Dimitriou v Huybers

[2017] NSWCA 252

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Dimitriou v Huybers [2017] NSWCA 252
Hearing dates:	25 September 2017
Decision date:	10 October 2017
Before:	Meagher JA
Decision:	1. Dismiss the first, second and third appellants’ application to extend the time for compliance with order 1 made by Beazley P on 5 June 2017. 2. Otherwise dismiss the applications for relief in paragraphs 4, 5, 6, 7 and 8 of the Amended Notice of Motion filed on 25 September 2017. 3. The first, second and third appellants pay the first, second and third respondents’ costs of that Amended Notice of Motion.
Catchwords:	PRACTICE AND PROCEDURE – where appeal dismissed pursuant to self-executing order for failure to comply with procedural direction – where application to extend time for compliance after expiry of time – whether satisfactory explanation for failure to comply with direction – whether appeal devoid of merit – no issue of principle
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW), r 1.12
Cases Cited:	Devries v Australian National Railways Commission (1993) 177 CLR 472 FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 Jackamarra v Krakouer (1998) 195 CLR 516; [1998] HCA 27 Singh v Singh [2017] NSWCA 15 Stollznow v Calvert [1980] 2 NSWLR 749
Category:	Procedural and other rulings
Parties:	George Dimitriou (First Appellant) Wyse & Young International Pty Ltd (Second Appellant) Wyse Accounting Pty Ltd (Third Appellant) Susan Elizabeth Huybers (First Respondent) Pineview Property Holdings Pty Ltd (Second Respondent) Salvatore Russo (Third Respondent)
Representation:	Counsel: D Allen (First and Second Respondents)   Solicitors: Foleys Lawyers (Appellants) Kekatos Lawyers (First and Second Respondents) Russo and Partners (Third Respondent)
File Number(s):	2016/227999
Decision under appeal	Court or tribunal: Supreme Court Jurisdiction: Equity division Citation: [2016] NSWSC 904 Date of Decision: 30 June 2016 Before: White J File Number(s): 2013/301976

Judgment

MEAGHER JA:

Overview

1. On 31 October 2016, the applicants (Mr Dimitriou, WYI and WAC) filed an appeal against judgments of White J (as his Honour then was) in favour of the first respondent (Ms Huybers) and second respondent (Pineview), and against his Honour’s refusal to order that the third respondent (Mr Russo) pay the Dimitriou parties’ costs of defending his unsuccessful cross-claim. Their appeal was dismissed on 3 July 2017 pursuant to self-executing orders made and entered by Beazley P on 5 June 2017. Those orders included:

1.   Vary orders 2 and 3 made on 10 May 2017 and direct that the appellants file and serve:

(a)   any further amended notice of appeal; and/or

(b)   written submissions in support of their appeal

on or before 5 pm on 3 July 2017.

…

3.   Subject to order 6, order that in the event that the appellants do not comply with order 1 above, that the proceedings be dismissed with the appellants to pay the respondent’s costs.

…

6.   Grant the appellants liberty to apply in respect of order 3, such liberty to be exercised on 2 business days’ notice and prior to 3 July 2017, with the intent that the matter is to be listed before me or at my direction on or before 3 July 2017 if the liberty to apply is exercised.

2. No application was made in accordance with order 6 to extend the time for compliance with order 1. The Dimitriou parties did not comply with order 1. On 11 August, they filed a motion seeking orders which include that the “time for compliance with Order 3 be extended”. That reference to order 3 must be taken to be to order 1. On the hearing of that application before me on 25 September 2017, they produced a further amended notice of appeal (containing 28 grounds) and “Appellants’ Submissions” (of 20 pages). The first of these documents is dated 21 September and the second, 22 September 2017.

3. The application to extend the time for compliance with order 1 is made under Uniform Civil Procedure Rules 2005 (NSW), r 1.12, which provides:

(1) Subject to these rules, the court may, by order, extend or abridge any time fixed by these rules or by any judgment or order of the court.

(2) The court may extend time under this rule, either before or after the time expires, and may do so after the time expires even if an application for extension is made after the time expires.

4. Ms Huybers and Pineview (who were represented by the same counsel) opposed that application on the grounds that the proposed appeal is devoid of merit and that the Dimitriou parties have not provided any satisfactory explanation for the non-compliance with order 1, which followed several earlier failures to comply with directions. Mr Russo’s position is different from that of Ms Huybers and Pineview. The only order subject to appeal which relates to him is an order that the plaintiffs in the underlying proceedings (rather than he) pay the Dimitriou parties’ costs of his unsuccessful cross-claim. Such an appeal requires leave under Supreme Court Act 1970 (NSW), s 101(2)(c). The appeal was brought without leave, and one of the orders sought by the applicants’ amended notice of motion is that such leave be granted.

The procedural history in this Court

5. The plaintiffs in the proceedings before the primary judge were (at the time of trial) Mrs Rubino Snr and the executor of her late husband’s estate. The defendants were the ANZ Bank, Pineview, the Registrar-General and Mr Russo. The plaintiffs alleged fraud as against Pineview which was able to be committed by the negligence of Mr Russo, their solicitor. The claim against the ANZ Bank was settled. There were two cross-claims against the Dimitriou parties: one by Mr Russo (denoted the second cross-claim) and one by Ms Huybers and Pineview (the third cross-claim). Judgment was delivered on 30 June 2016: Rubino v Pineview Property Holdings Pty Ltd [2016] NSWSC 904. The plaintiffs’ claims were dismissed, as was Mr Russo’s cross-claim. Pineview obtained judgment against the Dimitriou parties for $1,276,389.29, and Ms Huybers obtained judgment for $535,151.62. The Dimitriou parties were also declared liable to indemnify Pineview and Ms Huybers against certain liabilities: Judgment [376]. In a later judgment, the plaintiffs were ordered to pay the Dimitriou parties’ costs of Mr Russo’s unsuccessful cross-claim: Rubino v Pineview Property Holdings Pty Ltd (Supreme Court (NSW), White J, 19 July 2016, unrep) (incorrectly described on its face as having medium neutral citation [2016] NSWSC 1050).

6. A notice of intention to appeal was filed on 28 July 2016 and a notice of appeal (which contained 170 grounds) on 31 October 2016. The latter was one month outside the three-month period from the material date provided for by UCPR, r 51.9(1). An amended notice of appeal (containing 192 grounds) was filed on 10 November 2016. In early December 2016, Brereton J heard an application for a stay of execution of the judgments in favour of Pineview and Ms Huybers. Mr Dimitriou appeared in person and on behalf of the two companies. In a judgment delivered on 9 December 2016 (Rubino v Pineview Property Holdings Pty Ltd [2016] NSWSC 1780), his Honour ordered that execution of those judgments be stayed on the followed terms (at [33(1)]):

Upon Wyse & Young International Pty Ltd, Wyse Accounting Pty Ltd and George Dimitriou (“the Dimitriou parties”) undertaking to the Court that they will diligently and expeditiously prosecute their appeal, and upon their executing and delivering to the solicitors for Susan Huybers and Pineview Holding Pty Ltd (“the judgment creditors”) a fixed and floating charge over the assets and undertaking of Wyse & Young International Pty Ltd and Wyse Accounting Pty Ltd as security for the judgments in favour of the judgment creditors, such charge to be in a form acceptable to the judgment creditors or settled by the registrar, execution of the judgments in paragraphs 3(b) and 3(d) of the judgment given and entered on 30 June 2016 be stayed until the hearing of the appeal in proceedings 2016/227999 in the Court of Appeal, or earlier further order of this Court or of the Court of Appeal.   

7. The fixed and floating charge was not provided and accordingly the stay order never became operative. In the course of addressing that application, Brereton J considered and formed a view as to whether the material before him established an arguable case of error in respect of each of the challenged judgments. That material appears to have consisted of the reasons for judgment and the amended notice of appeal.

8. The appeal was first listed for directions on 8 February 2017. The appellants appeared in person by Mr Dimitriou. Directions were made for submissions and red appeal books to be filed and served by 8 March. The appellants did not comply with those orders or appear at the next directions hearing on 15 March, when a direction was made under UCPR, r 13.6 that they show cause why the appeal should not be dismissed or struck out for non-attendance.

9. On 5 April, directions were made for the appellants’ submissions to be filed by 3 May, together with any amended notice of appeal. Mr Dimitriou was also directed to file an affidavit establishing his authority to act for the other appellants, WYI and WAC. That direction does not appear to have been complied with. At the next directions hearing on 10 May, Mr Dimitriou appearing for the appellants was directed to file written submissions and any amended notice of appeal by 31 May. Were that not to occur, an affidavit was to be filed giving the reasons why it had not. The appellants neither complied with that direction as to submissions nor filed an affidavit. On 5 June, the proceedings were listed before Beazley P, who made orders including those extracted in [1] above.

10. By email dated 6 July, the Registrar advised Mr Dimitriou that the appeal proceedings had been dismissed pursuant to order 3 made on 5 June and that a proposed directions hearing on 10 July had been vacated. Mr Dimitriou and the Registrar exchanged further email correspondence, to which I refer below. On 11 August, the original form of the current motion was filed, together with a supporting affidavit of Mr Dimitriou sworn on the same day. On 18 August, a second affidavit was filed attaching a further amended notice of appeal (containing 32 grounds). On 21 August, the applicants’ motion was stood over to 4 September, and on that date stood over again to 25 September. The purpose of those adjournments was to allow the Dimitriou parties further time to remedy their non-compliance with order 1 made on 5 June.

11. As noted in [2] above, a revised version of the further amended notice of appeal was provided to the respondents, together with the first and only version of the appellants’ written submissions, on 21 or 22 September 2017, two and a half months after the final versions of those documents were to be filed in accordance with Beazley P’s directions.

The explanation for non-compliance

12. The evidence addressing this subject consists of Mr Dimitriou’s longer affidavit of 11 August 2017 and copies of documents produced from his records (Ex 3). With a few exceptions, those documents were produced by Mr Dimitriou under a notice to produce and tendered by Ms Huybers and Pineview. The conclusion for which the Dimitriou parties contend from that evidence is expressed in their written submissions in support of their motion: “The fact that the Applicants’ delay is in part attributable to his former Solicitor and Barrister is a further matter for consideration by the Court why an extension should be granted.” [emphasis added] As will become apparent, the evidence falls well short of providing a complete and frank explanation for what has occurred and, as a consequence, this Court is not in a position to assess the extent to which the undoubted delay and non-compliance is properly attributable to the lawyers, rather than their clients.

13. The evidence does not offer any explanations for the failures to comply with directions made before 5 June 2017. It suggests the following sequence of events from late May 2017. On about 24 May, Mr Dimitriou transferred $8,000 into the trust account of Sydney Law Practice, of which Mr Dominic Carbone is a principal. That transfer was made on account of legal costs to be incurred, it would seem, by Mr Carbone’s acting for the Dimitriou parties in these appeal proceedings and in proceedings to recover moneys from a Mr Sanna. On 1 June, Mr Carbone conferred with Mr Paul Folino-Gallo of counsel and Mr Dimitriou in relation to the appeal. On 5 June (a Monday), Mr Carbone appeared before Beazley P. The narrative in his later fee note (dated 14 July) includes “seeking an extension of time for compliance and noting Orders made”.

14. Mr Dimitriou’s affidavit does not address what communications occurred between him and Mr Carbone or Mr Folino-Gallo between 5 June and 3 July in relation to compliance with Beazley P’s orders. Nor does it indicate what he understood to be the effect of those orders, or whether he made any arrangements to ensure they were complied with. However, the narrative of Mr Carbone’s later fee note refers on 29 June 2017 (a Thursday) to an “Email to you outlining legal position regarding appeal” and “Text message to you”. Those communications were not tendered by the Dimitriou parties, and there is no evidence as to their contents.

15. On 3 July (the following Monday), the time for complying with the outstanding order expired. The Registrar’s first email communication to Mr Dimitriou concerning the operation of the self-executing order was on Thursday, 6 July at 3:10 pm. On 10 July, Mr Dimitriou attended the Court registry and, on 12 July, responded to the Registrar’s email. That response is considered below. As to what occurred in the interim on Mr Dimitriou’s side of the record, the narrative of Mr Carbone’s fee invoice includes the following:

04/07/2017   Telephone call on Paul Gallo regarding drafting of notice of appeal

04/07/2017   Telephone call on Paul Gallo

04/07/2017   Email to Paul Gallo

05/07/2017   Conference with Paul Gallo and George Dimitriou

07/07/2017   Telephone call on Paul Gallo

07/07/2017   Telephone call on you regarding appeal

10/07/2017   Conference with Paul Gallo and George Dimitriou

10/07/2017   Telephone call on Paul Gallo

11/07/2017   Telephone call on Paul Gallo

12/07/2017   Email to [Mr Folino-Gallo’s email address] Re: Dimitriou -v- Huybers

12/07/2017   Telephone call on Paul Gallo

12/07/2017   Perusing email from George Dimitriou containing draft email to court

12/07/2017   Email to George Dimitriou regarding email to court

16. On 10 July, Mr Folino-Gallo wrote to Mr Carbone attaching a fee note “in respect of the work undertaken in this matter”. That fee note is for work done from 6 to 9 July, described as “read brief and transcripts, reviewed pleadings and drafted further amended notice of appeal”, and on 10 July, as “conference with clients”.

17. The communications between Mr Dimitriou and his lawyers after 3 July are not dealt with in his affidavit or explained in the documents tendered. The lawyers’ fee notes are consistent with the barrister having first commenced work directed to compliance with Beazley P’s order on 5 or 6 July (at least in relation to the filing of a further amended notice of appeal). That timeline, however, is not wholly consistent with Mr Dimitriou’s explanation for non-compliance in his email to the Registrar on 12 July.

18. That email, after referring to the preparation of an affidavit “setting out the reasons as to why the orders made” by Beazley P were not followed, continues:

I can confirm that Mr Carbone intrusted Mr Paul Follino Gallo to redraft the Amended Notice of Appeal …

The appellants representatives appreciated the further time granted [presumably a reference to the orders made on 5 June]. This meant that Mr. Paul Follino Gallo Barrister, was having to start again as Honourable Justice Beazley rightly suggested. Mr. Paul Follino Gallo having spent the time thoroughly reading through the voluminous Court Books, the Evidence , the 14 day Transcripts and the pleadings establish the legal grounds so that the Appellants had the best chance to successfully prosecute the appeal. This took longer than was expected although a very genuine effort was made to meet the time table ordered by the Honourable Justice Beazley AO.

Mr. Paul Follino Gallo had made the Further Amended Notice of Appeal available for Monday 10 July 2017 having worked tirelessly. The version is attached to this email correspondence. The Appeal Grounds have been reduced to 8 Legal points of Appeal.

What had occurred that created the slippage in time that prevented the Appellants legal representative to exercise liberty to apply for further time in an Affidavit was for reason that notes were not properly recorded on the day. Although the Registra’s decision on 6 July 2017 arose out of the self-prosecuting orders the Appellants, and or its Legal Representatives inexcusable delay for the filing of the Further Amended Notice Appeal and liberty to apply was not exercised has caused the Appellants to be denied the opportunity to successfully prosecute the appeal.

19. This email does not describe what happened between 5 June and Mr Felino-Gallo’s production of a draft further amended notice of appeal on about 10 July. It implies that the barrister commenced that task in time to enable the original timetable to be met, and that he was unable to do so before 10 July notwithstanding that he had worked “tirelessly” in the meantime. That sequence of events is not consistent with the timeline suggested by the narratives in the lawyers’ fee notes.

20. On 13 July, Mr Carbone wrote to the solicitors for Ms Huybers and Pineview, Kekatos Lawyers, enclosing a copy of a further amended notice of appeal (described as that finalised at the time the appeal was dismissed) and requesting their clients’ consent to the reinstatement of the appeal. That version of the further amended notice of appeal contained 8 grounds. It was subsequently redrafted and the version attached to Mr Dimitriou’s 11 August 2017 affidavit contains 49 grounds, although not all of the numbers appear to relate to separate grounds.

21. Finally, an email from Mr Dimitriou to Mr Folino-Gallo dated 3 August 2017 contains allegations that are difficult to reconcile with the explanations for non-compliance described above. The email, which expresses disappointment with the lawyers’ conduct of the appeal, is somewhat difficult to follow. It includes the following paragraph, which might be understood as indicating that the lawyers were given the task of preparing the further pleading and written submissions at the time Beazley P’s orders were made; that the timetable was one that Mr Carbone had requested; and that, upon their commencing that task, the lawyers realised further material was required:

To say the least it should be Domenic’s and Yours responsibility to have the proceedings recover due to both Domenic’s inability to properly perform his role as a solicitor and or to ensure that you were adequately briefed and your inability to provide a further notice of Appeal in an acceptable form and the submissions that come hand in hand that you were able to comply within the time table that Domenic had requested and was provided by the president of the Court of Appeal pursuant to the orders and Domenics appearance.

22. In circumstances where counsel for Pineview and Ms Huybers did not seek to cross-examine Mr Dimitriou and in the absence of more complete evidence, I am unable to make findings which might resolve these inconsistencies. Their existence, however, is due to the applicants’ failure to provide a full and frank explanation for their non-compliance. The consequence is that I cannot determine the extent to which that non-compliance was due to omissions of the lawyers that should not be attributed to the applicants: cf Singh v Singh [2017] NSWCA 15 at [26], citing Stollznow v Calvert [1980] 2 NSWLR 749.

The prospects of success of the proposed appeal

23. In order to address this subject, it is necessary to have an understanding of the background circumstances and the primary judge’s reasoning in order to assess the arguments which the Dimitriou parties seek to advance on appeal. The arguments sought to be made are to some extent revealed by the 28 grounds of the proposed further amended notice of appeal as explained in the appellants’ written submissions dated 22 September 2017 (together Ex A in the application before me). As will also emerge from what follows, those submissions do not separately address each of the proposed grounds and those that do contain much unsupported assertion and little argument directed to exposing error in the primary judge’s fact finding or reasoning.

Circumstances of the underlying proceedings

24. Mr and Mrs Rubino Snr owned two properties at Galston (the Calderwood and Pine Valley properties) and one at Arcadia. The parents lived in the Calderwood property, and their son (Frank) and his wife (Lee) lived in the Arcadia property. Each of the three properties was mortgaged to the ANZ Bank. Following a mediation in December 2011, the ANZ Bank agreed to let them keep each of the Pine Valley and Arcadia properties by paying $1,050,000 and $1,650,000, respectively, by 12 January. If those amounts were paid or possession of the relevant properties delivered by 16 January, the bank agreed to discharge the mortgage over the Calderwood property without further payment. Mr and Mrs Rubino Snr, via their son Frank, engaged the services of Mr Dimitriou (and his companies) to raise those moneys. They had previously used his services, for which Mr Dimitriou claimed there were significant amounts due to him and his associates.

25. Mr Dimitriou arranged short-term loans totalling $1,050,000, of which Ms Huybers advanced $570,000 (borrowed from the ANZ Bank) and a Mr Kalischer advanced $480,000. Those funds were used to discharge the Pine Valley mortgage. The Calderwood and Pine Valley properties were then transferred to Pineview, which had been incorporated in January 2012, with Ms Huybers as the sole director and shareholder. The stated consideration for that transfer, $2,500,900, was never paid to Mr and Mrs Rubino Snr. Mr Dimitriou then arranged for Pineview to borrow $2,000,720 from the ANZ Bank, secured by first mortgages over its two properties. Ms Huybers and a company associated with her (Green Global) guaranteed Pineview’s obligations to the bank. Ms Huybers maintained that she did not know that significantly more than $1,050,000 was being borrowed.

26. The ANZ Bank agreed to that loan. On 9 March 2012, after deducting certain fees and charges, it paid $1,990,551 to WYI and WAC. The amount received by WYI, $123,059.50, was used to pay stamp duty on the transfer of the properties to Pineview. Of the amount received by WAC, $1,867,491.50, Mr Kalischer was paid $490,010 and Mr Dimitriou or his companies retained or were paid $1,296,043.96. Mr Dimitriou accepted that the latter amount included $580,000 held for Ms Huybers, consisting of her advance and $10,000 agreed interest. That amount was not paid to her. Instead, Mr Dimitriou claimed that a payment to one of his companies (Defined Property Investments) included $495,000 of the amount due to her, to be reinvested on her behalf as part of a loan to companies associated with Mr Sanna: Judgment [180], [181], [277]. The remainder of the $1,296,043.96 was mostly retained by the Dimitriou parties on account of fees said to be owed by the Rubino family and their associates either to Mr Dimitriou, WYI or persons who in turn were indebted to the Dimitriou parties (namely, $64,000 due to Mr Kalischer and $108,000 due to Mr Russo): Judgment [12], [182].

27. Pineview defaulted under its loan from the ANZ Bank, which obtained judgment against Pineview, and against Green Global and Ms Huybers as guarantors. Moneys received from the sale of the Calderwood and Pine Valley properties are to be applied in reduction of those liabilities: Judgment [308].

Ms Huybers’ claims

28. Ms Huybers claimed the $580,000 to be paid to her from the proceeds of the ANZ Bank advance received by WAC. Although accepting that this amount when received was held by WAC for her, Mr Dimitriou maintained that Ms Huybers expressly agreed to $495,000 of it being advanced to the Sanna companies. The primary judge accepted her denial of any discussion with Mr Dimitriou to that effect: Judgment [277], [278], [284], [310]. Mr Dimitriou also maintained that Ms Huybers was required to give credit for 173 other payments, totalling $276,228, said to have been made to her or on her behalf: Judgment [312]. The primary judge only allowed an amount of $44,848.38 by way of set-off for those payments, leaving a balance of $535,151.62 as the amount of Ms Huybers’ judgment against the Dimitriou parties for breaches of fiduciary duty or trust: Judgment [371], [372].

29. Ms Huybers also claimed an indemnity from the Dimitriou parties in relation to her liability to the ANZ Bank under the guarantee of the Pineview loan. She alleged, and the primary judge accepted, that the Dimitriou parties had deceived her by not advising: that moneys had been drawn down from the ANZ Bank; that those moneys significantly exceeded the amount required to repay the advances totalling $1,050,000 to Mr and Mrs Rubino Snr; that almost all of those moneys had been paid to WYI and WAC; and that “the moneys received had been disbursed" without her authority: Judgment [264], [309]. The primary judge also found that Mr Dimitriou acted in breach of fiduciary duty by procuring that Ms Huybers give the guarantee (which was to benefit the Dimitriou parties because a significant part of the guaranteed moneys were to be paid to them in reduction of alleged indebtedness), and that WYI and WAC knowingly participated in that breach: Judgment [261]–[264].

Pineview’s claims

30. Pineview claimed the amount of the ANZ Bank loan received by it, $1,990,551, less amounts applied to meet its liabilities. Those amounts, as found, are at Judgment [300] and include stamp duty ($123,059.50), the repayment of Mr Kalischer’s loan ($490,010) and payments to or for the benefit of Ms Huybers ($44,848.38). After deduction of those amounts, Pineview obtained judgment for $1,276,389.29.

31. Its case had been that Mr Dimitriou did not have its authority (which it maintained could only have been given by Ms Huybers) to direct that the amount of $1,990,551 be paid to WAC and WYI, who in turn did not have its authority to disburse those funds as they did: Judgment [172], [267]. The primary judge held that Ms Huybers did not authorise those payments and that Pineview was therefore entitled to judgment except insofar as moneys had been applied to meet its liabilities: Judgment [173], [184], [266], [273]. The primary judge dealt separately with each of the claimed set-offs: Judgment [287]–[300].

The further amended grounds of appeal and written submissions

32. As I have already noted, the written submissions in many instances do not address the stated grounds or develop arguments that seek to expose the errors to which the grounds as expressed are directed. In many cases, the submissions do no more than assert error without further explication. Taken together at their highest, the grounds and written submissions seek to make the following case on appeal concerning the circumstances in which the claims by Ms Huybers and Pineview were made (with the grounds challenging the primary judge’s findings to the contrary identified in brackets):

1. The Rubino family and companies (principally represented by Frank Rubino) and the Dimitriou parties made an “arrangement” under which Pineview would take out a $2,000,720 loan from the ANZ Bank on the security of the Pine Valley and Calderwood properties. The proceeds of that loan were to be used to discharge the debts incurred by Mr and Mrs Rubino Snr to Mr Kalischer and Ms Huybers; then to discharge “all previous and current debts incurred” by members of the Rubino family, as well as their companies, to the Dimitriou parties and their associates; and finally to assist the Rubinos to purchase the Arcadia property when auctioned by the ANZ Bank (ground 7);

2. Ms Huybers and Pineview were aware of this “arrangement”. In addition, and for the purpose of attributing knowledge to Pineview and determining whether it authorised the disbursement of loan moneys, Frank Rubino was to be regarded as a de facto director and the controlling mind of Pineview, and he directed and instructed the Dimitriou parties in relation to the disbursement of the funds received from ANZ Bank (grounds 9, 10, 11 and 16);

3. Payments were made from those funds to or for the benefit of Pineview that should be set off against any judgment to which it was entitled (ground 5);

4. Ms Huybers authorised the investment by the Dimitriou parties of $495,000 with companies associated with Mr Sanna (ground 22); and

5. Other payments made to or for the benefit of Ms Huybers should have been set off against her claim for $580,000 (ground 17).

The money judgment for Ms Huybers

33. The primary judge accepted Ms Huybers’ denial that there was any discussion between her and Mr Dimitriou in which she authorised him to invest her “Pineview settlement moneys” with “the Sannas”: Judgment [277], [278]. At Judgment [188], his Honour described Mr Dimitriou (as well as Frank Rubino) as a witness on whose uncorroborated testimony he would not place any weight “unless it contained admissions or was consistent with facts otherwise objectively established”.

34. There are two grounds of appeal directed to these conclusions. Ground 22 challenges the finding of fact and ground 24, the general credibility finding. The written submission in relation to ground 22 (grouped with ground 23 and set out below in its entirety) contains no argument in support of the challenge to the finding of fact:

Not only did Huybers know about the ANZ loan to Pineview; after it settled she continually and wrongfully accessed the Pineview Bank Account (which only she was able to access) and took monies that were being deposited into that Account by the Rubinos to ensure that the ANZ Bank’s interest payment on the loan were being met. The amount of $25,000 had been deposited to that account for her benefit and Dimitriou told her that she could take that money. However, she continued to access that account for her own benefit and to the great detriment of the Rubinos.

35. The written submission in support of ground 24 is similarly unhelpful. It begins by extracting the following passage from the judgment of Brennan, Gaudron and McHugh JJ in Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479:

[A] finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against - even strongly against - that finding of fact. If the trial judge's finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge "has failed to use or has palpably misused his (or her) advantage" or has acted on evidence which was "inconsistent with facts incontrovertibly established by the evidence" or which was "glaringly improbable" [citations omitted]

36. The written submission continues:

Huybers’ and Frank Rubino’s evidence were farragoes of lies. Jetson either lied or did not tell the tell the truth in many instances. There are numerous points of evidence where His Honour can be said to have “failed to use or has palpably misused his advantage” or that he acted on evidence which was “inconsistent with facts incontrovertibly established by the evidence” or which was “glaringly improbable”. A few of those examples are as follows: xxx [sic]

37. Nothing follows. The other ground relevant to this money judgment, ground 17, challenges the refusal to allow further set-offs. The written submissions (para 17.2(a)–(e)) identify five amounts, described as “examples”, rather than as being all of the claimed set-offs to which the ground relates. In each case, the issue was whether the payment was made by or on behalf of the Dimitriou parties to or at the direction of Ms Huybers and not in discharge of an unrelated liability to her.

38. The first amount consists of payments by Union Steel Investments to Union Steel, which the primary judge rejected because he was not satisfied that Union Steel Investments was a company owned or controlled by Mr Dimitriou: Judgment [358]. Rather than addressing that reasoning, the written submissions merely assert that Ms Huybers admitted to receiving the funds “from various sources”. The second amount, identified as Item 126, was dealt with by the primary judge on the same basis at Judgment [358]. Again the written submissions are directed to the false issue of receipt. The third amount is not clear from the written submissions. It would appear to be moneys paid to Ms Huybers totalling $96,695.62, which she maintained were fees for her being a director of Union Steel while that company held property on trust for other clients of Mr Dimitriou: Judgment [345]. The primary judge found that there was such an agreement, and he was not satisfied that those payments were made by or on behalf of the Dimitriou parties: Judgment [354], [358]. The written submissions deprecate these conclusions without identifying any error. The fourth and fifth items, identified as Items 59 and 60, are dealt with at Judgment [365] and [366]. Each is for an amount of $20,000. His Honour found that Item 59 was paid by Defined Properties Investments to Green Global as part payment of a fee due to Ms Huybers for acting as director, guarantor and lender in the Pineview transaction. The written submissions do not point to any error in that characterisation of the payment. Item 60 was described in the books of account of Defined Properties Investments as a loan to Union Steel. The written submissions disclose no error in that characterisation, which was supported by the description of the payment in the bank statements of both payer and payee as a loan: Judgment [366]. The written submissions also refer to the inclusion of Item 60 in a list of items for which Ms Huybers should give credit, at Judgment [360]. However, that inclusion, which must be treated as an oversight given his Honour’s separate treatment of the item at Judgment [366], is not supported by any analysis that contradicts the later characterisation of the payment as one that should not be the subject of a credit.

The indemnity to Ms Huybers

39. The conclusion that Ms Huybers was entitled to be indemnified against her liability as guarantor of Pineview’s liability to the ANZ Bank is based on his Honour’s finding at Judgment [261]–[264] that Mr Dimitriou breached his fiduciary duties by not disclosing to Ms Huybers that the borrowings for which she would personally be liable were to be substantially applied to reduce debts he claimed were owed to him or others by the Rubino family. Ground 19 challenges that conclusion. But the written submissions in support of it (and grounds 18 and 20) do not identify any arguable error in relation to his Honour’s conclusion as to the legal characterisation of the relationship or the extent of Mr Dimitriou’s disclosures. Instead, as appears below, they make assertions and address matters the relevance of which is not readily apparent:

Huybers’ evidence is a farrago of lies. One example of that is that she lied when she said that she did not sign the authority provided to her prior to the settlement of the ANZ Loan on 8th March 2012. Further, she stole two boxes of documents out of Dimitriou’s office (which he says was at the urging of Det. Shawn Schussler). Those boxes contained, inter alia, various documents that were relevant and important to this case (including, Dimitriou claims, the original signed authority addressed to WYI confirming that the ANZ Bank proceeds being borrowed by Pineview were to be paid to WYI and Wyse Accounting and numerous recepts recording various payments that were either made to Huybers or on her behalf). That material was so important that Lee Rubino went to Queensland to meet Huybers and view the contents of those boxes. Further, Huybers had previously signed authorities addressed to ANZ Bank directing them that loan proceeds being borrowed by Pineview were to be paid to WYI (inserted by her in her handwriting).

The money judgment in favour of Pineview

40. The primary judge accepted Ms Huybers’ evidence that she did not on behalf of Pineview authorise payment of the ANZ Bank loan moneys in satisfaction of liabilities of the Rubino family and its companies to the Dimitriou parties. Specifically, his Honour accepted her evidence of not knowing that the loan moneys were to be paid to WYI and WAC and then applied substantially to discharge claimed debts of the Rubino family to the Dimitriou parties: Judgment [173], [175], [184], [264], [273]. For that reason, his Honour found that Pineview was entitled to an account of the moneys received by those companies, except insofar as they were applied to meet liabilities of Pineview. Those liabilities were held to include its obligation as trustee “to discharge the debts incurred by the Rubinos to Kalischer and Huybers”: Judgment [250], [254], [266], [273], [275].

41. These findings are challenged by grounds 5, 7, 9, 10, 11 and 16. Those grounds together assert that the primary judge erred in not holding that Frank Rubino was a de facto director and the controlling mind of Pineview (ground 9) and in not holding, for that reason, that the Dimitriou parties were authorised by him on behalf of Pineview to disburse the moneys received on settlement of the ANZ Bank loan, including in satisfaction of liabilities of the Rubino family to the Dimitriou parties (grounds 10, 11 and 16).

42. The written submissions in relation to ground 10 are brief:

Frank Rubino, as the de facto director of Pineview, did authorise the appellants on behalf of Pineview and the Plaintiffs to disbursement of all the monies held “to pay everyone”. It is more than a moot point, it is the critical finding of these proceedings involving a large number of the adverse findings that were made against the appellants.

43. The difficulty for this argument having any prospects of success on appeal is that it was not made to the primary judge. In their case, the plaintiffs (Mr and Mrs Rubino Snr) contended that Mr Dimitriou was a de facto director of Pineview and that accordingly his alleged fraud on them should also be attributed to the company: Judgment [10], [16]. The primary judge rejected that case: Judgment [211]. In doing so, his Honour did not hold (contrary to the assertion made by ground 8) that Mr Dimitriou was a de facto director of Pineview. In relation to its cross-claim, Pineview’s case was that, in arranging the ANZ Bank loan, the Dimitriou parties were acting on behalf of the Rubinos, and not for Ms Huybers or Pineview. The Dimitriou parties’ case in response accepted that Mr Dimitriou was an agent of the Rubinos, and not of Pineview, and claimed that, in that capacity, he received and relied on instructions and directions from Frank Rubino acting for the Rubinos. The primary judge addressed the issues raised by these arguments for Pineview’s cross-claim at Judgment [266]–[269]. His Honour had earlier held that Frank Rubino knew about and consented to the transaction whereby the two properties were to be transferred to Pineview so that it could use them as security for money to be borrowed from the ANZ Bank: Judgment [210].

44. The primary judge, however, observed at Judgment [252]:

I do not accept that Frank Rubino authorised the particular level of borrowing of $2,000,720. Dimitriou did not give any specific evidence to that effect. Frank Rubino denied any knowledge of the proposed loan to Pineview from the bank. Russo said only that Frank Rubino mentioned a figure of $1.7-$1.8 million.

45. At Judgment [268], his Honour revisited this subject:

Dimitriou said that he relied on Frank Rubino’s authority for the disbursement of moneys received by Wyse Accounting. He said he received a text message on his Blackberry from Frank Rubino authorising payments. He said that his Blackberry had been seized by the police. On the return of a subpoena to the NSW Police Detective Sergeant Schussler said that the Blackberry had been sent to Canada for forensic examination because Dimitriou had not provided the password. Dimitriou said that it was an old device and he no longer recalled the password. There was no corroboration of Dimitriou’s evidence that Frank Rubino had authorised payments from the moneys borrowed from the ANZ Bank.

46. The primary judge did not resolve this factual issue between Mr Dimitriou and Frank Rubino (neither of whom he regarded as a credible witness) because it was unnecessary to do so. The only argument made by the Dimitriou parties was that Frank Rubino, acting for his parents, the beneficial owners of the borrowed moneys, authorised the payments. Rejecting that argument, his Honour held that Mr Dimitriou needed Pineview’s authority as trustee, which meant Ms Huybers’s authority as its sole director: Judgment [269]. If the Dimitriou parties had argued that Frank Rubino’s authority was sufficient because he was a de facto director of Pineview, the primary judge would have needed to address that argument and the facts said to support it, and to resolve the factual dispute between Mr Dimitriou and Frank Rubino. No argument is developed in the written submissions to show that Frank Rubino was a de facto director of Pineview. Nor could such an argument be made for the first time on appeal.

47. Ground 16 alludes to what may be understood as an alternative basis for alleging that Pineview authorised the disbursement of the ANZ Bank loan moneys. It states that the primary judge erred in not holding that the Dimitriou parties “in accordance with the ‘arrangement’ were directed as to how those moneys were to be disbursed by [Mr and Mrs Rubino’s] authorised agent, Frank Rubino”. However, the written submissions contain no argument in support of this ground (which is grouped with ground 17 challenging the set-offs against Ms Huybers’ claim). In particular, there is no argument supporting the proposition that, under the terms of the “arrangement” to which Pineview and perhaps Ms Huybers were parties, Frank Rubino was authorised to direct disbursements on behalf of Pineview.

48. Furthermore, the ground assumes that Ms Huybers was aware of, and assented to, a substantial part of the prospective loan moneys being applied to reduce debts claimed as due to Mr Dimitriou and others from the Rubino family. Ground 7 (which contends for a finding upholding the “arrangement” described at [32(1)] above) does not expressly assert that Ms Huybers was a part of any such arrangement. And any argument in support of this assumption would have to overcome the primary judge’s findings that Ms Huybers was not aware of the amount of the moneys drawn down or that it was to be applied in satisfaction of debts claimed to be due by the Rubino family: Judgment [19], [20], [184], [264], [273].

49. This makes it unnecessary to consider Brereton J’s observation at [21] of his reasons for granting a conditional stay of execution (see [6] above) that it was “not unarguable” that authority from the Rubino’s, through their agent Frank, was sufficient to authorise the payment away of funds by Pineview as trustee.

50. The remaining ground relevant to the money judgment in favour of Pineview is ground 5, which challenges the refusal to allow further set-offs to Pineview. The written submissions (para 5.2(a) to (n)) identify 11 such amounts.

51. The first and second amounts are $64,000 due from the Rubino family to Mr Kalischer and $108,000 due to Mr Russo. The primary judge did not allow a set-off for those amounts, which did not involve the discharge of any liability of Pineview or liability of Mr or Mrs Rubino which Pineview was required to discharge (namely the debts incurred to Mr Kalischer and Ms Huybers): Judgment [12], [182], [184], [275]. The written submissions do not address the primary judge’s reasoning. The third amount is $21,350, said to be due to Mr Foley for services provided as solicitor for members of the Rubino family: Judgment [176]. It is not an amount owing by Pineview and not an amount which it was otherwise required to pay having regard to the limited purpose of the trust. The same observation applies to the fourth amount of $10,000, paid to Mr Jetson, an associate of Mr Dimitriou. Again, the written submissions do not address the primary judge’s reasoning.

52. The fifth, sixth and seventh amounts do not need to be considered. They involve in total an amount of less than $1,000. The eighth amount is $5,575.85, said to include payment of an insurance premium. The primary judge rejected this claim to set-off because there was no evidence that the payment satisfied a liability of Pineview. The written submissions do not explain why the “invoice” supporting the payment by Defined Properties Investments was such evidence. The ninth amount of $15,000 to $18,000 does not appear to have been dealt with by the primary judge. However, the written submissions do not explain what the actual amount is or why a set-off should have been granted. The tenth and eleventh amounts are related. The primary judge gave a credit for the tenth ($5,494.34 instead of $5,194.34) Judgment [296], [300]. No credit was sought in respect of the eleventh amount ($4,002): Judgment [296]. The final amount (fees incurred on the incorporation of Pineview) is not dealt with by his Honour, and the written submissions do not indicate whether it was an expense incurred by Pineview and the subject of any claim to a set-off.

The costs order in relation to Mr Russo’s cross-claim

53. It remains to consider the position of Mr Russo. The applicants require leave to appeal against the primary judge’s refusal to make an order that Mr Russo pay the Dimitriou parties’ costs of his unsuccessful second cross-claim. In Judgment (No 2), the primary judge made an order that the plaintiffs and Frank Rubino (a non-party) pay so much of those costs of the Dimitriou parties that were solely referable to the defence of the second cross-claim. His Honour made that order having assessed there to be no risk of the plaintiffs and Frank Rubino not being in a position to satisfy that costs order: Judgment (No 2) at [24]–[26].

54. Ground 27 asserts error in not making a costs order against Mr Russo and in not holding that the costs should be paid “on a full indemnity basis”. In relation to the basis on which costs were to be assessed, the reasons for judgment do not suggest that the Dimitriou parties sought any order that their costs of the second cross-claim be paid other than on the ordinary basis. In relation to the order itself, the written submissions do not identify any error of fact or principle in the exercise of the costs discretion. Nor is there any evidence before me that the plaintiffs and Frank Rubino are not able to satisfy the existing costs order. Accordingly, this part of the appeal (which currently is incompetent as brought without leave) is devoid of any merit.

Determination of application for extension of time

55. It is not contested that UCPR, r 1.12 permits the extension of time for compliance with a self-executing order after the period for compliance has expired and irrespective of whether the proceeding in which that order was made continues to be pending: see FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268. Such a power enables the court to “prevent injustice in circumstances where the party subject to a conditional order ought to be excused from non-compliance”: at 284 (Wilson J). It is also not controversial between the parties that the considerations relevant to the exercise of that power are those identified in Jackamarra v Krakouer (1998) 195 CLR 516; [1998] HCA 27. Notwithstanding the different formulations of the standard for assessing prospects of success, the application was argued on the basis that it should be dismissed if the appeal is “devoid of merit”: at [7] (Brennan CJ and McHugh J). That assessment ordinarily is made by reference to “limited materials and argument” and must necessarily be “fairly rough and ready”: at [9]. Other considerations include whether there is a satisfactory explanation for the failure to comply with the earlier order or orders and the extent to which the respondents would be prejudiced by the making of the order sought in a way which cannot be remedied by an order for costs.

56. As is apparent, I have assessed the prospects of the proposed appeal by reference to the grounds currently pressed and the written submissions made in support of them, rather than by reference to arguments which are not made but which might possibly be made. The written submissions are less than satisfactory because they do not separately address all of the grounds and, in relation to grounds that are addressed, do not contain argument which seeks to expose error in any relevant reasoning or fact finding of the primary judge. This has made that task of assessment more difficult, particularly in a case which is factually complex. However, on the material relied on before me, I am satisfied that the appeal against the orders in favour of Ms Huybers, Pineview and Mr Russo has no realistic prospects of success.

57. I accept that the refusal of this application does not finally determine the applicants’ rights to prosecute an appeal from the judgment of the primary judge. It is still open to them to seek to commence fresh appeal proceedings, albeit out of time, and to apply for an extension of the time in which to commence those proceedings. On any such application, they would have to demonstrate a sufficiently arguable case of error to justify such an extension of time, as well as deal with the other considerations relevant to such an application. However, the existence of the opportunity to make such an application is not a consideration to be weighed in favour of the granting of the present application even if the Court, while satisfied that the appeal as currently formulated is devoid of merit, cannot exclude the possibility of error being later identified.

Conclusion

58. The Court makes the following orders:

1. Dismiss the first, second and third appellants’ application to extend the time for compliance with order 1 made by Beazley P on 5 June 2017.

2. Otherwise dismiss the applications for relief in paragraphs 4, 5, 6, 7 and 8 of the Amended Notice of Motion filed on 25 September 2017.

3. The first, second and third appellants pay the first, second and third respondents’ costs of that Amended Notice of Motion.

**********

Amendments

10 October 2017 - [54] repeated phrase "be paid" removed

Decision last updated: 10 October 2017