THIRD SECTION
DECISION
AS TO THE ADMISSIBILITY OF
Application no. 53059/99
by Savvas KYRIAKIDES
against Cyprus
The European Court of Human Rights (Second Section), sitting on 11 December 2001 as a Chamber composed of
MrJ.-P. Costa, President,
MrA.B. Baka,
MrGaukur Jörundsson,
MrL. Loucaides,
MrC. Bîrsan,
MrM. Ugrekhelidze,
MrsA. Mularoni, judges,
and Mrs S. Dollé, Section Registrar,
Having regard to the above application introduced on 29 November 1999 and registered on 30 November 1999,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,
Having deliberated, decides as follows:
THE FACTS
The applicant, Savvas Kyriakides, is a Cypriot national, born in 1965 and living in Nicosia. He is represented before the Court by Mr E. Pourgourides, a lawyer practising in Limassol.
A. The circumstances of the case
The facts of the case, as submitted by the parties, may be summarised as follows.
The applicant is the Managing Director of the company Stellios Kyriakides Trading Ltd and in that capacity he obtained a number of loans from Dr Neophytou. Each time a loan was agreed, both parties entered into a written agreement which provided that the loan would become payable to Dr Neophytou with 7% interest at the end of 60 days. Each time the applicant received a loan, he issued a personal post-dated cheque in Dr Neophytou’s favour for the sum due at the end of the 60 days period. The amount included both the capital and the interest. When the various cheques became payable, Dr Neophytou did not cash them, but instead, entered into new agreements with the applicant whereby the sums due were referred to as “capital loaned”, again attracting 7% interest. The old agreements and cheques were cancelled by the new agreements.
In the summer of 1995, the parties decided to merge the numerous agreements and, when all sums fell due, they were added together to form the basis of two further agreements: the first, dated 23 July 1995, showed the capital at 30 000 Cypriot pounds (CYP). The second, dated 19 August 1995, showed the capital at 32 000 CYP. The new agreements provided for the reimbursement of the capital, plus interest at 7%, at the end of 60 days and were supported by two new post-dated personal cheques of the applicant. These cheques were presented to the applicant’s bank and were both dishonoured. On 31 May 1996, Dr Neophytou filed a private prosecution before the District Court of Nicosia against the applicant pursuant to Section 305(A)1 of the Cyprus Criminal Code.
At the material time in 1995, a criminal offence was deemed to have been committed under Section 305(A)1 where a cheque was dishonoured due to a lack of funds in the drawer’s bank account. Subsection 3 of the same Section provided that no offence was committed if the bearer of the cheque had no “actionable right” against the drawer.
On 26 November 1997 the District Court of Nicosia acquitted the applicant. In particular, it accepted the applicant’s argument that subsection 3 of Section 305(A) applied in the case since the agreements under which the cheques were issued were illegal under Cypriot law (Sections 3 and 5 of Law 2/77 and Sections 23 and 24 of the Contract Law Cap.149). In fact, Dr Neophytou had charged interest above the 9% per year allowed by law, namely 42% (7% every 60 days). This being so, Dr Neophytou had no right of action against the applicant.
On 2 December 1997 Dr Neophytou appealed to the Supreme Court. On 8 March 1999 the Supreme Court quashed the judgment of the District Court and convicted the applicant, sentencing him to three months’ imprisonment. The Supreme Court held that the District Court had misinterpreted Section 305(A)3. According to the Supreme Court, the correct meaning of that provision was that “the cheque must have the necessary characteristics of a cheque as these are referred to in the Bills of Exchange Law”, “the complainant must be the legal bearer of the cheque” and the trial court should not have examined the civil aspect of the agreement between the parties which led to the issue of the post-dated cheques.
Following that decision, Parliament passed a retroactive amendment to Section 305(A), which came into force on 30 April 1999. The amendment provided that Section 305(A) did not apply to any cheques which were issued under an illegal transaction. Furthermore, it provided that the amending Law was to apply to all pending cases.
Since the applicant’s case was still pending, as regards the imposition of sentence, the issue was raised before the Supreme Court on 17 May 1999. The applicant applied for a halt to the judgment, pursuant to Section 79 of the Criminal Procedure Law Cap.155. On 1 June 1999 the Supreme Court held that the amending law did not apply to the applicant’s case.
The applicant served 56 days of the sentence and was released after a pardon.
B. Relevant domestic law and practice
Section 305(A)1 of the Criminal Code provides that a person is guilty of a criminal offence carrying a sentence of imprisonment not exceeding six months, if he draws a cheque, which on being presented to the issuing bank within a reasonable time from the date on which it becomes payable, it is not discharged owing to the lack of available funds of its drawer and the latter fails to discharge payment within fifteen days as from the time he acquires knowledge of that fact.
Section 305(A)3 states that the provisions of Section 305(A)1 are not applicable with regard to any cheque on which no actionable right ensues against its drawer.
Section 25(1) of the Contract Law Cap.149 provides that “an agreement made without consideration is void...”. In the case of Loizou v. Republic of Cyprus (Supreme Court, judgment of 24 June 1994), the defendant raised before the first instance court the defence of Section 305(A)3, claiming inter alia that the complainant had no right of action against him because the agreement under which the cheque was issued was made without consideration. The court examined the contract between the parties and decided that, on the facts of the case, consideration was given and therefore the contract between the parties was valid and enforceable, giving rise to a right of action. Consequently, the defence failed and the defendant was convicted. The same question was raised on appeal and the Supreme Court found that the first instance court examined this matter extensively and that it correctly concluded that consideration was given for the issuing of the relevant cheque. After referring to the facts relating to this matter the Supreme Court added the following: “We also note that the relevant provision refers to an “actionable right”, and not to a good basis or arguable action. We are therefore of the view that the judgment of the first instance court is impeccable and the appeal against conviction is rejected”.
Section 62 of the Contract Law Cap.149 provides that “if the parties to a contract agree to substitute a new contract for it or to rescind or alter it, the original contract need not be performed”. In the case of Ergatides Motors Ltd and Georgios Ergatides v. the Police (Supreme Court, judgment of 19 June 1997), the defendant claimed under Section 305(A)3 that the contract under which the cheque was issued had been rescinded and that the parties had entered into a new contract. He contended that since the cheque was issued under the first contract which was rendered unenforceable by virtue of the new one, no right of action existed against him under the former. The Supreme Court examined the first contract and, having found that it was indeed rescinded and replaced, upheld the defence under Section 305(A)3 and acquitted the defendant. No right of action existed under the first contract.
COMPLAINT
The applicant complains under Article 7 of the Convention that he has been convicted of a non-existent offence. He submits that Section 305(A)3 of the Criminal Code has been interpreted in a peculiar, unjustified and unpredictable way, and was extensively construed to his detriment. The offence was so clearly defined by Section 305(A) that it left no room for him to be held liable. Based on the wording of Section 305(A)3 and on the previous case-law of the Supreme Court, the applicant could not foresee the risk of conviction even with the assistance of thorough legal advice. In the circumstances, the Supreme Court extended an existing criminal offence to cover facts which previously had not constituted such an offence.
THE LAW
The applicant alleges a violation of Article 7 of the Convention, which reads as follows:
“1. No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed.
2. This article shall not prejudice the trial and punishment of any person for any act or omission which, at the time when it was committed, was criminal according to the general principles of law recognised by civilised nations.”
The Government submit that the gist of the applicant’s complaint is that, in the light of the Supreme court’s case-law interpreting Section 305(A)3 of the Criminal Code, the circumstances of his case satisfied the provisions of the said Section, so that the relevant acts were not criminal at the time of their commission. They contend that at least one of the judgments of the Supreme Court relied upon by the applicant (above-mentioned Ergatides judgment) do not reflect the state of the law at the time of the commission of the relevant acts in the present case: the Ergatides judgment was delivered in 1997 and the acts constituting an offence under Section 305(A)1 were committed in 1995.
Relying on the Commission’s and the Court’s case-law on Article 7 of the Convention, and in particular on the judgment of the Court in the case of C.R. v. the United Kingdom (Series A 335-C), the Government recall that Article 7 cannot be read as outlawing the gradual clarification of the rules of criminal liability through judicial interpretation from case to case, provided that the resultant development is consistent with the essence of the offence and could reasonably be foreseen.
The aim of Section 305(A)3 was to ensure that a person would not be criminally liable and convicted under Section 305(A)1 for having drawn, contrary to the said Section, a cheque which was dishonoured for non‑availability of funds of the drawer, unless an actionable right was apparent on the cheque. The Section was not intended to enable individuals charged with an offence, and against whom there was an actionable right or a cause of action founded on the cheque, to be nevertheless exonerated from the criminal liability imposed by Section 305(A)1 by proving in court that they had nevertheless a defence in relation to the agreement which had led to the drawing of the cheque. The ordinary meaning the term “actionable right” denotes a right capable of enforcement by way of a judicial action. The terms used in the Section do not qualify “actionable right” by reference to its chances of success in obtaining judicial redress against the drawer. Furthermore, the terms “actionable right” or “cause of action” were not unknown to Cyprus statutes, as interpreted by the Supreme Court. The aim of Section 305(A)3, that is “putting a stop to the disturbing tendency of drawing checks that were dishonoured”, would have been defeated if the Section was to be understood as enabling drawers of cheques to be exonerated from criminal liability every time they were in a position to show that they had a defence to the actionable right subsisting against them on the cheque or on the agreement which had preceded it.
By its judgment, the Supreme Court merely clarified what constituted an actionable right or a cause of action on the cheque, in the light of the Bills of Exchange Law. The Supreme Court reiterated that for Section 305(A)3 to apply, so as to exonerate the drawer from criminal liability, the relevant cheque must have the characteristics of a cheque as these are referred to in the Law and that the complainant must be a “bearer” of the check again as provided by the Law.
The applicant rebuts the Government argument that the Supreme Court merely clarified the meaning of Section 350(A)3. He contends that the Supreme Court exceeded the permissible bounds of reasonable interpretation.
The applicant submits that the above-mentioned Ergatides precedent should have applied in his case because it represented all along the law applicable in his case irrespective of the fact that the Ergatides case was decided after the commission of the offence for which he was found guilty. The judgment in the Ergatides case affords a solid argument in support of the applicant’s contention that the wording of Section 350(A)3 was so clear and unambiguous that it did not call for any interpretation or clarification. Through the judgment in his case, the Supreme Court changed the provisions of that Section completely, in a manner impossible to foresee. In the Ergatides judgment, the Supreme Court applied the Section as it stood in 1993 and, since it had not been amended since, the “law applicable” to both cases was identical, and the Ergatides judgment was directly relevant in the applicant’s case. Although the Supreme Court was competent to reverse the Ergatides judgment, if it considered that it was wrong in law, it did not do it; on the contrary, it followed a different approach based on reasons which were wrong.
Furthermore the applicant maintains that the Supreme Court did not reasonably interprete the meaning of the term “actionable right” contained in Section 305(A)3. Even assuming that it did so, the interpretation was neither consistent with the Parliament’s intent, when it enacted that provision, nor with the Bills of Exchange Law-Cap 262.
The mere reading of the judgment of the Supreme Court reveals the completely erroneous and confusing approach of that court. If a cheque does not have the necessary characteristics of a cheque, there can be no offence under Section 305(A)1 and thus no need to invoke the defence provided in Section 305(A)3. One may wonder why the complainant was held to be the legal bearer of the cheque in the present case; both the transaction behind the drawing of the two cheques and the illegality affecting them were purposely ignored. The Government refer to the existing case-law as supportive to their contentions, but fail to explain how, in the circumstances of the case, the complainant would have had a right of recovery for his illegal debt. An illegal debt cannot be recovered in a court and, if there is no right of recovery, there can be no right to file an action.
Moreover, when the Parliament enacted Section 305(A)3, it envisaged transactions which gave rise to debts which were null and void or otherwise unenforceable. If there was a lawful and enforceable debt, then the defence would not apply. If, however, the debt was unenforceable either due to the illegality or novation of the contract (as in the Ergatides case) or a lack of consideration (as in the Loizou case), then there was no civil liability, no right to redress and consequently no actionable right. The gist of the Supreme Court’s and of the Government’s interpretation of that Section is that the terms “actionable right” exclude any defence which an accused might have in relation to an illegal transaction.
Finally, the applicant stresses that both Section 29(2) and 30(2) of the Bills of Exchange law-Cap 262 refer expressly to illegality as a matter affecting directly the validity of a bill and any suggestion to the contrary would offend common sense.
The Court reiterates its jurisprudence according to which it is not its task to take the place of the domestic courts. It is primarily for the national authorities, notably the courts, to resolve problems of interpretation of domestic legislation and this court does not interfere to substitute its own interpretation for that of the domestic courts in the absence of arbitrariness (Gomez de la Torre Judgment, 19 December 1997, Reports of Judgements and Decisions, 1997-VIII, p. 2947 § 31). It is not the function of this Court to deal with errors of fact or law allegedly committed by a national court unless and in so far as they may have infringed rights and freedoms protected by the Convention (Garcia Ruiz v. Spain Judgment, Reports, 1999-I, p. 87 § 28).
The Court notes that the applicant’s complaint under Article 7 of the Convention is essentially based on the interpretation by the Supreme Court of section 305(A)3 of the Criminal Code and the case-law which preceded that interpretation. The applicant argues that this interpretation restricted the defence provided under subsection 3 in a way that excluded his own defence, which was to the effect that the agreements which led to the issuing of the relevant cheques were illegal and therefore invalid. According to the applicant, this was an unpredictable interpretation contrary to Article 7 of the Convention. In this respect applicant argues that the interpretation itself was unreasonable and contrary to two specific previous judgments of the Supreme Court.
As regards the interpretation in question, the Court finds that when such interpretation is examined on its own, without any regard to the previous case-law invoked by the applicant, it does not appear to be arbitrary.
As regards the previous case-law of the Supreme Court relating to the statutory provisions in question, the Court notes the following: one of the two judgments relied on by the applicant (the Ergatides judgment) was delivered by the Supreme Court after the commission of the relevant offence by the applicant and, accordingly, is not pertinent to the question under consideration, i.e. whether at the time of the commission of the offence it was reasonably foreseeable for a person in the position of the applicant to expect the interpretation complained of. The other judgment (Loizou judgment) did not profess to interpret the relevant statutory provisions. Nevertheless, it contained elements compatible with the position of the applicant. In particular, the Supreme Court in dealing with the argument of the applicant on appeal that there was no “actionable right” against him, because the evidence before the first instance court established that there was no consideration on the part of the bearer of the cheque, the court, basing itself on the evidence, rejected the argument. However, the court proceeded to state: “we also note that the relevant provision [of the law] refers ‘to an actionable right’ and not to a good basis or arguable action”. The Court considers that this statement in the judgment of the Supreme Court in the context that it was made had the effect of blurring somewhat the interpretative effect of the judgment as regards the question under consideration in the present case.
In the circumstances, the Court considers that the judgments cited by the applicant cannot be relied on in order to adopt the conclusion that, at the time of the commission of the offence by the applicant, a person in his position was justified in believing or foreseeing that the defence of illegality of the transaction, in respect of which the cheque was issued, was available to him and that the contrary view was altogether excluded.
The question remains as to whether the interpretation given by the Supreme Court did, in any event, have the effect of changing the scope of the offence for which the applicant was convicted to an extent which was unforeseeable by persons in the applicant’s position.
The Court recalls that, according to its case-law, Article 7 embodies, inter alia, the principle that only the law can define a crime and prescribe a penalty (nullum crimen, nulla poena sine lege), and the principle that the criminal law must not be extensively construed to an accused’s detriment, for instance by analogy. From these principles it follows that an offence and the sanctions provided for it must be clearly defined in the law. This requirement is satisfied where the individual can know from the wording of the relevant provision and, if need be, with the assistance of the courts’ interpretation of it, what acts and omissions will make him criminally liable.
When speaking of “law”, Article 7 alludes to the very same concept as that to which the Convention refers elsewhere when using that term, a concept which comprises statutory law as well as case-law, and implies qualitative requirements, notably those of accessibility and foreseeability (see the Cantoni v. France, 15.11.1996, Reports 1998-V, no. 20, pp. § 29; the S.W. and C.R. v. the United Kingdom judgments of 22 November 1995, Series A nos. 335-B and 335-C, pp. 41-42, § 35, and pp. 68-69, § 33; Baskaya and Okçuoglu v. Turkey, 8.7.1999, Reports 1999, § 36). The citizen must be able - if need be with appropriate advice - to foresee to a degree that it is reasonable in the circumstances, the consequences which a given action may entail. Those consequences need not be foreseeable with absolute certainty. It is sufficient if the citizen was able to foresee the risk of punishment for his acts (see the Sunday Times Case, Series A no. 30, pp. 30-33).
In the circumstances of the present case, the Court finds that a person in the position of the applicant could, with appropriate advice, foresee the risk of punishment for his act in accordance with the interpretation by the Supreme Court of subsection 3 of Section 305(A) of the Criminal Code as above, which excluded the examination of the civil aspect of the agreement which led to the issuing of the two cheques for which he was accused.
It follows that the application must be rejected as manifestly ill-founded within the meaning of Article 35 §§ 3 and 4 of the Convention.
For these reasons, the Court unanimously
Declares the application inadmissible.
S. DolléJ.-P. Costa
RegistrarPresident
Full & Egal Universal Law Academy