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Landmark ruling by the Supreme Court

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