clr/1980/1980_3_69.pdf

(1980)of mortgages; and all the three agreements in question were made parts of declarations of mortgages undersection 21 of the Immovable Property (Transfer and Mortgage) Law, 1965 (Law 9/65). The respondent Commissioner decided that in respect of the 5 agreements between the appellant and the National Bank of Greeceand the Bank of Cyprus Limited, the stampduty payable ought to be charged in accordance with item 12(e) in the First Schedule to the Stamp Law, 1963 (Law 19/63), as amended, in particular, by means of the Stamp (Amendment) Law, 1972 10 (Law 38/72);and in relation to theagreement between theappellant and the International Finance Corporation, the respondent Commissioner decided that the stamp duty payable in respect of it ought to be charged under item 3(A) of the said First Schedule because in this agreement there was no provision for 15 mortgage of immovable property but merely a provision for entering into another mortgage agreement. The respondent Commissioner, in calculating the stamp duty payable,as aforesaid,took into account not only the amount of the loan secured bymeansofeach agreement but, also,the value 20 ofthe"commitment charge",aswellastheinterestpayableunder each agreement. Upon a recourse against the above decision of the Commissioner the trial Judge reached the conclusion, in relation to all the said three agreements, that the respondent Commissioner 25 was not entitled to take into account, in calculating the stamp duty payable in respectthereof,either the"commitment charge" or the interest; but, he upheld the decision of the Commissioner that the stamp duty ought to becharged under item 12(e)of the aforementioned First Schedule to the Stamp Law; and that this 30 was so not only in respect of the agreements with the National Bank of Greece and the Bank of Cyprus Limited, but, also, on a proper application of thelaw,this should beso inrespect of the agreement with the International Finance Corporation, in relation to which the Commissioner had mistakenly decided that the 35 duty should be charged under item 3(A) of the First Schedule to the Stamp Law. The trial Judge treated this mistake as amounting, only, to wrong legal reasoning, which did not entail the annulment of this relevant decision of the Commissioner inasmuch as there was other legal support for his decision, 40 70 3 C.L.R. \ Cyprus Cement Co. v. Republic namelyitem 12(e),in accordancewithwhichsuchdecisionwould . be modified. \ 5 10 15 20 25 30 35 On theappeal·ofthe company: \ Held,

(1)that the trial Judge has correctly held that the two agreements with the National Bank of Greece and the Bank of Cyprus Limited, respectively, were agreements creating a charge by a company, in the sense of item 12(e)in the First Schedule; that these agreements rendered the mortgages charges created by the appellant company and it cannot be accepted that the charges were created merely by the respective declarations of mortgage, which were secondary documents and were rightly stamped as such under the provisions of section 5

(1)of Law 19/63.

(2)That even ifthis Court would takethe viewthat the said two agreements come within the ambit of both item 12(e) and item 3(A)ascontracts, again the stamp duty in respect of them ought to have been charged under item 12(e)in view of the provisions of section 7 of Law 19/63 which provides that "instruments so framed, asto comewithin two or moreofthedescriptions inthe First Schedule shall, where the duties chargeable thereunder are different, be chargeable only with the highest of such duties"; and that, therefore, this appeal, in so far as it relates to that" part of thejudgment ofthe trial Judge bymeans of whichit was found that the stamp duty, in respect of theagreements with the National Bank of Greece and the Bank of Cyprus Limited, had to becharged underitem 12

(3),butthat, incalculatingsuch duty, there ought not to have been taken into account the "commitment charge" and the interest, must be dismissed.

(3)That the courseadopted by the respondent Commissioner in distinguishing the agreement with the International Finance Corporation from the two other agreements and deciding to charge in relation to it the stamp duty under item 3(A) was reasonably open lo him on a proper application of the relevant legislation and on a correct construction of such agreement; and that, therefore, this wasnot a caseinwhich thelegal reasoning for the relevant subjudice decision of the respondent Commissioner was wrong. Held, further, that even if this Court were to agree that such reasoningwaswrong,thisisnot acaseinwhichitwaspermissible 71 CyprusCementCo.v. Republic

(1980)to treat the stamp duty, in relation to the agreement concerned, as being chargeable under item 12(e), instead of under item 3(A): Because such a course, on a proper calculation of the respectively payable stamp duty under the above two items, would have as a consequence the worsening, as a result of the 5 outcome of a recourse under Article 146of the Constitution, of the position of the person making the recourse, namely of the appellant company and it is well established, in Administrative Law that, generally, and particularly in relation to taxation matters, it is not possible for the position of an apphcant who 10 has made a recourse to beworsened through the outcome of the recourse; that, therefore, in such a case, the approach that the subjudice decision can be supported on other legal reasoning cannot be adopted; that, in other words, there cannot be, in sucha case,reformatio inpejus tothedetriment ofan applicant; 15 and that, accordingly, this appeal, in so far as it relates to the stamp duty charged in respect of the agreement of the appellant company with the International Finance Corporation, 'must be allowed Appeal partly allowed. 20 Cases referred to: Papadopoulos v. TheRepublic

(1968)3C.L.R. 662at p.674 Appeal. Appeal against the judgment of a Judge of the Supreme Court of Cyprus (A. Loizou, J.) given on the 31st May, 1974 25 (Revisional Jurisdiction Case No. 29/73) whereby applicant's recourse against decisions of the respondent Commissioner of Stamp Duty in respect of stamp dutypayable in relation to three written agreements was partly dismissed. P. Cacoyiannis, for the appellant. , 30 A. Evangelou, Counsel of the Republic, for the respondent. Cw.-adv~vult. TRIANTAFYLLIDESP. read thefollowingjudgment of the Court. This is an appeal against the first instance decision* of a Judge of this Court by means of which there was partly dismissed a 35 recourse of the appellant company against decisions of the respondent Commissioner ofStampDuty in respect of the stamp duty payable in relation to three written agreements. * Reported in

(1974)3C.L.R.304. 72 3 C.L.R. \ Cyprus Cement Co.v. Republic Triantaf>Hides P. The said agreements were concluded between the appellant company and, respectively, the International Finance Corporation, the NationalvBank of Greece and the Bank of Cyprus Limited, in relationto a loan of C£2,700,000, which was to be 5 advanced, inequalshares,bytheaforesaid threebankinginstitutions, to the appellant. It was a condition precedent in all the aforementioned agreements that before the appellant would be entitled to withdraw any sum as part of such loan it ought, interalia,to secure the 10 loan by means of mortgages; and, as a matter of fact, all the threeagreements in question weremade parts of declarations of mortgagesunder section 21 oftheImmovableProperty (Transfer and Mortgage) Law, 1965 (Law 9/65). The respondent Commissioner decided that in respect of two 15 out of the said agreements, namely those between the appellant and the National Bank of Greece and the Bank of Cyprus Limited, the stampduty payable ought to becharged in accordance with item 12(

1. e)in the First Schedule to the Stamp Law, 1963 (Law 19/63), as amended, in particular, by means of the 20 Stamp (Amendment) Law, 1972 (Law 38/72). In relation, however, to the third agreement, namely that between the appellant and the International Finance Corporation, the respondent Commissioner decided that the stamp duty payable in respect of it ought to be charged under item 3(A)of 25 the said First Schedule. The respondent Commissioner, in calculating the stamp duty payable,as aforesaid, took intoaccount not only the amount of theloan secured bymeansofeachagreement but,also,thevalue of the "commitment charge", as well as the interest payable 30 under each agreement. The learned trial Judge reached the conclusion, in relation to all the said three agreements, that the respondent Commissioner was not entitled to take into account, in calculating the stamp duly payable in respect thereof, either the "commitment 35 charge"ortheinterest;but, heupheldthedecisionoftheCommissioner that thestamp duty ought to becharged under item 12(
2. e)of the aforementioned First Scheduleto the Stamp Law; and he wenton tofindthat thiswassonot only inrespect oftheagreementswith theNational Bank ofGreeceandtheBankof Cyprus 40 Limited,asitwasdecidedbytherespondent Commissioner, but, 73 Triantafyllides P. Cyprus Cement Co. v. Republic

(1980)also, that, on a proper application of the law, this should beso in respect of the agreement with the International Finance Corporation, inrelation towhich theCommissioner had decided that the duty should be charged under item 3(A) of the First Schedule to the Stamp Law. Counsel for the appellant has argued in this appeal that the stamp duty in respect of all three agreements concerned ought to be charged under item 3(A) of the First Schedule. He submitted that the said agreements were documents embodying each an agreement for afixedsum and as they were not other- 10 wisechargeable it followed that the stamp duty could only have beencharged under thesaiditem 3(A);hesubmitted, too,inany event, that they could not have been treated as instruments creatinga charge bya company in the sense ofitem 12(e)ofthe First Schedule. 5 15 We are of the view that the learned trial Judge has correctly held that the two agreements with the National Bank of Greece and the Bank of Cyprus Limited, respectively, were agreements creatinga chargeby a company, inthe senseofitem 12(e)inthe First Schedule. In our opinion these agreements rendered the 20 mortgages charges created by the appellant company and we cannot accept that thecharges werecreated merelyby therespectivedeclarations of mortgage, which weresecondary documents and were rightly stamped as such under the provisions of section 5

(1)of Law 19/63. 25 Moreover, even if we would take the view that the said two agreements come within the ambit of both item 12(e) and item 3(A)as contracts again the stamp duty in respect of them ought to have been charged under item 12(e)in view of the provisions of section 7 of Law 19/63 which provides that "instruments so 30 framed, as to come within two or moreofthedescriptions inthe. First Schedule shall, where the duties chargeable thereunder are different, be chargeable only with the highest of such duties". We have, therefore, decided to dismiss this appeal in so far as it relates to that part of thejudgment of the trial Judge by 35 means of which it was found that the stamp duty, in respect of theaforesaid two agreements,namely withthe National Bank of Greeceandthe Bank ofCyprusLimited,had tobecharged under item 12(e), but that, in calculating such duty, there ought not 74 3 C.L.R. Cyprus Cement Co. v. Republic Triantafyllides P- tohave been taken into account the "commitment charge" and the interest. In relation, however, to the agreement between the appellant company and the International Finance Corporation, the trial 5 Judge, after finding that the amount of stamp duty charged in respect of it, namely C£2,408.400 mils, should be reduced by C£255, which represented duty relating to new shares in respect ofwhichno stamp duty waschargeable,upheld a submission of counsel for the respondent Commissioner that the duty, in 10 respect of such agreement, was mistakenly charged under item 3(A), and found that, on a proper application of the relevant legislation, it should have been charged under item 12(e); and heproceeded totreat this mistake,on thepart of the respondent Commissioner, as amounting, only, to wrong legal reasoning, 15 which did not entail the annulment of the relevant decision of the Commissioner inasmuch as there was other legal support for his decision, namely item 12(e), in accordance with which such decision would be modified. In deciding to adopt the above course the trial Judge referred 20 to Papadoponlos v. The Republic,

(1968)3 C.L.R. 662, where (at p.674)it washeld that "wrong legalreasoning doesnot lead to annulment if the decision can have other legal support". The trial Judge observed in his judgment that if the stamp duty, in respect of the agreement in question, namely theagree25 ment with the International Finance Corporation, was charged under item 12(e), the amount payable would be less than that which was charged in relation to such agreement under item 3(A). During, however, the hearing of this appeal before us it 30 transpired that if the duty in respect of the said agreement is correctly calculated under items 3(A) and 12(e), respectively, without taking into account the aforementioned amount of C£255 and without taking into consideration the "commitment charge" and interest—(having been correctly found by the trial 35 Judge that these factors could not have been lawfully taken into consideration)—then the duty in relation to the agreement in question would be C£l,860 if charged under item 12(e) and C£l,371ifcharged under item 3(A);inother words,theposition of the appellant company would be worsened if, on the basisof 40 a lawful and correctcalculation, thestampduty, inrespect ofthe 75 Triantafyllides P. Cyprus Cement Co. v. Republic

(1980)said agreement is to be charged under item 12(e), instead of under item 3(A). Inthe,firstplace,weareoftheopinionthat thecourseadopted bytherespondentCommissioner indistinguishing thisagreement from the two other agreements—namely the agreements with 5 the National Bank of Greece and with the Bank of Cyprus Limited—and deciding to charge in relation to it the stamp duty under item3(A)wasreasonably opentohimonaproperapplication of the relevant legislation and ona correct construction of such agreement (see, in this respect, the reasons stated in 10 paragraph 2 of his letter to counsel for the appellant, dated January 11,1973,exhibit4). So, wedo not think that it could be said that this is a case in which the legal reasoning for the relevant sub judice decision of the respondent Commissioner is wrong. 15 Even if, however, we were to agree that such reasoning is wrong, this isnot a case in which it waspermissible to treat the stamp duty, in relation to the agreement concerned, as being chargeableunderitem 12(e),insteadofunderitem3(A): Because sucha course,ona proper calculation oftherespectivelypayable 20 stamp duty under the above two items, would have as a consequence the worsening, as a result of the outcome of a recourse under Article 146 of the Constitution, of the position of the person making the recourse, namely of the appellant company; and it is well established in Administrative Law that, generally, 25 and particularly inrelation totaxation matters, it isnot possible for the position of an applicant who has made a recourse to be worsened through the outcome of the recourse and that, therefore, insucha case,theapproach that thesubjudicedecisioncan be supported on other legal reasoning cannot be adopted; in 30 other words, there cannot be,in sucha case,reformatio in pejus to the detriment of an apphcant (see, in this respect, inter aliat Conclusions from the Case-Law of the Council of State in Greece, 1929-1959, p. 219, Kyriacopoulos on Greek Administrative Law, 4th ed., vol. C, p. 51,and Dendias on Adminis- 35 trative Law, 2nd ed.

(1965),vol. C, pp. 112-114). We, therefore, have decided to allow this appeal in so far as it relates to the stamp duty charged in respect of the agreement of theappellant company withtheInternational FinanceCorporation and such duty has, consequently, to be calculated under 40 76 3 C.L.R. Cyprus Cement Co.τ. Republic Triantafyllides P. item3(A)oftheFirst ScheduletoLaw 19/63,without taking into account the"commitmentcharge" or the interest andwithout, also, charging C£255 stamp duty inrespect of new shares. In the result, this appeal succeeds inpart and is dismissedin 5 part as stated above. Taking all relevant considerations into account we have decided tomakeno order astoitscosts. Appealpartly allowed. No order as tocosts. 77