Civil-law notary, Land Register and Island Territory of Curacao held liable

On 25 May 2009, the Court of First Instance held a civil-law notary, the land register and the Island Territory liable for the incorrect registration of a mortgaged parcel of land. This judgment brings an end for now to liability proceedings that started four years ago.

In 1996 Maduro & Curiel’s Bank N.V. (“MCB”) obtained a right of mortgage on two parcels of land. In 2002 the mortgage on one parcel of land was canceled. However, the other parcel of land remained mortgaged. Subsequently, the mortgaged parcel of land was transferred to new owners. N.V. De Spaar en Beleenbank van Curaçao (“SBC”) financed this purchase and in return obtained a right of first mortgage on the parcel. At the time of the transfer of the real estate, MCB’s right of mortgage was ignored and the proceeds of the sale were not allocated to repay the mortgage. Hence, there was still an older mortgage on the parcel and, as a consequence, SBC’s right of mortgage ranked second. Subsequently, MCB indicated that the debt that was secured by the right of mortgage had not been settled and is still outstanding and that it has the intention to enforce its right of first mortgage, as its debtor stopped to pay off the loan and had no assets from which the debt can be recovered.

Next, SBC started proceedings against civil-law notary Burgers who had carried out the transfer of the real estate and therefore performed a search in the public registers, the Land Register itself who keeps record of the public registers and the Island Territory of Curacao. According to SBC, the civil law notary had breached his duty of care, when, at the first inspection, one of his employees failed to discover that MCB still held a right of mortgage on said parcel. Furthermore, the Land Register had failed to inform the civil law notary about said mortgage right at either the re- and/or the final inspection. Additionally, the Island Territory of Curacao is liable on the basis of art. 3:30 of the Netherlands-Antillean Civil Code (“CCNA”), which holds that the Island Territory of Curacao is liable for any mistake the Land Register makes in keeping record of the public registers.

The Court agreed with these claims. Already on 20 October, 2008, the Court held Burgers liable. According to the Court, he had acted in breach of his duty of care towards third parties, like SBC, because he had failed to search all public registers. On 25 May 2009, the Court also held the Land Register and the Island Territory of Curacao liable for damages towards SBC. As said by the Court, the Land Register had written in its register that MCB’s right of mortgage had been canceled. This comment, which was followed by a question mark in the margin, had put Burgers on the wrong track. Besides that, the Island Territory of Curacao was also held liable on the basis of art. 3:30 CCNA. The Court ordered them to jointly and severally pay SBC’s procedural costs and damages which will be established in follow-up proceedings for the determination of damages.

Dave E. Liqui-Lung and Randolph van Eps of VanEps Kunneman VanDoorne represented the interests of SBC.

(Source: www.ekvandoorne.com)

July, 2009

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