The Provincial Audience in Cordoba recently passed an interesting sentence in a dispute between an off-plan property purchaser and a developer, on account of the inability of the former to complete the purchase due to lack of financing and the unwillingness of the latter to refund the deposit, on those grounds.

The buyer had argued that he was a victim of the financial crisis and requested a full refund, considering the downturn of the economy as an Act of God. The developer, in turn, counter-sued and requested that the contract was complied with (specific performance suit) and, only in the event that the buyer was declared unable to complete, due to insolvency, the contract was terminated and the deposit kept.

The courts started stating some general observations, applicable to most contracts, whereby:

1. It is a well-known fact the property buyers require financing to complete property deals.
2. Prior to entering into an off-plan property contract, buyers have a duty to establish their credit-worthiness and the financial means available to them.
3. Obtaining financing from a lender, where the balance of the price is not readily available, is a buyer’s obligation.
4. To the extent that the buyer is able to complete, the courts will not examine the required diligence in the buyer’s activities or actions in respect to compliance with his obligations.
5. As a consequence, in the event of the buyer’s insolvency, he still has an obligation to complete the sale and should this not occur, the developer will be entitled to formally terminate the contract (which is exactly what happened here).

But then, in a solomonic ruling, established that indeed the crisis could be considered as a mitigating factor, and upheld the following considerations:

1. That penalty clauses are envisaged by parties as a means to fix the value of the loss, in case of full or deliberate contractual default.
2. That in this economic day and age, the financial cataclysm that has affected lenders and the drastic downturn of the property market are events that property developers cannot stand aloof from, even if they can be considered to be “risks of the trade”.
3. That although in this case the buyer is the victims of the debacle, property developers are well aware that it is now no longer possible to find a buyer at year 2007 prices, and thus cannot stay in “limbo”, estranged from reality.
4. That in this case, the buyer did not default fully but partially, as a result of events outside of their control, and therefore the penalty clause has to be reduced as a result of the necessary sweetening  or mitigation of the degree of default, to avoid unjust enrichment.

The Cordoba courts, on account of the above considerations established that, notwithstanding the content of the penalty clause, it was fair and equitable to reduce it by 50% as the buyer had not fully defaulted. 

It sometimes happens that, when you start off a new business venture where reputation is considered to be crucial, you need to start off with a slate cleaner than clean. Of course, it is quite possible that one has left a few debts unpaid, particularly with lending entities (who cares, really!) and perhaps a bit of social security or taxes, as they are the last to the get paid, generally.

What is just defies prudency and common sense is starting off a business consisting on sorting out other people’s real estate problems when you have a few skeletons in the cupboard that are rattling like a dildo in a biscuit tin.

Because, this is exactly what is happening with Restructuring & Recovery Consulting Group, fronted by Mark Farber. The story (PDF)(the real one might I say) is actually one that he has twisted to make it one of his case histories, the truth being far from what he claims it to be.

Indeed, the project was located in Inland Andalusia, in Casarabonela to be accurate, it was certainly close to 20 hectares, and changes in regional planning laws did render the project unacceptable (no mention of the crisis here nor running out of cash). And this is as far you can stretch the truth, as the rest is a load of imaginative B.S.

Not only was there no proper project in place, but also, nobody proceeded to immediately discuss the situation with local and regional planning authorities, and no agreement was reached that re-zoning would be acceptable if the project was repositioned as a tourist oriented resort rather than a straight residencial developement.

And, on top of the pile, you get the worst lie of all: a large amount of money was also owed to a local savings bank which had already begun the process of recovery. Mark, it is Lawbird’s clients who are owed the money, and they are a British couple and not a local savings bank, unless they have morphed into some rural lender in the last couple of weeks. And they are owed close to €1,300,000 which seems they will never get if, as your lawyers say, the company that owns the cortijo (Rural Excellence S.L.) will be swallowed by the bankrupt Ecur Constructora Urbanizadora S.L., which owns I assume also part of Restructuring & Recovery Consulting Group, given your statements.

And finally, you have not been instrumental in negotiating with the savings bank to refinance the debt, because there is no such thing. If any, you have been instrumental in keeping my clients like a mushroom, in the dark and being fed bullshit. And unpaid. Oh, and also, killing a good number of avocado trees by failing to water them…

See you in court!

Today I’m going to talk about a case that, without a hint of doubt, will trigger someone into spewing the type of nonsense “that Spanish judges will favour Spanish nationals at the expense of the poor Brits, major investors in Spain and yet victims of a judicial system clearly biased, racist, etc.”

Well, the case is being heard in Tenerife where they also use the word “guiris” (the nick given to any foreigner originally from above the parallel running across central France and typically blonder than Spaniards), but where they have coined an equally derogatory name for mainland Spaniards: “godos”, which derives from “visigodos”, or Visigoths, post-Roman inhabitants of Spain and who originally came from Germany and Scandinavia and supposedly, invaded them many centuries ago.

So going to the “legals” of the case itself, I will mention that it involves the following:

• A deceased British property owner resident and re-married in Spain.
• Children from both marriages, 2 from the first, both British nationals, and a further Spanish national from the last.
• The existence of a Spanish will leaving everything to the Spanish son.
• The absence of property in the United Kingdom but the existence of a few real estate units in Tenerife, under his name.
• And a Spanish widower unwilling to share the estate…

Our clients, both British citizens and children of the deceased, from a previous marriage, and who had been left out of an inheritance they claimed they were entitled to, hired us to study the case and bring an action for the judicial recognition of their right to the estate of their late father.

In application of Spanish laws, but most importantly, pursuant to the findings of a Spanish Supreme Court ruling, it so happened that they had an entitlement, given that, although testators in England enjoy a basic freedom of testamentary disposition (under certain constraints), Spanish inheritance laws stipulate that a “legitim”, or minimum  portion of the estate, should go to the children where the testator was

1. British and
2. had no assets in Spain, due to a complex application of conflict or law rules that involved bouncing the matter to and fro between Spain and England.

Under Spanish provisions, one third should be going equally to all 3 children, and therefore our clients would be entitled, on paper, to 2/3 on 1/3, which works out at 1/9 each. And whereas the deceased’s Spanish widower opposed to sharing, her lawyer saw it convenient to settle with the above figures in mind, be means of a cash payoff.

Their proposal, not negligible given the size of the estate, was argued against on the basis of what was we thought is a sound theory: that the testator had left out his British children on the basis of what he thought right and lawful, under his personal law, but that had he known that Spanish laws also protected his British children in the event of dying in Spain, as a resident and holding only Spanish property, he would have wanted his estate to be bequeathed in equally shares.

And this is the direction of our petition, that they inherit 1/3 each, failing which we will still settle for the lesser portion of 1/9 each. And what about the risk of not settling? Since we filed a “cascade claim”, having the first petition for the higher portion dismissed (and the second accepted), would almost necessarily mean that legal costs would not be awarded: still worth the try I would say!

And what about the ethnically discerning judge? If he is Canarian, he will surely have nightmarish nights trying to choose between a half-Scottish half-Spanish defendant, the latter half originally from Germanic and Scandinavian lands, according to Canarians, and 2 half-Scottish half-Irish claimants, the first half also with substantial “Norsemen” blood, who are the Germanic people who inhabited Scandinavia in the Middle Ages which means that, by reference to blood lineage, we have solved the Judge’s tribal dilemma by boiling it down to a pure dispute between Scandis. Init Your Honour?

The title is very unsettling and surely, libel action material by anyone’s standards. But sadly, it is exactly what is being done by Inmobiliaria Peñarroya, developer for La Reserva de Marbella, to uphold the legality of these properties in courts.

The story, in short, involves licenses of first occupancy issued by administrative silence that were granted, supposedly and according to Peñarroya, for a number of buildings completed at La Reserva de Marbella. These licenses were granted by Leopoldo Barrantes Conde, currently indicted in the Malaya Operation, on behalf of the Marbella Town Hall, and the certificates are there to prove it.

However, my colleague Luis got suspicious because these certificates lacked the classic stamp issued by the documentation registrar of any Town Hall to evidence the date of notification of the administrative act. So we wrote to the Town Hall to enquire whether these certificates were actually part of the file stored with the Planning Department ,and, to our surprise, we were advised they were not, there is simply no trace of the original document supporting the photocopies in file.

The seriousness of this situation is shocking: already, the Supreme Court has ruled in favour of the developer on the basis of these fraudulent ghost licenses, perpetuating this deliberate legal anomaly based on fake official document.

Mr. Barrantes issued the licenses on the 16^th of December 2005 and was arrested on the 29^th of March 2006.

In our opinion, one of the following has happened:

1. The documents have been drawn up for the occasion, using Photo Shop or another less sophisticated method, leaving the registrar stamp out.
2. The documents were, at some point, officially issued by the Town Hall but the originals were removed by someone, either before or after the arrest of Mr. Barrantes.
3. The originals existed but have been carelessly lost, or inadvertently misplaced…

Whichever the case, the use of the documents by La Reserva de Marbella constitutes “procedural swindle” (estafa procesal), an action entailing deliberately deceiving a Judge or court into issuing a ruling that would have not been otherwise reached.

Documents

• 2011-07-la-reserva-de-marbella-fake-lfo-town-hall-information-request (PDF)
• 2011-07-la-reserva-de-marbella-fake-lfo-town-hall-reply (PDF)

Mr. Macanthony is waiving the banner of victory and some calculated dose of persecution mania since knowing that the “Audiencia Nacional” has chosen to defer the criminal complaint filed for swindle and misappropriation to the Courts in Marbella. Alas, he has conveniently omitted the fact that the Courts have not made any comment on the claim itself other that stating that this likely criminal activity is to be heard elsewhere.

The Audiencia Nacional has taken the route of stating that the “possible” swindle and misappropriation is not in a massive scale that could affect the normal performance of the Spanish economy, and thus determines that it should be the Marbella Courts who should deal with this matter.

Our choice of the Audinecia Nacional was based on the multiplicity of points of contact which involved several jurisdictions, including a 90-year-old Peruvian-domiciled yet Madrid-based Spanish former civil-war combatant who was the director of choice for Mr. Macanthony’s companies, claimants from different countries and defendants equally based abroad.

From a substantive-law point of view, the same rules apply whether it is the Audiencia Nacional or the Court of Instance. From a procedural point of view there will be variations.

As a result of this rather inconvenient criminal complaint, Mr. Macanthony has clearly taken a personal distaste for me and has reserved his best and most emotive words for the undersigned: ambulance-chaser, small-time lawyer, non-real lawyer and rather insultingly and defamatory, the concocting of a twisted story whereby I had approached his representative in Marbella, asking for money in exchange for dropping the case by spuriously persuading my clients that there was no such case to be had (when the reality is that two lawyers in our firm had been approached by him, on instructions of Macanthony, proposing that we became his new Spanish representative, with an offer of a blank check; This man failed to mention whether it was a Euro or Soles-denominated check, the Peruvian currency).

Claimants have requested from the Courts that Mr. Macanthony answers the following:

1. Where is the money paid by 51 of his former clients for furniture packs?
2. Why did he alternate company directors, choosing an insolvent 90-year old man, Fernando De Arespacochaga Alcalá del Olmo, living in Lima, Perú, to front a company acting as a director for his dying companies?
3. Why did he re-domicile his companies to a non-descript office in Madrid that serves as a cemetery for creditor-dodging companies?
4. Why did lucid Mr. Arespacochaga appoint in March 2005, November 2005, December 2006 and December 2009 four different company directors, all of which now deny knowing what were their roles?
5. Why did he disappear from Spain and not file for insolvency? (reputation perhaps?)
6. Why is he the subject of a forum with over one thousand members with an axe to grind? (this I think he has answered…).

On the subject of Spanish litigation, in my experience, there seems to be quite a bit of confusion in respect of several aspects related to the way justice works in Spain, such as how long court cases take, what sort of costs you expect to face, etc. I have found some interesting statistics which I will sum up in a few bullet points below.

• Duration of court cases According to a report issued by the supervisor for the judiciary (CGPJ), courts issued rulings in the following average time:
  • Civil cases: 7.7 months
  • Civil appeal cases: 4.9 months
  • Divorce mutually consented: 1-3 months
  • Administrative cases: around 15 months

• Number of court cases in a year In all of Spain, last year  just over 9 million court cases were filed, around the same amount were finalized and just over 1.6 million rulings were passed. Andalusia is the most belligerent regional community in 2010, with 230 court cases per 1.000 inhabitants. The least is La Rioja, with 136, no doubt the wine would have something to do with it!

• Compensation granted for courts responsibility for defective operation in 2010, approximately €5 million were awarded in compensation for defective or dysfunctional dispensation of justice.

• Number of complaints In 2010, a total 16,650 complaints were lodged in relation to the dispensation of justice. Of these, 200 complaints were received in the Law Societies.

• Money lodged within court bank accounts At the end of 2010, Banesto bank (the officially appointed by Spanish courts) had a balance in its accounts of €3.3 billion. I have a client with 1.4 million sitting there since June last year.

• Number of Prison Inmates In 2010 75,000 people were confined in Spanish prisons. Of these, 35% were foreign.

Average Length of Court Cases in Spain in 2010

A note on the Cost of Justice in Spain

Firstly, justice is free in Spain as such, as court action does not cost money, except for a symbolic deposit and a higher sum when you go to the Supreme Court.

It is the lawyers that make up for the costs, and this is what we would call Court costs in Spain. Many people believe that when you lose a case, you have to pay the other parties lawyers’ fees to be calculated depending on the hours of work of the lawyer, the professional prestige of the lawyer in question, what other costs these lawyers may engage when litigating (private investigators, detectives, technical reports etc.), so that in the end, these are often far beyond the actually monetary worth of a case. However, in Spain the Law Societies stipulates what sort of costs are to be awarded, on the basis of a number of rules which, generally, are based on the value of the claim.

My client has had a narrow escape: having been notified in early March by the courts that his property was to be auctioned by Danske Bank, at 11:00h of the 8^th of June 2011, we managed to obtain from the same court a ruling suspending the auction exactly…24 hours before (just like that one last call from the Alabama Governor…)

And prior to this, on the 27^th of May 2011, that is, just a few days before the auction, we are advised, through the courts (Document in PDF), that, unbeknownst to him, my client did indeed have €126,946.64 with Danske Bank, in some account in Luxembourg, which is what he had been wiring to them, over the years, to attempt to placate them and avoid being kicked out of his retirement home bought with his life-savings. One can only imagine the topnotch service Danske bank provided my client once they had abandoned Spain, not before trying to repossess a few homes in its wake. Danske Bank had all but forgotten about this money until the very end, and they have the cheek to say that the debtor had paid up this sum when, as a matter of fact, it had been blocked for years.

So if it was not enough stress, we added that extra bit to it by, unwillingly, choosing the latest of the possible dates (other than tomorrow) to set aside the sale at public auction instigated by Danske Bank against a 73 year-old retired mariner victim of an equity-release, who had been conned into believing that, by going with the biggest Bank in Denmark and contracting what is effectively a tax-evading financial product on his unencumbered retirement home, he would have a monthly payment coming his way, pretty much all the inheritance tax his daughters would be hit with waived or wiped out and all of it, without risking anything (apart from his home, his health and, potentially, his two beautiful daughters’ freedom, as they would have been eligible for prison sentences to be served at Alhaurin prison, 10 minutes’ drive from the foreclosed home, had they followed Danske Bank’s careful tax planning).

The Judge had no choice but to suspend the auction as, alongside these foreclosure proceedings claiming approximately €845,000 (which is what Danske Bank’s clever and optimized investing has lost, or rather, in my opinion, allegedly misappropriated), a criminal complaint had been lodged in Mijas against CEO Peter Staarup and his sales guys once based on the Costa del Sol, including an unregulated IFA hired by the bank.

These are some the promises made by Danske Bank on its prospectus:

• Exempt from Spanish Inheritance Tax : if the beneficiaries, on the death of the insured, are not residents in Spain, the capital will not be liable to Spanish inheritance tax.
• Investment Strategy: CAUTIOUS

If this is what the HMRC thinks about tax-avoidance schemes, what would they say about the Danske Bank Tax-Evasion Capital Assurance product?

Documents

• 21-03-2011 – Danske Bank Equity Release Lawbird Client Case – Auction Notice (PDF – 70Kb)
• 07-06-2011 – Danske Bank Equity Release Lawbird Client Case – Auction Judge Suspension Order (PDF – 72Kb)

Acting on behalf of over 160 claimants (of a total of 290), Lawbird, in conjunction with the Prosecutor and other accusing lawyers, has secured prison sentences for 10 individuals acussed of masterminding the largest timeshare resale scam ever to hit the Costa del Sol. A further 8 are on the run and a ninth passed away.

The agreement was almost inevitable given the particulars of a complex case that, lasting more than 10 years, would have been downplayed due to the mitigating effect of the abnormal judicial delay in administering justice. In the end, all of the accused individuals have agreed to prison sentences that, due to an pre-agreed reduction (under 2 years) , will not see them spend time as an Alhaurin prison immate for illicit association and swindle by theft.

W. Prinsloo, a man of frail appearance deemed the gang´s ideological beacon, was absent due to having died some years earlier. He had also been accused possessing an unlicensed gun, a .22 rimfire pistol, that would have made him not eligible for a suspended sentence. Being familiar with handguns as a licensed owner (I too have a .22, and a 9 mm., plus a .357), we have better places to store them rather than, well, in his “office” desk drawer, as Prinsloo did…

The ruling also obliges the convicted conmen to repay over half a million Euros, as civil liability compensation, within a period of 2 years.

And what about Argentinian conman Fabian Marcelo Ramirez, a man who is still cold-calling hundreds in spite of having being arrested 4 times? I do hope that he now sees that his moment is coming.

Documents

• 2011-05 – Timeshare Resale Scam Case Sentence (PDF – 2 Mbytes)

It has left us all wondering how come a ruling clearly favouring men has not been used, as a political weapon, by the sectarian feminist brigade and in fact, has gone almost unnoticed. The reason? Because the deciding magistrate was a woman.

I am talking about the latest Supreme Court decision that rules that divorcees will both pay the mortgage on the existing home in proportion to their share of ownership. So, whereas before the mortgage was deemed to be part of the monthly payment the better off divorcee (or separated spouse) had to pay the worst off, thereby being shared in accordance to their earnings (the appealing ex-husband was paying 80 per cent), it is now considered to be a debt generated by the spousal financial agreement, signed prior to marriage, and thus shared equally.

Most opinions I’ve listened to coincide in one thing: this new trend will help ease off the strain recent case law has created in couples in respect to the perceived advantages women got when divorcing, in a seemingly endless gender struggle. This subject, always susceptible to being interpreted by male extremists as  the price to pay for living in a country famed for domestic abuse/violence (one would be surprised though to know what statistics published in other countries say) will no doubt be debated thoroughly in the months to come, if new similar rulings see the light, in particular one seen as the “war of sexes time bomb”: the shared children custody.

Convicted conman John Doust was right in one thing, when reflecting on the reasons why he had become exposed as one of the longest-serving crooks around: “internet is a terrible thing”. It definetely proved awful to him, to the point that even a  relative of his found out about his latest scam via the cyberspace!

For Nykredit and Sydbank, Internet can administer the coup de grace for equity release contracts, signed with otherwise happy British unencumbered property owners, that invariably failed to achieve what was intended from them, leaving the supposedly happy beneficiaries in dire financial ruin.

It is not known how many people actually signed with them but what is clear is that Nykredit and Sydbank, in the process of recruiting their clients and getting them to sign up for their losing financial product, broke every existing law, regulation, norm, code of conduct, you name it. So since my previous post was boring enough with all the laws that these guys infringed, I will just outline 2 decisive aspects of their actions that would define their activities:

• They arrived in Spain through the back door: if the first stop for any entity or person who wishes to legally and properly advise on financial products or services in Spain is the CNMV (Spanish regulator), then the duet Nykredit/Sydbank must have swam in from Mediterranean to reach the Costa del Sol, or perhaps used the vehicle of the photo. If you go to the CNMV website you will not find trace of any of the two Danish banks…

• They arrived in Spain through the back door and actually knew they were doing so. You see, the WayBackMachine.org site tells us that back in 2007, Nykredit was selling equity release in Spain but were aware that they could not do so, and to warn people they actually posted a warning on their website that read:

“Please note that due to legal barriers, we currently only offer mortgage loans in France and Spain to Scandinavian retail customers.”

Because once you get into the habit of breaking the laws and other inconvenient regulations implemented by a different country , you end up doing the same with self-imposed prohibitions like the one above. Nykredit and Sydbank were just never allowed/authorised/cleared/legally entitled offer or sell equity release programmes to anyone in Spain, whether Scandis or not.

Shortly after realizing  how wrong they were, they removed the equity release page…

And my clients, all over 60, British, and retired, have had to rent their property, start working (a lady in particular is now cleaning other people’s homes) and suffer untold levels of stress since having the misfortune of crossing paths with the chap on the picture…