Club La Costa – Claims in Spain Now Doomed to Fail

We write to update our website regarding recent developments in connection with claims against the Club La Costa group of companies (“CLC”) via the Courts in Spain.  

Whilst this firm has been focused on pursuing claims in the UK against UK financial institutions, it has kept itself abreast of developments in Spain via its contacts with Spanish lawyers and by generally keeping itself up to date regarding legal developments in this sector.

We have previously written articles expressing concerns regarding the viability of claims in Spain against CLC following the administration and subsequent liquidation of Club La Costa UK plc.

For a number of years now, cold calling claims management companies have been promoting “claims in Spain” which we understand are based on allegations that CLC when marketing and selling timeshares and fractional products breached Spanish timeshare legislation.

The basis of such claims were as follows: 

  1. CLC had failed to adequately describe and/or provide information to identify the object of their contracts. It was alleged in particular that “points” contracts which were not linked to any particular property were void for uncertainty. 
  2. The timeshares had a contract length potentially in excess of 50 years.

Claims promoted by claims management companies included an alleged the right to pursue the following remedies: 

  1. Rescission of contracts, thereby bringing to an end the liability to pay management fees. 
  2. Return of all purchase consideration plus a penalty equivalent to 100% of the sums claimed.
  3. Refund of maintenance fees where maintenance fees have been paid but holidays not taken.
  4. Interest
  5. Recovery of legal costs. 

We have repeatedly flagged concerns regarding the operation of unregulated claims management companies.  Our concerns regarding such companies focused on how they procured Club La Costa member data to enable them to make cold call approaches and the large sums of money charged up front which are significantly in excess of any amount that would ultimately be paid to Spanish lawyers to pursue a claim. Everything was promoted as being “straightforward” and “guaranteed”. There was no meaningful discussion of litigation risk. Little wonder as in the main these companies were operated by ex-timeshare salesmen.

It is well reported that numerous claims were pursued via the Courts in Spain by Spanish lawyers and, to be fair, many of these claims gained traction with a number of Judgments being obtained.  It is a matter of public record that such Judgments have been received and was a factor in the ultimate insolvency of Club La Costa UK Plc.  Readers can access the report of the administrators of Club La Costa UK Plc via UK Companies House.  These reports are in any event summarised in the historic article referenced below:

https://www.athlaw.co.uk/club-la-costa-in-administration-and-claims-in-spain/

In September 2023 there was a significant development.  An application was made to the European Court of Justice for clarification of Spanish Courts jurisdiction to deal with claims involving Club La Costa consumer contracts.  The Judgment itself can be read via the link below:

https://curia.europa.eu/juris/document/document.jsf;jsessionid=98334219516D441E5823932FD13E6F37?text=&docid=277408&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=6421758

Judgment was handed down on 14th September 2023 following submissions from interested parties including the Spanish Government and the European Commission

The significance of this decision cannot be understated.  Spain is of course a continuing member of the European Union, and its National Courts have to give effect to decisions handed down from the European Court of Justice.  

In the ECJ case referred to it was found: 

  1. Claimants had contracted with non-Spanish companies including Club La Costa UK Plc.
  2. The Claimants were non-Spanish nationals, mainly citizens of the United Kingdom.
  3. The contracts included a governing law clause which expressly states that the parties submit themselves to the law of England and Wales.
  4. Claimants could not “forum shop” and seek a forum that they perceived as being most advantageous to them.  There was nothing unfair in contracting for your own law to apply to a contract you sign, indeed such a clause would normally be deemed advantageous to a consumer.  

In short, the court held that the clause is binding with the consequence that any dispute and/or claim relating to Club La Costa contracts will be governed by the law of England and Wales and not by Spanish law.  As a result, the Spanish Courts do not have any jurisdiction to deal with these claims. 

It is our understanding having discussed the matter with reputable Spanish lawyers, that all ongoing cases will now be dismissed as, put simply, the Spanish Courts cannot hear the claims.  Existing Judgments will not be impacted, albeit it is extremely unlikely there will be any monetary recovery given the insolvency of Club La Costa UK Plc.

Again, we have written articles on the Club La Costa liquidation which reveals it is extremely unlikely that any unsecured creditors will receive any recovery from that liquidation, even if the liquidator admits and upholds any submitted claim.  

We are further advised by Spanish lawyers that on 29th January 2024 the High Court in Malaga issued a Unification Criteria which confirms the following claims cannot be pursued in Spain:

  1. Claims where the contract with a non-Spanish company (that means UK companies, Isle of Man and British Virgin Islands); or
  2. Claims where the contract was signed with a Spanish company, but applicable law is stated as UK law (even if the jurisdiction is granted in Spain, as the applicable law is UK).

As a consequence of the decision of the ECJ and the issuance of the Unification Criteria from the High Court in Malaga, any claim in Spain against Club La Costa will be ruled against consumers on jurisdiction grounds and carries also the risk of imposition of adverse costs.

If you have an outstanding claim before the Spanish Courts in Spain, you need to take urgent advice from your Spanish lawyers to mitigate very significant financial harm that could result from continuation of a claim which would appear to be hopeless. 

If you engaged a claims management company, marketing claims in Spain, please feel free to contact us to see whether or not you have a viable claim against any unregulated claims management company to recover funds paid to date. 

Regarding any disputes with Club La Costa those will now have to be resolved under English Law. As a consequence, an English solicitor will be required to give advice on the prospects of success.

Direct claims against Club La Costa appear to be hopeless given that the selling entities along with the parent company, Club La Costa PLC are now in liquidation with liabilities significantly exceeding assets. We are aware of some claims management companies promoting claims in the liquidation. It appears that all they are doing is submitting proof of debt forms which Liquidators have yet to accept. Even if such debts are proved there is little prospect of recovery. The Reports from the liquidators reveal there are insufficient assets to meet claims made by preferential creditors, let alone unsecured creditors.

The only potential viable claim would be against a UK lender that provided a linked loan to finance any purchase. Regarding such UK financial claims, strict time limits apply.

This firm has of course been a leader in pursuing claims via the Financial Ombudsman Service and has been involved in 1 out of 2 test cases recently reviewed by the High Court following a challenge by impacted lenders via Judicial Review proceedings.  We refer to our articles below regarding the work we are doing in connection with complaints brought via the Financial Ombudsman Service which can be viewed below: 

https://www.athlaw.co.uk/diamond-resorts-and-club-la-costa-fractional-ownership-claims/

Contact us for a free consultation

If you need any advice or further information regarding this article, please contact us.  

We offer a free initial consultation and if clients have a viable claim, we offer a variety of retainer options including no win – no fee arrangements.  Every case or potential case will have to be assessed, however, on its own merits.

If you have found this article interesting and would like to learn more about how Athena Law can help you please feel free to contact the writer, Stephen Boyd, at stephen.boyd@athlaw.co.uk or via the contact page on the website.

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Stephen Boyd - Timeshare Lawyer

Stephen Boyd, Partner