Lawyer - client relationship of trust

"The trust relationship between lawyer - client does not allow him to do business with the client"

Every lawyer must have as a primary concern the service of the interest of his client, who often seeks advice in view of investment, activity or property development. He should be honest, sincere and fair to the client, above all to respect his property and protect it, as well as be accountable to him for the way it is managed. Especially when the client is a foreigner, he must exercise the utmost diligence and must not attempt to exploit the client for his own benefit either personally or through his company.

The lawyer should ensure the relationship of confidentiality and trust between him and the client and should not become a partner in the client's activity, nor participate in joint development of the client's property for personal gain. Much more, he must not seek to exploit the client either because of ignorance, necessity or because he is a foreigner.

First instance decision

A lawyer took advantage of a foreign client and, through a company of his own interests, sold her various properties at an exorbitant price. Furthermore, his company undertook to carry out building works without being a registered licensed contractor. To this end, he took advantage of the lawyer-client relationship of trust and fraudulently and falsely advised her that she would have to acquire some real estate in order to secure permanent residence in Cyprus, which he himself sold to her through his company. When the client found out, she filed a lawsuit against the lawyer and the company, demanding the cancellation of all the agreements she entered into and the return of her money, alleging fraud, mental duress, fraudulent representations and illegality.

The District Court criticized the lawyer's conduct and issued decisions canceling the various agreements the company entered into with the client and ordered the return of the money she paid, amounting to more than one million euros. The lawyer and the company filed an appeal, claiming that the trial Court decision was wrong.

Decision of the Court of Appeal

The Court of Appeal in its unanimous decision issued in C.A.429/2019, dated 11.7.2024, approved the first instance decision and the findings regarding the way the lawyer handled his client. It emphasized that the Court of First Instance correctly notes, the client bases her claims on deceit and fraud, mental duress, real and presumed as well as breach of trust on the part of the lawyer. As long as the transaction is unduly onerous, the person who is in a position to dominate the other bears the burden of proving that the contract was entered into under duress.

It also notes that the special relationships that trigger the Presumption of Mental Duress are of two kinds. Those which as a matter of law create the Presumption and the others whose existence should be documented by the complainant. In the first case, the complainant must simply prove the existence of a historically established relationship, e.g. lawyer and client from which the Presumption of mental pressure with all its consequences arises.

The Presumption of Law in the present case is raised and activated. The appellant was the lawyer of his client-respondent and in a trust relationship with her. Therefore, any agreement is considered to have been reached as a result of mental duress, the client's consent was secured by mental pressure, it was not free and therefore the agreements should be canceled and the amounts paid should be returned to her.

The Court of Appeal regarding the conclusion of the Court of First Instance not to refund her the amount for the construction work, considering that as illegal as the company was in undertaking the construction project, it was even more illegal for the client to entrust it, considered that the case should be differentiated. It is well known the principle that money paid on the basis of an illegal contract cannot be recovered when the contracting parties are equally liable. In the present case, however, the client, as she rightly suggests in the counter-appeal, proceeded with the assignment of construction work, relying on the fact that he was her lawyer and in a relationship of trust with her, but at the same time the representative of the company, would not urge her to draw up an agreement which was illegal.

The conclusion of the Court of Appeal was to dismiss the appeal and to accept the counter-appeal for the return to the client the amount she paid for the construction work.

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