Court grants debt relief to applicants who lost all savings purchasing property due to Turkish invasion.

[*104] 1980 March 29

(PIKIS, P.D.C )

IN THE DISTRICT COURT OF FAMAGUSTA SITTING

AT LARNACA

Andreas Lysandrou and Another,

Applicants,

v.

Alexandros G. Georghiou,

Respondent.

(Debtors Relief Application No.1/79).

DebtorsRelief (Temporary Provisions) Law, 1979 (Law No. 21/1979) - “Stricken debtor” in section 2 of the Law - Meaning - Investment of total of savings in purchasing property for development

- Loss of property because of Turkish invasion - Loss making it impossible for purchasers to pay the debt owed for the purchase of the property - Purchasers “stricken debtors”.

N. Spanos, for the Applicants.

G. Michaelides, for the Respondent.

RULING

The following ruling was delivered by:-

PIKIS P.D.C. :This is an application under the [*105] Debtors Relief Law of 1979 (24/79) for an order suspending the execution of a judgment debt owing

under the terms of an order made in Action 565/75 on the ground that applicants are stricken debtors within the meaning of the law and therefore entitled to relief under the provisions of s.3, Law 24/79. By virtue of the provisions of s.3(1) of the law the right of a creditor to collect a debt from a displaced or stricken debtor is suspended to 31st December 1980. A person qualifying for relief acquires specific rights with regard to the payment of interest, defined by section 4 of the same law.

The sole issue arising for consideration is whether the applicants are stricken debtors. The issue will be resolved on the basis of the facts set forth in the affidavits sworn to in support of the application and opposition respectively that illuminate the background regarding the contraction of the debt and the position of the parties. In 1973 the applicants purchased from the defendant a piece of immovable property at Famagusta for £29,000.-.About half the purchase price was paid upon execution of the agreement and transfer of the property whereas the

balance, amounting to £14,500.- was agreed to be paid on 25th July, 1974 plus interest accruing at the rate of 8 per cent per annum. Apparently

the property was mortgaged as security for the payment of the debt. It was within the contemplation of the applicants to develop the property by building shops and flats. Therefore an assignment [*106] was given to architect Marios Eleftheriades for the preparation of a feasibility report as a prelude to the development of the property (exh.1). The calamitous events of the summer of 1974 brought their plans to an abrupt end for the. area where their property was situate as well as the whole of the town of Famagusta came under the occupation of the Turkish army. The Debtors Relief Law enacted in 1975, Law 9/75 limited the protection afforded to stricken debtors to residents of Cyprus, therefore disentitling, the applicants from relief under its provisions. The new Debtors Relief Law widened the ambit of the definition of a stricken debtor encompassing under its provisions, inter alia, debtors who resided abroad provided they answered to the definition of a stricken debtor. Nothing is disclosed in the affidavits either about the work or the business of the applicants in South Africa. The only revelation made about their financial standing is that the sum invested for the purchase of the property of the respondent was the sum total of their savings.

The respondent is apparently a displaced personbut little is disclosed about his financial position. As his counsel rightly explained the omission is due to the provisions of the law that renders considerations of comparable hardship irrelevant to a determination whether a given debtor is entitled to relief under the law.

These being the facts I must resolve whether the applicants are stricken debtors. Learned counsel for the [*107] applicants laid stress on the fact that the business of the applicants was, because of the Turkish invasion, prejudicially effected and submitted that the whole venture of buying property with a view to its development amounted to a business. He cited, for the assistance of the Court, a decision of a West Indian Court, Hanover v. I.T. Comr.(l965) West Indian Reports, volume 7 para.1. p. 300 where it was held, for purposes of income tax, that the use of premises for the purpose of acquiring income amounts to a business. Further reference was made to Words and Phrases Legally Defined, 2nd edition, volume 1, at p. 199, where emphasis is laid on the fact that “business” is a wider term than “trade” and means “practically anything which is an occupation as distinguished from a pleasure.”

Learned counsel for the respendent cited a decision I gave on 25th February 1976 as to the implications of the definition of a stricken debtor under Law 9/75, submitting that the same interpretation should be placed on the new law for the wording employed in both sections is, subject to minor exceptions, identical. There I pointed out that the adverse effects of the events of 1974 must be such as to cause direct adverse repercussions to the financial position of the debtor to an extent rendering him unable to meet the contractual obligations in virtue of which the debt is owing, adding that what amounts to inability to pay “is a matter of fact and degree and in answering the question the Court should have regard to

the overall financial position of the applicant.” (See Tsokkos v. Economides (1978) 2 J.S.C. 173.) [*108] Also reference was made to the decision

of the Supreme Court in Neophytou and Another v. PapaSolomondos (1977) 1 C.L.R.181, where it was stressed that it is unwise to attempt to improve on the plain wording of the law, defining a stricken debtor. Further one may refer with benefit to another decision of the Supreme Court, Kem.Ltd. and Others v. Popular Bank (1978) 1 C.L.R. 346 throwing light on the objects and implications of the repealed Debtors Relief Law 9/75.

I see no reason why I should depart from the analysis made of the definition of a stricken debtor in Tsokkos (supra). The gravamen of the definition of stricken debtor lay in the degree to which the debtor’s ability to meet contractual obligations is prejudicially affected as a result of the anomalous situation created by the events of 1974 This is achieved by encompassing prejudice resulting from loss suffered either in one’s work or in his business, thereby signifying loss in one’s earning pursuits. The anomalous situation created by the events of 1974 caused loss to the applicants by putting beyond their reach capital assets of considerable value, making it at the same time impossible the furtherance of their intention to utilize the property for the purpose of earning income. Therefore the applicants business in that regard was prejudicially affected and what remains to consider is whether the prejudice is such as to make it impossible for them to meet their obligations to the respondent. In my judgment that is the case for there is uncontradicted evidence before me that the investment applicants made represented the sum [*109] total of their savings, the loss of which naturally makes it impossible for them to pay the debt owing to the respondent. That applicants submitted to a consent order for the repayment of the debt by instalments is not in itself a conclusive factor nor does it alter the position concerning applicants’ ability to pay the debt. The applicants might conceivably contract another debt for the purpose or rely on the indulgence of friends.

For all the above reasons I find that applicants are stricken debtors within the meaning of the law and are entitled to the benefits conferred by law 24/79.

Application granted.