APPEARANCES
For the Prosecution: Mr. Yiannos Georgiades with Mr. Savvides
For the Defendants: Mr. Flourentzou with Mr. Vasilakka
Defendants 2, 3, 4 presents
Mr. Georgiades:
I’ll cross-examine Mr. Pittatzis…………………………………………………………..
Mr. Flourentzou:
…………………………………………………………………………………………………………
Court:
…………………………………the witness shall be subject to cross-examination
D.W.- George Pittatzis swears and says:
Q. Are you aware whether any document was prepared between Mrs Michelle McDonald and defendants 1 and 2 as regards the sale of a house purchased by the complainant?
A. No, I don’t know
Q. Have you advised the Defendants 1 and 2 in respect of the sale of the house of the complainant to third parties? Did you represent Defendant 2 or Mr Mario Karayiannas in relation to any sale of the immovable property bought by the complainant to the 4th Defendant?
A. As to whether I have provided advices and what kind of legal advices I have provided to my clients, I believe it is forbidden by law to say and it is considered as a disciplinary offence.
Q. Have you represented during 2006 Mrs Michelle McDonald in respect of the purchase of the house of the complainant? Do you know the lady over there? (shows the 4th Defendant).
A. I know her but not so well. When I saw her at the Court, they have introduced her to me. We have never met before and when I saw her in Court I asked her who she was.
Q. And you are not her lawyer?
A. No.
Q. Have you represented at any time during 2006 Mrs Michelle McDonald for the purchase of the house of the complainant?
A. Tell me specifically when in order for me to be able to reply. When during 2006?
Q. You said you are not the 4th Defendants lawyer.
A. I have been informed that the 4th Defendant had contacted my son Photos Pittadjis concerning some matters, but I believe my son made his own office at the beginning of 2006 and I am not sure if during the time period the advocate refers to and does not specify, Photos Pittadjis saw the 4th Defendant. I was informed that the 4th Defendant saw Photos Pittadjis at some point for some matters.
Q. Nothing else.
RE-EXAMINATION None.
…………………………………………………………………….
Court:
The case is fixed for closing speeches on 26.11.10, at 10:00am. The Defendants tmust be present under the same conditions.
The Registrar Office to arrange for an interpreter.
(Sign.) . ………………………………………
St. Tsividanidou – Kizi, D.J.
Dr Alan Waring considers the growing problems with the Cyprus property market and wonders where it is heading and if there are ways to prevent the industry from destroying itself.
“THOSE whom the gods wish to destroy they first make mad”, an ancient Greek saying goes. Judging by the growing eccentricities in the Cyprus property market, there are quite a few parties heading for destruction.
For example, some developers seem to have declared open warfare on buyers and any who try to protect themselves or defend the rights of buyers. Is threat of legal action, assault or other intimidation a good way to attract new buyers?
The Long March
OVER the past 5 years, Risk Watch has commented many times on the overall scandal of Title Deeds, property fraud and official blind eyes and deaf ears.
The recent Financial Mirror Editorial ‘A Sad Day for Cyprus Property’ plus the article from George Mouskides of APPDM ‘We have not learnt our lesson’ have highlighted yet again the uphill battle that property buyers, especially foreigners, have in Cyprus both against those developers and lawyers who decide to treat them badly and against the state infrastructure and justice administration, which thus far have failed to protect them.
The new government legislation may partly correct some aspects but it almost certainly will not fix the overall problem. For example, it will not address the developer mortgage debt bubble hanging over Cyprus, estimated to be at least Euros 7 billion. It does not address the issue of rogue lawyers or errant banks or inefficient government departments or the tardy justice system. No obvious anti-corruption/anti-rusfeti mechanisms are included.
Much of the buyer protection, which the government has asserted as being exemplary in its official response to probes by the European Parliament, is therefore virtual or illusory. Fortunately, the EC is still pursuing the matter.
Risk Watch understands that further questions about the Cyprus government and its handling of the property scandal are being tabled in the EP, the initial ones being:
With reference to previous Parliamentary Written Questions E-0110/09, E-6793/08 and E-6513/08.
1. Cyprus Title Deeds Legislation
“With a view to the new legislation that is about to be put in place by the Cypriot government to address the problem of withheld Title Deeds, would the Commission answer the following questions:
Does the Commission agree that this new legislation will not address the main problem cited in the numerous buyer petitions or indeed the above-referenced Parliamentary Questions, since it will not help buyers whose properties are encumbered with developer mortgages?
Does the Commission agree that the sale of mortgaged property without full disclosure at point-of-sale is practised systemically by Cypriot developers and should be prevented in all EU countries, with stringent penalties for transgressions?
How can a prospective buyer find out about the possibility of existing developer mortgages on the property? Do any developer websites or brochures mention this possibility or how to carry out searches to discover the risk before purchase? Historically buyers’ own lawyers have not alerted them to this risk in the majority of cases.
Finally, will the Commission send a fact-finding mission to Cyprus in order to investigate these problems in more detail?”
2. Cyprus Developer Mortgages
“With a view to the new legislation that is about to be put in place by the Cypriot government to address the problem of withheld Title Deeds, would the Commission answer the following questions:
How many individual properties whose sales contracts are lodged at the Land Registry in Cyprus are encumbered with developer mortgages? How many of these have been sold to Cypriots and how many to non-Cypriots?
What is the current balance of the total mortgage debt of Cypriot developers and the percentage increase, year on year, over the last three years?”
The recent Supreme Court landmark ruling, whereby a British couple’s Paphos lawyer was forced to pay them 120,000 Euros in compensation for negligent searches, took 11 years to conclude.
It is staggering that the guilty lawyer is still practising and that mandatory duty of care rules or professional standards for lawyers’ conveyancing search duties still do not exist in Cyprus.
Other cases involving developers, lawyers or both are also taking years to pursue through the court system. It is almost as if there is a conspiracy by the Cyprus establishment to ensure that buyers with real and often horrendous grievances are deterred from seeking justice by grinding them down and exhausting their energy, health and finances with a deliberately long drawn out process. Undoubtedly, some plaintiffs will die before their cases are concluded.
However, a growing number are determined to go all the way to the European Court if necessary, no matter how long it takes.
Some More Appalling Cases
THE NUMBER of cases of alleged serious wrong-doing against property buyers in Cyprus in recent years is now legion.
Many have been logged in detail by the Cyprus Property Action Group (CPAG) and Denis O’Hare, who has been the subject of a gagging order and a withdrawn libel suit by Leptos (Armonia Estates). Nigel Howarth’s website www.news.cyprus-property-buyers.com cites more.
Yet another is the case of Mr & Mrs Smith reported in Cyprus Mail 9 June 2010 ‘British couple plan to sue property developer’ which has even prompted the Cyprus President’s Under-Secretary to personally intervene publicly to try to ensure they receive full and prompt justice.
Will he also do the same for the hundreds of others held up by slow courts and the Attorney General’s block on criminal investigations into alleged property fraud? I have selected five cases as further illustration:
Case 1: Alleged Developer Fraud and Assault
The Conor O’Dwyer case has reached such a level of international notoriety it is difficult to see Cyprus ever living it down.
Mr O’Dwyer alleges that he paid CYP75k towards a property in Frenaros from the developers Karayiannis. On raising some concerns about the contract, he alleges that the developers then sold his property again without his knowledge or permission and also failed to return his money. As the Attorney General views such issues as civil and not criminal, Mr O’Dwyer was forced to take a civil case against the developers.
The developers and their lawyers contest Mr O’Dwyer’s allegations and counter-charge him with attempted extortion. While collecting video evidence of the property in question, Mr O’Dwyer alleges that senior representatives of the developer arrived and assaulted him.
Initially dismissing it as a simple road traffic accident, the police were then persuaded by intervention from the British High Commission to raise assault charges against the alleged attackers. His injuries were serious enough to keep him in hospital for a week.
Both the fraud and the assault cases have now been before the Cyprus courts for some years, largely owing to multiple adjournments. In the meantime, he has organised a protest campaign in the UK including a vigil outside the Cyprus High Commission, protests outside Cyprus property exhibitions and a DIY protest website.
Case 2: Alleged Lawyer Fraud, Forgery and Assault
A buyer alleges that she has been defrauded of Euros 200,000 as a result of her house having been sold twice.
She had appointed a well-known Cyprus law firm. She alleges that her contract of sale was withdrawn from the Land Registry using a forged power of attorney not even in her name. She further alleges that when she complained to her Cyprus lawyer about these matters he assaulted her by spitting in her face. This lawyer continues to practise unfettered.
Case 3: Alleged Lawyer Fraud
Following the death of a Cypriot woman in Cyprus in 2007, her son who had been living with her at the time of her death and who was co-executor to her will with a Paphos lawyer was puzzled by the unresolved probate.
He alleges that unbeknown to him the lawyer had submitted false affidavits to the court (and without a copy of her death certificate) that this woman had died in the UK some nine years previously and that he had been unable to locate her son! The affidavits also sought, and succeeded in, her son’s removal as an executor.
Her son, armed with her actual death certificate, eventually persuaded the court to overturn this errant decision and reinstate him as sole executor.
However, his subsequent attempts to persuade the Justice Minister and Ombudswoman to act on what was prima facie evidence of criminal fraud failed. The Disciplinary Board of Advocates of the Cyprus Bar Association after nine months also has yet to consider his complaint of serious professional misconduct against the lawyer, who continues to practise unfettered.
Case 4: Alleged Lawyer Negligence, Deception and Collusion
A buyer alleges that his Cyprus lawyer failed to advise him prior to contract of the presence of a CYP50k mortgage secured by the developer against the property. He also alleges that his sales contract was biased in favour of the developer and that there was probable collusion with the developer.
For example, he discovered that for a time the lawyer shared the services of an office secretary with the developer, thus raising a question of partiality and conflict of interest. Further, he alleges that the lawyer blatantly lied in a letter to him that the sales contract had been lodged with the Land Registry within the requisite period of 4-weeks, whereas subsequent investigations revealed the registration was not completed until 18-months later.
Case 5: Alleged Developer Fraud and Complicity of Others
A foreign couple were persuaded by their IFA (Independent Financial Adviser) who worked for a well-known firm based in Cyprus to buy as an investment four apartments off-plan at a new development from Sun Gain Estates in the Paphos area.
The buyers who were overseas relied on a well-known Cyprus lawyer appointed by the IFA. The contract was signed and the initial stage payments totalling CYP50k were made. After 18 months and no progress reports, the couple asked me to investigate. I discovered that the developers had never obtained planning permission and so the work had not started. Further, the IFA reported that as all the estate agents’ sales commissions had already been paid there was no longer enough money left to complete the job even if retrospective planning permission were granted!
The lawyer of record refused to respond to a request for assistance so he was replaced by a reputable Cyprus lawyer who soon discovered that in fact the Sun Gain directors had abruptly closed their Paphos offices and fled abroad with the money.
Where is it all heading?
HAVING highlighted the activities of rogue developers and lawyers in the inglorious Title Deeds/fraud mess in Cyprus, what about others in the cast of characters in this macabre theatre? Where is it all heading? Is there a way out?
The Attorney General
Although aspects of Cyprus property law are based in Ottoman law, the administration of justice and Cyprus law in general claims to follow English law and precedents.
Therefore, where there is prima facie evidence of criminal activity, then criminal procedures should take precedence over civil. Indeed, in English law it is standard for civil cases to await the outcome of related criminal cases so that a higher standard of proof (‘beyond reasonable doubt’) has been tested. Cyprus law references e.g. Neocleous (2000) state that in determining whether actions are fraudulent, the authorities ‘must concentrate on the acts committed and determine whether the taking was deliberate and intentional’.
The general ‘lack of intent’ exemption from criminal liability therefore does not apply if there is prima facie evidence that, for example, a developer has:
(a) received payment from one buyer, kept the money and then sold it again to a second buyer (or, in some cases, more than two!) and
(b) refused or failed to return the first buyer’s money.
However, as the Attorney General has repudiated all this in relation to property offences, the police cannot act. It is puzzling why property crime has been singled out for this special dispensation. Why not also for murder, rape, robbery or blackmail?
Why does the Cyprus property establishment use the quaint and trivializing word ‘cheating’ when they mean ‘fraud’? Why are long-winded civil cases forced on property victims before a criminal investigation is allowed, even when strong prima facie evidence of a crime exists?
A perverse parody of English law is being acted out, which has not gone unnoticed in legal circles in other countries that actually do follow the English legal system.
The Cyprus Bar Association
Ostensibly, the Cyprus Bar Association is the professional body for lawyers and to practise as a lawyer in Cyprus requires CBA membership.
The CBA supposedly sets professional standards and a Disciplinary Board exists. However, beyond the window dressing there is precious little evidence that it takes its disciplinary role seriously.
With such a growing number of allegations of professional misconduct, including fraud, against its members, especially in property-related cases, many are asking whether the CBA controllers have even a basic understanding of the purpose, function and duties of a professional body.
Early in my career, the Deputy Director General of a UK law enforcement body advised me that a professional body exists primarily to protect the public from the activities of rogues, quacks and charlatans and should never allow itself to fall into the trap of becoming a trade union protecting the interests of its members at the expense of its duties to the public. The contrast between the behaviour of the CBA and the UK’s Law Society, for example, on matters of client allegations of fraud or other misconduct is startling.
Recently Antonis Loizou, a high profile member of the Cyprus property establishment and a regular commentator on property matters, asked in the media why there appeared to be such a disproportionately high number of cases of allegations of fraud and misconduct against Paphos lawyers. The implication of an alleged cabal of rogue lawyers operating in Paphos is disturbing enough in itself.
The deafening silence from the CBA on the matter is even more disturbing. One would expect a professional body to act swiftly and publicly at the merest hint of impropriety.
The Banks
There is also the question of the banks’ role in the whole sorry property mess in Cyprus.
As the recent Toscafund Asset Management report on Cyprus emphasized, Cyprus banks are vulnerable to the continuing further slide in property values which may involve a sharp correction. The banks would then be forced to either liquidate immovable property at fire-sale prices or extend loans but with the risk of creating a massive toxic debt bubble already thought to be in excess of €7bn.
However, just as they were only too happy to grant developers further mortgages on properties already sold, banks are still willing to extend developer loans even those that are clearly distressed or delinquent. Such loan extensions are encouraging greedy developers to maintain artificially high prices (at least 30% too high). 90-day foreclosure procedures are supposed to kick-in on defaulters but rarely do in Cyprus.
Even establishment figures in the property market such as Antonis Loizou have been calling for developer foreclosures by the banks so as to bring Cyprus into line with the rest of the developed world.
Where Are the ‘Honest but Silent’?
IT IS OFTEN said that the only thing necessary for the triumph of evil is for good men to do nothing.
From what I know, there are decent developers, lawyers and agents in Cyprus who hate what they see going on among the ‘bad guys’ and the conspiracy of convenience with a grossly inefficient government administration; but they are scared to go public. Many of them tell me how much they admire what the Cyprus Property Action Group has done. We need to hear more public statements of support from the ‘honest but silent’ so as to publicly identify and isolate the wrongdoers.
If a cabal of dishonest lawyers exists, for example, why does a cabal of honest lawyers not stand up and denounce the ‘bad apples’ and insist that the CBA throws them out?
Without unequivocal action from those developers, lawyers and agents who do have integrity, I fear that Cyprus will continue to carry a general stigma that will continue to harm the economy.
A Way Forward?
THE DAMAGE to the property market inflicted collectively by bad developers and their lawyer cronies and the weak and flaccid authorities can only be countered by sustained action on the whole ‘system’. That includes the government stopping the banks in Cyprus from extending developer loans when they clearly have no means to repay.
CPAG has already advised the Interior Minister of a tried-and-tested formula to save developers from bankruptcy and all the terrible effects on buyers and the economy.
The Irish government, with full EU backing, has instituted a compulsory developer debt purchase scheme. A National Agency (using existing civil servants) to supervise the Cyprus property developer debt bubble and loosen the constipation of the market and tax revenues would also be a positive step in the gathering crisis.
The longer-term culture change at the population and industry levels will require time and persuasion. Bringing individual rogues to account in specific cases, however, warrants more immediate action and of a different kind. Unfortunately, the current attitude of the Bar Association and the Attorney General makes redress, both criminal and civil, that is normal in other EU countries hard to attain in Cyprus.
The ‘appeasement of wrong-doers’ argument favoured by some apologists is without merit and will only encourage bad developers and crooked lawyers to continue to ride roughshod over their luckless clients. Throughout history, appeasement of power-abusers and bullies of any kind has rarely worked. They can only be contained or crushed, not bought off or negotiated with.
Pressure and persuasion of the right kind do work. ‘Naming and shaming’ is one tactic against individual wrong-doers, which eventually hits them in the pocket if they fail to remedy the wrongs or to change for the good. If the professional bodies and the justice system fail to identify and root out dishonesty, it is likely that an angry and emboldened public will do it themselves.
A number of developers and lawyers who are alleged to be ‘bad apples’ have been identified on a variety of websites and blogs. Ultimately, there is no hiding place.
Apart from culling the ‘bad apples’, what is also needed, in effect, is an embedded cultural change in the property industry and the wider population. This will take many years. It can’t be bludgeoned into people.
Changing deep-seated attitudes and behaviours in a whole population can only come about if the population sees clear benefits from the change i.e. enlightened self-interest. Remember, the problem of rusfeti, ‘cheating’ i.e. fraud, cigar-cigar and laissez-faire does not just involve neatly packaged groups such as ‘bad developers’, ‘dodgy lawyers’, ‘low integrity bankers’ and ‘incompetent and inefficient civil servants’. These entities exist and flourish in a wider society that nourishes them.
The carrot is Cyprus’s return to economic prosperity and a respected status as a high integrity/high reputation investment location. The stick is economic decline and a low reputation among foreign buyers and investors.
A twin-track approach is needed involving the faster-paced pressure from CPAG, the EU, foreign governments, international media etc plus pro-active peer pressure from the honest but thus far silent individuals within the industry itself.
Conclusion
ONE MIGHT imagine that the Cyprus property market’s current Ice Age might have already concentrated minds and galvanized action to attract foreign buyers back by the industry cleaning up its own mess.
It was not compulsory that mastodons and dinosaurs should survive a sudden and lengthy change in climate. It is not compulsory that the Cyprus property market should survive a sustained loss of customers.
(This article first appeared in the Financial Mirror)
To read comments on this article from expats in Cyprus see the Cyprus Property News
Dr Alan Waring is an international risk management consultant with extensive experience in Europe, Asia and the Middle East with industrial, commercial and governmental clients. He is a Fellow of the Institute of Risk Management and is a founding member of the IRM Cyprus Regional Group. Contact info@dralanwaring-riskconsultants.com.
Corporate Risk and Governance: An End to Mismanagement, Tunnel Vision and Quackery
A letter to the editor published Cyprus Mail – Monday, June 7th 2010
Sir,
The Attorney-general’s decision not to prosecute the developers in the O’Dwyer house case (December 21) is both astonishing and disturbing. Your article quotes his decision as stating that “It has been ascertained that no criminal offence has been committed”. His Counsel stated that “it was not a case of fraud” until such time as a civil court could decide who the real owner of the house is and whether Mr O’Dwyer had been wrongfully and intentionally deprived of his money and his house.
It seems that the Attorney-general has decided that in Cyprus criminal law is now subordinate to civil law, whereas the long-standing position has been the reverse, as in English law. Where there is prima facie evidence of criminal activity, then criminal procedures should take precedence over civil. Indeed, it is standard for civil cases to await the outcome of related criminal cases so that a higher standard of proof (beyond reasonable doubt) has been tested. In the O’Dwyer case, there is the prima facie evidence of intentional fraud in that allegedly his house has been sold again to a third party without his prior knowledge or permission and his £75,000 sterling has not been returned to him.
Cyprus law references e.g. Neocleous (2000) state that in determining whether actions are fraudulent, the authorities ‘must concentrate on the acts committed and determine whether the taking was deliberate and intentional’. The general ‘lack of intent’ exemption from criminal liability therefore does not apply in this case since the developers allegedly (a) sold O’Dwyer’s property again after he had already paid, and (b) appear to be arguing that they have deliberately hung on to his money for all this time partly in order to punish him for daring to argue about terms in the contract. They have not, as far as we know, indicated any intention of returning his money.
An Attorney-general is supposed to ensure an unbiased administration and delivery of justice. Why this Attorney-general made this particular decision we will never know. However, this latest twist in the O’Dwyer case has not improved Cyprus’s bad reputation as an unsafe and insecure destination for investment, immovable property or otherwise.
OPENING a new can of worms for property owners, the Attorney General has told a British buyer his developers had not committed any crime by effectively re-selling a house legally registered in his name.
The three-line letter to Conor O’Dwyer, who is engaged in a high-profile dispute with the developers over a house in Frenaros, has left other buyers worried that the Contract of Sale they lodge with the Land Registry is not enough of a protection when they come up against the title-deed holders.
“They always say the sale of contract is a great protection, but it’s clear now that the owner of the land is the developer, even though we are told once the sale is registered, we are protected and the house cannot be sold to someone else,” said Denis O’Hare of the Cyprus Property Action Group (CPAG).
Indeed the law says that once the Contract of Sale is registered at the Land Registry, the purchaser is the beneficial owner of the property until the provisions of the contract have been fulfilled by both sides.
O’Dwyer is however in dispute with the developers, an issue that is pending before the civil courts, which will decide who was in breach of the contract. In the meantime, the house registered in his name at the Land Regsitry has been sold to someone else, although the second buyer cannot register her contract legally as O’Dwyer is listed as the beneficial owner and had paid around £75,000 sterling before the dispute arose. The developers, Karayiannas of Paralimni, still have this money.
In an attempt to secure justice, O’Dwyer’s lawyer Yiannos Georgiades asked the Attorney General’s office to bring criminal charges over the re-sale of the house.
He used Section 303a of the criminal code, which says: “Any person who, with intent to defraud, deals in immovable property belonging to another is guilty of a felony and is liable to imprisonment for seven years” “Dealing in immovable property” is defined as selling, renting, mortgaging to another, or “encumbering in any way”.
However following a police investigation, the Attorney General’s office said in a letter to Georgiades on November 26 saying: “It has been ascertained that no criminal offence has been committed.”
Paulina Paulina Evthyvoulou–Evthymiou, the Counsel for the Republic who signed the letter told the Sunday Mail: “It was not a case of fraud and it’s not something we could go before the court with.”
Evthyvoulou–Evthymiou said all of the money had not been paid by O’Dwyer, and that the contractors said the Briton had broken one of the terms of the contract “This is a civil case and not a matter for the Attorney General,” she said. “If he had a judgement from a civil case that he was the owner, it would be different. The civil case is unresolved. I don’t have an owner and I’m not in a position to decide who the owner is,” she added.
“This just sets a precedent that a house can be sold twice,” O’Dwyer said. He said all estate agents say a house can’t be sold twice. “We fell out,” he said of Karayiannas. “The contract was never declared legally null and void so this is quite clearly criminal fraud.”
Referring to the fact that he had not ultimately paid all of the money due to the dispute, O’Dwyer said: “How much is the developer entitled to keep… eighty per cent, ninety per cent? They (the Attorney General’s office) just proved you don’t own your house.”
CPAG’s O’Hare was equally damning. He said with the ruling it appeared the Attorney General was now confirming that the “so-called protection” of lodging a sales contract with the Land Registry gave little protection to buyers.
“This situation whereby a developer can sell you a property, take your money and then arbitrarily cancel your contract and sell your house on to some other unsuspecting buyer – and that this is not a crime, just beggars belief!” he said.
“If we don’t have protection of the land registry, that means even if you paid 90 per cent and the developer then comes and says I don’t like your face…it puts all buyers in jeopardy.”
Sounds extreme?
Larnaca-based property lawyer George Coucounis details a case of a woman who was the registered owner of an apartment but did not yet have title deeds from the seller, as is usual in Cyprus. When the seller died, his heirs accused her of trespassing and denied the apartment had been sold to her. She, however made the mistake of counterclaiming for damages instead of sticking to the sales contract, which
Coucounis said would have guaranteed her rights. Counterclaiming meant she accepted termination of the contract. Ultimately she was compensated but lost her apartment.
But Evthyvoulou–Evthymiou said the letter she signed to O’Dwyer did not mean the general concept ‘Contract of Sale’ meant nothing. “I can understand his point. The problem is for a criminal case we need a
case beyond reasonable doubt. How are we going to prove he is the owner beyond reasonable doubt? It’s not beyond reasonable doubt that he is the owner under 303a,” she said.
“I would have to prove the house belongs to Conor and his wife and I can’t prove that. Here we have two parties to a contract each saying he is the owner of the house. A judge must decide who the owner is. Why do we have to decide in the criminal court that he is the owner? The Attorney General cannot resolve this,” she added.
Georgiades, O’ Dwyer’s lawyer, said Karayiannas had no right to unilaterally cancel the contract, especially since O’Dwyer gave them the money for the due instalment they claim he didn’t pay. “The money was literally given to them but they refused to accept it. This was their way of terminating the contract. They were not entitled to terminate it. Conor was always willing and able to pay the money,” he said.
“In accordance with the files at the land registry, Conor remains the beneficial owner unless a judgement is issued otherwise. Until then no one is entitled to buy it. If anyone does, it’s not a bona fide purchase, and that person has no legal rights,” he added.
Referring to the Attorney General’s decision, Georgiades said it was a matter of interpretation. “We shouldn’t have to wait until the court judgement in the civil case. Since there is a dispute, the developers can’t say the property is theirs, whether Conor paid all of the money or not. If you are the legal owner, under what circumstance are you the legal owner? It depends on how you interpret ‘belonging to another’. There are a lot of inconsistencies in my opinion as to how things are dealt with.”
What is beyond doubt however is that the woman now living in O’Dwyer’s house did actually buy it from Karayiannas but she has not been able to register it due to his prior legal claim. The woman’s lawyers Pittadjis of Paralimni said in a letter to O’Dwyer in May 2007 that the woman had no idea there was a dispute raging over the property. Pittadjis was also the lawyer for the developers at the time.
“She bought it in good faith and after she was told that a previous contract had been cancelled,” the Pittadjis letter said. Evthyvoulou–Evthymiou said police had interviewed the woman and she had no complaint and did not feel defrauded
“She was told it would be all resolved with damages so she would not lose the house. There is no theft, no fraud. What is the criminal offence?”
However Coucounis, who is not familiar with the O’Dwyer case, said generally a contract can only be dissolved legally, and nothing can be done with a property until the civil court decides who is in breach. “The sale of contract remains in force and is valid until the court orders that it is legally or lawfully terminated. Until then delivery rights remain with the purchaser,” he said.
He said he had another case in Larnaca eight years ago, which went before the Supreme Court.
The first purchaser filed the sale of contract to the Land Registry close to the deadline but had not yet taken possession of the property. The second purchaser had possession but had not registered the sale of contract, he said.
“The Supreme Court decided that the contract deposited at the land registry was the one that was valid and that it superseded the second contract. It’s not that easy for a vendor to get rid of a purchaser as long as the purchaser insists on the contract,” he added.
WHEN you buy a property in Cyprus, your right to ownership is guaranteed under the law. Depositing your contract of sale at the Land Registry allegedly prevents the vendor from selling it to someone else; or does it?
According to the Cyprus Interior Ministry:
“The deposit of a contract of sale at the Department of Lands & Surveys creates an encumbrance of a great practical importance on the encumbered property. The subsistence of such encumbrance prevents the vendor from selling or charging any such property whereas the purchaser may obtain a judgment from the Court directing the registration of the property in his name, if the vendor refuses or fails to transfer the property within the time agreed as per contract of sale.“
This is supported by section 303A of the Cyprus Penal code which states:
“(1) Any person who, with intent to defraud, deals in immovable property belonging to another is guilty of a felony and is liable to imprisonment for seven years.
(2) For the purposes of the present section a person shall be deemed to be dealing in immovable property where-
(a) [that person] Sells to another, or rents to another, or mortgages to another or encumbers in any way, or makes available for use by another immovable property, or (b) advertises or otherwise promotes the sale or renting out or mortgaging or charging in any way to another of immovable property or the use thereof by another, or
(c) concludes an agreement for the sale to another, or the renting out to another, or the mortgaging to another, or the charging in any way to the benefit of another, or the use by another of immovable property, or
(d) accepts the immovable property which is the object of the dealing as this is defined in the present subsection.
(3) For the purposes of the present section, a person acts with intent to defraud if, when committing any of the acts set out in subsection (2), that person knows or, under the circumstances, should reasonably have known, that he does not have the consent of the registered owner of the immovable property, or of any other person who has the lawful authority to grant such consent.”
What this means is that if you buy a property in Cyprus and deposit your contract of sale at the Land Registry, the person who sold it to you cannot sell it to anyone else or rent it, mortgage it, etc. If they do, they face the prospect of spending seven years in jail.
Indeed, Cypriot courts have used the law to prosecute people involved in the sale or purchase of property in the areas of the island under Turkish occupation. But for some reason the Cypriot authorities appear ‘reluctant’ to use this law in other situations.
Consider the case of Conor and Michaela O’Dwyer:
The O’Dwyer case
In 2005 Mr O’Dwyer and his wife Michaela bought a property in the village of Frenaros from a Paralimni-based developer. Their lawyer, quite correctly, deposited their contract of sale at the Land Registry where it remains deposited to this day – the Lands Registry reference is ΠΩΕ 1064/2005.
During a dispute between the developer and Mr O’Dwyer, the developer re-sold the property to Michelle McDonald. This, according to the law, was illegal.
If you click on the small picture on the right you can read a letter from Ms McDonald’s lawyer confirming the sale of Mr & Mrs O’Dwyer’s home.
(As well as acting on behalf of Ms McDonald the firm was apparently representing the developer with whom Mr O’Dwyer was in dispute. It is therefore surprising that that the lawyer did not advise Ms McDonald of the fact that the property she was buying had actually been sold to someone else and for her to buy it would be illegal.)
Police investigation
On 24th August 2007, the Cyprus Mail reported that the (former) Interior Minister, Christos Patsalides, had ordered an investigation into the matter.
Last month, the police concluded their investigation. Subsequently the following letter was sent to Mr O’Dwyer’s lawyer by the Counsel for the Republic; it has been translated from the original Greek:
RE: Breach of article 303A, Cap. 154 – Cornelius Desmond O’Dwyer
Further to our letter, file no. 93/1984/128 and dated 22/10/2008, we hereby wish to inform you that the Police have completed their inquiry, the file has been studied and it has been ascertained that no criminal offence has been committed.
[signed]
Paulina Evthyvoulou – Evthymiou
Counsel for the Republic
For the Attorney General of the Republic
New precedent?
It would appear that a precedent has been set. Although Mr O’Dwyers contract of sale was deposited at the Land Registry, the developer who re-sold it to Ms McDonald has committed no crime according to the police who investigated the matter.
This precedent raises a number of serious questions:
Does the deposit of a contract of sale at the Land Registry prevent the sale of a property for a second time?
Will this ruling open the floodgates enabling other developers to sell the same house to more than one unsuspecting foreign buyer?
Are the authorities willing to take action to enforce the law?
Is it safe to buy property in Cyprus?
I’ll leave you, the readers of this magazine, to draw your own conclusions.
BRITISH home buyer Conor O’Dwyer was furious yesterday that it will have taken more than a year for Paralimni court to hear his case involving an alleged beating by the property developers with whom he is in dispute over a house purchase.
On Thursday the developers, Karayiannas, father and son, pleaded not guilty to grievous bodily harm after O’Dwyer spent a week in Larnaca hospital at the beginning of this year.
According to O’Dwyer’s lawyer Yiannos Georgiaides the court set the hearing for January 20, 2009. The assault happened on January 14 this year.
A third man, who O’Dwyer claims held him down while the two developers attacked him in the centre of Frenaros, failed to show up at court on Thursday but his lawyer guaranteed the judge that he would show up on October 23 to enter a plea and the arrest warrant was cancelled.
Georgiades said from the date of the assault to the date of the hearing was more than a year. “We had to keep contacting the Attorney General’s office for a long time for information on the prosecution case,” said Georgiades. “Conor is justifiably upset over the delay in taking the case to court. It’s not usual for the courts to fix dates such a long way off.”
He said cases involving assault were usually tried very quickly.
O’Dwyer, 39, who has spent the last 60 days protesting outside the Cyprus High Commission in London said he was furious over the length of time it was taking considering it was a criminal case and not a civil one.
He added police had not filed any charges against the father and son, who O’Dwyer said had grabbed his mobile phone and the memory stick from his camera the day he was assaulted. O’Dwyer had been filming the alleged confrontation. His phone was never recovered and the camera was returned empty.
“It’s all absolutely disgusting,” said O’Dwyer. He said he had met the new Cyprus High Commissioner and another Cypriot official on Thursday and made his feelings clear. “I let them know I was annoyed,” he said. “And I gave them a list of my grievances. I have been here 60 nights. Where is the investigation into the unlawful selling of my house that the Minister said in August 2007, would be carried out?”
“My money is in his (Karayiannas) bank and someone else is living in my house”.
Every detail of O’ Dwyer’s case has been outlined on his website www.lyingbuilder.com and he has now set up a new site www.ShameOnCyprus.com.
O’Dwyer said the only option left to him was the road to Strasbourg. He has hired an EU law firm in London and plans to take action against Karayiannas, the developers` lawyers in Paralimni and another law firm that used to represent him but now represents the developers, and all those who have defamed his name.
“What happened on Thursday with the court case was the final insult,” O’Dwyer said.
Commenting on the response he has been receiving from the Cyprus High Commission in London, O`Dwyer said it’s always “investigation, investigation, investigation”. But nothing has changed since August 2007,” he said.
“I have been here 60 days. My wife and children are upset that I’m here and I have lost two stones in weight but I am determined not to move”.
