A question for Maria re LEY 57/1968 General Guarantee to ensure the repayment of amounts paid on account – SUPREME COURT RULING

Dear Maria and Keith,

Please would it be possible for you to advise on the following queries..

1) If a generic BG exists for a developer for a given development (or sector of a development), but the guarantee was never actually delivered along with the contract of sale, what rights prevail according to Ley 57/68?

2) What legal responsibilities does the Generic Bank have according to Ley 57/68, where receptor accounts were in the name of the developer (i.e. where depositors monies were transferred) but were held in different Bank(s) to the specific Bank that provided the Generic BG, where no individual BG's were provided by those receptor Banks?

Is the Generic Bank ultimately responsible for return of ALL MONIES where no other individual BG's were provided, since the collective guarantee has been agreed to cover any repayment obligations of the developer in regards to the advanced amounts perceived from buyers? Does Ley 57/68 lay down a requirement that the Generic Bank must comply with all administrative processes required to ensure that deposited monies in developer(s) receptor accounts are FULLY safeguarded?

3) Have any Supreme Court rulings been issued to date with regard to either or both of the above scenarios?

Many thanks.

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Answers below in bold green ( same text as your email):

Dear Maria and Keith,

Please would it be possible for you to advise on the following queries..

1) If a generic BG exists for a developer for a given development (or sector of a development), but the guarantee was never actually delivered along with the contract of sale, what rights prevail according to Ley 57/68? All rights. Supreme Court has already confirmed this.

2) What legal responsibilities does the Generic Bank have according to Ley 57/68, where receptor accounts were in the name of the developer (i.e. where depositors monies were transferred) but were held in different Bank(s) to the specific Bank that provided the Generic BG, where no individual BG's were provided by those receptor Banks?

According to numeorus Appeal Court decissions, receptor Bank is liable till it is confirmed the existence of a General Bank Guarantee/ Insurance Policy. Once receptor Bank confirms this exist, its liability ceases and it starts the liability of Gneral Guarantoor for all amounts the client paid to developer.

Is the Generic Bank ultimately responsible for return of ALL MONIES where no other individual BG's were provided, since the collective guarantee has been agreed to coverany repayment obligations of the developer in regards to the advanced amounts perceived from buyers? It is. Does Ley 57/68 lay down a requirement that the Generic Bank must comply with all administrative processes required to ensure that deposited monies in developer(s) receptor accounts are FULLY safeguarded? A related Ministerial Order do and Supreme Court has already applied this in favour of buyer

3) Have any Supreme Court rulings been issued to date with regard to either or both of the above scenarios? Yes, thay have

Many thanks.

You are a star to take time out to answer these questions. Many thanks, Maria.

One further question remains.

Where you quote "Once receptor Bank confirms this exist, its liability ceases and it starts the liability of Gneral Guarantoor for all amounts the client paid to developer. " is it necessary to gain this confirmation from any receptor Bank(s) in writing, to act as evidence when making a claim against the Generic Bank?

Or is it sufficient to just provide the General BG as evidence of its existence for "the liability of Gneral Guarantoor for all amounts the client paid to developer. " to qualify?

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From last Case Law development, it is now deffendable that once the buyer proves he paid to developers account, if a General Guarnatoor exists, this is liable as he had from the beginning faculties to monitor contracts, payments and guarantees throughout the whole process.

Thank you so much Maria for the clarification.

I'm sure you are as frustrated as we all are to know that even though case law and Supreme Court rulings and related Ministerial Orders now exist in clients favour in respect of Ley 57/68, that the Banks still retain the right to continue to appeal to the Supreme Court until such time as two SC rulings are achieved against an exact same point of law. Is this correct or has this been amended?

I think many are disillusioned and very concerned by this continuing appeal procedure and the continuing associated risks and insecurities when they perceive existing case law being continually challenged in this way

At what point is this pattern of events by the Banks continual appeals process reviewed, to determine if this has become an obstructive/abusive pattern of events by the Banks ignoring existing case law and SC rulings (bearing in mind the impact from the timeframes involved), as opposed to trying to gain genuine clarification of the law?

Is there any mechanism within the Spanish Justice system to protect against obstructive behaviour and non adherence by the Banks to growing case law/SC rulings, if this becomes apparent?

Banks will fight till all doctrine by Supreme Court is produced.

Interests run against them. That should concern them.

It should be interests AND costs that run against them Maria!!!

Banks will fight till all doctrine by Supreme Court is produced.

Interests run against them. That should concern them.

Thats really true Maria (your currently running a case for us).  The only thing I would add to that is that the general public (the small people if you like) are very scared that the money they seek to be returned will be swallowed up by fees and appeals, and the amount they are 'out of pocket' may even be doubled if the result goes against them.

The bank has plenty of muscle which the legal system allows them to use to the full extent.  I have also been told a recent ruling allows the bank to make an appeal and not have to refund the claimants court fees.

The bank in question could probably even look at the claimants account (if they bank with them) to assess the likelihood of them being able to defend themselves financially!!!!

Maria, where you say "they will fight till all doctrine by Supreme Court is produced"..... Does this relate to SC ruling twice over on a specific point of law? It takes an eternity to achieve one SC ruling, let alone two. According to this legal logic the Banks will continue this ploy even in full knowledge of SC rulings and growing case law, which is morally indefensible is it not?

It really is a disgrace when you consider these continual challenges by the Banks are against purchasers INALIENABLE rights, where purchasers deposits following developer breach (and insolvency) have been proven to have been deposited into developer accounts which generic Banks (in the absence of individual BGs) have NEGLIGENTLY allowed to remain unprotected, which is totally CONTRARY TO THE LAW.

How can the Banks possibly dispute this and on what grounds?

When SC rulings are produced with regard to Ley 57/68 is it correct to say that they act as clarification of the law to assist the judiciary in their interpretation of all subsequent lawsuits relating to generic BGs, such that the following will apply to all claimants against generic Banks (as identified by Lucas Ascoiados) " rights to be refunded for buyers comes out from the guarantee policy and not from individual certificate, and that the mere payment of the agreed amounts put the buyer under the protection of the policy, as this kind of guarantee is considered as a collective insurance"?

Likewise, (as previously identified by Maria) are the following conclusions from SC rulings applicable to all subsequent lawsuits relating to generic BGs?

If so, does this now mean that judges can no longer ignore such Supreme Court clarifications and misintepret the law?

Answers below in bold green ( same text as your message):

Maria, where you say "they will fight till all doctrine by Supreme Court is produced"..... Does this relate to SC ruling twice over on a specific point of law? Correct. It takes an eternity to achieve one SC ruling, let alone two. According to this legal logic the Banks will continue this ploy even in full knowledge of SC rulings and growing case law, which is morally indefensible is it not? They can take the option of appealing if they see a chance. Once there is doctrine by the Supreme Court they will not as costs will be imposed against them. At present when they are not imposed legal costs by Judges is because there is still not such doctrine.

It really is a disgrace when you consider these continual challenges by the Banks are against purchasers INALIENABLE rights, where purchasers deposits following developer breach (and insolvency) have been proven to have been deposited into developer accounts which generic Banks (in the absence of individual BGs) have NEGLIGENTLY allowed to remain unprotected, which is totally CONTRARY TO THE LAW. If they fight is obviously because in that specific case, with the specific facts and the specific legal debate being brought to Courts, they see a chance for interpretation of Law in favour of their interests.

How can the Banks possibly dispute this and on what grounds? Every case is different.

When SC rulings are produced with regard to Ley 57/68 is it correct to say that they act as clarification of the law to assist the judiciary in their interpretation of all subsequent lawsuits relating to generic BGs, such that the following will apply to all claimants against generic Banks (as identified by Lucas Ascoiados) " rights to be refunded for buyers comes out from the guarantee policy and not from individual certificate, and that the mere payment of the agreed amounts put the buyer under the protection of the policy, as this kind of guarantee is considered as a collective insurance"?

Correct. Once doctrine by the SC is produced on an  specific matter, there is no further room for discussion

Likewise, (as previously identified by Maria) are the following conclusions from SC rulings applicable to all subsequent lawsuits relating to generic BGs?

i)  Guarantor, once General Guarantee is signed and premiums are perceived, needs to cover the guaranteed event, which is to refund the amounts received, together with  interest as provided in the legal standard, in regards to the development the guarantee is linked to.

 ii) the issuance of the certificates or individual guarantees, by the insurer or guarantor, for each of the buyers, legitimizes these to enforce them, according to art. 3 Law 57/1968; AND

 iii) the absence of the corresponding individual guarantees does not preclude the obligation to repay the  advanced amounts, with interest, is covered for buyers who have entered into a purchase agreement and delivered these advance payments, under the existence of the General Guarantee.

It is still just one SC ruling, once there are two, hopefully soon, there will be no further room for debate on this and of course on the imposition of legal costs against the Bank.

If so, does this now mean that judges can no longer ignore such Supreme Court clarifications and misintepret the law? Answered above

Thank you again Maria.

If I have understood this correctly there will be no incentive for a Bank to take the case fully to SC to gain a ruling, as this would then ironically run the risk that the law would be fully  clarified in favour of claimants thus affirming all these correct recent judicial legal interpretations at provincial level (now being continually fought by the Banks) and all subsequent lawsuits  that follow on would go against the Banks and achieve costs. No wonder as Lucas Asociados recently observed a Bank pulled out from the SC at the last minute (without penalty!!!) And ironically in the interim more cases remain at risk due to lack of clarification from the SC and/or not sufficiently definitive to be awarded costs. 

The only sequence of events that appears to be able to gain two SC rulings and achieve proper clarification of the law would be if two CLAIMANTS got the opportunity to go to SC (following two contra legem or failed rulings at provincial level) and even then they run a risk that it might not be admitted for SC ruling due to cassational financial restrictions (being less than 600,000 euros??)

The Banks recognise throughout all of this lengthy and costly procedures that the client has to have the money and the lifespan (!!!) to fight the case, which in itself could be deemed discriminatory against those who cannot afford to continue their legal fight against a Bank that has no such financial constraints.  This in turn restricts the numbers of claimants able to achieve SC clarification, and the Banks remain aware of this and continue with their manipulative ploys wherever provincial rulings go in favour of the claimants .... with little intention of gaining true clarification of the law. How can this pattern of events be deemed to be "in good faith" Maria?

This does a grave diservice to the system of justice in Spain and appears morally indefensible. All we can hope and pray is that the 2nd SC ruling you refer to Maria is not delayed any further nor deemed to be protectionist and will now consider fully all good legal arguments being presented by those lawyers with good intent to gain true justice and make the Banks fully accountable for their compromising negligences.

Yes. Let´s trust all SC doctrine on Law 57/68 is displayed soon

Can anyone answer this question for me, please?  for example - i win deposit, interest and costs at my First Instance hearing,  bank appeal and i then have to pay my own costs.  if, at some time in the future, let's say next year, the Supreme Court rules that banks have to pay costs to all plaintiffs in our situation, could i then take the bank to court to claim for costs?

I would like to hereby add my Muchas Gracias to Maria for her continued, very helpful advice.

P.S.  why do we even have to wait for a 2nd Supreme Court ruling to ensure we win costs?  surely the law already exists.  

This message was last edited by john123 on 01/12/2015.

Dear John:

Unfortunately, you will not be able to claim against the Bank for costs then

The reason for which once there is SC doctrine costs will be imposed to Bank is because the matter will cease being " under controversy" which is why some judges are legally, currently not imposing costs to the Banks in some cases

And that's why we have to depend upon bringing attention to judicial moral authority in the interim Maria!

Thanks for all your support.

Kindest regards.

Is there some way of telling if one case may have costs awarded or may not have costs awarded Maria?  Or is it an 'unlucky day' if they are not?

Would it be possible Maria to identify the specific points of law that you are seeking to be clarified by the SC in this latest appeal admission, and when was this submitted to the SC?

Many thanks.

Briando55:

Rules applying to  imposition of costs in both First Instance and Appeal are as follows:

- Party whose pretensions are totally rejected pay legal costs of counterparty

- Exceptio to above rule: Courts estiamtes that the case has serious doubts either on facts or on legal fundaments.  For the Court to justify this, it needs to take similar cases into the argumentation.

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Case we are waiting the Supreme Court to decide about is on liability of receiver Bank when no General Guarantee was issued. 

It is a case against Caja Canarias which is pending to be decided-- Caja Canarias already presented its defense at the Supreme Court -- since 9 th of December 2014. Almost one year.

There are numerous Appeal Court decissions on this and there is some contradiction on the type of liability and events which make that liability arise. Appeal Case Law against Banks is more numerous than in their favour but.... Supreme Court has still not said its word on this.

It is true that there are obiter dicta, incidental, statements of the Supreme Court on liabilities of receiver bank but no Court decission where main object of discussion is this.

We are eagerly waiting for this Court decission

Thank you Maria and good luck.

Will this SC ruling against Caja Canaries, if successful and being the second of its kind (?), then establish doctrine in principle for all subsequent cases where proof of monies into developer accounts is provided (developer subsequently insolvent) and no individual BG or generic BG's were provided? Will this confirm the principal that all receptor Banks under this circumstance will be liable for return of monies/interest/costs? Or will this SC ruling be just relevant to this specific Bank and developer?

With regard to other lawsuits for those with generic BG's and no individual BGs where monies were deposited into developer accounts with other receptor Banks (developer now insolvent), will the following legal assumption still stand

"Once there is a General Bank Guarantee, liability is for them. Liabilities of receptor banks ceases at that precise point"

 Is there any SC doctrine currently in place to sufficiently support this legal argument to act as clarification to the judiciary? If not are there any relevant SC appeals in the pipeline to assist in this regard?