George Theonas v Dimitra Selemidis (formerly known as Dimitra Vrettakos)

Case •

[2016] VSCA 115

•

20 May 2016

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2015 0082

GEORGE THEONAS Applicant
v
DIMITRA SELEMIDIS (formerly known as DIMITRA VRETTAKOS) Respondent

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JUDGES: ASHLEY, REDLICH and TATE JJA
WHERE HELD: MELBOURNE
DATE OF HEARING: 2 May 2016
DATE OF JUDGMENT: 20 May 2016
MEDIUM NEUTRAL CITATION: [2016] VSCA 115
JUDGMENT APPEALED FROM: Selemidis v Theonas [2015] VCC 1029 (Judge Anderson)

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CONTRACT – Loan agreement – Loan guaranteed by applicant – Subsequent contract for purchase of property between lender and vendor – Amendment of loan agreement, by which guarantor to pay deposit under contract for sale in substantial repayment of loan – Certain amounts paid by guarantor to vendor – Whether payments in respect of deposit – Whether vendor appropriated payments in respect of deposit – Cory Brothers & Co Ltd v Owners of the Turkish Steamship ‘Mecca’ [1897] AC 286 – Moneys paid incapable of appropriation – Finding at trial that moneys not paid in respect of deposit – Finding at trial that respondent should recover amount of loan less amounts admittedly repaid – Leave to appeal refused.

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APPEARANCES: Counsel Solicitors
For the Applicant Mr A Monichino QC with Mr P T Duggan Russo Pellicano Carlei
For the Respondent Mr T R Messer with
Mr J P Foster 		Allpass & Associates

ASHLEY JA
REDLICH JA
TATE JA:

  1. On  5 August 2015, a judge in the County Court entered judgment in favour of Dimitra Selemidis against George Theonas in the amount of $166 310.68.  On 29 September 2015, his Honour ordered that Theonas pay interest on judgment amounting to $85 194.57, and that he pay the plaintiff’s costs.  The judgment and orders reflected the judge’s conclusions that Ms Selemidis had loaned money to Theonas which in substantial part he had not repaid.

  1. Theonas (‘the applicant’) sought leave to appeal against the judgment and orders.  After an oral hearing on 2 May 2016, the Court intimated that it would refuse leave to appeal, but that it would not make orders until it published its reasons.  What follows are our reasons why leave to appeal should be refused.

Circumstances

  1. The trial occupied some ten days.  A number of witnesses including the applicant, Ms Selemidis (‘the respondent’), a man named George Vrettakos, a solicitor named Bill Velos, and a woman named Maria Sinopoli gave viva voce evidence.  Other witnesses included Dr Con Perkoulidis, Samuel Sleigh, and Martin Galea.  A number of documents were introduced as exhibits.

  1. The judge, in our opinion quite understandably, stated that:[1]

9.…  Occasionally, the court is faced with inconsistent accounts where one or more of the parties, or a number of the witnesses, must know that significant parts of the evidence which has been given is untrue.

10.This is such a case.  It has involved evidence from a number of witnesses where there are serious concerns raised about their credibility.  It is not easy, therefore, to pick one’s way through the farrago of lies and half-truths to reach the conclusions that are needed.

[1]Selemidis v Theonas [2015] VCC 1029 [9]–[10] (‘Reasons’).

  1. With respect to those conclusions, his Honour carefully analysed the evidence of the various witnesses.

  1. He concluded that the respondent’s recollection was wrong in some respects, and that it was possible that other parts of her evidence were unreliable.[2]

    [2]Reasons [20].

  1. His Honour said of Vrettakos that the man was a self-admitted liar, whose relationship with the respondent had been problematic, who had hidden things from her, and who claimed to have been financially dependent upon the applicant, in which circumstances he had been required by the applicant to ‘persuade’ the respondent of the need for her to enter into transactions with the applicant and to execute documents.[3]

    [3]Reasons [22], [27], [30].

  1. The applicant, the judge concluded, had given false evidence about a number of matters, and was in other respects unconvincing.  By his defence, he had falsely denied that the respondent had made any loan either to a company named Malvern and Williams Road Pty Ltd (‘Malvern Road’), or to him.  Any loan made, he had pleaded, had been advanced to ‘various strangers to this proceeding’.  Further, the judge found, the applicant—contrary to his stated position—probably had at least a substantial beneficial interest in what was called, at trial, ‘the Beaumaris property’.[4]

    [4]Reasons [33], [97]–[98], [113(e)].

  1. The judge said of Maria Sinopoli that she gave evidence about the circumstances of entry into a contract of sale for the Beaumaris property which was ‘not credible’.[5]

    [5]Reasons [48].

  1. The judge said of Dr Perkoulidis, an associate of the applicant and Vrettakos in their business dealings, that he had given evidence which lacked ‘a coherent explanation’ of a transaction, and provided an unsatisfactory explanation in respect of another matter.[6]

    [6]Reasons [50].

  1. Samuel Sleigh, a solicitor who was ‘the lawyer supposedly acting’ for the respondent and Vrettakos in relation to the purchase of the Beaumaris property, was found by the judge to have no proper file notes, to have received instructions not from the respondent and Vrettakos but from a conveyancer acting for the Sinopolis.  He was, moreover, a man who appeared to have links with the applicant.[7]

    [7]Reasons [55]–[59].

  1. Principle Conveyancing Services was the conveyancer which instructed Mr Sleigh to act for the respondent and Vrettakos.  The judge found that Martin Galea of that firm had received instructions with respect to the sale of the Beaumaris property from the applicant, rather than from the Sinopolis (who were the owners on title).  Mr Galea had previously acted for the applicant, and had bought a property jointly with him.[8]

    [8]Reasons [60].

  1. Mr Bill Velos, the judge found, had acted for the respondent with respect to a loan raised by her on the security of what was called, at trial, ‘the Croydon property’.  He admitted to falsity in a document which he completed in support of the loan.  Further, documents showed that he had disbursed borrowings obtained on the security of the Croydon property in accordance with instructions from the applicant, although he was nominally acting for the respondent.  She had belatedly signed an authority to disburse.  Further again, the judge found, Velos was involved, with the applicant and Vrettakos, in attempting to scuttle the respondent’s claim to repayment of a loan made by her to Malvern Road.  Velos gave other improbable evidence also.[9]

    [9]Reasons [67]–[77], [80].

  1. We earlier noted that a number of documents went into evidence.  Some of them, the evidence showed, were quite misleading.

  1. Against the unsatisfactory background which we have described, the evidence permitted the following conclusions.

  1. On 1 November 2009, the respondent married Vrettakos.  It was her second marriage.  At the time, Vrettakos was the owner of a house property at Doncaster, and he was a loans officer employed by the Commonwealth Bank of Australia (‘CBA’).  For her part, the respondent then had equity in the Croydon property.

  1. In March 2010, Vrettakos was dismissed by CBA.  Unbeknownst to the respondent, he had arranged a number of inappropriate loan dealings in the course of his employment, and CBA had sustained a loss of some $3 million.  He agreed to sell his Doncaster property, and to pay $1 million in compensation to CBA.  At the time when that arrangement was made, the respondent knew nothing about it.

  1. Stretching back before his marriage to the respondent, Vrettakos had business dealings with the applicant.  The applicant, Vrettakos and Dr Perkoulidis appear to have had large plans, which often enough did not align with reality.  It is, however, at least clear that, as at May 2010, the applicant was, in substance, the owner of Malvern Road.

  1. It is next clear that the respondent was persuaded to borrow $275 000 on the security of her previously unencumbered Croydon property. That was in late May 2010. Velos, who appears to have regularly acted for the applicant, acted for the respondent on that occasion. Although not central to the narrative, it is the fact that, protected by a certificate given by the judge under s 128 of the Evidence Act 2008, Velos admitted to making a false statement in support of the respondent’s loan application.  There was no suggestion at trial that the respondent was party to that deception.

  1. At about the time when the respondent finalised her borrowing on the security of her Croydon home, the respondent and Malvern Road entered into an agreement by which she loaned Malvern Road $230 000 (‘the Malvern Road agreement’).  The commencement date of the agreement was stated to be 30 May 2010.[10]  A copy of the agreement was put into evidence.  The copy, on its face, did not evidence execution by the respondent.  But it was not in dispute at trial that the agreement had been entered into and that the respondent had loaned Malvern Road $230 000 pursuant thereto.

    [10]The agreement recited that it was executed on the day and year mentioned in the schedule under the heading ‘The Date’.  There was a schedule, but there was no such heading.  Nothing was said to turn on it.

  1. We should set out the schedule to the agreement.

SCHEDULE

1.The Borrower:  Malvern & Williams Rd Pty Ltd ACN 122924430

Address:  Ll 1/141 Capel Street Nth Melbourne Vic 3051

1.The Loan Amount:                $230,000

3.The Commencement Date:     30th day of May 2010

4.The Maturity Date                 28th day of February 2011

5.     The interest to be repaid:       21.5% per annum payable in advance with the initial interest payable 6 monthly upfront.  Upfront fees include 4600 establishment fees and 1500 to cover legal fees

6.     It is noted that Malvern and Williams Rd is the current owner of 40 Units in Ferris Rd Pty Ltd which has entered into a contract to purchase 201-243 Ferris Rd Melton South Vol 9068 Fol 407.

The borrower hereby warrants that: It is the legal owner of the security and has a right to enter into this agreement and that there are no undisclosed matters that may affect the security of the above mentioned property pertaining to the loan

7.     George Theonas of 41 Howard Street glen [sic] Iris hereby agrees to guarantee the above mentioned loan should any default occur for any reason.

IN WITNESS WHEREOF the parties hereto have executed this Deed on the day and year mentioned in the Schedule under the heading “The Date”.

LENDERS

Executed by DIMITRA VRETTAKOS

BORROWERS

Executed by Malvern & Williams Rd P/L

(acn 122924430)
Of L 1 141 Capel Street Nth Melbourne 3051
in accordance with s 127 Corporations Act

Director

GUARANTOR

George Theonas

  1. We noted earlier that moneys were disbursed under the Malvern Road agreement.  The detail of their disbursement was determined by the applicant, as revealed by documents passing between him and Velos.[11]

    [11]The respondent belatedly ‘authorised’ disbursement in accordance with the applicant’s instructions to Velos.

  1. The schedule showed that the maturity date of the loan was 28 February 2011.  This was a date which assumed other significance in this litigation.

  1. The other feature of the Malvern Road agreement which requires emphasis is that the applicant guaranteed the loan.

  1. By early September 2010, Vrettakos and the respondent, the latter of whom was now heavily pregnant, were required by CBA to leave the Doncaster home.  At that time, it appears, a sister of Vrettakos was in occupation of the respondent’s Croydon premises.

  1. Re-enter the applicant.  Maria Sinopoli met the applicant some 15 years before trial.  They became friends.  In 2008, the applicant mentioned that there was a good investment opportunity coming up in Beaumaris.  He said that he was interested in buying the property (it was one of four units in a development) with Mrs Sinopoli and her husband.  The three of them signed a contract, dated 19 February 2008.  It was a purchase off the plan of what we have previously referred to as the Beaumaris property.  Settlement was due in early 2009.  But as settlement time approached, the applicant told Mrs Sinopoli that he could not proceed with the purchase.  Mrs Sinopoli and her husband, being concerned about what would happen if settlement fell through, went ahead.  The purchase price was $1.2 million.  Mrs Sinopoli gave evidence that the property was to be resold as soon as possible, and that she and her husband reached agreement with the applicant that he would pay amounts due under a mortgage over the property until it was sold.

  1. What was described as a deed of agreement, dated 1 March 2009 (‘the March 2009 agreement’), was signed by the applicant and the Sinopolis.  In substance, the applicant agreed to lend moneys to the Sinopolis ‘to assist with the payment of the property’, to be ‘used for monthly repayments’.  Such moneys were to be repaid when funds were available, or on the settlement date.  The agreement described the applicant as ‘The Lender’, and the Sinopolis as ‘The Borrower’.  In our view, those descriptions were apt.  In the course of his submissions, senior counsel for the applicant described his client as ‘a borrower of sorts’.  He used that description to support an ‘appropriation’ argument to which we will later refer in some detail.

  1. The Sinopolis unsuccessfully attempted to sell the property from the time when they took title.  As at September 2010, they still needed to sell.  At that time, for reasons which we have explained, the respondent and Vrettakos were soon to be without a roof over their heads.  It was in these circumstances that the applicant introduced Vrettakos and the respondent to the Beaumaris property.

  1. On 11 September 2010, apparently sight unseen,[12] Vrettakos and the respondent entered into a contract to purchase the Beaumaris property for the asking price of $1.2 million.  The arrangement was unusual in more than one respect.  According to the particulars of sale, the deposit was $200 400, payable by 28 February 2011—that is, five and a half months after the date of the contract.  Of the proportionately large deposit amount, no more than $400 was paid at the time of signing.  The balance of $999 600 was to be payable on 11 May 2011.  Further, although the contract of sale said nothing about it, the Sinopolis agreed that the respondent and Vrettakos should be given vacant possession of the premises  up to the time of settlement, rent free, as soon as an existing tenant vacated.

    [12]There was some evidence that Vrettakos had driven past the property.

  1. The date of 28 February 2011, it will be recalled, was the date on which the respondent’s loan to Malvern Road was due to be repaid.

  1. On 12 September 2010—that is, the day after the date on which Vrettakos and the respondent signed the contract of sale—a document described as ‘Amendment to agreement dated 12 September 2010’ (‘the amendment agreement’) was signed by the applicant and the respondent, Vrettakos witnessing their signatures.  At trial, the respondent denied signing this document, although just what her denial amounted to was not quite clear.[13]  Whilst the judge said that it was ‘difficult to unravel a likely chronology of [relevant] events or even speculate on the circumstances in which [the respondent] signed the [amendment agreement]’,[14] he was satisfied that she had signed it.

    [13]Reasons [126].

    [14]Reasons [133].

  1. The respondent alternatively alleged that, if she had signed the amendment agreement, then it was by reason of mistake, undue influence, or in circumstances which constituted unconscionable conduct.  The judge below was not persuaded that the respondent had made out any of those allegations.

  1. The substance of the amendment agreement, by which, the judge was satisfied, the respondent was bound,[15] was as follows:

IT IS HEREBY AGREED THAT DIMITRA VRETTAKOS WILL AUTHORISE GEORGE THEONAS TO PAY 200,000 FROM MONIES LENT ON THE ABOVE AGREEMENT (COPY ATTACHED) TO MARIA SINOPOLI (OR HER NOMINATED PARTY) ON THE 28TH FEBRUARY 2011 AND THAT THESE FUNDS WILL FORM THE BALANCE OF DEPOSIT DUE ON THE PURCHASE OF PROPERTY SITUATED AT UNIT 4/4 BEACH RD BEAUMARIS WHICH HAS BEEN PURCHASED BY DIMITRA AND GEORGE VRETTAKOS.

IT IS ALSO HEREBY AGREED THAT THE BALANCE OF MONIES OWING ON THE ABOVE NAMED CONTRACT WILL BE PAID BY GEORGE THEONAS DIRECT TO DIMITRA VRETTAKOS

IT IS ALSO HEREBY AGREED THAT PAYMENT TO DIMITRA VRETTAKOS WILL BE 30,000 AND THAT THIS PAYMENT WILL BE MADE ON/BEFORE 11 MAY 2011

IT IS AGREED THAT ONCE THE ABOVE TWO PAYMENTS OF 30,000 AND 200,000 ARE PAID, THAT WILL CONSTITUTE FULL AND FINAL SETTLEMENT OF THE ABOVE NAMED LOANED (sic) AGREEMENT BETWEEN THE PARTIES CONCERNED

[15]Reasons [156].

  1. Pausing, it is clear enough that, by the amendment agreement, the applicant was obliged to pay the moneys in the manner provided for, not that he promise to so pay them.  Payment would discharge his obligations under the Malvern Road agreement.  Moreover, the amendment agreement was specific that $200 000 be paid to Mrs Sinopoli[16] ‘on the 28th February 2011’.

    [16]‘Or her nominated party’.

  1. Chronologically, the next document in evidence was a s 27 statement, apparently signed by the respondent and Vrettakos on 16 September 2010.  It authorised the release of deposit moneys—which, of course, but for $400 had not then been paid, and which, as events transpired were not paid in accordance with the contract of sale. It provided a foundation for the Sinopolis signing a document, in March 2011, which purportedly released the deposit moneys due by the purchaser to the applicant.

  1. On 20 September 2010, a document headed ‘Deed of Agreement’ (‘the 20 September agreement’) was signed by the applicant and the Sinopolis.[17]  It said this:

    [17]It was another document described as a deed, without there being any indication that it was executed as such. The documentation generally was appalling.

Pursuant to a Contract of Sale relating to the purchase of 4/4 Beach Road Beaumaris VIC 3193, between Maria & Raffaele Sinopoli (Vendors) signed on 12th September 2010 and George & Dimitra Vrettakos (Purchasers) signed 11th September 2010.  It is hereby agreed by Maria & Raffaele Sinopoli with George Theonas that:

1.As per Deed of Agreement dated 1st March 2009 Maria and Raffaele Sinopoli borrowed funds from George Theonas

2.George Theonas guarantees to pay the deposit owing by the above named purchasers, George & Dimitra Vrettakos due on the 28th February 2011 less any amounts owed by Maria & Raffaele Sinopoli to George Theonas

All three parties agree to the above

  1. Despite there being documents suggestive that Theonas paid $200 000 to the Sinopolis on or about 28 February 2011,[18] that was not in fact the case.  The judge found that between 1 March 2009 and 11 September 2010 the applicant ‘paid’ the Sinopolis $61 981;[19] and that between 11 September 2010 and 28 February 2011, he ‘paid’ the Sinopolis $24 355,[20] which amounts were loans made to the Sinopolis under the March 2009 agreement together with a supplement to account for the fact that Vrettakos and the respondent had been given rent-free use of the Beaumaris property from the time when the former tenant vacated—the Sinopolis thereby being deprived of rental income which they had hitherto been receiving.

    [18]Reasons [163].

    [19]Reasons [8(h)].

    [20]Reasons [8(j)].

  1. The balance of deposit was not paid to the Sinopolis by 28 February 2011 as the contract of sale required—whether by Vrettakos and the respondent, or by the applicant.  Nor did Malvern Road or the applicant repay loan moneys due for repayment under the Malvern Road agreement directly to the respondent by 28 February 2011.

  1. Not only was the balance of the deposit not paid as the contract of sale required, the balance of the purchase price was not paid on the settlement date.  In consequence, the Sinopolis served a notice of rescission, dated 26 May 2011, on the purchasers.

  1. Then, in about May 2011, the respondent engaged solicitors to recover the Malvern Road loan moneys.

  1. On 11 June, the respondent signed a document, handwritten by Vrettakos, addressed to Mrs Sinopoli, which stated that the loan agreement between herself and Malvern Road, and the guarantee by the applicant, were ‘now finalised’.  The document was patently inaccurate.  It appears that the applicant procured Vrettakos to prepare it and have it signed as a quid pro quo for the applicant financing some overseas trip by Vrettakos; and that the applicant paid $6500 to the respondent in return for her signature.  The judge found that the respondent signed the document as a result of pressure applied by Vrettakos following a request by the applicant.[21]  Understandably, his Honour did not regard it as an impediment to the respondent’s claim.[22]

    [21]Reasons [172].

    [22]The applicant pleaded by his defence that the document evidenced a discharge of the Malvern Road agreement, including the guarantee which he had given.

  1. Vrettakos had evidently thrown in his hand with the applicant.  In late June 2011, as the judge found, the applicant, Vrettakos and Velos ‘were meeting to further bolster the case against’ the respondent’s claim to repayment by the applicant.  This involved Velos preparing, for signature by Vrettakos, a statutory declaration which was adverse to the respondent. Vrettakos signed the document on 5 July 2011.[23]

    [23]Reasons [173], [177].

  1. The Sinopolis eventually sold the Beaumaris property, in June 2013, for just over $1 million.

  1. The judge found that the applicant paid the Sinopolis, between 2 April 2009 and 9 June 2013, a total of $285 148.[24] This included the amounts totalling $86 336 to which we referred at [37] above. His Honour’s finding as to the total amount paid was based upon bank statements and a spreadsheet put in evidence through Mrs Sinopoli.

    [24]Reasons [162].

  1. The applicant contended that the judge did not clearly conclude that payments made by him to the Sinopolis between February 2011 and June 2013 were not made in accordance with the amendment agreement.  He further submitted that, if the judge did conclude that the moneys were not paid pursuant to that agreement, then his Honour had erred, because he should have concluded to the contrary.  He relied upon evidence given by Mrs Sinopoli as to ‘appropriation’ and upon authority as to the consequences of appropriation.  He relied also upon the language of the 20 September agreement.  The respondent contended that his Honour’s reasons show that he did not accept that moneys paid in the period in question constituted compliance with the amendment agreement.

  1. The respondent’s claim against the applicant was for $185 500 plus interest.  That amount was based upon the loan of $230 000 under the Malvern Road agreement, but gave credit for $44 500 which she agreed had been repaid to her.  The judge reduced the amount of $185 000 by a little over $19 000 so as to account for payments made by the applicant to the Sinopolis to cover the shortfall caused by loss of rental income.  Thus it was that his Honour ordered that the applicant pay the respondent $166 310.68 plus interest and costs.

Proposed grounds of appeal.  Notice of contention

  1. The applicant relied upon these proposed grounds of appeal:

(1)Failure to find that moneys were paid pursuant to the [Malvern Road agreement], as amended [by the amendment agreement].

(2)Finding that there was not a full and final settlement of the [Malvern Road agreement], as amended [by the amendment agreement].

  1. By notice of contention, the respondent raised these proposed grounds:

(1)The trial judge erred in declining to find that the signature of the respondent to the [amendment agreement] was procured by the applicant by the use of undue influence over the respondent.

(2)The trial judge erred in declining to find that, in all the circumstances of the case, retention by the applicant of the benefit of [the amendment agreement] was unconscionable.

Submissions for the applicant

  1. We put the respondent’s notice of contention to one side for the moment.

  1. The gist of the applicant’s argument on proposed ground 1 was that the applicant, as he said, had paid money to the Sinopolis in accordance with the amendment agreement; that the judge had failed to make any finding as to the characterisation of the payments made; that Mrs Sinopoli gave unchallenged evidence that she characterised the payments as having been made by the applicant by way of payment of the deposit; and that there is longstanding authority that such characterisation by a recipient is, in circumstances such as the present, determinative of the matter.

  1. The gist of ground 2, as argued for the applicant, was that, whilst the full amount of $200 000 was not paid by 28 February 2011, it was paid by 9 June 2013.  The judge appeared to find that time was of the essence regarding payments by the applicant pursuant to the amendment agreement.  But that was not an issue raised by the pleadings, nor was it an express term of the amendment agreement or of the original loan agreement.  It was not what the 20 September 2010 agreement required.  There was no basis identified or existing for the conclusion apparently reached by the judge.  But if those contentions were wrong, and time was an essential term of the amendment agreement, there was no allegation that the respondent had ever sought to terminate the amendment agreement for the breach of the time stipulation.

Submissions for the Respondent

  1. Again putting the notice of contention to one side, the respondent advanced the following submissions.

  1. First, the amendment agreement required payment of $200 000 to the Sinopolis by 28 February 2011 by way of payment of the deposit under the contract of sale.  That did not happen.  The amendment agreement thus failed.  In consequence, Malvern Road, and the applicant as guarantor, were under the obligations to repay imposed by the Malvern Road agreement.  That agreement was breached, and so the respondent was entitled to judgment for the loan amount less payments made.

  1. Second, where moneys are received under a contract of sale of land, there are statutory requirements attending their receipt.  They give protection to both purchaser and vendor.  The Sinopolis had done nothing with the moneys received by them periodically between February 2011 and June 2013 to suggest that they represented deposit moneys.  Moreover, the contract of sale required payment of the deposit by 28 February 2011.  If it was the case that the Sinopolis and the applicant had agreed that payment could be made in dribs and drabs, or be subject to a ‘contra’ in favour of the applicant, it was beside the point.

  1. Third, the alleged ‘appropriation’ by Mrs Sinopoli of moneys received was of no moment.  Thus — (a) for good reason, the witness’s evidence about that matter was rejected by the judge.  His Honour found that all payments made to the Sinopolis between March 2009 and June 2013 were made pursuant to the March 2009 agreement; and (b), contrary to the applicant’s argument, no question arose of appropriation to one, rather than another, debt.  That was because the Sinopolis were owed money under the contract of sale; but owed money to the applicant under the March 2009 agreement.

  1. Fourth, the judge did not find that time was of the essence.  Simply, the amendment agreement required the payment of moneys for a particular purpose by a particular date, and that had not occurred.  Likewise, the Malvern Road agreement required repayment by a certain date, and that had not occurred.

Conclusions

  1. In our view, it is strictly unnecessary to embark upon consideration of matters raised by the notice of contention because, even assuming the correctness of the judge’s findings about those matters, the proposed grounds of appeal lack substance.  Leave to appeal should be refused because the issues agitated by the applicant do not meet the threshold for grant of leave to appeal stated in Kennedy v Shire of Campaspe.[25]

Ground 1

[25][2015] VSCA 47 [19].

  1. Central to the applicant’s argument on ground 1 was the submission that moneys received by the Sinopolis between February 2011 and June 2013 constituted—by reason of the amendment agreement—repayment of the loan made under the Malvern Road agreement.  This was said to be the result flowing from ‘appropriation’ by Mrs Sinopoli of moneys received from the applicant in the period between February 2011 and June 2013.  There were a number of threads to the argument.  Thus: (1) Mrs Sinopoli was entitled, as a matter of principle, to appropriate the moneys received in payment of the deposit under the contract of sale; (2) that is what she did; (3) it mattered not that the contract of sale was rescinded in May 2011; (4) it mattered not that Mrs Sinopoli did not appropriate the moneys at the times of their receipt; (5) the judge did not distinctly find that the moneys were all paid pursuant to the March 2009 agreement.  But if he so found, he erred.

  1. Those arguments should be rejected. First, in the circumstances of this matter, Mrs Sinopoli did not have the right of appropriation upon which the applicant placed reliance.  Second, assuming that she did have a right of appropriation, the evidence which Mrs Sinopoli gave about appropriation of moneys to the deposit was rightly rejected by the judge.  His Honour found that moneys paid by the applicant to the Sinopolis in the period in question were paid pursuant to the March 2009 agreement, and not otherwise.  That conclusion was justified because Mrs Sinopoli’s  conduct with respect to moneys received in the period in question contraindicated such evidence as she gave about appropriation, because the September 2009 agreement did not permit the applicant to pay the deposit moneys if and when he chose, and because a right of appropriation (if it existed) can only be exercised once, and it was arguably exercised in favour of moneys being received under the March 2009 agreement.  In all, the principle of law invoked by the applicant did not run in his favour; and, in any event, the factual basis for its application was lacking.

  1. It is necessary to expand upon those conclusions.  We will do so in the order stated above.

A right of appropriation?

  1. Applicant’s counsel relied upon Cory Brothers & Co Ltd v Owners of the Turkish Steamship ‘Mecca’[26] in support of the ‘appropriation’ argument.  But in our opinion that authority does not assist the applicant.  It was concerned with the right of a creditor to appropriate to particular items moneys paid by a debtor.  That is, it was concerned with the situation in which more than one debt was owed by a debtor to a creditor.  The creditor’s right to appropriate moneys to a particular debt, if the debtor had not done so, was affirmed.  Thus, the ‘Mecca’ was not concerned with the question of appropriation between moneys paid to a person by a debtor and moneys loaned to that person by a creditor.[27]  Thus is likely explained the characterisation of the applicant, by his counsel, as ‘a debtor of sorts’ with respect to the March 2009 agreement.

    [26][1897] AC 286 (‘the “Mecca”’).

    [27]The applicant also referred to Lontav Pty Ltd v Pineross Custodial Services Pty Ltd [2011] VSC 278 [65]. That was a case involving the other side of the coin. A debtor had appropriated a particular amount paid to a particular debt. It was not in doubt that such an appropriation may be made. It is the other side of the coin.

Evidence of appropriation rightly rejected

  1. Assume, contrary to our opinion, that the Sinopolis were able to appropriate moneys received by them from the applicant either to advances under the March 2009 agreement or to payment of the balance of the deposit moneys.  Did they do so?  Specifically, did they appropriate moneys received to payment of the deposit?  In our opinion, if there was any ‘appropriation’, a matter to which we will later return, the judge’s reasons and the evidence deny an affirmative answer to the second of those questions.

  1. First, it seems clear that the judge found that moneys paid by the applicant to the Sinopolis between February 2011 and June 2013 were paid pursuant to the March 2009 agreement, and not otherwise.  So much emerges from the following parts of his Honour’s reasons:

(1)His Honour’s observation that ‘Mr Theonas simply appeared to continue the arrangement he had with Mr and Mrs Sinopoli and did not ever appear to have intended to pay a lump sum balance of deposit of $200 000 in February 2011.[28]

(2)His Honour’s reference to the evidence of Mrs Sinopoli as follows:[29]

Mrs Sinopoli said that from 2 April 2009, Mr Theonas paid into her bank account the amounts she told him were required to meet the bank repayments and other outgoings on the property.  The only difference, after Ms Selemidis and Mr Vrettakos moved into the Beaumauris property, was that the rental of $750 per week, which had been received from the tenants, was covered by an increased contribution by Mr Theonas.

(3)His Honour’s reference to a document signed by the Sinopolis[30] which— (a) implied that, as at 10 March 2011, ‘the deposit money due’ on 28 February 2011 had not been paid as the contract of sale required; and (b) confirmed the likelihood that the applicant was the real beneficial owner of the Beaumaris property, the amendment agreement being an intended and convenient way of the applicant expunging Malvern Road’s indebtedness to the respondent by making (what need only have been a notional) payment under the contract of sale which would return to him.

(4)The document referred to at [163(c)] of the Reasons, in which the vendors’ conveyancer implied that the full amount of the deposit had been paid, and that the same had ‘now been released to the vendors’.

(5)The evidence of Mrs Sinopoli, as noted by the judge at [162] in the Reasons, which may be compared with the letter dated 11 June 2011, addressed to Mrs Sinopoli, and signed by the respondent.[31]

[28]Reasons [158(e)].

[29]Reasons [160]. It seems clear that his Honour was referring to payments which continued beyond February 2011: see Reasons [165].

[30]Reasons [163(b)].

[31]Reasons [8(m)], [163], [165]. That is, correct subject to consideration of the ‘appropriation’ argument.

  1. In all, the judge’s observation[32] that he had—

little confidence in the evidence given by Mr Theonas and Mrs Sinopoli of the supposed compliance by Mr Theonas of the requirement in the [amendment agreement] for the payment of the $200,000 balance of deposit.

was well-justified.

[32]Reasons [165].

  1. Second, the Sinopolis rescinded the contract of sale in May 2011.  Applicant’s counsel referred to Bot v Ristevski[33] for the proposition that the purchaser’s obligation to pay the deposit moneys continued even after the contract had been rescinded.  Assuming for present purposes that Bot stands for the proposition asserted,[34] there was no evidence that the Sinopolis understood that to be the case.

    [33][1981] VR 120 (‘Bot’).

    [34]The specific question raised by Bot was whether a vendor who discharged a contract in consequence of a purchaser’s repudiation could recover a deposit that should have been paid before the contract was discharged.

  1. Third, it is the fact that the balance of deposit moneys was not paid to the Sinopolis either by, or on, 28 February 2011.  That is what the contract of sale required.  It is also what was required by the amendment agreement.  According to the latter, it was the payment of the balance of deposit and payment of the further amount of $30 000 by the applicant to the respondent on or before 11 May 2011 which were to ‘constitute full and final settlement’ of the Malvern Road agreement.  The judge was, with respect, correct to find that the applicant’s ‘failure to meet the requirement he accepted of paying the $200 000 balance of the Beaumaris property deposit as the basis to amend the loan agreement meant that there was not a “full and final settlement” of the [Malvern Road] loan agreement’.[35]  In those circumstances, the respondent was entitled to recover from the applicant, as guarantor under the Malvern Road agreement, the moneys which had been lent and not repaid.

    [35]Reasons [180].

  1. Fourth, we consider that the applicant’s reliance upon the 20 September agreement, made between him and the Sinopolis, was not well founded.  The applicant relied upon it as having modified the contract of sale, in effect, in two ways.  First, by enabling the applicant to pay the balance of deposit whenever he chose to do so; and presumably even after the contract had been rescinded.   Second, by permitting the applicant to set up a ‘contra’ with respect to moneys owed to him by the Sinopolis under the March 2009 agreement.

  1. There is a question whether the applicant and the Sinopolis could agree, by a document to which the respondent and Vrettakos were not parties, to vary the contractual obligation by the purchasers under the contract of sale.  But even if that was possible, we do not accept the construction put upon the 20 September agreement, at least with respect to the applicant’s contention that it permitted him to pay the balance of the deposit when he chose.  So to conclude would give a strained meaning to the words, ‘due on the 28th February 2011’, understanding that what was being referred to was the contractual obligation of the respondent and Vrettakos to pay the balance of deposit moneys by that date.  Further, such a meaning could not sit with the amendment agreement, which plainly contemplated payment of the balance of purchase moneys in accordance with the contract of sale.

  1. Fifth, the applicant’s submission that Mrs Sinopoli ‘appropriated’ moneys paid by him to the contract of sale—and thus in reduction of his liability to the respondent—depended, in part, upon the applicant having the right to make payments under the contract of sale when he chose.  But in our opinion he had no such right.

  1. Sixth, the factual evidence of ‘appropriation’ to payment of deposit moneys was wafer thin, and confused.  In our opinion, the judge was correct to reject it.[36]

    [36]As he did: Reasons [165].

  1. According to Mrs Sinopoli, she drafted the 20 September 2010 agreement:[37]

I said to George, “Right.  If they’ve got this agreement with you, you don’t have that agreement with me, so we need to put something in writing that says that 200,000 that they say is with you is going to be coming to me, as the 200,000 deposit.”  So we spoke about it.  I put something on paper or wrote something up on paper, went away, and I typed the second agreement with George – I can’t remember the date but in September I think some time – around the 200,000 deposit, saying that when he got that 200,000, when it came due, was supposed to come – was supposed to be for the payment of the deposit.  So that’s what I did.  I went away, typed it up and then we signed it, we all signed it.

[37]T435, line 26 to T436, line 8.

  1. There were these (questions and) answers also:[38]

    [38]T438, line 28–29.

Did you receive the $200,000 on that day?---Not in a lump sum form, no.

and:[39]

[39]T439, lines 14–17.

… I said “George has spoken to me.  He said he can’t give me the lump sum now because he doesn’t have the funds, but he said I was to get the funds, you know, when they became available.”

and:[40]

So I said to him, “Don’t worry about giving me the 200, then I’ve got to give whatever back.  How about we wait until the Vrettakoses settle on the property, then we’ll sort out who owed what to who.”  So in saying that, I told Martin[41] and Martin then sent me another – either an email or a letter that I signed saying that I release the benefit of the funds of $200,000 to George.

and:[42]

But you said that you planned to sort this out after settlement?---Correct.  George was continuing to make the monthly repayments, and then once that all happened we were going to work out what I owed him minus what he owed me and then whatever was left either way, we would’ve paid.

[40]T439, lines 22–28 (footnote added). This evidence related to the document referred to at Reasons [163(b)].

[41]That is, Martin Galea of Principle Conveyancing Services.

[42]T440, lines 12–17.

  1. We should refer next to this evidence, given by Mrs Sinopoli with respect to a spreadsheet which she produced at trial:[43]

    [43]T443, lines 23–25.

Have you, for the purposes of this case, gone through those bank statements and identified payments you’ve received from Mr Theonas?---Yes, I put a spreadsheet together.

and:[44]

[44]T444, lines 9–19.

All those payments are from George.

Did they come from George directly or did some of them come – did you understand some of them came from - - -?---They were coming from all different account names but they George [sic].  Because I would either ring George or email George and I would tell George how much he had to put in that bank account.  So as much as George probably didn’t – you know, the fact that, you know, he had to pay it but he was relying on me to give him the dollar value of what he needed to put in there for the month.

and:[45]

So the total payments you’ve received from Mr Theonas or others on his behalf, by your calculations, is how much?---The total amount was 285,148.

Of that, you attributed how much to the deposit?---Well, minus the deposit from the Vrettakoses of 200,000, I’m still owing Mr Theonas 85,148.

So you’ve allocated 200,000 of that to the deposit?---Correct.

[45]T445, lines 5–11.  

  1. The last mentioned exchange was the high water mark of the applicant’s ‘appropriation’ argument so far as it relied upon the evidence.  It thus depended upon answers to two questions which employed the verbs, respectively, ‘attributed’ and ‘allocated’.  They were not the witness’s words.  Further that evidence did not sit at all comfortably with the other passages in her evidence to which we have referred.

  1. Seventh, not only did the Sinopolis rescind the contract of sale, nothing done by them between February 2011 and June 2013 would suggest that any part of the moneys paid to them by the applicant in that period was treated by them as relating to the contract of sale.  The respondent was correct in submitting that there is a statutory regime pertaining to moneys paid pursuant to a contract of sale which is intended to protect vendor and purchaser alike; and that nothing done by the Sinopolis with the moneys which they received had any connection with the statutory regime.

  1. Eighth, assuming that the Sinopolis did have a right of appropriation, it was a right which could be exercised only once in respect of any payment received.[46]  Appropriation need not be formal, it may be declared by any conduct which makes the creditor’s intention plain.  It is at least well arguable that some conduct of Mrs Sinopoli in the period from February 2011 involved ‘appropriation’ of moneys received from time to time to advances made pursuant to the March 2009 agreement, for which reason later ‘appropriation’ of moneys received to the deposit would not have been possible.

    [46]The ‘Mecca’ [1897] AC 286, 292 (Lord Herschell).

  1. Ninth, it may be accepted that the applicant did pay more than $200 000 to the Sinopolis between February 2011 and June 2013.  But even if, contrary to the judge’s conclusion, some part of that money was not paid pursuant to the March 2009 agreement, the reason why it was paid would remain opaque.  The document referred to at [163(b)] of the Reasons gives a hint of an explanation.[47]  But the question need not be decided.  What can be said is that, for more than one reason, the applicant failed to show that the balance of deposit moneys was paid by him to the Sinopolis.

    [47]See [63(3)] above.

Ground 2

  1. Contrary to the argument advanced for the applicant, this was not a case in which the judge found that time was of the essence when the same was neither pleaded nor argued.  The simple point was that the contract of sale, the amendment agreement and, for that matter, the 20 September agreement, all required payment of the deposit balance by 28 February 2011.  When the applicant failed to comply with the amendment agreement, the Malvern Road agreement continued unaffected.  The applicant was indebted to the respondent, and the respondent was entitled to enforce repayment of the debt against the applicant as guarantor of the loan.

  1. In all, the applicant, upon whom the burden of proof of discharge of his indebtedness[48] (as guarantor) to the respondent lay, for a number of reasons failed decisively to discharge that burden.

    [48]Young v Queensland Trustees Ltd (1956) 99 CLR 560.

Notice of contention

  1. For reasons which we have attempted to explain, it is unnecessary to resolve the matters raised by the respondent’s notice of contention.  But if it had been necessary to decide whether either ground raised by the respondent was established, as presently advised we would have resolved the question adversely to the respondent.  We will say just a little about the matter.

  1. The gist of proposed ground 1 was that the judge ought to have found that the respondent and the applicant were in a relationship out of which a presumption of undue influence arose with respect to the execution of the amendment agreement.  The argument ran that the burden of disproof would then have fallen upon the applicant, and that he had failed to discharge that burden in circumstances where the judge was left in a state of uncertainty as to what the respondent knew about the amendment agreement when she signed it.  The applicant’s response was relevantly that the respondent did not rely upon any of the established circumstances which may ground a presumption of undue influence, and that the antecedent relationship between the applicant and the respondent was not such as could give rise to a presumption of undue influence.[49]  Applicant’s counsel further submitted that, on the facts found by the judge, which, he argued, could not be successfully impugned, there was no basis for finding that the applicant had exercised actual undue influence over the respondent with respect to execution of the document, or that he had acted unconscionably.

    [49]Counsel referred to the judgment of Kaye J (as his Honour then was) in Christodoulou v Christodoulou [2009] VSC 583 [70].

  1. The judge’s findings, relevantly, were to the applicant’s advantage.  It appears that his Honour did not accept that the circumstances relied upon by the respondent[50] gave rise to an antecedent relationship upon which a presumption of undue influence could be erected.  Further, his Honour was not prepared to find that there was undue influence in fact.  We agree with the submission for the applicant that the particular findings could not be successfully impugned.  Whilst it might be said that the applicant’s evidence was the most evidently untruthful, the respondent’s evidence was definitely flawed in some respects; and this made fact-finding a difficult exercise.

    [50]See Reasons [144].

  1. Respecting proposed ground 2, the respondent submitted that it was unconscionable to permit the applicant to retain the benefit of the amendment agreement.  The benefit was said to be that the applicant’s indebtedness was forgiven except for $30 000; and that the applicant procured payment of $200 000 to the vendors when he was the ‘real’, or a substantial, owner of the Beaumaris property.  This benefit was said to be wholly to the applicant’s advantage.  It was submitted for the applicant, however, in our view correctly, that the respondent’s argument that the amendment agreement was entirely to her disadvantage, and to the advantage of the applicant, was wrong.  Had the applicant paid the balance of the deposit moneys as he was obliged to do, the applicant and her husband, as purchasers, would have been a step along the road to obtaining title to the Beaumaris property.  The fact that the deposit moneys might ultimately have found their way to the applicant as the beneficial owner of the property would have been beside the point.  It is true that settlement might not have been consummated, but even then, the respondent and Vrettakos would not have been entirely without remedy.  All other arguments advanced by the parties put to one side, we consider that it was definitely open to the judge to conclude that the applicant had not taken unconscientious advantage of such (special) disability as the respondent had been under.[51]

    [51]Which itself raised another question.

Order

  1. The application for leave to appeal should be dismissed with costs.


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Lontav Pty Ltd v Pineross Custodial Services Pty Ltd [2011] VSC 278
Young v Queensland Trustees Ltd [1956] HCA 51
Young v Queensland Trustees Ltd [1956] HCA 51