June 28, 2022

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The municipality of Oslo lost another lawsuit in Boligbygg

The municipality of Oslo lost another lawsuit in Boligbygg

For the second time, the municipality of Oslo lost the lawsuit over the sale of an apartment building in Grønnegata in Bislet in Oslo. It shows a recent judgment of the Borgarting Court of Appeal. Real estate investor Remy Andre Lund is in charge of the real estate company that emerged victorious from the case.

in April All five defendants in police investigations into the case were sentenced to prison terms. It was soon announced that the criminal case could be appealed.

The lawsuit is one of several from the Oslo municipality in the Boligbygg case, after DN revealed in 2017 how investors exposed Earn Millions of Dollars on Quick Resale For farms and municipal apartments Boligbygg.

After the Boligbygg events were revealed, the mayor of Oslo's city council, Raymond Johansen, announced several lawsuits against property investors, with the goal being to recover nearly one hundred million kroner which the municipality believed had been overpaid.

After the Boligbygg events were revealed, the mayor of Oslo’s city council, Raymond Johansen, announced several lawsuits against property investors, with the goal being to recover nearly one hundred million kroner which the municipality believed had been overpaid. (Photo: Michaela Berg)

In addition to the police investigation and criminal case against five defendants in the case, the municipality of Oslo itself has filed a number of compensation claims to recover money for the purchase of apartments where the municipality believes it paid a premium.

In the case of Grønnegata 21, with 16 apartments, a rooftop terrace and 12 parking spaces, consultancy Deloitte thought the Bislett apartment building had sold for NOK 13-17 million overpriced.

The lawsuit, filed in the city of Oslo, claimed up to NOK 17 million from real estate firm Remy Andre Lund – not on the basis of the purchase contract between the parties, but on the claim that the premium was a public support illegal under EEA rules.

The Court of Appeal agreed that the purchase included NOK 8 million in illegal public support – but still believed the Oslo municipality could not claim the money.

‘core concerns’

The logic of the court is a combination of the rules on state assistance, the rules of the contract, and the more fundamental question of what interventions the municipality can make against a person or another private party – the so-called principle of legality. The Court of Appeal notes that the illegal state aid is being provided in the form of an agreement between two parties, a purchase agreement for Grønnegata 21, and that the municipality is bound by the agreement in the usual manner.

“Concerns about principles” would be raised if the municipality were granted the right to demand refunds in such an agreement, as the Court of Appeal wrote: “It is not entirely inconceivable that such a practice could affect private parties’ assessment of predictability when entering into agreements with the public sector.” From the point of view of the private party, the reversal of the agreed-upon price may appear as a private authority for the public sector to review bad deals.”

After discussing the legal literature and review, the Court of Appeal concluded that the state aid rules do not provide the City of Oslo with a legal basis to claim the return of the 8 million kroner.

Two pending cases

The City of Oslo has filed a total of five lawsuits in the Boligbygg complex, four of them based on the rules of the State Aid Act, and backed by an investigative report from consultancy Deloitte that concluded that the municipality had paid a lump sum. 80-115 million NOK in excess prices.

The municipality previously stated that two of the lawsuits have been suspended pending a final ruling against Grønnegata 21. The conclusion in these two cases is still open.

The fourth lawsuit, against Real Estate Manu and two investors Per Oyvind Martinsen and Jer Ag Normansyth, ended in a settlement after a loss in the Oslo Municipal District Court.

The municipality also originally filed a lawsuit against attorney and real estate investor Frode Philster Sorle, but that lawsuit was filed before it reached the Oslo District Court. (Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.

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