ANTHOUPOLIS LTD., AND ANOTHER ν. REPUBLIC (1980) 3 CLR 296

(1980) 3 CLR 296

1980 June 14

[A. LOIZOU, J

IN THE MATTER OF ARTICLE 146 OF THE CONSTITUTION

1. AKINITA ANTHOUPOLIS LTD.,

2. KYRIACOS KOUNNIS,

Applicants,

THE REPUBLIC OF CYPRUS, THROUGH

THE MINISTER OF INTERIOR,

Respondent.

(Case No. 362/78).

Exchange Control Law, Cap.199-"Disposition" in section 31(4)(a) of the Law-Includes transfer of immovable property for consideration-Transfer of immovable property to non-resident-Requires the permit of the Central Bank-Section 31(1) of Cap.199 and section 14 (c) of the Immovable Property (Transfer and Mortgage) Law, 1965 (Law 9/1965).

Immovable property-Transfer to non-resident-Requires the permission of the Central Bank-Section 31(1) and 4(a) of the Exchange Control Law, Cap.199 and section 14(c) of the Immovable Property (Transfer and Mortgage) Law, 1965 (Law 9/1965).

Administrative Law-Administrative decision-Reasoning-Legally defective reasoning-Court can uphold validity of sub judice decision on the basis of a lawful reasoning even though such reasoning is different from that given by the Administration.

By virtue of a contract of sale between the applicants, applicants No. 1 sold to applicant No. 2, a Cypriot resident outside Cyprus, two building sites for £2,800. The purchase price was paid off and when the parties to the contract sought to effect transfer of the plots in question in the name of applicant No. 2 the D.L.O. officer in charge of transfers recorded the following on the back of the declaration form: "Before the present declaration is accepted it is indispensable that the approval of the Central Bank regarding the repatriation of the purchase price be produced".

The above decision was taken under section 31 of the Exchange Control Law, Cap. 199 (as amended by Law 53/1972) which, so far as relevant, reads as follows:

"31(1) Except with the permission of the Central Bank, no person resident in the Republic shall settle any property otherwise than by will, so as to confer an interest in the property on a person who, at the time of the settlement, is resident outside the Republic

(4) for the purpose of this section-

(a) any reference to settling property includes a reference to the making of any disposition, covenant, agreement or arrangement whereby the property becomes subject to a trust, or (in the case of a resettlement) to a different trust;"

The applicants challenged the validity of the above decision by means of this recourse contending that the aforequoted section 31 is entirely irrelevant and inapplicable to the present case because it does not cover transfers of immovable property but merely settlements of immovable property.

Held, (1) that the word disposition as used in section 31(4) (a) of the Exchange Control Law, Cap. 199, in its ordinary meaning is wide enough to include a transfer of property for consideration; that, therefore, the transfer of immovable property from applicant No. 1 to applicant No. 2, who was resident outside Cyprus, falls within the provisions of s. 31(1) of Cap.199 and consequently the permission of the Central Bank was required; that such permission was not produced and so the District Lands Officer could refuse to effect the transfer in question, otherwise he would have been a party to an illegal transaction (see section 14(c) of the Immovable Property (Transfer and Mortgage) Law, 1965 (Law 9 of 1965); that, therefore, the refusal of the respondent to effect the transfer without the production of such a permit was lawful; and that, accordingly, the recourse must fail.

Held, further, that the reference of the respondent to the repatriation of the purchase money does not affect the validity and legality of the sub judice decision which can be upheld on the basis of other lawful reasoning, namely, the mere non-existence of the prescribed by the Exchange Control Law permit; and there is ample authority that administrative decisions, valid in Law, for some other reasoning than the one given by their author could be judicially upheld on the basis of other lawful reasoning (see, inter alia, Yerasimou v. Republic (1978) 3 C.L.R. 267 at p. 275).

Application dismissed.

Cases referred to:

Ward v. Commissioner of Inland Revenue [1956] A.C. 391 at p. 400;

Pikis v. The Republic (1967) 3 C.L.R. 562 at p. 574;

Spyrou v. The Republic (1973) 3 C.L.R. 478 at p. 484;

Yerasimou v. The Republic (1978) 3 C.L.R. 267 at p. 275.

Recourse.

Recourse against the refusal of the District Lands Officer Nicosia to transfer and register in the name of applicant No. 2 two building sites which were sold to him by applicant No. 1.

L. N. Clerides, for the applicants.

A. Evangelou, Counsel of the Republic, for the respondent.

Cur. adv. vult.

A. LOIZOU J. read the following judgment. The applicants by the present recourse challenge the validity of the decision of the District Lands Officer, Nicosia by which he refused to transfer and register in the name of applicant No. 2, two building sites, plots number 829 and 832, situate at Anthoupolis area in Nicosia and which were sold to him by applicant No. 1. The relevant facts are not in dispute.

Applicant No.1, is a private company with limited liability duly registered under the Law and one of its objects is the development and exploitation of immovable property in Cyprus.

Applicant No. 2, is a Cypriot resident in London and with dual nationality. By virtue of a contract of sale entered into between the two applicants on the 12th December, 1969, applicant No.1, sold to applicant No. 2, the aforesaid two building sites for £2,800.-. The purchase price was paid off and on the 9th August 1978, the authorised agent of applicant No. 2, Chariton Christodoulou, went to the District Lands Office Nicosia, together with the representative of applicant No. 1 for the transfer of these plots in the name of applicant No. 2. The application for the transfer was examined in the usual manner and it appears that there was no impediment to effect same when it was taken before Mr. Pallikaros, the D.L.O. officer in charge of transfers. This officer, acting obviously on instructions and on behalf of the officer having competence in the matter, recorded, on the back of the declaration form the following. "Before the present declaration is accepted it is indispensable that the approval of the Central Bank regarding the repatriation of the purchase price be produced."

It is the case for the respondents that the decision complained of was properly and lawfully taken under section 31 of the Exchange Control Law, Cap. 199, as amended by the Exchange Control (Amendment) Law, 1972, (Law No. 53 of 1972).

Section 31 reads as follows:

"31. (1) Except with the permission of the Central Bank, no person resident in the Republic shall settle any property, otherwise than by will, so as to confer an interest in the property on a person who, at the time of the settlement, is resident outside the Republic, or shall exercise, otherwise than by will, any power of appointment, whether created by will or otherwise, in favour of a person who, at the time of the exercise of the power, is resident outside the Republic.

(2) A settlement or exercise of a power of appointment shall not be invalid by reason that it is prohibited by this section, except so far as it purports to confer any interest on any person who, at the time of the settlement or the exercise of the power, is resident outside the Republic.

(3) Subsections (2) and (3) of section 20 shall apply in relation to a settlement or the exercise of a power of appointment prohibited by this section as they apply in relation to a transfer prohibited by this Law of a security.

(4) For the purpose of this section-

(b) a person shall be deemed to have an interest in property if he has any beneficial interest therein, whether present or future, and whether vested or contingent, or falls within a limited class of persons in whose favour a discretion or power in respect of the property is exercisable; and

(5) No person resident in the Republic shall in the Republic do any act which involves, is in association with or is preparatory to any such transaction outside the Republic as is referred to in this section."

It is the case for the applicant that the aforesaid section 31 is entirely irrelevant and inapplicable to the present case as it does not cover transfers of immovable property, but merely settlements of immovable property, as it is obvious from the marginal note of the section and also from subsection 4 thereof, whereby any reference to settling property includes a reference to the making of any disposition, covenant, agreement or arrangement whereby the property becomes subject to a trust, or (in the case of a resettlement) to a different trust.

In view of this provision it was argued that this section is inapplicable as the words "whereby the property becomes subject to a trust" should refer to the words "disposition" and "covenant" as well as to the words "agreement or arrangement".

Before proceeding any further reference may be made to the provisions of section 20 of the Law whereby the Central Bank has power to issue certificates validating, such settlements where its permission has .not been obtained. Also reference must be made to paragraph 1(1) of. Part II of the Fifth Schedule to the Law which makes it a criminal offence for any person in or resident in the Republic that contravenes any restriction or requirements of the Law and this under section 20 subsection 3 of the Law, irrespective of whether a certificate validating the settlement was issued.

The first question for examination is whether the words "whereby the property becomes subject to a trust, or (in the case of a resettlement) to a different trust" refer also to the words "disposition" and "covenant" or only to the words "agreement or arrangement". The commas after the words "disposition" and "covenant" and the absence of any comma after the words "agreement or arrangement" coupled with the fact that these last two words are followed by the word "whereby" leave no room for doubt regarding the correct reading of this provision. The words "whereby the property becomes subject to a trust" clearly qualify only the preceding words "agreement or arrangement" and not the words "disposition" or "covenants", which are capable as we shall see of a different legal meaning.

The word "disposition", as used in the aforesaid section, in its ordinary meaning is wide enough to include a transfer of property for consideration.

In the case of Ward v. Commissioner of Inland Revenue, [1956] A. C. 391 at p. 400 Lord Morton of Henryton had this to say:

"First, was the transfer a disposition of property? Counsel for the appellants submitted that the wide definition contained in section 39 did not apply to the words 'disposition of property' in section 5(j), but their Lordships again find it unnecessary to decide this point, since in their view the words in their ordinary meaning are wide enough to include this transfer. As Gresson J. observed in the Supreme Court, the word 'disposition' is not a technical word but an ordinary English word of very wide meaning, and their Lordships see no good reason for giving to it a restricted meaning in paragraph (j). In their opinion any transfer of property which possesses the characteristics described in sub-paragraph (1) or sub-paragraph (ii) or sub-paragraph (iii) is a disposition to which paragraph (j) applies.

Counsel for the appellants argued that if this meaning were attached to the word 'disposition' the words 'settlement' and 'trust' were unnecessary. This is so, but their Lordships agree with Hutchison .3 when he observed: 'I think that the legislature might very well, and understandably, have specially mentioned settlements and trusts as being the types of disposition that would the more likely be used for the purposes set out in the sub-paragraphs without thereby intending to exclude from the Operation of the provision any other dispositions that might be used for those purposes."

Therefore the transfer of immovable property from applicant No.1 to applicant No. 2, who admittedly was resident outside Cyprus, falls within the provisions of subsection 1 of section 31, and consequently the permission of the Central Bank was required. Such permission was not produced, and in fact had not been sought by the applicants-when the transfer was to be effected and so the District Lands Officer could refuse to effect the transfer of the properties in question, otherwise he would have been a party to a transaction that would have been illegal if the necessary permit had not been obtained by the parties.

This approach is consistent with section 14(c) of the Immovable Property (Transfer and Mortgage) Law 1965 (Law No. 9 of 1965) which provides that the Director may refuse to allow the proper officer of a District Lands Office or sub-office to accept any declaration of transfer where the proposed transfer would contravene or frustrate the provisions of any other Law in force for the time being.

The refusal therefore of the respondent to do so without the production of such a permit was lawful and proper in the circumstances. The fact that he connected the permit of the Central Bank with the repatriation of the purchase price does not change the situation. That, might in my view be one of the matters-and I need not pronounce on it now-that the Central Bank might consider in deciding to give or not the necessary permit for the transfer of immovable property to a nonresident and not a matter for the respondent whose duty was-only to see if a permit for such a transfer had been obtained or not.

His reference, however, to the repatriation of the purchase money, which I take it to be his understanding of the philosophy of the Exchange Control Law, does not affect the validity and legality of the sub judice decision which can be upheld on the basis of other lawful reasoning, namely, the mere non-existence of the prescribed by the Exchange Control Law permit and there is ample authority that administrative decisions, valid in Law, for some other reasoning than the one given by their author could be judicially upheld on the basis of other lawful reasoning.

In support of this proposition reference may be made to the cases of Pikis v. The Republic (1967) 3 C.L.R. 562 at p. 574 and the decision of the Greek Council of State, mentioned therein, Spyrou v. The Republic (1973) 3 C.L.R. p. 478 at p. 484 and Yerasimou v. The Republic (1978) 3 C.L.R. 267 at p. 275.

For all the above reasons I uphold the validity of the sub judice administrative decision and I hereby dismiss this recourse but in the circumstances I make no order as to costs.

Application dismissed.

No order as to costs.

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