Limitations to the enforcement of credit derived from the assessment of legal costs: Can these conclusions be extrapolated to other enforcement cases?

Cost assessment - PLA Litigation Funding

The interesting judgment of the First Chamber of the Supreme Court, No. 1,683/2023, dated November 29 (hereinafter referred to as the “Judgment“), has ruled on the time limit and procedure to be followed in order to collect the credit established in the assessment of the legal costs by a final decision.

From a factual point of view, the main proceedings date back to 2009, when a son filed an ordinary lawsuit against his father, claiming compensation for moral damages for breach of filial duty.

The proceedings ended in July 2010 with a judgment dismissing the case and ordering the plaintiff son to pay the costs. The appeal and subsequent cassation appeal met the same fate and were also dismissed, with the plaintiff son being ordered to pay the costs.

After the judgement became final, the father requested the assessment of the legal costs of the proceedings. These assessments were approved by separate orders between May and September 2012.

In October 2017, the father filed an action against his son, claiming the amounts recognised in the assessment of legal costs.

The court of first instance upheld the claim and ordered the defendant son to pay the costs of the proceedings.

However, following an appeal against the above decision, the Provincial Court of Madrid issued a judgment overturning the decision of the first instance, considering that (i) the credits derived from the judgment for the assessment of the legal costs could be enforced through an action for ordinary declaratory judgment, but that there was a limit to the application of such an action.

In fact, (ii) the Provincial Court concluded that the father had committed fraud, since the five-year period for the enforcement action had expired when the ordinary declaratory judgment was initiated. It is not possible to attempt to avoid the expiry of the enforcement proceedings by means of a new declaratory judgment, as provided for in Art. 518 of the Spanish Procedural Law.

Finally, the Supreme Court rejected, for different reasons, the possibility of initiating a subsequent declarative proceeding to reverse and invalidate the expiration of the enforcement action.

The High Court affirms that “we are not dealing with a case of fraud (art. 6.4 of the Spanish civil code), but rather with a different scenario of application of the relevant rule, which is art. 518 of the Spanish Procedural Law”.

The judgment is of interest to us in that it raises some practical issues in relation to the enforcement of costs orders. Specifically,

– After the judgment on costs has become final, there is a five-year limitation period for claiming the corresponding assessment of legal costs (Article 518 of the Spanish Procedural Law). Once the assessment has been carried out within this period and the liquidated amount of these costs has been determined, a new five-year limitation period begins for the enforcement of the quantified credit for these costs.

– If a judgment contains several sentences (e.g. an order for payment of a principal sum, interest and costs), each of these sentences constitutes grounds for an enforcement/execution measure to make it effective. Consequently, the application of enforcement measures in respect of one of these judgments does not preclude the lapse of actions in respect of the other judgments that have not been pursued.

– If the five-year limitation expires after the approval of the assessment of legal costs without any enforcement, the possibility of claiming compulsory payment of the costs of the proceedings is lost for good.

In the future, the Supreme Court’s jurisprudence should be monitored to see how this doctrine is applied to other cases in which declaratory relief is sought to override the statute of limitations.

These cases will need to be considered on an individual basis and it would not be the first time that PLA Litigation Funding has considered funding similar types of cases where we have always followed the view that the Supreme Court has now expressed in its judgment.

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