(1982)1982 June 23 [A. Loizou, SAVVIDES A N D STYLIANIDES, JJ.] COSTAS CHRISTYS, Appellant, EVE GEORGHALLI, Respondent. (Civil Appeal No. 6241). Debtors Relief (Temporary Provisions) Law, 1979 (Law 24/79)— "Stricken debtor" under section 2 of the Law—Meaning—· Husband and wifejointly engagedinconstruction works—Husband offering his specialized knowledge and wife financing the projects through borrowing money by mortgaging her immovable property—She couldproperly befound in law to have been a stricken debtor. Costs—Proceedings under the Debtors Relief (Temporary Provisions) Law, 1979 (Law 24/79)—Costs against respondent because of applications for adjournment made on her behalf—Were final in themselves and could not have been cancelled at the conclusion of the proceedings. 5 10 In 1964 the respondent set up and registered together with her husband a private company of limited liability in which she owned 90% of the shares. Since then either through the afore- 15 said company or in conjunction with her husband, who was a real estate valuer and building contractor but owned no property, they jointly engaged in construction works and real estate development. The respondent was contributing by providing the necessary capital through borrowing money on 20 the security of mortgages on her immovable property and the husband was offering his specialized knowledge and services.The activities of the couple extended also at Kyrenia and Karmi village which since 1974 are under Turkish occupation. In 1973 when their cash was exhausted the respondent borrowed 25 492 1 C.L.R. Christys v. Georgalli the sum of C£16,000 with 9% interest thereon fiom the appellant and asa security they mortgaged her houte at Strovolos. 5 10 15 20 25 30 35 On December 20, 1974judgment was given in favour of the appellant in respect of the above sum and the interest accrued together with an order of sale of the mortgaged property. In proceedings instituted by the respondent undei the Debtois Relief (Temporary Pro\isions) Law, 1979 (Law 24/1979) the trial Judge having come to the conclusion that there was a joint business activity of the respondent and her husband, declared the respondent as a stricken debtor and, inter alia, stayed execution of thejudgment against the respondent. The trial Judge, further, made no order as to costs but he cancelled all previous orders as to costs given against the respondent, which were made by the Judges who dealt with the application at earlier stages, and were occasioned by applications foi adjournment made on hei behalf. Upon appeal by the judgment-creditor it was contended that the trial Judge should not have found that the borrowing of the respondent was interwoven with the business activities of her husband, whichadmittedly wereaffected by the situation created bythe Turkish invasion and as such hecould only himself be found to be a stricken debtor under the law. It was alsoargued that thelearned trial Judgeerred in law in annulling the previous orders as to costs. Held,
(1)that a stricken debtor isdefined bys.2 of Law24/79 as a debtor whose financial position was, as a result of the anomalous situation resulting from the Turkish invasion, prejudiced to an extent that renders him unable to respond to the financial obligations arising from his debt; that a debt in this context is one created prior to 14.8.1974 (see Evangelou andAnother v. Ambizasand Another
(1982)1 C.L.R. 41 at p. 54); that since the respondent and her husband weie acting in concert himself contributing his know-how and herself financing the projects through borrowing money by mortgaging her immovable property, she could properly be found in law to have been a stricken debtor inasmuch as the losses incurred from thejoint ventures fell on her as well as on her husband, if not solely on her as it appears from the facts of the present case, and she has been definitely prejudiced to an extent that 493 Christys τ. Georgalli
(1982)renders her unable to respond to her financial obligations aris ing from her debt which was created prior to the 14th August, 1974; accordingly the appeal should fail.
(2)That the orders as to costs by which the respondent was adjudged to pay because of the applications for adjournment made on her behalf were final in themselves and could not have been annulled or cancelled by thetrial Judge; accordingly theappealwillbeallowed with regard totheorderas to previous costs and dismissed on the remaining issues. 5 Appealpartlyallowed. 10 Cases referred to: Evangelou and Another v. Ambiza and Another
(1982)1 C.L.R. 41 at p. 54. Appeal. Appeal by respondent-judgment creditor against the judgment of the District Court of Nicosia (HjiConstantinou, S.D.J.) dated the7th March, 1981 (Appl. No. 106/79)whereby the appli cant judgment-debtor was declared a stricken debtor under the provisions of the Debtors Relief (Temporary Provisions) Law, 1979 (Law No. 24 of 1979). 15 20 Ch. Velaris, for the appellant. P. Ioannides, for the respondent. A. Loizou J. gave the following of the Court. The appellant -judgment creditor, appealed against the judgment and order of a Judge of the District Courtof Nicosia, by which the respon- 25 dent-judgment debtor, (
- a)was declared to be a stricken debtor under the provisions of the Debtors Relief (Temporary Provi sions) Law 1979, (Law No. 24 of 1979), (
- b)stayed during the anomalous situation and/or until 31st December 1980 the right of collection by the appellant of the debt of the respondent due 30 under judgment of the Court dated 20th December 1974, issued in Action No. 2189/74, (
- c)ordered the stay of execution of the aforesaid judgment pending the anomalous situation and/or until the 31st December, 1980 and (d)further ordered and decla red that the respondent-judgment debtor did not owe any inte- 35 rest on tht aforesaid judgment-debt as from 15th August, 1974, pending the anomalous situation and/or until the 31st December, 1980. 494 1 C.L.R. Christys v. Georgfllli A. Lolzoa J. The facts as found by the trial Judge are as follows: Theappellant on the29th January, 1973, lent to the respondent the sum of C£16,000.-with 9% interest thereon and as a security thereof she mortgaged her house at Strovolos where she 5 resides with her husband and two children. Theappellant instituted in the District Court of Nicosia proceedings for the recovery of the aforesaid sum and interest accrued and for an order of sale of the mortgaged property and on the20th December 1974,judgment and order wasgiven 10 in his favour. The husband of the respondent was a real estate valuer and building contractor but heowned neither movablenor immovable property. In March 1964 the two spouses set up and registered a private company with limited liability under the 15 name Kokos M. Yiorgalis Ltd., in which the respondent owns 90% of the shares. Since then either through the aforesaid company or in conjunction with her husband they jointly engaged in construction works and real estate development. She was contributing by providing the necessary capital, bor20 rowing money on the security of mortgages on her immovable property and the husband was offering his specialized knowledgeandservices. In theyear 1972theystartedtheconstruction of a block of flats in Strovolos on the immovable proporty of thewife. In 1973 whentheircashwasexhausted, she borrowed 25 the aforesaid money from the appellant and continued the building of the block of flats which at the time of the Turkish invasion had not beencompleted. In the meantime and whilst the building of these flats was in progress, the respondent sold certainflats and collected sumsof moneyon account which the 30 respondent utilized for the continuation of the building of the said block of flats and for other similar activities carried out eitherbythecompany or byherselfandherhusbandjointly. Their activities extended also in such areas as Kyrenia and Karmi village, which since 1974are under Turkish occupation. 35 Also by virtue of a contract dated the 1st June 1973,entered into between the husband of the respondent and C. Frangeskides(Properties) Ltd., thebuildingofablockofflats on property owned by the aforesaid company at Ayios Dhometios, was 495 A. LoizoQ J. Christys v. GeorgaUi
(1982)undertaken and the financing of the project would havebeen made on a fifty-fifty basis between thecontracting parties. An amount of C£4,045.-waspaid bythehusband oftherespondent upto thetimeofthe Turkish invasion for theaforesaid project. After the Turkish invasion the husband of the respondent left 5 Cyprus, the project, however, was completed and he was debited with the sum of C£l7,693.- as balance of his contribution for the completion of the building. The said sum of C£4,045.- was paid to Frangeskides with cheques drawn on Gnndlays Bank and this amount cameout of C£5,000.-bor- 10 rowed from the said Bank by the respondent mortgaging as a security her house at Strovolos. There was another joint venture between Frangeskides and the husband of the respondent for the building of a block of flats in an area which also after the Turkish invasion became inaccessible to them. 15 On the totality of the circumstances, the learned trial Judge came to the conclusion that there was a joint business activity of the respondent and her husband, declared the respondent as a stricken debtor under the provisions of the aforesaid Law and granted the remedies set out earlier in thejudgment. 20 With regard to the costs of the present proceedings, he made no order as to them but he cancelled all previous orders as to costs given against the respondent which were made by the Judges who dealt with the application at earlier stages. It has been argued on behalf ofthe appellant that thelearned 25 trial Judge misdirected himself on the facts and that hisfindings were contrary to the evidence adduced. In particular it was said that he should not have found that the borrowing cf the respondent was interwoven with the business activities of her husband, whichadmittedly wereaffected bythesituationcreated 30 by the Turkish invasion and as such he could only himself be found to be a stricken debtor under the law. It was also argued that the learned trial Judge erred in law in annulling the previous orders as to costs. We have considered the findings of fact made by the learned 35 trial Judge in the light of the totality of the evidence adduced and we have come to the conclusion that no sufficient reasons 496 \ \ 1 C.L.R. C&Hstys v, Ceorgalli A. Loizou J. have boonshown by the appellantentitling us to interfere with those findings and conclusions based thereon. Who is a stricken debtor under the law hir> been summed up very aptly by Pikis J., in delivering the judgment of the 5 Court in Evcmgelou ά Anotherv. Ambizas & Another
(1982)1 C.L.R., p. 41, at p. 54: 10 15 20 25 "A stricken debtot is defined by s.2 of Law 24/79 as a debtor whose financial position was, as a result of the anomalous situation resulting from the Turkish invasion, prejudiced to anextent that rendershimunable to respond to the financial obligations arising from his debt. A debt in this context is one created prior to 14.8.1974. In Lorris Tryfonos & Another v. Famagusta Shipping Co.
(1957)Ltd.,
(1981)1 C.L.R. 137, it was held that the inquiiy mustbe solely restricted to the· ability of thedubtor to respond to his particular obligation and not to his financial obligations, generally. The law postulates as a first prerequisite for relief,adversefinancialrepercussions emanating from the Turkish invasion. Therefore, the Court must, to start with, weigh the magnitude of the loss sustained as a result of the Turkish invasion. Then, it mustevaluatethefinancialpositionof thedebtor,asshaped by the events of 1974, in juxtaposition to the debt, and decide whether he is in a position to respond to his obligations". No doubt the respondent and her husband were acting in concerthimself contributinghis know-how andherself financing the projects through borrowing money by mortgaging her immovable property. She could, therefore, properly be found 30 in law to have been a stricken debtor inasmuch as the losses incurred from the joint ventures fell on her as well as on her husband, if not solely on her as it appears from the facts of the present case, and she has been definitely prejudiced to an extent that renders her unable to respond to herfinancialobli35 gations arising from her debt which was created prior to the 14th August, 1974. The appeal, therefore, should fall onthis ground. Wefind,however, valid thecomplaint of theappellant regar497 Λ. Loizou J. Christys v. Georgalli
(1982)ding the annulment or cancellation of the orders as to costs by which therespondent was adjudged to pay because of the applications for adjournment made inherbehalf as such orders were final in themselves andcould nothave been annulled or cancelled by him. 5 The appeal is, therefore, allowed with regard to this part, namely, this order as to previous costs and dismissed on the remaining issues. In the circumstances, however, we make no order as to the costs of this appeal. Appealpartyallowed. Noorder 10 as to costs. 498