By George Coucounis
“THE ISSUE of an order for specific performance prevents the vendor from raising an objection for the transfer of the property”
THE specific performance of a sale contract is achieved through the issue of a Court order after an action filed by the purchaser against the vendor and creates res judicata, which prevents the vendor from raising an objection for the registration of the property in the name of the purchaser, alleging that the sale price wasn’t paid, after he consented to the issue of the order. In the action of the purchaser, the vendor is entitled and ought to claim through a counterclaim the payment of any balance of the purchase price of the property.
By virtue of article 15 of the Specific Performance Law, L.81(I)/2011, when the purchaser met the relevant provisions of the law, but he refuses to pay the purchase price and accepts the property, the remedy available to the vendor under the contract is only damages.
It is evident that the vendor, after the issue of the order for specific performance of the contract and during its execution, cannot raise an objection regarding the transfer of the property to the purchaser because the purchase price wasn’t paid, since the aforesaid order creates an estoppel in any judicial proceedings to be instituted thereafter by the vendor, which will be considered as an abuse of the process of the Court.
Based on the rule of res judicata, a litigant ought to include in the action or the counterclaim all the causes supporting it and if he omits to raise before the Court a cause which could have been included in the original proceedings, he will not be allowed to raise it in any subsequent action.
The omission of the purchaser who obtained an order for specific performance to enforce it on time, by applying to the Director of the Lands and Surveys Department within a year from its issue for the registration of the property in his name, does not preclude him from using the procedure which is available to enclaved purchasers in order to achieve the transfer.
The Director, when examining the application of the purchaser, notifies the vendor of his intention to proceed with the registration of the property in the name of the purchaser under the sale contract and informs him for his right to object within 45 days from the notice, submitting all the relevant evidence supporting his objection.
In the event the Director is not satisfied that the sale price was not paid, he informs the vendor of his intention to transfer the property to the purchaser unless the vendor submits within 30 days an order of the Court stating otherwise.
In an appeal of a vendor against the decision of the Director, the District Court of Paphos in its judgment dated 3.4.2019 examined the allegations of the parties, especially those of the purchaser and the Director that the existence of a previous specific performance order issued by consent constituted res judicata and precluded the vendor from filing the appeal.
The Court analysed the rule of res judicata with reference to case-law, stating that it is based on the principles that the finality of a decided dispute serves the public interest and no one can be disturbed twice for the same issue.
This rule provides that the judgment must be final, the litigants and the matters in issue must be the same. For the avoidance of filing multiple actions, the rule of res judicata has been extended in order to cover all the causes of action that a litigant can include in his pleadings after reasonable search other than those upon which his action is based.
In the particular case, the Court found that the payment of the purchase price of the property did not constitute a prerequisite for the issue of the specific performance order, however the vendor’s position today that the purchase price hadn’t been paid existed at the time of the filing of the action and a lot later at the time of the issue of the order by consent.
With this in mind, the vendor could have raised the issue that the purchase price hadn’t been paid as the cause of a separate action or in a counterclaim against the purchaser, something which he didn’t do. The vendor was very late in alleging this cause today as a reason for setting aside the decision through which the Director decided to transfer the property to the purchaser, although paradoxically the vendor had agreed to this many years ago at the time of the issue of the specific performance order.
The Court dismissed the appeal of the vendor, concluding that the order issued by consent constituted an obstacle with regard to the cause of the action and that the filing of the appeal constituted abuse of the process of the Court.
George Coucounis is a lawyer practicing in Larnaca and he is the founder of GEORGE COUCOUNIS LLC, Advocates & Legal Consultants, email address: [email protected]
