(1981)1981 November 27 [TRIANTAFYLLIDES, P.] IN THE MATTER OF THE CHARITIES LAW, CAP. 41. "ORPHANAGE AND TRAINING SCHOOL, DEMETRAKIS G. DIANELLOS OF LARNACA", Plaintiff, v. THE ATTORNEY-GENERAL OF THE REPUBLIC, Defendant. {Charity Application No. 3/81). Charitable trusts—Charity property—Application for approval of additions and alterations thereto—Trustees failing to comply with previous Court Ordersfor filing, inter alia, audited accounts of the trust—Such failure rendering meaningless exercise of relevant supervisory powers under the Charities Law, Cap. 41— 5 Pronouncement on merits of application deferred in order to afford plaintiff opportunity to comply with above orders. This was an application for approval of the carrying out of additions and alterations to a building ("the Sun Hall Hotel") in which the plaintiff charity was one of two equal partners. 10 The additions and alterations applied for entailed the contracting of a loan for C£275,000 and the mortgaging of the building in question. Theproject for theerection ofthebuilding in question was approved by means of a judgment of this Court given in 1971 whereby it was, also,directed that the trustees of the charity 15 should file annually with the Court copies of their audited accounts and that the property of the plaintiff charity should not be mortgaged without an order of the Court. The plaintiff charity, in disregard of the above direction, mortgaged the said property, as security for two loans of C£100,000each. OnAugust 20 31, 1973, this Court approved both the loans and mortgages and, also, directed that relevant accounts of the two loans should be filed annually. 624 1 CX.R. Dianellos τ.Attorney-General Up to the time when the above application was lodged there was no compliance with the above directions of this Court, for the filing of annual audited accounts and for the filing of accounts of the two loans. 5 10 15 Held,that, notwithstanding that this Court has no reason at all to doubt the good faith of the trustees of the plaintiff charity, it cannotoverlook the failure to comply with the afore said two orders, and that it will, indeed, render meaningless the exercise of relevant supervisory powers of this Courtunder theCharities Law, Cap. 41, in relation tothecharity in question, if the present application is granted without,first,securing due compliance, even belatedly, with the above orders; that,there fore, irrespective of the merits of the present application, on which this Court is not pronouncing at this stage, the plaintiff will be afforded an opportunity to comply duly with the afore mentioned two orders and for this purpose, an extension of time of one month from today is granted which can be further extended, on good grounds, if necessary. Order accordingly. 20 Cases referred to: Bishop of Kitium (No. 1) v. Attorney-General of the Republic
(1971)1 C.L.R. 92. Charity Application. 25 30 Application by the Trustees of the charity known as "Orphanage andTraining School, Demetrakis G. Dianellos of Larnaca" under section 13(c) of the Charities Law, Cap. 41 for an order sanctioning the carrying out of additions and alterations to the "Sun Hall Hotel" in which the plaintiff charily is one of two equal partners. G. Nicolaides, for the plaintiff. R. Gavrielides, Senior Counsel of the Republic, for the defendant. Cur. adv. vult. 35 TRIANTAFYLLIDES P. read the following interim decision. By means of this charity apphcation approval is being sought for the carrying out of additions and alterations to a building which may conveniently be described as the "Sun Hall Hotel" 625 Triantafyllides P. Dianellos v. Attorney-Genera)
(1981)in Larnaca and which belongs to the Sun Hall partnership, in which the plaintiff charity is one of two equal partners, the other one being the Archbishopric of Cyprus. Theproject for theerection ofthesaid buildingwasapproved bymeans of thejudgment given incharity application No. 1/70 5 (see TheBishopofKitiumandOthersasTrusteesoftheDianellos Charity (No. 1)v. TheAttorney-General of theRepublic,
(1971)1 C.L.R. 92). Paragraphs 4 and 5 of the order madein the aforementioned charity appUcation No. 1/70 (see at p. 107of the report of the 10 case) read as follows:"
- The partnership formed under the said Agreement shall be subject to the provisions of the Charities Law for the time being in force, as provided under clause 6 of theAgreement; and, havingregard to thewishexpressed 15 in clause 10(e) of the will of the late D.G. Dianellos, the part of the property on which the old 'Sun Hall* building stood (which forms part of the permanent endowment of the Dianellos charity), after transfer to the partnership, shall not, without an order of the Court, be mortgaged 20 or charged by way of security for the repayment of money borrowed, nor be sold or otherwise disposed of.
- The partnership shall keep books of account and render audited accounts in compliance with the provisions of clauses 5 and 6 of the Agreement and pursuant to the 25 provisions of section 10of the Charities Law, Cap. 41,or any statutory modification or re-enactment thereof for the time being in force. Copy of such accounts shall also be filed in this Court by the trustees of the charity annually. Thefirstofsuchaccounts shallbefiledin Court 30 on the 1st March, 1972". Unfortunately, in disregard of the provisions of paragraph 4,above,theproperty describedthereinwasmortgaged, without an order of the Court, on December 23, 1972, as security for a loan of C£100,000 and it was only later, on August 3, 1973, 35 that there was sought covering approval for the mortgage concerned by means of charity application No. 2/73; at that time there was, also, sought approval to mortgage the same property by way of security for a further loan of C£100,
- 626 1 C.L.R. Dianellos τ. Attorney-General Trfantafyllides P. As regards both th; said loans the indebtedness of the plaintiff charity was to be to the extent of one half of them. OnAugust 31,1973,an order was madeapproving both loans and mortgages and it was directed, too, that relevant accounts 5 should befiledannually. Inthesaid order of August 31, 1973, there is to be found, inter alia,the following passage:- 10 "It is further necessary' to stress that a serious view if taken of ihe fact that the loan of £100,000 (for which now leave has been granted by virtue of theorder made inthepresent proceedings) was incurred on the 23rd December, 1972, without thepriorleaveof this Court;and itis only because there is no doubt about the good faith of all concerned that an order giving covering approval of this loan has been made today ex post facto". 15 There wes regrettably no compliance with the-direction th2t relevant accountsshould befiledannually and so up tothetime when the present charity appUcation was lodged no accounts at all werefiledin reipect of cither of thetwo aforesaid loans of C£100,000 each. 20 It is stated, however, in an affidavit filed in the present case, and dated October 17, 1981, that the balance itill due now in relation to thefirst of the said two loans is C£39,800.331 mils. Furthermore, there has been no compliance at all with para graph 5,above, of theorder which was made incharity applica25 tionNo. 1/70, as noyearly accounts of the Sun Hall partnership were filed from 1972 onwards, as directed by means of such paragraph
- Only when the present application was filed there were attached thereto accounts of the said partnership for sobly ths years 1979 and
- 30 This Court is, thus, faced now with a situation in which the plaintiff charity is seeking approval for building works entailing thecontractingofanew loan(for C£275,000)andthe mortgaging again of the Sun Hall building and yet the plaintiff charity has not duly complied with the orders made in charity applications 35 Nos. 1/70 and 2/
- I am of the opinion that, notwithstanding that I have no reason at all to doubt thegood faith of thetrustees of theplain tiff charity, I cannot overlook the failure to comply with the 627 TriantflfylUdes P. DIaoeUos •. Attorney-General
(1981)aforesaid twoorders;andthatitwill,indeed,rendermeaningless the exercise of relevant supervisory powers of this Court under theCharitiesLaw,Cap.41,inrelationtothecharityinquestion, if I grant the present application without, first., securing due compliance, even belatedly, with the above orders. 5 I, therefore, have decided, irrespective of the merits of the presentappUcation,onwhichIamnot pronouncingatthisstage, to afford the plaintiff an opportunity to comply duly with the aforementioned two orders and I grant, for this purpose, an extensionoftime!ofonemonthfrom today,whichcanbefurther 10 extended, on good grounds, if necessary. When there has taken place due compliance with the orders madeincharity applications Nos. 1/70 and2/73,1shallproceed to deal with the present application on its merits. Orderaccordingly. 15 628