Industry Funds Management (Nominees 2) Pty Limited v James Nicholas Panagopoulos and Anor

[2013] NSWSC 868

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Industry Funds Management (Nominees 2) Pty Limited v James Nicholas Panagopoulos and Anor [2013] NSWSC 868

Hearing dates:

25 June 2013

Decision date:

28 June 2013

Jurisdiction:

Equity Division

Before:

Sackar J

Decision:

1. Defendants' motion dismissed.

2. Defendants to pay plaintiff's cost of the motion.

Catchwords:

PROCEDURE - consent judgments - whether consent judgments were procured "against good faith" - meaning of "against good faith" - whether consent judgments should be set aside.

EVIDENCE - cross-examination - whether rule in Browne v Dunn complied with.

Legislation Cited:

Civil Procedure Act 2005
Uniform Civil Procedure Rules 2005

Cases Cited:

Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1
Coles v Burke (1987) 10 NSWLR 429
Cubillo v Commonwealth of Australia (2000) 174 ALR 97
Harvey v Phillips (1956) 95 CLR 235
Kendell v Carnegie (2006) 68 NSWLR 193
Roach v B & W Steel Pty Ltd (1991) 23 NSWLR 110
Watson v Foxman (1995) 49 NSWLR 315

Category:

Consequential orders

Parties:

Industry Funds Management (Nominees 2) Pty Limited (Plaintiff / Respondent on the motion)
James Nicholas Panagopoulos (First Defendant / Applicant on the motion)
Equal 54 Pty Limited (Second Defendant / Applicant on the motion)

Representation:

Counsel:
A McInerney SC (Plaintiff / Respondent on the motion)
G Sirtes SC and M Gollan (Defendants / Applicants on the motion)
Solicitors:
Gadens Lawyers (Plaintiff / Respondent on the motion)
(No solicitors recorded for the Defendants / Applicants on the motion)

File Number(s):

2012/207713

Judgment

Proceedings

1. The applicants (being the defendants to the main proceedings) move the court by a notice of motion filed 28 March 2013 to stay execution on and to set aside consent judgments made against them on 27 September 2012 and entered on 2 October 2012.

1. The applicants rely upon s 135(1) of the Civil Procedure Act 2005 and the powers granted to the court pursuant to r 36.15 of the Uniform Civil Procedure Rules 2005 (UCPR). The applicants also rely upon the inherent jurisdiction of the court.

Background facts

1. The plaintiff, Industry Funds Management (Nominees 2) Pty Limited (the plaintiff or the bank), provided certain facilities to two corporate entities. The first is San Marco World Square Pty Limited (in liquidation, receivers and managers appointed) (San Marco) and the second is Wanslea Grove Pty Ltd (in liquidation, receivers and managers appointed) (Wanslea).

1. To secure the obligations of San Marco, the first and second defendants executed a deed of guarantee and indemnity on 31 March 2006, in favour of the plaintiff, to guarantee payment and indemnify against loss of all present or future monies owing by San Marco to the plaintiff.

1. To secure the obligations of Wanslea, the first defendant executed a deed of guarantee and indemnity on 5 December 2008 in favour of the plaintiff, to guarantee payment and indemnify against loss of all present or future monies owing by Wanslea to the plaintiff (up to $1,302,500 plus interest on that amount, fees, costs and expenses).

1. Mr Panagopoulos was first introduced to the principals of San Marco (Tobias Farinha, Miguel Farinha and Marco Zagato, together the Farinhas) by friends common to Mr Panagopoulos and the Farinhas. The Farinhas were directors of San Marco. As the friendship between the Farinhas and Mr Panagopoulos developed, Mr Panagopoulos discovered that the Farinhas were involved in a venture in respect of a start-up pub in World Square to be known as the Equilibrium Hotel. Mr Panagopoulos alleges the Farinhas asked if he was interested in becoming a co-investor to replace an existing co-investor, a Mr Carl Frauenstein, who was another director and shareholder of San Marco.

1. After having met with Colin Steingold of Steingold Abel Lawyers (solicitor for the Farinhas) and as a result of discussions between himself and Tobias Farinha, Mr Panagopoulos decided to invest in the hotel project. In or about late September 2005, Mr Panagopoulos caused the second defendant to pay $200,000 to the Farinhas, allegedly at the request of Tobias Farinha, and on the understanding that it was to be treated as a deposit to be refunded in the event that Mr Panagopoulos decided not to proceed. At the time he paid the sum of $200,000, Mr Panagopoulos was advised by Dennis Galimberti (of Hall & Thompson Lawyers) in relation to the proposed venture with the Farinhas. There was some correspondence between Mr Galimberti and Mr Steingold in relation to the venture.

1. Mr Panagopoulos asserts that on 14 December 2005, Mr Galimberti emailed to him a partnership agreement under which the second defendant would enter into partnership with San Marco and another company, Cine San Marco Pty Ltd. Under that agreement, the second defendant was to be allotted shares in San Marco. Mr Panagopoulos asserts that late in 2005 he signed the partnership agreement and as a result caused the second defendant to pay a further $1.2 million on 20 December 2005. Mr Panagopoulos asserts the monies were paid, at the direction of the Farinhas, into a bank account held by Cockle Bay San Marco Pty Ltd.

1. On 21 December 2005, Mr Panagopoulos was made a director of San Marco, but he asserts he had no involvement in the daily management or operation of San Marco or the Equilibrium Hotel, and was only to receive monthly financial reports so he could monitor the performance of the Equilibrium Hotel.

1. The second defendant was allotted 300 fully paid shares in San Marco. Mr Panagopoulos asserts this took place on 6 March 2006, and he cannot recall any reason for the delay between having made the payment of $1.2 million and the allotting of shares to the second defendant.

1. Mr Panagopoulos understood, from discussions with Mr Steingold and the Farinhas prior to executing the partnership agreement and prior to procuring the second defendant to invest the $1.2 million, that he would be required to sign a guarantee to replace that which had previously been given by Mr Frauenstein. He attended Mr Steingold's office on 31 March 2006 to sign the guarantee but did not obtain, he asserts, any legal advice in relation to the document before signing it.

1. On 31 October 2006, Mr Frauenstein brought proceedings in the Federal Court against San Marco and several other entities, seeking, among other things, to set aside the allocation of shares to the second defendant on 6 March 2006. In June 2007, Mr Frauenstein joined Mr Panagopoulos personally to the Federal Court proceedings. On 21 June 2007, Mr Panagopoulos resigned as a director of San Marco. Both Mr Panagopoulos and the second defendant filed a submitting appearance in the proceedings, but neither of them put on any defence in those proceedings. During the course of the proceedings, Mr Frauenstein asserted that the allocation of shares in San Marco to the second defendant was in breach of San Marco's constitution. During the course of the proceedings, the shares in San Marco held by the second defendant were held in escrow pending the outcome of the proceedings. Judgment was ultimately delivered by Emmett J on 10 December 2007 in Mr Frauenstein's favour, setting aside the allotment of shares in the capital of San Marco to the second defendant, as it was made in contravention of San Marco's constitution.

1. In the meantime, on 26 September 2007, the plaintiff appointed Stephen Parbery and Christopher Hill of PPB as receivers and managers of San Marco and took possession of, and continued to trade, the Equilibrium Hotel.

1. Mr Panagopoulos attended a meeting on 31 October 2007, at the request of the plaintiff, at the office of Gadens Lawyers in Sydney, together with various employees of the plaintiff and the Farinhas, to discuss difficulties that the receivers and managers of San Marco were facing. Mr Panagopoulos asserts that Mr Graham Fryer (an employee of the plaintiff) said the receivers and managers were having difficulty selling the Equilibrium Hotel, that the hotel would therefore be given back to Mr Panagopoulos and the Farinhas, and that if the plaintiff's facilities were not repaid, the plaintiff would pursue Mr Panagopoulos personally to the point of bankruptcy.

1. It seems Mr Panagopoulos then spent a good deal of time trying to arrange for other investors or syndicates to purchase the hotel from the receivers and managers, and discussions were had from time to time with the receivers about that possibility. Mr Panagopoulos asserts the plaintiff indicated it would not pursue the second defendant or himself for the debt owing by San Marco if Mr Panagopoulos purchased the Equilibrium Hotel.

1. Ultimately, a "Business and Asset Sale Agreement" was entered into on 29 February 2008 between San Marco (as vendor), Stephen Parbery and Christopher Hill (receivers and managers) and Wanslea, under which Wanslea (a company associated with Mr Panagopoulos) would purchase the Equilibrium Hotel from San Marco for $3.5 million. Mr Panagopoulos asserts he paid a deposit of $275,000. He asserts that in consideration for purchasing the hotel the plaintiff agreed to release the second defendant and himself from the guarantees once the purchase price had been paid.

1. Mr Panagopoulos says that in about April 2008 the contract for sale (i.e. the Business and Asset Sale Agreement of 29 February 2008) was terminated by the plaintiff as Mr Panagopoulos had been unable to raise the funds for the purchase price.

1. On 5 December 2008 Wanslea signed a new contract for the sale with the receivers and managers to purchase the hotel, this time for $2 million. He signed various loan and facility documents for the provision of additional funding to complete the purchase and to operate the hotel. He asserts that the plaintiff continued to offer to release himself and the second defendant from the San Marco debt upon payment of the purchase price and repayment of the facilities provided to Wanslea.

1. Mr Panagopoulos began operating the hotel on a day-to-day basis from the date of settlement (which was also 5 December 2008). However, during 2009 and 2010, the hotel business faced financial difficulties, as did Mr Panagopoulos it seems in respect of other business activities.

1. By around March 2010 however the hotel began to perform poorly and he came to the realisation that he would be unable to continue to operate the business. He tried unsuccessfully again to negotiate a sale of the business or even to sub-lease part of the premises, but was unsuccessful.

1. The plaintiff claimed that the first and second defendants had defaulted under the terms of their guarantees leading to a sum of $9,692,302.56 being owed by the first defendant and $8,179,476.68 being owed by the second defendant and made demands for the repayment of the monies upon Mr Panagopoulos and the second defendant.

1. Mr Panagopoulos alleges that having received certain demands from the plaintiff he rang his solicitor, Mr Galimberti, on 12 June 2012, to get legal advice in respect of the demands. Mr Galimberti indicated that he required the first defendant to place funds in his trust account before he gave any advice. At the relevant time Mr Panagopoulos had no money to deposit in the trust account as all his spare funds had been consumed in his attempt to buy an interest in what is called the Equilibrium Hotel.

1. On 20 June 2012 he then contacted a Mr Stephen Harris at Maurice Blackburn in order to obtain advice. Again, Mr Harris required a payment of $50,000 to into his trust account, which again, Mr Panagopoulos did not have.

1. On 4 July 2012, Mr Panagopoulos acknowledged being served with the Commercial List Statement and Summons.

1. On 26 July 2012 he contacted another solicitor, Mr Marks of B2B Lawyers, who again requested money be paid into the trust account. Again Mr Panagopoulos had no funds available.

1. Mr Panagopoulos decided that, since he had no money to engage solicitors, he should try to resolve the matter directly and he says he spoke to Ms Vetrova (on a number of occasions) who is a solicitor employed by Gadens Lawyers acting for the plaintiff. In their conversations he alleges that Ms Vetrova told him that the plaintiff would be interested in resolving the matter but only if consent judgments were entered. He alleges, however, that she indicated to him that her client would meet to discuss matters and give him favourable consideration. The critical parts of the conversations are disputed.

1. He sent an email to Ms Vetrova on 21 August 2012 indicating that he did not dispute liability and would therefore consent to judgment.

1. On 13 September 2012 he signed the consent judgments which had been sent to him by Ms Vetrova. He insists however that he did so without the ability of obtaining any legal advice in relation to the facilities and the transactions that were the subject of the proceedings and that he was induced to consent to the judgments by reason of certain inducements made by Ms Vetrova on behalf of the plaintiff.

1. Mr Panagopoulos asserts that in breach of those arrangements, notwithstanding his cooperation, the plaintiff has wrongfully refused to discuss the matter with him or give him any favourable consideration.

Defendants' contentions

1. The defendants assert that there was an arrangement or an agreement that if Mr Panagopoulos saved the plaintiff the expense of seeking a default judgment or of defending the proceedings by consenting to judgments, the plaintiff would in some way or another participate in some discussions with him and give consideration to treating him favourably. The plaintiff has acted, it is submitted, in bad faith by failing to honour its commitments, and hence the judgments should be set aside.

1. Mr Panagopoulos says he was led to believe that the bank would not move to bankrupt him but would somehow engage in meaningful attempts to resolve differences. The defendants submit that the plaintiff, in all the circumstances, acted in bad faith such that the judgments should be set aside pursuant to r 36.15.

1. In the alternative, the defendants invoke the inherent jurisdiction of the court on the basis that to leave the judgments in place in the circumstances would create an injustice. It was accepted however that if, on the facts as alleged, the defendants do not succeed under r 36.15, they could not succeed by invoking the inherent jurisdiction of the court.

Legal principles

1. There is no doubt that a consent judgment is capable of creating a res judicata. Generally speaking, once controversies are resolved they should not be reopened except in what might be suggested are limited circumstances.

1. UCPR 36.15(1) requires an applicant to satisfy the court that there is a sufficient cause shown for setting aside such a consent judgment. Rule 36.15 of the UCPR provides:

36.15 General power to set aside judgment or order

(1) A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith.

(2) A judgment or order of the court in any proceedings may be set aside by order of the court if the parties to the proceedings consent.

1. Mr Panagopoulos contends that the consent judgments were made against good faith. He does not rely on any irregularity or illegality. The meaning of the expression "against good faith" has received consideration in a number of cases.

1. In Coles v Burke (1987) 10 NSWLR 429, Kirby P (with whom Samuels and McHugh JJA agreed) said (at 437):

The genus which is involved in the phrase "irregularly, illegally or against good faith" appears to me to be misconduct or dishonourable conduct of the person who procured the judgment which it is suggested undermines the authority of that judgment warranting the exceptional course for which r 12A provides. Here, there was no such lack of good faith on the part of the claimants. The signing of the judgment was made in accordance with the authority of the order earlier consented to and after a warning had been given by the letter to which I have referred. It is perhaps undesirable, in the modern practice of the legal profession (where much give and take is required) that judgment should be signed in this way without a final telephone call or other warning. However, the failure to give such a final and further warning could not, on any view, amount to a lack of good faith. Therefore, r 12A, likewise, has no application to these circumstances.

1. In Roach v B & W Steel Pty Ltd (1991) 23 NSWLR 110, the Court of Appeal (Kirby P, Clarke and Handley JJA), in a joint judgment, considered whether certain conduct was "against good faith". The court observed (at 113-114):

In Cash v Wells (1830) 1 B & Ad 375; 109 ER 826, the Court of Kings Bench held that a default judgment signed contrary to the terms of a contract between the parties was "against good faith" and we see no reason why in this day and age the breach of a promissory representation should be treated any differently for this purpose: compare Legione v Hateley (1983) 152 CLR 406 at 421-423.

It does not matter that the legal practitioner who acted to obtain the judgment or order was not aware at the time that his or her conduct was contrary to an earlier promise or representation made by or on behalf of the client. It would still be contrary to good faith for a client to attempt to retain the benefit of an order innocently obtained by his legal practitioner if it had been obtained contrary to a promise or representation binding on the client.

Equity granted relief in cases of innocent misrepresentation because it was judged to be unconscionable for the representor to attempt to retain the benefit of a contract obtained however innocently through his misrepresentation once the truth was known. Similarly equity grants relief by way of rescission or rectification in respect of contracts entered into by one party under the influence of a material mistake if the other party "knows or ought to know" of that mistake: see Taylor v Johnson (1983) 151 CLR 422 at 432-433. Equity judged that it was unconscionable for one party to take advantage of an obvious and material mistake of another. This principle was applied by Finlay J in Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 528 in setting aside a settlement of litigation.

1. The meaning of "against good faith" was further considered in Kendell v Carnegie (2006) 68 NSWLR 193 where Bryson JA (with whom Hodgson and McColl JJA agreed), after quoting from Coles v Burke and Roach v B & W Steel Pty Ltd and reviewing other relevant authorities, added (at [60]):

[60] There is not and could not, I would think, ever be an exhaustive judicial definition of what is against good faith; only very broad limits are set by proceeding by analogy from circumstances in which judicial remedies are based on good faith, unconscionability, or other concepts closely related to good faith. I would include the passage cited from Taylor v Johnson among the many conceivably available sources from which to proceed by analogy. "Against good faith" is an expression which requires the impeachment of the intention or behaviour of the person whose good faith is impugned.

1. It may be capable of being asserted that a judgment was procured irregularly, illegally or against good faith, which if it were the fact would clearly undermine the authority of the judgment warranting the setting aside of it. Clearly if a person is deliberately tricked into signing or entering a consent judgment, that would be something which, in accordance with r 36.15, would be against good faith. But if one party who consents to the judgment makes a mistake and the other side simply behaves innocently then there is no occasion to set aside a judgment in those circumstances on the basis of an absence of good faith (Kendall v Carnegie at [53]).

1. In addition to the power conferred on the court by r 36.15, the court possesses inherent power to set aside a consent judgment if it could be suggested that it was entered as the result of illegality, misrepresentation, non-disclosure of a material fact or where disclosure was required. Further if there was duress, mistake, undue influence or an abuse of confidence or the like, such circumstances may well provide a basis for invoking the inherent jurisdiction. In other words there should be a basis upon which the agreement to enter the consent judgment could invalidated (Harvey v Phillips (1956) 95 CLR 235 at 243-244).

1. However, despite the terms of the motion and the written submissions, counsel for the defendants indicated during the course of the hearing that he accepted that if the defendants were unsuccessful in their application under r 36.15, they were not likely to succeed under the court's inherent jurisdiction. No submissions were therefore directed to invoke the court's inherent jurisdiction.

1. In considering whether the defendants have established the requisite lack of good faith for the purpose of r 36.15, and in light of the importance of particular factual details of particular conversations in the circumstances of this application, I am mindful of the observations of McLelland CJ in Equity in Watson v Foxman (1995) 49 NSWLR 315 (at 318-319) in relation to the proof of misleading conduct:

Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.

1. Another principle of evidence relevant to this application is that a trial judge is in no way restricted in his or her assessment of a witness. He or she is not bound to accept any of that which the witness attests to or indeed may only accept part thereof (Cubillo v Commonwealth of Australia (2000) 174 ALR 97 at [188]-[123]).

The conduct of the case

1. Mr Panagopoulos initially asserted he was under some mistaken belief in entering the first guarantee or that somehow the first guarantee was unenforceable and that the plaintiff knew or ought to have known these things.

1. It seems to me on the basis of this argument even assuming those matters were proven (and I have some serious doubts about them) it does not appear that the plaintiff's conduct could be described in any way as amounting to misconduct or dishonourable such as to affect the manner in which the judgment was given or entered. On that basis, I do not think that the consent judgments could be set aside. In any event, in the hearing before me, this argument based on "mistaken belief" was no longer pursued.

1. Mr Panagopoulos also initially relied on the same factual materials to assert that the inherent jurisdiction of the court should be invoked to set aside the consent judgments. Effectively, he relied upon the doctrine of unilateral mistake in equity. However, here the evidence simply does not establish, in my view, that the defendants laboured under a relevant mistake in respect of the consent judgments. Mr Panagopoulos was only too well aware of the effect, it seems to me, of the consent judgments. It is true that he was unable to procure legal advice, but as an experienced person of business he clearly understood what he was doing, in my view. In addition, even assuming there was some sort of representation that the plaintiff would entertain some discussion, I do not think the evidence establishes that the plaintiff was aware of any circumstances such as to fix it with knowledge of some mistake or misapprehension under which the defendants laboured.

1. In those circumstances, I do not think the court should, on the basis of its inherent jurisdiction, interfere with the consent judgments entered. Again, in any event, the defendants no longer sought to invoke the court's inherent jurisdiction when the matter was before me.

1. The defendants, at the beginning of the hearing of the motion, narrowed the grounds upon which they sought the consent judgments to be set aside. Essentially, as I understand it, they only contend there was a lack of good faith, as it were, on the part of the plaintiff. The argument, as I understand it, was that having commenced proceedings in the middle of 2012, the plaintiff and/or its representative was aware that Mr Panagopoulos had no legal representation. He had no legal ability himself and was attempting to do his best to negotiate a position to stave off bankruptcy and financial ruin if he could. The only basis, therefore it was submitted, that he was prepared to consent to judgment on his behalf and that of the second defendant was on the understanding which it is asserted he clearly obtained from his conversations with Ms Vetrova, to the effect that as a condition of agreeing to the consent judgments, the plaintiff would meet with him and attempt to favourably resolve the question of his and his company's indebtedness.

1. I must confess that even though it was articulated by senior counsel for the defendants both in opening and closing, the so-called undertaking, representation or whatever it was, seems to me at most to amount to no more than that the bank would entertain representations at some point from Mr Panagopoulos to permit him an opportunity to put some proposal to the bank in order to avoid his bankruptcy and, as I have said, financial ruin. It is certainly not suggested by him that any concrete proposal was ever put by him let alone the bank.

1. It is important however to deal in some detail with the contemporaneous events, both as asserted by Mr Panagopoulos on the one hand and Ms Vetrova on the other. Mr Panagopoulos and Ms Vetrova are the principal actors in the relevant events. I should note in passing that Mr Panagopoulos has no diary notes or notes of any kind of the conversations he undoubtedly had with Ms Vetrova during the period from about the middle to the end of 2012. On the other hand, Ms Vetrova has at least diary notes for conversations she had with Mr Panagopoulos on 28 May, 4 July, 25 July, 6 August and 21 August 2012. Although it is accepted by Mr Panagopoulos and Ms Vetrova that they spoke to each other on 30 August 2012, Ms Vetrova does not have a diary note in relation to that conversation. However, each sent emails to the other and, in Ms Vetrova's case, contemporaneously to her client (i.e. the plaintiff) from time to time following communications with Mr Panagopoulos.

1. Having heard Ms Vetrova's explanation I accept that the handwritten diary notes were contemporaneous or virtually contemporaneous with her phone calls. It matters little, but either she took all or some of the notes during the course of her conversations with Mr Panagopoulos or very shortly thereafter when the matter was fresh in her mind. It is also clear that the diary notes did not purport to record all that was said between herself and Mr Panagopoulos, although she did volunteer that her conversations with him were generally quite short. I am also persuaded that she sent emails both to Mr Panagopoulos and her client immediately upon, or very shortly after, she had conversations with Mr Panagopoulos of any relevance.

A little more detail

1. To properly consider the defendants' allegation of bad faith, it is necessary to consider the relevant factual material in further detail.

1. Following demands for repayment being made by the plaintiff to the defendants by letter, Mr Panagopoulos rang Ms Vetrova on 28 May 2012. He acknowledged that he had received the letter in relation to the guarantees and indicated to her that he would be writing to Gadens Lawyers. A note included in the evidence of Ms Vetrova records, and I accept, that Mr Panagopoulos told her that he did not want anyone to spend time and money on the matter. I am persuaded that he told her that he, or those associated with him perhaps, had no money and that he may have to be declared bankrupt.

1. At 9:54am on 5 June 2012, with the benefit of her earlier diary note, Ms Vetrova wrote to her client's representative, Mr Haq, indicating matters to that effect. Ms Vetrova also indicated in that email that she had in the meantime received a communication at about 8:11am that morning from Mr Panagopoulos seemingly sent from the email of a Mr Marco Schena, his accountant, indicating that the matter had been referred to "our lawyers" who would contact Ms Vetrova shortly. The email went on to indicate that the lawyer was currently away and would deal with the matter on his return. Mr Panagopoulos gave details of his mobile number to Ms Vetrova.

1. On 4 July 2012, Mr Panagopoulos again telephoned Ms Vetrova. According to Ms Vetrova's note of that call, Mr Panagopoulos indicated he wanted to talk about the "demands". He indicated to her again that he did not have any money and did not know where the matter may end up, but the position was not good. He simply wanted to inform Ms Vetrova of that fact and again indicated that he would probably be declared bankrupt at some point by "someone". He indicated to her that he wanted to put something on the "table" about his financial situation, which was indicated in her note by using a "$" symbol. The note records that he also indicated that he received the commercial list statement and summons filed by the plaintiff. Although the note records that he had a lawyer, it then goes on to record, in effect, that the lawyer or lawyers wanted money paid up-front.

1. On 9 July 2012 at 2:24pm, Ms Vetrova sent an email to Mr Haq. She referred to the conversation she had had the previous week with Mr Panagopoulos. In that email however, she indicated that he was looking for a solicitor and that he was not sure that he would be appearing at the first directions hearing on 27 July 2012. She informed Mr Haq that Mr Panagopoulos had again reiterated that he had no money and he may himself declare bankruptcy shortly. She then makes the following comments in the email:

He wanted to see if Members Equity would be prepared to meet to discuss the possible resolution of the claim in these circumstances.

I asked that he put his request in writing. I will let you know if we receive anything.

1. Although in Ms Vetrova's diary note of 4 July 2012 there was a reference to putting facts on the table which Ms Vetrova interpreted as effectively requesting a meeting, she did not record words to that effect. There was also no reference in the diary note to her requesting Mr Panagopoulos to put the request in writing.

1. She had further telephone contact with Mr Panagopoulos who again called her on 25 July 2012. Her notes for this conversation are very brief and consist of the words "not looking to challenge" and an email address.

1. There is no time identified as to when a telephone conversation took place with Mr Panagopoulos, but at 4:28pm that day she sent him an email and copied in Mr Schena and Mr Justin Bates (also at Gadens Lawyers). She informed Mr Panagopoulos that the proceedings were listed for directions on 27 July 2012 and attached some proposed short minutes of order, the effect of which provided for him to file a commercial list response by 17 August 2012 and that the matter was otherwise to be stood over for directions on 31 August 2012. The email also informed Mr Panagopoulos that if no commercial list response was filed by the due date her client would proceed to file a motion for default judgment without further notice.

1. At 4:32pm on the same day she sent an email to her client, Mr Haq. She informed Mr Haq that Mr Panagopoulos intended to consent to the orders for the filing of the list response and the date for further directions. She also said:

He also indicated that he will write to us shortly, (via a solicitor) to explain his financial position and to possible [sic] arrange a meeting with the Bank.

1. On 6 August 2012 she had a further telephone conversation with Mr Panagopoulos. Her diary note records that she was informed that Mr Marco Schena was the external bookkeeper that Mr Panagopoulos used (although she already knew of Mr Schena's existence, as is apparent from her email of 27 July 2012). It appears Mr Panagopoulos asked whether orders were made and Ms Vetrova indicated she would send a copy to him. Her note also records that Mr Panagopoulos indicated that he would meet with his lawyer "today + write to us". There is some other handwriting on the diary note which Ms Vetrova said related to another matter, which explains why she had crossed that out.

1. On 21 August 2012 Mr Panagopoulos again telephoned Ms Vetrova. Her note records that apparently Mr Panagopoulos had indicated to her that he had sent a letter but Ms Vetrova records that she told Mr Panagopoulos that it had not been received and that he should re-send it. The note also records that he asked "what our plan is". She records in her diary note that she told him that, subject to instructions, the bank would proceed to apply for default judgment and bankrupt him. The note also records that she told him that it was up to him to write to Gadens Lawyers or put any proposal. She further records that she told him that she was not able to advise him and that he should seek his own independent legal advice. It also records that he acknowledged that he understood that and would email her later that day.

1. At 10:03am on 21 August 2012 (and after her phone call with Mr Panagopoulos) she sent an email to her client, Mr Haq. She reminded Mr Haq that Mr Panagopoulos and his company had to file their defences by 17 August 2012, which they had failed to do. She advised Mr Haq that it was open to him to now apply for default judgment. She asked whether he was happy for that to occur and an application to be made accordingly. She then said:

I note that I received a call from Jim Panagopoulos who told me that he wrote to us. I have not received his email. I asked him to forward any proposal to us in writing so that I may seek your instructions. We recommend pressing with the default judgment application despite Mr Panagopoulos's calls.

1. At 4:49pm on 21 August 2012, Mr Panagopoulos sent an email to Ms Vetrova. It is important that it be set out in its entirety. It reads:

I wish to advise that I do not dispute the liability to your client.

At all times I have acted in the best interests of all concerned. Under the Wanslea Grove structure many changes and a significant renovation were undertaken in order to improve the business that was left decimated after the receivers for San Marco ran it for over 12 months. The intention was to improve the business in the short term and then sell it on in order to mitigate the loss to Members Equity. However the interceding global financial crisis significantly undermined my efforts.

I now find myself with nothing left to draw from in order to repay any of the debt being pursued by Members Equity. The failure of the pub in Sydney for the second time has actually financially ruined me, I put everything into trying to solve the problem of the first failure. Including selling our home.

In addition to this I've experienced two more business failures that have set me back even further.

I would like to make myself available and any information you may require to verify my current financial position in the hope that action against me can be averted or at least delayed.

In view of the above, and to avoid the need to engage in protracted litigation I am in principal [sic] willing to consent to judgement being entered against me in the sum claimed in the summons.

In the event that I elect at a later stage to propose a Part X arrangement I hope that the bank would consider such a proposal favourably.

1. There is a dispute between the parties as to what precisely was said during the telephone conversation of 21 August 2012. Mr Panagopoulos asserts a number of things were said and in a number of respects Ms Vetrova is simply unable to recall precisely what was said. However, notwithstanding the extent of her diary note and recollection, she does deny a number of aspects in relation to the alleged conversation.

1. Mr Panagopoulos asserts during the course of this telephone call he said that he wanted to meet the bank to talk about facilities and to try to work something out with them. Ms Vetrova says two things in relation to this assertion. First, she did not receive any written request for a meeting, and certainly it was her practice when acting for banking clients that if a borrower or a guarantor requested a meeting she would report such a request to the client by email. She points to her email to Mr Haq of 21 August 2012 in order to refresh her recollection as it were that during the course of the telephone call Mr Panagopoulos did not ask for a meeting. The email to Mr Haq of course does refer to "any proposal" which Ms Vetrova recalls asking Mr Panagopoulos about in writing but there is no reference to that proposal involving a meeting. It is true that Mr Panagopoulos' email does indicate that he would like to "make [himself] available", but does not as such request a meeting.

1. The next matter which Ms Vetrova takes issue with and which Mr Panagopoulos asserts took place during the conversation, was that she is attributed with having said that the bank would look favourably to Mr Panagopoulos surrendering himself as it were and saving the bank incurring legal costs in the proceedings. In particular, Mr Panagopoulos asserts that Ms Vetrova said the bank would look more favourably and be more inclined to talk with him if he consented to a judgment. Ms Vetrova does not deny that the notion of consent judgment may have been referred to during one or other of her telephone calls with Mr Panagopoulos (either on 6 or 21 August 2012), but on the basis of her practice with banking clients she asserts that she would not have made any promise in relation to the bank agreeing to meet with a customer without instructions to that effect. She also denied, without instructions, indicating in such circumstances that her client would consider any such proposal favourably. In other words, she simply did not have a practice of volunteering such maters and as a result she felt able to deny that she would have said such things in the course of that conversation.

1. On 22 August 2012 she sent an email to Mr Haq. The email enclosed a copy of Mr Panagopoulos' email of 21 August 2012. She suggested that the bank put on hold the default judgment application and instead send to Mr Panagopoulos a consent judgment for his execution and ask for its return within 7 days, along with a sworn statement of his financial position. On 27 August 2012, Mr Haq responded by agreeing to the recommendation and made it clear that in any response the bank should make it clear that it would not be committing to necessarily supporting any Part X arrangement sought by Mr Panagopoulos.

1. A number of things occurred on 30 August 2012. First, it seems a telephone conversation took place between Mr Panagopoulos and Ms Vetrova. Again there are aspects of this conversation which are disputed.

1. During the course of the conversation, again, Mr Panagopoulos asserts a number of things were said in respect of which Ms Vetrova has no recollection. There does not appear to be a diary note prepared by Ms Vetrova in respect of this call, and she accepted that having made an unsuccessful search to locate one, the absence of it would suggest that she perhaps did not make one in the first place.

1. Mr Panagopoulos asserts that during the course of the telephone conversation he informed Ms Vetrova that he could not afford a lawyer and so he had been unable to get any legal advice. He also said he again requested a meeting with the bank so that he could explain his overall financial position. Ms Vetrova is unable to deny such an assertion. Mr Panagopoulos again asserts that during this conversation, Ms Vetrova said that if he could save the bank the expense of going to court to get judgment on the debt (by consenting to a judgment), the bank would be willing to meet with him. Although Ms Vetrova could not deny such things might have been said, she observed again that she had no instructions to say such things or to agree to a meeting as at that date and it was her practice in relation to banking clients that if a meeting was requested, she would report this to the client and obtain instructions. She then says as a result of her not having instructions to agree to a meeting, and on the basis of her practice, she would deny that such things were said by her.

1. Mr Panagopoulos also asserts that Ms Vetrova said to him that if he did consent to a judgment, which would avoid a lengthy hearing and costs, the bank would look favourably upon that. Ms Vetrova is unable to deny that assertion by Mr Panagopoulos but clearly had no instructions to make such a statement. Mr Panagopoulos also asserts that during the course of the conversation on 30 August 2012, Ms Vetrova effectively was trying to pressure him by insisting that documents that would be sent to him should be signed very quickly as there is a deadline with the court. She agrees that she did send some short minutes to him in the morning asking that they be returned before midday, but otherwise denies that the words, even if used, applied to the documentation concerning the consent judgments.

1. What is clear is that at 9:52am on 30 August 2012, Ms Vetrova sent an email to Mr Panagopoulos referring to the earlier telephone conversation and attaching some short minutes of order. She sought the defendants' consent and indeed did ask that they be executed if they were to be consented to and sent back to her before midday "if possible". The short minutes which were attached provided for the matter to be stood over to 28 September 2012 with liberty to restore.

1. It is clear that Mr Panagopoulos signed the consent orders in which he agreed to adjourn the matter because at 10:07am on the same day, Ms Vetrova sent an email to the Associate of Justice Hammerschlag enclosing a copy of the signed short minutes of order so that his Honour could deal with the matter in chambers to avoid the parties appearing the next day at the appointed directions hearing.

1. At 10:18am on 30 August 2012 Ms Vetrova sent the orders of the court adjourning the matter to Mr Panagopoulos. At 10:19am she sent an email to Mr Haq enquiring what his instructions were regarding the consent judgment "documents".

1. At 3:43pm that day, I infer, having obtained instructions, Ms Vetrova sent a letter to Mr Panagopoulos. She also sent a copy to Mr Schena. The letter was marked "Without Prejudice". It was in the following terms:

30 August 2012

James Panagopoulos

PO Box 16054

COLLINS STREET WEST VIC 8007

Without Prejudice

Dear Mr Panagopoulos

Industry Funds Management (Nominees 2) Pty Limited v James Nicholas Panagopoulos & Anor

Supreme Court of New South Wales Proceedings No. 2012/207713

We refer to your letter of 21 August 2012.

Please find enclosed the following documents for execution:

1. Consent judgment; and

2. Sworn statement of financial position.

Kindly execute the consent judgment where marked and execute the statutory declaration in the presence of a justice of the peace or solicitor and return to our office on or before 5pm on Friday, 7 September 2012.

In the event the executed documents are not returned to our office on or before 7 September 2012, we expect to receive instructions to proceed with an application for default judgment without further notice to you.

Further, our client reserves all its rights including without limitation in relation to the facilities, securities and any Part X arrangement.

If you have any concerns in relation to your legal position, we recommend you obtain independent legal advice.

1. The letter had attached to it a form of consent judgment which made it abundantly plain that there was to be a consent judgment against the first defendant in the amount of $8,179,476.68 made up in accordance with the form of judgment. It was plainly indicated that this was in relation to the San Marco guarantee. There was a further consent judgment against the first defendant in the amount of $1,512,825.88 in respect of the Wanslea guarantee. The form of consent judgment provided for interest in respect of both of those amounts. Costs were provided for on an indemnity basis in accordance with the terms of the guarantee. As against the second defendant, there was to be a consent judgment in the amount of $8,179,476.68 which was said to be in relation to the San Marco guarantee and again costs on an indemnity basis.

1. In the letter of 30 August 2012 Mr Panagopoulos was also supplied with a document which was described as a "Sworn Statement of Financial Position".

1. On 6 September 2012 Mr Panagopoulos sent an email to Ms Vetrova. In it, he requested an extra week to provide the information, as he needed to check with his accountant who would not be available. Ms Vetrova responded on 12 September 2012 at 7:12pm indicating that she looked forward to receiving the signed consent judgments and his Sworn Statement of Financial Position by Friday 14 September 2012, otherwise she had instructions to apply for a default judgment. Mr Panagopoulos responded at 7:40am on 13 September 2012 indicating that was acceptable and that he would comply with the 14 September 2012 deadline.

1. It appears at 7:06am on 14 September 2012, Mr Schena sent a signed copy of the consent judgments (dated 13 September 2012), along with the Statement of Financial Position which had been filled out in handwriting. Although the statement was purportedly only in relation to Mr Panagopoulos, it showed on its face very little by way of income or assets. Household furniture was estimated to be worth $20,000, however, notably, he supplied a considerable amount of detail in relation to credit card debt. For example, an ANZ Visa card which had been suspended had $48,882 owing on it. A Citibank Visa and BankWest Mastercard each had respectively $44,854 and $16,206, both of which cards had been suspended. His Westpac Mastercard debt was at $40,631, although there seemed to be some arrangement for weekly repayment. He had two American Express cards, on one of which was a debt of $20,857 and on the other $36,695, both of which were being reduced by some modest weekly amounts.

1. On 14 September 2012 at 4:31pm, Ms Vetrova asked Mr Schena and/or Mr Panagopoulos to send the original of the documents by express post to her office. This was done by registered mail and the reference number for that purpose was provided by Mr Schena to Ms Vetrova on 17 September 2012.

1. On 27 September 2012 Ms Vetrova wrote to Mr Haq by way of an update. She had indicated that by that stage she had received the signed consent judgments from Mr Panagopoulos and the second defendant. They had been filed with the court and she was awaiting the court's confirmation as to when a sealed copy would be available.

1. On 27 September 2012 Ms Vetrova, in an email to Mr Panagopoulos and Mr Schena, confirmed that the original documents had been received and filed with the court, but said she required the financial statement to be sworn before a justice of the peace or a solicitor. That appears to have been done on 4 October 2012 when Mr Schena sent the Statement of Financial Position to Ms Vetrova witnessed this time by Mr Galimberti, a solicitor (who had formerly acted for Mr Panagopoulos).

1. On 8 October 2012 however, Ms Vetrova sent a letter to Mr Panagopoulos and to Mr Schena. The letter stated that the financial position did not disclose a number of companies in respect of which Mr Panagopoulos remained a director. They were White Sox Pty Limited, Quizus Pty Limited, Hackney Bay Pty Limited, Sirocco Enterprises (Aust.) Pty Ltd and Equal 54 Pty Ltd. It was also pointed out that the Statement of Financial Position did not record any income received from employment with Sirocco Enterprises (Aust.) Pty Ltd.

1. It is clear that Ms Vetrova and Mr Panagopoulos had a telephone conversation in early October 2012. Although there is no diary note for the conversation, Ms Vetrova sent an email to Mr Haq on that day, 8 October 2012, at 4:02pm. This was an update in relation to the documents that had been filed in the court in relation to the consent judgments. She also indicated that she had received a phone call from Mr Panagopoulos "last week". He had requested a meeting with the bank to explain his financial position. She went on to say:

It is uncertain if he can offer any money to pay the bank at this point in time though this may be something that can be discussed at the. [sic]

Please let me know if the bank is minded to hold a without prejudice meeting with Jim Panagopoulos.

1. The conversation referred to in the email of 8 October 2012 seems to have taken place on 5 October 2012 given Ms Vetrova's time sheets. Although he does not recall the precise date of the conversation, Mr Panagopoulos asserts that after, he provided the financial information and answered further queries on or after 9 November 2012.

1. Mr Haq had made clear to Ms Vetrova on 10 October 2012 in an email of that day that he saw no reason to delay the bankruptcy process. The bank would only consider doing so, he told her, if Mr Panagopoulos offered a significant sum of money to the bank.

1. On 19 October 2012, Mr Panagopoulos provided information (through Mr Schena) concerning the companies, but in each and every case he informed Ms Vetrova that each of the companies was a trustee for a discretionary trust in which he had no personal interest. In relation to Equal 54 Pty Ltd, he indicated the company did not trade and had been set up as a special purpose vehicle for the investment in the hotel. Also on that day, Ms Vetrova sent to Mr Panagopoulos a sealed copy of the consent judgments.

1. Further, on 23 October 2012 Ms Vetrova sent an email to both Mr Schena and Mr Panagopoulos indicating that a search undertaken indicated that Equal 54 Pty Ltd owned a property in Victoria and that there were three fixed and floating charges over it. A further explanation was requested.

1. On 9 November 2012, Mr Panagopoulos responded to Ms Vetrova, advising that Equal 54 Pty Ltd had previously acted as trustee for a discretionary trust, and in that capacity held the property in Victoria that Ms Vetrova was enquiring about. Mr Panagopoulos also advised that the property was already heavily encumbered.

1. On 14 November 2012 Ms Vetrova passed this information on to Mr Haq, who on the same day instructed Ms Vetrova to proceed to bankrupt Mr Panagopoulos.

Discussion

1. For reasons I am about to come to, I am persuaded that the whole idea of having a meeting with the bank in order to obtain some form of favourable treatment emanated at all relevant times from Mr Panagopoulos himself. Although Ms Vetrova does not have any recollection in relation to the crucial conversations Mr Panagopoulos asserts he had with her, I am satisfied, that she did not at any point indicate the bank would treat Mr Panagopoulos favourably were he to consent to the judgments, nor did she at any time promise that the bank would meet for that purpose.

1. I should record that Ms Vetrova impressed me as a careful, diligent and thorough lawyer who was acutely aware of the sensitivities when acting for banks and dealing as she may be called upon from time to time with customers directly. She was at pains to indicate that she would never, as I understand her evidence, represent that a customer might be given favourable consideration or that a bank would even be inclined to meet direct with the customer without obtaining instructions accordingly. I find that position entirely unsurprising. She impressed me as entirely truthful in that regard, and I accept her evidence unequivocally.

1. There were a number of problems with Mr Panagopoulos' evidence. Apart from his emails, he had no contemporaneous notes of any telephone call he had with Ms Vetrova. Accordingly, when pressed, he was simply unable to recall (in one sense) unsurprisingly events on key dates in 2012. Importantly however, his contemporaneous materials simply do not support his case. Nowhere does he refer in them to promises to be treated favourably or for the bank to meet with him. There is no complaint or comment on or about 30 August 2012 that the consent judgments and provision of financial materials had anything whatsoever to do with a promise or representation that the bank would give some unspecified favourable consideration or indeed meet with him to that end.

1. So far as Mr Panagopoulos is concerned, I am simply unable to accept his versions of those conversations. I do not think it is probable that they were uttered in the form that he suggests, I have little doubt that the question of a meeting with the bank was raised, I have little doubt that he volunteered the futility of the bank proceeding against him and he wanted to provide corroboration for that assertion by the provision of financial information.

1. The unreliability of Mr Panagopoulos' recollection can be illustrated by the manner in which his evidence unfolded. In his first affidavit, dated 27 March 2013, the only critical conversation with Ms Vetrova he refers to is one "in or about mid August 2012". This would correspond to one of the conversations recorded in Ms Vetrova's file notes of either 6 or 21 August 2012. Mr Panagopoulos later prepared a further affidavit, dated 3 June 2013. However, in the meantime, Mr Bates prepared an affidavit, which is dated 17 May 2013, which includes contemporaneous material indicating that a conversation took place between Ms Vetrova and Mr Panagopoulos on 30 August 2012. Mr Panagopoulos' affidavit of 3 June 2013 then identifies, for the first time, a critical and relatively detailed and lengthy conversation with Ms Vetrova on 30 August 2012, despite no reference to such a conversation being made in his first affidavit. This important chronology was noted by counsel for the plaintiff during the hearing.

1. It was alleged in final submissions by counsel for the defendants that the two critical aspects of Mr Panagopoulos' recount of his conversation with Ms Vetrova, as recorded in his affidavit, should not be rejected, as those two statements were not challenged in cross-examination. The first statement is that the bank would look favourably on Mr Panagopoulos if he consented to judgment and would be more inclined to talk to him. The second statement is that if he consented to judgment, thereby avoiding the costs of lengthy litigation, the bank would look favourably on that.

1. In Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1, Hunt J said (at 16 and 26):

It has in my experience always been a rule of professional practice that, unless notice has already clearly been given of the cross-examiner's intention to rely upon such matters, it is necessary to put to an opponent's witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, particularly where that case relies upon inferences to be drawn from other evidence in the proceedings. Such a rule of practice is necessary both to give the witness the opportunity to deal with that other evidence, or the inferences to be drawn from it, and to allow the other party the opportunity to call evidence either to corroborate that explanation or to contradict the inference sought to be drawn. That rule of practice follows from what I have always believed to be rules of conduct which are essential to fair play at the trial and which are generally regarded as being established by the decision of the House of Lords in Browne v Dunn (1894) 6 R 67.

...

... unless notice has already clearly been given of the cross-examiner's intention to rely upon such matters, it is necessary to put to an opponent's witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, particularly where that case relies upon inferences to be drawn from other evidence in the proceedings.

...

... as it was said by the Court of Appeal in Poricanin's case [1979] 2 NSWLR 419, at pp 426, 427, it would in many cases be wrong, unreasonable or even perverse for a tribunal of fact to reject evidence upon which there has been no relevant cross-examination. I am satisfied with the description that it would usually be unfair to do so where the rule in Browne v Dunn has not been complied with, and where the witness has not otherwise been given the opportunity to deal with the suggestion now made for the first time in the final address.

1. It was abundantly plain in the present case that the parties held different views about what was or was probably said between Mr Vetrova and Mr Panagopoulos in a particular critical conversation. Indeed, the parties were acutely aware that this was a critical factual matter on which the outcome of the application may turn. Having reviewed the transcript, I am satisfied that, in substance, counsel for the plaintiff put to Mr Panagopoulos in cross-examination the nature of the case which the plaintiff proposed to rely on in contradiction of his evidence (T29.10-T26.41 and T34.7-T34.24).

1. It is plain in my mind that from the very moment Mr Panagopoulos received the commercial list statement he was intent on ensuring that the bank understood clearly and unequivocally that it should regard any action against him or for that matter his corporate entity, as futile. In telling Ms Vetrova, as I believe he did, that the position was not good and that he wanted to let the bank know that he would probably be declared bankrupt at some point, as she puts it in her notes, by "someone", was for the purpose of persuading her client that its position was commercially hopeless. Given the extent of his credit card debts alone, it would seem that he was likely to be made bankrupt by one or other of the creditor card operators.

1. I accept that he certainly told Ms Vetrova that he had no money, as she records in her email of 9 July 2012, which I accept was said during the course of the conversation with Mr Panagopoulos on 4 July 2012. I also accept that it was likely it was said that he was considering declaring himself a bankrupt. I have no doubt that it was him who raised the possibility of the meeting during the course of his meeting with her on 4 July 2012. She faithfully reported that accordingly.

1. I am also persuaded that Mr Panagopoulos, as an experienced and realistic business man, understood only too well that there was really no basis upon which he could challenge the debts that had accrued by reason of the guarantees.

1. In her diary note of 21 August 2012 Ms Vetrova indicates that she made it clear to Mr Panagopoulos that, subject to instructions, the bank would consider proceeding against him for default judgment and in due course bankrupt him. It is also clear that Mr Panagopoulos wanted to formulate some proposal, which he raised with Ms Vetrova during their conversation.

1. His email to her of 21 August 2012 is clearly an important communication. Very importantly he commences by indicating that he does not dispute his liability. He refers to the global financial crisis which had undermined his efforts to make the hotel work profitably. Again, in order to convince the bank that any action against him would be futile, he said explicitly that he had nothing by way of resources from which to repay "any of the debt". He also talked about being in financial ruin and having to sell his home. He also added that he had experienced two more business failures which have set him back even further.

1. The terms of his email of 21 August 2012 make it plain that he was offering himself to the bank (should they wish to take up the invitation) to explain the situation in order to avert or delay what he clearly understood was the inevitable. The choice by him of the words "I would like to make myself available" are quite contrary to any promises on the part of Ms Vetrova on behalf of the bank offering favourable treatment or promising a meeting.

1. There is no doubt that in his email of 21 August 2012 Mr Panagopoulos was testing the water. In other words, he was holding out that he was in principle willing to consent to judgment but was really waiting to see, it seems to me, what reaction the bank might have to his rather vague proposal to either avoid or delay the process in some way. He also asked whether the bank would look favourably if in due course he proposed a Part X arrangement. Again on this he was, in my view, merely testing the water.

1. The bank's position, in my opinion, was clear and unequivocal. It required the consent judgments and a Sworn Statement of Financial Position. It gave no commitment at all to what attitude it may or may not adopt in relation to the facilities, the securities, or for that matter any proposed Part X arrangement. All it required was execution of the documents by 7 September 2012, otherwise it would proceed to default judgment without any further notice to him.

1. Importantly, Mr Panagopoulos did not respond to this email of 30 August 2012 with the suggestion that he had been promised a meeting or that were he to have supplied the information concerning his financial position he would get a meeting at which he may receive favourable treatment. He knew what the commercial reality was. He literally did not have a feather to fly with. He was in no position to bargain at all and simply, it seems to me, decided to throw himself on the mercy of the bank, if it had any.

1. The provision of his financial information again was both incomplete and, I am certain, designed to ensure that the bank understood that to proceed against him would be futile and that indeed any number of creditors, mostly credit card operators, could bankrupt him at any time given the level of indebtedness he had.

1. The lapse of time between 30 August and 13 September 2012 when he finally signed the consent judgments (and before which I infer he discussed presumably at some length with Mr Schena) suggests a considered position, and is also of some significance. He clearly took his time to think about the situation. When he signed the documents and had them returned, there had been no invitation from the bank to meet or discuss matters, and no meeting time had been fixed. The bank had certainly not committed itself in writing to giving him any form of favourable treatment, and yet he wrote no complaint about these matters at this point.

1. However, it is clear that on 5 October 2012 when he discussed matters again with Ms Vetrova, he did request on this occasion a meeting to explain his financial position. That is clear from Ms Vetrova's email to Mr Haq of 8 October 2012. I accept that he did request such a meeting but that is quite contrary to him believing prior to that date that he had been promised one or was led to understand that he would be given some form of favourable treatment by signing the consent judgments.

1. Even his letter written as late as 3 May 2013, which he accepted was written with the benefit of legal assistance, makes no reference to or complaint about a failure to meet as promised or give him some favourable consideration. Quite the contrary, it refers to a whole series of issues of a technical nature as to why the guarantee or guarantees may be unenforceable. I accept that by 27 March 2013 Mr Panagopoulos had put on an affidavit in which he had adverted to some of the conversations which have been disputed. However that does not detract from the absence of any complaint concerning a promise to meet or provide favourable treatment in the letter of 3 May 2013.

1. On the basis of the above, as I have already said, I am satisfied that the whole idea of a meeting with the bank in an attempt to obtain some form of favourable treatment, whatever that may be, was a strategy devised solely by Mr Panagopoulos. Part of that strategy was to attempt to persuade the bank that there was simply no utility in pursuing him or any related entity in relation to any aspect of the debt. He clearly, in my mind, did not have any idea of what he wanted to achieve except that if bankruptcy could be averted or even delayed there might be some advantage to him of an unspecified nature. That was his decision-making and strategy. I think this is supported by some of the answers Mr Panagopoulos gave during cross-examination (T21.11-T21.15 and T29.43-T30.8). I do not think anything said to him by Ms Vetrova encouraged him to believe there would be a meeting and/or that he would receive any favourable consideration or treatment.

Conclusion

1. For the above reasons, the defendants' motion will be dismissed and I order that they pay the plaintiff's cost of the motion.

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Amendments

01 July 2013 - Coversheet amended

Amended paragraphs: Coversheet

Decision last updated: 01 July 2013