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COURT OF FIRST INSTANCE No. 5                                        Procedure: Ordinary procedure

Avda. Chayofita s/n. Los Cristianos                                             Procedure No.: 0000360/2015

Arona                                                                                              General ID No. (NIG): 3800642120150002963

Phone No.: 922 74 73 31/32                                                         Subject: Claim for Payment

Fax: 922 74 73 30                                                                          Decision: Ruling 000149/2016

Case No. (IUP): OR2015021701

 

Intervention:                       Intervening Party:                      Attorney:                            Public Prosecutor:

Plaintiff                               [redacted]                                                                               Maria Luisa Diaz Vecino

Plaintiff                               [redacted]                                                                               Maria Luisa Diaz Vecino

Respondent                         silverpoint vacations SL                                                         Pedro Antonio Ledo Crespo

 

27 May

RULING

In Arona on the 24th of May 2016.

SEEN by JOSÉ PABLO CARRERA FERNÁNDEZ, JUDGE of Court of First Instance Number 5 of this city and its judicial district, these orders of ORDINARY TRIAL number 360/2015, filed by Mr. [redacted] against SILVERPOINT VACATIONS S.L. The purpose of the process is a claim of contractual nullification.

FINDINGS OF FACT

FIRST. Barrister of the courts, María Díaz Vecino, working on behalf of [redacted], filed an ORDINARY LAWSUIT against SILVERPOINT VACATION [sic] SL, a lawsuit in which, after stating the facts and legal bases that she considered pertinent in support of her claim, she ended by asking that the Judge state a judgement whereby the contract dated 15 May 2012 for the amount of 13,164 pounds sterling (18,187.34 Euros) would be declared null and void, with the obligation that the respondent return to the plaintiffs the amounts paid as payments derived from that contract along with the corresponding interest accrued from the filing of the lawsuit, with express imposition of the costs to the counterpart.

SECOND. After the lawsuit was admitted, the respondent was summoned so that they could respond to the lawsuit within the period of twenty days.

Barrister of the courts Pedro Ledo Crespo, on behalf of SILVERPOINT VACATIONS S.L., responded to the lawsuit, remaining opposed to what which the plaintiff requested, alleging the facts and legal bases that he considered pertinent to that end and ended by asking the Judge to state a judgement wherein the lawsuit would be dismissed, with express imposition of the costs to the plaintiff.

THIRD. The parties having convened for the mandatory pre-trial hearing indicated by law, and the indicated day having arrived, both parties appeared, being encouraged to reach an agreement, which was not reached, stating and confirming in their respective writs of lawsuit and reply, and making the statements that appear in the orders and requesting the receipt of the litigation being tested, all of which is duly registered in proper support for the recording and reproduction of the sound and images, with the result being found in the orders.

FOURTH. Having agreed on the receipt of the litigation to be tested, at the request of both parties, and the day indicated for the trial having been reached, the evidence was submitted and admitted in the terms contained in the recording and which, in the interest of brevity, has been reproduced. The evidence having been shown, the parties formed their oral conclusions in the terms found in the orders.

LEGAL BASES

FIRST. Duration of the contract. There is no doubt that the plaintiffs acquired from the respondent the corresponding time-share rights on properties with respect to Apartments Nos. 3.5243 [sic] and 5.418 in Weeks 12 and 49, respectively, in the Hollywood Mirage Club complex. The transaction was verified in virtue of the contract dated 15 May 2012, attached as Document No. 2 of the lawsuit.

The plaintiff is interested, first of all, in declaring the aforementioned contract null and void as a result of breaching Royal Decree-Law 8/2012, a standard that currently disciplines this type of transfer. The plaintiff maintains, first of all, that it infringes upon Article 24.1, which establishes that the duration of the regime shall be greater than one year and shall not exceed fifty years (…). In addition, the Sole Repealing Provision establishes in its Point 3 that all pre-existing regimes shall have a maximum duration of 50 years, which in the case of those entered into prior to the entrance into effect of Law 42/1998, of 15 December, will be computed from that date, except if they are for a shorter duration or had been made in the deed of rectification, with express declaration for indefinite continuity, or for a certain period.

This claim must be made in connection with the second issue invoked, referring to the omission from the contract the information demanded by Article 30 of the aforementioned standard.

Certainly, the aforementioned Article 30 demands, among other things, that the contract include, at a minimum, the duration of the regime with regards to the regulatory writ and to its registration date. If the property is under construction, the duration shall be with regards to the deadline by which the certificate of work completed must be registered.

It should be noted that, in fact, as the plaintiff states, nowhere in the documentation provided  (by either party) does it state the duration of the regime.

The plaintiff considers this omission to be a determining factor in the complete nullification of the contract since this omission is equivalent to a transfer for an indefinite period of time. The respondent considers that the omission must be formed by the legal standard, so therefore the duration is 50 years.

The first thing that should be pointed out is that strictly speaking, the legal standard does not determine the maximum duration that the transferred right must have. However, it does determine that the minimum period will be greater than one year, as derived, for example, from Articles 2, 23.6 and 23.7. What the law does do is set the maximum duration whereby a building, building complex, or differentiated architectural sector can be linked to a regime that allows for the transfer of their accommodations through the time-sharing system. That maximum period is the aforementioned 50-year period stipulated by Article 24.1, with the post-script that once the regimen ends by the duration period has lapsed, the owners shall have no right to any compensation. In addition, the provisions of Sole Repealing Provision 3 must be taken into account, as in certain cases it allows the duration of the regime to be for an indefinite period of time.

That being said, what is true is that the aforementioned standards are correlated with the repealed Law 42/1998, the essential difference being that under this law, the minimum duration of the transmitted right was three years; with the current law, the duration is one year. Article 24.1 of the current law is equivalent to Article 3.1 of Law 42/1998, with the exception of the minimum period. With regards to the aforementioned Art. 3.1 of the repealed standard, STS (Supreme Court Ruling) 787/2016, of 19 February 2016, declared as jurisprudence that the marketing of time-shares for tourists, after the entry into effect of Law 42/1998, without respecting the temporary regime established in Article 3.1 of that law, which set a duration of between three to fifty years, gives rise to the nullification of full contract rights. This jurisprudence must be considered completely valid with regards to the current Article 24.1. Therefore, it must be understood that time-share rights cannot be marketed for times less than one year or greater than 50 years under the new law. In the same line, the content of Article 1.7 of the repealed standard is equivalent to the current 23.7 (except for the minimum duration). Therefore, there is a correlation between the maximum period for the establishment of the regimen and the maximum period for transferring rights.

Therefore, it is evident that the duration of the regime is not absolutely irrelevant and, on the other hand, neither can it be supposed, without additional information, that the duration should be 50 years in the absence of evidence otherwise. However, in this case, unlike those events to which the plaintiff refers with regards to jurisprudence, neither may it be said that the right transmitted may be for life or for an indeterminate period of time.

The buyer is not indifferent to the duration of the regimen because when the duration ends, as I have indicated, so to does their right, without being able to receive any compensation for that. Therefore, the maximum period being 50 years or 20 years is not the same thing since, logically, their right will end before or after. Conversely, knowing the duration is relevant for evaluating whether the price that is being paid is reasonable or adequate for the circumstances of the case. Evidently, purchasing for 20 years is not the same as purchasing for 50.

All of the above having been established, what is true is that the respondent does not indicate in their reply the time whereby the regime was created for the Hollywood [sic] Mirage Club complex. It is not indicated directly since indirectly it seems to argue that the creation was made for an indefinite period of time. In fact, the respondent argues (and this argument is maintained in Document No. 4 of the reply) that the time-share rights on properties sold to the plaintiffs had been transferred and created prior to January 1999 (date of entry into effect of Law 42/1998). This is a veiled way to state that the transfer was done for an indefinite period of time, even more so when it interprets, in this context, STS 771/2014, of 15 January 2015, insofar that all time-shares NOT transferred prior to Law 42/1998 must be transferred under the requirements established in Article 3 of Law 42/1998, i.e., with a maximum duration of 50 years. In the same sense, the lawsuit notes the existence of a deed of rectification to Law 42/1998 from pre-existing regimes granted on 2 January 2001.

It may be supposed that if the right had been transferred with a duration no greater than 50 years, the respondent would have provided the appropriate documentation to support that case, something that was not done, the burden of proof corresponding to her due to 1) dealing with information that the standard demands be expressly indicated to the buyer; 2) based on the principle of evidentiary facility. It would have been very simple for the respondent to justify that case and thus clear any doubts about the time for which the regime on the complex had been created.

Therefore, in this case, it may not be supposed that the absence of mention of the duration of the regime means that this contract is for 50 years, particularly when there is a deliberate vagueness in the activity of the professional dealing with those regimes. In fact, her position in the response to the lawsuit leads on to suppose, and in fact, consider it proven, that the transfer was done for an indefinite period of time. In other words, the respondent, instead of affirming or denying the allegations of the other party, has been turning a blind eye and trying to dodge the issue. The argument being held is that Supreme Court doctrine would allow for the transfer of time-share rights for an indefinite period of time if they were transferred prior to January 1999. If what justifies a transfer for an indefinite period of time abides by the law, what that says is that we are, in fact, facing a transfer for an indefinite period of time. Otherwise, plainly and simply, the documentary evidence would have been provided that would justify the regime for a period no greater than 50 years, as stated in Article 23 of RD-Law 8/2012 and as was previously given in Law 42/1998.

The vagueness cannot favour the professional over the consumer. The professional cannot dance around with omitting the duration of the transfer when she does not clarify whether the regime was created for a period of time equal to or less than 50 years or if, on the contrary, it was created for an indefinite period of time. This vagueness must be harmful, since there is the risk that, as long as the buyer does not say anything, she pretends that the transfer operates indefinitely (as it would seem that the regime, in this case, is created); instead, when the buyer questions that omission (such as is the present case), she alleges that in reality, the duration of the contract is 50 years since that is what the law says. The vagueness makes it possible for the professional to act as she best sees it and to “modulate” the duration of the contract as best suits her. This reason should reinforce the previous arguments by considering it proven that, in this case, the transfer was done for an indefinite period of time, although the contract does not state that expressly (although the contract does not say anything), in accord with the undefined duration regimen to which it seems that the complex is subject.

Thus, the issue is whether or not the transfer of a time-share right for an indefinite period of time is lawful under RD-Law 8/2012. First of all, it must be stated that the aforementioned standard allows, in a residual manner, the existence of regimes created for indefinite period of times, specifically those referenced in Sole Repealing Provision 3: those entered into prior to the entrance into effect of Law 42/1998, of 15 December (…) that had been done in the deed of rectification, with express declaration for indefinite continuity (…). A provision that is correlated to Transitional Provision 2.3 of the repealed Law 42/1998.

It is not up for debate, at present, that there may be regimes created for durations of greater than 50 years as a result of the set of successive provisions of the intertemporal law of the standards that regulate the issue. However, this does not mean that transfers may take place for periods of time greater than 50 years. Despite the interpretation that the respondent makes of STS 774/2014, of 15 January 2015, what is true is that it must remain in line with the aforementioned jurisprudence of Supreme Court Ruling of 19 February 2016, Rec. 461/2014: the marketing of time-shares for tourists, after the entry into effect of Law 42/1998, without respecting the temporary regime established in Article 3.1 of that law, which set a duration of between three to fifty years, gives rise to the nullification of full contract rights. Therefore, it is impossible to accept the interpretation given by the respondent when the Supreme Court has set jurisprudence on the effects of a contract to transfer time-share rights for an unlimited period of time. What is relevant is the transfer date.

Furthermore, regarding the interpretation that must be made about the “rights not transferred”, STS 96/2016 nevertheless states the interpretation that the appellant made and, with regards to Section 3 of the second transitional provision, on which it is supported, it states that it is not respectful to the meaning that steams from the systematic connection of the same with Section 2 of the same transitional provision, the contents of which respects in any case -“notwithstanding what was said in the previous section […]” – and according to which all owners – and therefore also now the appellant – who should wish, after the deed of rectification,” to market the shares not yet transferred as time-shares”, would constitute “the regime with respect to the period available with the requirements established in this law”, including the requirements related to time, established in Article 3, Section 1.

Therefore, if the shares not transferred were already subject, at the time of their transfer, to the time limits of Law 42/1998, even more so would those that are transferred after it (and are now under RD.L. 8/2012). It is unacceptable that the shares that are currently being transferred, even though they refer to regimes created for an indefinite duration, are transferred with durations greater than 50 years.

To the extent that I have considered it proven that in this case the transfer was made for an indefinite period of time, the contractual nullification must be stated, and therefore the parties must reciprocally give restitution to the other (the plaintiff the rights acquired, the Respondent the price).

That being said, however, STS 192/2016, of 29 March, must be considered, which says: It is true that Article 1.7 of Law 42/1998 establishes that, in case of nullification of full rights, the entirety of the amounts paid will be returned to the buyer. Regardless of the interpretation of that standard and its application to the case, one must consider the provisions of Article 3 of the Civil Code insofar that that interpretation must be made by attending primarily to its “spirit and purpose”. In the case of the aforementioned Article 1.7, it deals with holding harmless a contractor who, in good faith, was surprised by the content of a contract -normally an adhesion contract- that does not comply with legal prescriptions, but has not occurred as such in this event in which, as has been said, for eleven years the respondents have enjoyed the accommodations that the contract offered them and even signed a new one, which is why the repayment of amounts paid must not be complete, but rather proportional to the time that remained, taking into account the maximum legal duration of fifty years.

Thus, from the amount paid of 8,941 pounds sterling, the respondent must repay only the amount corresponding to the thirty-nine years not enjoyed (specifically, 6,973.98 pounds sterling), starting from the attribution of a contractual duration of fifty years, which is the maximum provided for in law, with application of the legal interest from the date the lawsuit was filed, thus entailing the first of the requests made in the “petitions” of the lawsuit with regards to the contract, from which it is not necessary to take into consideration the claims made that are tied to the same.

I feel that this criterion should not be applied to this case, since, as has been said, the contract was signed in 2012 and the lawsuit was formulated barely three years later in 2015. Nor have the respondents signed any similar contracts with the respondent [sic]. Therefore, I feel that the elements that the Supreme Court takes as a reference in that case to limit the restitution are not present in this case. Therefore, it is appropriate to agree on the complete restitution of payments.

SECOND. Other breaches. Although the lawsuit must be considered with regards to what was stated in the legal bases above, nevertheless, the plaintiffs invoke other breaches. Specifically, it is stated that the information supplied by the respondent did not meet the requirements of Article 30 of RD-L 8/2012.

The plaintiff considers that omission to likewise be a determining factor in contract nullification. STS 830/2015, of 15 January 2015, is invoked to maintain that nullification. However, strictly speaking, the aforementioned STS does not declare contractual nullification by an omission of the information demanded in the repealed Art. 9.1 of Law 42/1998, since it leaves the issue open; instead, it declares nullification due to not identifying the specific accommodations on which the time-share right is transferred

Not only is there missing data on the regulatory instrument on the regime, with indication of the granting date, the authorising notary public, and the number of his or her protocol, and on the registration data in the Property Registry (Section 1), which in this case would have to be stated with respect to each of the nine tourist complexes to which the contract would refer, but also there is no express mention of the “real or personal” nature of the right transferred, making it state “the date on which the regime will be terminated” in accordance with the provisions of this law (Section 2).

But above all, although it was considered that such defects do not reach sufficient severity to determine contractual nullification, causing other consequences to occur, the contract is not subject to the lack of purpose provided for by law and thus breaches the mandatory standard of Article 9.1, Section 3, of Law 42/1998, according to which the contract must necessarily contain the “precise description of the building, its placement, and the accommodation on which the right falls, with express reference to their registry data and to the share that is the subject of the contract, with indication of the days and times on which it starts and ends”. Law 42/1998 does not cover another type of contract such as this one in which the accommodation on which it falls is not determined; I agree that it could be covered in the regulation of Article 1255 of the Civil Code if not for the fact that the law itself prohibits punishing that with nullification (Article 6.3 of the Civil Code) in defence of consumer rights. This demand is also contained in Article 30.1.3 of the new Law 4/2012, of 6 July, which is the one that currently governs these contracts.

Therefore, in this judgement, the Supreme Court leaves open the possibility that that omission of information does not reach sufficient severity to determine contractual nullification. That being said, it does consider that what is inadmissible is that the accommodations on which it falls is not determined.

In the case of orders, the accommodations are identified perfectly, as are the weeks in which the time-share right can be enjoyed by the plaintiffs.

In this line, STS 775/2015, of 15 January, 460/2015 and STS 29 of March 2016 (Rec. No. 793/2014) declared the following as jurisprudence: in the legal regime established by Law 42/1998, of 15 December, on time-share rights for properties for tourist use, the lack of determination in the contract of the accommodations that constitutes its purpose may result in the termination of that contract, as provided for in Article 1.7 in relation to 9.1.3 of that law. Therefore, the contract nullification is linked to the omission of the information on the identification of the accommodations being transferred but expressly does not extend to other omissions.

On the contrary, in the aforementioned STS 96/2015, as in STS 112/16, both referring to contracts signed under Law 42/1998, it is noted that the reasons for nullification that are cited for failure to comply with the provisions of Articles 8 and 9 of Law 42/1998 are not the same insofar that the lack in the contract of the provisions in those standards does not result in nullification, but rather the possibility of termination, as stated in Article 10.2 of the same law.

If that were so, currently, under RD-L 8/2012, the omission of that information would make it possible for the consumer to withdraw from the contract, in the terms of Article 12, in the manner and periods computed starting with the delivery of said information. Therefore, if the jurisprudential interpretation of Law 42/1998 points to contractual termination (and not nullification) in cases of omission of legally required information (with the qualification related to the identification of the accommodation on which the right and the period is transferred), the new standard deviates from the repealed Art. 10 of Law 42/1998 and refers to a special regimen of an exercise of that withdrawal right.

Therefore, in the present case, I feel that the alleged omissions by themselves would not give rise to the nullification of the contract, but rather to the possibility of the plaintiffs to withdraw from the contract insofar that they may not have received all legally required information.

Another issue is that these omissions had made it possible to create vitiated consent, which was determinant in a relevant error by the buyer that served as a basis for declaring the nullification of the contract (already in accordance with the general standards of the Civil Code and, if applicable, regulation on consumer and user protection, according to the remission of Art. 12 of RD-L 8/12 to Article 78 to RD-Leg. 1/2007 and, therefore, the general regulation).

THIRD. Costs. The lawsuit expects the respondent to provide the payment for the procedural costs.

HAVING SEEN the cited legal provisions, their related articles, and other articles of general and pertinent application,

I HEREBY RULE

I HAVE CONSIDERED FULLY the lawsuit filed by Barrister of the Courts María Díaz Vecino, on behalf of [redacted] against SILVERPOINT VACATION [sic] SL and:

  1. I DECLARE NULL AND VOID the contract dated 15 May 2012 subject to this litigation, referring to the transfer of the time-share right on Apartments Nos. 3,523 and 5,418 (Weeks 12 and 49) of the Hollywood Mirage Club complex.
  2. – I ORDER the respondent to pay the plaintiffs the amount paid for the purchase, to the amount of 13,164 pounds sterling (18,187.34 €); as a result, the plaintiffs will return the rights acquired to the respondent.

III. – I ORDER to the respondent to pay the procedural costs.

This judgement, which will be notified to the parties, is not firm and an APPEAL may be placed against it before the Provincial Court within the period of TWENTY days from the date of its notification, an appeal that will be filed in accordance with the provisions established in Articles 458 et seq. of the Civil Procedure Act, meaning that in accordance with the provisions established in ADDITIONAL PROVISION FIFTEEN of the Organic Law of the Judiciary 6/1985, of 1 July, introduced by Organic Law 1/2009, of 3 November, complementary to the procedural legislation reform law for the implementation of the new Judicial Office, the appealing party must allocate the amount of FIFTY EUROS (€50), a deposit that will be made through allocation of the Deposits and Allocations Account opened in the name of this Court and which must be confirmed at the time the appeal is filed, stating that in case of the total or partial consideration of the appeal, the entirety of the deposit put forth will be returned to the appellant.

Thus, for this my sentence, from which proof will be taken to be joined with the orders, I pronounce, order, and sign definitively in the court of the first instance.


Posted on: 24th June 2016