The Cyprus Supreme Court demonstrated flexibility in interpreting statutory rules on service of statutory demands in its recent judgment in Re TIG Lifestyle Hotels Ltd.(1)
In particular, despite the express statutory requirement that statutory demands should be served on the company's registered address, the Court found that service on the company's director at a different address constituted good service, as the company's registered address was not in operation at the time and such service resulted in the company becoming sufficiently notified of the demand.
The first-instance court issued an order for the winding up of the appellant company, having been satisfied that the company had failed to settle a debt of over €5,000 within 21 days from the service of a statutory demand for that debt.
At the time of service of the statutory demand, the company's operations had been transferred to an address other than its registered address, which had not been in use.
The appeal was on grounds primarily concerning the issue of service. In particular, the appellant contended that the service of the statutory demand on the company's directors at an address other than the company's registered address could not be deemed good service because statute provided for service of the demand on the company by delivery at its registered address.
In its judgment, the Cyprus Supreme Court adopted the approach of the first-instance court and found that there was good service of the statutory demand.
With its analysis, the Court noted that an inflexible interpretation of statute could result in an absurdity, as companies that have transferred their operations to a new address prior to changing their registered address would be left without notice that insolvency proceedings against them will commence.
Furthermore, statutory demands are not court documents. Therefore, strictly speaking, there are no procedural means by which to receive leave of the court prior to effecting service to another address.
In view of the above, the Court concluded that in circumstances where there is evidence to support that the company's registered office was not in operation and that the company in question would receive notice of the demand at an alternative address, provided such notice was indeed received, service cannot be deemed irregular if effected at an alternative address.
With its judgment, the Court has laid down principles that would impede companies from evading service by changing their place of business without updating their registered office, and raising such obscure defences in the context of the proceedings.
For further information on this topic please contact Elina Nikolaidou or Christianna Tzalavreta at AG Erotocritou LLC by telephone (+357 25 370 101) or email ([email protected] or [email protected]). The AG Erotocritou LLC website can be accessed at www.erotocritou.com.