A buyer of ten off-plan flats stopped paying instalments, then terminated because building had not started. The Supreme Court upheld the finding that it had no right to.
A company bought ten flats off plan in a Limassol development in 2008, paid the early instalments and then stopped. In June 2009 it terminated all ten contracts, saying the developer had not started building and could not deliver on time. On 23 September 2026 the Supreme Court upheld the finding that the termination was unlawful, and that it was the buyer, not the developer, who had broken the contracts.
The buyer still got its money back, less what it owed. How that happened is as useful as the main ruling.
What happened
On 22 February 2008 Lainers Enterprises Ltd signed ten separate contracts of sale with Masterya Ltd and Gamdalyo Holdings Ltd for ten flats to be built in the "Malibu Complex" at Potamos Germasogeias, Limassol. Delivery was agreed for 15 October 2009.
The buyer paid the deposits, the sums due on signing and, about a month late, the first instalment due on 15 May 2008. It paid nothing after that, despite letters from the sellers. The instalments due on 15 October 2008 and 15 May 2009 stayed unpaid on every flat, and the trial court put that down to the buyer's financial difficulty.
On 3 June 2009 the buyer terminated all ten contracts for anticipatory breach, because building work had not begun, and sued for the return of what it had paid, with interest and damages. The sellers at first rejected the termination and insisted on performance, but later accepted it because the buyer was still not paying, and counterclaimed for damages. The planning permit had been issued on 15 October 2008 and the building permit on 6 August 2009, and the trial court accepted evidence that the project could be finished about twelve months after the building permit.
The Limassol District Court dismissed the ten actions and allowed the counterclaims. The Supreme Court (Stamatiou P., Dimitriadou-Andreou and David JJ.) dismissed sixteen of the buyer's eighteen grounds of appeal and allowed two, one of them in part.
Why the termination failed
The trial court held that the obligation to pay the instalments was independent of the progress of the works, and that the lack of a building permit was not a breach, because under the contracts the sellers could not lawfully start building before it was issued and were entitled to an extension for the delay. The buyer, having first broken essential terms by not paying, could not rely on anticipatory breach by the sellers or lawfully terminate.
The buyer's main argument on appeal was that obtaining the permit was the sellers' own legal duty, so a delay in obtaining it could not count as force majeure or as a "legal or other prohibition" extending the delivery date. The Supreme Court restated that a contract is read as a whole, so that every term is given meaning and the parties' objective intention appears from the entire agreement, and held that the trial court had done exactly that.
The contracts obliged the seller to build in accordance with the building permit, and gave it an extension equal to the delay if completion or delivery was prevented by a legal or other prohibition or any other reason beyond its control. The buyer argued that "legal or other prohibition" meant only a "building order of any Governmental Authority". The court disagreed: that phrase appeared in an illustrative list of force majeure events, while "legal or other prohibition" was worded separately and in general terms.
The question was not who had to obtain the permit, but that until it was issued, building could not lawfully begin.
The court said the buyer had confused two things: the seller's duty to obtain the permit, and the legal possibility of starting work before it existed. A clause allowing the seller to start earlier "entirely at his risk" did not change the legislation that required the permit first. The buyer also knew at signing that there was no permit, because the preamble said the seller "shall obtain a planning and building permit".
The buyer argued too that the sellers never told it about the delay or asked for an extension. The court held that this went to how the clause was applied, not to what it meant, which was the question the grounds of appeal raised. It did not decide whether notice was required.
What the sellers recovered
Damages were measured as the difference between the contract price and the market value of each flat in June 2009, when the contracts ended. The trial court accepted the sellers' valuer, but used the floor areas stated in the contracts instead of the wrong figures the valuer had been given, and added 15% VAT to the market value. On that basis only one flat, A201, showed a loss: 46,525.50 euro, plus legal interest.
The buyer said the judge had turned himself into a valuer. The Supreme Court disagreed: a court may not make specialist calculations, but it may do simple arithmetic, and the judge had only applied the valuer's own method to undisputed figures. It also upheld 9% contractual interest on the instalments of 15 October 2008. The trial court had not awarded it on those of 15 May 2009, because the contractual grace period had not run out when the contracts ended.
Where the buyer won
The trial court ordered the sellers to return what had been paid on the ten flats, without interest, after deducting what they had been awarded on the counterclaims. The Supreme Court held there was no contradiction in dismissing the buyer's actions and still ordering repayment. A party that terminates and claims damages cannot keep benefits it received only because the contract was in force, and doing otherwise would enrich the sellers unjustly. Deducting the damages and returning the balance was a practical way of settling both sides' claims, not set-off in the strict legal sense.
The buyer succeeded on two points. The payments on flats A201 and A203 had been added up wrongly, and the court corrected them to 139,933 euro and 112,973 euro. And the refunds now carry legal interest from 14 January 2016, the date of the trial judgment, under section 33(2) of the Courts Law of 1960. The buyer failed on everything else, including its argument that the two sellers were jointly and severally liable, since the contracts named them together as "Vendor" with no clause dividing their liability. The sellers keep their costs at trial; the buyer receives 3,500 euro in costs of the appeal.
What this means in practice
For buyers purchasing off plan, withholding instalments is not a safe way to put pressure on a developer who seems to be running late. If the payment dates are fixed and not tied to stages of the work, the buyer who stops paying is the one in breach, and a later termination can turn into a damages claim against the buyer. Before signing, it is worth knowing whether the instalments follow the calendar or the construction, and what the extension clause covers. Our contract review work looks at exactly these terms, and our guide to buying off plan explains the wider protections.
For developers, the judgment supports an extension clause worded broadly enough to cover the wait for a building permit, where the contract makes clear that building follows the permit. It does not settle whether the developer has to tell the buyer about a delay or ask for an extension, and a developer relying on the clause should not assume that silence is safe.
For anyone thinking of terminating a contract, the first question is whether your own obligations are up to date. Termination for the other side's breach is only as strong as your own performance, and here the instalments left unpaid from October 2008 onwards decided the case.
The trap is thinking that losing means losing everything, or that winning means keeping everything. The sellers won, but still had to repay what they had received, with interest from the trial judgment, keeping back only what the court awarded them. The buyer lost, but got its money back less the sellers' damages and costs. Where an off-plan contract breaks down, both sides should work out that net figure before deciding whether to fight. Our property team acts for buyers and developers in these disputes.
Questions we are asked
Can an off-plan buyer stop paying instalments because construction has not started?
On the contracts in this case, no. The trial court held that the instalments fell due on fixed dates and were owed whatever the progress of the works, and that finding stood after the appeal. A buyer who stops paying is then the party in breach, and loses the ability to terminate for the developer's delay. Whether the same is true of another contract depends on how its payment terms are written.
Does a delay in the building permit count against the developer?
Not necessarily. These contracts gave the developer an extension equal to any delay caused by a legal or other prohibition, or by any other reason beyond its control. The Supreme Court upheld the reading that the developer could not lawfully start building before the permit was issued, and that the wait for it triggered the extension. It made no difference that obtaining the permit was the developer's own obligation.
The buyer knew there was no permit yet. Did that matter?
It supported the result. The preamble of each contract said that the seller shall obtain a planning and building permit, so both sides knew when they signed that the permit would come later. The court read that as confirming that the parties intended building to start after the permit, not regardless of it.
If the termination was unlawful, why did the buyer get its money back?
Because a seller that ends the contract and claims damages cannot also keep the payments it received only because the contract was in force. The trial court ordered the sums paid returned, after deducting what the buyer owed the sellers on their counterclaims, including damages, contractual interest and costs. The Supreme Court approved that as a practical way of settling both sides' claims in the same dispute.
Does the returned money carry interest?
Yes, from the date of the trial judgment. The trial court had ordered the return without interest. The Supreme Court held that under section 33(2) of the Courts Law of 1960 the general rule is legal interest on the sum awarded, that a court may limit it only for reasons it gives, and that excluding interest at least from the date the sums were awarded was not justified.
Did the late payment interest survive the termination?
Yes. Term 6 of the contracts provided for 9% interest on late instalments. The right arose when the instalment of 15 October 2008 went unpaid, before the termination, and the sellers kept it. No order for specific performance was needed, because the interest rested on the express clause.
Sources
- Lainers Enterprises Ltd v. Masterya Ltd and another, Civil Appeal 105/2016, Supreme Court of Cyprus, 23 September 2026
- The Courts Law of 1960, 14/1960, CyLaw
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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