The apparent gift of more time to file a claim follows a move by the Cypriot Government on Friday to remove the end-of-year deadline.
Neil Heaney, chief executive of the Judicare Group – a UK-based firm which is currently handling more than 250 Cypriot property cases – said the so-called Limitation Act, which had set the end-of-year deadline, "has now been suspended, until it is most likely reviewed again to 31/12/2014", giving those investors who believe they were mis-sold their Cyprus properties more time to prepare a legal case.
This will come as good news to many disgruntled Cyprus property investors, some of whom, Heaney noted, may have felt forced to initiate claims ahead of the 31 December deadline as a result of sales tactics employed by certain UK law firms. Such investors, he added, need not feel rushed now, as that deadline has become meaningless.
“We trust that with the suspension [of the Act] last week by the Cypriot Parliament, people will now be allowed to make some informed decisions, without the tactics which it appeared were being used in certain quarters to solicit for clients," Heaney said.
Origins in property boom
The Cypriot property cases date back at least six years, as British investors, keen to take advantage of a property boom that was then in full swing, began to be advised to take out Swiss franc mortgages to buy Cyprus properties, on the grounds that the currency was seen as stable and the interest rates low relative to those of other currencies, including the pound.
After the financial crisis caused the value of the Swiss currency to soar relative to the pound, and banks to raise their rates, many of these investors saw their monthly mortgage repayments soar, even as the value of their properties fell steadily – in some cases to as little as half what these properties were said to be worth when the investors purchased them.
Estimates of the number of people who bought properties in Cyprus with Swiss franc mortgages and are now struggling with the payments as a result typically run from around 800 to more than 1,000.
Those considering filing claims argue that they were mis-sold their mortgages because they were not alerted to the currency risk by the banks.
Clock-start time may change
With the December deadline now removed, investors have more time to file a claim, although precisely how much more time is not clear. Heaney believes that the clock on each investor's case will be seen to have been started not from the minute when the property in question was purchased, but from when the investor received his or her first dispute letter from the bank which holds the mortgage.
He nevertheless advises those who think they have grounds for a claim to act sooner, rather than later.
“Should any individual feel he or she may have a case to investigate the circumstances of their loan in Cyprus, or any associated issues, then they should raise their claim at the earliest opportunity, and not wait for the bank to move first against them,” said Heaney.
Another issue surrounding the cases, which has not yet been resolved, is which jurisdiction the cases should be heard in – Britain or the UK. What is still being decided is whether British courts have the jurisdiction and the competence to hear the cases. Heaney believes that the correct place for the cases to be heard in is the Cypriot courts, even though they don’t allow for class action suits.
“The UK’s courts may or may not have competence but what is certain is that the Cypriot courts have jurisdiction. Taking action in the UK rather than Cyprus involves a number of risks and added expenses, such as having to pay people to come and give expert evidence in the UK court,” Heaney said.
“Most importantly, there is a chance the court could dismiss the case against the banks because of the jurisdictional issues, as all clients entered into loan agreements that define Cyprus courts as the appropriate courts, and were given loans in Cyprus, for properties in Cyprus."
According to Heaney, many banks with a base in Cyprus are involved in the claims, although the one which appears to have had most exposure to Swiss Bank Loans is Alpha Bank, the second largest bank in Greece.
He added that while the details of some financial advisers have been passed to Judicare, the firm is not currently pursuing any IFAs in connection with mis-sold Swiss franc mortgages.
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In a separate development, the Anglo-Hellenic & Cypriot Law Association has announced that its associated law firms, which include Highgate Hill Solicitors and Alexandrou Law Offices, had "begun accepting instructions from people who have been mis-sold Swiss franc loans", in what it said was a "co-ordinated move to bring a direct action at the European Court of Justice".
In a statement on the Cyprus Property News website on Saturday, the association said that its action was focused on "the serious systemic failings in the banks [that] led to the misselling of these foreign exchange loans", and that it was intended to "highlight the significant regulatory failings that allowed the mis-selling to take place, and pursue a claim for damages against the responsible European authorities".
