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In a Judgment dated 13 January 2023 Harris Kyriakides representing a reputable credit acquisition company (the Plaintiff) successfully obtained a judgment against Defendants 2, 3, 4, 5 and 6 (the Guarantors) in a claim relating to credit facilities. In relation to Defendants 1, 7, 8 and 9, a judgment in agreement was obtained against them on 2.12.2022 and their counterclaim was retrieved without costs.

Background Information: The Bank provided Defendant 1 (the Principal Debtor), credit facilities in the form of an overdraft agreement and four loans. The rest of the Defendants guaranteed the payment of all of the responsibilities of the principal debtor present and/or future jointly and severally. The sole issue in dispute in the case, was whether the debt became due and payable from the guarantors considering the alleged (by the Defendants 2-6), non-receipt of the letters of demand by the guarantors.

In the present case, based on the admitted facts and consequential findings of the Court Defendant 1 was in breach of his contractual obligations. The overdraft account was in excess, and the instalments of the loans were not paid at the time they were due. Therefore the Bank  sent both the warning letters dated 16.7.12 and the termination letters dated 8.8.12 of the disputed agreements to the Defendants at their last known address they had provided to the Bank. The above letters were sent by post and were not returned to the Bank.

The Defendant’s advocate suggested that the receipt of such letter of demand for the repayment of the debt, was an indispensable prerequisite for the commencement of a claim against them. He further recommended that the debt was not recoverable from the guarantors due to non-receipt of the claim for payment of the debt as provided for in the Guarantee Agreement dated 16.5.11.

According to clause 1 of the guarantee agreement dated 16.5.11, the guarantors had undertaken to pay upon demand any amount requested by the Bank pursuant to the guarantee agreement, in relation to the responsibilities of the principal debtor.  Clause 14 of the above guarantee provided as follows:

Provided always that a written demand for payment from you to me shall be deemed to have been properly made to me or the administrators or executors of my estate if made by letter by ordinary post to my address shown below and shall be valid notwithstanding any change of my address and even if the change is notified to you; such demand shall be deemed to have been duly received by me or the administrators or executors 24 hours after its posting..."

The Court held that, according to case law, a letter sent by post which has not been returned back to the sender, consists of a prima facie proof (rebuttable presumption) of delivery of the letter to the person to whom it is addressed (see Theodorou v. Abbot of Kykko Monastery (1965) 1 C.L.R. 9, 18 and Christodoulos Pittaka v. C & B Hatzidimosthenous Ltd (2004) 1 A.A.D. 1895, and Laiki Kipriaki Trapeza v. Lambrou Harilaou Ltd and others, Civil Appeal 163/2006, dated 5.5.09 and Ellinas v. Ethnikis Trapezas tis Elladas (Kiprou) Ltd, Civil Appeal 87/2013 dated 3.12.19). As mentioned before, the letters have been sent at their last known address they had provided to the Bank and were not returned to the Bank.

In view of the above, the termination of the contested agreements was lawful and the written demand for payment sent by the Bank to the guarantors was received by the latter. In any case, even if the letters were not received (which is not the case in the present), the commencement of the claim constituted itself lawful termination on behalf of the Bank and lawful demand of repayment of the sums due.

Decision: For the reasons mentioned above, the suggestion by the advocates for Defendants 2-6 namely that the debt has not become due and payable to the guarantors, due to the non-receipt of the letters of demand under the guarantee agreement, was rejected by the Court. The Court held that the Plaintiffs have successfully proved their claim and the Court issued a judgment in favour of the Plaintiffs and against the Defendants 2-6, jointly and severally with defendants 1, 7 , 8 and 9.


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