Court allows tenant damages for landlord's concealment of loan dependency in eviction, rejecting exemplary damages.

[*240] 1980 December 13

(PIKIS, P.D.C.)

IN THE DISTRICT COURT OF LARNACA

Agamemnon Charalambous,

Applicant,

v.

Stelios Stavrou Tryfonos,

Respondents

(Applic. No.I2/80).

Landlord and tenant - Statutory tenancy - Recovery of possession - False pretences or concealment of material facts - Section 19 of the Rent Control Law, 1975 (Law 36/75) - Principles applicable - - Proof of fraud not essential - Innocent misrepresentation (false pretences) or concealment of facts will suffice - Recovery of possession for the purpose of implementing building plans - Owner not disclosing that implementation of plans dependant on the securing of a loan - Abandonment of plans due to lack of means

- Tenant's consent to recovery of possession held to have been given as a result of concealment of material facts.

Damages - Exemplary damages - Recovery of possession through misrepresentation or concealment of material facts - No room for award of exemplary damages - Damages which can be awarded is foreseeable damage directly arising from the fact of wrongful dispossession.

A. Poetis, for the Applicant.

A. Andreou, for the Respondent.

JUDGMENT

The following judgment was deliverer by:

PIKIS. P.D.C.:This is an application[*241]

for damages for the ejectment of the applicant by his landlord, the respondent, of the premises at 3 Hellispondos street, Larnaca, occupied by the respondent between 30th April 1974 until 1st October 1978, on the ground that the ejectment was obtained by false pretences or the concealment of material facts. Section 19 of the Rent Control Law, 1975, confers a right of action to a tenant for damages suffered in consequence of an ejectment order obtained by false pretences or by the concealment of material facts.

It Is the case of the applicant, hereafter referred to as a tenant for the avoidance of confusion, that he consented to an order being made ordering him to vacate the premises in consequence of the representations made on behalf of the respondent, hereafter referred to as the owner, in Rent Application 48/78 (exhibit 2) and oral statements made by agents or servants of the applicant, tending to support the genuineness and validity of the claim for recovery of possession, notably by the attorney Mr. Christofi and Mr. Nicolaides, a civil engineer who prepared the architectural plans for erecting a storey on top of the existing building and certain alterations to the existing premises. The owner contests the validity of the allegations of the tenant and denied making any false representations or concealing any material facts for the purpose of securing an ejectment order. On the contrary it is his case that Rent Application 48/78 was prosecuted in good faith and for valid reasons.

It appears from the file of Rent Application[*242]48/78 (exh. 2) that an, ejectment order was made on 9th June 1978 consequent to the followingstatements made on behalf of the parties, notably by advocates Poetis and Andreou:

Poetis: We admit that , on the facts as alleged the applicant is entitled to an eviction order. We submit to such an order and apply for a stay until 31.I2.1978.

Andreou: I agree. I agree to the staying of the order as well.

Thereupon the learned Judge made an eviction order, the enforcement of which he suspended in the exercise of his discretion until 31st December 1978. Before the expiry of the time limited for the vacation of the premises the tenant rented a new house at Aradhippou and in consequence vacated the premises on 1st October 1978. The rent for the new house was £35 as opposed to £21 per month previously paid to the owner for the lease of his property. The tenant maintained that he decided to move to Aradhippou because of the prohibitevely high rents demanded for the lease of a house at Larnaca. This increase in the monthly rent was not the only additional expense that the tenant had to incur because, of the abandonment of the premises of the owner but had in addition thereto to incur a monthly sum of £9 travelling expenses, that is £6 for himself and £3 for his wife. The net monthly difference in the rent bill of the tenant amounted to £9 considering the rent allowance he was receiving between £I6 to £17 while occupying the house of the owner and £22 per month when he moved to Aradhippou. On 1st August 198O the[*243]tenant moved to a house situate within a government housing estate but the rent has not been fixed yet. No allegation is made that the damage of the tenant extends to any period . after 1st August 1980. And the tenant claims damages resulting from his allegedly wrongful eviction. The tenant testified that the attorney of the owner, a relation of the owner, demonstrated soon after his appointment on 4th April 1977 (see exh.3), a cold determination to secure his eviction and maintained that as it transpired at the end of the day it was a pre-conceived plan aimed at causing him to vacate the premises. Mr. Christofi denied these allegations and described them as a fabrication on the part of the tenant.

Not only the attorney of the owner but the owner himself, on a visit to Cyprus, assured the tenant that he had the amenity to implement the building project that he had in mind and that it was within his contemplation to come to Cyprus and reside in the premises then in the possession of the tenant. Also in his allegation Mr. Nicolaides, on the day of hearing of the rent application before coming up for trial, assured him that the owner had the funds to proceed and that their implementation envisaged structural alterations on the ground floor necessitating their vacation in order to overcome his unwillingness to vacate the premises. Mr. Nicolaides denied making the alleged or any representations to the tenant in connection with the building then contemplated. That the tenant was unwilling to vacate the premises has not been seriously disputed, his unwillingness stemming, inter alia, as he explained to the Court from the[*244]loss of considerable immovable property at Famagusta as a result of the Turkish invasion of the country. And as it appears from the statement made on his behalf by Mr. Poetis, he agreed to vacate the premises in the light Of the allegations made in the application. Now, to the allegations made in the application.

Representations made in Rent Application 48/78.

By the time of the trial of Rent Application 48/78 the owner had obtained a permit for the construction of two flats on top of the existing premises entailing, inter alia, as alleged, structural alterations on the ground floor by the erection of a number of columns necessitating as a prelude to the works vacant possession of the ground floor. Mr. Polyvios hoizides, an employee of the Municipality attached to the department responsible for building permits testified that the permit issued did not authorize the erection of any columns in the interior on the ground floor. And he added that had this been the case additional fees would have been charged. The history of the application and the permit granted thereto appear in the file of the Municipality, notably in exh.I. Mr. Nicolaides who prepared the architectural plans and submitted them for approval testified that the plans provided for the erection of supporting beams in the interior of the existing building and that any failure to approve the plans as submitted was due to oversight on the part of the Municipality. He did not examine the, terms of the permit and was evidently not acquainted with its terms when the rent application came[*245]up for trial and rested on the assumption that the plans had been approved as submitted, which was not the case. I need not examine the reasons for not approving the construction of columns within the existing premises but the fact is that the permit did not authorize the construction of such columns. Consequently the owner had no right at the time of trial to carry out the work mentioned in paragraph 3 of the particulars given in the statement of claim.

The basis upon which the owner rested his application for recovery of possession was the implementation of the plans in respect of which a permit had been obtained. It is common ground that these plans were abandoned because of lack of finance. Mr. Christofi gave details as to the circumstances under which these plans were abandoned. In December 1978, that is some two months after the vacation of the premises by the tenant, the owner came to Cyprus and an

application was made for a loan to finance the building project. The application was turned down and in consequence the

plans were abandoned. Thereupon new plans were prepared within the financial limits of the owners and the ground floor was renovated at a cost of £4,I00 . (See exh.7).

It is manifest that the owner omitted from disclosing in his application for recovery of possession that the implementation of his building plans was dependent or on securing an appropriate loan and that without such a loan the project would have to be abandoned. The significance of this omission becomes greater considering that as Mr. Christofi admitted Mr. Nicolaides[*246]acquainted them about the probable cost of the construction estimated in the region of £12,000. Not only the owner omitted from disclosing that the implementation of the plan was very much conditional on securing a loan but from the representations made in his statement of claim it was implicit that he had the means to carry out the project for which he had obtained a permit.

Interpretation of s.19,Rent Control Law 36/75

Mr. Poetis argued for the tenant that the aforementioned representations and concealment of material facts was. fraud with mala fides, considering in particular the statements earlier made by Mr. Christofi and the failure of the owner to communicate to the tenant the fact of abandonment of the original plans and the absence of any offer to the tenant to re-occupy the premises. Mr. Andreou for the owner submitted that any misrepresentations that may have been made or any concealment of facts was entirely innocent and inasmuch as fraud is a vital ingredient of the cause of action created by s.19, the application must be dismissed. And he went on to refer me to the interpretation of the notion of false pretences as encountered in the Criminal Law, particularly as. defined in the context of the crime of obtaining by false pretences. (He cited Smith & Hogan on Criminal Law, 2nd edition, at. p. 383, and a decision of mine, notably Police v.Petrou alias Yiatros (1971) I2 J.S.C. I524, where an attempt is made to depict the ingredients of the crime of obtaining by false pretences as defined by the Criminal Code).[*247]

It is, I must confess, the first time that I am called to construe the provisions of s.19 and examine its implications. Section 19 is by no means a new provision of the law. It emanates from previous rent control legislation controlling rents (Rent (Control) Law-s.21 - Cap.86); and owes its origin to comparable English legislation. It has been decided both in England as well as Cyprus, contrary to the submission of Mr. Andreou that proof of fraud is not essential and that innocent misrepresentation (false pretences) or concealment of facts will suffice to support the action.

And as matter of general principle the Court will not normally, unlike criminal offences, require the proof of mens rea as a necessary ingredient of a statutory civil wrong unless such interpretation is compelling in view of the wording employed by the legislature. The subject is discussed in Megarry's Rent Acts where an analysis is made of the case law on the subject (see 9th edition, p. 268). A similar interpretation was adopted by the Supreme Court in Ayshe Moustafa and Another v. Athena Theocharous, 18 (Part III) C.L.R. p. 183. The Supreme Court relied, inter alia, in interpreting analogous provisions on the definition of misrepresentations supplied by the Contract Law.

The tenor of their decision is that neither "misrepresentation" or "concealment of facts" are terms of art and should be interpreted in accordance with their popular meaning. And inasmuch as neither term imports fraud as a necessary ingredient of the tort created by the statute proof of innocent misrepresentation is sufficient to give[*248]rise to an action for damages provided it is established that damage is caused as a result thereof. In the aforesaid case damages were awarded to the tenant for wrongful dispossession where the owner had innocently misrepresented that the premises were needed for personal use in view of her impending marriage.

She omitted to disclose to the Court that such marriage was contemplated without first disclosing to her prospective husband that she had a child of I2. And inasmuch as the finalization of such marriage was dependent on acceptance of this fact by her husband to be she" was found guilty of misrepresentation and concealment of material facts. And when plans for marriage were frustrated by the withdrawal of the male partner on learning of the true facts it was held that the tenant was entitled to damages. One can argue that the case for the tenant in this case is far stronger compared to that of the owner in the aforesaid case, quite independently of allegations of fraud.

In the present case the owner was awareall along that the whole venture was dependent on securing appropriate finance and concealed this fact from the Court, In Thorne v. Smith (1947) I All E.R. 39 it was pointedout that the cause of action created by parallel English statutory provisions notably s.5(6) of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920 is a separate and different cause from the common law action deceit that entitles the deceived party to claim damages for fraudulent misrepresentation. In Megarry (supra) reference is made to[*249]the

decision in Hunt v. Barnett (1951) E.G.D. 323 K.B. where the Court sustained the tenant’s action against a landlord who had concealed in his application for recovery of possession the fact that his wife was reluctant to move into occupation and whose subsequent occupation was in fact short lived.

It matters not that the premises are vacated as a result of a consent order so long as it is made to appear that consent was given as a result of false pretences or concealment of material facts. (See Megarry (supra) p. 269 and Hurd v. Hicks (1948) 98 L.J. News 430 C.C., per Judge Tylor K.C.).

Findings

On any view of the evidence it is abundantly clear that the owner concealed from the Court and the tenant the fact that implementation of the plans in furtherance of which he sought an eviction order was dependent on a future uncertain fact, viz. securing a loan. Ability to carry out building plans was a most material factor with a direct bearing on the fate of the rent application. Moreover the owner had impliedly falsely represented that he had the amenity to implement the building plans whereas this was not so. And in the end the plans were abandoned. If the aforesaid facts were disclosed to the Court in proceedings for recovery of possession serious doubts would be cast on the need that the owner allegedly had of the premises. And the tenant could reasonably argue that the premises were not reasonably required by the owner for purposes of material[*250]alterations and additions thereto. That new plans were subsequently drawn and a new project undertaken is quite irrelevant to the fate of the present proceedings. Possession was recovered for the purpose of implementing building plans that the owner lacked the means to implement and eventually had to abandon. I accept that the tenant consented to vacate the premises acting on the assumption that the owner had the means to carry out the building project in question. Therefore his consent cannot stand in the way of his action to recover damages caused by the fact that he was induced to vacate the premises by the aforementioned Concealment of facts and false pretences of the owner. Therefore the only remaining question is that of the amount of damages to which he is entitled.

However before examining damages it would be prudent to make my findings as to the credibility of the witnesses, particularly that of the tenant and the agent of the owner, namely Mr. Christofi, not least because a lot of evidence was directed with regard to this aspect of the case.

Having seen and heard the witnesses I accept that Mr. Christofi, for reasons best known to. him, quite apart from the allegations made in rent proceedings tried to harrass the tenant in order to cause him to vacate the premises and. accept the. evidence of the tenant as to what was exchanged between them in the meetings they had. It was, to my comprehension, this anxiety to secure vacant possession under any circumstances that led the. owner and his agent to take the precipitate action they did to proceed with an application[*251]for recovery of possession before securing the necessary loan.

Damages

Mr. Poetis submitted that the tenant is entitled to the recovery of exemplary damages, that is damages over and above the loss he suffered, punitive in nature, in order to castigate appropriately the behaviour of the owner in accordance with the principles expounded in Rookes v.Barnard

(1964) I All E.R. 369, subsequently approved in Cassell & Co.Ltd, v. Broome (1972) I All E.R. 801. (See also the cases of Gregoriades v. Kyriakides

(1930) I C.L.R. I20 and Savvas Paraskevas v. Despina Mouzoura

(1973) I C.L.R.88, where the question of exemplary damages was discussed). If I were to assume that there is room for the award of exemplary damages in this kind of case there is no evidence that the owner pursued his wrongful conduct after balancing profit and loss. And that he pursued his conduct for the sinister purpose of making a profit. Of course I do not ignore that the premises were subsequently let, after renovation at £80 per month; but that is not in itself conclusive.In my view there is no room for the award of exemplary damages in the case of statutory torts which is the case with thetort created by s.19, Law 36/75, unless the statute expressly so provides. Moreover in Megarry (supra) the proposition is adopted on the authority of Engleheart v. Catford

(1926) E.G. D. 197, 352, C.A. that there is no right to make a punitive award in proceedings of this nature. In my judgment the damage to which the injured party is entitled to recover[*252]is

foreseeable damages directly arising from the fact of wrongful dispossession. In the case of Ayshe (supra) little is said that could guide

us in determining the measure of damages in proceedings of this nature. The question of damages for wrongful dispossession is, to a degree, illuminated by the decision of the Supreme Court in Margarita Ikosi. v. Andreas Karayiannis and Others (1971) I C.L.R.189, though both the cause of action as well as the facts of the aforesaid case were different from those of the case in hand.

In the light of the evidence before me the tenant is entitled to recover £9 per month, that is to say difference in rent plus £9 per month travelling expenses resulting from the change of residence. Damage stopped to flow after 1st August 1980. The tenant would be entitled. as mentioned in Megarry (supra), to removal expenses but no evidence was adduced supporting such a claim.

In the result, judgment is given for the applicant for £378.-, with costs. The costs to be assessed by the Registrar and approved by the Court.

Judgment for plaintiff for £378.- with costs.