In its recent case law xxx Eustratiou and Alpha Bank Limited, Appeal No. 314/2013, dated 20/04/2021 the Supreme Court provided guidance on different legal questions that may arise in the context of a banking case through the Defence of the Defendant.
In the case of xxx Eustratiou and Alpha Bank Limited, Appeal No. 314/2013, dated 20/04/2021 the Appellant agreed to guarantee the obligations of the Borrower in the context of a loan agreement provided by Alpha Bank Limited (the Bank). The Bank filed a claim against the Borrower and the Appellant, filed a Defence claiming that (a) he never executed the Guarantee, (b) that he never received the letter of demand sent by the Bank and (c) that he provided a specific guarantee and not a continuing guarantee (the Défense).
The Court of First Instance, after hearing the case, rejected the Appellant’s defence and issued a decision against the Appellant and the Borrower, ordering them to pay the owed amount to the Bank as per the provisions of the Guarantee and the Loan Agreement. Followingly the Appellant filed an appeal to the Supreme Court of Cyprus, requesting from the Supreme Court to reverse the First Instance Court’s decision.
In this context the Supreme Court of Cyprus in relation to the (a) execution of the Guarantee Agreement it adopted the First Instance Court approach and held that “Where the witness has no recollection of the execution, but from seeing his signature has no doubt that it took place, this is sufficient proof” (with reference to Phipson on Evidence, 16th Edition par. 40-17). In relation to the Appellant’s position that (b) he never received the letter of demand, the Supreme Court clarified that:
(a) A letter of demand must comply with any requirements imposed by the contract of guarantee as to the form and manner of the demand and in case that the letter of demand does not comply with the requirements imposed by the Contract, then there is no valid letter of demand and
(b) A contractual term stating that a letter of demand shall be send to a specific address creates a contractual presumption that can be rebutted, and it does not affect the letter of demand’s validity.
Finally, © the Supreme Court found that where the Defendant denies that he executed a Guarantee Agreement, then he cannot claim that he provided a specific guarantee and not a continuing guarantee, especially in cases where the relevant Defence wasn’t included in the pleadings explicitly.
The case is important, since it clarifies different legal questions that arise very often in the context of banking litigation.