Court allows claim for lost deposit receipts by displaced persons, rejecting strict proof requirements due to wartime circumstances.

[*25] 1977 February 02

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

IN THE DISTRICT COURT OF FAMAGUSTA SITTING AT LARNACA.

Kyriakos K. Masonou , of Pighi

Plaintiff,

v.

National Bank of Greece, S.A. of Nicosia,

Defendants.

(Civil Action No. 4/1976) [*26]

The judgment of the Court was delivered by:-

PIKIS.P.D.C.; This is an action .for the recovery of an amount exceeding £4,000 allegedly due by the defendants to the plaintiff under two “grammatia”, or, alternatively, balance due under an account. Defendants sought further and better particulars of the nature of the claim envisaged by the term “grammatia”, and in reply thereto the plaintiff clarified that by this description he meant to refer to documents ordinarily issued by the bank evidencing a deposit of money with the bank repayable after the lapse of 13 months.

In the course of the trial it was made clear that the documents described as ”grammatia” were the ordinary deposit receipts ordinarily issued by the bank to depositors evidencing the indebtedness of the bank and stipulating for the time of repayment of the debt.

In his final address learned counsel for the defendants invited the Court to dismiss the action for the reason that the nature of the plaintiff’s claim, as disclosed at the trial, is different from the claim raised by his statement of claim. It was argued that a document answering to the description of “grammation” is a document different from the deposit receipt relied by the plaintiff in support of his case. Of course they did not complain of surprise as the defendants could have been left in no doubt by the further and better particulars supplied by the plaintiff about the nature of his case and the documents to which he referred. [*27]

The word “grammation” is not, as suggested by learned counsel for the defendants, exclusively synonymous with the documents known as bonds under English law. The word “bond” has a French origin and its synonym in Greek is “kalon”. To our comprehension the word “grammation” is not, unlike a bond in customary form, a term of art with a settled meaning. In its ordinary use the word “grammation” connotes a document acknowledging a debt coupled with an obligation to repay it. To whatever extent this may be relevant useful reference may be made to the definition of

“grammation” given in a Greek dictionary of legal terms, namely “Ermineftikon Lexicon Nomikon Oron.Ekdhosis PIGHASOS”. Therein the word “grammation” is defined as “a document

acknowledging liability to repay a sum of money at a future time and place” (the translation is ours). One may also usefully refer to the definition of “grammation” in “Eggiklopedhikon Ke Glossikon Lexicon PAPYROS”.

In our judgment the word “grammation” is apt to cover plaintiff’s claim as it was developed before us in the course of the trial and the submission made on behalf of the defendants to the contrary is dismissed.

It is the case for the plaintiff that on two occasions, i.e. on 19th January 1974 and on a subsequent occasion approximately 1 1/2 months later, he deposited with the defendant bank £4,800. The first time he deposited £2,500 in the presence of his distant relation and co-villager Sotiris Costi (P.W.3). The second deposit was for [*28] an amount of £2,300. On both occasions the money was deposited with the bank on similar terms and conditions, with interest accruing thereon at the rate of 7 3/4 per cent per annum, capital and interest being repayable after the expiration of 13 months.

The plaintiff was unable to produce the receipts for the reason that the documents were left behind at his house at Pighi village, an area to which he no longer has access. The accused and his family left their house and village in a great hurry on 14th August, 1 974, in the face of the imminent occupation of the village by the invading Turkish forces. The plaintiff was allowed, for the reasons given in a ruling delivered in the course of the trial, to give secondary evidence about the contents of these documents sustaining, in the circumstances, his plea that the documents were lost and, therefore, he should be allowed to give secondary evidence of their contents.

Subsequent to his displacement the plaintiff made a demand for the repayment of the moneys allegedly due to him by virtue of the aforesaid deposits. The defendants refused, at first, to make any payment to the plaintiff; later they agreed to pay the sum of £1,000 upon the plaintiff executing what has been referred to as an indemnity bond in the terms of exhibit 1. This document contains a declaration on the part of the plaintiff to the effect that the bank is indebted to him for an amount of £4,800 coupled with an affirmation that he did not assign his rights therein. In the course of giving his testimony the plaintiff [*29] was asked, in cross-examination, about his ability to raise an amount of £4,800 over the relatively short period of 1 1/2 months and generally he was challenged as to his ability to be a depositor of the bank for the amount allegedly deposited with the bank. The plaintiff stated in reply that he was in funds, trading, as he did, on a large scale in livestock and running a pigsty. The testimony of both the mukhtar of the village, namely Pandelis Avghousti (P.W.2), the secretary of the Co-Operative Society of the village, and Chrysostomos Georghiou, a shepherd of Pighi (P.W.4). lends support to the evidence of the plaintiff on this score, in particular the fact that he was trading in livestock on a relatively large scale. The manager of the Famagusta branch of the defendants now operating at Larnaca gave evidence for the defendants and enlightened the Court about their practices at Famagusta, gave the Court a rough indication of the number of their customers and the circumstances under which they vacated their Famagusta branch in the wake of the Turkish invasion. Before the Turkish invasion and the occupation of Famagusta by the Turkish forces Mr. Kyprianou was serving as assistant branch manager at Famagusta. It seems that the employees of the Famagusta branch of the. defendants left in a hurry without taking with them the books of the bank, a fact that has created many difficulties for the subsequent transaction of the banking business of the defendants. Apparently the defendants have no alternative source of information as to the state of the accounts of the many customers of the [*30] Famagusta branch of the defendants. Mr. Kyprianou explained that in the absence of their books it is very difficult to verify the claims of depositors and one can well imagine the magnitude of

their difficulties considering that the bank had some 3,500 depositors at their .Famagusta branch. The large number of

customers made it difficult for the employees of the bank to remember with accuracy who was and who was not a customer of the bank and speaking of the plaintiff Mr. Kyprianou was unable to confirm or deny whether the plaintiff was a depositor of the bank. He did, however, state in cross-examination that it is their practice, after their displacement from Famagusta, to inquire into the claims of persons claiming to be depositors of the bank before allowing the payment of any sum of money to them. Therefore one may legitimately infer, in the light of the evidence of Mr. Kyprianou, that the defendants did scrutinize plaintiff’s claim to be a depositor of the bank before paying to him the amount of £1,000. Indeed Mr. Kyprianou stated that before making any payment similar to the one made to the plaintiff, they had to feel certain that the person in question was a depositor of the bank and acquainted the Court of the fact that the cashier of the bank at Famagusta, a certain Christakis, did inform the bank that the plaintiff was a depositor of the bank. This piece of evidence, obviously hearsay, is not evidence of the truth of the statement made by the said Christakis to the bank but was received in evidence as a fact tending to indicate the state of mind of the defendants, in particular their reaction [*31] to plaintiff’s claim that he is a depositor of the bank.

On any fair assessment of the evidence of Mr. Kyprianou one may legitimately infer that the defendants, after enquiries, agreed to the fact that plaintiff was a depositor of the bank though they had no certain knowledge of the amount owing to the plaintiff. The cashier of the bank, namely Michalakis Koufettas (D.W.2) was, like. Mr. Kyprianou, unable to affirm or refute the allegation of the plaintiff that he is a depositor of the bank.

It is the evidence of Mr. Kyprianou that on accepting a fixed term deposit the bank invariably issued a receipt in triplicate furnishing the depositor with the first copy of the receipt. The receipts were identical in form and terms in a receipt produced before the Court (exhibit 2). The plaintiff was unable to state with certainty whether the receipts issued to him were identical to exhibit 2 but agreed that the documents issued to him were, broadly speaking, similar to exhibit 2 except perhaps for the colour. We do accept that the bank, on accepting a deposit, was invariably furnishing the depositors with a receipt identical to exhibit 2, filled in with the particulars of the depositor and the money lodged with the bank.

The issues posing for determination are: (a) was the plaintiff a depositor of the bank and, if so, for what amount?

(b) if the answer to the above is in the affirmative, a second question arises, that is whether the defendants are under any obligation to refund the money owing to the plaintiff in the absence of the production of the relevant receipts. [*32]

Findings of Fact

Learned counsel for the defendants submitted that the claim of plaintiffs should not be accepted unless supported by corroboration, in fact strong corroboration. In support of this submission reference was made to a number of cases and to Phipson On Evidence. (See Gillie v. Posho. Limited (1939) 2 All E.R. 196 and Spittle v. Spittle (1965) 3 All E.R. 451.) None of these authorites nor anything that is said in Phipson supports the view that a claim for the recovery of money due by a bank to a customer by virtue of a deposit receipt or otherwise must be corroborated before sustained. The claim must be resolved in the same way that any other type of civil action must be decided, that is it is for the plaintiff to prove his claim on a balance of probabilities. Within this ambit the onus of proof, as it has been repeatedly stressed, varies in direct proportion to the gravity of the allegation made and considering the nature of the claim of the plaintiffs and the position in which the defendants found themselves in the absence of their books a claim of this nature must be scrutinized in the most careful manner. Relaxation of this attitude might pave the way for fraud. It is in this vein that we have approached the claim of the plaintiff having seen and heard the witnesses testify before us. The plaintiff and his witnesses impressed us extremely well and we accept them as witnesses of truth. The testimony of Sotiris Costi supports in a very direct way the contention of the plaintiff that on 19th January 1 974 he deposited a sum of [*33] money with the. defendants. As already indicated, the testimony of Mr. Kyprianou does lend further support to the allegation of the plaintiff that he is a depositor of the bank. We find as a fact that the plaintiff, on 19th January 1974, deposited with the defendants £2,500 payable after the expiration of 13 months; the deposit carried interest at the rate of 7 3/4 per cent per annum. One and a half months later he deposited a further sum with the defendants upon similar terms and conditions, this time the amount being £2,300. On both instances the plaintiff was issued with a receipt in the terms of exhibit 2. An amount of £1,000 has been refunded in accordance with the provisions of exhibit 1.

Liability of the Bank to refund money to a depositor in the absence of the production of the deposit receipt.

It is the case for the defendants, that the claim of the plaintiff should be dismissed, despite any finding of the Court accepting the details of the claim of the plaintiff, in the absence of the production of the receipts evidencing the debt. Reference was made to the decision of the English Court of Appeal in Bagley v. Winsome (1952) 1 All E.R. 637, an authority for the proposition that where, by virtue of a contractual stipulation the production of a receipt is made a condition precedent to the repayment of a deposit, the banker is entitled to withhold payment pending such production. To the same effect is the decision in Birch v. Treasury Solicitor (1950) 2 All E.R. 1198

(1205) and this proposition is accepted as a sound banking principle [*34] in Paget’s Law of Banking, 7th edition, p. 143 Mr. Cacoyannis canvassed the point further and

made reference to the implications of such a condition upon the attachability of the debt and the legislative intervention in England to remove the

impediment. (See section 38 of the Administration of Justice Act, 1956 and the amendment of the rules of the Supreme Court in England

making the attachment feasible.)

Mr. Poetis did not dispute the existence of the principle cited in support of the submission made on behalf of the defendants but referred the Court to the existence of equitable jurisdiction to grant relief for lost documents, thereby relieving a party from the consequences attendant on the loss of the document where its production is a condition precedent to payment.

The conditions at the back of exhibit

2 stipulate, inter alia, for the production of the receipt as an essential condition (“aparetitos”) for the payment of the debt. In his evidence, Mr. Kyprianou referred the Court to the practice followed at Famagusta where the loss of a document was reported. The procedure followed, provided the bank was satisfied that it was a genuine case involving the loss of the relevant document entailed the issue by the bank of a new receipt.

In his final address learned counsel for the defendants referred to the case in hand as unique in the annals of the administration of justice in Cyprus, a statement containing a degree of exaggeration. In Action 145/75, [*35] filed before the Famagusta District Court, sitting at Larnaca, the Court was faced with virtually identical questions with those posing for consideration before the Court in the present action and in a judgment given on 20th December 1975, I had to deal with practically the same issues we are concerned to decide today. Subsequently an appeal was lodged but the appeal did not result in a judgment of the Supreme Court as the parties had settled their dispute before or during the hearing of the appeal. The defendants were, as in the present case, the National Bank of Greece.

The existence of equitable jurisdiction to grant relief for the loss of documents is acknowledged in Halsbury’s Laws of England. The ambit of this equitable jurisdiction is put in this perspective:-

“If the return of the deposit book is a condition precedent no actual debt arises until its return. In case of the loss of the book, however, a Court would exercise its equitable jurisdiction, and not allow the absence of the receipt to stand in the way of the depositor reclaiming his money. Nor would the Court require the depositor to give an indemnity, the deposit book or receipt not being a negotiable instrument”.

(See Halsbury’s Laws of England, 3rd edition, volume 2, at p. 174.) [*36]

It is evident that equity stepped in to fill a gap and close the door to a party’s unjustified insistance on his contractual rights in circumstances where this would lead to manifest injustice. In support of this equitable principle reference is made in

Halsbury’s to a decision of the Court of Appeal in Re Dillon (1890) 44 Ch.D. 76 (81). It is quite apparent that equity intervened to stop the abuse of

a legal right in an effort to moderate the rigors of the Contract Law thereby ensuring that justice is done in accordance with the substantive rights of the parties. (See Halsbury’s Law of England, volume 14, p.

465 (G).) Mr. Cacoyannis argued that the above principle of equity is inapplicable to the facts of the present case and in the alternative submitted that even if applicable it should not be invoked inasmuch as it would put the defendants at a disadvantage and thereby defeat another principle of equity designed to ensure equality of treatment between the parties. We are unable to uphold any aspect of this submission. The jurisdiction to grant relief for the loss of documents is not limited to any particular class of documents. Further, nothing before us makes the invocation of this principle unjust.

The modern trend of judicial authority is to unfetter the hands of the Court to whatever extent this is necessary to do justice, from technical rules that might otherwise impede doing justice between the parties. Observations of Lord Denning made in a fairly recent decision of the English Court of Appeal are indicative of this trend:- [*37]

(Gillespie Brothers Ltd. v. Roy Bowles Ltd. (1973) 1 All E.R.

193 (C.A.).

“ The Common Law will not allow a party to exempt himself from his liability at Common Law when it would be unconscionable for him to do so.”

Mr. Cacoyannis submitted that the application of the aforesaid principle of equity would lead to inequality in breach of the principle of equality enshrined in Article

28 of the Constitution and the maxim of equity “equality is equity”. The substance of this submission, if we understood it correctly,

is that the Court should not intervene if there are conflicting equities in the sense of the two parties being likewise afflicted by the same calamity from which relief is sought.

Firstly there is nothing in Article

28 of the Constitution or in any of the many

decided cases of the Supreme Court on its interpretation, conferring a discretion on the Court to intervene, in the same

way that equitable principles may be invoked, in order to bend rules of substantive law in the interest of subjective equality. Article 28 of the Constitution is a fundamental constitutional provision providing that laws should not make any arbitrary differentiations between citizens, thereby ensuring equality of all citizens before the law, that is all persons likewise circumstanced should be likewise treated. For example, the Constitutional principle embodied in Article 28 might [*38] be offended if a law provided that banks displaced as a result of the calamitous events of 1974 would have no right to recover money due to them by debtors of the bank whereas depositors of the bank would be at liberty to withdraw moneys due to them by the bank.

The maxim of equity “equality is equity” has no relevance whatever to the facts of the case. The substratum of this rule is that a Court may intervene and authorize equal division of property among claimants to it in the absence of sufficient reasons or basis

for its division among interested parties in any other way. (See Snell’s Principles of Equity, 27th edition, p. 36.) But even if this maxim had any conceivable application to equate

the circumstances of the plaintiff with those of the defendants would be both risky and unfair.

We do not overlook either the financial repercassions upon the bank consequent on the events of 1974, nor their difficulties in rebuilding their books. But surely the defendants seek no recompense from the plaintiff for losses inflicted upon the bank by the invading army. They would be right to suggest that the Court should scrutinize to whatever extent this is possible and with the utmost care any claim made unaccompanied by the relevant receipt. And this the Court has done. But to suggest that the fate of the claim of the plaintiff for such a substantial amount of money should be frustrated on account of his inability to produce the documents evidencing the debt would be unjust [*39] especially when we know the circumstances under which the plaintiff and his family departed from their home and the greate hurry in which they left. Lastly and again for the sake of argument we may pose yet another question: Why should a distinction be made between displaced persons depositors of the bank depending on whether they removed, as they left their homes, the deposit receipts? Because if the plaintiff was in possession of the receipt nothing has been said or suggested justifying the bank to withhold payment. Provided the Court is satisfied that a displaced person was, in point of fact, a depositor of the bank for a sum certain it would, in our judgment, be unconscionable on the part of the bank to insist on the strict enforcement of its contractual rights, a stand that this Court would not countenance.

Finally we have been invited by the defendants, in the event of giving judgment for the plaintiff, to make the judgment conditional and require the plaintiff to furnish an indemnity. This should not be done if the document lost is not a

negotiable instrument and there is clear authority for this proposition. (See Halsbury’s Laws of England, volume 2, at p. 174, paragraph 327). Even though the plaintiff does not

object to making a declaration like the one contained in exhibit 1 and supplying a similar guarantee we believe that to make the judgment conditional in any way would be wrong in principle. The plaintiff has established a right to the recovery of the money and having in mind the nature of the documents lost the defendants are [*40] not at risk of paying the same amount of money over twice which is the purpose of an indemnity, for lost negotiable instruments.

In the result, judgment is given for the plaintiff as per claim. There shall be no order as to costs for the reason that the defendants could, in the circumstances, require the strictest possible proof of the claim before making payment which could take the form of sworn testimony.

Judgment for plaintiff as per claim with no order as to costs.