Legal tip 1400.LEY 57/1968 Won Case in Provincial Appeal Court against ZURICH INSURANCE for our client who purchased an off-plan property from the developer Sea Golf Apartments SL at La Alcaidesa
Tuesday, July 26, 2016 @ 1:03 PM
LEY 57/1968 Won Case in Provincial Appeal Court against ZURICH INSURANCE for our client who purchased an off-plan property from the developer Sea Golf Apartments SL at La Alcaidesa
We were pleased to inform our client recently that we had won their case against Zurich Insurance in the Provincial Appeal Court.
The client paid their off-plan deposit according to the Purchase Contract to the developer’s bank account. Zurich issued an insurance policy to cover the off-plan deposit.
The First Instance Court dismissed the Lawsuit in which we claimed against the insurance policy, as the Judge was of the opinion that this type of action to claim on an insurance policy issued according to LEY 57/1968 had a time limit of 2 years.
Under instruction from our client, we filed an Appeal against the First Instance Sentence. The Provincial Appeal Court has upheld our Appeal and revoked the First Instance Sentence. Zurich is now sentenced to refund the principal amount of the off-plan deposit plus interest at 6% per annum from the date of filing of the Lawsuit.
Re: YOUR CASE AGAINST ZURICH INSURANCE PLC.
PO xxxx/2014
Please find attached Sentence number xxx/2016 from the Provincial Appeal Court of Madrid Section 12.
I am very pleased to advise you that your Appeal against the First Instance Sentence has been won.
The final paragraph of the First Instance Sentence delivered on 10 June 2015 and notified on 15 June 2015 stated:
“I entirely dismiss the Lawsuit filed on behalf of xxxxxx against ZURICH INSURANCE PLC, and absolve the defendant of all claims against it, all with no explicit imposition of costs”
The final paragraph of the Provincial Appeal Court Sentence delivered on 29 June 2016 and notified on 22 July 2016 states:
“Upholding the appeal filed by xxxxxx against the Sentence dated 10 June 2015 issued by the Judge of the First Instance Court No. 33 of Madrid in Ordinary Procedure 1076/14, we must revoke that sentence and instead uphold the Lawsuit filed by the plaintiff against the defendant, condemning it to pay to the plaintiff the amount of xx,xxx€ of principal, plus 6% annual interest from the date of filing the Lawsuit, without prejudice to the second paragraph of the seventh article of this sentence, all without imposing costs of both instances”
So your Appeal has been won and the First Instance Sentence has been revoked.
Zurich Insurance is now liable to refund the principal amount of xx,xxx€ plus 6% annual interest from the date of filing of the Lawsuit.
There was no imposition of costs relating to the First Instance procedure or to the Appeal. Therefore, each party will pay its own costs for both procedures.
Interesting statements by the Appeal Court Magistrates are:
“The claimant states in the Lawsuit that he reserved an off-plan property that should have been completed and delivered in February 2003, but in 2014 when the Lawsuit was filed the house had not been completed. He paid his off-plan deposit according to the purchase contract signed under LEY 57/1968.
Zurich opposed the Lawsuit on the grounds of Res. Judicata, since there was a previous action against the developer and the insurer which ended in an agreement that the developer would repay the money and that no action would be taken against Zurich. The developer never honoured that agreement.
Zurich also opposed the Lawsuit on the grounds that the time limit for actions against insurers is 2 years as per Article 23 of the Insurance Contract Law.
The Judge of the First Instance Court agreed with Zurich’s arguments and dismissed the Lawsuit.
The plaintiff appealed arguing that the limitation period provided for in Article 23 of the Insurance Contract Law cannot be applied, since this action is subject to Articles 1 & 3 of LEY 57/1968 and therefore the general limitation period of 15 years must apply.
The appeal must be upheld.
The limitation period provided for in Article 23 of the Insurance Contract Law is applicable only for those actions that arise as a direct and exclusive result of a contract being entered into specifically for insurance. The term of 2 years is not applicable to a claim against the insurer’s liability as a result of the event covered by this insurance.
The defendant also raised the exception in the First Instance procedure of Res. Judicata, given the existence of a previous procedure which concluded with a compromise agreement in which the plaintiff renounced any further actions against the defendant.
Even assuming that the plaintiff had agreed not to take further actions against Zurich, that waiver of rights would have been ineffective due to the fact that Article 7 of LEY 57/1968 recognises that the rights granted to the buyer by that Law are inalienable and cannot be waived.
In terms of interest, the defendant must be ordered to pay the interest as agreed in the guarantee policy, i.e. the interest rate of 6%. The fact that the First Additional Provision of the Law on Construction & Planning of 1999 established interest at the legal rate shall not apply because since it is for the benefit of the acquirer the higher rate in the policy must prevail.
It is appropriate to maintain the non-imposition of costs as per the First Instance Sentence, given the existence of questions of fact and law, since as indicated in the judgement, the question of term limitation of actions directed against the insurer is a subject that has resulted in different opinions of the Provincial Courts , which implies the existence of questions of fact and law which is referred to in Article 394 of the Civil Procedure Act.
As this appeal has been upheld, according to Article 398.2 of the Civil Procedure Act, there is no imposition of costs of this appeal”
ZURICH has 20 working days from the date of notification of the Sentence, which was 22 July 2016, to comply with the Sentence or to file a Cassation Appeal to the Supreme Court.
Although any appeal must be submitted strictly within the 20 working day deadline, we may not receive notification of an Appeal or of a firm sentence from the Court for a few weeks after the deadline due to the workload of the Court.
If a Cassation Appeal is filed by the defendant it will be necessary for us to file an Opposition to the Appeal on your behalf.
La Alcaidesa, Cádiz, Southern Spain