Ioppolo v Cumace
[2021] WADC 86
•9 SEPTEMBER 2021
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: IOPPOLO -v- CUMACE [2021] WADC 86
CORAM: LONSDALE DCJ
HEARD: 2 AUGUST 2021
DELIVERED : 9 SEPTEMBER 2021
FILE NO/S: CIV 4574 of 2020
BETWEEN: LEO ANTONINO IOPPOLO
Plaintiff
AND
ANTONIO STEFANO CUMACE
Defendant
FILE NO/S: CIV 4578 of 2020
BETWEEN: PIERO CAMPEOTTO as Trustee for THE CAMPEOTTO FAMILY TRUST
First Plaintiff
LEO ANTONINO IOPPOLO as Trustee for THE ANNIMATT FAMILY TRUST
Second Plaintiff
ANTHONY PAOLINO
Third Plaintiff
LINA PAOLINO
Fourth Plaintiff
AND
ANTONIO STEFANO CUMACE
Defendant
Catchwords:
Practice and procedure - Appeal against registrar's decision to enter default judgment - Delay
Legislation:
Nil
Result:
Appeal dismissed
Representation:
CIV 4574 of 2020
Counsel:
| Plaintiff | : | Mr B G Grubb |
| Defendant | : | Mr J C Yeldon |
Solicitors:
| Plaintiff | : | Tudori Hager Grubb Lawyers |
| Defendant | : | Westmont Legal |
CIV 4578 of 2020
Counsel:
| First Plaintiff | : | Mr B G Grubb |
| Second Plaintiff | : | Mr B G Grubb |
| Third Plaintiff | : | Mr B G Grubb |
| Fourth Plaintiff | : | Mr B G Grubb |
| Defendant | : | Mr J C Yeldon |
Solicitors:
| First Plaintiff | : | Tudori Hager Grubb Lawyers |
| Second Plaintiff | : | Tudori Hager Grubb Lawyers |
| Third Plaintiff | : | Tudori Hager Grubb Lawyers |
| Fourth Plaintiff | : | Tudori Hager Grubb Lawyers |
| Defendant | : | Westmont Legal |
Case(s) referred to in decision(s):
Hall v Hall [2007] WASC 198
Markopolous v Marco [2020] WASC 79
Mavaddat v HSBC Bank Australia Ltd (No 2) [2016] WASCA 94
National Australia Bank Ltd v Singh [1995] 1 Qd R 377
Parker v Transfield Pty Ltd [2000] WASCA 382
LONSDALE DCJ:
On 14 December 2020 the plaintiffs, who had invested - and lost - money with Mr Cumace, filed writs and statements of claim claiming the loss of their investment plus interest. The plaintiffs plead that Mr Cumace caused the losses by breaching the terms of investment agreements to which he and the plaintiffs were parties.[1]
[1] The respondents in this appeal are the plaintiffs in CIV 4574 and 4578 of 2020. The plaintiff in CIV 4574 of 2020 is Leo Antonino Ioppolo. The first, second, third and fourth plaintiffs on CIV 4578 of 2020 are Piero Campeotto as Trustee for The Campeotto Family Trust, Leo Antonino Ioppolo as Trustee for The Annimatt Family Trust, Anthony Paolino and Lina Paolino.
Mr Cumace failed to lodge appearances to the writs in time and the plaintiffs obtained default judgment. Mr Cumace then filed an application to have default judgment set aside.
On 23 April 2021 Deputy Registrar Hewitt dismissed Mr Cumace's application. Mr Cumace has appealed that decision.
Principles for the setting aside of default judgment
The court has an unfettered discretion to set aside default judgment but the party seeking to set aside default judgment must show a credible argument that, if default judgment is set aside, he would have a real prospect of success: see Parker v Transfield Pty Ltd [2000] WASCA 382 [3] - [4] and Hall v Hall [2007] WASC 198 [61] - [67].
The fact that the party seeking to have default judgment set aside failed to lodge a timely appearance is not fatal to an application to have judgment set aside provided there is some explanation for the delay, there is no prejudice to the respondent and there is an arguable defence on the merits: see National Australia Bank Ltd v Singh [1995] 1 Qd R 377.
For reasons which follow, I find that Mr Cumace has failed to demonstrate an arguable defence on the merits. Further, he has failed to demonstrate a credible explanation for the delay.
The appeal is therefore dismissed.
The defendant's explanation for failing to file an appearance within time
It is convenient to deal with the issue of delay first.
In an affidavit sworn on 20 July 2021 Mr Cumace deposed that on 22 December 2020 he was in his car at a building site when he was approached by a gentleman (the process server) who asked if he was Antonio Cumace. Mr Cumace answered in the affirmative and the man handed him an open envelope. The man did not say to Mr Cumace that he was being served. Mr Cumace thanked him and placed the envelope on the seat of his car. Mr Cumace said that he had been waiting for some building plans to be delivered for a project and assumed that the envelope contained the plans. Mr Cumace said he did not need the plans at that time and thought nothing further of it. He did not open the envelope and went on holiday. He did not look at the documents until 29 January 2021. He instructed his lawyers on 2 February 2021 but a memorandum of appearance was not filed until 8 February 2021 because 'it was lockdown'.[2]
[2] Affidavit of Antonio Stefano Cumace sworn 20 July 2021, pars 47 - 55.
In the absence of holding a hearing, I am unable to decide whether Mr Cumace's explanation is true or not. I am not presently persuaded that it is.
I find Mr Cumace's claim that he did not know he had been served and that he did not look in the envelope until 29 January 2021 as barely plausible on its face.
Also, Mr Cumace's explanation is contradicted by the affidavit of the process server Geoffrey Grant Reid sworn on 17 March 2021. The veracity of Mr Reid's affidavit was not challenged at the appeal.
Mr Reid deposed that he knew Mr Cumace, having served him with legal documents in the month prior. Mr Reid further deposed that he told Mr Cumace, when he presented him with the documents, that he had been served. Further, Mr Reid deposed that he had telephoned Mr Cumace prior to serving him with the documents to advise him of his intention to effect service on him. Mr Cumace has not sought to challenge the veracity of Mr Reid's account.
I find explanation for the delay to be inadequate. However, Mr Cumace's failure to properly explain the delay will not be fatal if Mr Cumace is able to demonstrate a defence on the merits. I turn to consider whether there is a defence on the merits.
The evidence on the appeal
At the hearing of the appeal the defendant relied on various affidavits including four affidavits sworn by him, an affidavit of Chris Marco sworn 16 July 2021 and an affidavit of Kevin D'Silva sworn 15 July 2021.
The plaintiffs filed various affidavits including an affidavit of Piero Campeotto, as Trustee for The Campeotto Family Trust (the first plaintiff in CIV 4578 of 2020).
The following facts emerging from the affidavit material are not in dispute.
A man by the name of Chris Marco conducted business activities which included engaging investors to commit funds through what are known as 'private placement investments': see Markopolous v Marco [2020] WASC 79 [15] - [28].
Mr Cumace had been investing funds with Mr Marco for approximately six years. Mr Cumace received regular ‑ and apparently ‑ quite handsome returns on those investments.
In the year 2016 Mr Cumace told the third plaintiff in CIV 4578 of 2020, Anthony Paolini, that he had been receiving a good return on his investments with Mr Marco for the past two years. Sometime after that, Mr Cumace explained to Mr Paolino how the investments worked. Mr Cumace told him that Mr Marco offered 'private placement investment' programmes that paid good returns (of about 2% ‑ 3% per month and sometimes 20% ‑ 24% per year).
Mr Cumace also discussed the idea of investing with Mr Marco with the second and third plaintiffs in CIV 4578 of 2020. Mr Cumace explained to them that Mr Marco did not want to deal with many individuals and invited Anthony Paolino to give him funds to pool with other investors' funds to be given to Mr Marco when the next placement was ready.
Between 2016 and 2018 Anthony Paolino decided that he wished to invest in the scheme and transferred funds to Mr Cumace.
Anthony Paolini introduced Piero Campeotto, the first plaintiff in CIV 4578 of 2020 to the scheme. Mr Campeotto also paid Mr Cumace an amount of money to invest with Mr Marco.
In August 2021 the plaintiff in CIV 4574 of 2020 Leo Antonio Ioppolo, who is also the representative of the Ioppolo Family Trust (the second plaintiff in CIV 4578 of 2020) decided to participate in a private placement investment. He paid $250,000 to Mr Cumace for that purpose.
Upon paying money to Mr Cumace, the plaintiffs were presented with a document which was entitled 'Private Placement Investment' (PPI).
The PPI signed by the plaintiffs in CIV 4578 of 2020 reads as follows:
PRIVATE PLACEMENT INVESTMENT
I, Antonio Cumace (Principal) of [REDACTED], Hereby Declare that I hold the private placement investment specified in schedule below.
I declare that the beneficiary is entitled to their proportion of the capital and interest of income therefrom as single investment holder.
The investor has agreed to advance to the Principal the sum specified in below schedule upon the terms and conditions here contained.
SCHEDULE DETAILS
Description of Investment
a)Name of Investor : Campeotto Family Trust,
Annimatt Family Trust and
A & L Paolino
b)Investment Amount : AUD$250,000
c)Rate of Return : 2% per month
d)Commencement Date : 1st April 2018
e)Maturity Date : 31st March 2019
(or with 30 days notice)
f)Investment Type : Private Placement
Financial Institution Details
a)Name of Financial Institution : [REDACTED]
b)BSB Number : [REDACTED]
c)Account Number : [REDACTED]
Please note: Due to Financial Institution terms & conditions, funds may not clear on the same day or date of investor maturity date.
Name of Beneficiary and Relevant Proportion
Signature of Investor Signature of Principal
Guarantee
By the execution of this declaration, the Principal hereby guarantees to the investor the repayment of the principal sum in the event of investment loss.
Bank Details of Principal
Antonio Cumace [REDACTED]
BSB [REDACTED]
ACCOUNT [REDACTED]
P A I D
25.3.18
$250,000
Eft 113718911
On 26 March 2018 Mr Campeotto made a payment on behalf of all the plaintiffs in the amount of $250,000 to Mr Cumace's bank account.
Mr Cumace made several payments to the plaintiffs for their returns on investment between 8 May 2018 and 9 November 2018.
Mr Cumace and Leo Ioppolo signed a PPI in materially similar terms to the PPI signed by the other plaintiffs.
In November 2018 ASIC sought and was granted a freezing order over Mr Marco's accounts. Mr Marco was unable to make any payments to Mr Cumace so Mr Cumace ceased making any further payments to the plaintiffs.
By written notice dated 5 November 2020 the plaintiffs demanded that Mr Cumace repay the principal sums invested plus outstanding returns less the investment returns paid. The solicitors for the plaintiffs issued a corresponding letter of demand.
On 10 November 2020 Mr Cumace did not comply with the written notice of demand.
In addition to the affidavit evidence filed in advance of the hearing of the appeal, the plaintiffs produced a document disclosed by the solicitors for Mr Cumace on the morning of the appeal. The disclosed document is entitled 'Declaration of Trust' and is dated 1 September 2018. The document names Mr Cumace as 'investor' and Mr Marco as 'principal'. The document is unsigned. However, there is no dispute that this document contained the terms of an investment agreement between Mr Marco and Mr Cumace. The terms of the document appear below:
DECLARATION OF TRUST
I, CHRIS MARCO (Principal) of [REDACTED], Western Australia HEREBY DECLARE that I hold the investment specified in item 1 of the Schedule in trust for the party specified in item 2 of the Schedule in the proportions set out against their name in item 2 of the Schedule AND DECLARE that the beneficiary is entitled to their proportion of the capital and interest or income therefrom as single investment holder.
The investor has agreed to advance to the Principal the sum specified in item 1 of the Schedule upon the terms and conditions herein contained.
Schedule
1.Description of Investment
a)Investment Amount: AUD$4,995,000.00
b)Rate of Return: 3% Monthly
c)Commencement Date: 1 September 2018
d)Maturity: End of each calendar month
e)Investment Type: Monthly "Warehousing Funds"
2.Name of Beneficiary and Relevant Proportion
Antonio Cumace 100 per centum
3.Guarantee
By the execution of this declaration, the Principal hereby guarantees to the investor the repayment of the principal sum in the event of investment loss in accordance with the provisions of this declaration.
Declaration of Trust - Cumace "Warehousing Funds" C Marco 01/09/2018
The defendant's contentions
Mr Cumace contends that he was not a party to any investment agreement with the plaintiffs and submits he was a mere volunteer or conduit between the plaintiffs and Mr Marco. Counsel for Mr Cumace made two primary contentions in support of that submission.
First, he submitted that the PPI document did not represent the entire agreement between Mr Cumace and the four plaintiffs; other facts showed Mr Cumace to be a volunteer or conduit.
Secondly, he submitted that the PPI is ambiguous both on its face and having regard to the context in which it was signed. Counsel for Mr Cumace submitted that the evidence establishes that all parties understood the plaintiffs to have provided funds to be invested with Mr Marco and therefore the agreement did not establish any obligation by Mr Cumace to repay the plaintiffs.
Was Mr Cumace merely a volunteer?
The PPI documents signed by the plaintiffs and the defendant are not materially different to the 'Declaration of Trust' document signed between Mr Cumace and Mr Marco on the occasions in which Mr Cumace had invested his own funds.
A similar situation arose in the case of Markopolous v Marco. In that case Mr Marco (who is one and the same) acknowledged his indebtedness to Ms Markopolous for monies paid to him pursuant to a 'Declaration of Trust' document in materially similar terms to the one produced by the defendant in this case. In that case, Ms Markopolous had sought to persuade the court that the funds advanced for investment were held by Mr Marco on trust for her benefit. Mr Marco had denied the existence of a trust relationship with Ms Markopolous but did not deny that the document created a debtor‑creditor relationship.
Having regard to Mr Marco's position in that case, it is logical to assume that Mr Marco would not seek to deny that the 'Declaration of Trust' document here created a debtor‑creditor relationship with Mr Cumace. However, it is also plain from Mr Marco's affidavit in these proceedings that (although he was aware Mr Cumace had procured funds from the plaintiffs) Mr Marco had entered into an agreement with Mr Cumace and not the plaintiffs in these proceedings.
There is no evidence before me that Mr Marco had ever dealt with the plaintiffs prior to them signing the PPI; nor is there any evidence of Mr Marco having promised to guarantee the plaintiffs' investments.
I have compared the 'Declaration of Trust' document signed by Mr Marco and Mr Cumace with the PPI documents signed by Mr Cumace and the plaintiffs. Both documents refer to a 'principal' and 'investor' or 'beneficiary' and provide for an 'investment amount', a 'specified rate of return' and contain a guarantee by the principal in the event of 'investment loss'. Mr Cumace is stated to be the 'beneficiary' in relation to the 'Declaration of Trust' by Mr Marco who is the principal. However, Mr Cumace is identified as the principal on the PPI document with the plaintiffs identified as investors.
Counsel for the defendant submitted that the PPI document was ambiguous as to whether the document created an obligation for Mr Cumace as principal to reimburse the plaintiffs. However, counsel for the defendant did not submit that the terms of the PPI document did not represent the entire agreement. Rather, he submitted that the absence of any obligation between Mr Cumace and the plaintiffs is evidenced by the fact that Mr Cumace had not received any benefit for his involvement.
The difficulty with Mr Cumace's contentions in this regard is that the PPI document shows that Mr Cumace had agreed to pay the respondents 2% per month and repay the sum of amount invested on the 'Maturity Date'. There is a clause whereby Mr Cumace guaranteed any investment loss. Also, as counsel for the plaintiffs pointed out, the 'Declaration of Trust' document between Mr Marco and Mr Cumace showed that Mr Cumace had been receiving a benefit - namely a 3% return on his investment. As the PPI document provided for the plaintiffs to be paid only 2% on their investments. As counsel for the plaintiffs submitted the documentation appeared to establish that Mr Cumace had been 'skimming' profits from the plaintiffs and thus receiving a benefit.
In reply, counsel for Mr Cumace conceded (on the basis of the PPI document I have just referred to) that he could no longer maintain that Mr Cumace was a mere volunteer: see Mavaddat v HSBC Bank Australia Ltd (No 2) [2016] WASCA 94 [61] - [68] (Mitchell J).
The ambiguity argument
Having abandoned the volunteer argument, that left Mr Cumace's submission that the terms of the PPI were ambiguous.
I do not accept that there is any reasonable basis for arguing that the PPI document is in any way ambiguous or that it did not represent an agreement between Mr Cumace and the four plaintiffs. The PPI document, being Mr Cumace's own document, must be read contra profferentem. It was an agreement whereby Mr Cumace (the principal) agreed to pay the plaintiffs (the investors) a return of 2% and to guarantee repayment of the principal. The terms of the agreement are, with respect, clear and unambiguous.
Counsel for Mr Cumace submitted that it was not clear who 'the investor' was from the document but that argument has no merit. The only sensible reading of the documents leads to a conclusion that the plaintiffs are the investors.
Counsel for Mr Cumace further submitted it was not clear that Mr Cumace had guaranteed the investment because the signatures appeared above the paragraph about a guarantee. However, there was no evidence from Mr Cumace or anyone else that the guarantee was referable to some other feature of an agreement between the parties. The submission is devoid of merit.
The only reasonable interpretation is that by his signature on the document, Mr Cumace had agreed to guarantee the plaintiffs against the loss of their investments.
Conclusion
Like Deputy Registrar Hewitt, I have concluded that there is no arguable defence on the merits.
The appeal is dismissed.
I will hear the parties as to costs.
Orders
The appeal is dismissed.
There will be judgment for the plaintiffs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
PH
Court Officer
8 SEPTEMBER 2021
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