020. If Wu Zongzhan fails to do the same within the time limit, it shall be deemed to have agreed to be handed over to Nanyuan Company for disposal.
3. The time for Nanyuan Company to pay to Wu Zongzhan is that within five days after the Paper of Civil Mediation becomes effective, Nanyuan Company shall pay 200,000 yuan. On November 5, 2020, Nanyuan Company shall pay 800,000 yuan. On May 1, 2021, Nanyuan Company shall pay the balance 727,500 yuan.
IV. Liability for breach of contract: If Nanyuan Company fails to pay the amount within time limit, it shall pay the liquidate damage to Wu Zongzhan as per 0.3‰ of the overdue payment for each day overdue. If Wu Zongzhan fails to vacate the bases within the time limit, he shall pay the liquidate damage to Nanyuan Company as per 0.3‰ of 1,727,500 yuan, and Nanyuan Company shall corresponding postpone the payment of compensation for withdrawal. The liquidated damages that one party should bear shall be paid or deducted at the same time as the last compensation.
V. Liao Jianxiong voluntarily assumes joint and several liabilities for the payment obligations of Nanyuan Company herein.
VI. After this agreement becomes effective, Nanyuan Company and Wu Zongzhan voluntarily terminate the Land Lease Contract involved herein, and other agreements in relation to the Land Lease Contract between Nanyuan Company and Wu Zongzhan, as well as any agreements or documents involving this Case that Xiao Shifu concluded with Wu Zongzhan in the name of Nanyuan Company while serving as the legal representative of Nanyuan Company. Meanwhile, Wu Zongzhan shall no longer claim any rights to Nanyuan Company for damages, compensation for land acquisition, liability for breach of contract, etc. based on the aforementioned agreements, documents or other reasons.
VII. This agreement is in quadruplicate with Nanyuan Company, Wu Zongzhan and Liao Jianxiong each holding one copy and Hainan Higher People's Court filing one copy of the same effect. This agreement shall become effective as of the date of signing (sealing) by the three parties.
This Court upholds that the above-mentioned mediation agreement reached by Nanyuan Company, Wu Zongzhan and Liao Jianxiong voluntarily does not go against laws and regulations, for which this Court approves. Xiao Shifu and Liao Jianxiong entered into an Equity Transfer Agreement on December 14, 2010, agreeing to transfer 100% of the equity of Nanyuan Company held by Xiao Shifu to Liao Jianxiong, and on July 10, 2011, the parties thereto went through the procedures for changing the registration of industrial and commercial, after which Liao Jianxiong was changed to the shareholder and legal representative of Nanyuan Company. The mediation agreement in this Case did not discipline Xiao Shifu’s substantive rights, nor did it force Xiao Shifu to assume any obligations. Pursuant to Article 15 of the Provisions of the Supreme People’s Court on Certain Issues Concerning the Civil Mediation Work of People’s Courts, i.e. “if a party who neither has the rights nor assumes the obligations of the mediation agreement does not sign for the mediation agreement, the validity of the mediation agreement will not be affected therefore”, Xiao Shifu’s failure to sign the mediation statement shall not affect the validity of the Paper of Civil Mediation.
This Paper of Civil Mediation shall be legally effective after being signed by Nanyuan Company, Wu Zongzhan and Liao Jianxiong.
The first-instance case acceptance fee of 50 yuan shall be borne by Wu Zongzhan, and the first-instance case acceptance fee of 8,000 yuan prepaid by Wu Zongzhan shall be refunded by the Intermediate People's Court Sanya. The second-instance case acceptance fee of 50 yuan shall be by half borne by Wu Zongzhan, i.e. 25 yuan, and the second-instance case acceptance fee of 8,000 yuan prepaid by Wu Zongzhan shall be refunded by this Court.
Chief Judge: Li Jing
Judge: Yin Maoping
Judge: Zeng Ruizhen
August 5, 2020
Judge Assistant: Huang Jiachen
Court Clert: Xiao Qin

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