Spouse’s consent to incur debt | In Principle

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Spouse’s consent to incur debt

How should a spouse consent to incurring a debt encumbering the marital community property so that the creditor can obtain security against marital property or execute against marital property? And what should a creditor do if there is no written consent?

The system of marital joint property remains the most common form of organisation of property belonging to married couples in Poland. This has significant consequences for creditors. If a creditor wants to secure or satisfy its claim against a spouse against marital community assets (other than assets of an enterprise that are not earnings from the debtor’s gainful activity, business activity or copyright), the creditor should be able to prove by an official or private document that the claim arose from a transaction performed with consent of the debtor’s spouse. After all, some of a debtor’s most valuable assets are part of marital joint property unconnected with the debtor’s business or current gainful activity.

It might seem that this is a well-known issue, and that creditors routinely take the precaution of obtaining written consent from their prospective debtor’s spouse before entering into a transaction. But that is not the case. As our observation of commercial practice shows, creditors often forget about the possibility of obtaining clear, written consent to the transaction from the counterparty’s spouse. But even then, do they have any chance of reaching the marital community property co-owned by the debtor? Below, we highlight the factual and legal considerations that a creditor must take into account if it intends to reach not only the debtor’s personal assets, but also assets belonging (by way of marital joint property) to the debtor’s spouse.

Written consent is necessary

Art. 787 of the Civil Procedure Code states: “A writ of enforcement issued by the court for an enforcement order against a married person shall also apply to his or her spouse, provided that the spouse’s liability is limited to items forming part of community property, if the creditor produces an official or private document evidencing that the debt acknowledged in the enforcement order results from an act in law to which the debtor’s spouse consented.” This provision also applies as relevant in protective proceedings (Civil Procedure Code Art. 7431 §4). It follows that obtaining a writ of enforcement (or security title) also against the debtor’s spouse depends on whether the spouse has consented in writing to the act constituting the source of debt.

Granting an enforceability clause (writ of enforcement or security title) against the debtor’s spouse should be based on the most reliable evidence. Therefore, in a case seeking issuance of an enforceability clause for a writ of enforcement against the debtor’s spouse (pursuant to Civil Procedure Code Art. 787), it is not permissible to apply a factual presumption when establishing that the debt stated in the writ of enforcement arose with consent of the debtor’s spouse (e.g. Supreme Court of Poland resolution of 17 September 2008, case no. III CZP 77/08; Katowice Court of Appeal order of 22 February 2017, case no. V ACz 162/17). The creditor has no hope of obtaining an enforceability clause against the debtor’s spouse by citing spousal conduct or the spouse’s general knowledge of the transaction, or trying to prove this with witness testimony. The spouse’s consent to the transaction must always be evident from a document, even if it is “only” a private document.

Consent to a specific action

The document sought to be used by a creditor cannot be limited to general consent to the debtor’s incurring obligations to a particular creditor. Under Civil Procedure Code Art. 787, the spouse’s consent to assumption of an obligation by the other spouse must be consent relating to a specific obligation. General consent will not suffice (e.g. Wrocław Court of Appeal order of 28 September 2012, case no. I ACz 1681/12).

...but also after the fact

The view can be encountered in practice that the spouse’s consent enabling a creditor to seek satisfaction from joint property may be submitted at some time other than when the transaction is carried out—even after the debtor incurs the obligation. So creditors who did not seek the spouse’s prior consent to a particular transaction may at least attempt to obtain consent after the fact.

What sort of document will confirm consent?

Finally, we would like to touch upon perhaps the most debatable issue, but extremely important in practice: Does Civil Procedure Code Art. 787 require written form for the spouse’s consent, or is it sufficient that the document sufficiently shows that the spouse consented? As we know from business practice, many documents may exist (e.g. written orders, invoices, warehouse documents, business correspondence) proving that the debtor’s spouse is well aware of a given transaction or even participates in carrying it out, but at the same time, none of these documents contains an unambiguous statement of the spouse that he or she consents to conclusion and execution of the transaction. Are these documents likely to be considered sufficient for the creditor to take advantage of Art. 787?

In the case law, there is a view that Art. 787 does not require written form for consent of the debtor’s spouse. This is because the consent may be one thing and the “official or private document” showing that “the claim arose out of a legal transaction made with the consent of the debtor’s spouse” may be another. The document should prove the fact of giving consent, but the consent does not have to take the form of a document (e.g. Poznań Court of Appeal orders of 23 February 2013, case no. I ACz 181/13, and 23 May 2013, case no. I ACz 719/13). In light of this case law, the evidence of subjective consent may include, for example, an order document signed by the spouse relating to a specific contract. Personally placing an order and signing it sufficiently proves that the spouse knew about the contract made by the debtor and agreed to it, which also allows issuing a writ of enforcement (or security) against the spouse as well.

At the same time, we should warn that this view is criticised by respected commentators with a conservative understanding of Art. 787—and the courts often rely on the conservatives’ position. Thus, a creditor cannot rest comfortably on the assertion that a document is intended to prove only that consent was given and that unambiguous consent need not take the form of a document.

If the spouse knew about the activity and benefited from it, then the spouse consented

Personally, we stand firmly in line with the legal view cited above from the Poznań Court of Appeal. We believe that if it can be proved by documents (even if only private ones) that the spouse had full knowledge of the civil transaction from which the obligation claimed by the creditor arises, and the spouse knowingly participated in execution of the transaction or knowingly benefited from it, that should be considered sufficient to prove the spouse’s knowledge and consent to the transaction, even if it is nowhere explicitly stated in those documents. In our view, an interpretation of Civil Procedure Code Art. 787 that would allow the debtor’s spouse to knowingly participate in actions provided for in a transaction taken independently by the debtor and consciously benefit from it, while at the same time allowing the spouse to evade shared liability through a bare allegation that the spouse never gave express written consent to the action, would violate basic principles of commercial fairness and justice.

For this proposition, we may cite the case law of the Supreme Court of Poland (see e.g. judgment of 23 May 2013, case no. IV CSK 660/12) holding that Art. 5 of the Civil Code refers to principles of equity, objective good faith, and principles of fairness applicable in civil dealings. Therefore, if the spouse in fact has full knowledge (as evidenced by the documents) of, for example, a loan agreement concluded by the debtor, and of the specific purposes for which the loan proceeds were used (also for the benefit of the non-debtor spouse), then, respecting the principle of good faith towards the creditor and requirements of fundamental fairness in business transactions, in view of Civil Code Art. 5 the spouse should submit to execution and not plead a lack of express written consent to take out the loan. It is thus the role of the courts to compel the debtor’s spouse to undergo execution of the claim against joint marital assets.

Jan Ciećwierz, adwokat, Adam Studziński, adwokat, Dispute Resolution & Arbitration practice, Wardyński & Partners