The international legal services company, set up by former professional footballer Neil Heaney, has appointed Cypriot legal firm Triantafyllides and Christoforou to argue that its clients were missold the loans through a void power of attorney.
After submitting actions to the courts against the banks in 2011, Stylianos Christoforou, a barrister at Triantafyllides and Christoforou, said the first hearings are likely to take place next month.
“We are optimistic going forward because similar cases in other countries have worked in the favour of the client,” said Christoforou.
Many of the investors purchased property in Cyprus during a property boom in 2003.
After paying an initial down payment, clients were told they would only be asked for further payments once the property had been constructed and was ready to rent out.
In order to support payments on the properties after the property boom ended, many clients were sold mortgages in Swiss francs by Cypriot banks, a currency which inflated dramatically after the loan was sold, leaving clients unable to pay.
“There is legislation which ensures a client is not found in a worse position than if he had taken the same loan, for the same purpose, in a bank’s local currency,” said Christoforou.
When purchasing a loan in a foreign currency, Cypriot legislation requires that a client is informed of all potential risks through a signed, official declaration, complete with numerical examples.
“Unaware”
Judicare argues that many of the UK clients were either unaware that their adviser had purchased a mortgage in a foreign currency, or did not have the risks of such an investment adequately explained to them.
It argues the banks should not have sold the loans to the clients.
Christoforou said banks did not send an official risk assessment, and that clients would have declined a loan if they had been warned of the risks.
“To give you an idea of how much the loans have increased, an original payment of £700 will now cost a client £1500,” he said. “It was of benefit to banks to sell the loans in this currency and that is why they did it.”
As well as being mis-sold the loans, Judicare argues the power of attorney is void because Cyprus legislation requires a power of attorney to be signed in the presence of a state official or in an embassy building.
In the case of the property investors, Judicare alleges that the documents for the power of attorney were sent to the UK, signed, and then carried back by a courier, rendering them illegal.
While the first hearings for clients are estimated to begin next month, Christoforou said Cypriot banks have launched counterclaims against clients for failing to make payments towards their loans.
In June last year, the Cypriot banks, of which Alpha Bank is the main lender, began serving writs of summons on their clients and their UK homes.
Foreclosure
Meanwhile, a piece of legislation titled The Foreclosures Bill, which was introduced in 2014 but has been suspended twice under opposition challenge, is expected by Christoforou to be enforced later this month or in the beginning of March.
The Bill will protect homes from repossession if the owner can prove a lack of income or any other asset, safeguarding low-income families, and potentially impacting the Cypriot Government’s ability to release further funding from the Troika and, subsequently, on the country itself.
However, Christoforou said the Bill is unlikely to affect Judicare’s clients as the fall in property prices has meant many clients’ home were never completed due to building companys going into administration.
Additionally, many clients have had difficulty selling the property they purchased as locals can now afford more luxurious housing for the same price.
