Two Recently Won Cases against banks at the Supreme Court by CostaLuz Lawyers and DeCastro teams

I. First of them  was a Trampolin Case against Sabadell in development Trampolin Royal Dream by Solera El Trampolin SL on May 24th 2019, a Supreme Court decission dated 21st of May which states liabiliy of Sabadell as depositer bank ( reciver of off plan amounts) as it did no ensured those amounts were rightly insured/guaranteed.

This Supreme Court decission also states that there is no need for the payments to be made in a " special account" and affirms according to omportant Decission dated  23 November, 2017:

"The fundamental reason for this Supreme Court Case law is that credit institutions
receivers of amounts coming from off plan private home buyers do not have the character of third parties unrelated to the relationship between buyer and developer, but must actively collaborate with the latter in order to ensure that
fulfills its legal obligations (to receive the advanced amounts in a special account duly guaranteed). 

Consequently, it is enough for the credit institution to know or not to
ignore (who "knew or had to know", said literally said sentence of November 2017) that the buyers were entering amounts on account of the price of homes under construction to answer for not having demanded from the promoter the opening of a special account, separated and duly guaranteed. Not understand it like that and exonerate the responsibility of the credit institution in cases where the amounts are received "in a single account of the promoter, intended for multiple attentions "would deprive buyers of the protection that it shields the "energetic and imperative" system of Law 57/1968 »

II. Most recent one is dated 5th of June 2019, by  the Supreme Cort en banc, 

Regarding actions time barr when claim is against an Insurer, as there was some contradictory decissions among different Appeal Courts, Supreme Court has stated in this Sentence:

In the process of setting a uniform criterion on the time barring  period for actions against insurance companies under the regime of Law 57/1968, this room ( en banc) considers that this os the general time barring period of art. 1964 Civil Code (for the present case, fifteen years).

The fundamental reason is that the art. 1-1.a of said law provides as
alternative guarantees for the repayment of the amounts advanced both an insurance contract and a bank guarantee, and would be no legally acceptable that the the term of limitation of the action of the buyers should be
different - and considerably shorter - in the case of insurance than in the case of
bank guarantee, since both forms of guarantee must be contracted
imperatively by the seller for the exclusive benefit of the buyers and
the art. 7 of the Law 57/1968 establishes that the rights of thise Law have "
the character of irrevocable».

Adittionally, this recent Supreme Court decission states that the develper meets its contract not just with the obtention of the First Occupation License but  mainly with the effective hand over of the property to buyers, so despite the existence of a FOL if this was illegally granted, buyer can exercise its rights.

Our First Supreme Court won case stated stablished Case LAw for the interest period to start at the moment amounts are paid into the developers account

Again, well done Maria and all at Costa Luz Lawyers and De Castro Teams !

This is a little difficult to understand from a wider perspective.

In layman’s terms, Maria, does this mean that in the event of proven developer breach (and insolvency) with proof of monies being placed into developer/ promoter named accounts, that the Supreme Court has clarified and confirmed that responsibility and control for the safeguarding and repayment of all deposited offplan monies paid in advance, commences at the point of monies being deposited according to Ley 57/68, alongside recognition of irrevocable rights ( inalienable rights) and the need for “ uniform criterion”, as being the strict responsibility of 

1. Depositor Banks, in the case where no guarantees ( or illegal Guarantees) were made available, or
2. Guarantor Banks linked to the developer/promoter, in the case where individual guarantee or generic guarantees existed? or
3. Insurance  Companies, in the case where insurance contracts were made available.

Has this resolved elements of doubt relating to responsibility and control?

Is the reference to “irrevocable rights” yet confirmed as doctrine, such that all Banks and Guarantors/ Insurers and Judges when making their rulings, will be obliged to recognise  going forward? Do you perceive this also as an essential part of the Supreme Court’s intention to gain uniformity of rulings irrespective of who the lawsuit is against with regard to Ley 57/68?

Does this also clarify that any lawsuit relating to Ley 57/68 must be brought within 15 years of developer breach to qualify? 

Does the SC ruling that made reference to start date of interest also now act as doctrine and create uniformity for judges to recognise that legal interest should be backdated to date of deposit, whether this be Depositor Banks, Individual Guarantor/ Generic Guarantor Banks or Insurance companies alike?

Many thanks and so pleased at your success.

On control possibilities of Guarantoors, new good Supreme Court decission issued on May 29th is also important.This last one is not a CostaluzLawyers-DeCastro won case

This last one states full control possibilities of guarantoors over contracts and developers accounts, according to the system which was establisheh by Orden Ministerial following Law 57/68. So regardless the bank that developer had their acccounts opened and regardless they were formally named special or not, they have control possibilities and therefore are liable.

So, yes, in that Court Decission, Supreme Court is clarifying a matter which was bringing much fight and discussion at Appeal Courts.

Weak/difficult/illogical/ contradictory point of that same decission is that, against previous prononcements of the Supreme Court, it says that for General Guarantoors to be liable, developers need to have handed over a copy of the General Guarantee. A statement which is against much of its previous correspondece and the protective/ public order/ imperative spirit of Law 57/68

 In regards to control possibilities of depositers banks, yes, Trampolin Court decission won by Costaluz Lawyers-DeCastro clarifies on active control possibilities by receivers banks. There are two interesting Supreme Court decissions dated STS 18/07/2017 y 23/11/2017 whch already states that depositers banks are under obligation to ensure the existence of guarantees since they notice the possibility of off plan amounts being received in their accounts.

Following with the answer to your questions, Ads: yes, I perceive this also as an essential part of the Supreme Court’s intention to gain uniformity of rulings 

Yes, our recently won decission at the Supreme Court ( dated May 21st) fixes that there is not a two years time-barr for these actions as guarantoors/banks were deffending and some Appeal rooms admitting. Time frame is of 15 years since breach of contract by developer, correct.

Yes, that case we won on 17th of March 2016,  on start date of interest has been, since then, doctrine and have created uniformity for judges to recognise that legal interest should be backdated to date of deposit, whether this be Depositor Banks, Individual Guarantor/ Generic Guarantor Banks or Insurance companies alike.

Hello Maria

I do not fully understand the Supreme Court Rulings in these cases but does the part about ' It is enough to know or not to ignore) who knew or had to know said literally said sentence of November 2017) that the buyers were entering amounts on account of the price of homes under construction to answer for not having demands from the promoter the opening of a special account, separated and duly guaranteed......

Does this help our case? We are with Costaluz and our case was lost because the Bank would not accept that the account that our money (exact amount to the penny) was paid into an account in their Bank. They stated that the account it was paid into was not the numbered account stated on the contract with the developers/builders of our home who had gone bankrupt,  but had been paid to an Estate Agent account who then paid it into the Developers Bank.

This argument was upheld by the Appeal Court when you appealed against Bank with Ley57/68, even though you had won our case against the Developers.

 We have waited since December 2017 for our case to come to the Supreme Court, does this latest ruling give us some hope that when our case does come to the Supreme Court we will finally win our case and receive Justice?

Rosemary

Rosemary:

I would need to look into your case with detail. Please send an email to me so I can review and get back to you

M

Maria,

Many thanks for your clarifications which are much appreciated as sometimes it’s really difficult to understand the legal talk and the actual implications of what rulings  mean going forward. 

With this in mind, where you observed

“ “Weak/difficult/illogical/ contradictory point of that same decissionis that, against previous prononcements of the Supreme Court, it says that for General Guarantoors to be liable, developers need to have handed over a copy of the General Guarantee. A statement which is against much of its previous correspondece and the protective/ public order/ imperative spirit of Law 57/68 “

Without wishing in any way to diminish supportive judicial rulings that have assisted in gaining  justice, does this particular contradictory pronouncement now mean that even at SC level there are  inconsistencies that will require many more years of litigation to achieve justice, or to your knowledge are there upcoming cases where these matters have already reached the SC ( have been admitted and are awaiting rulings) that will clarify these concerning outstanding elements of doubt?

Are your Barristers at De Castro currently  challenging these particular  elements of doubt at SC level as we speak? Do you feel that until this is resolved the risk of inconsistent appeal rulings will continue to compromise clients who are litigating against general guarantors,  to ensure these Banks are made fully accountable for their failures to provide adequate control and safeguarding of deposited monies that have so badly compromised innocent off plan purchasers?

Has the timeframe to this particular aspect of litigation been compromised (set back)  by this pronouncement, or are you aware of current cases coming before the SC to clarify this once and for all? 

We are increasingly aware that the Banks are stepping up their challenges to do all in their power to denounce their responsibilities and we look to the SC in these instances to effect good consistent justice to act as protection whilst also deterring manipulative ploys that undermine not only the rule of law but  accountability and strict compliance with law intended to protect.

Please have answers below in bold green : 

Maria,

Many thanks for your clarifications which are much appreciated as sometimes it’s really difficult to understand the legal talk and the actual implications of what rulings  mean going forward. 

With this in mind, where you observed

“ “Weak/difficult/illogical/ contradictory point of that same decissionis that, against previous prononcements of the Supreme Court, it says that for General Guarantoors to be liable, developers need to have handed over a copy of the General Guarantee. A statement which is against much of its previous correspondece and the protective/ public order/ imperative spirit of Law 57/68 “

Without wishing in any way to diminish supportive judicial rulings that have assisted in gaining  justice, does this particular contradictory pronouncement now mean that even at SC level there are  inconsistencies that will require many more years of litigation to achieve justice, or to your knowledge are there upcoming cases where these matters have already reached the SC ( have been admitted and are awaiting rulings) that will clarify these concerning outstanding elements of doubt? None of our cases is currently wauting for a ruling from the Supreme Court on this particular  point. I am not sure if there are other, by other lawyers sitting there waiting for this pronunceament. It is surprisingly  in full contradiction to what the Supreme Court has stated so far in this regard.

Are your Barristers at De Castro currently  challenging these particular  elements of doubt at SC level as we speak?  No, we are not. We are challenging other matters.Do you feel that until this is resolved the risk of inconsistent appeal rulings will continue to compromise clients who are litigating against general guarantors,  to ensure these Banks are made fully accountable for their failures to provide adequate control and safeguarding of deposited monies that have so badly compromised innocent off plan purchasers? Yes, I clearly see the risk of Banks starting to use this Court Decission now.

Has the timeframe to this particular aspect of litigation been compromised (set back)  by this pronouncement, or are you aware of current cases coming before the SC to clarify this once and for all? I cannot now if there are other Cassation Appeal on this.

We are increasingly aware that the Banks are stepping up their challenges to do all in their power to denounce their responsibilities and we look to the SC in these instances to effect good consistent justice to act as protection whilst also deterring manipulative ploys that undermine not only the rule of law but  accountability and strict compliance with law intended to protect. Of course. Very serious matter.

Following proven breach of developer contract with subsequent cancellation of contract , with proof of deposited monies placed into developer accounts and proof of subsequent developer insolvency ....how can it ever be considered ok ( deemed legally acceptable in the eyes of a Supreme Court) for a generic bank named in a purchase contract and existing generic bank guarantee, not to be made fully accountable for their legal responsibilities as guarantors according to inalienable rights afforded  to offplan purchasers within an existing  law Ley 57/68 in place at point of purchase contract .....a law intended to protect?

Under these conditions how can generic Banks possibly deny knowledge of their role and/ or subsequent responsibilities as guarantors?

Perhaps I have misunderstood Maria?

Following proven breach of developer contract with subsequent cancellation of contract , with proof of deposited monies placed into developer accounts and proof of subsequent developer insolvency ....how can it ever be considered ok ( deemed legally acceptable in the eyes of a Supreme Court) for a generic bank named in a purchase contract and existing generic bank guarantee, not to be made fully accountable for their legal responsibilities as guarantors according to inalienable rights afforded  to offplan purchasers within an existing  law Ley 57/68 in place at point of purchase contract .....a law intended to protect? Never, in the opinion of numeorus Appeal Courts

Under these conditions how can generic Banks possibly deny knowledge of their role and/ or subsequent responsibilities as guarantors? Never, in the opinion of numerous Appeal Courts

Perhaps I have misunderstood Maria? No, you did not. Supreme Court is deffending in that May 28th 2019 Court Decission that just if buyers received the actual General Guarantee document, Guarantoors are liable. This is against the full spirit and previous interpretation of Law 57/68.

Maria,

Given your observation, 

“Supreme Court is deffending in that May 28th 2019 Court Decission that just ifbuyers received the actual General Guarantee document, Guarantoors are liable. This is against the full spirit and previous interpretation of Law 57/68.”

This prompts many serious questions going forward I’m afraid Maria, so thank you for your patience in this regard.

According to this SC ruling, are ALL offplan purchasers who never actually receivedBGs ( whether individual or generic) now also at risk going forward? Are all instances of being subjected to non provision of  Bank Guarantees now at risk of prolonged litigation given the likelihood that Banks will now suggest this line of legal reasoning against all cases relating to non provision? 

Looking at this in further detail....

On what grounds can this only apply to generic BGs and not individual BGs? 

Is the Supreme Court suggesting that existence of guarantees (where a guarantor has been written into a contract as is presumably the norm re litigating against existing generic guarantors), provides less protection than having no guarantee at all ( as is presumably the norm re litigating against depositor banks which appear to have achieved supportive SC rulings) ?

Is this why you observed this being against the full spirit and interpretation of Law 57/68?

But also how does this affect contract law where a legal guarantor was actually named in the contract and legal guarantees actually existed? 

Again does this imply that by referencing a guarantor in the contract provides less protection than a contract that made no reference? 

Doesn’t this ruling in effect sadly make a mockery of the contract and pre existence of guarantees? Are they no longer worth the paper they are written on if they hold no protection in law?

So what happens now to those falling under this circumstance of non provision I.e. for those who are already litigating against banks, for all those already in the justice system having received successful rulings at first instance and/or provincial level if the banks now contest all these rulings going forward to the SC? 

Have they in effect little chance of recovering their monies according to Ley 57/68 until such time as this SC ruling is either overridden or re clarified which will subject them to prolonged litigation lasting many many more years?

Or is this recent SC ruling only applicable to those who previously had already been subjected to Banks using these legal arguments in earlier litigation, I.e. at first instance, but the Banks were subsequently ruled against at appeal level?

Is it correct to say that those Banks/ insurers who never used these legal arguments from the outset, cannot change their legal arguments going forward?

This contradictory SC ruling appears to have wide reaching and serious consequences in terms of non recognition of purchasers inalienable rights according to Ley 57/68 does it not Maria? 

It also has wide reaching implications on contract law and the existence of BGs, does it not?

And the poor innocent offplan purchaser is yet again being scapegoated in this inconsistent prolonged litigious process which desperately requires the SC to provide swift and consistent clarity on purchasers inalienable rights. 

Not for the first time of observing, the Banks are running rings round the justice system.

Given the numbers of people denied actual BG provision currently fighting for their rights in Spain, do you foresee that the legal profession as a whole will need to discuss this as a matter of urgency in terms of adopting a consistent approach with emphasis on effectively defending  offplan purchasers INALIENABLE rights and the immediate impact on interpretations of contract law where guarantors were named in the contract and the relevant Bank Guarantees existed?

Ads:

Please have answers below in bold green ( same text as your email): 

Maria,

Given your observation, 

“Supreme Court is deffending in that May 28th 2019 Court Decission that just ifbuyers received the actual General Guarantee document, Guarantoors are liable. This is against the full spirit and previous interpretation of Law 57/68.”

This prompts many serious questions going forward I’m afraid Maria, so thank you for your patience in this regard.

According to this SC ruling, are ALL offplan purchasers who never actually receivedBGs ( whether individual or generic) now also at risk going forward?Just if that was/is being used by Banks as a defense. Anyway, I am quite sure, Supreme Court will never set this as a doctrine: it is against much of what they have stated before regarding protective character of Law 57/68 and liabilities of Guarantoors. Are all instances of being subjected to non provision of  Bank Guarantees now at risk of prolonged litigation given the likelihood that Banks will now suggest this line of legal reasoning against all cases relating to non provision? As explained before, just if that was/ is being used by Banks, they will very much possibly use that argument in a new lawsuit or will use that Court decission in an Appeal/ Cassation if they already used in the first instance fight.

Looking at this in further detail....

On what grounds can this only apply to generic BGs and not individual BGs? With individual bank guarantee it is clear that you need the title to use it in either an enforcing/ declarative proceeding: the document is the title.

Is the Supreme Court suggesting that existence of guarantees (where a guarantor has been written into a contract as is presumably the norm re litigating against existing generic guarantors), provides less protection than having no guarantee at all ( as is presumably the norm re litigating against depositor banks which appear to have achieved supportive SC rulings) ?

In some sense, it is.

Is this why you observed this being against the full spirit and interpretation of Law 57/68? Somehow. Also because SC doctrine in this type of liability is that the mere existence of the Guarantee, plus the delay by the developer and the proof of money paid in advance to a developer were enough elements for liabiliy. An article on that by us has been published by LegalToday , right today:

http://www.legaltoday.com/practica-juridica/civil/civil/el-garante-en-compraventa-sobre-planos-siempre-pudo-conocer-su-responsabilidad-es-inexcusable

But also how does this affect contract law where a legal guarantor was actually named in the contract and legal guarantees actually existed? It does somehow as that contract party, signed according to specific features of Law 57/68. It also breaches some rules of Consumers Law and Insurance Law.

Again does this imply that by referencing a guarantor in the contract provides less protection than a contract that made no reference? Yes, as they are placing a requisite for your effective proetction by the Guarantoor that you were never were made aware of.

Doesn’t this ruling in effect sadly make a mockery of the contract and pre existence of guarantees? Are they no longer worth the paper they are written on if they hold no protection in law? Somehow, yes.

So what happens now to those falling under this circumstance of non provision I.e. for those who are already litigating against banks, for all those already in the justice system having received successful rulings at first instance and/or provincial level if the banks now contest all these rulings going forward to the SC? As explained in first answers:, just if that was/ is being used by Banks, they will very much possibly use that argument in a new lawsuit or will use that Court decission in an Appeal/ Cassation if they already used in the first instance fight.

Have they in effect little chance of recovering their monies according to Ley 57/68 until such time as this SC ruling is either overridden or re clarified which will subject them to prolonged litigation lasting many many more years? No, if they have a good lawyer deffending them ;)

Or is this recent SC ruling only applicable to those who previously had already been subjected to Banks using these legal arguments in earlier litigation, I.e. at first instance, but the Banks were subsequently ruled against at appeal level? Correct.

Is it correct to say that those Banks/ insurers who never used these legal arguments from the outset, cannot change their legal arguments going forward? Correct.

This contradictory SC ruling appears to have wide reaching and serious consequences in terms of non recognition of purchasers inalienable rights according to Ley 57/68 does it not Maria? If it was consolidated, which I do not think it will.

It also has wide reaching implications on contract law and the existence of BGs, does it not? Somehow, if it was consolidated.

And the poor innocent offplan purchaser is yet again being scapegoated in this inconsistent prolonged litigious process which desperately requires the SC to provide swift and consistent clarity on purchasers inalienable rights. Correct. 

Not for the first time of observing, the Banks are running rings round the justice system.

Given the numbers of people denied actual BG provision currently fighting for their rights in Spain, do you foresee that the legal profession as a whole will need to discuss this as a matter of urgency in terms of adopting a consistent approach with emphasis on effectively defending  offplan purchasers INALIENABLE rights and the immediate impact on interpretations of contract law where guarantors were named in the contract and the relevant Bank Guarantees existed? There are already a good number of good lawyers defffending right interpretation of Law 57/68. I am sure they will fight against this if their clients are affected.