Successful claim against Macdonald Resorts: Leila Playa Club contract void, £11,839 refunded

We issued a claim in the Spanish courts against Macdonald Resorts Spain S.A. Leila Playa Club seeking a declaration that the purchase contracts signed in 2003 and 2008 were null and void. The claim was based on breaches of the Spanish Timeshare Law 42/1998, including the Resort’s failure to meet statutory information duties (such as providing a general description of the accommodation and clear information on the consumer’s right of withdrawal). We also argued that the Resort infringed the maximum term of 50 years for this type of contract, and that the consumers signed under misrepresentation. In support, we submitted the purchase contracts and other documentation.

On misrepresentation, Macdonald Resorts argued in its defence that there had been no misrepresentation because the claimants knew and understood the product. The Resort also denied any breach of the 50-year maximum term, contending that Law 42/1998 did not apply because its system existed before the law came into force.

The Judge rejected the Resort’s arguments, stating:

“In relation to the applicable law to the present case, we must look at the Law 42/1998, in which the contentious contract should give the claimants the right to use more than one accommodation, for a fixed price, for more than three years, permanent but without the owner condition, therefore we are clearly facing a contract that confers a personal right to use multiple accommodations for a fixed period superior to three years but inferior to 50 years. This is the type of contract stated as null and void by the article 1.7 of the Law 42/1998. The aforementioned purchase contracts are therefore null and void”

On the defence that the law was inapplicable, the Judge held that this argument had to be rejected. The Judge said that any pre-existing systems similar to timeshare that exceed the legal limit should be treated as fraudulent and null and void (art. 1.7). The D.T. 2ª is based on respect for acquired rights and covers timeshare rights acquired before the law came into force according to the agreed system, but it does not allow rights not transferred to infringe the legal rules; these must comply with the new law (STS 477/2014, 15th January 2015).

The Judge found that the purchase contracts did not meet the requirements of artículo 1 of Law 42/1998, because the Resort did not provide a description of the different accommodation available to consumers, nor the real possibilities of making a reservation.

The Judge also stated that this was within the framework of a unilateral contract, where the supplier (the Resort) sets the terms and conditions, without any real equality between the parties. The clients were offered products and advantages without the necessary cooling-off period being respected, and without sufficient time between the explanation of the product and the signing of the contract.

The claim was upheld and the Judge declared the contracts null and void on the basis of infringements of Spanish consumer legislation. Similar reasoning can be found in another case (Sentencia de la Audiencia Provincial de Málaga, 7th November 2005), where the Court of Appeal ruled that the contract should be treated as null and void because the vendor failed to comply with its legal obligation to provide the consumer with information about the accommodation and services offered.

The Judge further held that the clients had not been properly informed of the contract terms and conditions, and that the documentation provided did not meet the requirements necessary to ensure the clients were correctly informed.

We also claimed that Macdonald Resorts should pay compensation for the delay in payment, namely legal interest on the sum owed from the date the claim was issued until payment was made in full.

Decision

1. The contract between the parties is declared null and void, together with any agreements annexed to that contract.
2. Macdonald Resorts must reimburse the clients the sum of 11,839.22&pounds;, plus accrued interest from 17th September 2015 until payment is completed.
3. Macdonald Resorts Spain S.A. Leila Playa Club must also pay the costs incurred in these proceedings.