Judgment of the Supreme Court against the dismissal of an application/appeal
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On the 2nd of June 2023, the Supreme Court issued the first judgment against the dismissal of an application/appeal and clarified the meaning of ‘an interested person’ for the purposes of Article 44 C (2) and Article 44IE of the Transfer and Mortgage of Property Law of 1965 (N.9/1965) (the Law).
The facts of the case were the following: The Bank granted credit facilities to Appellant 1, and Appellant 2 mortgaged in favor of the Bank 1/5 of his share in nine plots. The remaining 4/5 shares of the nine plots were owned by a company (Company). Company had sold over 30 villas to third parties. When the Bank initiated the foreclosure process of the mortgaged share of the Appellant 2 as provided in Part VIA of the Law, no notice was served to Company or to the buyers of the villas. In addition, most of the buyers of the villas had applied to the Director of the Land Registry under Part VIB of the Law, requesting the transfer of the property to their name and filed trapped buyer applications. The first instance court concluded that the aforementioned persons were not interested parties within the meaning of Article 44C (2) and therefore had no right to any part of the auction sale.
At first, the Supreme Court examined whether the appeal was without merit due to the fact that the auction had already been held. The Supreme Court held that that even if the scheduled auction took place as planned and the mortgaged property was not sold, the appeal was not rendered without merit since a specific procedure is provided following an unsuccessful sale attempt, as defined in Article 44H (1) of the Law. Therefore, setting aside notice "IA", retains its significance and the appeal was not without merit.
The Supreme Court disagreed with the submission of the Appellant 2 namely, that in order to ascertain whether Company had any right to any part of the auction or was affected, Company should have been given the right to be heard first. Moreover, there were no contracts of sale burdening the Appellant’s shares and the trapped buyer applications registered were not linked to them.
The Ruling of the Supreme Court was that neither Company nor the buyers of the villas were interested persons within the meaning of Article 44C (2) and Article 44IE of the Law, and the Court highlighted that when a mortgaged share is sold, the co-owner of another share in the property is not entitled to receive any amount of money from the sale price. In light of the aforementioned, the appeal was dismissed.
By Margarita Avraam
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