No Irreparable Damage to Owner of Mortgaged Property, Supreme Court clarifies
In its very recent judgment, Civil Appeal E203/2013, Loucas Panayiotou Estates Ltd et al. v. Hellenic Bank Public Company Ltd, dated 11/9/2019, the Supreme Court of Cyprus has provided further insight on its approach to the requirement that the plaintiff will suffer irreparable harm if the injunction is not granted, in applications for injunctions against foreclosure procedures concerning mortgaged property.
The Bank had submitted a lawsuit against the Defendants for breach of a loan agreement and sought the repayment of the loan and an order of the Court allowing the foreclosure of the mortgaged immovable property.
The Defendants submitted a counterclaim seeking the cancellation of the mortgages and an order recognizing that the loan agreement was void. At the same time, the Defendants/Counterclaimants submitted an application for an interim injunction prohibiting the Bank from taking any action against the Defendants that would lead to the alienation, sale or transfer of the ownership of the mortgaged property, such as foreclosure procedures until the hearing of the lawsuit and the counterclaim.
The Court of First Instance stated that the first two requirements for the issue of an injunction were “obviously” met, meaning that the Defendants/Counterclaimants had showed that there was a serious issue to be tried and they had good chances of success in their counterclaim. However, The Court rejected the application for injunctions explaining that they failed to show they would suffer irreparable harm if the injunctions were not issued.
The Court further explained that the fact that Defendants may eventually lose the ownership of the mortgaged property does not constitute irreparable damage to them, since monetary compensation for the loss would be a sufficient remedy.
The Defendants/Counterclaimants submitted the Civil Appeal E203/2013 before the Supreme Court against the aforementioned judgment, claiming that monetary compensation does not constitute sufficient remedy for the loss of the mortgaged property and that the loss of the property should be considered “irreparable harm” for the purposes of issuing an interim injunction.
The Supreme Court in its judgment explained that the availability of monetary compensation is not the only aspect that should be taken into account when assessing whether the plaintiff will suffer irreparable harm if the injunction is not granted. Furthermore it sighted previous case law of the Supreme Court explaining that the third requirement set by Article 32(1) of the Courts Act 14/1960, that it will be difficult or impossible for justice to be served in full at a later stage, is not limited to the award of monetary compensation. The fact that the Bank was in a position to compensate the Counterclaimants if they were successful in their counterclaim, should not immediately lead to the conclusion an injunction cannot be issued.
As the Court explained, in such cases the applicant must explain in very specific and express manner the nature of the damage he/she will suffer if the injunction is not issued and why monetary compensation is not enough on the basis of the facts set before the Court. Abstract and general allegations that the applicant will suffer irreparable harm from the alienation of the mortgaged property will not suffice.
However, the Supreme Court explained that in cases, such as the one at hand, that the subject of the application for interim injunctions is a mortgaged property, no issue of irreparable harm can exist. The Supreme Court stated that the counterclaimants agreed to the mortgage which inherently leads to the possibility of loss of the property through foreclosure. As a result, they have already accepted the risk of a possible alienation of the mortgaged property and no interim injunction can be issued to prevent it.
Given the above, no interim injunctions should be issued to prevent foreclosure proceedings regarding mortgaged property.