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CYPRUS: Guidance by the Supreme Court of Cyprus on “mens rea” for bounced cheques

In October 2015 the Supreme Court made a remarking judgment which overturned the decision of the First-instance Court in relation to the innocence of two Defendants who had issued bounced cheques on behalf of a public Company in Cyprus.

The First-instance Court found that the first Defendant who was the Director of the Company and his wife who was a representative of the Company were innocent on all charges, on the grounds that the Plaintiffs failed to demonstrate that both Defendants had any way of knowing, when issuing the cheques, that the bank accounts would have insufficient cash balances on the value date. In fact to the contrary it was proven that both Defendants had minimal if any involvements in the company’s finances.

However the Supreme Court examined this main issue of whether both Defendants were aware, when signing the cheques that such cheques would fail to be honoured because of insufficient funds. This was the necessary “mens rea” that had to be established to prove their guilt or innocence.

The Supreme Court in its findings stated amongst others as follows:

(a)  The lack of involvement in the finances of the company was irrelevant to the question of whether they had the necessary knowledge; and

(b)  The relationship of both Defendants with the Company and their status within the Company should give rise to the fact that they both knew or at least should have known that the company's bank account was frozen at the time of signing the cheques.  

 

Hence the decision of the First-instance Court was overturned and instead both Defendants were found guilty as accomplices of the Company which was also a Defendant to the case.  It can therefore be argued that this twist in the case, which marks the first time that both Defendants were held accountable and guilty for the bad debts of the Company, is likely to be of immense importance in light of other cases pending against the same Defendants for exactly the same issues of bounced cheques. 

 

For further information on this topic please contact

Ms. Nada Starovlah (nstarovlah@pittaslegal.com) at SOTERIS PITTAS & CO LLC,

by telephone (+357 25 028460) or by fax (+357 25 028461)

 

 

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