The Court of Appeal found all grounds of appeal unfounded
The Court of Appeal rejected an appeal against a decision of the District Court of Nicosia for a lawsuit against the Bank of Cyprus and the Central Bank in relation to the purchase of securities and bonds, as it considered all grounds of appeal unfounded.
With his lawsuit in the District Court of Nicosia, the plaintiff claimed against the Bank of Cyprus the cancellation of the contracts for the purchase of the debentures and/or securities at issue due to fraud/fraud or false representations or due to the exercise of pressure/impermissible influence or/violation of the relevant legislation and the Directives/Regulations issued by the CBC. He also claimed against the Bank of Cyprus €217,985 due to violation of the relevant legislation and the above instructions.
Furthermore, it claimed against CBC the cancellation of the sale of the debentures or securities in question and €217,985 due to bad faith or serious negligence or violation of legal duties or faulty performance of duty on its part. Finally, he claimed against both of them special or general damages for breach of duty of good faith or due diligence or conflict of interest as well as interest and costs.
The plaintiff/appellant argued that he was a person without the necessary knowledge about investments and investment products and had a cooperation with the Bank of Cyprus, which was based on absolute trust, confidence and certainty. In relation to the convertible debentures and convertible capital securities (“MAK”), as well as convertible securities of enhanced capital (“MAEK”) which he purchased with his own applications, it was his position that the employees of the Bank of Cyprus provided him with the service of investment advice and the service of receiving transmission and execution of an order, without possessing such authority. Further the representations made to him, that he was in fact depositing his money in a sophisticated deposit scheme, was made without the persons who provided him with this advice possessing the necessary certification provided for in the legislation.
He claimed that he had received assurances that this was a deposit scheme with a high interest rate and that the money he would be giving to the bank was insured and that interest would be paid to him as usual.
He accuses the Bank of Cyprus of failing to take any action that would constitute an assessment of his compatibility at the stage of the sale and disposal of the MAK and MAEK to him, before quoting him the services of reception, transmission and execution.
According to the appellant, the sale and disposal of the complex financial instruments by the Bank of Cyprus to him was not ensured through the provision of objective and correct information.
In the CBC, the appellant alleged negligence in relation to the failure to exercise prudential supervision, to prevent the procedures and practices applied by the licensed credit institutions, including the Bank of Cyprus, in the intention and disposition of the MAK and MAEK. It was also charged with neglecting to promote complex financial products on a massive and massive scale within a short period of time.
It was also his position that the CBC should have examined and assessed sufficiently whether the Bank of Cyprus carried out the necessary assessment and information that the intended investors received from it, while at the same time accusing it of insufficient control and assessment in relation to the Bank's compliance. of Cyprus, regarding the arrangements, methods and mechanisms it applied for the disposal of its financial products.
The Court of Cyprus denied the allegations related to fraud, illegality, coercion and false representations for the purpose of obtaining the products in question. It presented the position that it took a series of actions in relation to the disposal of its financial products, that is to say that all issues were offered to the investing public through a public offer based on the relevant law, for which a prospectus was prepared detailing both the terms and conditions issuance, as well as the risk factors, which were approved by the Capital Market Commission and were also posted on the internet. Furthermore, they were available at any branch of the Bank of Cyprus, which called for complete transparency in terms of the issuance and distribution of the products.
According to the Bank of Cyprus, all issuances for both MAKs and MAEKs were sent by post to all shareholders and holders of eligible securities, accompanied by relevant letters of concession, together with a special information note in which extensive reference was made to the issuance conditions, but also to the risk factors that should be taken into account by any interested investor. Further, a specific condition of the application was invoked in relation to both the purchase of MAEKs and MAKs, by which each purchaser certified that he had the knowledge to carry out the evaluation of his investment and accepted the terms of issue, while acknowledging the factors risk.
He further stated that the appellant had read, signed and accepted each and every term of the applications, prospectuses, confirming in writing that he had the knowledge and skills to evaluate his investment and that he was not given investment advice by the bank or its employees.
He even put forward the position that even if the appellant's deposits were not converted into securities, they would be reduced after the events of 3/16/2013 in accordance with KDP decrees 103/2013.
The CBC put forward the position that its only involvement in relation to the issuance of the convertible capital securities was its non-objection to the classification of the capital resulting from their issuance as secondary capital, which applies to both the securities and MAK and MAEK. It denied the allegations of defective performance of its duties and obligations, as well as violation of its legal duties, arguing that its supervision obligation did not include its representation in every branch or branch of the Bank of Cyprus, nor does it transfer the same obligation of each transaction to the which was carried out by the Cyprus Bank in the course of its work.
According to the CBC, the purchase of the bonds and securities, as well as their subsequent conversion, was the result of the appellant's free will and personal decision which was made under his own responsibility and his own conscious investment decision. The appellant was the only one who would receive a profit from his investments and therefore should be the only one who would suffer any losses from his investment.
It was further her position that her side fully performed its duties and obligations, as required by the relevant legislation and international practice and took all appropriate measures and necessary instructions, imposing at the same time restrictions on the Bank of Cyprus in relation to the actions of the latter.
According to the trial court, the appellant did not leave a good impression on the Court, since the latter found contradictions and gaps in his testimony. The appellant did not convince the Court that he was a person who did not realize the risks of buying bonds and securities, and he also did not convince what he reported about his deception.
On the contrary, the trial court found that the appellant watched the economic events of the country and of the Bank of Cyprus and that as a shareholder he understood the risks that his share was exposed to as a holder of securities.
Also according to the Court of First Instance, the appellant was not convinced in relation to his fraud, since he did not state why he ignored the reports of the applications he signed and why he did not name the people who led him astray and deceived him.
The Court of First Instance concluded that by signing the applications the appellant unconditionally accepted all the terms contained therein.
Furthermore, the Court of First Instance stated that it was not established that the plaintiff had succeeded in prove negligence or breach of institutional duty on the part of the CBC in the exercise of supervision over the Bank of Cyprus.
As a consequence of the above, the Court of First Instance concluded that the action could not succeed on any basis and dismissed it.
The appellant subsequently challenged the first instance decision with 14 grounds of appeal. Among them, he stated that the report of the trial Court that the appellant fell into contradictions and that he perceived and read the content of the applications for the acquisition of the bonds and securities was incorrect. In addition, he stated that the Court of First Instance failed to consider whether the Appellant understood that these were agreements for the purchase of financial instruments, while he raised as a ground of appeal the fact that the Court of First Instance erroneously considered that the Appellant understood the risks entailed in the purchase of securities by of. He also argued that the Court of First Instance wrongly ruled that the appellant was not deceived by the Cyprus Court.
The Court of Appeal considered that the above reasons are unfounded and rejected them. In addition, he ruled that the claim of the appellant's side for the exercise of mental pressure during the conclusion of the contracts is unfounded, since, as he states, according to the Court's findings, the appellant unconditionally accepted all the terms contained in the relevant applications.< /p>
The appellant also submitted that he did not receive a fair trial by an independent and impartial Court in violation of the European Convention on Human Rights. It is submitted that the trial Court was not independent, impartial or uninfluenced, but was influenced and biased against the appellant.
The Court of Appeal states that this ground of appeal lacks sufficient justification. “What is attributed to the Court of First Instance is very serious and cannot be lightly thrown at the heart with vague statements/accusations without any substantiation,” he notes. and the appeal was rejected with €2400 costs plus VAT in favor of the appellants and against the appellant.
