Antonio Flores’ Blog

The above proverb often implies that details might cause failure, and failure is what occurred to the three real test-cases (below) who thought that, by having a tax-residence-of-convenience status (Andorra and Switzerland) and spending a short time there, they would be shielded from the action of the AEAT (Spanish Tax Office).

TEST CASE 1: A self-defined Swiss tax resident lost an interesting case brought by the Spanish Tax Office who deemed him a resident of Spain. The tax payer had argued that, according to the DTA (Double Taxation Agreement) Spain-Switzerland, he could be classed as a resident of both country. Indeed, the man had properties in Switzerland and Spain, and had one daughter in each country; according to the Spanish Supreme Court, these facts alone would not conclusively establish where his connections were stronger. The devil in this case was he had signed up to the Spanish Automobile Club as well as Maritime Clubs in Ibiza and Marbella, without analogous memberships in Switzerland (attempts to convince the Taxman that there was no sea in this country were to no avail…).

TEST CASE 2: A Spanish Andorra-based taxpayer could not successfully argue against the evidence that was stacked up against him, notwithstanding his marriage to an Andorra citizen. The AEAT challenged his status by arguing that he had a company in Barcelona, his apartments in Spain were being regularly used (utilities were up and running), yet there was no proof of rental activity, he had a daily subscription to a local paper and had hired domestic employees. In upholding the Tax Office’s case, the Catalonia Supreme Court (1254/2013) deemed a tax residency certificate from the Andorran authorities not relevant.

TEST CASE 3: Similar to the above case, the Spanish Tax Office successfully proved that the Andorra resident was in fact in Barcelona-based because his medical insurance broker was based in the city and, more conclusively, a local hospital had reported frequent visits inconsistent with living in Andorra.

On a next issue, we will discuss those who were able to successfully challenge the AEAT who, we should not forget, has no influence over a Court decision (contrary to popular belief).

Antonio Flores Litigation, Tax Law Andorra Tax Evasion, Double TAxation Agreements Spain, Switzerland Tax Evasion Spain, tax avoidance Spain, Tax Residency Spain

Most people are aware that a European Arrest Warrant (EAW) is an arrest warrant valid throughout all member states of the European Union. Once issued, it requires another member state to arrest and transfer a criminal suspect or sentenced person to the issuing state so that the person can be put on trial or complete a detention period.

Spain, being part of the EU, is no exception when applying foreign EAWs in all its territory. But there are other types of warrants that are largely unknown and yet are used by Spanish Police Forces regularly. This the list they use, with the associated protocol code:

• Code 1/ Ascertainment of Domicile and Whereabouts: applied when a person is being sought after to notify them, officially, of impending legal action. This warrant can mature and become an arrest warrant.
• Code 2/ Search, Arrest and Attendance: applied when a person has allegedly committed a serious offence or a defendant has not turned up when requested to do so, either by the Police or the Courts. It is commonly known as ‘arrest warrant’.
• Code 3/ Search, Arrest and Imprisonment: applied when a person has been convicted but later absconds.
• Code 4/ Prohibition to leave the country: applied to persons that are subject to legal action or minors, where there is risk of parental child abduction.
• Code 5/ Prohibition to enter the country: applied to non-EU citizens that have an entry ban.
• Code 6/ Protection of a person: applied to people under 18 years of age or incapables.
• Code 7/ Specific surveillance: applied to people that have a residence ban in a specific area, or are being investigated, and it includes verifying the origin, destination, itinerary, belongings, habitual domicile and identity documentation.
• Code 8/ Discreet surveillance: without attracting attention, gather as much evidence on the suspect (as above).
• Code 9/ Search and Arrest for Extradition: commonly carried out in cooperation with the Interpol Service or the ‘Sirene Office’. The arrested person is take to Court who will decide on the merits of the case.

Antonio Flores Litigation Arrested Spain, EAW Europe, European Arrest Warrant, Spain Court system, Spanish Police

What Mr. Keith Rule and Castro Abogados have achieved is one great result for the 47-strong Finca Parcs (Hellín) group of claimants who, having paid upfront deposits on a failed off-plan development, found to their horror that through the incompetence of their legal representation, no bank guarantees were available.

An undeniable great exposure has meant that numerous claimants who are on the same boat are starting to enquire what is it with this case that is different from many others, in process or already finalized with equal result. Our firm has received a handful of such enquiries, and presumably, many other are already receiving similar emails.

In writing this, I am aware that I do risk being dismissed as some miserly person void of happiness and filled with envy at the successes of others, but far from it: I do wish to congratulate the Castro family and Keith’s group for this success that, by “juridical contagion”, should help everyone involved in this conundrum.

But still, factuality deserves respect and so, once again, let us allow the truth get in the way of a good story:

• The CAM bank and Cleyton Ges S.L. had given out the 1968/57 bank guarantees to a very large number of customers at Finca Parcs, some of which in fact happened to be represented by us. When the developer kicked the bucket, those with bank guarantees were duly refunded by the CAM whereas those who did not, were told to sod off. No surprise there considering that the predatory CAM bank was governed by a gang of pirates who saw no issues with lending themselves astronomical amounts to invest in the Caribbean, a robbery now subject to criminal investigation.
• To contend that this is a landmark ruling is to be dismissive of the work of many other lawyers who have already obtained success in identical cases. The reality is that there are plenty of rulings that contradict Mr. Rule’s claim that this is legal precedent, no matter how hard, perhaps at the insistence of the media, they were conveniently omitted. Strangely enough, the original article published in El Pais does not say it’s a groundbreaking case, and it does not for the simple reason that it was a serious journalist who did his homework and got the facts right (he did call us and we pointed him to  the most reliable source of information: online law libraries!). Conversely, we could admit that, where no bank guarantees of any description or special accounts were available, a ruling ordering a bank to pay would be deemed worthy of being classified as legal precedent. In the ruling of this post, both bank guarantees and a special account were actually available.Keith’s Rule: Don’t let the truth get in the way of a good story!
• To say that Mr. Rule had “…taken on bank bosses after discovering a 45-year-old property law making them jointly responsible with promoters for returning guaranteed deposits on failed developments” is just risible; Mr. Rule has not discovered the 57/1968, just as Roberto Sanchez Saavedra did not discover the Spanish Civil Code (it was already there when his great-grandfather was born). The reality is that the “dug out” 1968 Act was helping many when Franco still went wild-boar hunting, and thousands have already benefited since then…including many of the Finca Parcs victims.

In summary, what has really happened is that Keith Rule and his group hired competent legal representation to help them out, and were lucky that funds were channeled through the developer’s accounts with the CAM, and not pocketed by the rogue developers via overseas accounts (even in this case protection may still be available). And not the least, that many buyers had bank guarantees whereas others didn’t (implying the existence of a blanket bank guarantee), an unfair situation caused by the inaction of property conveyance lawyers, the developer and the CAM bank and, as far as Spanish consistent case law is concerned, totally unacceptable.

But to announce that this is a groundbreaking ruling -when the bank had already given out dozens of individual bank guarantees (a few examples below) to as many customers, and there are plenty of identical rulings on the matter-  is just false.

Proof that Bank Guarantees for Finca Parks do Exist

Downloads

• Bank Guarantees for Finca Parks (PDF)

Antonio Flores Litigation, Property bank guarantees, CAM Bank, Cleyton Ges S.L., Finca Parcs, Keith Rule

The Spanish Supreme Court has ruled that floor clauses can be deemed void where the bank failed to advise customers with clarity and transparency, establishing conversely that would be licit where borrowers were fully and adequately informed.

The high court analysed the clauses used by the bank BBVA and found them to be in breach of consumer regulations due to the following reasons:

• There is insufficient clear information that such clauses are material to the object of the contract.
• They were inserted together with “ceiling clauses”, which caps the loan interest rate, as if offered in exchange for the bank’s concession.
• The bank failed to offer examples on specific instances of interest rate behaviour.
• There is a lack of clear and comprehensible information in respect of cost comparisons with other loans offered by the lender -where there are others- or a warning that the borrower is not being offered others.
• In the case of BBVA, the clause is embedded within significant data that  disguises it and has the effect of diluting the attention of the consumer.

The Supreme Court has also found these clauses to have a perverse effect: they created the false appearance that the lower the Euribor, the lower the mortgage repayment (it was thus just an amiable facade).

Customers in the above scenario are now in a position to succesfully challenge such clauses although, as was made clear by the Supreme Court, the ruling does not have a retrospective effect.

Do you have one of such clauses in your mortgage loan contract? Have you calculated how much you could save by having it removed?

Antonio Flores Litigation, Mortgages, Property Abusive Clauses, BBVA, Caixa Nova Galicia, Cajas Rurales Reunidas, Floor Clauses, La Caixa, Santander, Spanish mortgage borrowers, spanish mortgages

Newspaper ABC has exposed a worrying trend: since 2007 110% more of eligible heirs to Spanish inheritance have renounced to their portion of the estate because there is more debt than equity to inherit.

According to the Notarial Council General, it’s a shame that so many people take the route of renouncing the inheritance, without knowing whether indeed the liabilities exceed the assets, just because it is not possible to have a clearer picture of the financial situation of the deceased prior to going in front of a Notary.

But Spanish Notaries remind us that the Spanish Civil Code has a solution for this: to inherit subject to “benefit of inventory”. This allows the inheritor to have the right to obtain the exact situation with the estate of the deceased testator prior to becoming a full inheritor but at the same time, accepting the designation if finally, there are assets worth inheriting. In other words, debts that are inherited will be covered by assets from the estate, not the inheritor.

For example, beneficiaries of a will written by victims of banks implicated in the Equity Release fraud are advised to choose this route to avoid becoming personally responsible for the mortgage loan that was sold fraudulently as the miracle product against Spanish Inheritance Tax.

This method of inheriting also allows inheritors to litigate against creditors (banks for instance where miselling took place) without becoming personally liable for it.

Finally, if all inheritors renounce to the inheritance, the Spanish State will be eligible to receive it although, subject too to debts not being higher than the part of the estate that is really worth something!

Antonio Flores Inheritance, Litigation herencia beneficio inventario, spanish inheritance tax, Spanish Succession, Spanish Wills

In this video blog I talk about bank guarantees and the responsibility of financial entities that consented property developers use their bank accounts to collect deposits, without ensuring that those deposits were guaranteed. In this instance, the bank applied the 57/1968 Act which stipulates that “banks will ensure under their responsibility, prior to opening a special account for a property developer, that a guarantee has been taken out.”

Some interesting case law can be read here.

Antonio Flores Litigation Act 57/1968, Aifos, Banco popular, El Pinet, Enforcement guarantees, Execution bank guarantees, La Caixa, La Fortuna, Offplan property, Spain bank guarantees

By now, most people should be aware that drinking alcohol and driving are two incompatible activities that, when mixed, can put people’s lives in dangerous risk. But alcohol-impaired driving will also get the driver into serious trouble with the authorities, particularly when alcohol breath readings exceed 0, 25 mg/liter and blood levels 0, 5 gr/liter, and will become a criminal offence if the quantum of alcohol exceeds 0, 6 mg/liter in a breath test and 1, 2 mg/liter in blood.

Additionally, one faces an automatic driving ban and a fine and where there is careless driving, refusal to provide a specimen for analysis or an accident causing injury or death to other people, prison terms.

Statistically, 98% of cases end up with the Court passing a guilty verdict and it for this reason that most lawyers will advise their clients to plead guilty to benefit from a “slap on the wrist” reduced sentence (one third off, which translates normally in a 8-12 month ban and a €800-€1,000 fine), avoiding more severe consequences, after negotiating with the State Prosecutor.

But then, there is always a departure from the norm. The remaining 2% of drivers will pluck up courage, challenge the Prosecutor’s offer and win! This is how some did it:

• A driver who had been charged with criminal drink driving provided a medical report certifying that, whilst under the effects of a drug called Manidon, a breath test reading of 0, 63% mg/liter should read 0, 53% mg/liter. This meant that he fell under the threshold to be criminally prosecuted and so, the Court had to acquit him, even though the certificate was issued 2 days after the event and did not certify that the driver had taken the prescription drug on the day, only that he was being treated for it!

• A driver was found in a vehicle that happened to be diagonally parked (incorrectly as it happened). When the police ordered him to come out of the car, he stumbled and fell right down, being subsequently tested positive for alcohol consumption. Against the Prosecutor’s opinion, the lawyer acting in this instance argued that there was no evidence that he was driving and thus, the Court acquitted.

• A driver that was found guilty of driving while intoxicated and had been banned from driving by the criminal Courts was later stopped by the police, who noticed he was already disqualified. The Courts acquitted him of a further criminal charge because the lawyer successfully argued that formal notification of the ban, by the Traffic Authorities, was not conducted properly, but by means of ordinary registered post.

• A driver who had had an accident left the scene and went home. Later, he returned drunk and invoked that the alcohol had been ingested after the accident. The Prosecutor was not able to demonstrate, beyond reasonable doubt, that the driver had been drunk whilst causing the accident and the Court had no option but to pass an acquittal sentence.

Still, better not drink and drive.

Antonio Flores Litigation drink driving spain law, drink driving spain lawyers, drunk driving deaths spain, drunk driving lawyers spain, drunk driving spain, drunk driving statistics in Spain, spain drunk driving laws

Losses sustained on a financial investment that has not performed cannot always be attributed to the consumer. There are many instances where risks were not properly disclosed,where the consumer’s profile and an understanding of the complexities were incompatible, perhaps there was been misrepresentation or even fraud..

Of special importance are the timescales within which an action may be taken as, where there was mistake or misrepresentation, the contract can be rescinded within a period of 4 years since it was consummated but if, for instance, the contract is null and void because it violates public policy, or goes against moral or ethics, the contract is deemed to have never existed and so, there are no timescales to bring such an action.

The type of financial contract entered into may also determine when the 4-year rule elapses: as an example, claimants that sue for having been mis-sold “swaps” have 4 years since the contract was consummated (end of the term of the contract for both parties) whereas, those who wish to set aside a contract on a Unit-Linked Life Assurance product, pursuant to a recent ruling by the Appeal Court in Vizcaya (30-9-2011), can only bring an action within 4 years since the contract was signed.

It is worth noting that the 4-year term is for mistake or misrepresentation (viodability), but not for contractual default (15 years) or total voidness (no term).

Antonio Flores Litigation Banco Valencia, CAM Bank, Complex bank deposits, Equity Release Spain, Financial Mis-selling, Preferential Shares Spain, Suing Financial Failed Investments, Swaps

Is Spanish off-plan property development dead? I would think so, considering the diverse value judges give to misleading advertising by property developers and, consequently, an increasing lack of trust in an already damaged sector.

The story goes like this:

Recently, a property developer in the north of Spain was sentenced to 21 months imprisonment for falsely advertising, on a billboard, that the urbanization he was developing would offer gardens, swimming pool and a children’s playground. Additionally, he had also indicated that the development would include adequate sewage infrastructure, water treatment plant, lighting and sidewalks…when, according to the sentencing court, he had no intention of providing such facilities.

Yes, a tough ruling by 3 tough magistrates who imposed a 21^st century version of the Talion Law, exacting retribution to the defaulter in the most strict way possible, under Spanish law.

In an almost identical case by Court of First Instance in Murcia number 13, the Judge dealing with a dispute over unfinished facilities in Corvera Golf and Country Club accepted the following:

• That the construction of the promised 5-start hotel, to be run by Devere, was never started.
• That there are no, as recognized by the defendant, commercial centers, restaurants luxury hotel, health center nor a spa.
• That the promotional literature is fully binding, citing several Supreme Court rulings.

But, in stark contrast with the ruling that saw the Galician developer almost having to do time for fraud (received a suspended sentence), the Corvera Golf & Country Club developers, who had not built (and had no intention of doing so, as it happens), among others, a 5-star hotel, even though it had been offered, enjoyed a favourable ruling as the claimants’ civil claim for contractual default was dismissed.

And so, the question that remains to be answered: what is it that made this judge rule in such a manner?

Succinctly speaking, that the buyers did not prove that they had relied on the promised facilities to sign the contract! The judge adds that

“…the answer to the claim has to necessarily be negative for, on the one side, the contracts did not stipulate a deadline for building the promised amenities and, on the other, the buyer does not prove, in any way, that the concrete construction of the 5-start hotel and commercial center had, when exchanging contracts, such an intense relevance that it would justify pulling out the transaction should the amenities not be built…in fact, the golf course was indeed completed and the construction of such element was, as evidenced, the only element that was contractually agreed to.” 

And to further justify his anomalous decision, he supported the developer’s argument that the 4^th phase had not been completed, by which time presumably the hotel and other amenities would have been finished. What he did not feel relevant was the fact that Corvera developers had previously undertaken to the following, in respect to Phase IV:  

“By reference to the main plot number 3832 Corvera Golf & Country Club reserves its rights for a period no less than 100 YEARS, to build the FOURTH PHASE of the community, which entails, in the event of this happening within the stipulated time, the proportional redistribution of the service charges being paid by other phases within the community.

Your honour, 100 years seems an awful lot of time to wait for the 5-star hotel, would you not agree?

An appeal has already been lodged.

Antonio Flores Litigation, Property Corvera Golf and Country Club, litigation against spanish developers

68 year-old Anne may have been “saved by the bell”, as she fully qualifies for Court protection under new anti-eviction legislation just passed by the Spanish Government, at least during 2 years.

Her story probably epitomizes the greed of most banks, and their bankers, in pursuit of sky-high profits, commissions and promotions. Predatory, crazy, irresponsible, avaricious are some words that can be applied to what happened to Anne, a story where a bank actually forced a loan on someone who was, at the time, convalescing of a cancer operation.

Anne owned a small apartment outright in Marbella, had some savings inherited from her late mother and after having beaten a life threatening cancer stumbled across a lender, Jyske Bank Gibraltar, who convinced her that she should take up the opportunity to access cheap money and upgrade her living conditions by taking out 2 loans, using the spare cash savings to top up the bank’s money and then, hopefully, get some fresh new income by renting one of the two and…bla bla, as we all now know.

The odds were clearly against her: she could not prove she had an official income in Spain after 20 years living here (had never been registered with the Spanish Social Security system), was not able to work and relied on a €600 pension from the Belgian Government. No worries, Jyske Bank Gibraltar, after “carefully studying the case”, concluded she was a suitable borrower and eligible to take out 2 loans worth €550,000, repayable during then next 35 years. But quite how she intended to repay them remains a mystery even today, presumably even to Jyske’s Christian Bjørløw. What were they both thinking…? Was Jyske also convalescing…?

The law passed yesterday stipulates that even if her home has been repossessed, she qualifies for a 2-year moratorium as she has not yet been evicted. Time to type up a writ to the Courts!

Antonio Flores Equity Release, Litigation equity release, Eviction, foreclosure in spain, Gibraltar Private Banking, Jyske Bank, Jyske Bank Gibraltar, Jyske Bank Spain, Spanish Mortgage Loans