Our British clients had paid a total of 114,000 euros for the purchase of a house under construction in the “Medina Elvira 23” development, whose delivery was delayed for reasons attributable to the developer. As we had not provided the buyers with the corresponding guarantees or bank warranties required by Law 57/1968, and as we understood that the failure to provide these documents was a serious breach by the developer, we filed a lawsuit against the developer, which was upheld, condemning the developer to return to our clients the amounts paid, plus interest.
This interesting ruling of the Provincial Court of Malaga that has given us the right against Peninsula Project Management SL condemning it to return to our customers the amounts delivered for the purchase of a house in the promotion “Medina Elvira 23”. and which includes case law relating to Law 57/1968, says:
JUDGMENT N° 142/2015
SECTION FOUR PROVINCIAL COURT OF MALAGA
PRESIDENT ILMO. MR. DON MANUEL TORRES VELA
JUDGES, ILTMOS. ERS.
DON JOAQUIN DELGADO BAENA
DON FRANCISCO SANCHEZ GALVEZ
COURT OF ORIGIN: COURT OF FIRST INSTANCE N°5 OF MARBELLA (FORMERLY MIXED N°7)
ROLL OF APPEAL N° 1019/2012
CARS NO. 939/2010
In the city of Malaga, on the twenty-third of March of two thousand and fifteen.
Having regard to the FOURTH MALAGA PROVINCIAL HEARING of this Audience, composed of the Judges indicated in the margin, the appeal lodged against the sentence passed in Ordinary Procedural Court No. 939/2010 followed in the referenced Court. PENINSULA PROJECT MANAGEMENT S.L., who was a defendant in the case, files the appeal and is represented by the Attorney General, Mr. CARLOS BUXO NARVAEZ. ALFONSO, represented by the Procurator, Mr ALBERTO SANCHEZ GIL, and the lawyer, Mr MARTÍN DE LA HERRÁN SABICK, who was the plaintiff in the proceedings.
I.- FACTUAL BACKGROUND
FIRST- The Court of First Instance delivered its judgment on 4 May 2015, the operative part of which is as follows: “Granting in full the main application made in the name and on behalf of ALFONSO, against PENINSULA PROJECT MANAGEMENT,S.L., I must declare and declare resolved the purchase and sale contracts dated 26/10/2005 and 2/12/2005, which were binding on the parties, and I must condemn and sentence the defendant to be and to pass through such a declaration, as well as, and consequently, I must condemn and sentence the defendant to pay the plaintiffs the total amount of one hundred and fourteen thousand six hundred and eighty five euros and sixty cents (114. 685.60), plus the statutory interest thereon from the date on which the application was lodged; the defendant is hereby expressly ordered to pay the costs’.
SECOND – The appeal was submitted to this section of the Provincial Court, where a roll of paper was prepared and presented. The vote and ruling took place on March 17, 2011, and the sentence was handed down.
THIRD: The legal prescriptions have been observed in the processing of the appeal.
Seen, being rapporteur the Honourable Judge D. JOAQUIN DELGADO BAENA who expresses the opinion of the Court.
II.- LEGAL GROUNDS
FIRST : For the procedural representation of the entity Peninsula Project Management S.L., which appears as an appellant, it is alleged in the first place, defencelessness, infringement of the provisions of Article 24 of the Constitution, requesting the nullity of actions. Secondly, it is alleged that there has been an error in the evaluation of the evidence, since there is a guarantee and there has been no failure to comply with the date of delivery of the property. For all the above reasons, the applicant requests the revocation of the decision appealed against and the issuing of another ruling rejecting the complaint and imposing the costs of the proceedings on the plaintiff.
ALFONSO’s procedural representation presented a letter of opposition to the appeal, contesting the allegations made to the contrary and requesting the conﬁrmación of the contested decision.
SECOND: The application for a declaration of invalidity of the proceedings was resolved in the order made by the Chamber on 14 March 2013, in the corresponding roll of paper, in which the evidence requested was rejected, on the ground that the question submitted to the Court was of a legal nature. This decision was taken by ﬁrmeza, since the parties did not appeal against it.
THIRD: Once the arguments of the appellant have been analysed, the following facts should be taken into account:
1) That the parties ﬁrmaron signed contracts for the purchase and sale of housing under construction on the following dates 26 October 2005 and 2 December 2005, establishing that the period for delivery of the housing was expected to be twenty-eight months from the ﬁrma of the restatement act.
2) The stakeout report was drawn up on 6 October 2005.
3) According to the agreement, the houses would have to be finished on 26 February 2008 and 2 April 2008, respectively.
4. The first-occupancy licence was granted on 1 August 2008.
5) On March 5, 2010, the plaintiffs sent the defendant a request for the termination of the sale contracts ﬁrmados between the parties, based on the failure to comply with the delivery date.
FOURTH : To the above, it will be necessary to apply the new doctrine of the Supreme Court that makes this Chamber change its criteria as a result of the sentence dictated in plenary session by the Supreme Court dated March 12, 2015, in which it is stated that: “gathered in plenary session, it considers that it is not appropriate to reiterate the interpretation of art. 3 of Law 57/68 contained in its sentence of June 9, 1986.
The reasons are as follows:
(1) The most recent case law of this Chamber has advanced along the lines of interpreting Act No. 57/68 as pioneering, several years before the Constitution proclaimed in 1978 as guiding principles of social and economic policy the right to enjoy decent and adequate housing (art. 47) and the defence of consumers and users (art. 51), in the protection of purchasers of housing for residential use, including seasonal housing.
2) This line of jurisprudence has resulted in adhering to the rigour with which Law 57/68 conﬁgura imposes the obligations of the seller and its insurer or guarantor, overcoming a predominantly administrative conception of its content to give it full civil effect.
Thus, in the first place, on the accessory or, on the contrary, essential nature of the obligation of the promoter-seller to guarantee the return of the amounts advanced by the buyers (Arts. 1 and 2 of Law 57/68 ), it is settled case law that this is an essential obligation while the home is not finished and ready to be delivered, so that its breach will empower the buyer to terminate the contract and prevent the seller from terminating it if the buyer does not meet the partial payments on account of the price (SSTS of 25 October 2011, rec. 588/2008 10 December 2012, rec. 1044/2010, 11 April 2013, rec.1637 /2010, and 7 May 2014, rec. 828/2012).
Secondly, it has been rejected that the guarantee insurance for the amounts advanced by the housing cooperative members includes only a so-called ‘Tranche I’, for the purchase of the land for ediﬁcación. On the contrary, it has been declared that to ensure the proper functioning of the cooperative is to guarantee the completion and delivery of the houses and, therefore, the return to the cooperative members, in another case, of the amounts advanced (STS of 13 September 2013, rec. 281/2013 ).
Thirdly, regarding the amount covered by the insurance, it has been stated that it includes all amounts paid on account of the price, i.e. even if the insurance policy establishes a lower maximum amount, because otherwise inﬁringirían art. 2 of Law 57/68 and art. 68 of the Insurance Contract Law (STS of 3 July 2013, rec. 254/2011).
Fourthly, Art. 1 of Law 57/68 has been interpreted as allowing the buyer to address the seller and his insurer simultaneously in order to jointly demand the return of the amounts advanced and also to address the guarantor or insurer without having to sue the developer for default (SSTS of 3 July 2013, rec. 254/2011, and 7 May 2014, rec. 828/2012).
Fifthly, the directors of a development company have been held jointly and severally liable to the purchasers for the damage caused by the purchasers’ failure to recover the sums advanced because the relevant guarantee was not provided (STS of 23 May 2014, ECR 1423/2012).
Sixthly, although it is not possible for the buyer to oppose the failure to start construction to the bank by discounting the bills of exchange accepted by the buyer for the partial payments on account of the price of the house, it has been stated that the buyer can claim the total amount represented by these bills from the guarantor or insurer bank, even if it had agreed ‘with the same to settle for a lower amount and claim the rest from the developer, since such an agreement would be null and void for contravening the inalienable nature of the rights that Law 57/68 grants to buyers (STS of 25 November 2014, rec. 1176/2013).
3º) Well, moving along the same line, it is now appropriate to declare that the failure of the seller to comply with the term stipulated for the completion and delivery of the dwelling justifies, in accordance with art. 3 of Law 57/68, the termination of the contract at the request of the buyer, provided that, as is clear from the decision of the plenary session of this Chamber of 5 May 2014 (rec. 328/2012), the right to terminate is exercised by the purchaser before being requested by the vendor to execute a public deed because the dwelling is already completed and ready to be delivered even after the date stipulated for its delivery.
The above means that art. 3 of Law 57/68 introduces, in the contracts included in its scope of application, a speciality consisting of the fact that the delay in delivery, even if it is not particularly intense or relevant, constitutes a breach of contract by the seller that justifies the cancellation of the contract by the buyer. This speciality, in turn, determines that in the special area regulated by Law 57/68, the jurisprudential doctrine is not applicable, which, interpreting the general rule of art. 1124 CC, considers that the delay of a contracting party in the performance of a contract is a breach of contract.
The following are reasons to equate the “rescission” referred to in art. 3 of Law 57/68 to the termination of the contract for breach of contract by the seller:
a) The inalienable nature, in accordance with Article 7 of the said law, of the right recognised by Article 3 of the same law for the buyer, which consists of choosing between “rescission” of the contract, with return of the sums paid on account, or the granting of an extension to the seller.
b) The rigour with which art. 3 conﬁgura itself asserts this right and the correlative obligations of the seller, since if the buyer opts for the extension, this must be stated in an additional clause of the contract “especiﬁcando the new period with the date of completion of construction and delivery of the dwelling”.
c) The especíﬁco contractual balance that art. 3 of Law 57/68 introduces into the contracts subject to its regime, compensating the right of the seller to terminate the contract for a single non-payment by the buyer (art. 1504 CC and eighth stipulation of the litigious contract) with the right of the seller to terminate the contract for the delay in the completion and delivery of the dwelling.
(d) The contractual imbalance that would be to the detriment of the buyer, since in cases such as the present one, a penalty clause would even be applied against him, as is intended in the appeal, despite the fact that it has been proven and not disputed that the seller actually failed to comply with the stipulated delivery time.
e) The risk, which can never be ruled out and is not at all unlikely, of insolvency of the developer-seller, which may be aggravated precisely by the passage of time, thus reducing the expectations of the buyer as a creditor in a possible insolvency proceeding of the developer.
f) The various obstacles, inconveniences and problems that the passage of time from the date of delivery may cause the buyer to seek redress against the guarantor or insurer, as occurred in the present case when La Caixa objected to the buyers that the guarantee had expired on 30 September 2009, even though such opposition was unfounded in relation to the provisions of Article 4 of Law 57/68, which imperatively extended the guarantees in favour of the buyer until the issuance of the certificate of occupancy and the effective delivery of the home. The doctrine set out in this ruling does not exclude that the “rescission” or resolution of the contract may be denied, in accordance with general principles, due to bad faith or abuse of the buyer’s rights”.
In view of the foregoing, the conﬁrmación of the decision appealed against is deemed to have reproduced its legal basis.
THIRD : When rejecting the appeal, it is necessary to impose to the appellant the procedural costs originated in this appeal, in accordance with articles 394 and 398 of the LEC.
Having regard to the above provisions and other provisions of general and relevant application.
WE FAIL : That rejecting the appeal raised by the procedural representation of the entity Peninsula Project Management S.L., against the sentence issued by the Court of First Instance No. 5 of Marbella, we must conﬁrmar and conﬁrmamos the aforementioned resolution, with express imposition on the appellant of the procedural costs arising from this appeal, which also lose the deposit constituted.
Notiﬁcada that this resolution be the present one, please send the testimony of the same, together with the main proceedings to the Court of First Instance, requesting an acknowledgement of receipt.
Thus, by this our Sentence, judging deﬁnitivamente in second instance, we pronounce it, send it and ﬁrmamos.
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