Cyprus court dismissed application to stay proceedings, holding territorial jurisdiction exists despite foreign dispute elements.

[*1534] 1972 November 29

(STAVRINAKIS, P.D.C. ,ANASTASSIOU, AG. D.J.)

IN THE DISTRICT COURT OF KYRENIA

Filaretou Costa Kasmiri,

Plaintiff,

and

The National Bank of Greece and Another,

Defendants.

(Action No. 592/71).

Service of the writ of summons - Overseas Company incorporated in Athens - And registered in Cyprus under Part VIII of the Companies Law, Cap.113 - Service of the Writ of Summons on the registered office in Cyprus is good service on the foreign Company.

Jurisdiction - Application to stay proceedings for want of jurisdiction - Dispute arising in England - Action in personam dealing also with purported mortgage of land situate in Cyprus - Plaintiff a Greek Cypriot residing in London - Defendants carrying on business both in London and Cyprus - Service of writ of summons effected in Cyprus - Whether Cyprus Courts vested with authority to try the case.

Jurisdiction - Action relating to a foreign dispute - Application to dismiss or stay as being frivolous and vexatious - Principles governing the exercise of the Court’s discretion - Dispute arising in England with all witnesses abroad - Whether the Court should assume jurisdiction.

Jurisdiction - Territorial Jurisdiction - Distinguished from jurisdiction meaning authority of the Court - Section 21 of the Courts of Justice Law, 1960 (Law 14/60) - It deals with the jurisdiction of District Courts over an area of a District and not with the right or authority of the Court to try the case.

A. Dikigoropoulos for P. L. Cacoyannis & Co., for the Applicant-Defendant No. 1.

L. Clerides, for Respondent-Plaintiff.

No appearance, for Defendant No. 2.

RULING

The ruling of the Court was delivered by:-

STAVRINAKIS. P.D.C.: The defendant No. 1 in [*1535] this action, the National Bank of Greece S.A. applies for an order of the Court directing

that the writ of summons be set aside and the service thereof on the National Bank of Greece S.A. 64-68, Ledra Street, Nicosia he discharged on the following grounds:

(1) That the Court has no jurisdiction to entertain the action.

(2) That even if the Court has jurisdiction it is a matter of discretion and it ought not to be exercised in plaintiff's favour.

(3) That the action is frivolous and vexatious and/or embarrassing to the defendants and/or

(4) The action is an abuse of the process of the Court.

The application is based on s.21 of the Courts of Justice Law 1960 (No. 14/60) and upon the Court’s inherent powers. At the hearing of the application, learned counsel of the defendant No.l argued mainly the first two grounds.

According to the indorsement of the writ of summons the plaintiff claims for:

(A) A declaration of the Court that a guarantee given in London by the plaintiff to defendant No. 1 is null and void on the grounds of fraud and/or false pretences.

(B) For a declaration that a purported mortgage of plaintiff's property in Kyrenia is void (a) as having been obtained by fraud etc. and (b) as being contrary to Law 9/65. [*1536]

(C) Order for the cancellation of the said mortgage.

(D) Injunction restraining the defendants from interfering with the said mortgaged property.

(E) Order for the return of plaintiff’s title deeds.

(F) Damages and costs.

The guarantee was given by the plaintiff to the defendant Bank in consideration of the latter giving accommodation to defendant No.2; the contract of guarantee was executed on the 18th March, 1971, in London and on the same day the plaintiff signed a written declaration undertaking not to sell, gift or alienate in any way his immovable property situate at Thermia Kyrenia, Cyprus. By the said declaration the plaintiff requests the Land Registry of Cyprus not to accept any declaration for the transfer of this property at Thermia without the

consent of the defendant bank*. The advocates of defendant No. 1 Messrs. P. L. Cacoyannis & Co. by a letter dated the 26th June, 1972, addressed to the District

Land Officer Kyrenia, declared on behalf of the National Bank of Greece S.A. London that the said document (obviously the written declaration purporting to charge plaintiff's property) did not constitute a valid encumbrance or mortgage under the provisions of the Immovable Property The full text of the declaration is set out in Appendix 'A'. at p. 1551 post. [*1537] (Transfer and Mortgage) Law 1965 (No.9/65) in respect of the immovables of plaintiff at Thermia and that the said document did not in any way bind the District Land Officer*.Service of the writ of summons on defendant No. 2 was effected on the l6th December, 1971, but so far no memorandum of appearance was filed by them.

Arguments in support and in opposition to the application.

Mr. Dikigoropoulos on behalf of the defendantsapplicants argued that the District Court of Kyrenia has no jurisdiction under s. 21 of the Courts of Justice Law 1960 (14/60) to try the present action because neither the plaintiff nor any of the defendants have a place of business in Cyprus and he went on to say that even if the Court finds that it has jurisdiction it is discretionary upon the Court to assume or not jurisdiction in the present case where the cause of action not only arose abroad but also it will work an injustice to the defendants who will have to call all their witnesses and bring all their books to Cyprus. He cited in support:

Logan v. Bank of Scotland, (1904-1907) All E.R. (Reprint) p. 438.

St. Pierre & Others v. South American Stores (Gath &. Chaves) Ltd., (1935)All E.R. (Reprint) p.408.

Maharanee of Baroda v. Wildenstein,

(1975) 2 A11 E.R. 689.

Mitry-Trad v. Ottoman Bank, C.L.R. vol. 15 p.14. [*1538]

Mr. Clerides opposing the application contended that the Court has jurisdiction under s.2l(b) of the Courts of Justice Law 1960 to try the case because defendant No.l is carrying on business in Cyprus through a branch. He further argued that the Court has jurisdiction because the action relates to immovable property situate in Kyrenia and it makes no difference if the Bank does not consider the declaration made by the plaintiff as creating a charge on plaintiff's property. Regarding the discretionary power of the Court to assume jurisdiction he laid stress on the following cases:

Photiades v. Jadranska (1965) C.L.R. part 2 p.345-349. Esmerian v. The Ottoman Bank, C.L.R. 13 p.93.

As we see it there are three questions to be determined.

(1) Whether service on defendant No.1 is good.

(2) Whether the Cyprus Courts and in particular the District Court of Kyrenia have jurisdiction to try the case.

(3) If the Cyprus Courts have jurisdiction whether it should be assumed in favour of the plaintiff.

Question 1: Whether service on defendant No.1 is good or not.

It is not a disputed fact that the National Bank of Greece, S.A. is a company of limited liability incorporated in Greece under the laws of Greece. The said Bank carries on banking business in Cyprus as an oversea company registered [*1539] under part 8, ss. 346-353 of the Companies Law Cap. 113 and also in England again as an overseas company registered under the English Laws. It is the allegation Of the applicant (affidavit by Christos Phaedonos, Assistant Director of the Nicosia Branch of the Bank) that the business transactions of the English branch are quite independent from the business of the Cyprus branch and none of the Cyprus employees is aware of the facts of the present case.

0.5, r.7 of the Civil Procedure Rules reads as follows:

"In the absence of any statutory provision ....; and in the case of any company not formed in Cyprus, the copy may be left at its place of business in Cyprus, or if there is no such place, with any person in Cyprus who appears to be authorised to transact business for the company in Cyprus, and such leaving of the copy be deemed good service unless the Court or a judge otherwise orders......".

The next thing that we have to satisfy ourselves with is whether the "parent" company which is incorporated in Greece carries on business in Cyprus or has an apparent authorised agent to transact business of the company in Cyprus.

S.347 of the Companies Law Cap. 113 reads:

"347(1), overseas companies which after the commencement of this law establish a place of [*1540] business within the colony shall within one month of the establishmentof the place of business deliver to the Registrar of Companies for Registration:

(a) a certified copy of the charter ....

(b) a list of debtors .........;

(c) the names and addresses of someone or more persons resident in the colony authorized to accept on behalf of the company service of the process and any notices required to be served on the company".

And then s.352 specifically deals with service on overseas companies.

"Any process or notice required to be served on an oversea company shall be sufficiently served if addressed to any person whose name has been delivered to the Registry under the foregoing provisions of this part and left at or sent by post to the address which has been so delivered; provided ........".

Reading from Palmer's Company Law 21 ed. p.67 (top of the page):

"Foreign companies can be served with process of the English Court in three sets of circumstances:

(a) The company may have registered as an oversea [*1541] company in that case the company has to register the names and addresses of one or more persons resident in Great Britain and authorised to accept service on behalf of the company ...... Registration under part 'X' is regarded as voluntary submission on the part of the company to the jurisdiction of the English Courts.

(b) The company has not registered as an oversea company but carries on business within the jurisdiction.

(c) The company is not within the jurisdiction and has not submitted to the jurisdiction of the English Courts. Here the question is whether the facts of the case can be brought under one of the cases under the rules of the Supreme Court 0.16* which is likewise applicable to a corporation".

According to Dicey & Morris, Conflict of Laws, 8th ed. rule 22:

"The Court has jurisdiction to entertain an action in personam against a person if the defendant is in England at the time for the service of the writ". Dealing with service of process out of the jurisdiction. [*1542]

Regarding the presence of a corporation the following extract from an old edition of Dicey on Conflict of Laws (3rd ed. p. 244) is particularly lucid;

"And in the case of a foreign corporation more difficulty may arise. The simplest case is that of a company incorporated outside the United Kingdom which established a place of business in England and as required by the Companies (Consolidated) Act 1908 with the name of a person authorised to accept service of process on behalf of the company in that case service can be effected as in the case of an English Company".

It is deduced from the above that the registration of an oversea company does not constitute another company different from the parent company but it only operates as. a submission to the jurisdiction of the Cyprus Courts. Therefore, service of the writ of summons on the Cyprus branch is good service on the company incorporated in Greece although the transactions may be independent for purposes of administration from the transactions carried on in England or Athens. But submission to jurisdiction and want of jurisdiction are two different things and we shall now pass on to the next point.

Question 2: Whether the Cyprus Courts have jurisdiction at all to try the case.

We should state here and now that s.

21 of the Courts of Justice Law does not regulate the jurisdiction of the Cyprus Courts vis a vis the jurisdiction of foreign Courts but only [*1543] the territorial jurisdiction of the District Courts of Cyprus. The marginal note leaves no room for doubt; it specifically states that it deals with territorial jurisdiction of the District

Court in civil matters. Dicey (supra, 3rd ed. p. 213 distinguishes 'jurisdiction' meaning the right or authority of the

Court from the ’jurisdiction’ meaning the area of territory over which a Court has jurisdiction. In other words s.21 deals with the jurisdiction of the District Courts over an area of a district and not with the right or authority of the Court.

In this case we are not concerned with the territorial jurisdiction but with the right or authority of the Court to deal with the case, an in this respect we have to look at the Common Law Principles. Apart from the want of jurisdiction in respect of privileged persons we have the instances of want of jurisdiction in respect of subject matter.

It is a well established principle that an English (or Cyprus) Court has no jurisdiction to entertain an action for (a) the determination of the title to, or to the right to the possession of any immovable property situate out of England (or Cyprus) or (b) the recovery of damages for trespass to such, immovable*.

Dicey & Morris give a number of exceptions to the above rule and of particular importance in this case is exception No. l , which reads: [*1544]

"Where the Court has jurisdiction to entertain an action against a person under any of rules 22*, 23, and 25, the Court has jurisdiction to entertain an action against such person respecting an immovable situate out of England (foreign land), on the grounds of either –

(a) a contract between the parties of the action, or

(b) an equity between such parties: with reference to such immovable".

From the above we conclude that, the Cyprus Courts have authority to try the case which is an action in personam and also it deals with a purported mortgage of land situate at Thermia in the District of Kyrenia, Cyprus. By this we do not mean that the English Courts have no jurisdiction, as the purported mortgage is ancillary to an agreement concluded in

Rule 22: Subject to the exception hereinafter mentioned the Court has jurisdiction to entertain an action in personam if, and subject to rules 23 to 26 only if, the defendant is not English at the time for the service of the writ.

Rule 23: The Court has jurisdiction to entertain an action in personam against a person who submits to the jurisdiction of the Court.

Rule 25: The Court has jurisdiction to entertain an action in personam against a defendant who is not English at the time for the service of the writ whenever it assumes jurisdiction in any of the cases mentioned in this rule provided that the writ does not contain any claim to which rule 26 applies. [*1545]

London and it falls within exception No. 1 to rule 18 of Dicey & Morris Conflict of Laws. Further to the above even if under the Cyprus Laws the alleged mortgage is recognised as legally binding the defendants and in particular defendant No. 1 is in Cyprus and we can try the case if we so decide in the exercise of our discretion.

Question 3: Whether discretion should be exercised in

favour of the plaintiff.

The principles governing the exercise of discretion in dismissing or staying an action relating to foreign disputes as frivolous and vexatious, are clear and well established and we have a number of decisions and authoritative pronouncements on the issue.

In Esmerian v. The Ottoman Bank, 13 C.L.R. 93 the application by the defendant to stay proceedings and or dismiss the action was dismissed because the defendant failed to prove that the plaintiff who was a persona non grata would have had a fair hearing against the Bank in Turkey. In the case of Rene De Sumerer v. The Ottoman Bank, 13 C.L.R. 123 an application to stay proceedings on the ground that the action was vexatious and an abuse of the process of the Court was dismissed in that the bank had not satisfied the Court:

(l) That the bank will be so embarrassed in their defence as to amount to a denial of justice;

(2) That the plaintiff was not bona fide in proving the action. [*1546]

(3) That no injustice will result to the plaintiff if he proceeds in the Courts within the jurisdiction of which the cause of action arose.

Belcher, C.J. in concluding his judgment said:

"I think we should in such circumstances extend the hospitality of Cyprus Courts to those who seek redress here; that is where it is only sought and there is no question of it being used as a weapon of vexation or oppression".

In Mitry-Trad v„ 0ttoman Bank,15 C.L.R. 14 it was held that:

(1) The jurisdiction of the Court to stay proceedings that are frivolous vexatious and an abuse of process is a jurisdiction to be made use of with the greatest care and caution in exceptional cases and only when a clear case is made out.

(2) That it is not sufficient to show that the plaintiff had an accessible Court in the jurisdiction where the cause of action arose; to show that the plaintiff was not bona fide the defendant must establish that the plaintiff brought his action not for the purpose of obtaining justice but for a wrongful purpose of harassing and annoying defendant.

(3) That the application to stay proceedings cannot be decided on

considerations of expense or on the balance of convenience to the parties but depends upon whether [*1547] injustice will result to the defendant if proceedings are not

stayed and whether plaintiff has made an oppression or improper use of the process of the Court, and

(4) If defendant establishes that the action was brought to vex or oppress and that its continuance will cause it an injustice the Court will not stay an action unless it is satisfied that by so doing no injustice will result to the plaintiff.

In St. Pierre &. Others v. South American Stores (Gath & Chaves) Ltd., (1935) All E.R. Rep. p. 408; 414 Scott L.J. said:

"The true rule about a stay under s. 41, so far as relevant to this case, may, I think, be stated thus:

(i) A mere balance of convenience is not a sufficient ground for depriving a plaintiff of the advantages of prosecuting his action in an English Court if it is otherwise properly brought. The right of access to the King's Court must not be lightly refused; (ii) in order to justify a stay two conditions must be satisfied, one positive and the other negative; (a) the defendant must satisfy the Court that the continuance of the action would work an injustice because it would be oppressive, or vexatious to him or would be an abuse of the powers of the Court in some other way, and (b), the stay must not canse an injustice to the plaintiff. On both the burden of proof is on the defendant". [*1548]

Lord Denning in Maharanee of Baroda v. Wildenstein

(1972) 2 All E.R. 689 took into consideration the nature of the claim which revolved round the authenticity of a painting by an old master. He said at p. 693.

"But here the main issue is whether the plaintiff was a genuine 'Bucher' or not. The issue is one of fact which is crucial to the case in French Law as well as in English Law. It is not solely a french issue. The art world is so international in character today that this issue has itself something of its international character. The parties or either side are citizens of the world".

The case of Boon v. Bradshaw "The Times" 19.4.72 (C.A.) is yet another illustration on the issue with particular emphasis on the difficulties in calling witnesses from abroad. In that case leave to serve notice of the writ abroad was granted in respect of an action for libel committed abroad on the ground that in a small community pressures might be brought to bear on jurors and witnesses. The Court was not satisfied that there was any difficulty in getting the witnesses from the foreign country to England to give evidence.

Conclusion

Coming now to the facts of the present case we have reached the following conclusions: [*1549]

(1) The plaintiff is a Cypriot residing in London and there is no difficulty on his part to come to Cyprus whenever he so wishes. The defendant No. 1 is a Bank carrying on business both in London and in Cyprus through branches. In this respect there is a similarity with the facts of Baroda case where the parties were described as international people.

(2) The issue to be decided in this case is alleged fraud committed in England. This will be decided not only on documents but on oral evidence of witnesses residing in England. It may be expensive and inconvenient for the defendants to bring all their witnesses from England but expense and inconvenience are not factors strong enough to tip the scales in

favour of the applicant. The question is whether on account of the inconvenience an injustice will be done to them; we do

not think so. They may be inconvenienced in carrying on their business in London but not in the trial of this action. On the issue of the witnesses all being abroad there is similarity to the facts of Boon v. Bradshaw although there is no risk in the present case of the witnesses or jurors being influenced. The problem of compelling the attendance of witnesses residing abroad seems not to have a strong bearing in the case and this problem must have been of a particular importance in Boon v. Bradshaw where there was a risk of pressures being brought to bear on them. [*1550]

(3) Apart from the issue of the alleged mortgage which in our opinion can also he

determined by an English Court as an ancillary to the main issue, there is a second defendant in the present case carrying on

business in Cyprus and who so far failed to file an appearance. This is something that must not be overlooked/because we do not think that a splitting of the action will not result to an injustice to the plaintiff.

(4) Although we are satisfied that the plaintiff can have a fair trial in England and the defendant-applicant on this discharged the onus of proof cast on him yet this is only one of the prerequisites. The applicant has also to satisfy the Court that they will be so embarrassed in their defence if the trial is held in Cyprus as to amount to a denial of justice. On this we are not satisfied and further we are not satisfied that the plaintiff brought the action in Cyprus in bad faith and with a view to embarrassing or vexing the defendants.

The Court cannot likely acceed to such an application and refuse the hospitality of the Cyprus Court to those who seek redress here and especially to a Cypriot.

For all the above reasons the application is dismissed. Regarding costs we are of the opinion that as the applicant had nearly succeeded in his application but for his failure to satisfy the Court of the mala fides of the plaintiff we think that we should make no order as to costs.

Application dismissed.

No order as to costs.

[*1551] APPENDIX 'A'

ΕΓΓΡΑΦΟΣ ΔΗΛΩΣΙΣ

Ο υπογεγραμμένος Φιλάρετος Κώστα Κασμίρης εκ Θέρμιας Κύπρου

και νυν εκ 17 LICHFIELD GROVE, LONDON No. 3 δηλώ δια της παρούσης δηλώσεως ότι αναλαμβάνω όπως μη πωλήσω δωρήσω ή άλλως διαθέσω την

ακίνητον περιουσίαν μου ήτις

ευρίσκεται εις την περιοχήν Θέρμιας της επαρχίας Κυρήνειας της νήσου Κύπρου.

Δια της παρούσης παρακαλώ τας

αρμοδίας Κτηματολογικάς αρχάς της Κύπρου όπως μη δεχθούν οιανδήποτε δήλωσιν

μεταβιβάσεως της άνω περιουσίας μου εις άλλον πρόσωπον άνευ της εγκρίσεως της

Εθνικής Τραπέζης της Ελλάδος Υπ/μα Λονδίνου, νοουμένου ότι δια της δηλώσεως

ταύτης υποβάλλω την ως άνω περιουσίαν μου ως εγγύησιν δια την αποπληρωμήν ποσού

Λ25000 - (εικοσιπέντε χιλιάδες λίρες) το οποίον ήθελε παραχωρήσει ως δάνειον η

Εθνική Τράπεζα της Ελλάδος, υποκατάστημα Λονδίνου εις το CYPRUS TRAVEL

(NICOSIA) LTD., 28, WINDMILL ST., LONDON, W. 1

Ο Δηλών

Εν Λονδίνω 18 Μαρτίου,1971

The present document has been

signed in my presence to-day by

Φιλάρετος Κώστα Κασμίρης

Cyprus High Commission,

London, England.

(Sgd.)

Date: 18.3.1971

[*1552] APPENDIX 'B'

P.L.Cacoyannis & Co. ADVOCATES

Andreas I.Dikigoropoulos BARRISTER-AT-LAW

NICOSIA

Mitsis Building No. 2 Plat No. 2

14 Archbishop Makarios III Avenue (PZ118)

P.O.Box 2231.

Nicosia the 26th June,1972

The District Land Officer,

K Y R E N I A

Sir,

With reference to the letter dated the 23.3.1971, addressed to you, by Cyprus Travel (Nicosia)Ltd. , of Nicosia, we hereby declare on behalf of the National Bank of Greece S.A, London, ENGLAND, that the aforesaid letter/document does not constitute a valid encumbrance or mortgage under the provisions of the Immovable Property (Transfer and Mortgage) Law, 1965 (No. 9/1965), in respect of the immovable properties of Mr. philaretos Kasmiris at Thermia, and that such document does not in any way bind you.

P.L. CACOYANNIS & Co.

Advocates for

The National Bank of Greece S.A.

* The full text of the said letter is set out in Appendix 'B' at p. 1552 post.