Following on from yesterday’s article on the history of timeshare, today we revisit the story of Spanish Legal History and the first Supreme Court Rulings that changed the timeshare laws. It was a long-running battle as when the Timeshare Law 42/98 was enacted on 5 January 1999, the timeshare industry did not change their practices in accordance with the new laws. These were put into place as a result of various EU Timeshare Directives which sought to protect consumers of malpractice and lay down regulations on the sale of timeshare, which previously had been totally unregulated. The timeshare industry believed they were “untouchable”, that they were too big and strong and the law was wrong. As you will see this was not to be the case.
When the Timeshare Laws were enacted in 1999, the timeshare industry was given the opportunity to get their act together and adapt their contracts to comply with the law. They were also allowed what was known as a “deed of adaptation”, this allowed those contracts sold before the enactment of Law 42/98 to remain legal as they were sold before the law was put into place, but new contracts must comply.
Many timeshare companies saw this in a different light, they interpreted the law differently, they believed that the “deed of adaptation” meant that if the resort was running before the law came into force then that meant all contracts remain the same.
As with any new laws, these must be tested in the courts and placed into jurisprudence, which means they are now “set in stone”. In the beginning, very few cases ever got to court and those which did tend to be found in favour of the timeshare companies. Many lawyers would not take these cases on, it was a new law and they did not understand it. also, they believed the timeshare companies were too big, powerful and had plenty of money, they actually believed that they would never stand a chance of winning.
All this changed on 1st April 2015 when the Supreme Court ruled on the very first timeshare case to be brought before Spain’s Highest Court.
The story begins in 2001 When a Norwegian lady, Mrs Tove Grimsbo and her husband attended a presentation at the Anfi Resort in Gran Canaria. At the time this was a relatively new resort which was the dream of the Norwegian entrepreneur Bjorn Lyng and it was also still under development. It eventually turned into one of the flagship resorts in the timeshare world.
At the time, anyone who attended a presentation was impressed with the quality of the resort and the plans that were also in place for expansion, Mr & Mrs Grimsbo were themselves impressed and they were persuaded to purchase. They duly signed the contract and paid a deposit of 700€ by credit card, this along with the fact the contract was “in perpetuity” and not limited to the maximum of 50 years allowed by the new law made this contract illegal.
But at the time this did not seem to bother them, after all, they would have been totally unaware of the law and the fact that Anfi had disregarded it. It was not until Mr Grimsbo passed away and Mrs Grimsbo was left with ever-increasing maintenance fees and no foreseeable way out of the contract, that things changed. As they had been told during the presentation that Anfi would “buy back” their “weeks” for the same price they paid, Mrs Grimsbo approached Anfi. It is no surprise that Anfi told her that they did not buy back weeks, but they could place it on the resale market. Until then she was stuck with a timeshare she did not want or wanted to use. This is not surprising considering she did not want to return to Anfi because of the memories of her late husband.
She eventually decided to speak with a local lawyer, Miguel Rodriguez Cabello, a native of Arguineguin and one of the founding lawyers of Canarian Legal Alliance. He and other lawyers worked tirelessly to research the law and eventually found that Mrs Grimsbo did indeed have a very good case. This would now make legal history.
After some time, the case went in front of the Court of First Instance of San Bartelomé de Tirajana, this court found in favour of Mrs Grimsbo and declared the contract null and void plus the return of the full purchase price. Anfi immediately appealed to the High Court of Las Palmas Gran Canaria. This court confirmed the ruling and sentence of the Court of First Instance, another win for the lawyers.
Anfi did not accept this decision, they still believed that the law was wrong, that their contract was legal because they had the “deed of adaptation”, so they took the case to the Supreme Court.
After much debate between the panel of Judges they unanimously ruled that the case of Mrs Grimsbo v Anfi was in favour of Mrs Grimsbo and that the rulings and sentences of the previous courts were confirmed. Legal history had been made, the very first timeshare case had its first major test.
The court’s ruling would have a profound effect on timeshare and would open the gates for many more claims and cases to be taken to court. In their ruling, the Judges declared that the taking of any payment even by a third party within the Statutory 14 days cooling-off period was illegal. Taking payments within this period they believed had the effect of cancelling out the cooling-off period which was designed to give consumers the chance to read the contract, terms and conditions and also reflect on whether they made the right decision.
In their ruling on the “perpetuity” side of the contract, the Judges ruled that the Law 42/98 clearly stated that all contracts be limited to a minimum of 3 years and a maximum of 50 years. The Supreme Court upheld the rulings from the lower courts and confirmed the contract was illegal.
Anfi issued a statement that the Supreme Court’s ruling was in error and they required clarification. On 7 May 2015, the Supreme Court confirmed their original ruling and dismissed the appeal.
Anfi then issued a statement that the Supreme Court’s ruling was in error and wanted clarification, it should also be pointed out that the RDO (Resorts Development Organisation) backed up the statement by Anfi. The Supreme Court dismissed Anfi’s appeal for clarification and upheld their previous ruling, again unanimously. This left Anfi with no other course of appeal and they were ordered to pay double the deposit and all of the initial payments including costs and interest. This amounted to around 40.000€.
This particular case took almost 6 years to complete, now cases are being heard quicker with the Courts of First Instance now applying the sentence at the pre-trial stage instead of allowing a full-blown trial. Unfortunately, Anfi has continued to appeal to the High Court which then upholds and confirms the sentence of the First Court. They have even tried further appeals to the Supreme Court which have been rejected.
Not long after this case, another CLA client had their case placed before the Supreme Court, once again the Judges ruled in favour of the client against Anfi.
So far there have been 130 cases heard in the Supreme Court and all have been found in favour of the consumer. Within these rulings, there was also a clarification of the points and floating weeks systems, the Supreme Court deemed that these were also illegal as “they contained nothing of substance”. In other words, unlike the fixed week system where you are guaranteed your period of use, these systems are subject to “availability”.
With these first cases, the law had been tested and these rulings were now jurisprudence. This opened up a whole new avenue for disgruntled timeshare owners who have constantly battled to terminate their contracts when the need arises.
It also sent a message to the timeshare companies that they must comply with the law and ensure that they sell in accordance with those laws or the full weight of the law will be brought to bear. We have seen this consistently over the past 5 years with increased payouts awarded by the appeal courts as a way of sanctioning the timeshare companies for their frivolous appeals.
Anfi contracts are not the only ones which have been the subject of these cases, others have included Diamond and Club la Costa which are also two of the major players in the timeshare industry in Europe.
The timeshare laws were further enhanced with the inclusion of Law 4/12, which updated the previous regulations. It is very clear that the law and the courts are totally on the side of the consumer and that the days of the “invincibility” of timeshare companies have ended.
If you would like further information on this subject and to find out if your own contract is illegal along with your legal options, please use our contact page and Inside Timeshare will get back to you.