The English arm of a Spanish law firm is battling head-to-head with a London niche practice in a bid to act for claimants aiming to declare void holiday property mortgages they say they were hoodwinked into buying.
Madrid-based Judicare is gearing up to launch the first of what could be as many as 150 claims in the Cyprus courts on behalf of Britons challenging the terms of mortgage deals struck at the height of the European property boom in 2006/07.
That action follows developments in London at the end of June, when City firm Maxwell Alves filed a High Court action against Alpha Bank Cyprus and more than 20 Cypriot property developers on behalf of 215 UK claimants. Maxwell Alves consultant George Kounis is leading that bid, with the firm suggesting another wave of claimants is likely to follow.
Stylianos Christoforou, a partner at Nicosia law firm Triantafyllides & Christoforou, which is acting in conjunction with Judicare, maintains that litigating in England is the wrong approach. He argues that any English High Court judgment will be difficult and costly to enforce in Cyprus.
Kounis strongly disputes that point, saying that British litigants would be misguided to submit to the Cypriot jurisdiction. His firm has had a specialist opinion on jurisdiction, which he said advises that a UK would be enforceable under the terms of the EU’s Brussels I legislation covering cross-border litigation.
“Britons are entitled to have their case heard in the UK,” said Kounis, “because the sellers crossed the borders to this country to make the sales. That overrides anything in the contracts saying Cypriot law applies.”
The cases involve potentially thousands of British holiday-home buyers, many of whom are currently being hit with crippling demands from Cypriot courts after defaulting on loan repayments for flats and villas on the Mediterranean island they couldn’t afford.
Between 10,000 and 30,000 people in the UK bought properties through a scheme run by Cypriot developers, estate agents, lawyers and banks. The deals were done at the peak of the property boom, but following the Cyprus financial crisis earlier this year, local banks have been scrabbling to recover funds from British defaulters.
Alpha Bank Cyprus is the most prominent claimant, pursuing British buyers for full repayment of loans, which in some cases total £600,000. The banks have brought claims against the Britons in local courts and in most cases gain judgment in default when the property owners are unable to attend the hearing or present a defence.
That claim against a property owner for full repayment of the loan is then registered as a UK judgment and pursued through EU enforcement order provisions.
Lawyers acting for the Britons say the buyers were also clobbered by loan agreements that were struck without their knowledge in Swiss francs. That currency has increased in value dramatically against sterling over the last seven years, meaning some monthly repayments have trebled.
British buyers spent up to £300,000 on individual flats and villas – with some buying two properties – having been promised “a place in the sun”, said Christoforou, who is also called to the bar at Gray’s Inn. At the October hearing in Cyprus, Christoforou will attack the deals on two grounds. The first claims that many of the British buyers were wrongly persuaded to sign over power of attorney to local lawyers to deal with the details of the purchase. He maintains that doing so should render the deals void in Cypriot law.
Likewise, Christoforou said that selling loans in foreign currencies without properly informing the buyers of all the ramifications breaches local regulations.
“The buyers were told that they didn’t even have to travel to Cyprus to do the deal,” claimed Christoforou. “And because of the increasing strength of Swiss franc, many buyers are unable to afford to afford the dramatic increase in the repayments. They were taken by surprise and most have defaulted on the loans.”
Judicare’s front man in England is non-lawyer and former professional footballer Neil Heaney. After a career with Arsenal, Manchester City, Southampton – among other English football clubs – Heaney partnered with Judicare chairman Jose Dorta to launch a UK representative office of the firm, which specialises in advising on recovery actions for investors in overseas property disputes.