Surety for issuance of an order without notice

No interim order is issued unless a guarantee is provided in favour of the person against whom the order is sought

The court within the scope of its powers, upon proof of emergency or other peculiar circumstances, may issue a restraining or other interim order on the application of any party to an action without notice to the other party, as it is provided in Article 9(1) of the Civil Procedure Law, Cap, 6.

Before making any such order without notice the court shall require the person applying for it to enter a recognizance, with or without a surety, to the person against whom the order is sought (Article 9(2)). This is a mandatory provision and any interim order is not issued without prior guarantee of the surety as determined by the court to the satisfaction of the registrar. The taking of a surety by the applicant to ensure their obligation to compensate the person against whom the order is issued, is given to the court and its purpose is to compensate this person for the damage they may suffer as a result of the unjustified issuance of the order.

The surety states the name and address of the guarantor who undertakes to pay the Republic of Cyprus the amount ordered by the court. If the applicant who secured the order does not pay for the damages incurred, and the guarantor does not fulfill the conditions of the guarantee, the court will award damages in favour of the injured person and against the guarantor for the loss suffered as a result of the unjustified issuance of the order.

An issue arose in relation to the written guarantee signed on the basis of a restraining order issued by the district court that the wording of the surety did not meet the requirements. The matter was brought up by the defendant when he made an oral request for the annulment of the order, alleging that the obligation undertaken through the surety was given, instead of for his benefit, for the benefit of a third party, namely the Republic of Cyprus. The court dismissed his request finding that the surety met the necessary conditions set under the Law and the court’s directions at the time of the issuance of the order.

The defendant appealed to the supreme court by filing an application for leave to issue a prerogative order to annul the interim order issued by the district court. The supreme court dealing with the application in its judgement issued on August 9 referred to the provisions of the law and case law and held that the wording of Article 9(2) makes it imperative for the court to require the applicant to undertake a guarantee to ensure his obligation to compensate the person against whom the order is sought in his absence.

This obligation is necessary for the issuance of the interim order. The court decided further that the defendants objections were unfounded since: (a) as it is expressly clear from the wording of the guarantee, the undertaking of the guarantor to pay the amount specified concerns the case of awarding damages against him for the benefit of the defendant and not for the benefit of the Republic of Cyprus, (b) the guarantee was given to the court and in the manner that the court “thinks fit” and to the satisfaction of the registrar and (c) the guarantee is given not to the party against whom the order is issued, but to the court to the benefit of that party.

The supreme court noted that there was neither an obvious legal error by the district court, nor a violation of Article 9(2) or the principles of natural justice. It added that the court to which the guarantee is given, has the discretion to decide whether to activate it and in which manner after ascertaining the extent of the defendant’s loss, after the annulment of the interim order. As no prima facie case was disclosed by the defendant, the supreme court dismissed the defendant’s application.

George Coucounis is a lawyer practising in Larnaca and the founder of George Coucounis LLC, Advocates & Legal Consultants, [email protected]