Category Archives: Litigation

November 21st, 2018

With this post we will try to establish the nature and differences between the various charges likely to be considered of undue collection, determining the effects of its application and the reason for its inappropriateness.

In order to go deeper, we will carry out a small analysis of the most common ones:

  1. Commission for the return of unpaid bills of exchange.

    These originate in the so-called “bill discount contracts“, normally signed by commercial companies and by virtue of which they assign their credit rights (normally not yet due) to financial institutions, in order to collect them in advance and in exchange for a discount/interest on the principal assigned.

    However, it must be borne in mind that in those cases in which the entity cannot enforce such a credit right, it is directed against the original creditor (the assignor), charging him a series of commissions of doubtful legality, in addition to the principal.

    There is no place for the collection of such commissions, since the risk of non-payment by the debtor is a circumstance that necessarily has to be considered ab initio, in addition to the fact that the difficulty or impossibility of collecting the credit is more than compensated by the agreed remunerative interests.

    It is therefore completely inadmissible for the bank customer to pay this type of commission, since the payment of the same commission corresponds to the collection of the same service twice, a situation which becomes abusive.

  2. Commission for overdrafts generated in account.

    These are generated if the bank account remains in negative numbers (below 0), being the main reason of the entity that they respond to extraordinary expenses of overdraft claim (notification to the holder, etc).

    As in the previous case, current account contracts provide for the collection of interest in these situations, so that again we are faced with a double charge for the same management.

    Likewise, the expenses for extraordinary claim procedures must be considered as situations of probable occurrence and, therefore, should not be considered extraordinary. For example, sending letters by ordinary mail, e-mails or calls warning of present or imminent overdrafts should not be considered as additional management.

    In conclusion, in addition to double charging for the same service, overdraft fees should also be considered illegal as no information is given for pre-contractual or contractual purposes about the existence and cost of the additional services described in the previous paragraph.The above reasoning is legally protected, being the most relevant legislation:

    • Bank of Spain Circular 8/1990 of 7 September 1990. Credit institutions. Transparency of operations and protection of customers: we highlight your third standard:

      The commissions and expenses charged must relate to services actually rendered or expenses incurred. In no case can commissions or expenses be charged for services not accepted or firmly requested by the client“.

    • Order EHA/2899/2011, of 28 October, on transparency and customer protection of banking services, states in its Article 3 that:

      “Commissions or charges may only be levied for services which are firmly requested or expressly accepted by a client and which respond to services actually rendered or expenses incurred”.

      The same article goes on to say:

      This information shall be available in all commercial establishments of credit institutions, on their electronic pages and on the electronic page of the Banco de España, and shall be available to customers at any time and free of charge.Law 7/1998, of 13 April, on General Contracting Conditions, perhaps the most ambiguous and at the same time most categorical in terms of the regulation of clauses included in contracts:The general conditions will become part of the contract when its incorporation into it is accepted by the adherent and signed by all the contracting parties. All contracts must refer to the general conditions incorporated. Acceptance of the incorporation of the general terms and conditions into the contract may not be deemed to have taken place if the predisponent has not expressly informed the adherent of their existence and has not provided him with a copy thereof“.

      And he goes further, saying:

      The following general conditions shall not be incorporated into the contract:

      a) Those that the adherent has not had a real opportunity to know completely at the time of the conclusion of the contract or when they have not been signed, when necessary.

      b) Those that are illegible, ambiguous, obscure and incomprehensible, except, as regards the latter, that have been expressly accepted in writing by the adhering party and conform to the specific regulations that discipline the necessary transparency of the clauses contained in the contract“.

In conclusion, the main features are:

  1. The contractual conditions governing bank charges should be detailed in a concise manner, specifying their scope and effects.
  2. The predisposing party (entity) must explicitly inform the adhering party (customer) of the inclusion of these provisions, ensuring a complete understanding of them.
  3. Bank fees must appear in the bank’s tariff book, as well as in the bank’s information media, with the prior approval of the Bank of Spain.
  4. Bank commissions must be expressly accepted by the member and respond in a real way to a service actually provided.
  5. Entities may not charge simultaneously a commission and an interest for the same service, it being understood that interest alone already constitutes a sufficiently remunerative element.
  6. The “additional” efforts to achieve an adequate provision of services should not be considered extraordinary events, but should be included in the daily activity of financial institutions.

Therefore, the reading of this post is only to make the bank client know their rights, being totally legitimate to show disagreement with the size of the charges.

 

OVP_spanish property scam_Sunday LifeMore than 1,000 buyers from the UK and Ireland lost £45m after Birmingham- based Ocean View Properties (OVP) was formally dissolved in 2009. OVP was the exclusive agent for the Manilva Gardens luxury holiday complex in Estepona on the Costa del Sol. It was behind successful overseas property enterprises, but ran into difficulties as UK agent for Spanish developer Ricardo Miranda Miret. A claim for fraud and misappropriation of funds was lodged in February 2011 in a bid to recover deposits paid by investors to OVP. It has more than 50 Northern Irish investors among 120 claimants for £9.2m. A second class action complaint for £2m, brought by 30 British and Irish investors, was filed in 2013. Many Northern Irish investors remortgaged homes to finance their dream luxury buys. One local investor was Armagh ex-teacher Ollie Reel, who now works for a firm helping investors to recover their lost money. Mr Reel and his three brothers sank thousands of pounds into the deal, but have managed to get some of it back.

“It started in 2006 and through a few good friends, mainly in GAA circles, they invested in Spain and I was persuaded at that time it could be good for me as well and I couldn’t lose out,” he told an Irish radio station. “The economy was booming and everyone was going mad buying property, like everyone else I got caught up in the euphoria of it all. “If only I had known what was ahead of me, I would never have considered it. “The investment I was involved in was in Estepona in Spain and there was about 100 of us on both sides of the border, I suppose we lost a combined €12m.

“These apartments were all fully furnished, they were very good at advertising it, they flew groups of us down to Spain and we stood on the actual site and we were all taken in by owning a new property in Spain.” He added: “The company went bust and it was down to the fact that the developer who was building our property hadn’t even got a building licence.” Mr Reel explained that after going through Spanish lawyers, he eventually was able to recover around half of his £145,000 deposit through a group called the Claims Bureau. He now works as a consultant for the group. The Madrid High Court probe has been beset by delays and setbacks. An investigating judge was replaced after he was found to have family ties to Mr Miranda Miret. In the latest twist, the developer is accused of submitting forged documents in the criminal action.

A spokesman for Marbella- based legal firm Lawbird said: “By using these documents, supposedly signed by the secretary of Ocean View in Spain, the developer tried to prove that they had formally notified the estate agent that it was not possible to continue selling apartments as no licences were in place and they didn’t own the land where the development was to be built.” Final witness statements for OVP are to be given on Wednesday. Following these submissions, the judge will decide if the case should proceed to trial. Mr Miranda Miret and others accused have all strongly denied any wrongdoing. Former Aston Villa captain Gareth Barry and BBC’s Homes Under The Hammer star Martin Roberts, who starred on I’m a Celebrity, were among those duped into marketing luxury off-plan apartments for the firm, though neither benefited in any way, or had any knowledge of the alleged irregularities.

Original print (PDF ~ 4Mb)

November 11th, 2016

(Photo: M. Lorenzo)

A Court in Madrid has awarded 6 off-plan property buyers a grand total of circa four hundred thousand Euros, inclusive of interest, as a result of a bank guarantee claim filed against BBVA bank, the second largest in Spain.

The Court found against the bank as a result of the existence of a collective bank guarantee issued by the bank, despite no individual guarantees being available for each investor. On this occasion, it was not necessary to invoke the Supreme court case law as the merits for winning the case had been already established by previous Appeal Court rulings.

June 9th, 2014

The Malaga Mercantile Court 1 Bis, with datePalacioJusticia of the 7th of May 2014, has formally accepted a lawsuit filed by 15 pensioners against Rothschild, its jurisdiction on the subject matter and service of process on the Spanish addresses provided for N.M. Rothschild & Sons (Madrid and Barcelona).

According to the Unfair Competition and Protection Against Consumer Advertising, as ammended, (law 29/2009, of December 30, 2009), any service provider that advertises in Spain is obligated to run decent, legal, honest and truthful advertising.

According to Lawbird Legal Services Rothschild offered a product, the Credit Select Series Mortgage Loan, that was sold to pensioners as a legal means to reduce the value of their otherwise unencumbered homes, for Inheritance Tax mitigation purposes.

The Tax Office, on the contrary, has ruled that such scheme constitutes fraud.

Acting pensioners have demanded from Rothschild that their mortgages, with a combined value of over €4 million, are cancelled (action for removal of effects). But also, lawyers have filed, in conjunction with the most pressing ‘removal of effects action’, a main and principal declaratory action, an action for cessation, future prohibition and for rectification of misleading, inaccurate or false information.

With the new law it is also possible, if the court deems appropriate, to order that the judgment be published in whole or in part (this remedy is no longer dependent on an action for damages), or that a corrective statement be made.

Finally, it is worth mentioning that this case, alongside another one dealt with by the Criminal Courts in Denia, was a matter of Parliamentary discussion by MP Huw Irranca-Davies and Conservative Treasury Minister Sajid Javid. 

June 2nd, 2014

How Palatinum would look likeA Court in Madrid has ordered that “Caja de Ahorros de Murcia” is liable to return over €400,000 in deposits paid by British investors in the failed Urbanizadora Costa Palatinum/Proyectos Antele resort.

In a post written almost 4 years ago, we dubbed this developer “civil swindler” for taking deposits to finance an off-plan development that were never used for its intended purpose, in our opinion, fraudulently.

Consequently Lawbird Legal Services, represented by Roberto Leiro, sued the developer in a Criminal Court in Murcia hoping that the Judge took notice of the fact that whilst the construction of this development was being aborted –with no mention of returning deposits- a newer project was being proposed in…Venezuela.

As was the case, the Judge took no notice and the case was dismissed. However, the ruse had worked for us as the developer made full disclosure and submitted revealing documents that were otherwise out of our reach: a general bank guarantee issued by Caja Murcia to guarantee the Costa Antele Aparthotel and several bank account statements.

With this document in hand, we filed a case in Madrid (avoiding where possible Murcia) against Caja Murcia demanding the return of off-plan deposits, based on the 57/1968 Act on Off-Plan Property Down Payments, as it was our understanding that:

  • A recent Supreme Court ruling had concluded that for the 57/1968 Act to apply, the off-plan property should be used for family living accommodation purposes, whether temporary, accidental or circumstantial.
  • The developer had voluntarily submitted to the 57/1968 Act by producing a general bank guarantee that specifically referred to the Act.

The Court, on hearing the parties, upheld our allegations and ruled in favour of our customers, ordering Caja Murcia to make a full refund of the capital, plus interest. What are the conclusions to be drawn from this ruling? A few, and not just legal:

  • Most Courts are rejecting 2 defense arguments used by financial institutions who refuse responsibility on grounds that deposits were not paid into the “special bank account”, or that claimants did not have an individual policy.
  • Buyers in this development now have an opportunity to seek relief by filing against Caja Murcia, on the basis of documentation we hold and the conclusions of this rulings. We are unsure however whether claimants who already sued the bank and lost their cases would be able to “revisit” the matter and sue again, by submitting new fresh allegations.
  • It is recommendable to avoid suing in Murcia, or its neighbouring province, Alicante. Both jurisdictions have, in our opinion, a large density of bank/developer-friendly Judges who are becoming known for their bank-liability-exoneration-rulings, and also developers.

Roberto Leiro will now issue enforcement proceedings for recovery of the deposits, a faily uncomplicated process considering that technically banks are mostly a “liquid asset” and tend to pay up promptly.

Have you been caught out in the Urbanizadora Costa Palatinum/Proyectos Antele fiasco? If so, contact us.

May 6th, 2013

Within a space of time of less than 2 weeks, Huma Mediterraneo S.L. and Promociones Inroal S.L. have filed for voluntary insolvency (CVA) due to the adverse current economic climate.

Huma Mediterraneo’s flagship development, “Cuevas de Almanzora”, was never built in spite of which approximately 400 buyers paid their deposits.

Promociones Inroal S.L. has taken money from a large group of investors and equally, has left them stranded, “Azahar Villas” and “Los Olivos” being some of the unfinished developments.

Customers who had bought off-plan property from them and have not received their properties, or money, are now requested by the Courts to register their rights with administrators.

Experience tells us that whilst registering the credit (paid deposit) is convenient, adhering to a future creditors proposal would be counterproductive to the investor’s interests for legal technicality: banks will use this to stop payment under a “Bank Guarantee Action”  arguing that they are bound by the investor’s adhesion to the agreement in respect of delayed and reduced debt repayment terms.

The advice we can provide is that investors study the options offered by different firms against bank(s) that should have guaranteed the deposits, in the first, or the lawyers whom, in spite of their statutory obligations, failed to obtain a bank guarantee to secure the investment.

 

April 29th, 2013

Justice Mr. Jose Emilio Coronado Ruz, in charge of investigating the criminal claim against Ricardo Miranda Miret and Ocean View Properties former directors -all indicted for missapropriation and swindle- has been himself removed from the post following a recusal petition filed by firm Lawbird.

The reason why Justice Coronado Ruz was forced to leave the investigation by the Madrid Appeal Court was the implication of his brother, Ignacio Miranda Miret, in the sale of the land on which Punta Perla was to be built (via sale of shares of the company Paraiso Tropical).

Lawbird exposed the Judge after noticing that at least €100,000 worth of deposits paid by bona fide customers ended up in the pockets of the brother. The payment had seemingly gone unnoticed to the Judge as was, shockingly, the younger brother’s involvement in a high-profile case that could have not gone past him without knowledge of some degree of participation, a claim that The Honourable responded to by stating that for “reasons that he will not disclose, he has not been in touch with his brother since 1998 and hence, could have not known”.

What are the odds of a case lodged with the Madrid Courts of First Instance– 101 in operation- ending up in one whose boss happens to be the brother of a party implicated in receiving money? Well, 1 in 101. But then, what are the odds of that Judge not knowing that his brother could have been implicated in such case, and furthermore, the odds of both brothers not talking to each other for the best part of 15 years? 

 

February 17th, 2013

Zurich España Insurance Company, the company that insured deposits for off-plan property buyers, is to return these to 6 victorious owners.

Since it was undisputed that Zurich had agreed to cover the risk of contractual default, when the Appeal Court in Malaga found that Pinares de Mijas had not delivered the properties on time -contrary to the earlier ruling passed by the Courts of First Instance in Fuengirola-, the return of the deposits was ordered with inmediate effect.

2 points worth quoting from this run-of-the-mill ruling:

  • Legal interest is awarded from the date of lodging the claim, not since when the deposit was paid to the developer (as many other similar ruling have established).
  • The delay in delivering the promised properties was counted not from the date when the construction of the properties was physically concluded, but from when they could be legally lived in, establishing that the meaning of “completion” has to necessarily coincide with the grant of the license of occupancy by the local authority (Mijas Town Hall in this case).

Claimants can now shrug off fears that Zurich would do what Mary Beth Senkewicz, former senior executive at the National Association of Insurance Commisioners (US), once warned:

 the bottom line is that insurance companies make money when they don’t pay claims…they´ll do anything to avoid paying, because if they wait long enough, the know the policyholders will die.

 

February 11th, 2013

Arrohabitatge and Caixa Galicia, the saving’s bank in charge of providing the bank guarantees, have been jointly and severally found guilty of contractual default and forced to return the deposit of a British claimant.

The developer, in a brazen display of arrogance, rescinded its agreement with the investor due to his unwillingness to close the transaction, on grounds that no license of occupancy had been granted on the development. When sued, the developer’s defense was based around the fact that the works had been halted by the Town Hall due to a dispute with owners of a neighbouring plot, the Spanish Railway Company (RENFE), a dispute totally beyond the control of the developer.

Roberto Leiro, for the claimants, successfully argued that force majeure, or superior force, could not be invoked because the Spanish Supreme Court has established that this ground to oppose fullfilment must be of a decisive, unforeseeable, insuperable and inevitable nature, due to its alienness, characteristics not appertaining to the delay suffered. And it was not because Arrohabitatge  S.L. is a construction company that could have not been unaware of this matter since, within the scope of their activity, a neighbouring dispute is a vicissitude that can be expected to happen and prevented where possible, or at the very least warned of its likely happening, and never transfer the consequences of it to the consumer.

May 27th, 2012

The Court of Appeal in Seville has upheld a Court of First Instance ruling allowing enforcement of a ruling by a UK Court, obtained by claimants who successfully sued Manilva Costa (MC), and Ocean View Properties (OVP), at the Bristol County Court.

MC´s lawyers opposed the enforcement of the Bristol County Court ruling, pursuant to COUNCIL REGULATION (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, on the following grounds:

  • That the UK had no jurisdiction as the case versed on a dispute relating to Spanish property and
  • That property developer MC had not been properly served, as a co-defendant alongside now defunct Ocean View Properties.

The claimants petition was upheld by 3 Seville Magistrates who found that, since OVP was domiciled in the UK, a co-defendant (MC) could also be sued in this jurisdiction.

With regards to the inappropriate service of process, the Magistrates argued that because His Honour Judge Denyer QC had certified that the notifications were done observing the formalities of English laws, they could not argue against this.

The enforcement of the UK ruling is now well under way, through the Seville Courts. Equity on the embargoed properties still remain the biggest concern, though.