Review of a Court of Cassation Judgment "Assembly of Civil Chambers, File No. 2017/50, Decision No. 2021/33, Dated 04.02.2021"

"Court of Cassation, Assembly of Civil Chambers, File No. 2017/50, Decision No. 2021/33, Dated 04.02.2021"

The Court of Cassation Assembly of Civil Chambers ruled that "the defendant Bank, which argued that money had been credited to the claimant's account but had been withdrawn by the claimant, must prove this assertion by means of written documents bearing the claimant's signature."

In this study, we will briefly examine, in light of the relevant judgment, the banks' obligation to retain documents, the burden of proof, and the question of whether this obligation is subject to a limitation period.

Statement of the Facts

In the case that gave rise to the Court of Cassation judgment, when the claimant sought to withdraw money that had been deposited into his deposit account by the German Pension Institution, he was informed by the defendant bank that the money had previously been withdrawn and that he could not carry out this transaction at present. The claimant asserts that the money in his deposit account was not withdrawn by him and requests from the bank the documents relating to the withdrawal of the money. The defendant bank, for its part, argued that the documents had been destroyed on account of the ten-year limitation period, but that, according to its own computer records, a sum of DM 35,488.79 sent on behalf of the claimant by the German Pension and Insurance Institution had been transferred to the claimant's deposit account on 28.03.1994, and that the money in the account had been withdrawn by the claimant on 05.04.1994 and 02.05.1994.

Identification of the Dispute

The dispute centres on which party bears the burden of proof, given that the defendant bank acknowledges that the money deposited on the claimant's behalf by the German Pension and Insurance Institution was transferred to the claimant's deposit account, but argues that the money was withdrawn by the claimant and that the relevant documents were destroyed following the expiry of the ten-year period.

Views of the Relevant Authorities

In its judgment, the local court held that a payment of DM 34,470.00 had been made by the defendant bank to the claimant; that the payment slips bearing his signature relating to the payments made from the claimant's account had been destroyed because the 10-year period had elapsed; that it was therefore not possible to examine the documents relating to the payment transactions; that the defendant bank's computer records indicated that the payment had been made to the claimant; and, accordingly, dismissed the case on the ground that the claimant had failed to prove his claim.

The 11th Civil Chamber of the Court of Cassation, however, taking the view that the burden of proof should lie with the defendant bank, ruled as follows: "The action concerns a claim for the recovery of money sent from abroad and credited to a deposit account, and the court dismissed the action as set out in writing. However, although the court placed the burden of proof on the claimant, according to the defendant's admission and its records, the money at issue was sent to the claimant's account by the German authorities. In these circumstances, the burden of proving that this money was paid to the claimant lies with the defendant, and it was not correct for the court to reverse the burden of proof and rule as set out in writing; this required reversal of the judgment."

The local court, in addition to its previous reasoning, issued a judgment of insistence on the ground that the defendant bank's computer records showed that the payment had been made to the claimant; that the bank's computer records constituted a document within the meaning of Article 199 of the Code of Civil Procedure No. 6100; and that the defendant bank had therefore proved by written document that it had made the payment to the claimant.

In the present case, appealed by way of insistence, the Court of Cassation Assembly of Civil Chambers held;

"While banks are generally under an obligation to retain documents pursuant to Article 68/1 of the Turkish Commercial Code (TTK) No. 6762, the banks' obligation to retain documents falling within the scope of their direct banking activities is specifically regulated in Article 42 of the Banking Law No. 5411 of 19.10.2005."

Article 82/1 of the Turkish Commercial Code (TTK) No. 6102;

"ARTICLE 82- (1) Every merchant is obliged to retain in a classified manner: a) its commercial books, inventories, opening balance sheets, interim balance sheets, financial statements, annual activity reports, group financial statements and annual activity reports, together with the working instructions and other organisational documents that facilitate the comprehensibility of these documents; b) the commercial letters received; c) copies of the commercial letters sent; d) the documents on which the records made pursuant to the first paragraph of Article 64 are based. (5) The documents provided for in subparagraphs (a) to (d) of the first paragraph shall be retained for ten years."

Article 42 of the Banking Law No. 5411;

"ARTICLE 42. — The originals of the letters received and the documents relating to activities, or, where this is not possible, copies thereof leaving no room for doubt as to their authenticity, and the machine-produced copies of the letters written, drawn up with a sequence of dates and numbers, shall be retained, in accordance with the procedures, at the relevant bank for a period of ten years. It is possible for these documents to be retained in the form of microfilm, microfiche, or in electronic, magnetic or similar media. The procedures and principles relating to the application of this article shall be determined by the Board."

The question of when the ten-year period relating to the banks' obligation to retain documents commences must be assessed together with the provisions on limitation of the Code of Obligations No. 818 (Code of Obligations No. 818). Accordingly, unless there is a provision to the contrary in the Law, every claim is subject to a ten-year limitation period (Code of Obligations No. 818, Art. 125), and the limitation period begins to run when the claim becomes due; where the maturity of the claim is subject to a notice, the limitation period begins to run from the day on which such notice can be given (Code of Obligations No. 818, Art. 128). In this case, the banks' obligation to retain documents will begin to run not from the date of the documents, but from the date on which the claim becomes due.

On the other hand, in its judgment of insistence, the court stated that the bank's computer records constituted a document pursuant to Article 199 of the Code of Civil Procedure (HMK) and that the defendant bank had proved by written document that it had made the payment to the claimant. However, in order for something to be regarded as a document within the meaning of Article 199 of the HMK, the document must be a carrier of information regarding the facts that need to be proved. Moreover, not every carrier of information, but only those capable of proving the facts in dispute, are considered documents within the meaning of procedural law. Furthermore, even if these conditions are met, not every document is regarded as a deed within the meaning of Article 200 of the HMK. In other words, whether a document, within the meaning of procedural law, possesses the character of conclusive or discretionary evidence will vary depending on the person who drew it up, the content of the document and the other elements it carries (such as a signature). Accordingly, since the defendant bank's own electronic records, drawn up unilaterally, cannot be accepted as a deed even if they carry the character of a document within the meaning of Article 199 of the HMK, it is not possible to accept that the defendant bank proved its defence by this document alone.

Assessment

In its judgment, the Court of Cassation, with the interpretation that "the question of when the ten-year period relating to the banks' obligation to retain documents commences must be assessed together with the provisions of the Code of Obligations No. 818," proceeds on the preliminary assumption that the ten-year period in Article 42 of the Banking Law is a limitation period.

At this point, the matter that needs to be examined is whether Article 42 of the Banking Law is a limitation provision and whether this article has any significance in terms of procedural law.

The first thing to be said on this subject is that Article 42 of the Banking Law has no effect on substantive law, nor does it have any effect on procedural law. This obligation is, in essence, a rule of order and is significant in terms of the relations between banks and the BDDK (Banking Regulation and Supervision Agency). The purpose of this regulation is not to introduce a special limitation regime for the claims contained in these documents. For this reason, in a pending case, the argument that the documents at issue have been destroyed on account of the expiry of the 10 years will produce no effect on substantive law, nor will it be effective in terms of procedural law; that is, the assertion by a bank bearing the burden of proof that the period in Article 42 has expired cannot be used in its own favour, nor can it be argued on this basis that the burden of proof has shifted. In short, the fact that the 10-year retention obligation has ended does not eliminate the burden of proof resting on the bank. Relying on this provision, the bank cannot escape the burden of proof imposed on it in terms of procedural law. In the present case, we consider that, on the question of limitation, the general limitation provision in the Code of Obligations should be applied.

In conclusion, although the judgment rendered by the Court of Cassation is correct, its reasoning is flawed, as explained above.