National case details
Registration ID: 44/2019
Instance: Cassation (review)
Case status: Final
Area of law
In judicial dialogueJudgement of the CJEU Case C-26/13 Árpád Kásler e Hajnalka Káslerné Rábai v OTP Jelzálogbank Zrt, Case C-143/13 Bogdan Matei e Ioana Ofelia Matei v SC Volksbank România SA, Case C-483/16 Zsolt Sziber contro ERSTE Bank Hungary Zrt
19 September 2017
Judgement of the Tribunal of First Instance
20 April 2018
Judgement of the Appellate Court
23 January 2019
Judgement of the Supreme Court
Identification of the case
- Article 80.1 of the Texto Refundido de la Ley General para la Defensa de los Consumidores y Usuarios (Recast Version of the General Law on Consumer Protection)
- Article 4(2) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts
Summary of the case
In December 2005, Mrs Fermina entered into a mortgage loan to finance the acquisition of a property with Caja Insular de Ahorros de Canarias, which was subsequently absorbed by Bankia S.A. (hereinafter, Bankia).
In March 2017, Mrs Fermina filed a lawsuit against Bankia claiming and various terms of the mortgage contract were unfair and claiming the restitution of the amounts paid as a consequence of its application. In particular, Mrs Fermina challenged the unfairness of (i) a ‘floor clause’ limiting the variability of interest rates below a certain level; (ii) a clause imposing on the borrower to pay all costs related to the mortgage loan (including notary and property registrar’s fees, taxes and agency fees); (iii) a clause that established a default interest rate of 18.5% per year; and (iv) a clause establishing arrangement fees (comisión de apertura) of 0.85%. This note focuses on the second ground about the recovery of notary and property registrar’s fees.
The court of first instance held that the contract clause imposing on the borrower the payment of all costs and taxes related to the loan to be unfair and hence null and void and ordered Bankia to reimburse all amounts related to the property registrar’s fees as well as half of the notary’s fees and management agency’s fees.
The claimant, Mrs Fermina, appealed the first instance judgment seeking the reimbursement of the payments claimed to be unfair, among which the ones that the court of first instance had established to be distributed in half between the financial institution, Bankia, and the debtor. The appellate court held that Bankia should reimburse all of the notary, property registrar and management agency’s fees.
Bankia appealed that decision before the Supreme Court.
- Civil judicial enforcement
Mrs Fermina claimed that some of the contract terms of her mortgage contract were unfair and sought the restitution of the amounts paid as a result of those deemed to be unfair contract terms. In particular, Mrs Fermina requested the nullity of (i) a ‘floor clause’ limiting the variability of interest rates below a certain level; (ii) a clause imposing on the borrower to pay all costs related to the mortgage contract (including notary and property registrar’s fees, taxes and management agency’s fees); (iii) a clause that established a default interest rate of 18.5% per year; and (iv) a clause establishing arrangement fees (comisión de apertura) of 0.85%.
First, the Spanish Supreme Court confirmed that contract terms placing the burden of payment of all expenses related to the mortgage contract were unfair.
Regarding the payment of notary’s fees, the Supreme Court noted that the applicable legislation provided that the notary’s fees had to be borne by ‘the interested party’. Confirming the opinion of the first instance court, the Supreme court held that both parties – debtor and creditor – were equally interested in the notary’s services and hence fees should therefore be equally distributed between both parties, like the court had held in first instance.
Regarding property registrar’s fees, the applicable legislation provides that they should be born by the contractual party that benefits from the inscription of the mortgage in the Property Registrar. The Spanish Supreme Court held that the inscription of the mortgage in the Property registrar benefitted the creditor given that inscription allowed for special foreclosure proceedings in case of debtor’s default. Consequently, Bankia should therefore bear its cost. It should be noted that this finding of the Supreme Court regarding Property Registrar’s fees did not affect the financial institution in this case given that it had not expressly appealed the decision of the appellate court – distributing Property Registrar’s fees in equal shares – in that regard.
Consumers should give their consent after having been properly informed of such fees in the pre-contractual phase. When such pre-contractual information is not provided, such costs may not be allocated on the consumer/debtor and hence those contract terms may be unfair. Finally, the Supreme Court also held that management agency’s fees for services related to the processing of a loan should also be shared among the lender and the borrower, as both parties equally benefit from these services.
Elements of judicial dialogue
- Direct dialogue between CJEU/ECtHR and National court (out of preliminary reference procedure)
- Dialogue between high court - lower instance court at national level
- CJEU C-26/13, Kásler
- CJEU C-143/13, Matei
- CJEU C-483/16, Sziber
Conform interpretation with EU law as interpreted by the CJEU.