clr/1988/1988_3_1571.pdf

(3)—Shareholders of compamy were applicant 1, his wifeandtwoothercompanies, eachofwhichhadasshareholdersapplicant 1and hiswife-Such companiesareentitiesseparatefrom theirshareholders—Conditionsfor refundundersection9

(3)notsatisfied. Companies—Acompanyhasapersonalitydistinctfrom itsmembers. Reasoning ofanadministrativeact—Referencetorelevantsectionofthe law— In thecircumstancestherequirementofreasoningissatisfied. 10 Thisrecourse,which impugned thevalidityofthedecision toturn down refund of thetransfer fees ofimmovablepropertypaidbyacompanyon the ground that the conditions of the aforesaid section 9

(3)were not satisfied,wasdismissed for thereasons indicated inthehereinabove headnote. Recourse dismissed. No orderasto costs. 15 1571 Georghiades v. D.L.O. N' sia & Others

(1988)Casesreferredto: Salomon v.Salomon [1897]A.C.

1. Recourse. Recourseagainstthedecision oftherespondentsrefusingapplicants'claimforther·fund oftransfer fees. 5 A. Poetis, for theapplicants. Chr.loannides, fortherespondents. Cur. adv. vult. SAVVIDESJ.readthefollowingjudgment.Applicantsbythe presentrecoursechallenge thedecision of therespondentscom- JQ municated totheapplicantsbyletterofrespondent 1 dated23rd January, 1987,refusing applicants'claimfor therefund oftransfer fees. Imustnoteherethatalthoughinthetitleoftherecoursethe1st respondent isreffered to astheDistrict LandsOfficer, Nicosia, 15 thelettercontainingthesubjudicedecisionwasinfactwrittenby the District LandsOfficer of Larnaca.I willconsider thismisstatement inthetitle asbeingduetoanoversighton thepartof counselandanyreference inthisjudgment torespondent 1 will bedeemedasreferring totheDistrictLandsOfficer ofLamaca. ^ Applicant 1 isashareholderandaDirectorofapplicant2company.Onoraboutthe28thMay, 1980,acontractof salewasenteredbetweentheownersofthreebuildingsitesunderregistration Nos. 5836,5837,5838andapplicant 1 for thesumof£80,000.ThesaidcontractwasdepositedwiththeLarnacaDistrictLands «<; RegistryOffice onthe30thMay, 1980underNo.121/
2. On the 17thFebruary, 1981,both interested parties i.e. the sellerandtheapplicantaspurchaserappearedbefore theDistrict 1572 3 C.L.R. 5 ΙΟ 15 20 Georghiades v. D.L.O.N*sia & Others Savvides J. LandsRegistry Office atLarnacaanditwas agreed thatthesaid sites betransferred inthenameof applicant2as applicant 1 as­ signed hisrightsinrespect of such contracttoapplicant 2.The declared price was notaccepted as it was found by'the Lands Registry Office tobe lower than themarketvalue andthe Land Registry Office insisted andcollectedtransfer feesonthe amount of£120,000.- which was themarketvalue of theproperty"atthe materialtime.Thetransfer feespaidamounted to£7,275.
3. Theshareholders of applicant2companyatthematerialtime were applicant 1andhis wife,Interchange Ltd,and Interchange Services Ltd. By letterdated 19thJanuary; 1987,signed by applicant 1 act­ ingonbehalf ofbothapplicantsapplicant 1claimedfromrespon­ dent 1therefund of thetransfer fees paidbasing hisclaimon s.9

(2)of Law 31/76 which provides for therefund of transfer feesin cases wherepropertyistransferred toacompanytheshareholders of which areclose relatives andprovided thatwithin aperiodof five years from thedeclaration of transfer nootherperson ac­ quiredanyshareinthecompany. ' Respondent 1by letterdated23rdJanuary,1987,refused such application. Thecontentsof suchletterreadasfollows: "Ireturnherewith all documents submittedandwishtoin. form you thatyourcasedoesnotfall within the provisions of s.9

(2)of-Law 31/76." 25 30 As aresultapplicantsfiled thepresentrecoursechallengingthe subjudicedecision. Thelegal groundonwhichtherecourseisbased isthatthere­ spondentsactedinviolation of s. 9

(2)of Law 31/76. In arguing hiscasecounselfor applicantsexpoundedonthesaid ground and hefurther contendedthatthesubjudice decision lacks duerea­ soning. 1573 n Savvides J. Georghiades v. D.L.O. N' sia & Others

(1988)Section 9

(2)of the Department of Lands and Surveys (Fees and Charges) Law, Cap.219, as amended by laws 10/65 - 2/82 providesas follows: " Οσάκις ακίνητος ιδιοκτησία μεταβιβάζεταιεις εταιρείαντηςοποίαςμόνοι μέτοχοι είναιοιοιδήποτετωνακο- 5 λούθων,ήτοιτου μεταβιβάσαντοςδικαιοπαρόχουκαιστε­ νών συγγενών αυτού, και καθ' οιονδήποτε χρόνον προσάγεται εις τον Διευθυντήν ικανοποιητική, κατά την κρίσιν αυτού,απόδειξιςτουγεγονότος ότι,κατάτηνδιάρκειανπενταετίαςαπότηςημερομηνίαςτης δηλώσεως με- IQ ταβιβάσεως ή,εάν τοιαύτηείναι ηπερίπτωοις, μέχρι της εντός της προαναφερθείσηςπεριόδουτυχόνδιαλύσεως ή εκκαθαρίσεως της εταιρείας,ουδέν πρόσωπον άλλο του μεταβιβάσαντος δικαιοπαρόχου καιτων αυτώνή ετέρων στενών συγγενών αυτού απέκτησεν οιανδήποτε μετοχήν «5 της εταιρείας άλλως ή αιτία θανάτου, ο διευθυντής επι­ στρέφει εις την εταιρείαντο ποσόν των κατάτον χρόνον της δηλώσεως μεταβιβάσεως επιβληθέντων και εισπρα­ χθέντων τελών και δικαιωμάτων, μειωμένον κατά ποσόν ίσον προς4 επί τοις εκατόντηςκατάτηνημερομηνίαντης προαναφερθείσηςδηλώσεως μεταβιβάσεως εκτετιμημένης αξίαςτης μεταβιβασθείσης ακινήτουιδιοκτησίας. Thetranslation inEnglish reads: ("Wheneverimmovable property is transferred toacompa­ ny the only shareholders of which are any of thefollowing, js thatis thetransferor andcloserelativesof his,andatanytime is produced to theDirector satisfactory, in his opinion, proof of thefact that,during thefive-yearperiod from thedateof the declaration of transfer or,if such is thecase,until thedissolutionorliquidation of thecompany within theaforesaidperiod, J U noperson otherthanthetransferee andthesame orotherclose relatives of his has acquired any share in thecompany other ' than by reason of death,theDirector refunds tothe company the amount of thefees and charges imposed and collected at the time of thedeclaration of transfer, reduced by an amount 35 1574 3 C.L.R. . . · ; » Georghiades v.D.L.O.N' sia &Others Savvides J. . ;••< ; ; ' . . : ' ; • * " ' . . . ' • * . - • - ' ' . » . · · • equal to4 percent on the assessed value of the immovable propertytransferred asonthedateoftheaforesaid declaration oftransfer.") ' ' '• *"r*1 ' .'" : 5 10 15 ' 2Q It is further provided by sub-section

(3)of s. 9 that for the purposesofsub-sections

(1)and

(2)"closerelative"inrelationto apersonmeansthehusbandor*wifeofsuchpersonandrelatives withinthethirddegreeofrelationship. Ithasbeenarguedbycounselforapplicantsthattheshareholdersof applicant 2company in thenameof which theproperties were transferred fell within thedefinition of sub-section

(3)of section9inthatthe'only shareholders atthematerialtimewere applicant 1 andhiswifeandthattheothertwocompanieswhich ownedsharesinapplicant2,namely,InterchangeLtd.andInterchangeServicesLtd.werecompaniesholdingsharesastrustees oftheapplicantandhiswiferespectivelyandtherewerenoother shareholdersinthesaidcompanies.Itisthegistoftheargument ofcounselforapplicantsthattheonlyshareholderinInterchange Ltd. was applicant 1and in the Interchange Services Ltd. his wife. The trust deeds which were signed on behalf of the said companiesthattheywereholdingtheirsharesinapplicant2companyastrusteesfortheaccountofapplicant 1 andhiswife,were submitted togetherwithotherdocumentstorespondent 1.Inaccordancewithcounsel'sargument thetwocompanies shouldbe considered asbelongingtoapplicant 1 andhiswife respectively andoncetherewasnoothershareholderinapplicant2company the transfer fees should be refunded to the applicants in the presentcaseassatisfying thedefinition of"closerelatives"under sub-section

(3)ofs.9oftherelevantlaw. Counselfurther conteded that thesubjudicedecision merely ™ mentions that thecasedoesnotfall within theprovisions of s.9

(2)withoutgivinganyreasonsinthatrespectand,therefore, the subjudicedecisionhasalsotobeannulledonthisground. Counselfor therespondents by'hiswrittenaddresssubmitted thatthepresentcasedoesnotfall withintheprovisionsof s.9

(2)' 1575 ' · ' • • Savvides J. Georghiades v.D.L.O.N'sia &Others

(1988)as theapplicants donot fall withinthedefinition of sub-section

(3)i.e. therelation of husbandandwife orrelation of uptothe thirddegreehasnotbeenestablished. Ishalldispose first briefly oftheargumentofcounselforapplicantsthatthedecisionisnotdulyreasoned. 5 A perusal oftheletter ofrespondent 1 clearly showsthatthe application wasrefused for thesolereason that itdoesnot fall withintheprovisionsof s.9

(2)ofLaw31/76.Theprovisionsof such section areclearandtheyprovidefor therefund of transfer fees inaparticular casesuch astheoneonwhichtheapplicants 10 seektorely.Therefore, inmyview,thereference totherelevant section amountstosufficient reasoninginthepresentcase.Furthermoreaperusalofthedocumentswhichweresubmittedbyapplicantsandwhichwereattachedtotheletterofrespondent 1 embodyingthesubjudicedecisionsupplement hisreasoninginthat 15 theprovisionsofthelawwerenot satisfied. Asaresult thesolequestionwhichposesforconsideration is whether the applicants are entitled totherefund of the transfer fees paid when the three building sites were registered in the nameofapplicant2. Thereisnodisputeinthepresntcasethatthetimeperiodcontemplated by s. 9

(2)has in fact elapsed. The property wasacquired byapplicant 2in 1981andtheapplication forrefundwas submitted onthe 19thJanuary,1987. Itiscommon groundthatatallmaterialtimestheshareholders 25 inapplicant 2company wereapplicants 1,hiswifeandtwoother companiesallegedly belongingtoapplicants 1 and2.Itisawell established principleoflawthatacompanyisalegalentityindependent of its shareholders.(SeeSalomon v.Salomon [1897]A. C.22).Bearinginmind thisprincipleIcannottreatthetwocom- 30 panies, namely, InterchangeLtd.andInterchange ServicesLtd. asbeinginfact anylegalentitiesotherthantheonesacquiredby thembyoperationoflawandsuchlegalentitiesaredifferent from 1576 20 3 C.L.R. 5 Georghiades v. D.L.O.N'sia & Others Savvides J. those of their shareholders. Inview of such finding the share­ holdersinapplicant2companywerenotonly thetwopersonsre­ latedtoeachothertothedegree provided by sub-section

(3)of s. 9 butalsotwootherindependentlegalentities,thetwocompanies above mentioned,between, whom and applicant 1andhis wife norelationasdefined sub-section

(3)of s.9 couldexist. . Intheresult Ifindthatit was resonably open to therespon­ dentstotreatapplicants'application asnotfalling within thepro­ visionsof s.9 of the law. 10 Intheresult thisrecoursefails andis hereby dismissedbutin thecircumstancesImakenoorderfor costs. 1 J ' , -· \ , -ι . % Recoursedismissed. '.• Noorderasto costs. · •"**' ' ^ ~ - .Ή J 1 * ν · • r *H. »v ;* , r \ • f< r . "• t J . .JJ 1r l '* "j J . J ' lC Γ* i * l ' r ' ' , i ' !• ·• - 3 ·<• '•" •M.'i . ' · ! * , » ' J 1 i- "ίΓιι ' '. 1 . ' t '•·•.; i v '^'*- 1 1 ι •, : ί-V. r 1577 • •. i* '„ ** · > ι . - . · . " " - •>· · j/ii- *' υ ι '. r