Supreme Court judgment of 8th January 2020.

The summary of the facts of the judgment are outlined below as follows:

Two companies entered into a purchase option contract regarding some properties. In accordance with the contract, the purchaser paid part of the price upon signing the contract and after a short time, having met the agreed conditions, the seller called upon the buyer to exercise the right of purchase and sale, who replied saying that they were withdrawing from the operation and claiming the return of the amounts handed over as part of the price up until that moment. As this did not happen, the buyer filed a claim against the seller, and in spite of being condemned to pay, the company bank accounts of the seller were empty.

Therefore, the buyer brought an action against the directors of the seller company pursuant to article 367 of the Spanish Capital Companies Act, in breach of their legal duty for not having wound up the company when it  was found that there were grounds for winding-up. The first instance judgment accepted the plaintiff’s claim although the Provincial Court substantially reduced the amount of compensation claimed.

Given the difference between the amount claimed and the amount adjudicated in the first lawsuit, the buyer and the plaintiff in said lawsuit filed another claim against the directors of the seller company for the amount equivalent to the debt that the seller had with the buyer, deducting the amount collected as a result of the first judgment mentioned above. On this occasion, the claim was founded in the individual action for liability provided for in article 241 of the Spanish Capital Companies Act, and secondarily, in the corporate action of article 236 of the same Act.

With regard to the second claim against the directors of the seller company, the commercial Court verified that indeed the directors of the defendant company, having paid out dividends to its partners, terminated all of its directors, leaving no one responsible for the company, thus, breaching the obligation to formalise company accounts, therefore declaring  the directors to be jointly and severally liable and agreeing with the plaintiff.

However, the Court upheld the appeal of the directors, respecting the effectiveness of the res judicata of the judgment given in the previous case whereby the directors were declared responsible for the payment of the company debt (albeit for a lesser amount than that claimed in the second claim), and it was only partially upheld. The judgment became firm, which resulted in a preclusion of claims for such cause, and there was no longer a basis for a further claim for an amount not admitted in the first judgment based this time upon an individual liability action (article 241 of the Spanish Capital Companies Act).

The judgment was appealed in cassation before the Supreme Court which reached the following conclusion:

  • The fact that the Provincial Court did  not take into account all of the facts argued by the seller and plaintiff is irrelevant. As a foundation to its decision, it took into account what it found to be applicable or relevant to the case and what was not taken into account did not affect the essence of the claim, that is to say it clarified the effect of the material res judicata, as a consequence of the preclusion of claims from the first lawsuit.
  • With regard to the effect of material res judicata of the first judgment submitted by the appellant, the Supreme Court recalls that its effect is to exclude a further procedure the object of which is identical to the procedure which had already produced said judgment, and which affects the same parties of the procedure, heirs and successors. The intention is to prevent the alteration of “causa petendi” with allegations and legal grounds different from those of the first procedure, producing the defencelessness of the defendant; on the other hand, the intention is to prevent the plaintiff from making the same claim again based upon facts or legal grounds which could have been relied upon in the previous procedure and were not. Therefore, under the application of article 400 of the Spanish Civil Procedure Act, further actions may not be exercised based upon different facts, legal grounds or basis when what is being requested is the same as before and the plaintiff left them out of the lawsuit filed in the previous procedure. This has been determined by the Supreme Court in judgments dated 13th November 2018, 13th December 2017, 6th February 2012 and 21st March 2011.
  • The fact that one of the defendants in the first lawsuit was not sued in the second lawsuit is not relevant because the action brought for the liability of directors did not concern him, in the same way as the action of article 367.
  • The action brought in the second lawsuit is for the civil liability of the directors, based upon illegal behaviour. It is different to the action brought in the first lawsuit based upon the non-fulfilment of the obligation to call for winding-up. The fact that the cause of the action did not coincide in any of the lawsuits is not as relevant as the fact that the claim in both of the lawsuits has already been subject to request (in the first lawsuit). What was claimed in the second lawsuit formed a part of that claimed in the first, only the cause of the action varied. What is true, is that although certain new facts had been formulated in the second lawsuit, the essential and greatest part of the facts put forward had already been stated in the first. The Supreme Court emphasises that the essence is that what had happened at the time of bringing the first lawsuit could have been formulated in the second.

In conclusion, the judgment of the Supreme Court dismisses the appeal of the appellant on the understanding that the claim has become res judicata, and was sentenced in the first lawsuit. Furthermore, the  court orders the appellant to pay the costs.

 

 

Eduardo Vilá

Vilá Abogados

 

For more information, please contact:

va@vila.es

 

7th February 2020