NEW! Granada Appeal Court greatly applying Law 57/68

Legal tip 1082. NEW! Granada Appeal Court stating Banks liabilities 
11 December 2013 @ 14:16 
 

That's good news....and bad news Maria.

Why should it ever get to an appeal court in the first place?

Fazarelli

On 12 April 2013 the First Instance Court ruled that the Purchase Contract was cancelled and condemned the Developer and Bank 'jointly & severally' liable to refund the full deposit plus legal interest from the date of filing of the Lawsuit and costs.

The Bank appealed.

On 22 November 2013 the Provincial Appeal Court upheld the First Instance Sentence in full and imposed costs of the appeal on the Appellant Bank.  This Sentence was notified on 10 December 2013.

The Appeal Court stated:

"The important thing here is that the amounts were entered in the account and the entity was aware of its obligation to require the fullfillment of the corresponding guarantees.

The Bank was the one that managed the account of the developer in which the amounts were entered, with its knowlege, as payments on account of various off-plan property purchases and from which loans were made to finance the construction.  The Bank cannot plead ignorance to the numerous entries that appear on the bank statement extract for which it did not demand the guarantees required by law.  This passive attitude of the Bank makes it responsible for the repayment of the amounts subject to this claim"

The Bank now has the right, within 20 working days from the date of notification of the Sentence, to file a Cassation Appeal to the Supreme Court.

Kind regards

Keith

Keith,

With this appeal statement in mind, is it therefore essential to have the proof of the bank and account where deposited monies were entered..... I'm thinking of the case where the deposit was forwarded by the conveyancing lawyer to the developer in the form of a cheque, an appeal against developer for breach of contract won and case subsequently taken against the Bank that provided a generic BG. Can the Bank in this instance plead ignorance?

This message was last edited by ads on 12/12/2013.

Ads

Absolutely essential if there is no Individual and no General/Generic Guarantee.  Like in the case of Finca Parcs and the case in discussion in this thread (Granada Provincial Court & BBVA)

Very important (essential in most cases) when claiming against a General/Generic Guarantee issued by a Bank.

When claiming against a General/Generic policy issued by an Insurer it depends on the wording of the document and whether any specific bank account is mentioned.

If you have an Individual Guarantee then it is preferable to have proof of payment to the bank, but not essential in every case.

But, as you know I have always been of the mind that it is best to have as much evidence as possible in every case.  I would always rather have too much than too little evidence.

One big reason for the Finca Parcs success, in which none of the 47 buyers had an individual Guarantee and where there was no General/Generic Guarantee, was because I was able to obtain proof of deposit payment to CAM for all 47 buyers.  It took almost 18 months to gather that information because some buyers had paid to agents, conveyancing lawyers etc...  I had to obtain all the relevant documentation from many third parties - some of whom were not very cooperative!

In the case under discussion in this thread - GRANADA PROVINCIAL COURT / BBVA BANK - the buyer did not have a Bank Guarantee, but did have proof of payment being entered into the developers bank account at BBVA.

So this BBVA case is very similar to the Finca Parcs case - what we call a 'PURE BANK ACTION'.  This is where no Individual and no General/Generic Guarantee exists, but where the buyer (Lawyer) can prove that the Bank knowingly accepted the off-plan funds into the developers account and failed to issue or verify the existence of the corresponding Guarantee.

Kind regards

Keith

So... you all know now why we decided to hire Keith??

Cheers,Share

Maria

Thanks Keith,

If the conveyancing lawyer refuses to provide this Banking evidence (in relation to a case where a generic BG exists) will the conveyancing law firm be made to provide this evidence in court, or is this too late in the day? In other words should subsequent joint action have been taken against the Bank and conveyancing lawyer to ensure deposited monies are returned? Or would this allow the Bank the opportunity to relinquish their responsibility and put the onus on the conveyancing law firm?

If the Lawsuit has already been filed and the client does not have proof of off-plan deposit funds being paid to the Bank that issued the General/Generic Bank Guarantee due to the fact that the original conveyancing Lawyer will not provide the documentation to show where they sent the buyers off-plan deposit funds, then this would be a matter for the Litigator/Barrister at the Preliminary Hearing.

If the Bank is denying that it received the buyers off-plan deposit into the developers account then at the Preliminary Hearing the Litigator could request to the Judge that the Bank be made to produce copies of bank statements for all the developer accounts prior to the Trial/Final Hearing.  It would then be for the Judge to decide if the Bank should be made to do this.

It could also be an option for the Litigator to request that a representative from the buyers original conveyancing Lawyer be called as a witness to the Trial/Final Hearing.

If the Lawsuit has not yet been filed then the Bank or conveyancing Lawyer could be named in a pre-procedure called Preliminary Diligences whereby the Court is asked for its assistance in obtaining evidence necessary for the case to proceed.

Unfortunately there are many conveyancing Lawyers that accepted their clients off-plan deposit funds and now, despite repeated requests, will not provide evidence of the developers account to which they sent the funds.

Do they have anything to hide I wonder?

Kind regards

Keith

Fantastic posts Keith, thanks.

Yeah, I forgot the right to appeal that the bank has. And it still has another right to appeal even now! It's mad!

It's like going to a court to argue that the sky is green and not blue. When the Judge looks out the window and confirms that it is indeed blue, the bank decide to appeal anyway! Then the supreme court judge looks out the window and also confirms it is blue, then bank appeal again!

There is obviously some delaying tactic going on here. Has this got anything to do with the legal interest aspect of the case? Does it complicate matters, persuading the judge to dismiss or reduce the legal interest aspect? Or are they just hoping for the slim chance that a judge will find in their favour?

Hi Keith,

Am I right in thinking that the below would apply to the AIFOS cases from which your firm are at present trying to obtain the details of clients deposits

It could also be an option for the Litigator to request that a representative from the buyers original conveyancing Lawyer be called as a witness to the Trial/Final Hearing.

If it transpires that there are no bank accounts in the AIFOS books appertaining to my deposits could your firm request the attendance of my original conveyancing lawyer, as, up till now he will not divulge this information ?

If the Lawsuit has not yet been filed then the Bank or conveyancing Lawyer could be named in a pre-procedure called Preliminary Diligences whereby the Court is asked for its assistance in obtaining evidence necessary for the case to proceed.

When you say that the court can "ask" for his assistance, what happens if he refuses to assist are there any penalties ?

Unfortunately there are many conveyancing Lawyers that accepted their clients off-plan deposit funds and now, despite repeated requests, will not provide evidence of the developers account to which they sent the funds.

Would the fact that he has deliberately ignored mine and Maria's requests for this information be highlighted in court ?
 

Isn't the bottom line however to ALL of this continuing legal complexity that a Guarantee BY LAW  was supposed to have been put in place to protect consumers from the many varieties of compromising scenarios witnessed to date, and that no matter who is culpable in this corruption and theft of depositors' monies, whether a guarantee was issued or not, that a Guarantee should have been provided according to the law, and that consumers' INALIENABLE rights for return of monies as per Ley 57/68, must be respected by the Banks?

Keith states that Banks are jointly and severally liable for all offplan deposits they accept into their custody.

If these deposits have not been placed into secure accounts in their custody as required by law, then this is not the responsibility of the innocent consumer, it is the responsibility of the Bank and developer. Therefore where these monies have not been placed into secure accounts is this not a case of failure of due diligence on the part of the Banks that should be questioned here?

From the outset, is it not  the Banks’ responsibility and part of their due diligence and legal obligations, according to Ley 57/68, in connection with their financing and insurance of offplan developments, to ensure the correct management and financial controls/structure relating to offplan deposits are in place for all purchasers’ deposited monies, through provision of idenitifiable secure accounts for their future safe-keeping?

Why should an innocent offplan purchaser who has signed a contract based on legal guarantees and inalienable rights to protect their monies as written into existing law have to prove anything other than the developer has breached his contract to evoke return of their monies?

Banks cannot nor should deny the need for due diligence and legal responsibility to ensure offplan depositors' monies were protected in secure accounts from the outset.

If others (developers/conveyancing lawyers) have not acted as required by law then surely following return of monies to innocent consumers as per Ley 57/68, it should be for the Banks to regain these monies from those who have illegally retained these monies, and not the innocent consumer?

Innocent consumers should not be subjected to actions which further compromise the consumer and only add to the injustice and denial of inalienable rights.

What say you Maria and Keith?

Ads

You say:

Keith states that Banks are jointly and severally liable for all offplan deposits they accept into their custody.

I don't think I said it quite as simply as that...........

Each case is different and the evidence in each case must be considered.  My opinion, that is now backed up by several examples of Case Law is:

The bank should be held jointly and severally liable with the developer in cases where the buyer can prove that the developers Bank KNOWINGLY accepted the buyers off-plan funds into the developers accounts and failed to control the use of those funds, failed to secure the funds in a Special Account and failed to issue or verify the existence of the corresponding Guarantees.

As I said, each case is different and the evidence in each case must be considered and reviewed.

Also we have to remember that the outcome of each case is decided by a Judge or Magistrates and it is their view of the evidence, application of the relevant Law and available Case Law that really counts!

Kind regards

Keith

Hi Keith,

If possible can you reply to the three questions I asked in the message I posted on 14 Dec 2013 10:10

Cheers

Hi Keith, or anyone else from the firm,

Now that we have finished with the holiday period, could someone please spare a few minutes and assist me by replying to the three questions I posted on 14/12/13 and the 19/12/13.

Cheers

Belucky, in Spain the holiday period is not over until January 7.  It ends with the festivities of the Three Kings on January 6 as the Three Kings are the ones that bring presents to children in Spain.

Important questions Belucky but just as important is the question, if evidence subsequently proves that deposited monies were not (for whatever reason) placed into the developer's account, does this then relinquish the Banks from their responsibilities to protect these monies?

In other words, is this evidence an absolute essential pre-requisite for legal teams to assess BEFORE proceeding with action against the Bank?

But then the question remains, who becomes ultimately culpable?

For instance, at what point should action be taken against the conveyancing law firm who did not ensure by due diligence that deposited monies were placed into the developer's account from the outset? Do innocent consumers have to be exposed to losses of this nature against the Banks, before they can take action against the conveyancing law firm? Do they have to prove failure against the Bank to assist their case against the law firm? Would their case against the conveyancing law firm more than likely fail on the inference that they had not first discounted Bank's responsibilities?

Perhaps Keith and Maria can clarifiy these points for all those exposed to this compromising situation?

Talk about consumers being left vulnerable by a judicial system that exposes them to ever increasing legal actions.....

As things stand, the scenario appears to suggest that those being denied evidence of this nature could be at major risk of losing their cases against the Bank, through no fault of their own, with all legal costs associated with that loss, and then have to take separate action against the conveyancing law firm, which beggars belief!

Ads

You say:

Keith states that Banks are jointly and severally liable for all offplan deposits they accept into their custody.

I don't think I said it quite as simply as that...........

Each case is different and the evidence in each case must be considered.  My opinion, that is now backed up by several examples of Case Law is:

The bank should be held jointly and severally liable with the developer in cases where the buyer can prove that the developers Bank KNOWINGLY accepted the buyers off-plan funds into the developers accounts and failed to control the use of those funds, failed to secure the funds in a Special Account and failed to issue or verify the existence of the corresponding Guarantees.

As I said, each case is different and the evidence in each case must be considered and reviewed.

Also we have to remember that the outcome of each case is decided by a Judge or Magistrates and it is their view of the evidence, application of the relevant Law and available Case Law that really counts!

Kind regards

Keith

Keith,

Thanks again for the great reply.

I'm struggling to see a situation where the bank would NOT know they had accepted buyers off-plan deposits into developer's account. Unless, of course, the developer had accounts with more than one bank and some buyers were (unwittingly, of course) asked to pay their deposits to these other accounts. But then wouldn't the bank be wondering where all the deposit money was being deposited? I mean, surely they would be taking an active interest in the sales figures, and keeping an eye on their investment? Or where they hiding some of the deposits and that is where the problem lies? The developer could hardly say that they haven't sold any plots and secretly be placing the deposits into a private account with another bank, could they? And, of course, if large individual sums of money (i.e a deposit) were placed into their accounts via private individuals (i.e buyers), then they could hardly argue ignorance in court.

I'm obviously missing something with this suggestion.

Cheers.

Keith has stipulated in his BG petition the following:

We must remember that the Bank & Savings Banks who are supervised by the Bank of Spain were the “vehicle” through which the illegalities were performed.

The Banks and Savings Banks funding the developers were happy to avoid the obligations imposed on them by Ley 57/68 and use purchasers “unsecured deposit funds” to lesson the Banks exposure to the various developments. This is a serious public order matter.

The Spanish Government is aware of the scale of the problem but has failed to ensure Ley 57/68 is respected in its entirety.

The irreparable damage to trust and good faith is not only to the Spanish Property sector but also to the Spanish Justice system which has repeatedly failed to uphold the inalienable rights of the purchaser under Ley 57/68.

How can the Banks relinquish responsibility, given they have a duty under the ley law to protect depositers monies for all offplan developments for which they have loaned monies to the developers. How this is managed and controlled remains the responsibility of the Banks and innocent consumers who have provided monies to developers IN GOOD FAITH should not be made responsible nor be expected to have intellectual knowledge of the financial workings and management of Banks thereafter.

If the Banks have mismanaged their affairs in this regard, it should not be for the innocent consumer to be exposed to ever increasing litigation routes for return of their deposited monies but for the Banks to take action where required against the developer (or whoever) should they misappropriate those deposited monies.

Perhaps the question to ask is why are the judiciary not consistently recognising this law in its entirety given the inalienable status provided to consumers?

Why are consumer rights being denied individuals in Spain when there is a perfectly adequate law in place from the outset.

Why are they allowing this law to be cherry picked by the Banks (and developers) and misinterpreted?

Sorry for the repetition but why should an innocent offplan purchaser who has signed a contract based on legal guarantees and inalienable rights to protect their monies as written into existing law have to prove anything other than the developer has breached his contract, to evoke return of their monies from the developer/Bank who are jointly and severally liable for the protection of those deposited monies?

Hi ads,

I think that in all cases you will just have to follow your paper trail and assess what evidence you have, and if, like me, you do not know the Bank details into which your money was deposited then you will need to take action, as Maria is doing, through the Courts against AIFOS. Fortunately AIFOS has admitted in Court, in 2009, infront of the Judge, that they owed me the money that I was requesting, however the details of the bank were never mentioned during the hearing.  If it had come to light that AIFOS claimed they never received my deposits, then I would have gone after my original Spanish lawyer to whom I initially paid all my money.

Hopefully all these questions will be answered in the next few days, by as lobin has informed us that the holiday period ends on the 7th of January.

Hi,

Can anyone tell me when this "holiday period" actually ends and people are back at work.

Hopefully we will eventually get some answers !!!!!