Court dismisses claim against government for Consul's unauthorized loan, holding agent personally liable.

[*1188] 1972 July 31

(EVANGELIDES & IOANNOU, AG. D.JJ.)

IN THE DISTRICT COURT OF NICOSIA

Stylianos Theoklitou,

Plaintiff,

and

1. The Attorney-General of the Republic,

2. Michael Pissas,

Defendants.

(Action No. 4774/68).

Contract - Claim for money lent - Consul General of the Republic abroad borrowing money to be used for the release of crew and repair of ship belonging to an individual - No proof that he had authority to contract loan on behalf of the Government or that he was entitled to spend money without any special authority - Personally liable.

Contract

- Principal and Agent - Agent exceeding his authority - How far principal is bound - Sections 186 to 198 ofthe Contract Law, Cap. 149.

Master and Servant - Government - Servants thereof acting in excess of their powers - Government not responsible.

E. Nicolaou, (Miss) for A. Lemonaris, for the Plaintiff.

L. Loucaides, Senior Counsel of the Republic, for Defendant No. 1.

A. Eftychiou, for Defendant No. 2.

JUDGMENT

The judgment of the Court was delivered by:-

EVANGELIDES. AG. D.J.: The plaintiff is a certain [*1189] Stylianos Theoklitou, a Cypriot, who, during the years 1926- 1967, was residing and working at Alexandria. At first he was a baker but later he became a money-lender.

Defendant No. 1 is the Attorney-General who is sued as representing the Republic. Defendant No. 2, Michael Pissas, is now the General Secretary of the Cyprus Workers Federation but who, at the material time, that is, during the years 1962-1963, was the Consul General of the Republic at Alexandria.

In March or April, 1962, a fishing vessel under the Cyprus flag, named "PANORMITIS", had been fishing illegally within the territorial waters of Egypt. It was pursued by the Egyptian coast guard and as a result it foundered and the ship and crew were seized by the Egyptian authorities. Money was required for the release of the crew and the repair of the ship and defendant No. 2 requested the plaintiff to lend the amount required. The plaintiff did so, he lent the sum of 1,725 Egyptian pounds. He gave the money to defendant No, 2 who, as it was already stated, was the Consul General of the Republic at Alexandria. The money has not been repaid to the plaintiff and he has instituted the present action claiming the sum of £1,725.- from the Republic and from defendant No.2.

In the statement of claim the plaintiff claimed £1,725·- but during the trial it has been agreed that at the material time the 1,725.- Egyptian pounds were worth C. £.1,000.-. In the

statement of claim there is another item [*1190] of £200.- claimed from defendant No. 2 but this matter has already been settled.

The claim against the Republic is based on the fact that, at the material times, defendant No. 2 was the Consul General of the Republic and on the allegation that in this transaction he was acting on behalf of the Republic.

The case of the Republic is that all actions of defendant No. 2 in connection with the plaintiff’s claim had nothing to do with the performance of his duty as Consul for the Republic and that they were not within the scope of his authority and they did not have the authority, express or implied, of the Republic.

Mr. Pissas' case is that the money was not lent to him personally but it was given to him on behalf of the owners of the ship; in other words, that he had acted as an intermediary between the owners of the ship and the plaintiff. It is further part of his case that in any event the agreement was illegal because it had been agreed that the plaintiff would be repaid in Cyprus money and this was illegal as being contrary to the laws of the country where it was made, namely, Egypt.

On the question of the agreement between the plaintiff and defendant No. 2, the plaintiff gave evidence and also defendant No. 2. We have accepted the evidence of the plaintiff as far as his allegation is concerned that the defendant borrowed the money from him and that he gave him to understand that the money was lent to him as the Consul [*1191] General of the Republic. We have not accepted the defendant’s allegation that he had been acting as an intermediary between the plaintiff and the owners of the ship. It is not disputed by defendant No. 2 that he had received the sum of 1,725.- Egyptian pounds from the plaintiff. It was for him to satisfy us that he had received the money on behalf of somebody else. Not only he did not satisfy us on this but there are certain matters which corroborate the evidence of the plaintiff. One would have expected the defendant, a Consul General, had he been receiving the money on behalf of somebody else, that he would have made this clear in some kind of document. The defendant gave a receipt to the plaintiff and this is exhibit No. 2. In this receipt it is stated:- "Received from Stelios Theoklitou the following sums for the repair of the ship of Mr. Yiangos Loizides of Limassol". It is not stated that he received that money as an agent of Yiangos Loizides.

In July, 1965, the defendant wrote a letter to the plaintiff in reply to a letter of his and again, in that letter it is not made clear that neither the Republic nor himself were responsible for the money borrowed. Above all the defendant has submitted to the Government vouchers for certain expenses which had been made for the ship "PANORMITIS" and for the crew of that ship and for this money he was paid by the Government. These expenses are part of the expenses paid by the money received from the plaintiff. It is very difficult to accept that a Consul General should have asked the Government to pay to him money for expenses which he had [*1192] not incurred and which somebody else had paid. The total amount of these vouchers is about £20.-. It is not a large amount but all the same the defendant would have no right to claim these expenses, once these expenses had been paid by the owners with the money which was borrowed from the plaintiff. Needless to say that had defendant No. 2 received the money to spend it on behalf of the owners, he should have produced a proper list and receipts for any expense paid by him. This he did not do.

One could wonder why did the defendant borrow money from the plaintiff in order to spend it for the repair of the ship and the release and repatriation of the crew. The answer is applied by the defendant himself, when he was cross-examined by Mr. Loucaides and we quote from the cross-examination:-

"Q. You agree with me that it was not within your duties, it was not covered by any authority to borrow money personally on behalf of the Government from an individual for this kind of expenses?

A. It is not absolute; I do not agree absolutely.

Q. What is your qualification?

A. My qualification is that the fact that we were living in a country in which rapid revolutionary changes took place which affected the financial situation of every individual, any Cypriot citizen whom I had [*1193] to protect and see that their property should be also protected and see for their repatriation, it was not outside ray duties or my responsibilities or my powers so as to borrow even money if it was urgent cases as I have done in the first instance so as to establish the Consulate because the Republic had no Consulate at all and it was entrusted in me to find the means.

Q. You mean to say have you ever borrowed on behalf of the Republic from an individual, not from an authority or a public body or an official authority, Government branch, from an individual for the purposes of the Government?

A. I took from the Cyprus Brotherhood only; the first time I took from the Cyprus Brotherhood in Alexandria, not from an individual; it was the first time".

From the defendant's answers we can draw the conclusion that the defendant borrowed money in order to help the ship and the crew but he was not clear as to his rights and duties. He has not stated on what authority he either spent the money or borrowed the money in order to help·

We now come to the question of the liability of the Government. Mr. Lemonaris on behalf of the plaintiff submitted that the Government is liable and he relied on [*1194] ss. 188, 190 and 193 of Cap. 149 but the liability of the Government for the acts of its servants should be based on the powers and authority of its servants. In our view, for the plaintiff to succeed against the Government he must show:-

(a) That the defendant No. 2 was entitled to spend money for the repairs of a ship belonging to an individual, and,

(b) that he was entitled on his own initiative to borrow money from an individual.

An administrative act is based on the provisions of the Law. I cite from Stassinopoulos "Mathimata Diikitikou Dikeou", 1957 Edition, p. 219'-

"Μεταξύ της διοικητικής πράξεως και της δικαιοπραξίας του ιδιωτικού δικαίου υφίστανται αι εξής ουσιώδεις διαφοραί:

(α) ............

(β) Την ιδιωτικήν δικαιοπραξίαν

διέπει η αρχή της αυτονομίας της βουλήσεως δυνάμει της οποίας ο ιδιώτης δύναται

να διαμορφώνη ελευθέρως την βούλησίν του προς παν ό,τι δεν απαγορεύεται υπό του

νόμου. Τουναντίον, η διοικητική πράξις στηρίζεται πάντοτε εις διάταξιν νόμου

και δεν δύναται η διοικητική αρχή να θέλη ειμή ό,τι και εν ω μέτρω επιτρέπει ο νόμος".

And further in the note:- [*1195]

"Η Διοίκησις δύναται να επιτρέπη όχι ότι δεν απαγορεύει ο νόμος, αλλ’ ό,τι επιτρέπει ο νόμος".

The Government is not responsible for the acts of its servants if they are in excess of their powers. I cite again from "Στασινόπουλος, Αστική Ευθύνη του Κράτους" 1968 Reprint, page 189:-

"(α) Δεν ευθύνεται η Πολιτεία

δια πράξεις των υπαλλήλων, αίτινες είναι νομικώς ανύπαρκτοι, ως εκδοθείσαι καθ'

υπέρβασιν καθηκόντων. Ευθύνεται/ μόνον ο ενεργήσας υπάλληλος.

(β) Δεν ευθύνεται η Πολιτεία, οσάκις η πράξις εξεδόθη καθ' υπέρβασιν της αρμοδιότητος ου μόνον του ενεργήσαντος υπαλλήλου, αλλά και του υπηρεσιακού εν

γένει κλάδου, εις ον ανήκει ο υπάλληλος. Και ενταύθα ευθύνεται μόνον ο

ενεργήσας υπάλληλος".

In our view the plaintiff has failed to prove to us that defendant No. 2 had the authority to contract a loan on behalf of the Government or that he was entitled to spend money without any special authority from the Government to repair a ship belonging to an individual.

As we have said, Mr. Lemonaris has relied on the provisions of ss.188, 190 and 193 of the Contract Law. He has relied particularly on s. 193 which reads as follows:-

"In cases where the agent is personally liable, a person dealing with him may hold either him or his principal or both of them liable". [*1196]

In our view this section does not mean that in any case where a person is dealing with an agent, he can hold the principal liable when the agent exceeds his authority. The provisions of this section apply to the cases where a principal has entered into a contract with a third person through an agent and the agent has acted within his authority. This section must be read together with all other sections, from s. 186 to s. 198. This section refers to contracts entered through an agent. (Vide Pollock & Mulla, on Indian Contract, 6th Ed., p. 628 and subsequent).

Mr. Eftychiou on behalf of defendant No. 2 has submitted that the claim against defendant No. 2 should fail also on the ground that the contract was an unlawful one because it was contrary to the Foreign Exchange Regulations or Law of Egypt. It is not possible for us to take judicial notice of the Law or Regulations of another country. Foreign Law must be proved as a fact by skilled witnesses. (Vide Phipson on Evidence, 10th Ed., p.27, paragraph 49)·

For the above reasons, we give judgment for the plaintiff against defendant No. 2 for £1,000.- with costs and claim against defendant No. 1 dismissed. As regards costs for defendant No. 1, in our view, taking into consideration all the facts of the case, the Government should not claim costs.

Loucaides:- I do not claim costs.

Court: - No costs in favour of defendant No. 1.

Judgment for £l000.- against defendant 2 with costs. Action against defendant 1 dismissed with no order as to costs.