Injunction granted restraining foreign defendant from withdrawing funds due to risk of asset removal abroad.

[*304] 1976 October.20

(PIKIS, AG.P.D.C.)

IN THE DISTRICT COURT OF LARNACA

John Misirlis,

Plaintiff,

And

Adel Jabr,

Defendant.

(Action No. 805/76).

Injunction - Interlocutory injuction

- Money in bank - Defendant a foreign national with no fixed assets in Cyprus and can with ease remove abroad funds now credited in his name in an external account - Order restraining him from withdrawing from his said bank account an amount equal to plaintiff’s claim - Nippon Yusen v. Karageorghis (1975) 3 All E.R. 282 followed

- Section 32 of the Courts of Justice Law, 196O (Law 14 of 1960).

Judicial precedent - Whether permissible for lower Courts to depart from a decision of the Supreme Court which, according to English Courts, was based on an erroneous interpretation of the relevant statutory provision.

A. Poetis, for the Applicant.

G. Achilles, with G. Nicolaides, for the Defendant.

JUDGMENT

The following judgment was delivered by:-

PIKIS, AG.P.P.O.: The plaintiff is [*305] a Cypriot and the defendant a Lebanese trader. The plaintiff seeks, by the

present action, to recover from the defendant £1,859 allegedly the value of goods sold and delivered to the defendant. After the institution of the action the plaintiff sought, on an ex parte application, an interim order restraining the defendant from withdrawing from his bank account with Grindlay’s Bank, their Larnaca branch, an amount equal to the claim on the strength of the principle adopted by the English Court of Appeal in the case of Nippon Yusen v. Karageorgis (1975) 3 All E.R. 282. The order was provisional subject to review after affording an opportunity to the defendant to be heard in the matter. In due course the defendant opposed the application and applied for the discharge of the order.

The factual background to the application and opposition thereto is set out in three affidavits, two sworn in support of the application and one in support of the opposition. In the affidavits sworn in support of the application, one by plaintiff and one by his advocate, Mr. Poetis, the allegation is made that if the money now credited to the name of the defendant is withdrawn from his bank account, the plaintiff will run the risk of being left remediless; it is also stated that there is an imminent possibility of the defendant leaving the country without, however, disclosing the source of their information. This allegation, is contested by the defendant who maintains, in his affidavit, that he has no immediate plans of leaving the country but on the contrary arrangements have been made for him and his family to stay in Cyprus for the coming year. Further he discloses [*306] details of his business activities and the fact that his bank account is at present in substantial funds. The injunction, if granted, will cause inconvenience to the defendant, so it is alleged, as it is likely to hinder his business activities.

Counsel for both sides made reference with approval to the above decision of the English Court of Appeal but differed in their analysis of the ratio decidendi of the Karageorgis case (supra) and its applicability to the facts of the present case. Counsel shared the view that vent should be given to the principle in Karageorgis case despite the existence of authority to the contrary in Cyprus, namely the Polish Ocean Lines and Another v. Spyropoulos and Another. 20(2) C.L.R. 73.

An Interim Injunction - The Principle in Karageorgis case

The issue raised in these proceedings is one of considerable importance to the day to day administration of justice and I propose to devote some time in examining the historical background and proper perspective of s.32 of the Courts of justice Law, the provision of the law conferring power, inter alia, to make interim injunctions, and,the implications of the reasoning in Karageorgis (supra) on the interpretation of its provisions.

An injunction is an equitable remedy designed to enable the Court to fetter the actions of a party with a view to preventing the doing of something that may appear unconscionable. And in the case of an interim injunction the idea behind the remedy was to ensure that a

judgment that was likely to be given in the case would not be [*307] rendered nugatory by any intervening action of a litigant. Until

the day judgment was given in the case of Karageorgis (supra) the generally accepted understanding of the law was that an interlocutory injunction could be granted only in order to preserve in being the status quo either by ordering the preservation of the subject matter, if tangible property, or by restraining the defendant from doing something that was likely to change the state of affairs prevailing at the time of the institution of the action. Upon this understanding of the law the Supreme Court, in the case of Spyropoulos (supra) decided that the defendant could not be restrained from disposing of property not the subject matter of the action. Authority for this proposition was found in a passage in Kerr On Injunctions, 4th edition, summarizing the effect of a number of Court decisions on the subject. On a prior occasion the Supreme Court, differently constituted, expressed a similar view on the

interpretation of section 4 of the Civil Procedure Law, Cap. 6. (See Cyprus Palestine Plantations v. Olivier & Company,

16 C.L.R. p. 122).

The limited construction placed by the Supreme Court on the provisions of section 32 of the Courts of Justice Law

- Law 14/60 and section 4 of the Civil Procedure Law, originating from a similar construction placed on corresponding

provisions of the English Law, and in particular the words "just or convenient” was rejected by Lord Denning, giving the judgment of the Court of Appeal, as not warranted by the wording of the statute and as purporting to

limit the discretion of the Court where the test was [*308] that of doing justice in the case. In coming to its conclusion the

English Court of Appeal drew, inter alia, support from the practice prevailing in other European countries. And it seems that nowadays there are cross channels of influence enabling the two major systems of justice applicable in different countries of Europe to derive benefit from the practices of one another.

Binding Precedent

Under the Common Law the system of binding precedent is essential both for the orderly development of principle and for ensuring a meaningful Court hierarchy. In this way lower Courts are bound by the ratio decidendi of decisions of the Supreme Court. In this case a rather acute problem must be faced; it must be decided whether decisions of the Supreme Court, based on analogous decisions of English Courts, are to be applied if such decisions of English Courts that led to the laying down of principles adopted by the Supreme Court of Cyprus have been overruled by subsequent decisions of English Courts.

There can never arise a question of departing from the ratio decidendi of a decision of a Cyprus Court on a matter of interpreting indigenous Cyprus legislation, not deriving from English Common Law or English statutes. In my judgment greater latitude is allowed in two cases:-

(a) Where a decision of the Cyprus Supreme Court is based on a given understanding of the Common Law and subsequently English Courts pronounce that such understanding is erroneous; and [*309]

(b) where a decision is given on a matter of statutory interpretation along the lines adopted by English Courts, as it happened in Spyropoulos case (supra), and subsequently English Courts pronounce that such interpretation is either erroneous or, as in the case of Karageorgis, not warranted by the wording of the statute.

If the reasoning behind an English

decision overruling a previous understanding of the law is accepted by the Court in my view it is permissible to depart from a decision of the Supreme Court, especially if given before Independence, based on what has come to be regarded by English Courts as an erroneous interpretation. And in this way the development of law in Cyprus will continue to benefit from judicial decisions in England, the heartland of the Common Law.

I find, with, respect, the interpretation placed on the provisions of English Law corresponding to section

32 of the Courts of Justice Law perfectly warranted by the very wording of the Act and when power is conferred to do what appears to be just in a given situation Courts should not endeavour to limit the exercise of their discretion because, as human experience has shown, it is hard to postulate with accuracy different situations that may arise justifying the intervention of the Court to do what appears to be just in such circumstances.

The Facts

I have carefully examined the facts before me. The defendant is a foreign national with no fixed assets in [*310] Cyprus and can with ease remove abroad funds now credited in his name in an external account. It appears to me just to place some fetters on this freedom and thus ensure that if defendant is successful in the action any judgment he may get will not be rendered nugatory; and in the face of this risk I believe I am entitled to restrain the defendant from withdrawing money from his account with the aforesaid bank for an amount up to the amount claimed in this action. This restraint will be valid until the lapse of fifteen days after judgment if the plaintiff is successful in the action. I have come to this decision without overlooking the force of the submission of Mr. Nicolaides that the defendant has done nothing tending to suggest that he is likely to transfer moneys credited in his name in a Cyprus bank abroad. But the gist of the remedy lies in countering a risk and in deciding whether there is such a risk one must have regard to the totality of the circumstances of the case and especially the ease with which funds may be transferred abroad. This should be done on terms. And in this case the order granted will be discharged unless within seven days the defendant files security with the Registrar with a surety or sureties to his satisfaction in the amount of £200 undertaking to compensate the defendant for any loss he may suffer on account of this injunction if the plaintiff finally loses the action or if it validly appears that the action was unjustified.

Costs

The injunction sought and granted in this case is mainly intended to confer to the plaintiff added security. It is an extraordinary remedy and a drastic one, solely [*311] intended for the benefit of the plaintiff, not warranted by any acts of the defendant except his general circumstances. The plaintiff should, therefore, be burdened with the payment of costs especially in the present case where the defendant has done nothing by his conduct to arouse the fears of the plaintiff and the likelihood of his removing funds now lodged with a bank in Cyprus is not proximate.

General Observations

Before leaving this judgment, lest the judgment about to be given gives rise to any misunderstanding, I consider it my duty to point out that the remedy favoured in Karageorgis case is not intended to confer a general right on the plaintiff in an action to attach the bank account of a defendant. To approve of such a remedy generally would gravely inconvenience the commercial world and undermine the faith that people place on bank deposits, a matter of great consequence for the economy. Had it not been for the peculiar circumstances of the defendant, his lack of any real connection with Cyprus and the ease with which he may transfer funds abroad, I believe enough has been said to indicate that the remedy sought in this application would be refused.

In the result, an order is made restraining the defendant from withdrawing from his bank account with Grindlays Bank, Larnaca branch, an amount equal to the amount claimed in this action until judgment is given in the action and if judgment is given for the plaintiff for any amount then the injunction shall be valid for that amount for a further period of fifteen days. The order [*312] will lapse unless the plaintiff gives security in the sum of £200 with a surety or sureties to the satisfaction of the Registrar to answer in damages as indicated above. The plaintiff will pay the costs of these proceedings.

Order accordingly.