DEXTER AND OTHERS v. CYPRUS

FOURTH SECTION

DECISION

Application no. 63049/11
DEXTER against Cyprus
and 2 other applications

The European Court of Human Rights (Fourth Section), sitting on 17 December 2013 as a Chamber composed of:

Ineta Ziemele, President,
George Nicolaou,
Ledi Bianku,
Zdravka Kalaydjieva,
Vincent A. de Gaetano,
Paul Mahoney,
Robert Spano, judges,

and Fatoş Araci, Deputy Section Registrar,

Having regard to the above applications lodged on 29 September 2011, 19 October 2011 and 25 September 2011,

Having deliberated, decides as follows:

THE FACTS

1.  The applicants are:

in application no. 63049/11:

- Andrew William Charles Dexter, born in 1944, resident in Wellingborough, England, British national;

- Patricia Dexter, born in 1945, resident in London, England, British national.

in application no. 68057/11:

- Rodney Alfred James, born in 1944, resident in Kissonegra, Paphos, Cyprus, British national;

- Carol Ann James, resident in Kissonegra, Paphos, Cyprus, British national.

in application no. 62322/11:

-Cynthia Lloyd-Roberts, born in 1943, resident in Paphos, Cyprus,

British national.

The circumstances of the cases

2.  The facts of the cases, as submitted by the applicants, may be summarised as follows.

1. Application no. 63049/11 (Dexter)

3.  On 19 December 2003 the applicants signed a contract of sale with a company of property developers in Cyprus, by which the applicants bought a plot of land in the district of Limassol and a house to be built thereon. They were represented by a lawyer practising in Limassol.

4.  The contract was registered with the Limassol District Lands Office (“DLO”) on 23 December 2003.

5.  The applicants made all scheduled payments, except one, which was contractually withheld until transfer of title deeds.

6.  On 4 April 2005 the applicants took delivery of the house.

7.  The applicants later discovered, inter alia, that (a) the planning specifications in the contract of sale had not been the same as those submitted by the developers’ architect to the local planning and building authorities; (b) developer mortgages over the land had been registered with the Land Registry before the contract of sale had been concluded and which their lawyer had not informed them about; (c) other mortgages and tax debts had been registered against the land after the registration of the contract of sale with the DLO; and (d) although the contract of sale stated that the seller had already applied for and had obtained planning and building permits this had not been in fact true as the permit applications post-dated the contract. Construction had therefore started before the permits had been granted.

8.  The applicants commissioned a private valuation report according to which the property did not comply with planning and building regulations. In particular, the house had a total area of 206 m2 and therefore exceeded the allowed building density of the plot which was, on the basis of the planning zone in force, only 150 m2. At this stage the applicants realised that their lawyer, the developers and the architect in charge had not explained significant matters to them concerning planning zones, building coefficients and densities and that these terms had not been included in the contract of sale.

9.  The property does not have a certificate of final approval and the applicants do not have title deeds.

10.  By a letter dated 19 May 2011 the applicants made a complaint against the developers to the Competition and Consumer Protection Service (“CCPS”) of the Ministry of Commerce, Industry and Tourism of Cyprus under the Unfair Business-To-Consumer Commercial Practices Law (Law no. 103/(I)2007; see paragraph 61 below). In particular, they complained about the developers’ failure to transfer the property in their name and to disclose encumbrances on the property. The applicants sought the transfer of the title deeds to their name and the release of the property from the developers’ mortgages and debts.

11.  By a letter dated 31 May 2011 the CCPS replied that the provisions of Law no. 103/(I)2007 did not cover the applicants’ case as it did not have retrospective effect: complaints against developers in Cyprus regarding the purchase of property before the date it entered into force, that is, 12 December 2007, did not fall within the scope of the Law. As the applicants had bought their property in 2003 the Ministry did not have the authority to intervene in their case.

12.  The applicants also complained by letter dated 10 May 2011 to the Vice President of the European Commission about the situation in Cyprus with property developers and unfair commercial practices.

2. Application no. 68057/11 (James)

13.  On 30 September 2002 the applicants signed a contract of sale with a company of property developers in Cyprus to buy a plot of land in the district of Paphos and a house to be built thereon. The contract was registered with the Paphos DLO. The applicants had engaged a Cypriot lawyer who was recommended by the developers but they later discovered that the same lawyer was also representing the developers.

14.  The applicants took possession of the property in December 2003 and made the final payment in June 2004.

15.  In January 2009, through a visit to the Paphos DLO the applicants discovered that the property did not comply with planning regulations and that there was no certificate of final approval. Consequently they had unknowingly been occupying their property in contravention of domestic law. The applicants then complained to the Paphos DLO and requested them to intervene.

16.  In October 2009 the applicants complained to the Ombudsman.

17.  In January 2010 the Ombudsman’s office informed the applicants that they should contact the Paphos DLO. The latter informed them that the certificate of final approval would be issued once the developers had paid the required fees.

18.  The applicants received the certificate on 17 June 2010 but did not receive title deeds to the property.

19.  The applicants filed another complaint with the Ombudsman regarding the Cypriot Government’s failure to regulate the property sector. They were informed that the matter did not fall within the Ombudsman’s remit.

20.  By a letter dated 12 May 2011 the applicants brought a complaint against the developers to the CCPS about the unfair practice of withholding title deeds. In particular, they sought the transfer of the title deeds to their name or a refund of the sums paid.

21.  By a letter dated 19 May 2011 the CCPS replied that the provisions of Law no. 103/(I)2007 did not cover their case as the applicants had bought their property in 2002, that is, before its entry into force.

22.  The applicants also complained to the European Commission.

23.  The applicants wish to return to live in the United Kingdom but cannot afford to do so without selling their property in Cyprus. Despite their efforts to sell their property for a number of years they are unable to do so because of the lack of title deeds.

3. Application no. 62322/11 (Lloyd-Roberts)

24.  In December 2001 the applicant and her then husband agreed to purchase a building plot in the district of Paphos from a company of property developers in Cyprus. They engaged a lawyer practising in Paphos.

25.  They then secured a loan from a bank in the United Kingdom and paid in full for the property. Before the money was paid to the developers, the applicant and her husband at the time sought assurances in relation to the developers’ ownership of the property, the existence of title deeds and the developers’ ability to obtain a building permit; all of which the developers confirmed. They also asked their lawyer to carry out the necessary searches.

26.  The lawyer drew up the contract and then signed on the applicant’s behalf before obtaining their written permission or a power of attorney.

27.  The contract of sale was registered with the Paphos DLO.

28.  The applicant and her then husband signed a building contract on 14 June 2002 with the developers.

29.  The house was completed in March 2003 and they took possession on 2 April 2003.

30.  On 10 July 2007 the developers informed the applicant that their lawyer had commenced court proceedings against them on her own and her then husband’s behalf in order to obtain transfer of the title deeds. The applicant submits that no consent was given for such proceedings to be commenced. On their instructions the proceedings were withdrawn.

31.  Subsequently, the applicant discovered the existence of a developer mortgage over the land, registered before the applicant’s contract of sale, which prevented transfer of the title deeds.

32.  By a letter dated 8 March 2009 the applicant and her then husband complained to the Ministry of the Interior concerning the failure of the developers to transfer title to them.

33.  In its reply of 9 April 2009 the Ministry informed them as follows:

“...

2. Your grievances against the developer refer to a private agreement between you and the developer, and therefore it is up to you to pursue any legal action against him, if he has violated any parts of the agreement. The Ministry could not be involved. As this refers to a private agreement, the Ministry cannot get involved.

3. Cases like yours remind all of us, of the vigilance required when dealing with such major financial investments and prospective buyers are advised to be very cautious and research well in advance the deal they are about to get into. Thankfully, as corroborated by the thousands of trouble-free purchases across the island, most buyers follow that route.

4. For your information, the main protection that is provided to the buyers of immovable property is their right to deposit the Contract for Sale at the appropriate District Lands Office in pursuance to [sic] the Sales of Lands (Specific Performance) Law, Cap. 232. The deposit of the contract for sale at the Department of Lands and Surveys creates an encumbrance on the property. In case of denial or unwillingness on the part of the land developer-seller to transfer to the buyer the title deed, the buyer can apply to the Court and obtain a Court Order for the specific performance of the contract for sale. According to article 3(1) of the above-mentioned law, Cap. 232, in the case where the seller neglects or denies to take the necessary action for the issuing of separate titles, the Court may order the seller to do this within a given time limit, or may appoint another person to act on his behalf.”

34.  By a letter dated 7 May 2011 the applicant and her then husband brought a complaint against the developers to the CCPS about the unfair practice of withholding title deeds. In particular, they sought the transfer of the title deeds to their name and a refund of the sums paid.

35.  By a letter dated 16 May 2011 the CCPS replied that the provisions of Law no. 103/(I)2007 did not cover their case as the property had been bought in 2002.

36.  The applicant and her then husband complained to the CCPS about this decision and sought more explanations.

37.  By a letter dated 6 June 2011 the CCPS repeated that the relevant law did not have retrospective effect and informed them that the subject was considered closed unless they had new elements to present which could justify further investigation.

38.  The applicant states in effect that, in the meantime, she read in the local press that a receiving order had been issued against the person running the company and that he was in prison for various offences. The bank then put in an application to enable it to sell the property (application no.220/11 lodged on 2 November 2011 with the Paphos DLO).

39.  The applicant wrote to the Minister of the Interior and the Paphos DLO on 11 January 2012 requesting that they prevent the sale of her property and asked for confirmation that as a buyer she was protected by the fact that she had deposited the contract of sale with the Paphos DLO.

40.  In reply to their letter the Paphos DLO informed her of the following

“Firstly, it should be clarified that the mortgage in issue was registered prior to the deposit of your contract of sale in the Land registry records. It is always advisable to apply for a search as to any relevant information regarding the immovable property one intends to purchase.

Furthermore, since [the bank] registered their mortgage with [the developers] they are entitled under the 9/65 legislation to apply for the sale of the relevant property.

In such cases, according to the 81(I)/2011 specific performance law, purchasers are protected in the sense that when a public auction is to be carried out, they are given due notice as to their right to apply to the court to be granted an order for the amount of money that is payable to them by virtue of the registration of their contract of sale, in case the property in question in actually sold.

Having said the above, you should bear in mind that the application lodged by [the bank] is a very recent one, compared to the pile of similar applications pending from the previous years. Therefore, the possibility of scheduling a public action is not a matter you should worry about in the near future.

Lastly, the human rights issues involved in these cases are perfectly understandable. However, the Land Registry is restricted in its obligation to apply the law. It is not the appropriate authority to examine any particular issues or liabilities of contracting parties in loan or mortgage agreements. Nevertheless, you retain every right to pursue justice in a competent court forum.”

41.  In the meantime, the applicant’s marriage broke down as a result of the pressure the couple were subjected to due to the risk of losing their home.

42.  On 15 March 2012 a winding-up order was issued against the company by the District Court of Paphos and the Official Receiver was appointed Provisional Liquidator.

43.  The first Statutory Meeting of Creditors and Members was convened by the Official Receiver on 28 February 2013 and a liquidator was appointed. The relevant order ratifying the liquidator’s appointment was issued by the District Court of Paphos on 12 April 2013 (application no. 89/211).

44.  On 28 June 2013 a meeting was held between the liquidator and purchasers of property in the company’s projects/developments. The applicant attended the meeting. The liquidator informed the purchasers that they would be required to pay a part of the unpaid debts in order for the bank to release the mortgage. They would also have to pay transfer costs and/or outstanding taxes as well as the liquidator’s fees. He was entitled to charge 11% fees in connection with the assets realised or brought to credit i.e. 11% of the purchase price.

45.  The applicant also provided the Court with a letter by which the head of the consumer and marketing law unit of the Directorate-General Justice of the European Commission informed the representative of the Cyprus Property Action Group[1] that infringement proceedings had been opened against Cyprus. The letter reads as follows:

“... based on complaints by British consumers, Members of the European Parliament, as well as information obtained from the Cypriot authorities in connection with EU-Pilot cases 2632/11/JUST, the Commission has opened infringement proceedings against Cyprus under Article 258 TFEU (Treaty on the Functioning of the EU) with regard to certain aspects of the transposition and application of EU consumer law. In its letter of formal notice of 20 June 2013 the Commission raises different concerns related to the application of Directive 2005/29/EC on unfair commercial practices and Directive 93/13/ EEC on unfair contract terms.

A letter of formal notice is the first step in infringement proceedings under Article 258 TFUE. The Cypriot authorities have been invited to comment within two months. Further proceedings will depend on their observations.

It is important to emphasise the nature of infringement proceedings between the Commission and an EU Member State under Article 258 TFUE. The purpose of infringement proceedings is to remedy structural problems in the transposition and application of EU law, and not to protect the rights of individuals. It is, therefore impossible for the Commission to assess the particular circumstances of each individual case and take a position on its merits. Neither is it possible for the Commission to cover all questions raised in particular complaints or to act directly against traders which violate EU consumer law.

This means that, although complaints by individual consumers are a valuable source of information for the Commission, the Commission cannot, in infringement proceedings, resolve the individual cases.

Since infringement proceedings between the Commission and a Member State have no direct impact on the legal position of individual consumers, affected consumers have to take appropriate steps within the time-limits applying under national law to defend their rights.

...”.

COMPLAINTS

46.  The applicants all invoked Article 1 of Protocol No. 1 to the Convention and Article 8 of the Convention, complaining that they were unable to obtain title to their property. In this respect they complained that:

(a) the Cypriot Government had failed to protect their property rights through a lack of regulation of the property industry, inadequate legal provisions and by not enforcing the domestic law;

(b) that lodging a contract of sale with the Lands Registry only placed an encumbrance against the title deed for the land on which their house was built and did not give any ownership rights protection;

(c) that the property system in Cyprus did not require transfer of ownership upon payment.

47.  In addition, under the same provisions:

(a) the applicants in applications nos. 63049/11 (Dexter) and 62322/11 (Lloyd-Roberts), also complained: (i) that they risked losing their homes; (ii) that their lawyers had failed in their duty of care on various counts; the applicants in application no. 63049/11 (Dexter) complained in this respect that there was a failure by the Government to regulate lawyers in this area; (iii) about various current banking practices in Cyprus relating to, inter alia, the granting and valuation of mortgages over land for sale and development as well as the fact that once a building had been built on the land, the bank also had a claim against the building, despite the fact that the land was the sole collateral.

(b) the applicants in application no. 68057/11 (James) complained that they were unable, due to the lack of title deeds, to sell their property and move back to the United Kingdom. They were as a result forced to remain in Cyprus.

48.  The applicants also complained under Articles 6 and 13 of the Convention about the decisions taken by the CCPS refusing to examine their complaints. They further complained in this respect about the failure of the Government to properly publicise the CCPS and Law no. 103/(I)2007 (see paragraph 61 below) as required by the EU Unfair Commercial Practices Directive.

49.  Lastly, the applicants invoked certain Articles of the Constitution of the Republic of Cyprus. In addition, the applicants, in applications nos. 63049/11 (Dexter) and 62322/11 (Lloyd-Roberts) also invoked a number of articles of the EU Charter of Fundamental Rights (2000).

Relevant domestic law and practice

1. Contract and Tort Law

50.  A civil action can be brought before the District Court for breach of contract, including misrepresentation, (see sections 18, 19, 73 and 76 of the Contract Law, Cap.149, as amended) and in tort, inter alia, for professional negligence (sections 51 (1) (b) and 51 (2) (e) of the Civil Wrongs Law, Cap. 148, as amended). The relevant provisions provide as follows:

(a) Contract Law Cap. 149

Section 18

“Misrepresentation" includes:

(a) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;

(b) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or any one claiming under him, by misleading another to his prejudice or to the prejudice of any one claiming under him;

(c) causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject to the agreement.”

Section 19

“(1) When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.

(2) A party to a contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representations made had been true.

(3) If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.

(4) A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable.”

Section 73

“(1) When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.

Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.

(2) When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract.

(3) In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account.”

Section 76

“(1) A contract shall be capable of being specifically enforced by the Court if:

(a) it is not a void contract under this or any other Law; and

(b) it is expressed in writing; and

(c) it is signed at the end thereof by the party to be charged therewith; and

(d) the Court considers, having regard to all the circumstances, that the enforcement of specific performance of the contract would not be unreasonable or otherwise inequitable or impracticable.

(2) Nothing herein contained shall affect the specific performance of contracts for the sale of immovable property under the provisions of the Saleof Land (Specific Performance) Law, or any amendment thereof.”

(b) Civil Wrongs Law, Cap. 148

Section 51

“(1) Negligence consists of:

...

(b) failing to use such skill or take such care in the exercise of a profession, trade or occupation as a reasonable prudent person qualified to exercise such profession, trade or occupation would in the circumstances use or take, and thereby causing damage:

Provided that compensation therefor shall only be recovered by any person to whom the person guilty of negligence owed a duty, in the circumstances, not to be negligent.

(2) A duty not to be negligent shall exist in the following cases, that is to say:

...

(e) any person, whether for reward or otherwise, exercising any profession, trade or occupation or rendering any service to any other person shall owe such a duty to any person upon whom, or upon the property of whom or to whom such person is exercising his profession, trade or occupation or rendering any service.”

51.  The Supreme Court recently gave judgment on appeal on the issue of lawyers’ professional liability in a case brought by a couple from the United Kingdom against their lawyer concerning the contract for sale of property in Cyprus (Muriel Beaumont and Clifford George Joseph Sims v. Nikos Papakleovoulou, Supreme Court judgment of 21 April 2010, (2010) 1 CLR 525). The appellants had agreed to buy a villa (“off plan”) to be built on a plot of land in Paphos by a Cypriot developer company. They instructed a lawyer to prepare the contract of sale and to carry out all the necessary steps concerning the purchase. Subsequently, the construction of the house was not completed by the specified delivery date and in fact the building work ceased completely. A winding-up order was issued against the company and a receiving order against its director. The appellants later discovered that the villa under construction did not have all the necessary planning and building permits. The permits could not be issued due to the fact that the foundations had not been built properly. The type of soil of the land demanded a specific type of foundation. The defect could not be remedied. Further, the land was mortgaged and encumbered at the time the contracts were signed and it continued to be so. Title could not pass to them since separate title deeds could never be issued. They brought an action in tort and in breach of contract against their lawyer alleging that he had failed to make all the necessary searches and advise them as to the necessity of obtaining all permits. They claimed all the sums they had paid to the developer, including their legal fees as wasted expenditure. They were unsuccessful at first instance. The Supreme Court, however, found in their favour on appeal. The Supreme Court first defined the general duty of a lawyer as a “professional”. It held that the fact that the relationship between a lawyer and a client imposed a contractual duty of care did not exclude the simultaneous and independent existence of a duty of care in tort (sections 51 (1) (b) and 51 (2) (e) of the Civil Wrongs Law). The Supreme Court then determined the duty of a lawyer vis-à-vis a client in the context of the purchase of land, construction of a house and application for permission by a foreigner to acquire immovable property in Cyprus. In sum, it ruled that a lawyer had to make all the necessary enquiries and searches to the sellers’ title to the property as well as to whether the necessary planning and building permits had been acquired. He also had to warn his clients of the risks involved in the transaction, including the dangers emanating from possible insolvency of the seller in cases where they would be paying in advance large amounts of money without a simultaneous transfer of the property to their name. The lawyer also had a duty to draft the contract and insert clauses that would protect his clients to the extent that was possible. The Supreme Court awarded the appellants damages amounting to 81,683 Cyprus pounds as well as 3,000 euros for costs.

2. Relevant domestic laws concerning immovable property

(a) The Sale of Immovables (Specific Performance) Law

52.  In 2011 the Sale of Land (Specific Performance) Law (Cap. 232) was repealed and replaced by the Sale of Immovables (Specific Performance) Law (Law no. 81(I)/2011, as amended by Law no. 32(I)/2012). The aim of the amendments was to make the right of registration with the DLO more flexible in various ways, for example, by extending the time-limit for the registration of the contract of sale with the DLO and providing for the transfer and registration of property even in cases where there has not been strict compliance with the requirements set out in the law provided that the rights of parties in respect of prior encumbrances were not adversely affected (section 6).

53.  Specific performance of the contract of sale can be sought before the competent District Court (sections 6 and 7).

54.  Furthermore, the new Law spells out that the contract of sale when deposited at the Land Registry becomes an encumbrance on the immovable property and, shortly stated, is treated as follows: it takes priority over any other encumbrance subsequently filed, it binds the part of the immovable property that relates to the actual agreement and it secures, in order of priority, the sum actually paid under the agreement if the immovable property is sold in a forced sale (section 5).

(b) The “Planning Amnesty” Laws

55.  A number of amendments were introduced in April 2011 to the domestic legislation with the purpose, inter alia, of making it possible to transfer immovable property which does not fully comply with the planning permit and/or building permit. Some of these measures were intended to apply only for a certain period of time as the main aim was to legalise minor building irregularities in order to secure the required certificate of final approval and an updated title deed of the property. Provision is made for the insertion of notes, on the certificate of final approval, of certain irregularities. These notes will be transferred onto the title deeds and will remain there unless and until works have taken place that remove the irregularities. Whether it may in fact be possible to remove them will inevitably depend on their nature and magnitude. The main importance of such notes relates to the imposition of restrictions on the voluntary transfer of the property to others.

56.  These amendments affected a number of relevant laws, in particular:

(i) the Immovable Property (Tenure, Registration and Valuation) Law (Cap. 224) (as amended);

(ii) the Town and Country Planning Law of 1972 (as amended);

(iii) the Streets and Buildings Regulation Law (Cap. 96; as amended).

57.  The authorities issued a “Planning Amnesty Bulletin” with information about the key features of the legislation and the application procedure for persons seeking to legalise property despite irregularities. In brief, a Statement of Intent needed to be filed, followed by a full application. An initial six-month deadline for submitting the Statement of Intent was extended a number of times, the last of which ends on 30 April 2014, while the relevant plans depicting the irregularities must be submitted by 31 December 2015.

3. Challenging administrative decisions

58.  Administrative decisions and acts can be challenged before the Supreme Court by way of administrative recourse under Article 146 § 1 of the Constitution of the Republic of Cyprus. This provision provides as follows:

“1. The Supreme Constitutional Court shall have exclusive jurisdiction to adjudicate finally on a recourse made to it on a complaint that a decision, an act or omission of any organ, authority or person, exercising any executive or administrative authority is contrary to any of the provisions of this Constitution or of any law or is made in excess or in abuse of powers vested in such organ or authority or person.”

59.  Such a recourse must be made within 75 days of the date when the decision or act was published or, if not published and in the case of an omission, when it came to the knowledge of the person making the recourse (Article 146 § 3). Upon such a recourse the Supreme Court may (a) confirm, either in whole or in part, such decision or act or omission; or (b) declare, either in whole or in part, such decision or act to be null and void and of no effect whatsoever, or (c) declare that such omission, either in whole or in part, ought not to have been made and that whatever has been omitted should have been performed (Article 146 § 4). Article 146 § 6 provides for the possibility of claiming compensation following a successful recourse.

4. Bankruptcy proceedings

60.  The domestic laws on bankruptcy and insolvency (Bankruptcy Law, Cap. 5, as amended) together with the Bankruptcy Rules and the Companies Law (Cap.113, as amended) make provision for claims by both secured and unsecured creditors.

5. Unfair Commercial Practices

61.  The Unfair Business-To-Consumer Commercial Practices Law, Law no. 103/(I)2007, came into force on 12 December 2007 and implemented Directive 2005/29/EC on Unfair Commercial Practices. It does not have retroactive effect. The general enforcement of this Law is entrusted to the CCPS of the Ministry of Commerce, Industry and Tourism and, in particular, to the Director of the CCPS and any officer who is authorised to act on his behalf (section 2 of Law no. 103/(I)/2007). The CCPS is responsible for investigating consumer complaints. Under this law, the CCPS has investigative powers (section 9) and can, amongst other things, impose administrative fines after having given the opportunity to the alleged infringer to be heard (sections 11 and 12). The CCPS can also apply to the competent District Court for a prohibitory or preservation order, including an interim order (sections 11 and 13). An appeal against the decision of the CCPS lies with the Minister of Commerce, Industry and Tourism (section 12). The decision of the CCPS or of the Minister concerning the administrative fine can be challenged by way of administrative recourse to the Supreme Court under Article 146 (1) of the Constitution (see section 12(5); and paragraphs 58-59 above).

6. Length of proceedings

62.  In order to ensure the effective protection at domestic level of the principle of the right to a trial within a “reasonable time” and to provide effective domestic remedies in relation to breaches of that right, the Law Providing For Effective Remedies for Exceeding the Reasonable Time Requirement for the Determination of Civil Rights and Obligations, Law 2(I)/2010, was passed. This Law entered into force on 5 February 2010 and applies to complaints concerning the length of proceedings in all civil and administrative cases (the relevant legal provisions are set out in the Court’s decision in Panayi v. Cyprus (dec.), no. 46370/09, 23 September 2010).

THE LAW

A. Joinder of the applications

63.  Given their similar factual and legal background, the Court decides that the applications should be joined pursuant to Rule 42 § 1 of the Rules of Court.

B. Alleged violations of Article 1 of Protocol No. 1 to the Convention and Article 8 of the Convention

64.  The applicants principally complained that they were not able to obtain title to the property they bought in Cyprus in breach of their rights under Article 1 of Protocol No. 1 to the Convention and that there was consequently a breach of their rights under Article 8 of the Convention. In this respect they complained of a number of matters (see paragraphs 46-47 above). The above provisions read as follows:

Article 8

“1.  Everyone has the right to respect for his private and family life, his home and his correspondence.

2.  There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.”

Article 1 of Protocol No. 1

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

65.  The Court will first determine whether the applicants have complied with the rule of exhaustion of domestic remedies set out in Article 35 § 1 of the Convention, which provides that:

“1. The Court may only deal with the matter after all domestic remedies have been exhausted, according to the generally recognised rules of international law, and within a period of six months from the date on which the final decision was taken.”

1. The applicants’ submissions

66.  The applicants in application no. 63049/11 (Dexter) submitted that they had not made an application under the new “Planning Amnesty” Laws in order to obtain title deeds to their property, as due to the extent of building irregularities, there was a risk that they would be granted title deeds with notes, which would devalue the property or render transfer to others impossible. In particular, they argued that the extent of overbuild exceeded the parameters set out by the relevant domestic law. They therefore considered that the provisions of these new laws were inconsistent with the right to property as protected by the Constitution of Cyprus and revealed the failure of the authorities to enforce domestic law over the years and protect property buyers. Furthermore, the applicants maintained that it was impossible to initiate an action for specific performance of their contract against the developers without a certificate of final approval. In any event, the domestic courts were overburdened and therefore took an excessive period of time to examine cases. In addition, they claimed that it was hard to find an honest lawyer in Cyprus and that they would have to bear the costs involved in such an action. They would also have to settle “their portion” of the developer’s debts and outstanding taxes, thus rendering such an action prohibitive. Although they had complained to the CCPS, they had been turned down on quite “spurious” grounds.

67.  The applicants in application no. 68057/11 (James) submitted that in theory they could have brought an action for specific performance of their contract before the domestic courts but as these were overburdened, cases took time to progress. Furthermore, there was the significant question of costs and the difficulty in finding an honest lawyer and the CCPS had refused to investigate their complaint without giving a reasoned decision.

68.  The applicant in application no. 62322/11 (Lloyd-Roberts) submitted that due to financial difficulties she had been unable to contemplate any legal action of any kind. In any event, even if she had been “successful” she would still have to pay off any claims on the title deed and, with the developers’ mortgage debt increasing annually, this would be financially impossible. The proceedings in the Beaumont case (see paragraph 51 above) had taken eleven years. She was not prepared to wait for her home to be repossessed and then spend so many years involved in court proceedings. In addition, it was very difficult to sue a lawyer in Cyprus for negligence. Furthermore, it was not possible to bring an action for specific performance against the developers as they had been declared bankrupt. If she had done this, she would have to satisfy all the claimants in order to have the title deeds transferred. This option was available only before the developers were declared bankrupt and entailed paying off all the claims lodged against the main title at the Land Registry, something she could not afford to do. Lastly, she pointed out that her complaint to the CCPS had been dismissed on “spurious” grounds.

2. General principles

69.  The Court reiterates that under Article 35 § 1 it may only deal with a matter after all domestic remedies have been exhausted. Applicants must have provided the domestic courts with the opportunity, in principle intended to be afforded to Contracting States, of preventing or putting right the violations alleged against them (see, among other authorities, Selmouni v. France [GC], no. 25803/94, § 74, ECHR 1999-V). That rule is based on the assumption, reflected in Article 13 of the Convention – with which it has close affinity – that there is an effective remedy available in the domestic system in respect of the alleged breach (see Kudła v. Poland [GC], no. 30210/96, § 152, ECHR 2000‑XI). In this way, it is an important aspect of the principle that the machinery of protection established by the Convention is subsidiary to the national systems safeguarding human rights (see Akdivar and Others v. Turkey, 16 September 1996, § 65, Reports 1996-IV, and Aksoy v. Turkey, 18 December 1996, § 51, Reports 1996-VI).

70.  Nevertheless, the only remedies which Article 35 of the Convention requires to be exhausted are those that relate to the breaches alleged and at the same time are available and sufficient. The existence of such remedies must be sufficiently certain not only in theory but also in practice, failing which they will lack the requisite accessibility and effectiveness (see, inter alia, Vernillo v. France, 20 February 1991, § 27, Series A no. 198; Dalia v. France, 19 February 1998, § 38, Reports of Judgments and Decisions 1998-I, and Mifsud v. France (dec.) [GC], no. 57220/00, ECHR 2002-VIII). In addition, according to the “generally recognised principles of international law”, there may be special circumstances which absolve the applicant from the obligation to exhaust the domestic remedies at his disposal (see Selmouni, cited above, § 75). Lastly, it is also recalled that, in the event of there being a number of remedies which an individual can pursue, that person is entitled to choose a remedy which addresses his or her essential grievance (see Airey v. Ireland judgment of 9 October 1979, Series A No. 32, p. 12, § 23).

3. Application to the present case

71.  The Court notes that the applicants’ main grievance under Article 1 of Protocol No. 1 to the Convention and Article 8 of the Convention is that they have not been able to obtain title to their property. They complain about several matters in this respect, including all the consequences which the lack of title deeds entails.

72.  The Court points out that specific remedies exist in the Cypriot domestic legal system in respect of the complaints put forward by the applicants. First of all, under domestic law it is open to a property buyer to bring an action to obtain specific performance of the contract for sale of immovable property. The new law, enacted in this respect, affords the buyer increased protection possibilities (see paragraphs 52-54 above). Secondly, it is possible to bring before the domestic courts civil actions, depending on the nature of the complaint, including, in contract, for misrepresentation and for breach of contract as well as in tort for professional negligence (see paragraphs 50-51 above). Thirdly, provision is made in the domestic law both for secure and unsecured creditors in the event of insolvency (see paragraph 60 above). Finally, a number of significant amendments were introduced in April 2011 to address problems that have arisen with regard to the obtaining of title deeds, in particular, when the property does not comply with planning permit and/or building permit (see paragraphs 55-57 above).

73.  The applicants did not doubt that these remedies were available to them in the domestic system. However, the applicants refrained from having recourse to any of them as they considered that they may not have been effective in their particular situation. They also raised the issue of the legal costs involved and the more general financial implications, their alleged difficulties in finding a trustworthy lawyer and the possible length of any legal proceedings.

74.  The Court has long stated, however, that the effectiveness of a remedy does not depend on the certainty of a favourable outcome for the applicant. Moreover, although the Court understands the applicants’ disappointment, the difficulties they have had to face as well as their financial concerns, these are not legitimate grounds for not exhausting domestic remedies. In so far as the applicants are concerned about the potential length of the proceedings, it is noted that a remedy is available in the domestic law in respect of civil and administrative proceedings, whether concluded or pending at any stage, in respect of the length or delay in the proceedings (paragraph 62 above).

75.  The applicants have made a complaint about their developers to the CCPS which informed them that it did not have the competence to examine their complaint as they had bought their properties before the relevant law had entered into force (see paragraphs 11, 21, 35-37 and 61 above). The Court finds, however, that in any event it cannot be derived from the nature and powers of the CCPS that the resolution possibilities afforded by this body could redress the breaches alleged by the applicants. The CCPS cannot therefore be considered a remedy to be exhausted in respect of the complaints raised in the present applications.

76.  The Court therefore does not consider that the applicants have demonstrated that they took the necessary steps to exhaust effective domestic remedies in respect of their complaints. It cannot identify any grounds for considering that the specific remedies available in the domestic system, are in any way inadequate or ineffective. Finally, it finds no exceptional circumstances capable of exempting the applicants from the obligation to exhaust domestic remedies.

77.  Consequently, the Court is of the opinion that this part of the application must be rejected pursuant to Article 35 §§ 1 and 4 of the Convention for non-exhaustion of domestic remedies.

C. Remaining complaints

78.  The applicants complained under Articles 6 and 13 of the Convention about the decisions taken by the CCPS refusing to examine their complaints. They further complained in this respect that the Government had failed to properly publicise the CCPS and Law no. 103/(I)2007 as required by the EU Unfair Commercial Practices Directive. Lastly, the applicants invoked certain Articles of the Constitution of the Republic of Cyprus and a number of articles of the EU Charter of Fundamental Rights.

79.  The Court notes that the CCPS is a Government service responsible for safeguarding consumer interests and enforcing consumer protection laws. It is part of the Ministry of Commerce, Industry and Tourism and so are its members. Although the CCPS has a number of powers (see paragraph 61 above), it is part of the executive and cannot be considered a “tribunal” within the meaning of Article 6 § 1 of the Convention. This provision is therefore not applicable. No issue therefore arises under Article 13 of the Convention.

80.  In so far as the applicants’ remaining complaints are concerned, the Court reiterates that it has no jurisdiction to ensure compliance with instruments other than the European Convention on Human Rights and its Protocols. These complaints are therefore incompatible ratione materiae with the Convention.

81.  It follows that this part of the application must be rejected pursuant to Article 35 §§ 3 and 4 of the Convention.

For these reasons, the Court unanimously

Decides to join the applications;

Declares the applications inadmissible.

Fatoş AraciIneta Ziemele
Deputy RegistrarPresident

[1] A group established in May 2007 by volunteers, inter alia, lobbying to change the system of buying new property in Cyprus.

Full & Egal Universal Law Academy