The Republic of Cyprus, through the Central Committee for the Protection and Administration of Turkish Cypriot Properties v. Yiannis Christofi (1987) JSC 436

[*436] 1986 February 27

(KALLIS, D.J.)

IN THE DISTRICT COURT OF NICOSIA

The Republic of Cyprus, through The Central Committee

for the Protection and Administration of Turkish

Cypriot Properties,

Plaintiff,

Yiannis Christofi,

Defendant

(Action No. 3934/ 84).

Contract - Agency - Agency by estoppel - Holding out - Ostensible authority - Section 197 of the Contract Law, Cap. 149.

Landlord and Tenant - Landlord's liability to repair.

A. Danos, for the Plaintiff.

E. Lemonaris, for the Defendant.

JUDGMENT

The following judgment was delivered by:

KALLIS. D.J.

The Claim:

The plaintiffs in their capacity as the Requisitioning Authority of Turkish Cypriot properties claimed the amount of £564.- being arrears of rent or licence fees in respect of a house at Nicosia which they leased to the defendant on/ or about 25.4.77 or they granted to him a licence to possess or use it.

Defendant, in his defence, admitted that he owed the above amount but he contended that after the instigations of the plaintiffs and/ or the competent officers and/ or their servants and agents he expended £600 - for repairs to the said house and inspite of plaint- [*437] iffs' promise to compensate him for such expense they failed to do so and he was claiming the said amount by way of counterclaim.

At the commencement of the hearing judgment was entered by consent as per claim with costs and there remained only to be tried the question of the counterclaim.

The counterclaim:

In giving evidence in support of the counterclaim the defendant (D.W.1) testified that he has been residing in the house in question since 1973 originally by virtue of an agreement with its Turkish owner and after the Turkish invasion by virtue of an agreement with the District Officer. Three to four years ago, the house required repairs because its electrical installation was unfit and the need for the repairs was indicated by an employee of the Electricity Authority of Cyprus.

Following the above indication he asked repeatedly certain officers of the District Officer's office, the names of whom he could not remember, to see that the installation is repaired and one of them told him to find an electrician to make an estimate and to have it produced to them. In fact an estimate was made by an electrician wherein the work was estimated at £502- and accompanied by a certain Adamides he produced it to Mr. Charalambides whereupon the latter told him that he would notify him. One day he met Charalambides at Nicosia and upon enquiring as to the fate of his case he told him that he will notify him withing two-three days. In fact within two-three days Mr. Charalambides called at his house, he was not there, and he left a message for him to meet him at Jet Shop. Defendant went there and Charalambides told him "proceed with the electrical installation and we shall deduct the cost monthly". He thereafter repaired the installation at a cost of £420.- In the course of the trial it was jointly stated that the reasonable value of the repairs to the electrical installation was £320.-.

He also changed the W.C. installation at a cost of £80.- but he [*438] never mentioned anything about them to Mr. Charalambides or to any other officer, he changed them because they were worn.

D.W.2 Andreas Adamides, an 84-year old retired elementary- school teacher, testified that he accompanied defendant to the District Office Nicosia where they saw Mr. Charalambides and defendant told him that according to the report of the electrician the installation had to be replaced whereupon Mr. Charalambides said: "Find an electrician and let him do them, obtain receipts and we shall deduct them from the rents or if you cannot pay him we shall pay him".

In cross-examination he was firm that Mr. Charalambides did not tell defendant to have the repairs made, to produce the receipts and they will be placed before the Committee. But when asked to say precisely what was said by Mr. Charalambides he replied that he could remember in general terms what he said namely: "Find an electrician, let him do the repairs, bring the receipts to us and we shall fix it" ("tha ta kanonisoume").

P.W.1 Charalambos Charalambides an officer in the District Office Nicosia testified that he had in his possession the relevant file and at the material time he was in charge of repairs of Turkish- Cypriot houses. In June 1979 applicant submitted an application asking that the house in question be repaired. He visited the house and prepared an analytic estimate of the cost of the repairs which amounted to £250.-. He then suggested to the Committee that defendant should pay the arrears of rent and they would effect the repairs. In October, 1979 defendant requested that the electrical installation be repaired and he was asked to pay the rents in arrear. He did so on 30.6.1980. The Minister by a decision dated 16.4.1980 gave instructions that repairs to Turkish-Cypriot houses not possessed by displaced persons should cease and that only in cases of substantial repairs they could proceed to effect them and this [*439] under the appropriate procedure. The policy they follow until this day in respect of Turkish-Cypriot houses is to have them repaired themselves. He met defendant on many occasions and one day when he did meet him next to a kiosk near his house he told him that they had difficulties as a department to proceed with the repairs because there were certain complexities and the matter would be delayed; and for the solution of the problem he was facing he suggested to him to find electricians, to obtain tenders, to award the work to the cheapest tenderer in order to proceed with the repairs, and to produce the receipts for submission to the Central Committee and he (the witness) hoped that they will effect payment since, also, defendant was owing rents. He has retired since but from the file in his possession defendant produced receipts. He could not remember seeing witness Adamides; and he could not, by himself, take a decision in matters of repairs for this was a matter within the jurisdiction of an appropriate Committee.

In cross-examination he said that prior to his retirement he was a Village Roads Foreman and was in charge of repairs generally. He visited the house in question and ascertained that it was in need of repairs. He replied in the affirmative to the question "did you tell defendant pay the rents and we shall see that the repairs are made'' ("emis tha frontisoume na kamoume tis epidiorthosis"). He, also, replied in the affirmative to the question "did you tell the defendant, ask one or two technicians, obtain tenders and proceed with the repairs but to prefer the cheapest tender".

He agreed that the electrical installation was in a dangerous state and was in need of repair. He further agreed that the defendant obtained tenders, effected the repairs and submitted receipts; and that he (the defendant) did not know who the members of the Committee were and that for his problem he was looking upon ("exere") the witness as the competent for the purposes of repairs Office. He finally agreed that the [*440] repairs to the electrical installation could be described as substantial.

Having considered the whole of the evidence adduced it is apparent therefrom that there was, more or less, consensus amongst the three witnesses on all the issues save with regard to the following issue:

Whereas the evidence of the defendant and his witness Adamides was to the effect that they were told by Charalambides to proceed with the repairs and the cost thereof would be deducted from the rents, Charalambides said that he told defendant that the receipts would be submitted to the Central Committee and he "hoped that they will effect payment".

Learned counsel for the plaintiffs submitted that as this assertion of Charalambides was not challenged in cross-examination his evidence on this issue remains incontrovertible. Now it is true that such assertion was not challenged directly but such a course may have not been necessary in view of the above positive replies by Charalambides to the question whether he told defendant to pay the rents and "we shall see that the repairs are made" and to the question whether he told defendant to proceed with the repairs but to prefer the cheapest tender. Charalambides has not put in his replies the qualification that payment would be subject to the approval of the Central Committee. In any event having seen and heard all three witnesses, I must say that Adamides and the defendant have impressed me more favourably as witnesses than Charalambides and their version, therefore, on the issue of what has been exchanged between them and Charalambides, will be preferred to that of the latter whose remaining evidence is accepted. It is true, though, that there was some contradiction between the two D.W. regarding what transpired at the meeting with Charalambides but defendant himself admitted that he could not remember dates and names. Moreover they were both firm on the material issue namely that they were told by Charalambides that the cost of the repairs would be deducted from the rents. I would add, though, that even if the version of [*441] Charalambides was to be accepted looking at his evidence as a whole and at all his utterances, they may reasonably be taken that to an ordinary simple-minded aged man like the defendant they convey the message "do the repairs and the cost will be deducted from the rents".

In the light of my above evaluation of the evidence I find that the electrical installation was in a dangerous condition and was in need of repairs and that such repairs were substantial ones. I further find that Charalambides told plaintiff to have it repaired himself to produce the receipts and the cost would be deducted from the rents; and that the defendant did repair the installation paid the relevant cost but plaintiffs did not refund it to him. I, also, find that the policy the plaintiffs follow until this day is to repair Turkish-Cypriot houses themselves and that, with regard to houses occupied by non-displaced persons they do so in cases of substantial repairs. The question of repairs was a matter within the competence of an appropriate Committee but Charalambides was in charge of repairs generally and defendant did not know who the members of the Committee were but was looking ("exere") upon Charalambides as the competent for the purposes of repairs officer.

Conclusion:

Now Charalambides was in the position of an agent and what falls to be decided is whether the plaintiffs are bound by his acts or promises in the light of section 188 and 197 of the Contract Law, Cap. 149 and in the light of the fact that decisions for repairs fall within the competence of the appropriate Committee. [*442]

Section 197* is a verbatim reproduction of s. 237 of the Indian Contract Act and in Pollock & Mulla's Indian Contract and Specific Relief Acts the following are stated at p. 794:

"Ostensible authority - This section must, in point of fact, overlap s. 188 (above) in many cases, but the principles are distinct. Under s. 188 the question is of the true construction to be put upon a real, though perhaps not verbally expressed, authority. Here the liability is by estoppel, and independent of the apparent agent having any real authority at all; the question is only whether he was held out as being authorised; and this includes the case of secret restrictions on any existing authority of a well-known kind. It is a well-established principle that, if a person employes another as an agent in a character which involves a particular authority, he cannot by a secret reservation divest him of that authority'.

Section 237 of the Contract Act deals with the case where there is relationship of principal and agent, and the agent has acted without authority of the principal. The principal is bound by the unauthorised acts of the agent if by words or conduct he induces a third party to believe that the unauthorised acts of the agent are within the scope of the agent's authority. ' Good faith requires that the principal shall be held bound by the acts of the agent [*443] within the scope of his general authority, for he has held him out to the public, as competent to do the acts and to bind him thereby"'.

The question of ostensible authority or agency by estoppel is, also, dealt with in para. 374 - pp. 158-159 - of Halsbury's Laws of England 3rd ed. Vol. 1 where the following are stated:

"374. Holding out. Agency by estoppel arises where one person has so acted as to lead another to believe that he has authorised a third person to act on his behalf, and that other in such belief enters into transactions with the third person within the scope of such ostensible authority. In this case the first-mentioned person is estopped from denying the fact of the third person's agency under the general law of estoppel, and it is immaterial whether the ostensible agent had no authority whatever in fact or merely acted in excess of his actual authority. The principal cannot set up a private limitation upon the agent's ostensible authority, for, so far as third persons are concerned, the ostensible authority is the sole test of his liability. But if the agent be held out as having only a limited authority to do on behalf of his principal acts of a particular class, the principal is not bound by an act outside that authority even though it be an act of that particular class. The onus lies upon the person dealing with the agent to prove either real or ostensible authority, and it is a matter of fact in each case whether ostensible authority existed for the particular act for which it is sought to make the principal liable. Holding out is something more than estoppel by negligence; it is necessary to prove affirmatively conduct amounting to holding out.

A person who assumes to act as an agent is estopped from denying the agency as between himself and the person on whose behalf he professed to act". [*444]

As to ostensible authority relevant is, also, the case of Tsiodanis v. Avraam (1978) 1 C.L.R. 27 which though dealing with ostensible authority in the sphere of the law of Torts enunciates the same principle - vide page 35 where the following are stated:

"The comment to be found in Atiyah on Vicarious Liability in the Law of Torts, 1967 at p. 204, is that the reason why it was within the scope of the servant's authority to obey even the unauthorised instructions of his superior in that case was that, so far as the subordinate servant was concerned, the superior servant had ostensible authority to give him those instructions. He was held out by the master as being the person whose instructions had to be obeyed, and as in all cases of holding out, it mattered not that the superior servant was acting against express orders or entirely for his own purposes in giving the instructions. We subscribe fully to their principles and comments".

Having regard to my finding that Charalambides was the officer in charge of repairs generally and that defendant was looking upon him ("exere") for the purposes of repairs, I can safely conclude that Charalambides was "held out" as being authorised to make the promises he did make by the conduct of his principles and thus the defendant was induced to believe that the unauthorised acts of the agent were within the scope of the agents authority and acting in such belief the defendant proceeded and made the repairs. In view of this situation the plaintiffs are estopped from denying the fact of Charalambides' agency under the general Law of estoppel. I, therefore, hold that Charalambides was the agent of the plaintiffs and that the latter are bound by his acts. This being the position the defendant is entitled to recover the amount he spent for the repairs to the electrical installation under two heads:

(a) Contract.

(b) By virtue of the doctrine of equitable estoppel. [*445]

Regarding (a) it clearly emerges from my findings that there was an agreement between the parties, for Charalambides proposed and the defendant accepted to have the installation repaired and to deduct the cost from the rents. Regarding (b) - the Law of Estoppel - in the case of Hadji Yiannis v. Attorney-General of the Republic (1970) 1 C.L.R. 32 the following were stated at p. 48:

"The doctrine of promissory estoppel is to the following effect, that is to say, where by his words or conduct one party to a transaction makes to the other a promise or assurance which is intended to affect the legal relations between them, and the other party acts upon it, altering his position to his detriment, the party making the promise or assurance will not be permitted to act inconsistently with it: See Hughes v. Metropolitan Railway Co. (1877) 2 App. cas. 439, H.L.".

(See, also, Stylianou and Others v. Papacleovoulou and Others (1982) 1 C.L.R. 542 at pp. (555-553); Markidou v. Kiliaris and Another (1983) 1 C.L.R. 392 at p. 408 and Boustani v. Linmare Shinning Co. (1984) 1 C.L.R. 354 at p. 361).

In this case Charalambides did make a promise to defendant which was intended to affect the legal relations between them and the defendant did act upon it and altered his position to his detriment. Therefore the doctrine of promissory or equitable estoppel is clearly applicable and the party who made the promise - plaintiffs - cannot be permitted to act inconsistently with it.

Though the above conclusion seals the fate of the counterclaim regarding repairs to the electrical installation I will deal with a submission of learned counsel for the defendant to the effect that the plaintiffs had the legal obligations of a landlord and in this respect the obligation to repair the premises; and I adopt this course because the defendant claims £80.- expended for repairs to the W.C. which, as he admitted, have never been discussed with Charalambides. [*446]

In Halsbury' s Laws of England 3rd ed. Vol. 23 the following are stated at para. 1233 p. 562:

"Landlord' s liability to repair. In the absence of express stipulation or of a statutory duty, the landlord is under no liability towards the tenant to put the demised premises into repair at the commencement of the tenancy or to do repairs during the continuance of tenancy".

In this case the contract between the parties was not produced and so we are in the dark on the question whether there was a stipulation or undertaking to repair. True Charalambides testitied that the policy they follow is to repair Turkish-Cypriot houses themselves but government policy may change from time to time and I cannot endow the policy with the qualities of "express stipulation"; and in the absence, also, of statutory obligation, for neither the Rent Control Law, 1983 (Law 23/ 83) contains any such provision nor the procedure envisaged by the previous Law (section 21(2) of Law 36/ 75) had been followed, I hold that the landlord was not under any liability towards the tenant to put the demised premises into repair. Nor can the position of the defendant be made any better if it were to be held that the policy in question amounts to an implied covenant because as already stated covenants to repair should be express (see, also, Halsbury's , supra, paras. 1254, 1268 and 1290). For these reasons the counterclaim for the amount expended for the repairs to the W.C. must fail; and in the result judgment is given for the defendant, on his counterclaim, for £320. - with costs to be assessed by the Registrar.

Judgment for defendant for £320.- with costs.

* Section 197 provides as follows:

"197. When an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of the agent' s authority".