Neil Heaney, chief executive of Judicare Group, a law firm that is representing around 200 clients taking action in Cyprus, said he believes the hearings are set to begin in mid-October and will be “the first involving Swiss franc mortgages to go to trial in Cyprus” since the problems with these mortgages first began to surface three years ago.
At issue are the cases of Britons and others who took out Swiss franc mortgages in order to buy Cyprus properties – in some cases, some of the investors are alleging, without their knowledge that the mortgages were in the Swiss currency, or without their being told what the risks of such mortgages might be.
As the Cyprus property market collapsed and the value of the Swiss currency soared, these investors discovered that their investments were worth far less than they had paid.
According to Heaney, there may be as many as 20,000 to 30,000 UK buyers of Cyprus real estate who have been caught out to varying degrees by the Swiss franc mortgage problem. Many of them now face “demands for huge mortgage payments, threats of UK litigation, and [in some cases] the very real chance of losing their UK homes”, Heaney added.
Cyprus vs. UK
Although the UK’s High Court in London last year ruled that in some instances UK property buyers who claim they were mis-sold properties in Cyprus may have their cases heard and decided in a British court, in relation to claims against Cypriot developers, Heaney argues that for Judicare’s clients at least, going to court in Cyprus is the better option, even though the Cypriot courts don’t allow for class-action suits – that is, cases brought collectively by a group of individuals against a single defendant.
“Taking action in the UK rather than Cyprus involves a number of risks and added expenses, such as having to pay people to come and give expert evidence in the UK court,” Heaney said. “Most importantly, there is a chance the court could dismiss the case against banks because of the jurisdictional issues, as all clients entered into loan agreements that define Cyprus Courts as the appropriate courts, and were given loans in Cyprus, for properties in Cyprus.
And even if they are successful with the case in the UK, they [would] then have to register the decision in Cyprus thereafter."
On top of that, he noted, Cypriot or Greek banks being sued in the UK courts could seek to take advantage of the jurisdictional situation and initiate legal proceedings in Cyprus, which would result in the clients having to face legal actions in two countries instead of just one, and double the legal costs.
In Cyprus, Judicare is working with a local law firm, Triantafyllides & Christoforou, where partner Stylianos Christoforou is overseeing the Swiss franc mortgage cases.
“Neither the terms nor the risks [of taking out Swiss franc mortgages] were explained [to our clients],” Christoforou said in an interview last week in London.
“Local IFAs and real estate agents in the UK, working in connection with developers in Cyprus, tried to create a ‘one stop shop’ for potential clients to invest in Cyprus properties. The result, in most cases, was that the clients never flew to Cyprus, never saw the development they were buying into until they took delivery of the property.
“Their complaint is not that they were ‘mis-sold’ a property but rather, that the legal arrangements and other details were handled improperly and thus are void – for example, the way the power of attorney was obtained from the clients, even though no certifying officer legitimately certified their signatures.”
