Kebumen Religious Court Decision No. 2623 of 2013: Claim Dismissed for Lack of Legal Standing

In November 2010, the plaintiff permitted his daughter and son-in-law to use his property to secure a murabahah financing agreement for IDR 182,400,000 from the defendant. Rather than his daughter and son-in-law being parties to the agreement, it was in fact their company that became party to the agreement, a point to which the plaintiff did not object. On 22 November 2010, the defendant requested that the plaintiff sign a declaration acknowledging that he was financially responsible for the agreement, as well as a power-of-attorney granting the defendant authority to deal with his property as it saw fit, in the event his daughter's company defaulted on its repayments.

The plaintiff submitted that he did not know what the loan money was intended for, nor did he know about the repayment scheme agreed to by the parties to the agreement. On 24 April 2013, the plaintiff was informed that his property would be auctioned as his daughter and son-in-law's company had indeed defaulted on a repayment. While the plaintiff was informed by his son-in-law that the debt owing was IDR 118,604,000 (four monthly repayments), when the plaintiff requested the relevant information from the defendant to repay the debt, the defendant, the plaintiff submitted, failed to provide him with that information, confusing the plaintiff further by telling him that the total debt was not actually IDR 182,400,000. The plaintiff submitted that the defendant then unilaterally set the sale price of the property, rather than obtaining a quote from an independent and reputable appraisal company registered with the Ministry of Finance, contrary to Law No. 4 of 1996 on Mortgages of Land and Fixtures. The plaintiff further submitted that the credit arrangement was unlawful as the plaintiff had still not seen any evidence of an agreement, such as a repayment receipt. More significantly, contrary to art 18(1)(g) and (3) of Law No. 8 of 1999 on Consumer Protection, the plaintiff submitted that the defendant had included in the agreement a requirement that the plaintiff be subject to any new regulations the defendant sought to include. This conduct, the plaintiff asserted, was punishable by a maximum fine of IDR 2 billion (art 62 of Law No. 4 of 1996).

After court-sanctioned mediation failed, it initially appeared that the court had successfully counselled the parties, bringing them to reconcile. When this proved not to be the case, however, the plaintiff lodged an amended claim. In his amended claim, the plaintiff alleged that, in November 2010, the co-defendant, via his daughter, used the same property to secure the murabahah agreement. The plaintiff consented to this arrangement, pursuant to which the co-defendant secured IDR 182.4 million. On 22 November 2010, the plaintiff was asked by the defendant to sign a written statement that declared the plaintiff responsible for the financed amount, and that the plaintiff would fulfil all obligations pursuant to the agreement, pay all arrears and/or repayments, and provide his property as a security. On the same date, the plaintiff then signed a power of attorney before a notary, granting power of attorney to Limo Endriyanto, as head of the defendant's branch, to deal with the property as necessary in the event of a default. The plaintiff also signed a mortgage power of attorney in favour of the marketing department of the defendant, and a new mortgage deed was drafted on 20 December 2010. On 24 April 2013, the plaintiff was informed by the co-defendant that, owing to a default on the repayments to the defendant, the plaintiff's property would be auctioned on Wednesday 29 May 2013.

The plaintiff claimed that the co-defendant had informed him he would need to repay four instalments totalling IDR 118,604,000, however, he had only guaranteed repayment of IDR 182,400,000 in total. Moreover, despite his requests for further information to the defendant and co-defendant regarding the debt, the plaintiff received no information that clarified the situation.

On 25 December 2013, the plaintiff submitted, contrary to the mortgage deed, that the co-defendant visited him at his home and requested that he repay IDR 401,250,200, rather than the original IDR 182,400,000. The plaintiff also maintained that the co-defendant and defendant's conduct breached Law No. 4 of 1996 and Law No. 8 of 1999, as per the plaintiff's initial claim.

As a result of the confusion caused by the defendant and co-defendant, as well as time lost, the plaintiff submitted that he had suffered IDR 1 million in material damages. Moreover, due to the concern, disharmony and anxiety suffered by the plaintiff and his family, the plaintiff sought IDR 200 million in damages.

The court, however, finding that the plaintiff lacked the necessary legal standing as he was not a party to the original murabahah agreement, dismissed the plaintiff's claim.

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