Dimitriou v Pineview Property Holdings Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Dimitriou v Pineview Property Holdings Pty Ltd [2020] FCAFC 218

Appeal from: Pineview Property Holdings Pty Ltd v Dimitriou (No 2) [2019] FCA 1416
File number: NSD 1600 of 2019
Judgment of: MARKOVIC, ANASTASSIOU AND STEWART JJ
Date of judgment: 8 December 2020
Catchwords: BANKRUPTCY AND INSOLVENCY – appeal from Federal Court of Australia – creditor’s petition – whether deed of release should have been produced to primary judge – whether the debt underpinning creditor’s petition was still owing for the purposes of s 52(1)(a) of the Bankruptcy Act 1966 (Cth) – whether there was other sufficient cause under s 52(2)(b) of the Act for a sequestration order not to be made – appeal dismissed
Legislation:

Bankruptcy Act 1966 (Cth)

Competition and Consumer Act 2010 (Cth)

Federal Court of Australia Act 1976 (Cth)
Cases cited:

Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8; 343 ALR 632

Dimitriou v Huybers [2017] NSWCA 252

Pineview Property Holdings Pty Ltd v Dimitriou (No 2) [2019] FCA 1416

Rubino & Anor v Pineview Property Holdings Pty Limited & Ors [2016] NSWSC 904

Rubino & Anor v Pineview Property Holdings Pty Ltd & Ors; In the matter of Wyse Accounting Pty Ltd; In the matter of Wyse & Young International Pty Ltd; In the matter of Wyse & Young International Pty Ltd; In the matter of Wyse Accounting Pty Ltd [2016] NSWSC 1780

Rubino v Pineview Properties Pty Ltd (No 7) [2019] NSWSC 1031

Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38, 192 CLR 603
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Number of paragraphs: 64
Date of hearing: 3 February 2020
Counsel for the Appellant: Ms M. Castle
Solicitor for the Appellant: Adelsteins Solicitors
Counsel for the Respondent: Mr D. Allen
Solicitor for the Respondent: Kekatos Lawyers

ORDERS

NSD 1600 of 2019
BETWEEN:

GEORGE DIMITRIOU

Appellant
AND:

PINEVIEW PROPERTY HOLDINGS PTY LTD

Respondent

ORDER MADE BY:

MARKOVIC, ANASTASSIOU AND STEWART JJ

DATE OF ORDER:

8 DECEMBER 2020

THE COURT ORDERS THAT:

1.The appellant’s application to adduce further evidence on appeal be dismissed.

2.The appeal be dismissed.

3.There be no order as to costs of the appeal.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

THE COURT:

INTRODUCTION 

  1. On 12 July 2018, the respondent, Pineview Property Holdings Pty Ltd, filed a creditor’s petition against the appellant, Mr Dimitriou.  The debt underpinning the petition was the result of orders made by White J against Mr Dimitriou in Rubino & Anor v Pineview Property Holdings Pty Limited & Ors [2016] NSWSC 904 (referred to herein as the Liability Judgment and Proceeding).  The present appeal is against a sequestration order made by the primary judge pursuant to the creditor’s petition: Pineview Property Holdings Pty Ltd v Dimitriou (No 2) [2019] FCA 1416 (the Primary Judgment).

  2. The substance of the appeal…

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Details
Case
[2020] FCAFC 218
Decision Date

CaseChat Overview and Summary

In the case of Dimitriou v Pineview Property Holdings Pty Ltd, the Full Court of the Federal Court of Australia dismissed an appeal brought by the respondent, Pineview Property Holdings Pty Ltd, against a decision of the primary judge. The primary judge had made orders in relation to a creditor's petition brought by Dimitriou, who had advanced funds to the Rubinos in connection with a property refinancing arrangement. The appeal raised questions about whether a deed of release should have been produced to the primary judge, whether the debt underpinning the creditor’s petition was still owing for the purposes of s 52(1)(a) of the Bankruptcy Act 1966 (Cth), and whether there was other sufficient cause under s 52(2)(b) of the Act for a sequestration order not to be made. The Full Court concluded that the appeal should be dismissed and found that there should be no order for costs of the appeal.

The court considered whether a deed of release, which was not produced to the primary judge, should have been tendered as evidence. The court found that the deed of release was not material to the issues before the primary judge and that the primary judge's decision was not affected by the non-production of the deed. The Full Court also considered whether the debt underpinning the creditor’s petition was still owing for the purposes of s 52(1)(a) of the Bankruptcy Act 1966 (Cth). The court found that the debt was still owing as the funds provided by the ANZ to refinance the Rubinos’ mortgage did not find their way to the Rubinos but were transferred to entities controlled by Mr Dimitriou. Finally, the Full Court considered whether there was other sufficient cause under s 52(2)(b) of the Act for a sequestration order not to be made. The court found that there was no other sufficient cause for a sequestration order not to be made.

The Full Court dismissed the appeal and made orders that the appellant’s application to adduce further evidence on appeal be dismissed, the appeal be dismissed, and there be no order as to costs of the appeal. The Full Court found that the primary judge’s decision was correct and that there was no error in law or fact that warranted the appeal being allowed. The Full Court also found that there should be no order for costs of the appeal as the appeal was not frivolous or vexatious.

Orders

Orders of the court

1. The appellant’s application to adduce further evidence on appeal be dismissed.

2. The appeal be dismissed.

3. There be no order as to costs of the appeal.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

For the reasons that follow, the answer to the first question is, ‘yes’, and to the second and third questions, ‘no’. It follows that the appeal must be dismissed. However, for reasons discussed below, we have concluded that there should be no order for costs of the appeal. BACKGROUND In the opening paragraph of the Primary Judgment, the learned primary judge said: This judgment is the culmination of a long, drawn-out and tortuous hearing of a creditor’s petition. The background to this appeal spans several judgments and appeals in the Supreme Court of New South Wales and the Federal Circuit Court, in addition to the proceeding before the primary judge and the present appeal. The Primary Judgment as well as the Liability Proceeding originate from a 2012 property refinancing arrangement administered by Mr Dimitriou, which involved a suite of transactions. It is sufficient to mention some of the parties to, and features of, the refinancing arrangement: ·Alfio and Biagina Rubino (the Rubinos), were the proprietors of certain property; ·The properties were subject to mortgages which required refinancing; ·The Australian and New Zealand Bank (ANZ), was the original mortgagee of the properties and ultimately became the refinancer; ·Pineview had been incorporated to receive funds advanced by the ANZ for the purpose of re-financing and to hold the Rubinos’ properties as trustee;·Ms Susan Huybers was at all relevant times the sole director and shareholder in Pineview. She was also at all relevant times a client of Mr Dimitriou; ·Mr Dimitriou was the Rubinos’ advisor and the architect of the refinancing arrangement involving the ANZ and Pineview; and ·The Rubinos’ son, Francesco (Frank) Rubino, acted as the Rubinos’ agent for the purpose of engaging Mr Dimitriou. The salient features of the refinancing arrangement and the proceedings which followed are described further below. In short, however, the funds provided by the ANZ to refinance the Rubinos’ mortgage did not find their way to the Rubinos but were transferred to entities controlled by Mr Dimitriou. As a result, litigation ensued involving the parties referred to above, as well as various companies controlled by Mr Dimitriou. The relevant transactions and ensuing claims are set out in detail in the Liability Judgment at [3]-[21]. The transactions were precipitated by the financial difficulties Mr and Mrs Rubino were experiencing in about 2011. The Rubinos had secured their indebtedness to the ANZ with mortgages over certain properties owned by them. The ANZ called for repayment of the debt. Eventually a settlement was reached by which sums were assigned to particular titles. It was agreed that if those sums were paid by the Rubinos, the relevant titles held by the ANZ would be returned to them. The arrangement is described by White J at [7]-[10] of the Liability Judgment. Mr Dimitriou, through a corporate entity named Wyse & Young International Pty Ltd, was engaged by the Rubinos’ son, Frank Rubino, on behalf of the Rubinos to assist in sourcing funds to pay the sums required to release the titles. Eventually, Mr Dimitriou arranged for the ANZ to provide the refinance. Mr Dimitriou structured a transaction by which certain of the properties and their mortgages were transferred to Pineview, newly incorporated for that purpose, which became the counterparty to the new loan from the ANZ. Two of Mr Dimitriou’s clients, Ms Susan Huybers and Mr Danny Kalischer, provided short term finance to Pineview to facilitate the transaction. Ms Huybers was the sole director and shareholder of Pineview, and she and a company she controlled called Green Global Pty Ltd guaranteed Pineview’s obligations to the ANZ.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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