Recent Court Judgment examining the validity of a mortgage due to the allegation of Forgery

In a Judgment dated 17 February 2023 Harris Kyriakides representing a reputable Cypriot Bank (the Plaintiff) successfully obtained a judgment against a Company under Liquidation (the Company) in a claim relating to a number of credit facilities and relevant securities.

The Company claimed the illegality of the Mortgage Agreement due to the allegation of forgery of the signature of the secretary on the extract of the minutes of the Company for the registration of a Mortgage. It is noteworthy that the signature of the secretary of the company is not necessary for the legality of the aforementioned document and that there was no provision in the company’s Articles of Association which provided that the minutes should have been signed by the company secretary, nor such allegation was advanced at the hearing. In the present case, it was clear that the sole director of the company could take all the decisions regarding the company without the consent of the secretary. Therefore, even if the signature of the secretary was not genuine, the validity of the Mortgage was not affected in any way in view of the fact that the signature was not necessary, and in any case, this was not an element of the mortgage itself which could affect the binding nature of the document.

The Court highlighted, provision 139 of the Companies Law Cap. 113 which provides that all minutes shall be evidence of company proceedings and shall be signed by the chairman of the meeting at which the proceedings were held, or by the chairman of the next meeting. Therefore, the Court held that the according to the law itself, what is required is the signature of the Chairman of the meeting on the minutes and not the Secretary. 

Generally, the Court found that Company’s positions were presented in bad faith and abusively in an attempt to avoid their contractual responsibilities arising legally and fairly from the disputed agreements.

For more information, please visit our microsite on Banking & Finance or send your queries to This email address is being protected from spambots. You need JavaScript enabled to view it.