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Landmark ruling by the Supreme Court

In a landmark ruling, the three-judge panel of the Supreme Court of Cyprus has found a Cypriot lawyer to be professionally negligent and liable to compensate a British couple for money they lost as a result.

Cyprus Supreme Court

The Cyprus Supreme Court in Nicosia

THE SUPREME Court has ordered a Paphos-based lawyer to pay around €120,000 to his former clients, a British couple, in compensation for money lost over a property contract prepared over a decade ago.

It is believed to be the first time that a Cypriot lawyer has been found professionally negligent by the highest court in the land and made to compensate for the money lost by their client. This raises the prospect of more negligence cases being filed against lawyers in property cases, ringing alarm bells within the legal community. Until now, lawyers have largely avoided or directly refused to take on their colleagues in any negligence lawsuit in Cyprus.

To fight their negligence case, the British couple hired the legal services of father and son, Antonis and Nicholas Georghiades, who run a small firm in Nicosia, advising among other things on the acquisition of immovable property in Cyprus.

According to the three-judge panel of the Supreme Court on Wednesday, the defendant, Paphos lawyer Nicos Papacleovoulou – their original legal adviser – was liable to compensate the couple for the money they lost as a result of his negligence.

In 1999, the British couple chose to sell their property in England and move permanently to Cyprus to buy and live in their “dream house”. In November that year, they decided to buy land in Kinousa village in Paphos from a contractor on which he agreed to build them a three-bedroom villa.

The couple went to the defendant Papakleovoulou to prepare the necessary contracts which were then signed. It later transpired that the property had been mortgaged twice, an interest had been registered on the property, while the contractor went bankrupt. The couple lost all the money they had invested in the property and the chances of getting any back from the contractor minimal.

They decided to sue their lawyer for negligence in the Paphos district court and lost. They appealed to the Supreme Court, which ruled in favour of the claimants.

The top court ruled that “lawyers do not have immunity”, noting that a lawyer, like any professional, was judged based on the level of care and skill expected from the average professional. This level was “neither that of the very talented professional nor one who possesses limited qualities”.

The Supreme Court judges set out the basic duties of a lawyer when delivering their services outside of the courtroom. These include that the lawyer advises his client with care, brings to his attention any problems, any inherent dangers, warns him of them and protects his interests. Despite the fact there is no legal obligation to do so, prudent lawyers should also aim to receive all instructions in writing, especially in case of immovable property.

The appeals court highlighted that the main aim of any property case was to acquire the relevant Title Deed.

In the case of purchasing land, the ultimate aim is to secure, either immediately or in a time agreed upon, the Title Deeds for his client,” said the ruling.

The judged noted that where there was no Title Deed that could be immediately transferred, as in this case, the lawyer’s duties become more complicated, requiring expert knowledge and actions, “which is why the majority of buyers of immoveable property correctly turn to lawyers from whom they expect protection of their interests”.

The court employed a textbook check list for lawyers working on property cases. “The first issue the lawyer is obliged to investigate is the legality of the Title Deed of the intended vendor and that there are no registered charges or other legal impediments which could affect in future the transfer to his client of a Title free of any encumbrances.

On top of the duty to check for any charges registered against a property, lawyers will now be judged in future lawsuits on whether they fulfilled their duty “to warn his client of the dangers emanating from the possible insolvency of the vendor”.

In this case, it was deemed that the defendant had not met his duties, showing professional negligence. As a result he was ordered to compensate his former clients in a manner that they found themselves in the same position they would be in had the lawyer fulfilled his duties.

The judges concluded that compensation amounted to the money the plaintiffs paid to the vendors, which they would not have paid had had they received the correct legal advice, amounting to around €120,000, included in which was €2,152 charged by the lawyer for preparing the contracts.

Cyprus Mail

Readers' comments

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  • Pat says:

    The lawyers have put people in these situations and they should be held accountable.

    The issuing of Title Deeds is a matter for the European Parliament to act on.

    People are being denied their basic human rights.

  • Celtic Warrior says:

    Hate to pour cold water on this but this means that the government will get out of the title deeds mess by getting everyone to blame the lawyers, very few of whom will be able to give redress for their negligence. Its a dangerous decision for those without deeds.

    It will take the issue away from a legislative one and turn it into a a simple legal one.

    Many people will be outside of limitation period for suing their lawyers, some people wont have the money, some will be repossessed and so on – its an easy way for the government to take the sting out out of the problem and a case of “divide and conquer”.

    Its an easy option for the government – sacrifice a few lawyers without assets or insurance (who probably wont be prevented from practising) to get rid of a whole load of headache.

  • Jo says:

    Our first lawyer (when we were as green as grass upon arrival in Cyprus) didn’t advise us the land we were buying was mortgaged (she went to the bank and paid it off with our deposit we later learnt) We also later realised she was acting for both vendor and purchaser.

    She made the builder vendor into a limited company!

    She either didn’t examine or allowed that the planning permission upon which our purchase depended, was inadequate and incomplete and pushed our purchase through.

    She didn’t tell us that under Cypriot law we had made ourselves the vendor builder’s employer for him to complete the existing half built house and we were later threatened in the Tax Office with a summons for fraud and collusion to avoid VAT (we had paid it all to the builder).

    We subsequently had to pay another lawyer over 20,000 Euros to get us out of the complete mess and complete a sale (guess who bought it? – the builder!) – do you think we could claim it back? I won’t hold my breath….

  • Steve says:

    At last the blame for the mortgaged property fiasco is beginning to be put where it really belongs-with the Cyprus legal profession. Builders and developers all over the world finance their projects by mortgaging their assets with banks and loan corporations.

    When conveyancing solicitors do their work properly and advise their clients, the purchasers, that such mortgages exist on the assets they are planning to buy, then the clients have the option not to proceed if that is what they wish. In Cyprus, the cosy professional body called the *** ******* made it virtually impossible to obtain legal representation to sue lawyers who were negligent or were in reality working for the developers and knew that mortgages existed.

    Now there is an opportunity to correct some of the horrors of the past and to change the future for a better one for buyers of property in Cyprus.

  • Stuart Monkcom says:

    This indicates how the likes of the ****** District ***** protects those lawyers who fail to act with due care and attention but how the Supreme Court strips away any veneer of respectability and exposes such lawyers for their inadequate standard of legal practice so common in the Republic of Cyprus.

  • rh from Vienna says:

    I AM VERY SATISFIED !!!

    AS I KNOW OF SIMILAR CASES!

    THIS WILL ENCOURAGE OTHERS TO OBTAIN THEIR LEGAL RIGHTS !

  • Whirlybird says:

    Lets hope this is the start of the rotten eggs in the basket being sorted out across the board?

    Regards.

  • Ken of Kiti says:

    WOW!

    Cyprus at last appears to be entering the 21st century. I wonder what the the future will hold now for these so called Cypriot lawyer’s.

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.

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