Two sellers lawfully ended the sale of two off-plan flats and kept the €98,244.50 paid on signing. The Supreme Court held the money must go back to the buyer.
Two companies that build and sell homes sold two flats under construction in Ypsonas, Limassol, and received €98,244.50 from the buyer on signing. Within a year they terminated both contracts, lawfully, as the buyer came to accept at trial. They then kept the money and counterclaimed for damages. On 16 July 2026 the Supreme Court held that the whole of the €98,244.50 had to be returned, and that the sellers had proved no loss to set against it.
Being the innocent party to a terminated sale did not entitle the sellers to keep the price.
What happened
In 2008 the appellants sold the respondent two flats in a building complex under construction in Ypsonas, in the Limassol district. There were two contracts of sale, one for each flat, dated 16 October 2008, and both were lodged at the Limassol District Land Registry Office for the purposes of specific performance. On signing, the buyer paid the sellers a total of €98,244.50 as an advance payment.
Disputes followed over which side had failed to perform. By letters of 24 August 2009 and 13 October 2009 the sellers terminated the contracts. The buyer sued in the Limassol District Court for, among other things, the return of its money. The sellers defended on the basis that the termination was justified, and counterclaimed for general damages, damages for loss, and loss of profit.
At the trial the case narrowed considerably. The buyer's director accepted that the sellers had lawfully terminated the contracts, and the buyer limited its claim to the return of what it had paid. That left two questions: whether the buyer was entitled to the money back, and whether the sellers had proved any loss.
The trial court answered the first yes and the second no. It gave judgment for the buyer for €98,244.50 with legal interest, ordered the buyer to withdraw the contracts from the Land Registry on payment, and dismissed the counterclaim. The sellers appealed. The Supreme Court, in a unanimous judgment given by Ioannides J., dismissed the appeal with €3,000 costs plus VAT, if any.
Why the money had to go back
The sellers' argument on appeal was, in substance, that a buyer who had accepted that the termination was lawful could not then recover what it had paid. The court said, with respect, that it could not see why sellers who had lawfully ended the contracts should be entitled to keep the price or any part of it.
The buyer paid the €98,244.50 to acquire ownership of the two flats. Once the sellers had terminated, there was no longer any question of them performing their side, which was to transfer those flats. The court said the point had been decided years ago, and applied Kalisperas v. Dryadi, (1998) 1(B) A.A.D. 867, where Pikis P. held that money paid to the other party for a consideration that is not provided is recoverable as a debt, as money had and received. There, as here, the money had been paid solely to acquire ownership of a flat, the absence of consideration was complete, and the obligation to return it was equally absolute.
Money paid only to acquire a property was recoverable once the property would never be transferred, even though the seller had ended the contract lawfully.
The court also rejected the complaint that the refund went beyond the buyer's pleaded case: the statement of claim contained a specific claim for that amount. Because the refund stood on this ground, the court did not need to decide whether the buyer could also recover under the principles of unjust enrichment, on which the trial court had found in its favour.
Why the counterclaim failed
The sellers were the innocent party. The question was whether they had proved that they had suffered loss, and how much.
Their case was that each flat had lost €54,800 in value since the contracts were signed, €109,600 in total. The trial court held that any loss had to be measured at the time of termination, in 2009, not in 2016. The sellers' valuer, whose evidence the court accepted as credible, gave the market value of the flats in 2008 and in 2016. Nobody gave evidence of their value in 2009.
The trial court accepted that the sellers could not sell the flats while the contracts remained lodged at the Land Registry. But the sellers had kept possession of the flats, which they let at a profit, and they had kept the buyer's €98,244.50 as well. It found that no special damage was proved and that no general damages should be awarded either. It had also found that one of the sellers' directors exaggerated the "loss" from the sale, overlooking that the flats were still in the sellers' possession and ownership.
The Supreme Court agreed that there was no reliable and sufficient evidence of a fall in value at the date of termination. It added three points of its own:
- Lost profit. The sellers' cross-examination of the buyer's director had strayed, impermissibly, into an alleged loss of profit from the unpaid price, which was never specified. The court observed that the sellers would have had that profit had the contracts been kept, but they did not insist on performance; they terminated and claimed damages. The court cited Theocharides v. Ioannou, (2012) 1(B) A.A.D. 1311.
- Pleading. On appeal the sellers' counsel put the fall in value at the date of termination at €193,415. The court held that no such award could have been made in any event, because no such case had been pleaded. The counterclaim spoke only in general and vague terms of enormous financial losses, reduced prospects of resale and new borrowing.
- Special damages. The court repeated that special damages must be set out in detail in the pleadings and proved strictly, clearly and with specific evidence. Here that was missing.
What this means in practice
For developers, terminating a buyer's contract lawfully ends the obligation to transfer. On this judgment it does not, by itself, entitle the developer to keep money paid towards the price. A developer that wants compensation must prove loss: pleaded with particulars, measured at the date of termination, and supported by a valuation at that date. Keeping the unit, letting it and holding the buyer's money all weigh against the claim.
For buyers, accepting that the developer was entitled to end the contract did not mean losing everything paid. Here the buyer conceded the termination and still recovered the full €98,244.50 with interest. The judgment does not deal with contracts that contain a clause about what happens to the money on termination, and a contract that does is a different question which this judgment does not answer. A contract review before signing is where that clause is found, or negotiated.
For both sides, the contract lodged at the Land Registry stays there until someone withdraws it. Here it remained lodged for years after termination, the sellers could not sell the flats in the meantime, and the trial court tied its withdrawal to repayment of the judgment sum. Our guide to buying off-plan property in Cyprus explains why the contract is deposited at the Land Registry in the first place.
The trap is the evidence. The sellers had a valuer and a credible one, but his figures were for the wrong years, and the loss they argued on appeal had never been pleaded. A claim for damages after termination is decided on the valuation date and the pleadings, and in this case neither could be repaired on appeal. Where the choice is between insisting on the contract and ending it, it is worth knowing which remedies each route leaves open, and our note on specific performance or damages sets out the difference.
Questions we are asked
If the developer lawfully terminates, can it keep what the buyer paid?
Not on the facts of this case. The Supreme Court held that once the sellers had ended the contracts, there was no longer any question of them transferring the flats, and money paid solely to acquire ownership was recoverable because the consideration for it had wholly failed. The sellers' lawful termination did not change that. The judgment does not refer to any clause in the contracts entitling the sellers to keep the money, and the court was not asked to apply one.
What legal basis did the court use for the refund?
The general principle that money paid to the other party for a consideration that is not provided is recoverable as a debt, as money had and received. The court applied the passage of Pikis P. in Kalisperas v. Dryadi, (1998) 1(B) A.A.D. 867, where the absence of consideration was complete and the obligation to return the money was equally absolute. The trial court had also found for the buyer on unjust enrichment; the Supreme Court held it did not need to decide that point.
Could the sellers set off a fall in the value of the flats?
They tried and failed. Their valuer gave values for 2008, when the flats were sold, and for 2016, but none for 2009, when the contracts were terminated, which is the date the courts looked to. The sellers had also kept the flats, let them at a profit, and held the buyer's money throughout. On appeal their counsel put the loss at €193,415, but no such claim had been pleaded.
Could the sellers claim the profit they would have made on the sale?
Not here. The court observed that the sellers would have had that profit if the contracts had been kept, but they did not insist on performance: they terminated and claimed damages, and it referred to Theocharides v. Ioannou, (2012) 1(B) A.A.D. 1311. The alleged lost profit had also never been specified, and the court described the cross-examination on it as impermissible.
What happened to the contracts lodged at the Land Registry?
The trial court ordered the buyer to withdraw the two contracts of sale from the Land Registry on payment of the judgment sum. In a ground of appeal the sellers relied on the contracts still being lodged when judgment was given in 2017, although they had asked the buyer to withdraw them, to challenge the finding that the contracts ended in 2009. They later withdrew that ground.
Sources
This article is provided for general information purposes only and does not constitute legal advice.
Klitos Platis
Advocate, Partner
Kleanthous & Platis LLC, Nicosia · Published 26 September 2026
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