Under the Civil Procedure Law,(1) a judgment creditor has the right to make any immovable property in which his or her judgment debtor is beneficially interested – and which is registered with the Department of Lands and Surveys in the debtor's name – security for payment of the judgment debt. This is done by registering the judgment at the Department of Lands and Surveys (by filing an office copy of the judgment) together with a memorandum describing the property and claiming that the debtor's interest in it should remain answerable for the payment of the judgment debt.
In Demetra Georghiadou v Alpha Bank Cyprus Limited,(2) the Supreme Court considered for the first time the right of a judgment creditor to register a judgment on a debtor's immovable property by way of a memorandum of judgment in circumstances in which the value of the property was much higher than the judgment debt. The Supreme Court affirmed that a judgment creditor is entitled to register a memorandum of judgment and establish a lien against immovable property regardless of the relationship between the value of the property and the amount of the judgment debt; indeed, a judgment creditor is entitled to register a memorandum of judgment against all of a debtor's immovable property.
The debtor in Demetra complained that the registration of a memorandum of judgment for a comparatively small debt (approximately €40,000) against immovable property valued at approximately €700,000 was a violation of her private property rights, since it disproportionately restricted her right to dispose of and use her property.
The Supreme Court dismissed the debtor's appeal and reaffirmed the following points:
- Property rights are not absolute, but they can be limited. Limiting property rights for the purpose of enforcing a court judgment is legitimate.
- The legal burden resulting from the registration of a memorandum of judgment and the consequences of the memorandum do not constitute limitations of property disposal or use and do not amount to a disproportionate impairment of the right to property.
- The Supreme Court did not consider that the issue was, or should be, the need to create or maintain a balance between any conflicting rights. The debtor's argument totally disregarded the fact that she was under an obligation to repay the debt. That obligation concerns not only the judgment creditor, but the legal order itself, represented by a court judgment.
- The enforcement of court judgments is not restricted to the private sphere and the relationship between the creditor and the debtor – rather, it is a paramount issue of public interest and crucial to the administration of justice and validity and the effectiveness of court proceedings.
- A judgment creditor holds a right which is private in nature, but of public interest. In contrast, a judgment debtor holds no right, but instead has an obligation towards the creditor and the law to comply with the judgment issued by the court and repay the debt.
- Registering a memorandum of judgment regardless of the relationship between the value of the property and the amount of debt does not constitute an abuse of right. The mere fact that there is a difference in values does not create oppression.
- The right to enforce a judgment is reasonably and sufficiently limited by the statute law to 10 years, after which the creditor requires the court's permission to enforce the judgment, which may be given subject to conditions.
This case is of great importance, not only because it concerns the right to enforce a judgment and achieve justice at the final stage of the proceedings, but also because there is a legislative proposal pending, which has been strongly criticised by the Cyprus Bar Association, to amend the Civil Procedure Law(3) to introduce a limitation on the right to register a judgment on land based on a correlation between the value of the property and the size of the debt.
For further information on this topic please contact Christia Middleton at Elias Neocleous & Co LLC by telephone (+357 25 110110) or email (email@example.com). The Elias Neocleous & Co LLC website can be accessed at www.neo.law.
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