Developer made to pay back client the interest on the VAT

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Developer made to pay back client the interest on the VAT

I still feel a shiver cross my spine when I remember Dickens´ Bleak House, a harsh criticism to the English legal system of the XVIII-th century:

“fog up the river, fog on the Essex marshes, fog on the Kentish heights, fog on the Thames, fog in the eyes of men and women, fog cruelly pinching the toes and fingers of the shivering little apprentices…. and at the very heart of the fog sits the Lord High Chancellor in his High Court of Chancery…” The conclusion was that one should suffer any injustice rather than turn to the Law Court.

Many times, when I hear talking about the Spanish legal system, it sounds to me just like a portion of Dickens´ Bleak House.

Well, in Spain there are no Bleak Houses hiding in the very heart of the fog … the reason is mainly that there is no fog on the Costa Tropical (Tropical Coast), only very rarely.

No dark Lord Chancellors. We have light hearted, sunny judges… No, that is not the case either. The Spanish legal system has its flaws and shortcomings just like any other legal system in the world but it works and it works very well at times, especially if they are presented with cases that are pleaded by lawyers that have a high ethical and deontological code and they rule themselves according to it.

That was the case of one of the last trials of the Fernandez Cuevas Law firm.

The story in a nutshell: a developer in La Herradura was building a urbanization and the delivery of the houses was taking much longer than the agreed time. Fed up of waiting, our client goes to their office to cancel the contract. They agree to that and to give him back the money they were given that far plus the legal interests except for the interests of the quantities that our client has given as VAT (value added tax). The reason was that, according to the developer, the VAT has been paid to Hacienda, Spanish Tax Office, and as a consequence the developer didn’t perceive any interests. But the fact is that it was damaging for my client because he gave a sum of money as VAT for a purchase that never went through, he never bought the property, that’s why we considered that it was fair for him to get back the legal interests for that money too.

Amazingly enough the Court in Almuñecar turned down our claim, but as we were convinced that justice was on our side, we went to the Superior Court in Granada, that finally received our reasoning and they have declared null the former ruling of the Court in Almuñecar, ruled in our favor and imposed the expenses of the trial to the contrary party, that is the developer and they also had to pay the legal interests of the VAT, they didn’t pay when they should have.

We know that it is common practice with this developer not to pay back the interests on the VAT so we consider that, although they don’t have a legal obligation to pay, the moral and ethical criteria should make them call their other clients and give them back the quantities that are rightfully theirs.

This was what our senior lawyer called a beautiful case from a legal point of view and justice prevailed. The client was paid his legal interests on the VAT and it sat a precedent to be used in similar cases.

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