Category Archives: Litigation

May 4th, 2011

Manilva Costa S.A. (MC) has seen it’s appeal rejected by the Malaga Appeal Court on similar grounds to those of the Court of First Instance. The ruling judges maintaned the following:

  1. That Ocean View Properties’  (OVP) presence was not required as a defendant, since they were acting agents for MC and therefore, their intervention in the judicial action was irrelevant for which the exception of “joint defendant litigation” was dismissed.
  2. That the fact these contracts were not signed by MC was equally irrelevant, particularly where they had ratified them, as was proven it Court. It then goes on to insist that any discrepancies between OVP and MC in respect of the contracts were unopposable to the claimant by virtue of it being a relationship alien to him.

The biggest mistake MC made, according to the appeal judges, was to have summoned the buyers by using a registered letter with ackowlegdement of content (“burofax”), starting off with a “Dear Buyer…”, as quotes the ruling. 

And now, the big question any succesful claimant has in mind: where do we go from here? That is an interesting one considering that MC has most, if not all, properties mortgaged and little equity can be found in them. Its now time to turn to private investigators…

April 12th, 2011

Santa Ana del Monte / Herrada del Tollo S.L. Court CasWe took some chances and it worked out. A claim filed against the guarantor of the Herrada del Tollo S.L., developer for Santa Ana del Monte (and who we jumped over since they’d filed for voluntary insolvency), has been resolved favourable for the claimant. From a procedural point of view, it is an interesting case for it was not heard given that, legally speaking, the issues at stake were purely juridical and therefore, no evidence was to be proposed for admittance. In other words, there was no evidence of probative value in dispute and consequently, the pre-trial was enough to fix the object of the case and conclude that there was no possible settlement.

The defendant, “Sociedad de Garantía Recíproca de la Comunidad Valenciana (SGR)”, an insurance company of uncertain purpose, had given a guarantee to cover deposits worth €6,500,000, on behalf of Herrada del Tollo S.L. They did not, however, offer individual policies or guarantee documents to each individual and so, tried to negate the validity of the document under this pretext. The Court contended that not having an individual policy was not tantamount to losing the cover and falling by the wayside, given that the inalienable rights dispensed under Law 57/1968 are of a consumer-protection nature, but furthermore the ruling establishes that it was the intention of the insurer, when entering into a contract with the developer, to guarantee the down payments.Secondly, they opposed that the sums were not paid into the special account the law envisages and also, that the policy was capped to a certain sum. According to the judge, private agreements between the developer and the insurer cannot affect the privileged immunity the consumer has, in relation to Law 57/1968. The judge ruled that the defendant must pay back €60,000 plus interest, calculated as from the time the developer took the deposit.

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December 18th, 2010

I would say so if we take a look at how they have indemnified their clients for not building Lar Sol Estepona. Not only have their insurers repaid 100% of their deposits plus interest, but now an out of court settlement has been reached with Grupo Lar so that a group of investors that never got their homes also get, additionally, compensation valued at almost 50% of the original deposit they paid.

Admittedly, this penalty clause was not imposed by us back in 2005-6, when exchange of contracts took place, but was offered by Grupo Lar to prove their commitment to the project and boost their sales.

This is probably the best outcome any investor could have had as not only was the deposit returned, with interest, but also an additional payment received at a time where the exchange rate will allow them to buy 20% more sterling than they had to disburse to buy the Euros and…, they did not have to complete on a property that would have been worth, in the best of cases, 30% less.

December 13th, 2010


ocean-view-sun-golf-estepona-beach-and-country-club-affected

El Mundo reports today on the case of a hundred or so purchasers from Northern Ireland who between them paid 6 million € in deposits in the years 2005 and 2006 for 350 apartments in the Estepona Beach and Country Club, via the British real estate company, Ocean View Properties.

The newspaper brought some 70 families of those affected to a meeting in Belfast where the Marbella lawyer, Antonio Flores, from the company lawbird.com explained that the urbanisation was promoted by the Spanish company Sun Golf Desarrollos Inmobiliarios S.L.

The lawyer explained that there was a ‘commercialisation agreement’ between Sun Golf and Ocean View, under which the latter was to pay commissions to the former for the collection of deposits. Ocean View also found lawyers in both Spain and the U.K. to represent them and recommend the promotion.

Lawbird now has the idea of starting legal action in the Estepona courts, although they have not ruled out starting proceedings in the National Court because the single administrator of Sun Golf, Ricardo Miranda Miret, has his headquarters in Madrid, and the Ocean View representatives are based in Britain.

Similar frauds to the Estepona development are alleged to have been carried out in Morocco and the Dominican Republic.

The Northern Ireland victims have called for a meeting with the N.I Prime Minister, Peter Robinson, over the matter, and have also lamented the lack of coverage of the case in the Ulster media.

El Mundo prints statements from many of those defrauded, who say they were told the LTA British Tennis Federation were to invest, and that they were told that Disney World was going to Estepona.

Original Story: José Carlos Villanueva | El Mundo – Un centenar de familias irlandesas, víctima de una estafa inmobiliaria en Estepona

English Translation Courtesy of Typically Spanish.

Links to News Articles

Television

Canal Sur Noticias 13-12-2010

October 8th, 2010

Again, it is not one of the those spectacular cases that has been fought hard, but one where the Judge has upheld consistent Spanish Supreme Court jurisprudence in respect of delays in delivering property.

The Judge quotes case law that reminds that in the rescission of a contract, a default of an obligation incumbent on each one of the parties has to be serious, and it´s interpretation is a matter of fact.

According to the quoted ruling, the default needs to be of such importance in the economy of the contract that justifies the resolution in the common intention of the parties, not being enough a mere partial default of obligations, or one where such obligations are accessory or complementary to the main ones. It also then talks about the frustration of the legitimate expectations and aspirations of the party that applies for contractual resolution.

In connection to this, the Judge considers that delivery of the property is the main obligation of the developer, and that the license of occupancy is an essential element of the contract for it is not real estate what the developer is selling but a dwelling, a parking space and a storage room, where every day life is to be conducted. The lack of the license of occupancy is critical, and not because one cannot survive without it, but because it impedes the buyer from enjoying the services that society deems as necessary to be able to live with dignity, inasmuch as the lack of the license compromises water, electricity and similar services and supplies.

The Judge finally chooses not to delve into the reasons for the delay in granting the license of occupancy as, in spite of being outside the control of the developer, it is a predictable situation considering how Town Halls operate. He concludes by ruling out application of article 1105 of the Civil (Force Majeure/Acts of God).

As usual, a copy of the Court ruling is available upon request.

September 5th, 2010

It may not be worth mentioning, given it was a bit of a no-brainer, but Larsol’s obstinacy in challenging the validity of a penalty clause has merited an otherwise underserved publication.

The particular clause was a classic client-pitching enticement to lure fresh money into their accounts. It stipulated, on the Larsol-Estepona contracts, that if the development was not built, a 50% penalty refund (calculated on the deposit paid) was inmediately available to clients.

Larsol fought back stating that the works had not been completed due to delays attributable to “third parties”, even if these were not identified nor proof put forward to substantiate the claim. 

The judge stipulated that the clause was fully valid insofar as the works had not been finished on time, irrespective of whether those third parties were at fault.

Zurich had already repaid the capital previously, via enforcement of the developer’s insurance policies, and this was further used as proof of Larsol’s contractual default.

August 15th, 2010

Lawbird has won a court ruling against the developer Nadalsol, currently under voluntary insolvency administration, and Zurich España S.L.

This is a very interesting ruling, because the Granada Judge, so as to reach his conclusions and findings, resorts to “fresh” case law being written up in the midst of the economic crisis by mercantile courts dealing with insolvency cases, and therefore has that extra little bit of interest for our readers:

  1. The Judge starts criticizing the developer for bringing as a witness a son and nephew of the 2 shareholders of the defendant company, thereby with a “forecast of logical bias”. He also criticizes the fact that the owner of the report drawn up to prove force majeure is not called to give witness statement, particularly when he is not related to the owners (this is what I call a bad start!).
  2. Recorded the above, the Judge cites the developer Nadalsol quoting article 62.3 of the Insolvency Act whereby “even if the Judge finds that there are sufficient grounds for cancellation of contracts he may uphold the validity of these based on the interest of the Insolvency administration”. Here the judge says that yes, this may well be the case, but adds that “it is paradoxical that if the interest of the insolvency administrators is primarily to protect the creditors, such protection should not come at the cost and expense of other creditors, which are the purchasers of properties”. In this respect the Judge invokes established mercantile case law that concurs in one opinion: “such prerogative to uphold the validity and enforceability of contracts should be referred to suppliers’ contracts and generally all of those that are related to the phases of production, processing and formation, of the goods or services object of the commercial activity, and NOT real estate private purchase contracts.”
  3. The Judge also establishes a distinction between suppliers and property buyers and states that a supplier who has not been paid cannot be compared with property purchasers who have not received the promised property within 3 years from buying, and therefore the legal treatment should be clearly distinct. In any event, he warns that in the interest of equity a rationalized use of discretion should be made, on a case by case basis.
  4. Going to the delay, the Judge establishes that a 3 years delay is so long that, and read this well, “there is not one tribunal that would understand that such delay would not generate a right to cancel, for the contrary would equate to prostituting the principles of equity and proportionality of obligations” (could he have come up with a more graphic word?!).
  5. The developer argues that having had to change building contractors, a delay was expected and the Judge argues back, not without sarcasm: do you really need 3 years to swap contractors? Adopting a more serious tone, the Judge cites well established case law pointing to the inexistence of force majeure when the developer becomes insolvent, has disagreements with the contractor, suffers administrative expropriation, etc. “Force Majeure refers exclusively to events, certainly extraordinary and uncertain and detached from the will, prevision or forecast of the parties, a force superior to all control and prediction and that necessarily excludes guilt on any of the parties.”
  6. Finally, the Judge opposes the contention thrown by Zurich España S.L. that since the buyers had extended the validity of the insurance policies written out by the defendant’s insurance company till 2010, then that date would have to be upheld as a newly agreed completion date. Although the judges mistakes here the facts, as he does not realize that the buyers did indeed sign this document of extension of policy, he concludes by saying that this option never implied a will to extend the validity of the delivery date on the contract, but only the validity of the policy, as the mere filing of the claim pointed to exactly the opposite.

As usual, a copy of the Court ruling is available upon request.

March 26th, 2010

This is a very interesting Court ruling (and expensive to the developer!) where our client-claimant, who attempted to cancel her contract on a property at Santa Maria Green Hills, was counter-sued by the developer who requested from the Courts that specific performance of the contract was enforced (basically forcing her to complete) and, as it happened, lost her case and was forced to complete. In this case, Courts also awarded costs on the losing party so we had a tough telephone call to make…

Fortunately, though, she trusted our advice and we went for appeal and, as we were predicting (due to similar cases being judged on the matter), the more mature Appeal Court in Malaga overturned the case and awarded cost on the developer.

In this case, our very patient Irish client had approached us seeking contractual rescission on 2 main grounds:

  1. Contractual default as the property had been finished late and
  2. Unenforceability of the License of Occupancy, which in this case was understood by the developer to have been granted by administrative silence (this being a statutory mechanism designed to prevent administrative inefficiency and misfeasance and in the developers opinion, applied even in the case of properties with build licenses issued against regional planning regulations).

The Court of First Instance had determined that the License of Occupancy, based on administrative silence, was fully valid and also there had been no significant delay that would merit a contract cancellation ruling and therefore issued a sentence forcing our clients to complete on the unit. The Court of Appeal in Malaga (Audiencia Provincial), following similar recently passed rulings, dictated that it was not possible to consider the License of Occupancy issued by administrative silence as valid for it was clear that it was issued against planning regulations since the master urban plan or Marbella was never formally approved, adding that it was not the legal duty of the Civil Courts to determine the validity of this license but an Administrative Court.

As a result of the Court, our client saved the cost of the first instance (which happened to be monstrous due to the accumulation of 2 simultaneous cases in one) and was entitled to execute the ruling to get her deposit back, which amounted to over €120,000.

March 23rd, 2010

We are answering below a few interesting questions we have received in the past few days from people interested in joining the the Lawbird Corvera Golf and Country Club Group Case. Should you have further questions, feel free to put them forward.

I have been told I can be interrogated by the defendant’s lawyers during the hearing which means that I would have to fly to Spain. Another lawyer said that I can refuse to attend this since I am in a different country. Can you please advise?

If the defence lawyer requests that you attend the hearing to be interrogated you must certainly comply with this, because otherwise the Courts could determine that you are in agreement with all the questions raised in your absence! This means that you have to be prepared for this possibility although there will sufficient advance notice so that you can book your flights and accommodation, so don’t worry! We will in any case prepare you for this, and go through likely questions to be asked as well as the answers.

 


  

I believe that based on Article 1469, if the area of an off plan property is more than 10% less than the agreed area, you can request termination of the contract and the return of your deposit. This I have been led to believe is also true if the the value of the property is more than 10% less than it should be due the developer failing to fulfil his obligations, in our case the facilities. So the question is would we be able to terminate the contract and get our deposits returned if we can prove that the property was worth more than 10% less than it would be at the time we applied the Resolution of contract in June 09?, compared to what the property would have been worth if the facilities were in place. Or alternatively if the judge decides to compensate us by reducing the purchase price by 10% or more, in so doing he would be effectively stating that the value of the property is now worth more than 10% less as a result of the lack of promised facilities. Could we then ask him to terminate the contract and return the deposits due to this 10% rule?

The interesting point you raise is covered by article 1469 of the Spanish Civil Code (Spanish) according to which, if the sale of property was made on the basis of a price per unit of measure or number the seller will be obliged to give the buyer the full amount agreed on the contract. But if this was not possible the buyer will be entitled to opt for a proportional reduction of the agreed price or the contractual rescission provided that, in the latter case, the shortfall in size is not less than 10% of the size initially attributed to the property.

The first obstacle which I see to this is that rarely off-plan contracts are actually sold on the basis of price per square meter. This means that, in principle, this clause would not apply. However, selling the property “as seen”, that is, after having agreed to the product as a finished one is impossible because it is not built and therefore Consumer Protection Act rules could be invoked to make this sale subject to price per square meter, and effectively apply the clause.

In order for you be able to prepare a case on this basis, access to the properties will be necessary so as to measure the property up. If it is concluded that there is a shortfall of more than 10% of the agreed size, then it is possible to request a contractual rescission, but then again it would be necessary to prove that the sale was made per square meter (which the contract does not mention), by application of Consumer Protection Act provisions.

If the shortfall is less than 10%, then this can be the basis for reducing the price, but careful, because if what you want is to cancel the contract, then this has to be invoked as a secondary petition to the Courts after contract cancellation for lack of promised facilities.

Finally, with regards to the value of the property the law does not have specific provisions about this, although it can certainly be invoked, but has to be proved with at least two reports from registered real estate agents (we have requested reports for our claimants to this effect since it reinforces the issue of lack of facilities).

As a conclusion, if there is a suspicion that the properties are smaller than the promised size by more than 10% this can be invoked together with the lack of facilities, with the observations I have made above. Our firm is cautious in this respect because we don’t want to be seen as looking for every excuse possible to pull out, but for a fundamental and very crucial one, this being the non-built facilities.

 


 

We’ve paid €75,000 as deposits (30% of purchase price, incl. IVA ). Can you please provide me with a breakdwon of costs in the different possible scenarios?

Please find below clarification. On a €75,000 (incl. Vat) deposit, the breakdown of costs would be:

  1. Retainer: €3,500 VAT included (based on a group of 25 claimants)
  2. Lawbird maximum fee (10%): €7,500 VAT included. Balance is paid on recovery of funds (which in principle would include also interest and legal costs. Should legal costs be recovered, a full refund of the retainer would operate and we would be entitled to 10% of total amount obtained for you (liquid funds in bank account).
  3. Counter claim retainer: 65% of €3,500
  4. Appeal retainer: 50% of €3,500 (this retainer is regardless of whether we challenge a ruling or oppose an appeal lodged by the defendant.
  5. Insolvency: No further fees in this instance to join the creditors list.

 


  

What are the costs if you have 2 identical properties. I unfortunately have 2 properties, and I believe quite a number of other people on the forum also do.

We have finally decided to charge the same to claimants who have 2 properties and those who have 1 which means that there will only be one single fee for both cases (equal to claimants with 1 property/case). The reason for doing this is that we can consider both properties to be part of one claimant, within the group action. This however does not mean that it will occur the same if the case is lost as then the Murcia Bar Association Fee Guidelines apply.

For further information, please visit the Corvera Golf and Country Club Group Legal Action page.

March 20th, 2010

Lawbird Legal Services has obtained a favourable Court ruling in a Group Legal Action in a first ruling against property developer La Reserva de Marbella S.A., on the 15th March 2010, acting on behalf of a group of British clients.

Our clients had purchased off-plan property from La Reserva de Marbella S.A. for a number of units at the 400-unit development called La Reserva de Marbella, Elviria, Marbella East (Málaga), and invoked contractual rescission on mainly 2 grounds:

  1. The property did not have a valid license of habitation (or first occupation)
  2. The properties had been delivered late.

The defendants lawyer (a former Attorney General’s office solicitor) put up a very qualified defence based on the following:

  1. That the claimants were investors and not end-user buyers.
  2. That lawyers were retained to ensure that the legalities were complied with when contracts were signed.
  3. That since the administrative Court case filed by the Andalusian Government expired, further invoking that as a result the license had been approved by “administrative silence”, the aforementioned license was fully valid.
  4. That the properties had been delivered on time as the 7 month delay was fully attributable to strikes.

Our solicitors successfully challenged each of the lines of defence put up by the defendants’ lawyers, and obtained a favourable ruling based on the following legal grounds:

  1. That the license of occupancy had not been granted at the time of cancellation of the contract, and if fact it is still not been granted, even though the judges stresses the fact that it is not for him to decide if the license if valid or not but the administrative Courts, which have exclusive jurisdiction over this matter.
  2. That although the properties had been finished only few months after the designated time, these properties were not able to be legally transferred until the license of occupancy was validly granted, which was not the case as the Town Hall in Marbella had rejected it.
  3. That as a result of the lack of licence, the properties could not be delivered with the necessary conditions of habitability, security and salubrity, which is a mandatory pre-requisite to handing over a finished property.

Having accepted our claim in full, the judge ordered the defendant to:

  1. Refund the principal amount, this being the deposits paid on account of the price.
  2. Pay legal interest since the time the deposits were paid and not when the contracts were cancelled, increased in 2 points from the time of issuing of the ruling.
  3. Pay the legal costs (which effectively means that our clients would have the legal fees reimbursed).

It is important to note that, in this particular case, our clients were requested to attend the Court hearing on petition of the defendants, which we could not refuse, and therefore they had to fly to Spain for this matter. They were duly cross-examined by the defendant’s lawyer by means of a qualified translator. Unfortunately for the defendants, we had a two-hour meeting with our clients where we went through the probable questions La Reserva de Marbella legal defence team would throw at them and prepared the answers carefully.

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