Great North Properties Pty Ltd v Anastasopoulos
[2011] NSWSC 515
•06 May 2011
Supreme Court
New South Wales
Medium Neutral Citation: Great North Properties Pty Ltd v Anastasopoulos [2011] NSWSC 515 Hearing dates: 6 May 2011 Decision date: 06 May 2011 Jurisdiction: Equity Division Before: White J Decision: 1. Give judgment for the plaintiff against the first, second and third defendant in the sum of $770,000;
2. Order that the first, second and third defendants pay the plaintiff the sum of $770,000 and interest from 30 July 2009 on that sum at the rate prescribed by r 36.7 of the Uniform Civil Procedure Rules as the prescribed rate payable for the purpose of s 101;
3. Order that the first, second and third defendants pay the plaintiff's costs.
4. In the case of the costs to be assessed against the first defendant, such costs are to be assessed on the basis that the first defendant has not opposed the relief sought against him.
5. The exhibit may be returned after 28 days.
Catchwords: CONTRACT - deed - whether deed enforceable - whether deed unenforceable because it is attempt to enforce a loan agreement that is a sham - even if loan agreement does not contain true agreement between the parties that does not preclude plaintiff from claiming debt under deed - whether deed procured through undue influence or the result of unconscionable conduct engaged in by the plaintiff - undue influence and unconscionable conduct not established on the facts - creditor does not engage in unconscionable conduct by threatening to take all avenues lawfully available to recover its debt - whether plaintiff released second defendant from obligations under the deed - no agreement for release from obligations - defendants liable to plaintiff for sum owing under deed Legislation Cited: Competition and Consumer Act 2010 (Cth)Civil Procedure Act 2005 Cases Cited: Australia and New Zealand Banking Group Limited v Karam [2005] NSWCA 344; (2005) 64 NSWLR 149Universe Tankships Inc of Monrovia v International Transport Workers' Federation [1983] AC 366 Category: Principal judgment Parties: Great North Properties Pty Ltd (Plaintiff)
Nicholas Demetrios Anastasopoulos (1st Defendant)
Christos Voukidis (2nd Defendant)
Jedda Projects Pty Ltd (3rd Defendant)Representation: Counsel:
R Alkadamani (Plaintiff)
D Neggo (2nd and 3rd Defendants)
Solicitors:
Gibsons Lawyers (Plaintiff)
Spinks Eagle Lawyers (2nd & 3rd Defendants)
File Number(s): 2010/425463
Judgment
HIS HONOUR : In these proceedings, the plaintiff seeks judgment against the first, second and third defendants in the sum of $770,000. It sues for that sum as an amount owing under a deed made between those parties on 27 July 2009. The litigation concerns a property development of two levels of a building in Clarence Street, Sydney.
On 31 March 2004, the plaintiff, Great North Properties Pty Ltd ("GNP"), entered into an agreement with the third defendant, Jedda Projects Pty Ltd ("Jedda"), whereby it was agreed that GNP grant to Jedda a loan facility of $500,000. The agreement provided that interest would be payable on the loan at the rate of seven per cent per annum and that the loan was to be repayable by no later than 31 March 2006. GNP provided the sum of $500,000, which was used in the refurbishment of the development.
On 27 July 2009, GNP, Jedda and the first defendant (Nick Anastasopoulos) and the second defendant (Chris Voukidis), entered into the deed on which the plaintiff sues. It contained the following recitals.
"A. Nick and Chris are the only directors of each of Jedda and its ultimate holding company, Koombari Pty Ltd (ACN 094 015 782).
B. On or about 31 March 2004, at the request of Nick and Chris, Great North provided $500,000 (the Loan) to Jedda to be used for a development project on levels 12 and 13 of 50 Clarence Street, Sydney.
C. On or about 31 March 2004, Great North and Jedda entered into a document styled 'Loan Facility Agreement' in relation to the Loan and discussions ensued for several years thereafter between George Tsivis, the sole director of Great North (George) on behalf of Great North and Nick and Chris both personally and on behalf of Jedda.
D. Each of Jedda, Nick and Chris acknowledge that Jedda has not complied with any of its obligations to Great North under the Loan Facility Agreement.
E. Each of Nick and Chris further acknowledge that none of Jedda, Nick or Chris have complied with any of their respective obligations to Great North arising from the discussions between Nick and Chris on behalf of themselves and Jedda and George on behalf of Great North.
F. In order to induce Great North not to enforce its rights against each of Jedda, Nick and Christ at this time, Nick and Chris have made the offer referred to below which has been accepted by Great North in accordance with the terms below.
G. The said levels 12 and 13 of 50 Clarence Street, Sydney now comprise Lots 16, 17 and 18 in Strata Plan 71152 and are respectively known as Apartment 1201, Apartment 1202 and Apartment 1203, 50 Clarence Street, Sydney and are respectively owned by Perikles Giannopoulos, Konstadena Demetrios Laska (as nominee for Nick) and John Kolovos (as nominee for Chris)."
Relevantly, it provided:
" Now this Deed witnesses that the parties hereto mutually covenant as follows:
Covenants by Nick and Chris :
1. Nick and Chris covenant that:
1.1. The above Background is true and correct.
1.2. On the first to occur of:
(a) The passing of 10am on Thursday 30 July 2009 without each original Laskas Property Deed and Kolovos Property Deed duly executed by all parties being delivered to Gibsons Lawyers (Great North's lawyers) as the solicitors for Great North together with the relevant Solicitor's Certificate for each Property Deed.
(b) The passing of 10am on Wednesday 5 August 2009 without written permission of each registered mortgagee of Apartment 1202 and Apartment 1203 granting a second mortgage in accordance with the Property Deeds not reaching Great North's lawyers.
(c) The passing of 10am on Wednesday 5 August 2009 without evidence reasonably acceptable to Great North's lawyers being presented to those lawyers to the effect that each of the Apartments has been listed for sale in accordance with the respective Property Deed.
(d) Any failure by any of Laskas or Kolovos to comply with any substantive obligation on their part as set out in their respective Property Deed; or
(e) Any failure of any of Jedda or Nick or Chris to comply with any substantive obligation on their part in accordance with this Deed; or
(f) Great North becoming aware that any statement of fact by any of Laskas or Kolovos in their respective Property Deed or by Nick or Chris in any Property Deed or in this Deed is materially false; or
(g) Noon Wednesday 23 December 2009 passing without Great North's lawyers receiving the aggregate of the whole of the net proceeds of sale of the two Apartments 1202 and 1203, and Great North's costs;
then Jedda and Nick and Chris must pay to Great North's lawyers on behalf of Great North the aggregate of $770,000 and Great North's costs.
1.3. They have each had the opportunity to obtain independent legal and financial advice in respect of the effect of this Deed before executing same.
1.4. They acknowledge that the effect of this Deed may be that they must, on or before noon on Wednesday 23 December 2009, pay to Great North the aggregate of $770,000 and Great North's costs in consideration for the debt otherwise owing by Jedda to Great North which originally arose from the representations made by Nick and Chris to induce Great North to provide the Loan to Jedda on or about 31 March 2004."
Messrs Anastasopoulos and Voukidis covenanted that two other named individuals held two apartments as nominees for them and promised that they would cause those nominees to enter into further deeds, the effect of which, if implemented, would be to provide for the sale of the units. They covenanted that the net proceeds of sale of the units would be paid in partial satisfaction of the debt of the Jedda group to GNP.
Clauses 4.1 and 4.2 provided:
"4.1 Each of Jedda and Nick and Chris hereby irrevocably and for valuable consideration appoint Great North Properties Pty Ltd or any director thereof for the time being the attorney of each of Jedda and Nick and Chris respectively for the purpose of putting into effect each relevant obligation of each of Jedda and Nick and Chris in the Loan Facility and in this Deed of Agreement and in each of the Property Deeds for the benefit of Great North.
4.2 Each of Jedda and Nick and Chris will, without delay, do all acts and execute all documents reasonably required by Great North to put their respective obligations, expressed or implied in this Deed, into effect."
By clause 5, GNP agreed that if the other parties complied with all of their obligations under the deed and they received the whole of the net proceeds of sale from the anticipated sale of the apartments in an amount of, at least, $770,000 plus the costs, then it would accept that aggregate sum in full satisfaction of all moneys owing to it arising from the transactions referred to in the recitals.
The events referred to in clause 1.2 did not occur. As at 10am on Thursday, 30 July 2009, neither the Laska property deed, nor the Kolovos property deed duly executed by all parties to those deeds, had been delivered. Nor were the steps referred to in clause 1.2(b) or (c) complied with. The sum of $770,000 was not paid.
There is no issue that if the deed is enforceable, the debt claimed by the plaintiff is owing.
The first defendant, Mr Anastasopoulos, although served, has not appeared.
The second and third defendants contend that the deed is unenforceable for a number of reasons. These reasons only appeared from submissions of counsel for the second and third defendants delivered immediately prior to the hearing. The plaintiff's claim was brought by summons. It ought to have been pleaded. Notwithstanding that the plaintiff did not plead the claim for a debt, the second and third defendants ought to have insisted on pleadings and pleaded their defence. As it is, matters have been able to proceed.
The grounds upon which the second and third defendants deny that the deed is enforceable are as follows.
First, they contend that the deed is an attempt to enforce the loan agreement dated 31 March 2004. They say that that loan agreement did not reflect the true agreement between the parties, or the parties' intentions, but was created to create a false impression that the investment GNP was to make in relation to the project was by way of loan.
The second and third defendants say that the true arrangement was in the nature of a partnership, or joint venture, under which all of the parties to the partnership or joint venture would make contributions and be entitled to a share of profits when, but only when, profits were received as a result of the apartments in the development being sold.
The defendants say that the deed of 27 July 2009 is unenforceable because it is an attempt to enforce the loan agreement of 2004, which is a sham.
Secondly, the defendants contend that the deed of 27 July 2009 was procured through the exercise of undue influence, or was the product of unconscionable conduct engaged in by the plaintiff.
Thirdly, Mr Voukidis contends that GNP has released him from any obligation under the deed, or, alternatively, that it is estopped from asserting that he has any continuing obligation under the deed.
A foreshadowed defence that the second and third defendants were released because the plaintiff had released the first defendant was not finally pressed, as the evidence did not establish that the first defendant had been released.
Counsel for the second and third defendants accepted that for the second ground of challenge of unconscionable conduct, or (possibly) undue influence to succeed, it would have to be shown that the loan agreement of 2004 was indeed a sham.
The evidence about that was given by Mr Voukidis. He deposed that in March 2004, the director of GNP, Mr George Tsivis, agreed to invest $500,000 into the project and he was told that the project was a joint venture between five individuals, of which Mr Tsivis would have a one-eighth share. He says that Mr Tsivis said:
"Ok, I want to go ahead with the investment, but I want to pull the money out of my super funds, so I will need to make it look like a loan. Can you prepare and sign a loan agreement so I can get the super money"
Mr Voukidis said that he agreed. He deposed that he said to Mr Tsivis at the time of signing the agreement, to which Mr Tsivis assented:
"This is only for you to document that the investment money came out of your super funds, but you know we are really partners right."
Mr Tsivis denied that conversation and says that the 2004 loan agreement was intended to operate in accordance with its terms. He admits that, in the discussions in 2004 with Mr Voukidis, there was some discussion about profit share. It is his evidence that he was told by Mr Voukidis that:
"Once the apartments are refurbished, we will sell them. They should sell within three months ... If you put half a million dollars into the project and Kosmos puts in half a million dollars and Nick and I will put in one million dollars between us to complete refurbishment. We will repay your loan of half a million dollars together with an anticipated profit of two hundred and fifty thousand dollars."
According to Mr Tsivis, he agreed to, "put in the $500,000" , provided, "I get a Loan Agreement to record the borrowing" .
It is Mr Tsivis' evidence, which I accept, that he did not prepare the loan agreement. He says (and I accept this evidence) that at a meeting on 31 March 2004, he was handed the loan agreement signed by both Mr Anastasopoulos and Mr Voukidis and, at that meeting, he handed over a cheque for $500,000, payable to Jedda.
There is some evidence that Mr Tsivis expected a profit share from the development. The loan, as it was called, was not repaid. In January 2009, he instructed a solicitor, Mr Norman Isenberg of Gibsons Lawyers, to act for him. On 4 February 2009, Mr Isenberg wrote to Mr Anastasopoulos and Mr Voukidis, amongst others, responding to offers made by them. The background to this e-mail was that Mr Isenberg had written on 21 January 2009, asserting that there were a number of outstanding debts owing to Mr Tsivis and to GNP. It is clear from the text of the letter and from an annexure, that one of the debts the subject of that letter was the sum of $500,000, described as an advance on which interest was payable. The interest had accumulated to the sum of $200,176.29.
In his letter of 21 January 2009, Mr Isenberg said that Mr Tsivis was extremely disappointed that his request for payment had been ignored or fobbed off. He foreshadowed various actions that might be taken and I will return to these later in these reasons.
The initial response from Mr Voukidis to that correspondence was to say that he and Mr Anastasopoulos had been working, "diligently and feverishly towards completing a refinance of the relevant properties to satisfy the amounts advanced by George Tsivis" .
On 4 February 2009, Mr Isenberg wrote to Mr Anastasopoulos, copied to Mr Voukidis and others, that:
"I have spoken with George about your without prejudice offers on the 3 debts.
The most complex of the three offers appears to be that related to Jedda Projects Pty Ltd (Jedda).
In order to enable both George and myself to understand exactly what is being offered regarding Jedda I have set out below:
A my understanding of some aspects of the original verbal agreement and what then occurred;
B your current offer; and
C some further parts of the jigsaw ...
A My understanding
2004 arrangement In 2004 you, Chris and Theo Baker were involved in the development of the top floor of 50 Clarence St Sydney. The floor was to be subdivided into a strata block of three units (which became SP 71152) with one of the units effectively to be owned by each of you, Chris and Theo or your nominees.
You had previously borrowed money from George and asked George to attend a meeting at Clarence Street. You and Chris were both at that meeting. You informed George that an issue had arisen with Theo and that you wished to borrow money from George in relation to the development. George understood at that time that Jedda owned the whole floor.
As an inducement for George to lend the money, you and Chris informed him that if he lent the money the development would take a few months and each of the units would be sold for between $1.7 million and $2 million. One third of the overall profit on the development would go to George as his profit for lending money to Jedda.
Through his company Great North Properties Pty Ltd, George loaned $500,000 to Jedda and for reasons best known to, and at the request of, you and Chris, the arrangement was documented as loan in terms of the loan facility agreement prepared by you, dated 31 March 2004 and signed by you and Chris as officers of Jedda.
As you are aware George did not receive any legal advice regarding the document he signed.
Subsequently, you and Chris determined to vary the development so that the strata units, instead of being residential units, would be commercial offices.
You have informed George that you have now received approval from the council to redevelop the residential strata units as commercial office units."
Thus, the understanding, as described by Mr Isenberg, was that Mr Tsivis would make a loan, but that he had been informed by Mr Voukidis that he would receive a third of the overall profit on the development as his profit for lending money to Jedda.
Mr Isenberg's points seem to have been that the profit share arrangement was omitted from the loan documentation that Mr Anastasopoulos and Mr Voukidis prepared. The fact that there were discussions between the parties about a division of profits is not inconsistent with the loan agreement intending to take effect, according to its tenor, namely, that moneys advanced by GNP would be by way of loan, which would be required to be repaid. There were also discussions that Mr Tsivis would receive a share of profits that might, ultimately, be received from a sale of the units.
Considering the matter objectively, the case of sham does not appear likely. The reason advanced by Mr Voukidis as to why the loan agreement was proposed was to create a false impression in case any question arose about the ability of a trustee of a superannuation fund for Mr Tsivis to make an authorised investment by way of an equity share in a property development. The difficulty with the notion that that would be a reason for the parties creating a false document is that the advance (to use a neutral term) was not made out of Mr Tsivis' superannuation fund.
Moreover, no clear evidence was given that the investment of the kind described by Mr Voukidis could not lawfully have been made by a superannuation trustee without risking the taxation status of the fund from which the investment was made. It is not obvious why, if an unsecured loan for the purposes of the venture would satisfy the investment criteria for a superannuation trustee, an equity investment would not also do so.
A finding of sham is a serious finding. It amounts to saying that the parties intended to deceive any third person as to the purpose of the advance. Although Mr Voukidis attested to his willingness to assist in such deception, I do not accept that that was Mr Tsivis' intention.
A further fact relied upon to support the contention that the 2004 agreement was a sham is that, in 2008, when the $500,000 had not been repaid, Mr Tsivis made a further advance of $500,000 to a company called Oxley Group Finance Pty Ltd ("Oxley") which is a company which both Mr Voukidis and Mr Anastasopoulos had an interest. The loan was for a period of three or, perhaps, six months. It was guaranteed by Mr Voukidis.
It was submitted for the defendants that such a loan would not have been made if, at that time, Mr Tsivis thought that the defendants were in breach of their obligation to repay the loan that had been advanced as a loan in 2004. Rather, it showed that Mr Tsivis knew that the loan was not repayable until there were sufficient proceeds from the sale of units with which to repay it.
I accept that Mr Tsivis understood that the likely source of repayment was from the sale of the apartments. But it does not follow from the fact that he made a further loan in 2008 to Oxley that the 2004 transaction involving Jedda was by way of equity participation and not loan.
Mr Tsivis was told that the loan would be repaid from the sale of units. He had known the individuals involved for a long time. The fact that he did not sue to enforce the loan agreement of March 2004 does not indicate that the agreement was a sham. Rather, he was content to allow the other parties to attempt to sell the units so as to receive repayment.
Moreover, the deed of 27 July 2009 unequivocally states that the arrangements made in 2004 were that a loan would be made and that it would be made on the terms of the agreement of 31 March 2004. Unless the deed of 27 July 2009 were to be set aside, it creates an estoppel which precludes the defendant from denying the accuracy of the matters recited.
Of course, the defendants rely upon the contention that the loan agreement of March 2004 was a sham to support their argument that the deed of 27 July 2009 is unenforceable. But whether or not the recitals can be relied on as giving rise to an estoppel, the fact that the parties were prepared to acknowledge the obligation under the loan agreement is inconsistent with Mr Voukidis' contention.
Further, GNP is not suing on the agreement of 31 March 2004. It is suing on the deed of 27 July 2009. Even if the loan agreement of 31 March 2004 does not contain the true agreement between the parties, that fact, by itself, would not preclude the plaintiff from claiming the debt under the deed of 27 July 2009. It would only be if that fact led to the deed being unenforceable that it would have any relevance to the claim for the present debt.
The defendants did not file a cross-claim seeking to avoid the deed of 27 July 2009. So far as appears, they have not served any document seeking to avoid the deed.
The second and third defendants' written submissions also invoked concepts of economic duress. Their counsel acknowledged, in the light of the Court of Appeal's decision in Australia and New Zealand Banking Group Limited v Karam [2005] NSWCA 344; (2005) 64 NSWLR 149 at [66], that the better analysis would be to treat concepts of duress as being limited to threatened or actual unlawful conduct and that otherwise matters sometimes discussed under that rubric should be analysed by reference to equitable principles of undue influence, or unconscionable conduct based on taking unconscientious advantage of the other party's special disability or special disadvantage.
What is significant for present purposes is that economic duress has been said to be a ground for treating a contract as voidable (Universe Tankships Inc of Monrovia v International Transport Workers' Federation [1983] 1 AC 366 at 383). A contract may also be voidable if entered into through one party's taking unconscientious advantage of the position of special disadvantage of the other, or may be voidable for undue influence.
It does not appear that the deed of 27 July 2009 has been avoided, even if there were grounds to do so.
This is not a case of undue influence. All of the parties are businessmen who dealt with each other at arm's length in a commercial venture. Nor were the second and third defendants parties who were at a special disadvantage vis-a-vis GNP and Mr Tsivis. It is true that they owed money to GNP, or Mr Tsivis, or two other companies controlled by Mr Tsivis and that they were in default of payment. But those facts do not amount to a position of special disadvantage that attracts equitable jurisdiction in relation to unconscionable conduct.
The defendants relied, in particular, upon a letter of 21 January 2009 written by Mr Isenberg to which I earlier made reference. Mr Isenberg claimed that an amount in excess of $2,030,000 was owed by Mr Voukidis and Mr Anastasopoulos and by Jedda, Oxley and another company called Mandalene Pty Limited. Mr Isenberg said that if payment were not made, or satisfactory arrangements not arrived at, action would be taken against Messrs Voukidis and Anastasopoulos personally and against their companies. The foreshadowed action was described as potentially including the issuing of statutory demands to debtor companies; commencing proceedings against the debtor companies, or the individuals as guarantors; commencing proceedings in relation to a claimed misrepresentation regarding a charge said to have been given by Oxley; enforcing something described as a "Memorandum of Understanding" between Mr Tsivis and Mr Voukidis; notifying all shareholders of Oxley of a breach of the loan agreement; lodging caveats over all real property in respect of which Mr Voukidis had a beneficial legal interest; executing documents as attorney for Mr Voukidis; exercising powers as mortgagee under mortgages given by Mandalene in accordance with a deed of priority made between the National Australia Bank Limited and Mr Tsivis; and notifying the bank of the exercise of those powers.
There is no evidence that Mr Tsivis, or GNP, would not have been entitled to take any of the action described. A creditor does not engage in unconscionable conduct by threatening to take all of the avenues lawfully open to it to recover its debt.
The reason advanced as to why this correspondence created what might be called "legitimate pressure" was that the debts included in the demand included the debt of $500,000 and interest claimed to be owing by Jedda. For the reasons I have given, there was nothing improper about including that debt, as it was a debt that was due and payable.
The next question is whether Mr Voukidis' obligations under the deed were released.
Mr Voukidis gave evidence that, at the time of signing the deed, he asked Mr Isenberg about the Power of Attorney in clause 4.1 and Mr Isenberg said to him that the clause was included "so that we can make sure you comply with the deed" and "if you don't keep up your end of the bargain we will do it for you, that way we are protected" , and that if Mr Anastasopoulos did not comply with his obligations that "we can use our power of attorney to do it on his behalf" .
It appeared from Mr Voukidis' affidavit that a ground might have been sought to be raised that the deed was entered into as a result of misrepresentation as to the purpose of the inclusion of clause 4.1 in the deed. Mr Voukidis said that he understood that Mr Tsivis and GNP were attending to fulfilling the obligations that he and Mr Anastasopoulos and Jedda had assumed under the deed. However, in cross-examination, he made it clear that he was referring to the position that would obtain if GNP sold units in the exercise of the Power of Attorney, in which case, it would be required to apply the proceeds of sale in reduction of the debt. There is no issue about that and no question of misrepresentation arises. No issue of misrepresentation was pressed.
The claim that Mr Voukidis was released from his obligations under the deed is based upon evidence of a conversation he claims he had with Mr Tsivis "at some stage after the deed was signed" . According to Mr Voukidis, a conversation to the following effect took place:
"[Mr Voukidis] You are now claiming that your investment in Clarence Street is a loan. Well, the Oxley loan was for both me and Nick, but I have agreed to pay it myself. It will be [a]stretch to get that money but if I get it and pay it, I don't want you trying to get the Jedda money out of me.
[Mr Tsivis] Ok, just get the Oxley money to me. I will chase Nick for the Jedda loan."
Mr Voukidis said that he repaid the last instalment of the Oxley loan on or about 24 February 2010. He says that, at that time, he told Mr Tsivis that Mr Anastasopoulos would take responsibility "for any return of your investment in the Clarence Street apartments". He says that Mr Tsivis said "I understand. As long as you make the payment due by Oxley then I will follow up Nick for the Jedda amounts" .
Mr Tsivis denied both alleged discussions. I am not satisfied that the conversations to the effect deposed to by Mr Voukidis took place. If they did, they do not amount to an agreement to release Mr Voukidis from his obligations under the deed.
Whilst I have reservations as to parts of Mr Tsivis' evidence, I prefer his evidence to that of Mr Voukidis where it is not contradicted by documents and is in accordance with objective probabilities. Mr Voukidis' credit was shaken by his acknowledgment of having deliberately altered some bank statements produced on discovery in other proceedings in Victoria and is shaken by the evidence in his own affidavit to the effect that he claims to have been a knowing party to an intended deception. Accordingly, where there is no relevant documentary evidence and where the objective probabilities don't clearly point one way or the other, I prefer Mr Tsivis' evidence.
That having been said, I do not think that the objective probabilities favour the version of events put forward by Mr Voukidis in relation to the claimed release. The fact that Mr Voukidis repaid the Oxley loan provides no objective reason for Mr Tsivis to release him from his obligations under the deed. He was a guarantor of the Oxley loan. As far as appears, Mr Anastasopoulos was not a guarantor. There would be no reason, unless it were charity or friendship, why Mr Tsivis would have agreed to release Mr Voukidis. Given that Mr Tsivis insisted on the deed of 27 July 2009 being signed, it is unlikely that as a matter of charity or friendship he would have released Mr Voukidis.
If the words deposed to by Mr Voukidis were uttered, there would be no contract of release because there would be no consideration for the release. Nor would the words have created an estoppel against the plaintiff asserting its rights against Mr Voukidis under the deed. Mr Voukidis did not act to his detriment in a relevant sense by making the repayment of the Oxley loan, given that he was liable as a guarantor and obliged to do so.
Finally, reference was made in the course of submissions to statutory relief for unconscionable conduct under s 21 of the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)). Counsel accepted that, if the defendants were not entitled to relief in equity in respect of unconscionable conduct, the claim would be no stronger under the Act. There is a more fundamental problem that no cross-claim was filed seeking relief under the Act.
In these circumstances it is not necessary to consider in any detail the legislative provisions. I am satisfied that, if they had been invoked, the defendants' claim would not have succeeded.
For these reasons, the plaintiff is entitled to the judgment sought against the second and third defendants. As I have said, there has been no appearance for the first defendant.
I give judgment for the plaintiff against the first, second and third defendant in the sum of $770,000.
The plaintiff also seeks interest at the rate prescribed by the Uniform Civil Procedure Rules from 30 July 2009 on the sum of $770,000.
The deed created a separate debt for $770,000. It made no provision for interest on that debt, but, in the events which happened, the debt became payable on 30 July 2009.
The plaintiff is entitled to interest under s 100 of the Civil Procedure Act 2005. The plaintiff is entitled to the relief sought as to interest.
I order that the first, second and third defendants pay the plaintiff the sum of $770,000 and interest from 30 July 2009 on that sum at the rate prescribed by r 36.7 of the Uniform Civil Procedure Rules as the prescribed rate payable for the purpose of s 101.
I order that the first, second and third defendants pay the plaintiff's costs.
In the case of the costs to be assessed against the first defendant, such costs are to be assessed on the basis that the first defendant has not opposed the relief sought against him.
The exhibit may be returned after 28 days.
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Decision last updated: 03 June 2011
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