Court allows depositor to reclaim lost fixed deposit money despite lost receipt due to war invasion.

[*17] 1978 Dec.23

(PIKIS, P.D.C. & CONSTANTINIDES,D.J.)

IN THE DISTRICT COURT OP FAMAGUSTA SITTING

AT LARNACA

Irini A. Antoniou and Another,

Plaintiffs,

v.

National Bank of Greece, S.A.,

Defendants.

(Action No. 383/77)

Civil Procedure - Practice - Pleadings

- Defence -

Equitable defence - Should bespecially raised in a party’s pleadings.

Banking - Banker and customer - Fixed deposit account -

Money repayable only on production of receipt or deposit book - Both parties losing their documents - Court, in the exercise of its equitable jurisdiction, would not allow absence of the document to stand in the way of depositor reclaiming his money - Claim resolved in the same way as any other type of civil action - It is for plaintiff to prove his claim on a balance of probabilities.

Equity - Principles of equity - Banker and customer - Fixed deposit account - Re-payable on production of receipt - Both parties losing their documents - Depositor allowed to re-claim his money in exercise of Court’s equitable .jurisdiction.

Contract - Standard form contract - Exeption or limitation clause - Should not be given effect if either unreasonable per se or unreasonable to apply it in the circumstances of a given case - Banking - Banker and customer - Fixed deposit account - Deposit receipt stipulating that its prudiction a condition precedent to the payment of the money - Loss of receipt because of the Turkish invasion - Unreasonable in the circumstances to invoke terms of said stipulation - Loss of deposit receipt excusable both on a consideration of equitable as well as common law principles. [*18]

S. Evgheniou, for the Plaintiffs.

P. Cacoyannis, for the Defendants.

JUDGMENT

The Judgment of the Court was delivered by:- Pikis. P.D.C.: The plaintiffs come from Piyi and were, like other residents of that village, displaced in the wake of the second round of the Turkish invasion, leaving their homes in great hurry as their father, Andreas Lazarou (P.W.3) told us, evidently to avoid capture by the invading forces. After their displacement they sought to recover from the defendants, money lodged with the Famagusta branch of the defendants, prior to the Turkinh invasion but the defendants refused to meet their demand. It seems that suggestions had been made for the payment of the amount by instalments provided sufficient security was furnished, an arrangement that did not finally materialize for, as Mr. Lazarou explained, one of the proposed guarantors, his son, left Cyprus. Hence the present action whereby the plaintiffs seek to recover the amount of £3,800 plus interest allegedly owing by virtue of a bond or receipt. [*19]

Mr, Lazarou and. his father-in-law, Petros Yangou (P.W.2), testified with regard to the circumstances under which the aforesaid amount was deposited with the bank, towards the end of March 1974, and the document issued thereupon by the bank. Both the aforesaid witnesses testified about the contents of this document as well as the plaintiffs; all agreed that it was a deposit receipt for an amount of £3,800 plus interest accruing at the rate of 8¾ per cent per annum payable after thirteen months, at the end of April 1975. Secondary evidence was received of the contents of the document, without objection from the the defendants, as the document, was left behind and the plaintiffs have no means whatever of tracing it.

The defendants did not really challenge the evidence of the plaintiffs that they deposited money with the bank or their evidence that a document had been issued by the defendants indicating indebtedness to the plaintiffs for the sum referred to in their evidence. Be it noted that apart from the testimony of the plaintiffs and that of their father and grandfather we have evidence from another source indicating that in March 1974 their father came into possession of a sum of £4,000 from the sale of a building site, thereby confirming the evidence of Mr. Lazarou that the deposit was made from the proceeds of sale of this building plot. (See the evidence of P.W.1, Iacovos Hji Demetriou.) Mr. Kyprianou, the official of the bank who was, in plaintiffs’ contention, the officer who handled the transaction on behalf of the defendants was unable to [*20] recall the details of this transaction but could not exclude their allegations, understandably so, as he had to cope daily with many similar transactions and generally banking business.

In his final address learned counsel for the defendants in no way invited us to disbelieve any of plaintiffs’ witnesses; and rightly so for, in our judgment, both the plaintiffs and their witnesses told the Court the truth. At the end of March 1974 the father of plaintiffs deposited with the defendants a sum of £3,800 in a 13-month deposit account with interest at 8¾ per cent per annum, making his daughters; the plaintiffs, the beneficiaries of the deposit. Neither the plaintiffs nor their father or grandfather had a precise recollection of the receipt issued thereupon. But having regard to the evidence of Mr. Kyprianou we accept that the deposit receipt issued to the plaintiffs was identical to exhibit 1 . It was a receipt similar to exhibit 1 that plaintiffs lost.

Learned counsel for the defendants, in his able address, invited the Court to dismiss the action on a consideration of the terms of deposit receipt, notably clause 4, stipulating that the production of the deposit receipt is a condition precedent to the payment of the money due therein. He invited us to distinguish the judgment of the District Court of Larnaca in Action No. 4/76, given on 5th February 1977 (now the subject of an appeal*), and [*21] dismiss the claim of the plaintiffs on the ground that they failed to plead any equitable defence arising from the loss of the document. He based his submission on the combined effect of section 31 of the Courts of Justice Law (14/60) and 0.19, r.13 of the Civil Procedure Rules, modelled on the provisions of 0.19, r.15 of the old rules of the English Supreme Court (Annual Practice 1959) He argued that notwithstanding the availability of equitable defences it is not open to the plaintiffs to invoke their application unless the matter is specially pleaded.

An equitable defence must be specially raised in a party’s pleadings. Therefore a party relying on an equitable defence as a shield against the application of one’s common law rights must specifically set up this plea in his defence. And 0.19, r.13 above indicates the need for a special plea on the subject. The plaintiffs do not, in the present action, rely on any equitable defence but merely seek relief from the loss of the document. Hence the need for a special plea does not arise; of course the fact of loss is mentioned in the statement of claim. In its decision in Civil Action 4/76, the Court deals at length with issues identical to those raised in the present proceedings, particularly the power of the Court in equity to grant relief from the loss of a document. (The judgment was given by myself and H.H. Judge Artemis.) We have debated at length the reasoning and implications of that judgment and feel we should adopt the reasoning relevant to the circumstances under which the Court may grant [*22] relief for the loss of the document, mitigating thereby the rigors inherent in the application of contractual terms. Feeling, as we do, that we have nothing to add in this area, we can do no better than incorporate a copy of the judgment in that case and make it part of our judgment in the present action.(Copy of the judgment is attached hereto*).

Standard Terms in Contract - Applicability

On a study of a body of recent case law it appears that the common law has evolved its own principles designed to temper some unreasonable results that might ensue from the application of standard terms in contracts, not the product of a negotiated agreement, attached as a matter of course, often imposed by the stronger of two contracting parties who usually dictates its terms. The matter was discussed by Lord Diplock in Music Publishing Company Ltd. v. Macaulay (1974) 3 All E.R./ and put in the following perspective at p. 624:-

“This (standard form of contract) is of comparatively modern origin. It is the result of the concentration of particular kinds of business (Our note: Banking is such a type of business) in comparatively few hands. The terms….. have not been the subject of negotiation between the parties to it or approved by any organization representing the interests of the weaker party. They have been dictated by the party whose bargaining power, either exercised [*23] alone or in conjunction with others providing similar goods or services, enables him to say: ‘If you want these goods or services at all these are the terms on which they are obtainable. Take it or leave it.’”

Support for

this proposition was found in a decision dating back to 1934, namely L’Estrange v. F.Graucob Ltd. (1934.) All E.R. Rep. 16. Lord Denning, a protagonist of the evolutionary

process of the common law, has put the matter on a wider basis, laying down that contractual terms resulting from the inequality of bargaining power, may,

and in a proper case should, be disregarded. (See Gillespie Brothers and Co. Ltd. v. Roy Bowles Transport Ltd. (1973) 1 All E.R. 193.)• More

recently he applied this principle to standard terms in contracts and indicated that an exception or limitation clause should not be given effect if it is either unreasonable per se or unreasonable to apply it in the circumstances of a given case. (Levison v. Patent Steam Carpet Cleaning (1977) 3 All E.R. 498, 503.)

Coming back to the facts of the case it is manifest that the terms at the back of exhibit 1 were neither negotiated nor was the attention of the depositor drawn to them. We were told by Mr. Kyprianou that the imposition of these terms is standard practice for the past many years and such terms are invariably included in deposit contracts for a period over six months. Though we would not be prepared to say that it is unreasonable to require the production of a deposit receipt for the payment of the deposit the strict application of this rule may lead to [*24] absurdity and gross injustice. To carry the matter to logical conclusion, a depositor for £1,000.000.- may be deprived of his money because of the mere loss of the deposit receipt. But certainly it would be unreasonable to invoke this term in the tragic circumstances of the plaintiffs who moved in an emergency away from their house in the face of an advancing enemy army and have no means of recovering the deposit receipt. To hold that the law is powerless to come to the aid of persons in the position of the plaintiffs would lead to most unsatisfactory results. Fortunately the law is a living body and so it should be if it is to cope with changing social needs, particularly in a country like ours where dramatic changes have been the rule for the past many years. In such tragic circumstances if the law was inflexible it would cease to be the instrument of justice. So the loss of the deposit receipt is excusable both on a consideration of equitable as well as common law principles and we are happy to affirm that. It is heartening to know, as Mr. Kyprianou stated, that the defendants paid money due to many displaced depositors who were unable to produce their deposit receipts.

Interest

We were invited by Mr. Cacoyiannis, in the event of finding for the plaintiff, not to award interest after the expiration of the 13th month period, in accordance with another term of the deposit receipt, viz. caluse 2. It is manifest that defendants refused to pay the sum due despite plaintiffs’ repeated demands. In our judgment the plaintiffs [*25] are entitled to interest after the expiration of the 13th month period though not at the rate of 8¾ per cent but at a rate equal to that payable by the banks on deposits after September 1974. In the words of Pollock C.B. In Newton v. Grand Junction Railway Company (1846) 16 M. & W. 139, at 144, interest is payable in such circumstances because “it is in truth a compensation for delay”. This proposition was accepted as validly stating the law on the subject by Ackner J. in Parsons v. Mather & Piatt Ltd. (1977) 2 All E.R.

715 at 719 (See also K. v. K. (1977) 1 All E.R. 576) .

In the result, judgment is given for the plaintiffs for £3,800, with interest accruing at the rate of 8¾ per cent per annum from 1st April 1974 till 30th April 1975 and thereafter at the rate of 6 per cent per annum, less £700 paid on 25th October 1977. There shall be no order as to costs, considering that it was not unreasonable on the part of the defendants, given the loss of the document, to require proof on oath before agreeing to pay the sum deposited by the plaintiffs.

Judgment as per claim with no order as to costs.

*See (1980) 1 C.L.R. 195.

*See pp. 25 - 40 post.