Category Archives: Litigation

Bristol County Court applied Council Regulation (EC) No 44/2001 correctly, say Seville Magistrates

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.

Lack of Facilities Prevents Hercesa Dona Julia From Forcing Buyers to Complete

May 5th, 2012

The ruling seemed a logical consequence of a blatant contractual default.

Hercesa Inmobiliaria S.A. has lost a case brought against clients of this firm that intended to force them to complete the purchase of an off-plan property on a property development that was just that, a property development.

Never mind that Hercesa failed to build promised additional facilities, as noted on expensive promotional literature: 3 Golf Courses (2 of which were 18-hole facilities), football grounds, Club House, horse riding premises, restaurants and, if you were still skeptical, a luxury (could it be otherwise?) 6-star hotel boasting business center, spa, gym equipped with
hydrotherapy and several pools.

The Court deemed the intervention of the gone estate agency Andalucian Dream Homes ex-sales rep “crucial”, who swore that selling these units with those brochures was a “piece of cake”.

The Judge addtionally states that, on reviewing a photographic report invoked by the defendants’ counsel (we), the development is far from being in perfect conditions, as a consequence of which article 8 of the Consumers and Users Protection Act is fully applicable.

Court tells La Reserva de Marbella that Consumers are Sacred and Shady Licenses of Occupancy are not Good Enough

May 5th, 2012

Court of First Instance number 12 of Malaga has ruled that the discussion on whether a licence of occupancy (licencia de primera ocupación) obtained by administrative silence is valid or not, should not affect bona fide consumers (any consumer unless otherwise proven).

In recent ruling, the Judge has argued that a consumer that buys off-plan property should not be dragged into, and suffer, complex legal debates between a developer, La Reserva de Marbella, and an administrative body, the Marbella Town Hall, as well as the Andalusian Regional Government. The ruling also states that:

  • La Reserva de Marbella is still not fully compliant with the policies of the Marbella Development Plan (PGOU), and has serious infrastructure deficiencies.
  • Both regional (RD 515/1989) and national (LOE 38/1999) laws stipulate that a consumer is entitled to receive a fully legal licence of occupancy, free from litigation.
  • It is not possible to invoke administrative silence, by the mere passing of time, where it demonstrably contravenes planning laws and regulations. The Judge presses on by arguing that administrative silence is to be upheld only if it does not go against both national or EU laws, noting that Spanish laws specify that administrative silence cannot be used to validate situations of illegality.
  • 4 years and 10 months from when the property should have been delivered, la Reserva is still unable to offer an unconditional licence of occupancy.
  • Completion date needs to be interpreted as a fixed date, and not a mere approximation.
  • An unproved strike somewhere down the construction process is not a valid excuse for a 4-year delay in getting a valid licence of occupancy and thus, being able to complete.

Conversely, the Malaga Administrative Courts have ruled on the admissibility of some of these licences and that La Reserva is entitled to them as these were granted pursuant to applicable laws.

The question that remains is: will these Judges ever get together for a pint or two and straighten out -legal- disagreements?

San Jose Inversiones Left Out of Bank Guarantee Fight

February 15th, 2012

We did not foresee the Appeal Court in Alicante overturning a judgement that left little room for interpretation.

As expected, the Court of First Instance ruling forcing the all-purpose entity SGR- Sociedad de Garantía Recíproca de la Comunidad Valenciana (it comes across as a lender/insurer/guarantor, depending on who you ask) to refund fully a property purchaser of the failed Herrada del Tollo development, promoted by the developer Herrada del Tollo S.L., affiliate of the San José Inversiones Group, was ratified with ease.

 And so, what are the most practical conclusions that can be derived from the premises set forth by the initial ruling that has been confirmed by the Appeal Court in Alicante?

  • That a guarantee can be paid outside the receivership proceedings, whether by a bank, insurer or an all-purpose lender, such as SGR, and thus prior acceptance by the administrators is no prerequisite or prior condition for payment.
  • That the collective guarantee cannot be capped, nor needs to be individualized, nor requires the off-plan property buyer signing any document to avail of its protection.
  • That timescales are, contrary to popular belief, pretty acceptable (The civil lawsuit was lodged with the Court of First Instance in June 2010 and the Appeal Court ruled in February 2012).
  • That SGR’s obstinacy will cost them dearly: judicial interest on the €60k deposit (since 2007, at an average of 4.5% per annum) and legal costs (€8,000 approximately).
  • That SGR, who also guaranteed other developments of the Santa Ana Group, such as El Pinet, will presumably no longer be able to oppose payment on the above grounds.

Meanwhile, we have read that San José Inversiones has managed to emerge from the receivership proceedings and will resume its activities on projects that stalled as a result of the above process.

Documents

La Reserva de Marbella S.A. suffers another setback

February 12th, 2012

A recent Court judicial pronouncement by Court of First Instance 17 in Malaga tightens the noose on La Reserva de Marbella. Although the reading of the ruling can be tedious, save for if you are the claimant , the acting lawyers (us) or an avid reader of boring Court rulings, it is remarkable in that when typing up his conclusions the Judge, Mr. Antonio Valero González, has managed to extend the length of one sentence, with no full-stops, to…5 full pages (please help me find one (PDF))!!  The findings of the Court can be summed up as follows:

  • Older case law where a party was to be found deliberately obstructing fulfillment is now replaced by a less severe breach of contract: the standard now in off-plan property construction is one where the breach frustrates the legitimate aspirations of the buyers, preventing them from reaching the economical aims pursued.
  • La Reserva de Marbella S.A. obtained the license of occupancy on the 1st of June 2010, and on the 28th of October 2011 the Administrative Court 2 in Malaga ratified the right of the developer to retain the license, a ruling that is not firm. Mr. Valero points to the irrelevance of this item, given that termination was instigated well before.
  • High litigation activity on this development has meant that La Reserva de Marbella S.A. has created case law of its own, in the Malaga Courts. The judging magistrate concludes that an almost identical court case ruled on the 14.10.10 already deals with the issues surrounding the delay: lack of proper or legitimate planning compliance. Quoting the cited ruling, the magistrate delivers a fatal blow: it is clear that the defendant and seller is obliged to deliver a property in an able condition, to be used and lived in, being obliged to adapt the construction to current planning regulations to the extent that, if this is not in place, the property is not susceptible of being occupied and in fact, could even be demolished.
  • The sale of a property without an occupancy license represents a serious breach of contract, and property buyers are notforced to sustain the vicissitudes of an administrative nature i.e. build license, that was only achieved 5 years after completion was agreed to.
  • Counsel for La Reserva de Marbella S.A. argued, not without reason, that obtaning the license of occupancy was not instrumental in attaining full legal compliance, an allegation based on two Supreme Court rulings of the 10 of October of 1987 and 1989. Luckily, Magistrates at this very High Court in Madrid also get replaced and antiquated viewpoints also get replaced by more modern opinion (Supreme Court 24th of May 1991, 16th of March 1995, 28th of May 1996 and 23rd of October 1997).

Now straight on to the tricky stage of enforcing the ruling!

Santa Ana, Herrada del Tollo and SGR

August 8th, 2011

The decision came unexpectedly: shortly after the Judge ruled in favour our client, a British citizen, SGR (Sociedad de Garantia Reciproca), defendants, filed a motion to appeal hoping to get the decision reversed and requested that enforcement of the ruling was stayed pending the Appeal Court decision, not before lodging the amount of the deposit with the Courts’ bank. 

But the Judge of the Court of First Instance either did not get the petition of stay on time or simply ignored it and, unexpectedly, handed over the payment order written out to BBVA bank to us so that we could collect the payment. Because under Spanish law, you are able to enforce execution of a ruling without having to wait for the appeal decision, nor provide a security in case the decision was reversed, and in this case the defendants SGR argued that if our client received the funds and took them to the United Kingdom, in the event of she losing the case on appeal, it would be difficult or impossible to get the payment back.

The case continues…

Aifos bosses in trouble again

July 19th, 2011

Sur newspaper publishes today that Aifos´ CEO, alongside his wife, are being accused of missapropriation of approximately €72,571 of a client of theirs that paid a deposit on account of a property that was never built. The indictement and further accusation is the result of two premises:

  1. Having taken a deposit upfront without providing a bank guarantee to ensure repayment and
  2. Not using the deposit towards expenses arising directly from the proposed construction.

Many developers these are still believing that taking hundreds of thousands of deposits from punters, not guaranteeing them and using them to pay salaries, marketing, dividends (yes, even if no property has been delivered!) is something that, quite simply, is acceptable from a legal point of view.

Contrary to other businesses, property developers cannot incorporate downpayments received into their company normal business account and use for purposes different from the construction of the property, as such purpose would be deemed as unathorised, unless a bank guarantee is provided.

And as such, property buyers on off-plan property may not be deemed as regular creditors, but protected parties that pay deposits to a professional developer who assumes a fiduciary duty.