[Basic Facts]
Xinhao company (the plaintiff) and Youche company (the defendant) concluded a Land Lease (the "Land Lease") in May 2004, whereby Xinhao company agreed to lease a lot with a total area of 7,000 square meters located to the south of Shenzhen West Railway Station (the "Lot"), which it had leased from Pingnan company, to the defendant for its use of auto sales. After a period of time the Land Lease expired, and no further lease was entered into by Xinhao company and Youche company. Thereafter, a dispute arose over the rents of the Lot between the two parties, where Youche company defaulted in the payment of the rents and management fees for the period from January to May 2015, as a result of which Xinhao company filed a claim with the court, demanding Youche company pay the rents and liquidated damages.
[Judgment]
The court made such findings as follows: The Lot in question was lawfully acquired by Pingnan company for construction of the Pinghu – Nantou Railway and therefore Pingnan company had legitimate land-use rights to the Lot; as the plaintiff had been officially approved by competent authorities to build auto exhibition halls and 3S shops on the Lot, namely the Reserved Land for Development of Pinghu – Nantou Railway, and the relevant third party had obtained corresponding temporary building permit, Xinhao company and Pingnan company did not violate any law to lease the Lot, being a piece of state-owned land, hence the Land Lease, not contrary to any mandatory provision of law, was legal and valid. In the given case, the terms of the Lease between Xinhao company and Pingnan company as well as the Land Lease between Xinhao company and Youche company were both expired by the time of the dispute, and thereafter Youche company did not move from the Lot and continued to use the Lot, to which Xinhao company raised no objection but only demanded Youche company pay relevant fees including the rents in accordance with the Land Lease. Based on such circumstances, the Land Lease continued to have legal force, where the term of lease thereof became indefinite. The court thus ruled that Youche company shall pay Xinhao company the rents and liquidated damages.
[Significance of Being a Typical Case]
Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone and China (Guangdong) Pilot Trade Zone Shenzhen & Shekou Area of Shenzhen (the "Zones") have witnessed a rapid growth of the value of their lands since their establishment. Such growth, which has lifted the value of the rights and interest related to the lands in the Zones including the right to proceeds, the right to lease and other land-use rights, has been followed by a series of land-related disputes. Given that some areas in the Zones had been lands reclaimed from sea, beaches and canals and ditches prior to the Zones were being developed, a number of land users of such areas (Shenzhen Pingnan Railway Co., Ltd., for example), though having obtained the land-use rights thereto in the 1990s, failed to obtain the certificate of land-use rights issued by the land authorities of Shenzhen due to problems left over from history and limitation to land development within the Zones. As a result of absence of clear property rights, disputes and controversies over validity of contracts have arisen when such lands are used for lease or making proceeds. The judgment for this case has guiding significance, to a certain extent, for resolution of disputes over land-use rights that emerge as land users have not obtained certificate of land-use rights for lands within the Zonesfrom land authorities.
