(1988)1988 November 19 [MALACHTOS.DEMETRIADES, PIKIS.PAPADOPOULOS.HJTTSANGARIS, CHRYSOSTOMIS, JJ.] SOPHIAN.KOUPATOU, Appellant-Applicant, v. THEREPUBLICOFCYPRUS,THROUGH THEMINISTEROFFINANCE, Respondent. (RevisionalJurisdictionAppealNo. 742). Taxation—CapitalGainsTaxLaw, 1980(Law52/80}—Disputeasto whether dispositionmadebeforeoraftertheenactmentofsaidlaw—Onthematerial beforeitthe Courtreachedthe conclusion thatitwasmadeafteritsenactment—Consequently, theprofitwasliabletothesaidtax. Theoutcomeof thisappealturnedonthequestion whetherapplicant's 5 (appellant's)landhadbeendisposedpriororafter theenactmentofLaw52/ 80.Partof thelandinquestion wassoldon 31.1.1980prior totheenactmentof thesaidlaw,butsuchagreement wasabrogated byanewagreement madeon 12.2.1982,i.e. after theenactment of such law.Thenew agreementcomprisedthesamelandasthatcomprisedintheagreementof JQ 31.1.1980,butit,also,comprisedanadditionalpieceofland. OnthetotalityofthematerialbeforeittheCourtarrivedattheconclusion .thatthecontractof31.1.1980waseffectively abrogatedandthatthedispositionwasmadeon 12.2.1982.Consequently,theCourtdismissedtheappeal. Appealdismissed. Noorderastocosts. Casesreferredto: PapaconstantinouandAnotherv. TheRepublic
(1986)3 GLA.1672; 2204 15 3 C.L.R. Koupatou v. Republic Panayiotouv. TheRepublic
(1986)3GL.R.2311; ApostohuandOthersv. TheRepublic
(1986)3GLA.1838; Hadjimitsisv. TheRepublic
(1988)3GLA. 8%. .i Appeal. AppealagainstthejudgmentofaJudgeoftheSupremeCourt ofCyprus(A.Loizou,J.)givenonthe29thAugust, 1987(RevisionalJurisdiction Case No. 1037/85)*whereby appellant'srecourse against the imposition of the sum of £9,555.60 cent as capitalgainstaxwasdismissed. X.Xenopoulos, for theapplicant. Y.Lazarou, for therespondents. Cur. adv. vult. MALACHTOSJ:TheJudgmentoftheCourtwillbedelivered byPapadopoulos,J. PAPADOPOULOSJ:ThisisanappealagainstaJudgmentof aJudgeofthisCourtwhodismissed anapplication bytheappellantinarecoursebywhichtheapplicantinthatrecourseandthe appellantinthepresentcase,prayedforadeclarationbytheCourt thatadecision oftheMinisterofFinancewasnull andvoidand ofnoeffect whatsoever.Thedecisionwasinrespectoftaxesimposed on theapplicant regarding a saleof land byvirtueofthe provisions of sections 4 and 13of the Capital Gains TaxLaw 1980, Law 52/80. This tax amounted to £9,555.60 and was chargedontheapplicantinrespectofgainsaccruing toherwhen shesoldthepieceoflandatKatoPaphos. Thefactsofthecaseareadmittedbybothsidesandarebriefly asfollows: * Reported in
(1987)3 CL.R. 975. 2205 Papadopoulos J. Koupatou v. Republic
(1988)Theapplicant wastheregistered ownerof apieceof landofan extent of 15donums and 3evleks situate at KatoPaphos.On the 9thDecember, 1978,sheagreed tosellpartof theproperty, notably 7donums, toArmonia Estates Ltd., for £91,000.On the 31st January, 1980 she agreed to sell another portion of the land, 5 5 donums and 2 evleks, to another purchaser, namely, Tsintides and Eliades. In consideration of this sale,it was agreed that she would take ahouse and twelveflats, ten of which are tobe built on thisland. On the 12th February, 1982, a new agreement was executed ]Q between the vendor and the two purchasers i.e. Armonia Estates Ltd. and Tsintides and Eliades, whereby the whole of the field with theexception of thatportion which wasthesubject matterof the agreementof 9th December, 1978,wasdisposed to Armonia EstatesLtd. Arithmetic leads usto theconclusion that what was ,<disposed of on the 12thFebruary, 1982,was apiece of land consistingof 5donums and 2evleks which wasthe land sold by the agreement of the 31st January, 1980, plus the remaining 3 donumsand 1 evlek which up until then continued tobein the sole ownershipof the appellant. Itisthe submission of Mr. Xenopoulos for theapplicant that, whatever gain wasrealized from thesetransactionsit wasderived from the agreement of the 31st January, 1980, because, as he submitted, the agreement of the 12th February, 1982 wasa continuation, in a way, or arevival or an extension of the original 2 * agreement of the 31st January,
- The seller had made no profit at all with the sale of the 31st January,
- In fact, Mr. Xenopoulos suggested that this agreement of the 12/2/82 wasin conformity with the provisions of thecontract of the 31st Janu- 30 ary, 1980,whereby the seller wasobliged toregister thepieceof land which wassold tothe purchasers toanybody whowould be indicated by thepurchasers and that what the seller actually did with the agreement of the 12th February, 1982, was in furtherancetothetermsandconditionsof thatoriginal contract. 35 Mr.Lazarou opposed the submission of Mr. Xenopoulos and 2206 3 C.L.R. Koupatou v.Republic Fapadopoulos J. insisted thattheDirector of Inland Revenuecorrectly andrightly imposed thetax,aswhatever gain wasrealized itemanated from thecontractof the 12thFebruary, 1982which isa self-executory andindependent agreement thatsupersededearlierones. 5 Itmustbementioned that ifitisfound thatany gainswerederived from the original contract of the 31st January, 1980,they are not taxable as on that day the Capital Gains Tax Law 52/80 had not been passed. Itwasenacted afew monthslater.Therelevant sectionsoftheLawread as follows: 10 "
- Subject to the provisions of this Law and the exemptionscontained therein,on any gainsaccruing from adisposal of property, there shall be levied and paid a tax at the rateof twenty percentum on such gains. 15 20 25 30 13.The Director may at any time, whether the declaration of a disposal of property hasbeen delivered or not,assess the tax payablewithregard tothedisposal of property and sentto thedisponerthereof anotice of such assessment." The Law was interpreted and applied in a number of cases. (SeePapaconstantinou andAnother v.Republic
(1986)3 C.L.R. 1672,Panayiotou v.Republic
(1986)3C.L.R. 2311.Apostolou and Others v. Republic
(1986)3 C.L.R. 1838,Hadjimitsis v. Republic
(1988)3 C.L.R.
- Thevitalquestion thatthisCourthastodetermineisthedateof thedisposition of theimmovable property. Was thesubject property disposed of in 1982? If so, the transaction is subject to the provisions of Law 52/
- Wehaveexamined the submissions made bycounsel for both sides.Wehave nodifficulty in arriving at theconclusion thatthe disposaloftheproperty of theappellant wasmadeon the 12/2/82 and noton the31/1/80.Itisevident, inourview, that thecontract of the31/1/80hadbeen abrogated. All theparties concerned,appellant-seller and theotherpurchasers in theprevious contracts, 2207 Papadopoulos J. Koupatou v.Republic
(1988)i.e. Armonia Estates Ltd., Elias Eliades and Charalambos Tsintides, with their contract of the 12th February, 1982 have expressed clearly their wish tohavethepreviouscontractscancelled relievingeach other of theobligationsincurred bythecontractof 31st January, 1980.Buteven if thelanguage thattheparties used 5 in theircontract of the 12th February, 1982,hadnotbeenasclear as itis,wecould not interpret thesecontracts asmadein furtherance tothe agreement of 31st January, 1980.Itisanew contract with new parties, new terms and new subject matter. It had no connection with thecontract of 31stJanuary, 1980.Theeffect of *, the agreement of 1982wastocancelthe 1980agreement thereby enabling theownertosell hisproperty toanotherparty. As to the submission of Mr. Xenopoulos that his client had made nogain atall from thecontractof the 12thFebruary, 1982, we can only say that our duty is tointerpret thelegal documents , and the material before usand togiveeffect tothem according to Law. The inevitable conclusion is that the property was sold in 1982; therefore, the transaction was subject to theprovisions of Law 52/80. Thus it was reasonably open to the respondents to levy thetaxation theyimposed,inthecase. The appeal isdismissed. Noorder astocosts. Appeal is dismissed. No orderasto costs. .2208 *