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El blog de Maria

Your daily Spanish Law reporter. Have it with a cafe con leche. www.costaluzlawyers.es

Legal tip 1385. LEY 57/1968 WON CASE in FIRST INSTANCE COURT AGAINST CAIXABANK FOR TWO OF OUR CLIENTS WHO PURCHASED OFF-PLAN PROPERTIES FROM THE DEVELOPER OCHANDO S.A. AT OCHANDO GOLF
Thursday, May 5, 2016 @ 6:24 PM

LEY 57/1968 WON CASE in FIRST INSTANCE COURT AGAINST CAIXABANK FOR TWO OF OUR CLIENTS WHO PURCHASED OFF-PLAN PROPERTIES FROM THE DEVELOPER OCHANDO S.A. AT OCHANDO GOLF

We were extremely pleased to inform our clients recently that we had won their case against CAIXABANK (formerly Banco de Valencia) in the First Instance Court.

The clients paid their off-plan deposits to the developer’s account at CAIXABANK.  The clients did not receive individual Guarantees for their off-plan deposits from the developer, Ochando S.A. or from CAIXABANK, the Bank to which their off-plan deposit was paid and that bank that issued a General Guarantee to the developer.



Re: YOUR CASE AGAINST CAIXABANK S.A.
PO xxxx/2015

Please find attached the Sentence from the First Instance Court No.1 in Orihuela.

Your case against CAIXABANK S.A. has been won.

The final paragraph of the First Instance Sentence delivered on 26 April 2016 and notified on 26 April 2016 states:



“Upholding the Lawsuit filed on behalf of xxxxxx & xxxxxxx against CAIXABANK S.A. (formerly BANCO DE VALENCIA S.A.), I condemn the defendant bank to pay the total amount of xxx,xxx Euros, an amount that will be returned in the following proportion: Messrs xxxxxx the sum of xx,xxx Euros and Messrs xxxxxx the sum of xx,xxx Euros.  On such amounts accrue the legal interest from the date of payment to the developer or the depositing of the funds in the current account at CAIXABANK S.A., until full payment.  Interest will be increased by two points from the date of this resolution.

Without the express imposition of costs of these proceedings”


So CAIXABANK S.A. is sentenced to refund the total amount of xxx,xxx€ plus interest at the legal rate from the date you paid to the developer’s bank account until complete repayment.

The Judge did not impose the costs of the legal proceedings on any party.  Therefore, each party will pay its own costs.

Interesting statements from the Judge in the Sentence were:

“It is established that the entity Banco de Valencia (now Caixabank) signed with the promotor, Ochando S.A. a guarantee policy amounting to 6,800,000€, which was verified by public deed dated 1 August 2007, the purpose of which was none other than issuing guarantees to secure repayment of the amounts paid in advance by buyers of off-plan homes.

The main reason Caixabank opposed the Lawsuit was because it said that the buyers have no contractual relationship with the Bank as it had not issued individual guarantees to them.

Against this it should be noted that we are not facing a common endorsement under Article 1822 of the Civil Code, but an endorsement of a special nature regulated by Law 57/1968 that favours an interpretation in favour of the consumer.

Therefore, we should not forget that, although insurance companies & financial institutions are not party to the sales contracts, the truth is that they are not alien to their content or the performance of the obligations arising thereof, it follows therefore that they should confirm the existence of the guarantees established by LEY 57/1968.

It is worth noting that the Supreme Court has stated that the lack of an individual guarantee does not prevent the obligation to repay the amounts paid in advance by buyers of off-plan homes.

The buyers in this case are consumers and it has not been proven that they were speculative investors.

It is unknown if the General Guarantee was given to the buyers at the time of signing the purchase contract, thereby giving the legal appearance that guarantees for the amounts paid were established.  Also the bank has not proven that the existence of the General Guarantee was not mentioned to the buyers at the time of signing the contracts. These are facts that must be proved by the defendant bank to avoid liability on the basis of the first source of responsibility, that being the General Guarantee.

Now in this case the above facts are irrelevant as there is a double source of responsibility as it was also the entity in which the developer had opened a current account and into which the buyers paid their off-plan deposits.  This account despite being called a current account deserves to be called a special account and the defendant bank cannot escape liability on the basis of the second source of responsibility.

The buyers provided documentary evidence of their off-plan deposit being paid to the account opened at Banco de Valencia, and this is confirmed by the bank statements.

This account was the one specified by the developer as the account intended to receive off-plan funds from buyers, so as has been said, it should be regarded as a special account for the purpose of applying LEY 57/1968.

Moreover, the bank official at the trial acknowledged that it was an account funded essentially from the amounts paid by off-plan buyers and he acknowledged that the bank was aware of it and knew the activity undertaken by the developer.

Banco de Valencia, having opened an account to receive amounts paid by buyers, had a legal duty to ensure that those funds were guaranteed.  Having breached this duty its legal liability is generated.

In other words, the bank should not allow the opening of special accounts and accepting deposits into the accounts without first making sure that the promotor has assumed a legal obligation to ensure the return of the amounts paid on account by buyers, who otherwise cannot obtain reimbursement of the amounts paid.

Banks that accept these amounts paid by buyers of off-plan properties into accounts of the promotor, although not named as a special account, must be responsible for the total amounts paid by buyers into accounts opened by the developer in its branches.  In this case it has been proved that the account was designated for this purpose and it has also been established that the bank was aware of this fact and although it could not identify each amount for each specific buyer, knew that the income was from buyers of off-plan properties.

Even though the Lawsuit has been upheld in full, I plead the right not to impose costs on the defendant, as the Supreme Court Sentence of 21 December 2015 which clarifies the responsibility of banks according to LEY 57/1968, had not been issued at the time this Lawsuit was filed or when the bank submitted its defence.  Therefore I appreciate the contradictory jurisprudence existing at the time the Lawsuit was filed and the defence was submitted, so in accordance with Article 394 of the Civil Code, there is no imposition of costs”



CAIXABANK has 20 working days from the date of notification of the Sentence, which was 26 April 2016, to comply with the Sentence or to file an Appeal to the Provincial Appeal Court of Alicante.

If an Appeal is filed by CAIXABANK it will be necessary for us to file an Opposition to the Appeal on your behalf.

If the defendant fails to comply with the sentence then we will enforce the sentence against it.

"Malvarrosa" beach, Valencia, eastern Spain



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3 Comments


M11Block said:
Thursday, May 5, 2016 @ 8:06 PM

Sorry I don't understand. Is the judge saying they can't award costs against the bank in favour I'd the defendant because the SC ruling was only passed and made jurisprudence after they filed their case?


ads said:
Thursday, May 5, 2016 @ 10:57 PM

Maria, if the Bank appeal this ruling will this be deemed reckless litigation given the bank will not be respecting the SC ruling that was passed in Dec 2015?

But does this also mean that claimants who have been denied SC clarification due to major delays and under-resourcing of the court administration and judicial system in Spain and through no fault of their own will now pay the price by being denied award of costs?


mariadecastro said:
Friday, May 6, 2016 @ 9:05 AM

M11: Yes, Judge is saying this

Ads: Bank has always right to Appeal, Judge will decide on substantial matter and imposition of legal costs according to Law he estimates applicable. I hope he will impose legal costs to the Bank if it appealed and lost.


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