Disputing what the bank says you owe: a general denial fails

A manufacturing company in Limassol borrowed from Bank of Cyprus over fifteen years: a current account opened in 1993 and increased several times, a term loan of 124,727.90 euro in 2006 and a second of 17,000 euro in 2008. Its director guaranteed all of it personally, and the company gave a mortgage and a floating charge. When the bank ended the facilities and sued, the company and the director said the balances were inflated by unlawful charges, capitalised interest and default interest. On 28 September 2026 the Court of Appeal upheld judgment against both of them, jointly, for 44,949.87 euro on the current account, 238,509.71 euro and 27,417.92 euro on the two loans, with interest, and an order for the sale of the mortgaged property.

The company did not lose because its complaints were unthinkable. It lost because, at no stage of a long trial and an appeal, did anyone point to a specific entry in the bank's statements and say: this one is wrong, and here is why.

How the burden moved

The bank proved the agreements, which were not disputed, and put in statements of each account with a certificate from its officer. Under section 22 of the Evidence Law, Cap. 9, certified copies of entries in a bank's books are prima facie evidence of those entries. The trial court accepted that the statements met the conditions of the section, and the Court of Appeal agreed that from that point the burden passed to the borrowers. It was for them to prove that particular entries did not exist or were wrong.

They tried to do it with two witnesses. The director's evidence was found vague and general throughout. He never identified which interest charges were unlawful by reference to the statements in the case, he had never complained to the bank, orally or in writing, while the company was receiving those statements, and in cross-examination he referred most questions to his accountant. The second witness was a financial consultant called as an expert. He said that the bank had charged more than 9 per cent, had calculated interest on a 360-day year instead of 365, and that the balances were "contaminated". Asked which charges, at what point and by how much, he could not say. The court held that, without a challenge to specific entries, it could not take on the accounting itself and recalculate the interest for the parties.

General and vague challenges to a balance, without cross-examination on the entries themselves, do not leave a bank's claim unproved.

The bank's own write-off did not help the borrowers

Before trial the bank had produced restructured statements, removing charges and default interest it had decided not to claim: 23,557.99 euro, or 39,550.70 euro with interest. The borrowers argued that this proved the overcharging, and that without those sums the current account had been within its limit when the bank ended it. The bank's officer explained that the reduction was a decision taken when the case reached court, on an assessment of what was recoverable against the security held. The Court of Appeal accepted, as earlier case law had, that restructured statements do not show unlawful charges, and that they serve to fix the final balance. The ground of appeal built on the point failed in any event, because it did not say which charges had pushed the account over its limit.

Three further defences, and why each failed

The borrowers said they never received the bank's warning letters of 23 December 2009 or its termination letters. The bank's officer said the letters had been sent to the last address the bank held, as the agreements required, and had not come back. The courts applied the long-standing rule that a letter posted and not returned is prima facie proof that it reached the person it was addressed to. The officer did not have to be the person who posted it.

They relied on the Unfair Terms in Consumer Contracts Law, 93(I)/1996. That law protects a consumer, defined as a natural person acting for purposes outside his business. The facilities had been given to the company, which is a legal person, and the court noted that the director's guarantees were separate contracts between him and the bank. Anything more the borrowers wanted to say about the guarantees fell outside their ground of appeal and was not considered. The trial court had also observed that the rule treating a 360-day year as an unfair term was added to the law only in 2016, after the charges in issue, and that even an unfair term would not have released them from repaying the debt.

They argued, finally, that the Liberalisation of Interest Rates and Related Matters Law, 160(I)/1999, was unconstitutional. The challenge failed because they never said, at trial or on appeal, which provisions of the law offended which article of the Constitution. A general complaint that liberalising interest rates conflicts with freedom of contract is not enough.

What this means in practice

The people this judgment speaks to most directly are directors who have signed personal guarantees for their company's bank borrowing, and businesses facing a bank's recovery action. The guarantee was the reason the director here ended up with a personal judgment of more than 310,000 euro, plus interest.

For anyone in that position, the lessons are practical rather than legal.

• Read the statements when they arrive, and object in writing then. The court weighed heavily the fact that the director had received statements for years and never complained. A written objection at the time is evidence; a complaint first made after the bank sues is treated as an afterthought.
• An expert must go entry by entry. A report that says the balance is inflated, without identifying the charges, the dates and the amounts, will be rejected however experienced its author is. If the case is that interest exceeded a lawful rate, the expert has to show where, and recalculate.
• Keep the bank's records of your address current. A letter sent to the last address the bank holds and not returned will usually be treated as received. Moving premises without telling the bank does not stop the clock.
• Do not assume consumer law protects a company's borrowing. The unfair terms law is for natural persons acting outside their business. A guarantor who wants to argue that it applies to the guarantee itself needs to plead that point clearly, at trial, and carry it into the grounds of appeal.
• A constitutional challenge must name the provision. Without that, a court will not entertain it.

The hidden trap is timing. Every one of these points has to be prepared before the trial, because an appeal court will rarely revisit how a trial judge assessed the witnesses. Our banking and finance disputes page explains how we approach claims between borrowers and lenders, and our litigation practice handles them from the first letter through to appeal.

Sources

• Ch.K. Mould Manufactures Ltd and another v. Bank of Cyprus Public Company Ltd, Civil Appeal 20/2020, Court of Appeal of Cyprus, 28 September 2026
• The Evidence Law, Cap. 9, CyLaw
• The Unfair Terms in Consumer Contracts Law of 1996, 93(I)/1996, CyLaw
• The Liberalisation of Interest Rates and Related Matters Law of 1999, 160(I)/1999, CyLaw

This article is provided for general information purposes only and does not constitute legal advice.

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